Liquidity risk concerns a situation in which an 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.
Periodical planning and monitoring of liquidity at PGE Group allows for securing funds to cover a potential liquidity gap, both through allocation of funds between PGE Group companies (cash pooling mechanism) and using external financing, including overdraft facilities.
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 financing sources, such as overdrafts, term loans and investment loans, issue of domestic bonds and Eurobonds.
As part of its liquidity assessment, the Group monitors the performance of the net debt/EBITDA ratio at a level that guarantees the maintenance of investment grade credit ratings and, consequently, the ability to finance the Group’s investment program. The ratio is calculated on the basis of PGE Group’s consolidated financial statements. The debt ratio is presented in note 20 of these financial statements.
The following table presents maturities of the Group’s financial liabilities at reporting dates by maturity based on contractual undiscounted payments
| AT DECEMBER 31, 2021 | Carrying amount | Total payments | Under 3 months | From 3 to 12 months | From 1 year to 5 years | Over 5 years |
| Loans and borrowings | 7,856 | 8,591 | 902 | 1,339 | 3,986 | 2,364 |
| Bonds issued | 2,046 | 2,499 | – | 66 | 657 | 1,776 |
| Trade and other financial payables | 3,902 | 3,902 | 2,831 | 124 | 907 | 40 |
| Settlements with exchanges, largely related to the purchase of CO2 emission allowances (*) | 1,663 | 1,663 | 1,663 | – | – | – |
| Lease liabilities | 924 | 2,374 | 19 | 55 | 244 | 2,056 |
| Derivatives | 83 | 155 | 117 | 9 | 29 | – |
| TOTAL | 16,474 | 19,184 | 5,532 | 1,593 | 5,823 | 6,236 |
| AT DECEMBER 31, 2020 | Carrying amount | Total payments | Under 3 months | From 3 to 12 months | From 1 year to 5 years | Over 5 years |
| Loans and borrowings | 8,423 | 9,049 | 187 | 1,241 | 5,274 | 2,347 |
| Bonds issued | 2,045 | 2,381 | – | 41 | 166 | 2,174 |
| Trade and other financial payables | 3,096 | 3,096 | 2,508 | 142 | 441 | 5 |
| Settlements with exchanges, largely related to the purchase of CO2 emission allowances (*) | 856 | 856 | 856 | – | – | – |
| Lease liabilities | 941 | 2,322 | 18 | 55 | 239 | 2,010 |
| Derivatives | 448 | 450 | 42 | 147 | 242 | 19 |
| TOTAL | 15,809 | 18,154 | 3,611 | 1,626 | 6,362 | 6,555 |