Credit risk is connected with a potential credit event which may have the form of a business partner’s insolvency, partial payment of liabilities, significant delay in the payment of liabilities or any other default with respect to contractual conditions (in particular a failure to make a delivery of or to accept goods under a concluded contract or to pay damages and contractual penalties).
The PGE Group companies are exposed to credit risk arising in the following areas:
principal activities of the companies – credit risk results from, among others, purchases and sales of electricity, heat, property rights arising from certificates of origin for electricity, CO2 emission allowances, fuels etc. This relates primarily to the possibility of a default by the other party of the transaction, if fair value of the transaction is positive from the point of view of the Group;
investing activities of the companies – credit risk results from transactions resulting from investment projects whose success depends on the financial standing of the Group’s suppliers;
investing free cash of the companies – credit risk results from investing free cash of the PGE Group companies in securities bearing credit risk, i.e. financial instruments other than those issued by the State Treasury.
There is a concentration of credit risk in the PGE Capital Group related to trade receivables. The three most significant customers accounted for approximately 9% of the trade receivables balance.
The maximum exposure to credit risk resulting from the financial assets of the PGE Capital Group is equal to the book values of these items.