Group’s Q1-Q3 2014 financial results TAURON November 13, 2014

TAURON Group’s Q1-Q3 2014 financial results
November 13, 2014
Q1-Q3 2014 key financial parameters
TAURON Group’s Q1-Q3 2014 financial results
[PLN m]
Q1-Q3 2014
Sales revenue
13 603
(-4.3% yoy)
EBITDA
2 915
(-2.8% yoy)
Net profit*
1 049
(-13.8% yoy)
CAPEX
2 010
(-15.1% yoy)
Net debt/EBITDA
1.73x
(up 0,3)
Key segments’ Q1-Q3 2014 results
[PLN m]
Distribution
Supply
Heat
Generation
Mining
Segment’s revenue
4 529
11 267
967
2 305
871
EBITDA
1 778
501
182
200
83
EBIT
1 071
479
71
(154)
5
CAPEX
1 286
2.2
225
235
125
* Net profit attributable to the parent company’s shareholders
2
Q3 2014 key financial parameters
TAURON Group’s Q3 2014 financial results
[PLN m]
Q3 2014
Sales revenue
4 377
(-3.6% yoy)
EBITDA
921
(-2.8% yoy)
Net profit*
318
(-13.3% yoy)
CAPEX
760
(-25.4% yoy)
Net debt/EBITDA
1.73x
(up 0,3)
Key segments’ Q3 2014 results
[PLN m]
Distribution
Supply
Heat
Generation
Mining
1 480
3 692
249
832
341
EBITDA
608
110
17
73
55
EBIT
371
105
(21)
(44)
29
CAPEX
444
1.4
127
109
43
Segment’s revenue
* Net profit attributable to the parent company’s shareholders
3
Highlights
TAURON
Date
Event
July 22
Signature with the European Investment Bank of a PLN 295m loan agreement for CAPEX projects in the renewable
energy sources and distribution segments
October 24
Fitch Ratings agency reaffirmed TAURON’s BBB rating with a stable outlook. Company’s bond issue was granted A
level domestic rating
November 4
Settlement of the PLN 1.75bn bond issue as part of the bond issue program launched in July 2013. Bond issue funds
will be used to finance TAURON Group’s CAPEX projects
November 5
TAURON Ekoenergia signed agreement with Iberdrola group companies for the construction of the second stage of
Marszewo Wind Farm (18 MW). Contract’s net value: PLN 101.3m
MARKET
Date
Event
September 27
Publishing by PSE (TSO) of the Transmission Grid Operational Manual (Grid Code) update draft – planned modification
of the Operational Capacity Reserve (Operacyjna Rezerwa Mocy – ORM) and reduction of the ORM price in 2014 to
PLN 17/MW-h
October 24
European Council agreed on the climate policy framework until 2030. The main target: reducing CO2 emission by at
least 40 percent by 2030. Past 2020 the Polish power sector will be able to use a pool of free of charge CO2 emission
allowances – its allocation details have not been established yet
September
Continued works by the Parliament (Sejm) on the government’s draft law on renewable energy sources. Planned
coming into force of the law: January 2016
4
Macroeconomic and market situation
GDP growth rate
Manufacturing PMI2
+0.8 p.p.
4%
2%
0%
-2%
GDP growth rate forecast
Volume
[GWh]
Y-13
182.75
184 615
Y-14
164.24
225 263
Y-15
170.89
141 438
Y-16
175.79
20 918
Y-17
184.14
359
Average electricity sales prices on the competitive market (acc. to ERO):
 2013: PLN 181.55/MWh
* Source: GUS, IBnGR , PSE
Q4 2014
Q3 2014
Q2 2014
Q1 2014
Q4 2013
Q3 2013
Q2 2013
Structure of electricity generation in Poland [TWh]
TWh
120
100
80
119.7
7.6%
4.8%
9.09
5.73
-3.9%
115.1
-7.9%
+25.1%
42.29
-4.1%
35.3%
8.38
7.17
40.57
7.3%
6.2%
other
35.2%
renewable energy
sources
60
40
 2011: PLN 198.30/MWh
 2012: PLN 201.36/MWh
Q1 2013
increase of production sold
change of domestic electricity consumption
forecast increase of production sold
Yearly BASE contract prices on the Polish Power Exchange (TGE)
Average price
[PLN/MWh]
Q4 2012
-4%
Q3 2012
Q4 2014
Q3 2014
Q2 2014
Q1 2014
Q4 2013
Q3 2013
Q2 2013
Q1 2013
Q4 2012
Q3 2012
Q2 2012
Q1 2012
Q4 2011
Q3 2011
Q2 2011
Q1 2011
0%
6%
Q2 2012
1%
8%
Q1 2012
2%
10%
Q4 2011
3%
12%
Q2 2011
+0.3 p.p.
