7.3.3. Liquidity risk
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. As at December 31st 2016, the Group did not carry any amounts outstanding under overdraft facilities.
To enhance its liquidity position, the Group has launched several note issuance programmes. For details on note issue,
see Note 7.2.
The Group companies have also contracted lines of credit, as set out in Note 5.2.1.
The liquidity risk at the Parent is significantly mitigated through the application of the “PGNiG S.A. Liquidity Management Procedure”. which ensures proper financial liquidity management through:
- Settlement of payments,
- Cash flow forecasting,
- Optimal free cash management,
- Raising and restructuring funds used 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.
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| 2016 | 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 | |||||||
| Bank borrowings | 23 | 120 | 256 | 504 | 420 | 1,323 | 1,323 |
| Debt securities | 2,338 | 2,500 | 103 | 41 | – | 4,982 | 4,984 |
| Other | 8 | 18 | 27 | – | – | 53 | 45 |
| Trade payables | 2,168 | 53 | 34 | 11 | 45 | 2,311 | 2,311 |
| Derivative financial liabilities | |||||||
| IIRS designated for hedge accounting | |||||||
| – inflows | 15 | 46 | 91 | – | – | 152 | – |
| – outflows | (15) | (45) | (88) | – | – | (148) | 46 |
| Forwards | |||||||
| – inflows | 405 | 639 | 200 | – | – | 1,244 | – |
| – outflows | (408) | (614) | (114) | (1) | – | (1,137) | 179 |
| Other derivative instruments | |||||||
| – inflows | – | – | – | 40 | – | 40 | – |
| – outflows | (16) | (47) | (20) | – | – | (83) | 121 |
| Financial liabilities (outflows) | 4,976 | 3,397 | 642 | 557 | 465 | 10,037 | – |
| Financial liabilities, including inflows from derivatives | 4,556 | 2,712 | 351 | 517 | 465 | 8,601 | 9,009 |
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| 2015 | 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 | |||||||
| Bank borrowings | 48 | 235 | 691 | – | 550 | 1,524 | 1,524 |
| Debt securities | 184 | – | 4,619 | – | – | 4,803 | 4,772 |
| Other | 10 | 34 | 49 | – | – | 93 | 86 |
| Trade payables | 1,728 | 25 | 62 | 6 | 34 | 1,855 | 1,855 |
| Derivative financial liabilities | |||||||
| IRS designated for hedge accounting | |||||||
| – inflows | 15 | 46 | 91 | – | – | 152 | – |
| – outflows | (15) | (44) | (88) | – | – | (147) | 83 |
| Forwards | |||||||
| – inflows | 406 | 610 | 114 | – | – | 1,130 | – |
| – outflows | (408) | (621) | (237) | (1) | – | (1,267) | 295 |
| Other derivative instruments | |||||||
| – inflows | – | – | – | – | – | – | – |
| – outflows | (17) | (52) | (28) | – | – | (97) | 787 |
| Financial liabilities (outflows) | 2,410 | 1,011 | 5,774 | 7 | 584 | 9,786 | – |
| Financial liabilities, including inflows from derivatives | 1,989 | 355 | 5,569 | 7 | 584 | 8,504 | 9,402 |
