7.3.3 Liquidity risk
Liquidity risk is defined as the risk of inadequate liquidity restricting the Group’s ability to finance its capital requirements or the risk of structural excess liquidity adversely affecting profitability of the Group’s business.
The main objective of the liquidity risk management is to monitor and plan the Group’s liquidity on a continuous basis. Liquidity is monitored through at least 12-month projections of future cash flows, which are updated once a month. The Group reviews the actual cash flows against projections at regular intervals, which comprises an analysis of unmet cash-flow targets, as well as the related causes and effects.
The liquidity risk should not be associated exclusively with the risk of loss of liquidity by the Group. An equally serious threat is that of having excess structural liquidity, which could adversely affect the Group’s profitability. The Group monitors and plans its liquidity levels on a continuous basis.
To enhance its liquidity position, the Group operates a note programme. For details on the issues of notes, see Note 5.2.
The Group companies also use lines of credit; for credit limits, see Note 5.2.1.
The liquidity risk at the parent is significantly mitigated by following the PGNiG S.A. Liquidity Management Procedure, which ensures proper management of financial liquidity through:
- execution of payments,
- cash flow forecasting,
- optimal management of free cash,
- raising new financing and restructuring existing funding arrangements to finance day-to-day operations and investment projects,
- providing protection against temporary liquidity constraints resulting from unforeseen disruptions, and servicing contracted bank loans.
Measurement of the liquidity risk is based on ongoing detailed monitoring of cash flows, which takes into account the probability that specific flows will materialise, as well as the planned net cash position.
The tables below present maturities of financial liabilities at contractual undiscounted amounts.
| 2021 | Time to contractual maturity at the reporting date | Total | Carrying amount | ||||
| Up to 3 months | 3–12 months | 1-3 years | 3 – 5 years | over 5 years | |||
| Financing liabilities | 10,078 | 95 | 1,260 | 1,371 | 2,868 | 15,672 | 14,637 |
| Bank borrowings | 10,011 | 19 | 956 | 1,111 | 48 | 12,145 | 12,153 |
| Lease liabilities | 67 | 66 | 304 | 180 | 2,820 | 3,437 | 2,394 |
| Other | – | 10 | – | 80 | – | 90 | 90 |
| Trade payables | 6,433 | 68 | 66 | 11 | 27 | 6,605 | 6,605 |
| Derivative financial liabilities | |||||||
| CCIRS | |||||||
| – inflows | 14 | 1,672 | – | – | – | 1,686 | |
| – outflows | (14) | (1,810) | – | – | – | (1,824) | 141 |
| Forwards | |||||||
| – inflows | 3,184 | 4,118 | 771 | 11 | – | 8,084 | |
| – outflows | (3,698) | (5,713) | (911) | (14) | – | (10,336) | 3,478 |
| Futures | |||||||
| – inflows | 265 | 792 | 189 | 10 | – | 1,256 | |
| – outflows | (95) | (254) | (56) | (7) | – | (412) | 411 |
| Commodity swap | |||||||
| – inflows | – | – | – | – | – | – | |
| – outflows | (3,004) | (3,907) | (3,937) | (27) | – | (10,875) | 10,875 |
| Other derivative instruments | |||||||
| – inflows | – | – | – | – | – | – | |
| – outflows | (37) | (24) | (66) | – | – | (127) | 126 |
| Financial liabilities (outflows) | 23,292 | 11,805 | 5,992 | 1,250 | 75 | 42,414 | |
| Financial liabilities, including inflows from derivatives | 19,829 | 5,223 | 5,032 | 1,229 | 75 | 31,388 | 36,273 |
| 2020 | Time to contractual maturity at the reporting date | Total | Carrying amount | ||||
| Up to 3 months | 3–12 months | 1-3 years | 3-5 years | over 5 years | |||
| Financing liabilities | 77 | 247 | 281 | 1,282 | 2,335 | 4,222 | 4,184 |
| Bank borrowings | 16 | 215 | 83 | 1,067 | 614 | 1,995 | 1,995 |
| Lease liabilities | 61 | 20 | 198 | 127 | 1,721 | 2,127 | 2,089 |
| Other | – | 12 | – | 88 | – | 100 | 100 |
| Trade payables | 2,252 | 81 | 62 | 11 | 39 | 2,445 | 2,445 |
| Derivative financial liabilities | |||||||
| CCIRS | |||||||
|
– inflows |
11 | 34 | 1,566 | – | – | 1,611 | |
|
– outflows |
(11) | (34) | (1,742) | – | – | (1,787) | 45 |
| Forwards | |||||||
|
– inflows |
1,637 | 3,848 | 1,772 | 281 | – | 7,538 | |
|
– outflows |
(1,682) | (4,004) | (1,833) | (424) | – | (7,943) | 385 |
| Futures | |||||||
|
– inflows |
42 | 160 | 28 | – | – | 230 | |
|
– outflows |
(7) | (59) | (7) | – | – | (73) | 97 |
| Commodity swap | |||||||
|
– inflows |
– | – | – | – | – | – | |
|
– outflows |
(390) | (221) | (105) | (8) | – | (724) | 725 |
| Other derivative instruments | |||||||
|
– inflows |
– | – | – | – | – | – | |
|
– outflows |
(59) | (38) | (54) | – | – | (151) | 151 |
| Financial liabilities (outflows) | 4,417 | 4,664 | 3,886 | 1,598 | 653 | 15,218 | |
| Financial liabilities, including inflows from derivatives | 2,727 | 622 | 520 | 1,317 | 653 | 5,839 | 8,032 |