Financial risk factors

As Budimex Group, we are exposed to various types of financial risk: currency risk, interest rate risk, price risk, credit risk and liquidity risk.

Despite the introduction of restrictive procedures for controlling receivables in the Group, there is still a risk related to the insolvency of investors (credit risk of contractors). Possible delays in the timely settlement of receivables may negatively affect the Group’s financial results, which will require write-downs on receivables and financing the operations with external debt.^[1]

Each contract is different, i.e. it is accompanied by specific technical and economic conditions, which means specific risks affecting the level of the margin obtained. We monitor technical, organisational, legal, and financial risks related to the planning and current course of works in individual contracts. Despite the control mechanisms introduced and the protection of general risks (credit, currency and civil liability risks), it is possible for the occurrence of the factors that cause the execution of a contract with a margin lower than originally planned, among which are:

• increase in prices of construction materials, petroleum materials and energy,
• increase in service prices and limited availability or bankruptcy of subcontractors,
• increase in employment costs and limited availability of skilled workers,
• delays in timely performance of or insufficient quality of the subcontractors’ works,
• delays in obtaining appropriate administrative decisions,
• change in the scope of work or technologies agreed in the contracts,

adverse weather or ground conditions.

^[1]The information concerning the Group’s objectives and methods of financial risk management are included in the consolidated financial statements for the year ended 31 December 2019 (Note 3).