Note

Liquidity risk is the risk of a lack of the Group's ability to repay its financial obligations as they fall due. Measures to reduce this risk include appropriate liquidity management, are performed by a correct assessment of the level of cash resources based on cash flow projections in different time horizons. The Parent Company optimises the management of Group’s cash surplus using cash-pooling, revolving loans granted under the Intercompany Financing Agreement and dividend policy within the Group.

Within the centralised financing model of the Group, the Parent Company holds the corporate financing agreements for the total amount of PLN 2.2 billion further described in Note 21. The agreements ensure long-term financial liquidity, including financing for both the long-term strategy and current operating objectives. Additionally, the Azoty Group has unused available credit limits described in note 21, unused limits within the overdraft linked to the real cash pooling facility and multi-purpose loan in PKO BP, which the Parent Company can manage to respond to the financing needs of the individual Group entities.

The Group drew loans and credits that contain in the contracts unified and harmonised loan covenants. A future breach of these covenants may require the Group to repay the loans and credits earlier than indicated in the table below. In 2016 and 2015, there were no defaults in payments of liabilities or other conditions relating to the liabilities that could result in early payment requests.

The interest payments on variable interest rate loans and other financial instruments were estimated based on the interest rates at the reporting date and these amounts may change in the future.

The table below presents the contractual cash flows of financial liabilities at the reporting date.

Liquidity risk

31 December 2016

 31 December 2015