TAURON Group: 6.4 billion in revenue and PLN 1.7 billion of EBITDA in the first quarter of 2021

• Sales revenue: up by 18 percent to PLN 6.4 billion
• EBITDA: up by 81 percent to PLN 1.7 billion. EBITDA margin: 26.9 percent
• One-off events: PLN +363 million
• Capex: PLN 639 million. The largest capex in the Distribution segment (PLN 457 million)
• Net debt[1] to EBITDA ratio at 1.96x

 (all consolidated data for the first quarter of 2021)

– The financial results posted by TAURON Group in the first quarter have been positively impacted by one-off events that will not be repeated in the subsequent quarters. We are expecting a strong surge of the costs related to the CO₂ emissions and the rising pressure on the financial results of the hard coal fired generation sources in the subsequent periods, which is a consequence of an increase of the CO₂ emission allowances prices to more than EUR 50 per ton – says Paweł Strączyński, the President of the Management Board (CEO) of TAURON Polska Energia. – In view of the more and more stringent climate policy of the European Union, the solution required to ensure the continued existence of Poland’s energy groups, including TAURON, is to spin off the coal assets as soon as possible and concentrate them in an entity owned by the State Treasury that will ensure Poland's energy security. Spinning off of the coal-based assets from TAURON Group will unlock the Group's investment and expansion potential by restoring its ability to take on debt to fund the transition towards the zero- and low-emission generation sources – adds President Paweł Strączyński.

– In reference to the earnings of the individual segments, it is clear that the Distribution and Supply segments are the foundations of TAURON Group's stability. The results of the Generation segment were more than PLN 600 million higher on an annual basis, with PLN 360 million coming from a one-off transaction involving the restructuring of the CO₂ portfolio, and approximately PLN 170 million from the capacity market in the first quarter of 2021. On the other hand, the Mining segment – similar to what it had done over the last five years - generated a loss at the EBITDA level. – comments President Paweł Strączyński.

Operating data

TAURON Group delivered, in total, 13.79 TWh of electricity in the first quarter of 2021, i.e. 4 percent more as compared to the year ago period (13.25 TWh). The Distribution Segment provided the distribution services to 5.7 million consumers, and the number of customers went up by 53 thousand as compared to the previous year.

TAURON Group generated 4.2 TWh of electricity in the period under review, i.e. 31 percent more as compared to the previous year (3.2 TWh) which was mainly due to the operation of the 910 MW unit in Jaworzno, commissioned in November 2020. The production of electricity in the RES segment came in at 0.34 TWh, i.e. 26 percent less than in the same quarter of 2020 (0.46 TWh), which was due to the less favorable wind conditions as compared to last year.

The heat production climbed to 5.15 PJ, i.e. it rose by 4 percent.

The commercial coal production clocked in at 1.43 million ton in the first quarter of 2021 (+ 21 percent year on year). The better result is a consequence of the higher hard coal production output thanks to a more favorable arrangement (configuration) of the longwall fronts at the Sobieski Coal Mine (ZG Sobieski) and the Janina Coal Mine (ZG Janina). 48 percent of the hard coal supplies required for the production of electricity and heat were satisfied with the hard coal coming from TAURON Wydobycie’s coal mines in the first quarter of 2021. The remaining part of the demand was covered from the external sources.

Financial results

TAURON Group posted sales revenue of PLN 6.4 billion in the first quarter of 2021, i.e. higher by 18 percent than in the same period of 2020. It was a consequence of the higher electricity sales volume, the restructuring of the CO₂ emission allowances portfolio (+ PLN 363 million) and the revenue from the capacity market (+ PLN 170 million), with no revenue coming from the Operational Capacity Reserve and the Cold Intervention Reserve in 2021 (PLN 76 million of revenue in the first quarter of 2020).

TAURON Group’s reported EBITDA came in at more than PLN 1.7 billion in the first quarter of 2021, while excluding the above mentioned factors, it stood at PLN 1.2 billion. The following segments had the biggest share in TAURON Group’s total EBITDA: the Distribution Segment (a 43 percent share) and the Generation Segment (a 40 percent share).

The EBITDA margin clocked in at 26.9 percent in the first quarter of 2021 and it was higher by 9.4 pp as compared to the EBITDA margin earned in the same period of 2020, while the net margin came in at 13.2 percent and it was higher by 10.2 pp.

Investments (CAPEX)

TAURON Group's capital expenditures clocked in at PLN 639 million in the first quarter of 2021, and they were lower by 32 percent as compared to the outlays incurred in the same period of 2020 when the capex came in at PLN 940 million (excluding the equity investments). This is, first and foremost, a consequence of the decline of the capital expenditures in the Generation Segment, which was due to the completion of the construction of the 910 MW unit in Jaworzno in the fourth quarter of last year. The largest capital expenditures were incurred in the Distribution Segment (PLN 457 million), where the funds were spent, among others, on installing the new connections to the distribution grid (PLN 231 million), as well as on upgrading (refurbishing) and replacing the distribution grid (PLN 192 million).

Debt and financing

TAURON Group is managing financial liquidity using the central financing model as well as the central financial risk management policy. The net debt to EBITDA ratio was lower than the leverage ratio reported in the first quarter of 2020 and it stood at 1.96x.

- The level of the leverage ratio as of the end of the first quarter of this year is distorted because the calculation of the ratio is based on the EBITDA for the trailing 12 months, which includes the one-off events with the total value of almost PLN 900 million. We are expecting the leverage ratio to rise in the subsequent quarters – sums up President Paweł Strączyński.

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