TAURON Group's H1 2016 results impacted by write-offs


  • Sales revenue topped PLN 8.94bn
  • EBITDA reached PLN 1,653m, while EBITDA margin was 18.5 percent
  • Net profit reached PLN 4.7m which was the direct consequence of write-offs of impaired Generation assets
  • As a result of the write-offs EBIT declined approx. PLN 700m, while the net profit dropped approx. PLN 600m
  • Electricity distribution volume and the number of customers connected to the Group's distribution grid went up by approx. 1 percent
  • Segments that made the largest contribution to the company’s earnings: Distribution (EBITDA of PLN 1,148m), Generation (EBITDA of PLN 354m) and Supply (EBITDA of PLN 280m)
  • Total capital expenditures reached PLN 1,452m. The largest CAPEX went into Distribution (PLN 744m), Generation (PLN 600m) and Mining (PLN 91m)


(all data for H1 2016, consolidated data)


– TAURON Group's earnings were largely impacted by the market conditions, as well as the booking of the write-offs of impaired generation assets. The earnings are slightly weaker than last year, however this trend is observed in the majority of the companies in the sector. The coal supply glut and the resulting very depressed coal prices, lower electricity sales prices and volumes, higher CO2 emission related costs as well as the significantly lower return on capital in the Distribution segment had the biggest impact on the earnings. We are currently finalizing our new strategy that will allow the Group to operate more efficiently in a volatile market and regulatory environment and, as a consequence, improve its financial results says Remigiusz Nowakowski, CEO of TAURON Polska Energia.

- In the first half of this year we booked write-offs of impaired wind farms and some conventional generation units. Booking of the write-offs led to the reduction of our EBIT by approx. PLN 700m and the net profit by approx. PLN 600m. The write-offs do not affect the Group's cash position – says Marek Wadowski, CFO of TAURON Polska Energia.

Operating data

Key operating data


H1 2016

H1 2015

Change (percentage)

Commercial coal production

Mg m




Commercial coal sales

Mg m




Electricity generation (Group’s net production), including:





Electricity generation from renewable sources (biomass, wind, hydro)






Heat generation





Electricity distribution





Electricity supply





Number of customers – Distribution


5 446

5 392



TAURON Group produced 2.48 million tons of hard coal in H1 2016 (up 23% yoy), while selling 2.46 million tons (up 7% yoy) which is the direct consequence of the Group's incorporation of Nowe Brzeszcze Grupa TAURON as of the beginning of this year.

Electricity production reached approximately 8.45 TWh and it was close to last year's level. A substantial production decline was reported by the RES line of business (down 21%) which was the consequence of the reduction of the biomass firing (uneconomic due to the depressed prices of green certificates) and the lower production of the hydroelectric power plants and wind farms due to the worse hydrological conditions and weaker winds.

GDP growth and increased electricity consumption by the industrial consumers led to the rise of the electricity distribution volume which had a positive impact on the Distribution segment's financial result.

Electricity supply volume reached approx. 15.6 TWh in the first half of 2016, i.e. approx. 2.4 TWh less than last year. This is primarily the consequence of strong competition on the electricity retail supply market.


Financial results

Key financial data

(PLN ‘000)

H1 2016

H1 2015

Change (percentage)

Sales revenue

8 942 857

9 256 614



1 653 406

1 907 872


EBITDA margin (percentage)




Net profit

4 717

720 387


Net profit margin (percentage)




Net profit attributable to the shareholders of the parent company

3 435

718 524



Sales revenue

TAURON Group posted sales revenue of more than PLN 8.9bn in H1 2016, i.e. an approx. 3 percent drop year on year. The main factors behind it were the lower electricity retail and wholesale volumes, falling hard coal prices, lower rate for distribution services for end users and lower revenue from connection fees. The above declines were partly offset by the higher revenues from the sales of heat (higher prices), gas (rising volume due to the acquisition of new customers) as well as from the operational capacity reserve.


EBITDA and net profit

TAURON Group posted EBITDA of PLN 1,653.4m, i.e. an approx. 13 percent drop versus last year. Invariably, the largest contribution to EBITDA was made by Distribution (69 percent), followed by Generation (21 percent) and Supply (17 percent). EBITDA margin reached 18.5 percent in H1 2016 and it was approximately 2 percentage points lower than in H1 2015.

EBITDAs reported by the Distribution, Supply, Generation and Mining segments were lower than in the same period of 2015.

The loss reported by the Mining line of business is the consequence of the low production volumes and hard coal sales prices which did not allow the segment, both TAURON Wydobycie as well as Nowe Brzeszcze Grupa TAURON, to generate a positive financial result.

The lower earnings of the Generation line of business were primarily the consequence of the shortage of free CO2 emission allowances versus the actual emission and the segment's resulting higher costs.

The earnings of the Supply line of business were significantly affected by the decline of the retail supply volume (by 2.4 TWh) due to the lower demand for electricity, while in the case of Distribution the earnings were hurt by the reduction of the average rate for the distribution service for end users.

TAURON Group posted net profit of PLN 4.7m in H1 2016.

Both the operating profit as well as the net profit were significantly affected by the write-offs of impaired assets. The total net amount of the write-offs reached approx. PLN 700m which includes the write-off of the impaired wind farms of approx. PLN 500m and the write-offs of impaired electricity and heat generation assets in the net amount of approx. PLN 200m.

- As the Management Board we made more conservative assumptions for the impairment tests related to the future prices of, among others, hard coal and CO2. However, we took into account the possible introduction of capacity market mechanism. Our assumptions reflect our long term view of the energy market. Asset values are also negatively impacted by the new regulations related to the renewable energy sources resulting in, among others, rising costs of their operation, the low prices of electricity and green certificates as well as the forecast higher supply of electricity from sources that are competitive versus coal-fired power generation – says Jarosław Broda, Vice President of the Management Board of TAURON Polska Energia responsible for asset management and development.



TAURON Group's capital expenditures reached PLN 1,452m in the first half of 2016, i.e. they were approx. 18 percent lower than in the same period last year. Capital expenditures declined mainly in the Generation and Mining segments, while an almost 7 percent CAPEX increase was observed in the Distribution line of business.

In Distribution the Group spent PLN 387m on grid assets upgrades and replacement, while the construction of new connections consumed PLN 277m. In Generation the outlays on the construction of the 910 MW hard coal-fired generation unit at Jaworzno III Power Plant reached PLN 361m. The company spent PLN 107m on the construction of new co-generation capacity at ZW Tychy (50 MW) and this unit was commissioned in June.


Debt and financing

- In H1 2016 the net financial obligations went up by approx. 8 percent versus 2015 – In the first half of the year, as a result of the bond issue worth PLN 2.86bn that, to a large extent, re-financed our existing bonds, we reduced the short term debt which led to an extension of the weighted average maturity of debt – says Marek Wadowski, CFO.

As of the end of June 2016 the net debt to EBITDA ratio reached 2.58x.












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