Integrated Report 2019 | PGE Capital Group

Liquidity risk concerns a situation in which the entity is unable to meet its liabilities (current or non-current) when they become due.

The main objective of liquidity risk management at PGE Group is to ensure and maintain the companies’ ability to meet their existing and future financial liabilities, taking into account the cost to obtain liquidity.

Liquidity risk management at PGE Group involves planning and monitoring short- and long-term cash flows from operating, investing and financing activities and taking action intended to secure funds for the activities of PGE Group, while limiting the cost of these actions.

Periodic planning and monitoring of PGE Group’s liquidity makes it possible to secure funds for any liquidity gaps by allocating funds among PGE Group companies (cash pooling) as well as using external financing, including overdrafts.

Liquidity risk management in the long term allows PGE Group to define its borrowing capacity and supports decisions regarding the financing of long-term investments.

PGE Group has a central financing model in which, as a rule, agreements relating to external financing are executed by PGE S.A. PGE Group subsidiaries use various sources of intra-group financing such as loans, bonds, bank account consolidation agreements and real cash pooling agreements.

PGE Group uses various sources of financing, such as: overdraft facilities, term and investment facilities, bond and eurobond issues.

As part of the assessment of its liquidity, the Group monitors the level of the net debt/ EBITDA ratio, so as to ensure that the ratings are maintained at the investment grade and, consequently, that the Group’s ambitious investment programme can be financed. The ratio is calculated on the basis of the consolidated statements of PGE Group. The value of the debt ratio is presented in note 20 to these financial statements.

The following table presents maturities of the Group’s financial liabilities as at respective reporting dates based on contractual undiscounted payments:

AS AT DECEMBER 31, 2019 Carrying amount Total payments Up to 3 months 3 to 12 months 1 year to 5 years More than 5 years
Credit facilities and loans 9,381 10,407 1,089 471 6,057 2,790
Bonds issued 1,998 2,545 62 246 2,237
Trade and other payables 4,111 4,111 3,578 58 470 5
Lease liabilities 929 2,241 19 56 240 1,926
Derivatives 479 483 157 109 198 19
TOTAL 16,898 19,787 4,843 756 7,211 6,977
AS AT DECEMBER 31, 2018 Carrying amount Total payments Up to 3 months 3 to 12 months 1 year to 5 years More than 5 years
Credit facilities and loans 7,936 8,554 1,957 335 5,296 966
Bonds issued 2,769 2,974 18 2,185 71 700
Trade and other payables 4,134 4,134 3,402 211 63 458
Lease liabilities 3 3 1 1 1
Derivatives 136 137 24 81 46
TOTAL 14,978 15,802 5,402 2,799 5,477 2,124

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