TAURON Group: revenue of almost PLN 10 billion and EBITDA of PLN 2.4 billion in H1 2020

• Sales revenue: up 6 percent to PLN 9.9 billion
• EBITDA: up 8 percent to PLN 2.4 billion, EBITDA margin: 24.3 percent
• 45 percent increase of electricity production from renewable sources
• Impact of COVID-19 on the financial results: EBITDA lower by PLN 147 million, PLN 50 million in aid from the anti-crisis shield
• Capital expenditures: PLN 1.8 billion. The largest capex in the following segments: Distribution (PLN 908 million) and Generation (PLN 699 million)
• Net debt[1] to EBITDA ratio: 2.66x

 (all H1 2020 consolidated data)

– TAURON Group posted good financial results in the first half of 2020, as demonstrated by the generated EBITDA of more than PLN 2.4 billion. I am happy with the good results of energy production from renewable sources, which is a consequence of the steadfast implementation of the Green Turn of TAURON – says Wojciech Ignacok, President of the Management Board (CEO) of TAURON Polska Energia. – The pandemic did not disrupt the day-to-day operations of any of our subsidiaries, however we estimate that its effects translated into a reduction of EBITDA by approximately PLN 150 million. I would like to emphasize that we are constantly making efforts in order to protect the workforce – adds Wojciech Ignacok.

– We also took advantage of the government aid programs introduced in connection with the coronavirus pandemic, as a result of which TAURON Group subsidiaries received a total of PLN 50 million in aid from the anti-crisis shield – says Marek Wadowski, Vice President of the Management Board of TAURON Polska Energia for finance (CFO). – We were also taking steps which led to maintaining a stable liquidity position of TAURON Group in the first half of the year. As a result of such actions, we obtained financing from banks worth PLN 1 billion in total. The Group's earnings were positively impacted by the agreements reached with the workforce, which allowed for dissolving of the provisions in the total amount of more than PLN 530 million. – says Marek Wadowski.

Operating data

TAURON Group delivered, in total, 24.6 TWh of electricity to 5.7 million customers in the first half of 2020. 26.08 TWh of electricity, in total, was delivered to 5.63 million consumers in the same period of 2019. The decline in electricity consumption was, first and foremost, a consequence of the freezing of the economy due to the coronavirus pandemic.

TAURON Group’s generation units produced, in total, 5.87 TWh of electricity in the period under review, i.e. 18 percent less than in the first half of 2019 (7.15 TWh). The lower production volume was a consequence of the overhauls of some of the Group’s generating units carried out in order to adapt them to meet the requirements of the BAT conclusions, as well as the trading strategy adopted, taking into account the market conditions.

Renewable Energy Sources segment, comprising electricity generation by the hydroelectric power plants and wind farms, produced 0.75 TWh of electricity in the first half of 2020, i.e. 44% more as compared with last year (0.52 TWh), which was due to the favorable wind conditions and the production of electricity by the wind farms acquired in September 2019. The production of electricity from biomass came in at 0.24 TWh, i.e. 41% more as compared with last year (0.17 TWh).

Heat production went up to 6.7 PJ, i.e. it was 5 percent higher than in the same period of 2019, due to, among others, implementing heat generation at the 460 MW unit at the Łagisza Power Plant.

63 percent of the Generation segment subsidiaries’ demand for hard coal was satisfied with the hard coal coming from TAURON Group’s own coal mines in the first half of 2020. The balance was covered from the external sources.

Financial results

TAURON Group’s sales revenue came in at PLN 9.9 billion in the first half of 2020, i.e. it was 6 percent higher than in the same period of 2019. The increase in the revenue was positively impacted by the higher electricity sales revenue and the higher distribution services rates.

TAURON Group generated EBITDA of more than PLN 2.4 billion in the first half of 2020. The Distribution Segment was of key importance for the Group’s EBITDA, with its EBITDA coming in at PLN 1.69 billion (a 70 percent share). The Supply Segment (a 17 percent share) generated EBITDA of PLN 403 million, and the RES segment - PLN 164 million (a 7% share). The EBITDA margin clocked in at 24.3 percent, i.e. it was higher by 0.5 pp than the EBITDA margin generated in the same period of 2019.

The Group posted a PLN 316 million net loss attributable to the shareholders of the parent entity. The net result for the first half of the year was significantly impacted by the impairment charges related to the loss of the carrying amount of the Mining and Generation segments’ assets in the amount of PLN 227 million, which led to a decline of the consolidated net financial result by PLN 184 million, as well as by the impairment charge due to the reclassifying of TAURON Ciepło assets as assets held for sale (PLN 806 million).

Investments (CAPEX)

TAURON Group's capital expenditures came in at PLN 1 812 million in the first half of 2020, and they were higher by PLN 170 million (10 percent), as compared with the same period of 2019. This increase of the capex was a consequence of the higher outlays in the following segments: Distribution (a rise by PLN 198 million) and Generation (a rise by PLN 46 million).

The largest capital expenditures were incurred in the Distribution segment (PLN 908 million), primarily on upgrading (refurbishing) and replacing the distribution grid (PLN 423 million), as well as installing new connections to the grid (PLN 423 million). The capital expenditures in the Generation segment came in at PLN 699 million, and the largest investment outlays were related to the construction of the 910 MW super critical parameters power generating unit in Jaworzno (PLN 310 million), as well as the adaptation of the power generating units to the BAT conclusions (PLN 135 million). The work progress on the Jaworzno unit’s construction stands at 98 percent and the unit is planned to be commissioned by mid-November.

Debt and financing

TAURON Capital Group’s position, in terms of financial liquidity, is stable and the Group has guaranteed financing up to PLN 3.3 billion. The net debt / EBITDA ratio dropped significantly to 2.66x in the first half of 2020.

[1] Excluding the debt under the subordinated bonds issued in the amount of approx. PLN 2 billion