26.2 Liquidity risk

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 PGE Group’s liquidity management is to ensure and maintain the companies’ ability to meet both current and future financial obligations, taking into account the cost and ability to obtain them.

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 enables the Group to secure funds to cover any liquidity gap, both by allocating funds between PGE Group companies (cash pooling) and using external financing, including overdrafts and working capital loans.

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 a variety of financing sources, such as overdrafts, working capital loans, term investment loans, domestic bond issues 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.

In the case of derivatives – commodities, the table shows net flows – payments have been net of receipts from the execution of contracts.