Good Q2 and H1 2012 results

• TAURON Group’s revenue in H1 2012 amounted to over PLN 12.3bn, i.e. 19.2% more than in the same period last year when TAURON’s revenue amounted to PLN 10.3bn

• EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) grew faster than revenues – in H1 2012 it increased by 26.5% and reached almost PLN 2.1bn vs. PLN 1.6bn a year ago. EBITDA margin was 16.8%

• 22% net profit increase from PLN 728m in H1 2011 up to PLN 888m in H1 2012

• High coal production volume, uninterrupted by geological conditions – approx. 2.6m tones in H1 2012 

• In H1 2012 TAURON Group generated 9.22 TWh of electricity. Generation from renewable sources increased in H1 2012 by almost 40% from 0.46 TWh to 0.64 TWh

• Increased volume of electricity supplied by the Distribution segment. 24.18 TWh in H1 2012, i.e. 26% more than in the comparable period last year  

• Strong growth (22.7%) of retail electricity supply; 22.54 TWh in H1 2012 vs. 18.37 TWh in H1 2011

• Continued strong volume increases in the Distribution and Supply segments as well as the rising number of customers due to, among others, the acquisition of Górnośląski Zakład Elektroenergetyczny at the end of last year  

• Almost 60% growth in CAPEX to more than PLN 1.2bn in H1 2012 versus H1 2011 due to the implementation of the strategic projects aimed at improving efficiency, and as a consequence, increasing the Group’s value  

“TAURON Group posted very good results again. We achieved two-digit growth rates, both in the first half as well as in the second quarter of 2012. I would like to draw your attention to the fact that the growth rate in the second quarter was stronger than in the first one which in the power sector is usually considered to be the best period of the year. In my opinion there are only a few companies with the scale of operations comparable to ours that can boast a 40% plus profit increase that we achieved in the second quarter. We owe it to our optimized business model on one hand, and good results posted by companies acquired from Vattenfall on the other. We continue to work on improving efficiency – our first efficiency improvement program that was launched two years ago with a target of PLN 1bn in savings is almost completed”, said Dariusz Lubera, CEO of TAURON Polska Energia.  

Key operating and financial results

Revenue

In H1 2012 TAURON Group generated over PLN 12.3bn in revenue, i.e. 19.2% more than in the comparable period a year ago when the Group generated PLN 10.3bn in revenue. Higher revenue is mainly the result of increased volume of supplied electricity and revenue from its distribution. Increased sales in the RES and Heat segments also had a positive impact on the revenue. In line with expectations the Group also received higher compensation due to the termination of long-term contracts (LTC). In Q2 the compensation was PLN 155m.

“The results of both Q2 as well H1 2012 should definitely be considered as very good, in particular the performance of the Distribution, Supply and RES segments which once again confirms that the price we paid for the GZE assets was not overestimated and we hit the bull’s eye going ahead with this deal. We want to continue our efficiency improvements by both reducing the costs as well as implementing capex projects, including ones in the Distribution and Generation. The construction of new generation units will bring us tangible benefits, i.e. improved performance and significantly lower CO₂ emission versus the older units that will gradually be decommissioned over time”, said Krzysztof Zawadzki, CFO of TAURON Polska Energia.    

EBITDA and net profit

TAURON Group’s EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) in H1 2012 amounted to almost PLN 2.1bn, i.e. a 26.5% increase vs. PLN 1.6bn in H1 2011. EBITDA margin reached almost 17%. The Group increased EBITDA in most lines of business. A strong increase in the Supply segment is particularly noteworthy (approx. 88% up to PLN 252m). As usual Distribution posted the strongest gain in absolute terms (PLN 340.2m up to more than PLN 1bn) and its contribution to the Group’s total EBITDA rose to 49%. Despite slightly lower production of coal for sale the Mining segment also posted better results – EBITDA was PLN 130 m, i.e. 30% more than a year ago.

TAURON Group’s net profit grew in H1 2012 by 22% in comparison to the same period a year ago and reached PLN 888m, out of which PLN 855m was attributable to shareholders of the parent company. 

CAPEX and debt

As promised TAURON Group significantly increased its capital expenditures in H1 2012. Total CAPEX exceeded PLN 1.2bn, i.e. it was 56.1% higher than a year ago. More than 80% of CAPEX was spent in Generation and Distribution. The strong CAPEX growth in the Generation segment (approx. PLN 0.13bn up to PLN 0.42bn) was mainly due to the continued investments in capacity restoration (50 MW at ZEC Bielsko-Biała and the 50 MW biomass-fired unit at Elektrownia Jaworzno III). Increased CAPEX in the Distribution segment (by approx. PLN 0.22bn up to PLN 0.59bn) was mainly due to increased spending on upgrades and restoration of the existing grid assets as well as new customer connections. Part of the increase was also the result of last year’s acquisition of the distribution assets from Vattenfall.   

The Group is implementing capex projects and generating cash surplus at the same time. At the end of June the Group had approx. PLN 700m in cash whereas three months earlier it had PLN 560m and at the end of last year, PLN 506m. Net debt at the end of H1 2012 was approx. PLN 4.4bn, i.e. it decreased by PLN 279m since the end of March 2012. As a result the net debt/EBITDA ratio at the end of June 2012 was 1.28x (based on EBITDA for the last four quarters). This confirms that the Group maintains a safe debt level and is prepared to increase CAPEX in the coming years.