56
55
54
53
52
51
50
49
48
47
46
Q1 2011
5%
4%
Increase of manufacturing production sold and electricity
consumption (yoy change)*
PMI
Q3 2011
Poland’s GDP growth rate* and manufacturing PMI
(quarterly average)
GDP
52.3%
62.63
-5.9%
58.95
20
51.2%
lignite fired thermal
power plants
hard coal fired
thermal power plants
0
Q1-Q3 2013
Q1-Q3 2014
5
Q1-Q3 2014 key operating data
Mg m
TWh
Hard coal production and sales [tons m]
14
12
14.28
0.91
11.27
12
4,0
1.41
1.00
3,0
6
6
13.37
10.59
-25.7%
TWh
Q1-Q3 2013
electricity
hard coal sales outside the Group
Electricity distribution [TWh] and number of customers [‘000]
-17.1%
0
-6.3%
Q1-Q3 2014
Q1-Q3 2013
intra-Group hard coal sales
commercial hard coal production
4
2
2
2.53
-12.2%
8.78
4
1,0
0,0
8
9.94
3.99
2.88
1.33
8
4.26
2,0
10
46.2%
10
-29.1%
PJ
Electricity [TWh] and heat [PJ] generation
electricity - RES
heat
TWh
Electricity supply [TWh]
customers
0
Q1-Q3 2014
5 400
35
28
30
5 350
25
21
20
10
5 300
35.74
3 572
5 369
15
5 324
30.71
14
28.39
5 250
7
5
Q1-Q3 2013
electricity distribution
-7.6 %
45 thou.
0,1%
0
0
5 200
Q1-Q3 2014
number of customers
Q1-Q3 2013
Q1-Q3 2014
electricity supply
6
Q3 2014 key operating data
Mg m
TWh
Hard coal production and sales [tons m]
5
4.53
0.31
35.5%
4
1,0
PJ
Electricity [TWh] and heat [PJ] generation
3.98
0.42
0.42
0.50
1
-16.0%
3
1.44
1.26
2
4.22
1.16
3.56
0.93
0.83
0.95
1
14.3%
12.0%
0
Q3 2013
intra-Group hard coal sales
hard coal commercial production
TWh
-17.6%
-15.6%
0,0
0
Q3 2013
Q3 2014
electricity
hard coal sales outside the Group
Electricity distribution [TWh] and number of customers [‘000]
Q3 2014
electricity - RES
heat
TWh
Electricity supply [TWh]
customers
5 400
12
10
5 350
7
8
6
4
11.86
11.74
5 300
5 369
9.85
5 324
9.13
5 250
2
1.0%
45 thou.
