– Behind us is a year of economic slowdown. Difficult macroeconomic conditions were not without influence on the power sector. The good financial results for 2012 are thus all the more satisfactory. On the one hand, they are a result of effective and systematically pursued corporate strategy which translates into improved operating efficiency, on the other hand they are a result of significant synergies achieved as soon as in the first year after the acquisition of Górnośląski Zakład Elektroenergetyczny – said Dariusz Lubera, CEO at TAURON Polska Energia – We are aware of the challenges awaiting the power sector in this and in the coming years. In my opinion we are well prepared to face them and our actions, including further efficiency improvement through opex reduction and upgrade of assets, should have a positive impact on TAURON Group’s results in future.
Key operating and financial results
|
Key operating data |
Q4 2011 |
Q4 2012 |
Change |
2011 |
2012 |
Change |
|
Hard coal mining (m t) |
0.8 |
1.48 |
85.0% |
4.58 |
5.57 |
21.6% |
|
Electricity generation |
5.08 |
5.02 |
-1.2% |
21.38 |
19.11 |
-10.6% |
|
Including from RES |
0.22 |
0.30 |
36.4% |
0.99 |
1.22 |
23.2% |
|
Heat generation (PJ) |
5.57 |
5.68 |
2.0% |
15.96 |
16.36 |
2.5% |
|
Distribution (TWh) |
9.71 |
12.13 |
24.9% |
38,24 |
47.85 |
25.1% |
|
Electricity supply (TWh) |
8.87 |
11.60 |
30.8% |
35.52 |
44.74 |
26.0% |
|
No. of customers – Distribution (‘000) |
4,143 |
5,302 |
28% |
4,143 |
5,302 |
28% |
|
Financial results |
Q4 2011 |
Q4 2012 |
Change |
2011 |
2012 |
Change |
|
Revenue (PLN m) |
5,588.4 |
6,527.0 |
16.8% |
20,755.2 |
24,741.3 |
19.2% |
|
EBITDA (PLN m) |
686.3 |
764.9 |
11.5% |
3,057.1 |
3,839.9 |
25.6% |
|
EBIT (PLN m) |
324.6 |
307.8 |
- 5.2% |
1,645.5 |
2,153.4 |
30.9% |
|
Net profit (PLN m) |
246.6 |
202.1 |
-18.1% |
1,266.9 |
1,541.3 |
21.7% |
|
Attributable to shareholders of the parent company |
250.6 |
191.9 |
-23.4% |
1,245.1 |
1,466.8 |
17.8% |
Sales revenue
In 2012 TAURON Group generated over PLN 24.7bn in sales revenue, i.e. approx. 19.2% more than in comparable period a year ago when the Group generated almost PLN 20.8bn. Higher revenue is mainly a result of increased volume of supplied electricity (by approx. 26%), as well as proceeds from its distribution, and also increased commercial coal production which was particularly visible in H2 2012. Compensation due to termination of long-term contracts (LTC) in Q4 amounted to approx. PLN 136m. Q4 2012 was the last quarter when LTC compensation was applicable.
- Group’s net financial result went down by almost PLN 99m due to increase in provisions for employee benefits, which was a one-off event. It was a result of sharp decrease of interest rates which we could observe recently and a reduction of return rates on long-term bonds that followed. Thus, as of the balance sheet date, the Group applied significantly lower discount rate compared to last year to calculate provisions for employee benefits. This caused an increase in the provisions. An additional factor that had a significant impact on the increase of provisions for employee benefits was the first-time application of amended International Accounting Standard 19 to financial statements for the year 2012. As a result, approx. PLN 221m were added to other comprehensive income – said Krzysztof Zawadzki, CFO at TAURON Polska Energia.
EBITDA and net profit
In 2012 TAURON Group’s EBITDA grew by a fourth and reached over PLN 3.8bn compared to almost PLN 3.1bn a year earlier. EBITDA margin grew together with the expansion of operations and reached 15.5% in 2012 vs. 14.7% in 2011. The Group’s EBITDA increased in most segments. In terms of value the highest increases were recorded in Distribution (approx. 49% to reach PLN 1,944.2m) and Supply (approx. 77% to reach PLN 478.3m). Very good results were also achieved by Mining (159% increase to reach PLN 287.4m). Strong growth in the first two segments is a result of, among others, acquisition of GZE as well as increased operating efficiency thanks to the PLN 1.1bn OPEX reduction program for 2010-2012 that has just been completed. In the Mining segment, good geological conditions and improved mining efficiency resulted in over 20% increase in commercial coal production. As a consequence, the dynamics of EBIDTA growth in the Mining segment was the highest among all segments last year.
In 2012 TAURON Group’s net profit grew by almost 22% to over PLN 1.5bn, with more than 95% attributable to shareholders of the parent company.
CAPEX and debt
Last year TAURON Group significantly speeded up execution of the CAPEX program. Total CAPEX amounted to almost PLN 3.5bn and was by approx. 40 % higher than a year ago. Main investments include:
- in Generation: construction of new and upgrade of existing generation units; construction of installations for Nox emission reduction,
- in RES: construction of wind farms,
- in Distribution: construction of new connections; upgrade and restoration of grid assets,
- in Mining: lateral development and purchase of equipment.
Also, CAPEX of companies acquired from Vattenfall was included in the results for the current reporting period, which caused increase in expenditure.
Growth of fixed assets’ value by increasing CAPEX on tangible assets in each of the segments, in particular Generation and Distribution, generates additional cash surplus of TAURON Group through depreciation. As of the end of 2012 the Group had almost PLN 900m cash and cash equivalents vs. 506m a year ago. In line with earlier communication, operating cash flows slightly exceed the value of capital expenditure. However, TAURON assumes that CAPEX increase in the coming periods will require acquisition of additional external funding.
Group’s net financial debt, which at the end of the year amounted to PLN 4.5bn, remains at a safe and stable level. Thanks to cash level increase, net debt to EBITDA fell down last year by over 11% and at the end of 2012 amounted to 1.18x (vs. 1.33x at the end of 2011).
