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PGE S.A. identifies, on an ongoing basis, the risk factors that will potentially affect the Group’s performance in connection with the COVID-19 pandemic. On the other hand, the dynamics of the situation and the lack of realistic predictions concerning its duration and economic impact make it impossible at this stage to precisely estimate the financial impact of the pandemic on PGE Group. The outbreak of the pandemic has led to expectations of economic slowdown in 2020 in the global economy and in Poland. These are reflected, among others, in the revision of market projections for GDP, industrial output and investments.
At present, due to the reduced level of economic activity, the Group identifies the risk of further reduction in domestic electricity consumption, which may result in a decrease in revenues and margins from energy generation, distribution and sales in the Distribution, Supply, Conventional Generation and District Heating segments. As regards production activities, the majority of sales were contracted in previous periods, therefore in the short term the negative impact of lower production volumes in the Conventional Generation segment should be significantly limited. The negative effect should be related to potential reductions on the part of the Transmission System Operator, resulting in lower production from lignite, which is characterized by a relatively stable cost structure. The PGE Group expects, however, an impact on contracting volumes and prices for subsequent periods, but at this stage this impact cannot be estimated. The actual impact will depend on the consumption profile, changes in consumption in particular tariff groups and the duration of the pandemic, or its effect on the global economic slowdown.
At the same time, PGE Group identifies the risk of growth of overdue receivables in connection with the expected deterioration of PGE customers’ liquidity. It will depend on the scale of the reduction of economic activity and on the effects of the government’s protective measures for entrepreneurs.
PGE Group’s plants are of strategic importance for maintaining undisturbed production and supply of electricity and heat. In many cases, this involves additional costs resulting from changing work organisation and purchasing protective materials.
Regardless of the impact on the financial performance, there may be a greater demand for cash resulting from the need to increase security deposits in connection with purchases of CO2 emission allowances. It is likely that the average collection period will deteriorate. The above effects will result in the need to contract additional financial liabilities, which may also be reflected in finance costs incurred by the PGE Group.
Until the date on which these consolidated financial statements were approved, no other significant events took place after the end of the reporting period the impact or disclosure of which is not included in these financial statements.
