TAURON Group improved results

• TAURON Group’s revenues in 2011 amounted to nearly PLN 20.8 billion. After recalculation to make the data comparable, the Group’s sales would amount to approx. PLN 16.4 billion which means a 6.3% increase in comparison to 2010 when TAURON recorded over PLN 15.4 billion revenues.
  
• Increased EBITDA (Earnings Before Interest, Taxes, Depreciation, Amortization) by 9.6% to over PLN 3 billion in 2011 from nearly PLN 2.8 billion in 2010. EBITDA margin was 14.6% and after recalculation to show it in a comparable form¹ it was 18.4%. In 2010 the Group’s margin was 17.9%.   
  
• Net profit increase by 25% from PLN 991 million in 2010 to PLN 1.24 billion in 2011. Now only 1.6% of the net profit is attributable to minority shareholders in comparison to last year’s 13.4%.
  
• Operational costs reduction program by PLN 1 billion in the years 2010-2012 is executed in over 66%; PLN 366 million savings were achieved in 2011.
  
• Electricity generation in 2011 increased by 0.3% against 2010, from 21.32 TWh to  21.38 TWh (Generation and RES Segments jointly). 
  
• Increased volume of electricity supplied by the Distribution Segment. In 2011 the volume was 38.24 TWh, i.e. by 1.9% more than a year ago.
  
• Retail electricity supply rose by 3.4% from 34.34 TWh in 2010 to 35.52 TWh in 2011; increased supply volume achieved thanks to the existing clients and acquisition of new ones.
  
• Stable growth in the number of clients in the Distribution Segment. At the end of 2011 TAURON had over 4.14 million clients, 28 thousand more than a year ago.
  
• Investments’ value grew by over 56% and reached over PLN 2.5 billion in 2011.

“The results achieved by the TAURON Group last year have again met the market’s expectations. Particular attention should be given to a two-digit increase of operating profit and net profit. The strategy that has been steadily pursued by TAURON should allow us to continue results’ increase, which will be additionally strengthened by the acquisition of Górnośląski Zakład Elektroenergetyczny that was completed at the end of last year”, said Dariusz Lubera, President of the Management Board at TAURON Polska Energia. “We are simultaneously working on several issues now such as efficiency improvement, integration of GZE assets or acceleration of investment plan. All those actions are aimed at a steady increase of the Group’s value”, he added.

Key operational data and financial results

Revenues

In 2011 the TAURON Group’s revenues amounted to approx. PLN 20.8 billion. After recalculation to show it in a comparable form2 the revenues would amount to approx. PLN 16.4 billion which is an increase by 6.3% vs. 2010 when the Group had over PLN 15.4 billion revenues. Higher revenues are mainly a result of increased volume of supplied electricity as well as revenues from its distribution. On the other hand, in 2011 revenues from long-term contracts dropped and amounted to approx. PLN 415 million and constituted a 2.5% share in revenues after recalculation to a comparable form2 against PLN 438 million and 2.8% share in revenues in 2010.

“The results achieved by TAURON in more difficult market conditions than a year ago give us reasons to be satisfied. If we assume comparable conditions (excluding supply of majority of electricity we generated through public market) our EBITDA margin increased together with growing scale of our operations. Actions connected with efficiency improvement or Group reorganization have yielded measurable profits”, said Krzysztof Zawadzki, CFO at TAURON Polska Energia S.A. “Also, GZE’s results for 2011 give us reasons to be satisfied. Their impact on the Group’s results has not been significant yet due to consolidation principles, but EBITDA exceeding PLN 500 million is a good sign for the future before we achieve numerous synergies from the acquisition.

EBITDA and net profit

TAURON Group’s EBITDA (Earnings before Interest, Taxes, Depreciation, and Amortization) in 2011 amounted to over PLN 3 billion which is an increase by almost 10% vs. PLN 2.8 billion in 2010. EBITDA margin was 14.6% or 18.4% after recalculation to a comparable form, which is 0.5% points more than in 2010. The Group recorded a significant increase of EBITDA in Distribution and Supply segments which together grew by PLN 240 million to reach almost PLN 1.6 billion. It is worth mentioning that the Q4 2011 results of the Supply segments are positive, both in terms of EBITDA and net profit.

Acquisition of GZE Group will have a significant contribution to the TAURON Group’s results in 2012, its 2011 EBITDA being PLN 508 million, which is almost 18% more than a year ago.

Good operating results have translated into increase of the TAURON Group’s net profit which in 2011 amounted to over PLN 1.2 billion, i.e. 25% more than a year ago when the company’s net profit was PLN 991 million. Another significant thing is the decrease of minority shareholders’ share in the net profit of the TAURON Group. Throughout the year it fell from approx. 13.4% to approx. 1.6% in 2011. In Q4 2011 the number was negative and amounted -3% due to the ongoing processes of buying shares from non-controlling shareholders and forced buyback with the purpose of share redemption.

Better results owe also to a systematically pursued efficiency improvement policy.

Investments and debt  

The TAURON Group have significantly increased the value of investments in 2011 which amounted to over PLN 2.5 billion and were by 56% higher than in 2010. Majority of investments (approx. 88%) were executed in the Distribution and Generation segments. Significant CAPEX increase in the Generation segment stems mainly from the fact that we are now advanced in the execution of investments connected with capacity reconstruction (50MW at EC Bielsko-Biała and 50MW RES at Elektrownia Jaworzno III – causing an approx. PLN 0.3 billion increase) and other expenditure (mainly for NO_x installation at Elektrownia Jaworzno III and Łaziska and biomass installation for K-10 boiler at Elektrownia Stalowa Wola – causing an approx. PLN 0.2 billion increase). In the Distribution segment, CAPEX increase (by approx. PLN 0.4 billion) results mainly from increased outlays for modernization of existing grid assets (by approx. PLN 0.2 billion) and development of new connections (by approx. PLN 0.1 billion). 

Higher financial debt at the end of 2011 is connected with the bond issue for, among others, the acquisition of GZE. At the end of December 2011 the TAURON Group’s debt amounted to approx. PLN 4.5 billion vs. PLN 1.3 billion at the end of September last year. The company recorded decrease of cash from almost PLN 0.9 billion to over PLN 0.5 billion. On the one hand, it is a result of GZE acquisition, but on the other hand it is also a result of intensified actions connected with the investment program. The following investments are now accelerating, among others: at Elektrownia Jaworzno III (ongoing tender for contractor of 910MW unit), at Elektrociepłownia Stalowa Wola as well as projects from the heat and RES segments. Even after closing of the GZE acquisition from Vattenfall and financing of the transaction by a PLN 3.3 billion debt, our net debt is low in comparison to peers. Net debt to EBITDA ratio was 1.33.