A shareholder can reasonably ask why a company with EUR42 million of cash is reluctant to distribute EUR24 million. The opening figures appear to leave a comfortable remainder. In a group financed through individual generating projects, however, the consolidated balance is only the beginning of the answer. Money may sit in entities with their own commitments, reserve requirements and conditions on movement. The board cannot infer its freedom to pay simply by subtracting one headline number from another. It needs an account of where the money is and what must happen before it can be used.
This is a recurring communication challenge for an energy CFO because several accounts can be accurate at the same time. The financial statements may correctly show cash held across the group. Treasury may correctly describe the amount presently accessible to the parent. Project teams may correctly identify sums already needed for upcoming work. Confusion arises when those different questions are answered with one figure. I try to make the distinctions visible before a distribution request becomes a negotiation about whether finance is being unnecessarily cautious or shareholders are being unreasonable.
Locate the money before discussing the return
In our March 2025 review, EUR30 million was held within project entities and EUR12 million at the parent. Within the project amount, EUR12 million supported debt reserves and EUR9 million related to committed capital work. The remaining EUR9 million could be considered for movement after the relevant conditions had been confirmed. That produced an accessible amount of EUR21 million once those confirmations were obtained. The requested EUR24 million distribution was therefore not supported by the opening consolidated cash number in the way a simple subtraction suggested.
The breakdown was useful because it allowed directors to examine the actual choices. They could ask about the capital commitments, the timing of the permitted transfer and the parent's needs without implying that every project balance was either permanently trapped or immediately available. We avoided describing all EUR30 million as restricted, which would have been as misleading as treating it all as free. Precision about the categories improved the discussion. It also gave shareholders an explanation that could be checked against the entity-level account rather than accepted on the CFO's authority alone.
The board ultimately approved a EUR12 million distribution after the required conditions were satisfied. That left EUR9 million of accessible cash alongside EUR21 million supporting the identified project requirements, for EUR30 million across the group after payment. The decision did not improve profit, release a hidden reserve into earnings or create new cash. It changed how much existing money left the enterprise. Stating that plainly kept the outcome from becoming an inflated finance achievement. The contribution was the quality of the decision and the liquidity retained, with a real delay to the shareholders' requested receipt.
Give conditions an owner and a date
A phrase such as subject to confirmation can be useful shorthand, but it can also conceal an unfinished task. I want the distribution account to identify who is responsible for confirming each condition and when the board can rely on that work. Treasury can establish the cash location and proposed movement. Legal and financing specialists can examine the relevant permissions and obligations. Finance can connect the result to the forecast. The CFO should coordinate a complete account without pretending that a spreadsheet provides authority to move money between entities.
The timing matters because a conclusion can become stale. A transfer that appears possible early in a planning cycle may need to be reconsidered after an operating event, a new commitment or a change in the cash forecast. We therefore tied the decision to a defined information date and a confirmation before execution. This was not an attempt to introduce an indefinite right for finance to reverse a board decision. It made the conditions of that decision explicit so that a material change could be brought back through the appropriate process instead of being quietly absorbed by the treasury team.
I also distinguish expected project distributions from cash already held by the parent. The forecast may include a reasonable assumption that money will move later, but the board should see the conditions and timing behind it. That is particularly relevant when several projects contribute to one planned shareholder payment. A delay at one asset may be manageable; a common reason for delay across several assets may have a different effect. Aggregation can hide those relationships. A short explanation of the principal dependencies often adds more value than a large schedule presented without interpretation.
There is a practical discipline in keeping the language consistent across management, investors and lenders. Calling the same amount free cash in one conversation, available liquidity in another and expected distribution capacity in a third creates avoidable misunderstanding if the terms mean different things. I do not insist on one universal vocabulary for every organisation. I insist that our board knows what each measure includes and excludes. The definition should travel with the number when it is used to support a decision, especially where the audience has not seen the underlying project account.
Explain the cost of retaining flexibility
Retaining EUR9 million of accessible cash after the approved payment had an opportunity cost for shareholders who wanted an earlier return. Their preference was legitimate and deserved a clear response. We explained the operating and financing needs that informed the retained amount rather than presenting liquidity as an unquestionable virtue. Holding more cash is not automatically a better decision. The board must judge the value of flexibility against the return forgone and the alternatives available. Finance should make that trade-off visible instead of treating a larger balance as evidence of superior prudence.
The same reasoning applies when a group considers borrowing to support a distribution. A financing option may exist, but its cost, conditions and effect on future choices need to be examined. It should not enter the discussion as a convenient way to preserve the original shareholder request after the cash analysis has changed. Nor should it be dismissed without assessment. The purpose of the entity-level account is to clarify the decision, not to predetermine it. Directors may choose among alternatives once they understand their consequences and have the relevant professional advice.
I find that a well-explained smaller payment can strengthen trust more than an ambitious promise built on ambiguous availability. It shows shareholders how the enterprise is being managed and gives them a basis for revisiting the question when conditions change. The explanation must include what happens next: the expected review point, the evidence still required and the circumstances that would alter the recommendation. A board deserves more than a statement that finance is comfortable. It deserves a traceable route from the cash shown in the accounts to the amount it is actually deciding to pay.