TAURON Group: EBITDA of almost one billion PLN and revenue of PLN 5.5 billion in Q1 2020

• EBITDA of PLN 957 million, EBITDA margin: 17.5 percent
• Sales revenue: up 3 percent to PLN 5.5 billion
• 48 percent increase of electricity production from renewable sources
• Capital expenditures: PLN 940 million. The largest capex in the following segments: Distribution (PLN 485 million) and conventional Generation (PLN 361 million)
• High commercial coal production volume: 1.18 million tons
• Taking of actions aimed at reducing the impact of COVID-19 on TAURON Group’s business operations
• Net debt[1] to EBITDA ratio: 3.27x

(all Q1 2020 consolidated data)

– We posted good financial results in the first quarter of 2020. We generated EBITDA of almost one billion PLN. RES Segment is getting more and more important for the entire Group’s earnings, with its EBITDA going up by almost 70 percent. This is why we decided to present this segment separately in the financial statements – explains Filip Grzegorczyk, President of the Management Board (CEO) of TAURON Polska Energia. – COVID-19 epidemic is a factor that will have an impact on the earnings in the subsequent periods. Its impact on the Group’s business operations was relatively small in the first quarter. We are taking wide ranging preventive measures aimed at reducing the negative consequences of the current situation – adds Filip Grzegorczyk.

– Despite the coronavirus pandemic underway, TAURON Group is successfully obtaining external financing. We signed a loan agreement with a consortium of banks worth PLN 500 million in March, and the funds obtained will be used for general corporate financing, excluding projects related to coal assets. We have also signed an agreement with the SMBC bank for the same amount – says Marek Wadowski, Vice President of the Management Board for finance (CFO) of TAURON Polska Energia. – In accordance with our assumptions, we are seeking to obtain financing for the Green Turn of TAURON, which led to the conclusion of a memorandum of understanding with the PFR funds related to joint investments in renewable energy sources, including, first and foremost, on-shore wind farms as well as photovoltaic farms  – adds Marek Wadowski.

Operating data

TAURON Group delivered, in total, 13.25 TWh of electricity in the first quarter of 2019, as compared with 13.54 TWh a year ago. The number of the customers that were provided distribution services went up by 63 000, reaching 5.68 million.

The Group’s generation units produced, in total, 3.21 TWh of electricity in the period under review, i.e. 16 percent less than in the first quarter of 2019 (3.82 TWh). The lower production volume was a consequence of the 200 MW units’ overhaul works carried out in connection with their adaptation to the requirements of the so-called BAT conclusions and the trading strategy adopted by TAURON taking into account the market conditions. The production of electricity by the biomass fired units came in at 0.11 TWh, i.e. 19% more as compared with last year (0.09 TWh).

Renewable Energy Sources segment, comprising electricity generation by the hydroelectric power plants and wind farms, produced 0.46 TWh of electricity in the first quarter of 2020, i.e. 57% more as compared with last year (0.29 TWh). This increase was due to the acquisition, in September 2019, of five wind farms with the total capacity of 180 MW and favorable wind conditions.

Heat production went up by 4%, year on year, to 4.96 PJ, while its supply came in at 6.3 PJ, i.e. 7% less than in the same period of 2019. This change was a result of the higher outdoor temperatures and, as a consequence, lower consumer demand.

54 percent of the conventional Generation segment subsidiaries’ demand for coal was satisfied with the coal coming from TAURON Group’s coal mines in the first quarter of 2020.

Financial results

TAURON Group’s sales revenue was 3% higher in the first quarter of 2020, year on year, and it came in at PLN 5.5 billion. The increase in the revenue was positively impacted by the higher distribution services rates, higher electricity production achieved by the wind farms and an increase in the gas sales volume.

TAURON Group generated EBITDA of almost PLN 1 billion. Distribution Segment (PLN 684 million) was of key importance for the Group’s EBITDA, with its share coming in at 71 percent. Supply Segment generated EBITDA of PLN 179 million (a 19% share), and the RES segment - PLN 121 million (a 13% share). EBITDA margin clocked in at 17.5 percent

The Group posted a PLN 162 million net profit attributable to the shareholders of the parent entity.

Investments

TAURON Group's capital expenditures came in at PLN 940 million in the first quarter of 2020, and they were higher by PLN 213 million as compared with the same period of 2019. The rise of the capex was primarily the result of the higher outlays in the following segments: Distribution (an increase by PLN 135 million) and conventional Generation (an increase by PLN 127 million).

The largest capital expenditures were incurred in the Distribution segment (PLN 485 million), with the largest funds having been spent on upgrading (refurbishing) and replacing the distribution grid (PLN 231 million), as well as installing new connections to the grid (PLN 226 million). The conventional Generation segment was the other segment with material capital expenditures (PLN 361 million), where the investment outlays were related, primarily, to the construction of the 910 MW power generating unit in Jaworzno (PLN 219 million).

Debt and financing

TAURON Capital Group has guaranteed financing up to PLN 1 580 million. TAURON signed loan agreements for the total amount of PLN 1 billion in March. The funds raised will be used to finance the general corporate purposes, excluding any new projects related to coal assets.

TAURON also signed a memorandum of understanding with the Polish Development Fund, defining the preliminary conditions of cooperation with respect to the RES investments. The main goal of the investments will be on-shore wind farm and solar farm projects.

[1] Excluding the debt under the subordinated bonds issued in the amount of PLN 1.9 billion