0
Q3 2013
electricity distribution
Q3 2014
number of customers
-7.3%
0
5 200
Q3 2013
Q3 2014
electricity supply
7
Q1-Q3 2014 key financial data
Net profit [PLN m]
Sales revenue [PLN m]
16 000
14 214
14 000
1 699
-11.1%
1 400
1 264
13 603
1 200
1 053
1 511
12 000
1 000
4 166
10 000
4 327
3.9%
800
8 000
600
6 000
8 349
4 000
400
7 765
200
2 000
-7.0%
-16.7%
0
0
Q1-Q3
I-III
kw. 2013
electricity
I-III kw.2014
2014
Q1-Q3
distribution and commercial services
Q1-Q3 2013
other revenue
Q1-Q3 2013 EBITDA vs Q1-Q3 2014 EBITDA [PLN m]
3 500
+237
+42
+19
3 001
Q1-Q3 2013 EBITDA vs Q1-Q3 2014 EBITDA structure
2 915
0.5%
3 000
2 500
2 500
2 000
2 000
-2.8%
0.8%
3%
2%
17%
25%
1 500
1 500
2 915
3 001
mln
3 500
3 298
-11.6%
3 000
61%
57%
1 000
1 000
500
500
0
Q1-Q3 2014
0
Q1-Q3 2013 EBITDA
reported
Asset impairment
charge
Inventory impairment
charge
LTC (PPA) revenue
(final settlement)
No one-off events occurred in Q1-Q3 2014
Q1-Q3 2013 EBITDA
comparable
Q1-Q3 2014 EBITDA
reported
/comparable
3%
4%
6%
Q1-Q3 2013
-500
5%
5%
Mining
Heat
Customer service
-2%
Generation
Distribution
Other
6%
7%
3%
Q1-Q3 2014
-3%
RES
Supply
Unassigned items
8
Q3 2014 key financial data
Net profit [PLN m]
Sales revenue [PLN m]
6 000
400
372
45
4 377
5 000
350
319
-10.6%
300
468
4 000
448
250
1 347
3 000
1 400
3.9%
200
150
2 000
2 692
1 000
100
2 529
-14.3%
-6.1%
0
0
Q3 2013
2013
Q3
electricity
Q32014
2014
Q3
distribution and commercial services
Q3 2013
Q3 2014
other revenue
Q3 2013 EBITDA vs Q3 2014 EBITDA structure [PLN m]
Q3 2013 EBITDA vs Q3 2014 EBITDA [PLN m]
1 500
947
1 200
947
+19
966
921
-4.7%
921
0.8%
1 000
1 000
16%
800
-2.8%
1.2%
4%
12%
3%
600
66%
63%
400
500
200
0
0
50
3%
2%
9%
3%
-2%
2%
5%
8%
6%
-3%
-200
Q3 2013 EBITDA reported
LTC (PPA) compensation
revenue (final settlement)
Q3 2014 EBITDA comparable
No one-off events occurred in Q3 2014
Q3 2014 EBITDA reported/
comparable
Q3 2013
Mining
Heat
Customer service
Q3 2014
Generation
Distribution
Other
RES
Supply
Unassigned items
9
Q1-Q3 2014 EBITDA
-2.8%
PLN m
EBIT
Depreciation
Growth per segment
Drop per segment
EBITDA margin
4 000
3 500
21.1%
3 001
9.6%
83
3 000
1 287
8.7%
65.9%
18.8%
39.3%
59
17
77
4.5%
19.0%
11.3%
15
9
-246
-85
-
21.4%
2 915
-15
1 368
2 500
2 000
1 500
1 713
1 547
1 000
500
0
Q1-Q3 2013
EBITDA
Mining
Generation
RES
Heat
Distribution
Supply
Customer
service
Other
Unassigned
items
Q1-Q3 2014
EBITDA
Most important factors affecting Q1-Q3 2014 EBITDA:
 Mining – declining thermal coal price and sales volume along with the drop of own costs of coal sold
 Generation – lower wholesale electricity prices, lower electricity and heat sales volume, lower CO2 provision cost, lower variable unit cost (lower fuel
prices), higher revenue from Regulatory System Services (RUS) and operational reserve, asset impairment charge in H1 2013
 Distribution – increase of distribution service sales price and volume, lower balancing difference factor and lower cost of purchasing electricity to cover
the balancing difference
 RES – higher volume of sales of electricity and property rights from wind farms, higher property rights sales price, lower electricity prices
 Heat – lower electricity sales price, higher heat sales price, lower heat supply and distribution volume, higher margin on certificates, red and yellow
property rights impairment charge in the first half of 2013
 Supply – higher redemption obligation and prices of green, violet and white property rights, restoration of the obligation to redeem red and yellow
certificates; lower volume and retail sales price of electricity, lower electricity purchase price had a beneficial impact
10
