TAURON Group: PLN 14.9 billion in revenue and PLN 3.4 billion of EBITDA in Q1-3 2020

• Sales revenue: up 6 percent to PLN 14.9 billion
• EBITDA: up 8 percent to PLN 3.4 billion, EBITDA margin: 22.4 percent
• 43 percent increase of electricity production from renewable sources
• Negative impact of COVID-19 on EBITDA: PLN 171 million
• Capital expenditures: PLN 2.7 billion. The largest capex in the following segments: Distribution (PLN 1.3 billion) and Generation (PLN 955 million)
• Net debt[1] to EBITDA ratio: 2.53x

 (all consolidated data for the first three quarters of 2020, changes are presented on an annualized basis)

– I have a positive view of the financial and operating results generated by TAURON Group in the first three quarters of 2020. We posted an 8% increase of EBITDA and a solid rise of electricity production from RES during this period. The growth of the RES segment is of particular importance for us and this is why we are undertaking a number of initiatives to ensure that the Green Turn of TAURON could progress in accordance with the assumptions adopted in the Group's strategy. We are implementing the TAURON PV Program that envisages the construction of photovoltaic farms with a total capacity of up to 150 MW. We will have commissioned the first farm built as part of this program by the end of the year –– says Wojciech Ignacok, President of the Management Board (CEO) of TAURON Polska Energia. – In addition to focusing on the expansion of the renewable energy sources, we have completed this year the construction of the final projects in the conventional energy sector - the CCGT unit in Stalowa Wola and the hard coal fired unit in Jaworzno. They are modern generation units that constitute an important element of Poland's energy security – adds Wojciech Ignacok.

– Despite the challenging situation in the market environment the financial standing of TAURON Group is stable. I would like to emphasize that from the beginning of the year we have obtained financing in the amount of PLN 2 billion, that we will spend, first and foremost, on the Group’s energy transition. We have issued bonds worth PLN 1 billion on the Polish market in recent weeks. It is worth noting that it was the first issue of sustainable development bonds in Poland – says Marek Wadowski, Vice President of the Management Board of TAURON Polska Energia for finance (CFO).

Operating data

TAURON Group delivered, in total, 36.9 TWh of electricity to 5.7 million customers in the first three quarters of 2020. The Distribution segment delivered 38.7 TWh of electricity, in total, to 5.6 million consumers in the same period of 2019.

In line with the assumptions of the Update of the Strategic Directions, TAURON Group has been steadfastly increasing electricity production from RES. TAURON Group’s electricity production (in aggregate, the Generation Segment, RES and the discontinued operations) came in at 8.7 TWh in the period under review (a decline by 16 percent), with 7.3 TWh of that volume coming from the hard coal fired sources (a drop by more than 20 percent), and 1.4 TWh generated by RES (a rise by 43 percent). The increase of electricity generation by the hydroelectric power plants and the wind farms was due to the favorable wind conditions and the production of electricity by the wind farms acquired in September 2019.

Heat production clocked in at 7.5 PJ, i.e. it was 5 percent higher than in the same period of 2019.

64 percent of the Generation segment’s demand for the hard coal needed to produce electricity and heat was satisfied with the hard coal coming from TAURON Group’s own coal mines in the first three quarters of 2020. The balance was covered from the external sources.

Financial results

TAURON Group posted sales of PLN 14.9 billion in the first three quarters of 2020, i.e. by 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’s EBITDA came in at more than PLN 3.4 billion. The biggest contributors to the Group’s EBITDA are: the Distribution Segment (a 71 percent share), generating PLN 2.4 billion of EBITDA in the first three quarters of 2020, and the Supply Segment (a 19 percent share) whose EBITDA came in at PLN 641 million. The RES Segment is responsible for more than 6 percent of the Group’s EBITDA (PLN 217 million). The EBITDA margin clocked in at 22.4 percent, i.e. it was higher by 0.5 pp than the EBITDA margin generated in the same period of 2019.

Net profit attributable to the shareholders of the parent entity came in at PLN 61 million, as compared with PLN 974 million a year ago. The decline is a consequence of booking the write down of the carrying amount of TAURON Ciepło’s assets (PLN -822 million) and the costs of the foreign exchange differences.

Investments (CAPEX)

TAURON Group's capital expenditures stood at PLN 2 728 million in the first three quarters of 2020, and they were lower by PLN 13 million as compared with the outlays incurred in the same period of 2019. This is a consequence of the lower expenditures in the Mining Segment (a drop by PLN 142 million) and the higher outlays in the conventional Generation Segment (a rise by PLN 43 million) and in the Other Operations Segment (an increase by PLN 76 million).

The largest capital expenditures were incurred in the Distribution Segment (PLN 1 316 million), where the funds were spent, among others, on installing the new connections to the grid (PLN 639 million), as well as on upgrading (refurbishing) and replacing the distribution grid (PLN 597 million). The capital expenditures in the conventional Generation Segment came in at PLN 955 million and they were related, first and foremost, to the construction of the 910 MW super critical parameters power generating unit in Jaworzno (PLN 429 million), as well as to the adaptation of the power generating units to the BAT conclusions (PLN 199 million). It is worth noting that the unit in Jaworzno was commissioned on November 13, 2020, while the Stalowa Wola Combined Heat and Power Plant (Elektrociepłownia Stalowa Wola) commenced operating in the Polish power system on September 30, 2020.

Debt and financing

TAURON Capital Group’s position is stable in terms of its financial liquidity. In October 2020, based on the results of the book building process completed, TAURON issued bonds with a total value of PLN 1 billion. The Group has access to the guaranteed financing worth more than PLN 3.5 billion. The net debt to EBITDA ratio dropped to 2.53x.

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