More than PLN 4.2 billion - TAURON Group’s record breaking EBITDA in 2020

• EBITDA: up 17 percent to PLN 4.2 billion, EBITDA margin: 20.3 percent
• 9 TWh of production from RES (up 41 percent), the share of electricity production from RES in the total production volume went up from 10 to 16 percent
• Capex: PLN 4 billion. The largest capex in the following segments: Distribution (PLN 1.9 billion) and Generation (PLN 1.3 billion)
• Gross financial result affected by the impairment charges and the written down carrying amount of the loans granted
• Net debt[1] to EBITDA ratio at a safe level of 2.5x, as compared to 2.8x a year ago

 (all consolidated data for 2020, continued and discontinued operations)

- In 2020, we successfully launched a number of initiatives aimed at guaranteeing the financial resources needed for the expansion of TAURON Group. We were the first in Poland to conduct an issue of sustainable development bonds, as part of which we issued five year bonds worth PLN 1 billion, with the proceeds to be spent on the Group’s energy transition -  says Marek Wadowski, acting as the President of the Management Board of TAURON Polska Energia. – The earnings posted by the Group are good and the financial position is stable and safe. TAURON Group effectively uses its potential, which was reflected in the record breaking EBITDA posted in 2020. The financial condition of TAURON Group allows us to be optimistic about the future. We are ready to take an active part in the process of increasing the production of electricity from zero and low emission sources, which is an important element of the Polish energy sector’s transition, and in case of our organization, it is implemented as part of the Green Turn of TAURON – adds Marek Wadowski.

The net debt to EBITDA ratio dropped to 2.5x, as compared to 2.8x at the end of 2019. The ratio’s level confirms the stable financial position of TAURON Group.

Operating data

TAURON Group delivered, in total, 50.3 TWh of electricity in 2020, i.e. 3 percent less as compared to 2019. The decline of the volume of electricity distributed was caused by the economic slowdown brought about by the coronavirus pandemic. The number of the Distribution Segment’s customers went up by 64 thousand and topped 5.7 million.

TAURON Group generated 12.5 TWh of electricity in 2020 (including 1.9 TWh from RES), i.e. 10% less as compared to 2019, when the electricity production came in at 13.9 TWh (including 1.4 TWh from RES). The decrease in production was caused by the lower sales of electricity from the in-house production, as compared to 2019, and the adopted trading strategy. The increase in the RES production by 41% is a consequence of the all year round operation of the wind farms acquired in September 2019, the more favorable hydrological conditions and the higher electricity production by the biomass fired units. The share of the electricity generation from RES went up to 16%, as compared to 10 percent in 2019

As compared to the previous year, the heat production climbed by 7%, i.e. to 11.6 PJ.

56 percent of the demand for the hard coal supplies needed to produce electricity and heat was met in 2020 with the hard coal coming from TAURON Wydobycie’s in-house coal mines. The remaining part of the demand was covered from the external sources, with Polska Grupa Górnicza (Polish Mining Group - PGG) and Węglokoks responsible for the largest share thereof.

Financial results

*the results include the continued and discontinued operations (TAURON Ciepło Sp. z o.o.)

**attributable to the shareholders of the parent entity

TAURON Group posted sales revenue of PLN 20.9 billion in 2020, i.e. by 7 percent higher as compared to 2019. The increase was fueled by the higher average electricity sales prices and the rise in the distribution services rates.

TAURON Group’s EBITDA came in at more than PLN 4.2 billion in 2020 and it was higher by 17 percent than a year ago. The Distribution Segment’s share in EBITDA stood at 72 percent, with the Distribution line of business generating PLN 3 023 million of EBITDA in 2020. The Supply Segment had a 16 percent share (PLN 683 million), and the RES Segment is already responsible for more than 7 percent of the Group's EBITDA (PLN 297 million). The EBITDA margin increased by 1.9 percentage points year on year and clocked in at 20.3 percent.

As a consequence of the impairment tests completed, as well as the impairment of the carrying amount of the loans granted, the Group recorded a net loss of PLN 2.8 billion (in aggregate, on the continued and the discontinued operations). The total impact of these factors on the gross financial result of TAURON Group reached PLN 3.4 billion in 2020, while the impairment tests carried out in 2019 demonstrated that the recognition of the impairment charges in the amount of PLN 1.3 billion had been justified.

Investments (CAPEX)

TAURON Group's capital expenditures clocked in at PLN 4.0 billion in 2020, and they were lower by 2% as compared with the outlays incurred in 2019, when they stood at PLN 4.1 billion (excluding equity investments). This is, first and foremost, a consequence of the decline in the capital expenditures in the Mining Segment and in the Generation Segment and the rise of the outlays in the Distribution, Other Operations and RES Segments.

The largest capital expenditures were incurred in the Distribution Segment (PLN 1 908 million), where the funds were spent, among others, on installing the new connections to the grid (PLN 924 million), as well as on upgrading (refurbishing) and replacing the distribution grid (PLN 827 million). The capital expenditures in the Generation Segment came in at PLN 1 336 million in total in 2020, and more than half of those funds (PLN 688 million) were related to the construction of the 910 MW super critical parameters power generating unit in Jaworzno. PLN 239 million was allocated to the adaptation of the power generating units to the BAT conclusions.

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