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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 |
