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 in the PGE Capital Group is to ensure and maintain its companies’ ability to meet its current and future financial liabilities, taking into consideration the costs of acquiring liquidity.

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, minimizing the costs of such activities.

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

AS AT DECEMBER 31, 2020 Value in statement Total payments Up to 3 months From 3 to
12 months
From 1 year
to 5 years
Over 5 years
Credits and loans 8,423 9,049 187 1,241 5,274 2,347
Bonds issued 2,045 2,381 41 166 2,174
Trade payables and other financial liabilities 3,096 3,096 2,508 142 441 5
Settlements with exchanges, mainly related to purchase of CO2 emission allowances(*) 856 856 856
Lease liabilities 941 2,322 18 55 239 2,010
Derivative instruments 448 450 42 147 242 19
TOTAL 15,809 18,154 3,611 1,626 6,362 6,555
(*) Settlements are related to variation margins whose value depends on the current price of CO2 emission allowances.

AS AT DECEMBER 31, 2019 Value in statement Total payments Up to 3 months From 3 to
12 months
From 1 year
to 5 years
Over 5 years
Credits and loans 9,381 10,407 1,089 471 6,057 2,790
Bonds issued 1,998 2,545 62 246 2,237
Trade payables and other financial liabilities 4,111 4.111 3,578 58 470 5
Lease liabilities 929 2,241 19 56 240 1.926
Derivative instruments 479 483 157 109 198 19
TOTAL 16,898 19,787 4,843 756 7,211 6,977

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