Q3 2014 EBITDA
-2.8%
PLN m
EBIT
Depreciation
Growth per segment
1 400
1 200
20.9%
16.2%
1 000
947
25
800
423
8.8%
64.3%
6.7%
24
41.1%
20.1%
-42
-7
12
-16
-16
3.0%
14.1%
-
21.0%
921
3
-10
456
600
400
524
464
200
0
Q3 2013
EBITDA
Mining
Generation
RES
Heat
Distribution
Supply
Customer
service
Other
Unassigned
items
Q3 EBITDA
2014
Most important factors affecting Q3 2014 EBITDA:
 Mining – declining hard coal market prices, slight increase of the hard coal sales volume, along with the drop of the unit cost of coal sold
 Generation – lower electricity prices, lower electricity and heat sales volume, lower CO2 provision cost, higher revenue from the operational capacity
reserve
 RES – higher volume of sales of electricity and property rights from hydroelectric power plants (favorable hydrological conditions) and wind farms
(impact of Wicko and Marszewo wind farms)
 Heat – higher variable unit generation costs (higher prices of purchasing blast furnace gases), lower electricity sales price, higher CO2 cost
 Distribution – lower cost of purchasing electricity to cover the balancing difference, increase of distribution service sales price and volume, rising
transition fee charged by the TSO
 Supply – higher redemption obligation and prices of green and violet property rights, reinstatement of the obligation to redeem red and yellow
certificates, lower electricity supply volume and higher margin on electricity retail sales
11
Q1-Q3 2014 prime costs structure
Prime costs structure
PLN m
Q1-Q3
2014
1 373
19%
1 501
1 944
21%
27%
467
Fixed costs 63%
0%
20%
Depreciation
580
1 837
23%
20%
1%
-6.2%
Variable costs 38%
1 786
1 532
7 292
26%
Variable costs 37%
Fixed costs 62%
Q1-Q3
2013
1 895
6%
24%
40%
Consumption of materials and energy
Declining costs in Q1-Q3 2014 are mainly due to:
 consumption of materials (lower fuel costs)
 depreciation including impairment charges
 taxes and fees
 employee benefit costs – mainly the result of the Voluntary
Redundancy Programs implemented and the lower headcount
1 925
60%
External services
7 773
25%
7%
1%
80%
Taxes and fees
Employee benefit costs
100%
120%
Other prime costs
Cost structure:
 In Q1-Q3 2014: variable costs (excluding the value of goods and materials sold)
approx. 37%, fixed costs approx. 63%
 In Q1 –Q3 2013: variable costs approx. 38%, fixed costs approx. 62%
Most important reasons for the changed cost structure:

lower fuel cost

lower cost of CO2 emission allowances

higher cost of energy certificates of origin
12
Q3 2014 prime costs structure
Prime costs structure
PLN m
Q3
2014
456
489
19%
20%
655
179
619
27%
7%
25%
Fixed costs 64%
Variable costs 36%
Fixed costs 60%
432
Q3
2013
18%
0%
20%
Depreciation
2 440
2%
Variable costs 40%
553
645
179
23%
26%
7%
40%
Consumption of materials and energy
Q3 2014 costs comparable to Q3 2013 costs as a result of:
 declining costs of consumption of materials and energy
 rising costs of:
0.0%
60%
External services
593
24%
80%
Taxes and fees
Employee benefit cost
2 441
2%
100%
120%
Other prime costs
Cost structure:
 In Q3 2014: variable costs (excluding the value of goods and materials sold)
approx. 36%, fixed costs approx. 64%
 In Q3 2013: variable costs approx. 40%, fixed costs approx. 60%
 depreciation
Most important reasons for the changed cost structure:
 external services

lower fuel cost
 employee benefit costs – implementation of the remuneration
agreement in Q3 2014

lower cost of CO2 emission allowances’ provision

higher cost of energy certificates of origin
13
Debt and financing
Structure of TAURON Group’s debt [PLN m]
TAURON Group’s debt maturity [PLN m]
60 68
1% 1%
3 500
3 000
