25.2 Liquidity risk

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

The main objective of liquidity risk management in the PGE Capital Group is to ensure and maintain its companies’ ability to meet their current and future financial liabilities, taking into consideration their costs and acquirability.

In the PGE Capital Group, managing liquidity risk consists, among other things, in planning and monitoring cash flows in both the short- and long-term perspectives with respect to the conducted operating, investing, and financing activities and undertaking actions aimed at ensuring resources for the activities of the PGE Capital Group and, simultaneously, minimising the costs of such activities.

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

Long-term liquidity risk management allows the PGE Capital Group to determine its borrowing capacity and supports decisions regarding the financing of long-term investments.

The PGE Capital Group uses a central financing model according to which, as a matter of principle, external financing agreements are entered into by PGE S.A. Its subsidiaries within the PGE Capital Group take advantage of various intra-group financing sources such as loans, bonds, bank account consolidation agreements or real cash pooling agreements.

The PGE Capital Group uses various sources of financing such as overdraft and revolving facilities, term and investment loans, 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 investment programme can be financed. The ratio is calculated on the basis of the consolidated financial statements of the PGE Capital Group. The value of the debt ratio is presented in note 20 to these financial statements.

The table below shows the maturity of the Group’s financial liabilities at the reporting dates by maturity date based on contractual undiscounted payments.

In the case of commodity derivatives, the table shows net flows, i.e. payments are presented net of receipts from the performance of contracts.