2 500
Net debt / EBITDA:
1.73x
2 000
EIB loans
kredyty
z EBI
National/Regional
Environment Protection
and Water
pożyczki
Management Fund
preferencyjne
z
loans on preferential
NFOŚiGW/WFOSiGW
terms
1 453
1 500
6 552
1 000
500
-
obligacje
bonds
1 226
19%
3 153
86
150 158
240
240 240 189 182
161 100 100
pozostałe kredyty,
other credits, loans
pożyczki i leasingi
100
and leases
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
bonds
obligacje
kredyty,
pożyczki
leasingi
credits, loans
and i leases
 financial debt (debt due to investment
as of September 30, 2014: PLN 6 552m
loans,
loans,
 average weighted debt maturity as of September 30, 2014:
 including all BGK bonds – 43 months
 EUR debt constitutes 0.04% of the total debt
leases
and
5 198
79%
bonds)
Financing available toTAURON Group [PLN m]
295
8%
100
3%
obligacje
obejmowane
bonds underwritten
by
przez
konsorcjum
the consortium
of
banks
banków
300
9%
obligacje
BGK
BGK bonds
 structure of debt by interest rate:
 19% – fixed interest rate, i.e. PLN 1 226m
kredyt
EBI
EIB loans
3 445
 81% – floating interest rate, i.e. PLN 5 326m, including:
- unsecured amount – PLN 1 886m
- secured amount – PLN 3 440m
cashpooling
2 750
80%
14
CAPEX – key projects’ work progress
Investment project
Capaci Capac
ty
ity
(MWe) (MWt)
Project status
Work progress
Planned
completion date
-
In the first half of November RAFAKO-Mostostal consortium will hand over the
unit’s basic design. At the same time TAURON Generation is planning to formally
hand over the unit’s construction site to the General Contractor. The process of
selecting contractors that will install the unit’s auxiliary systems and installations –
ash removal and stoking (coal feeding) systems – is underway. Design works and
obtaining of successive administrative approvals are underway
9%
2019
450
240
Installations of the gas and steam turbogenerator sets are underway. Installation of
the pressurized part of the recuperation boiler is underway. Basic installation of the
stack is completed. The upgrade of the pressure increase stage is close to
completion. Main machines and devices of the gas and steam unit are at the
construction site
64%
2015
Construction of the hard coal-fired cogeneration unit at ZW Tychy
50
86
Boiler’s steel structure’s installation completed, boiler drum’s water tests
conducted. Foundations of the inclined coal conveyor’s support completed, works
related to installing cooling water ducts and cooling water pump station completed
26%
2016
Construction of the TG 50 ZW Nowa
turbogenerator
50
-
Turbine’s delivery completed, assembly works in the machine room underway.
Partial acceptance of the power offtake completed. Works on cooling water
installations underway
61%
2015
66%
2016
85%
2015
1%
2018
14%
2019
15%
2022
Construction of the hard coal-fired unit
910
at Jaworzno III Power Plant
Construction of the CCGT unit at
Stalowa Wola Combined Heat and
Power Plant
Jaworzno III Power Plant – installing of
the flue gas denitrification systems
and upgrading of the 200 MW units
-
-
Upgrade of two of six units to be upgraded is planned in 2015-16. Units no. 1 and 5
– tender procedure underway. Unit no. 3 – optimization works underway following
the commissioning of the unit after the upgrade and preparations of the warranty
measurements
Łaziska Power Plant installing of the
flue gas denitrification systems and
upgrading of the 200 MW units
-
-
Upgrade of the last one (no. 9) of the four units underway. According to the
project’s assumptions starting from 2015 all 200 MW units will reduce NOx
emissions to less than 200 mg/Nm3
Construction of the CCGT unit at
Łagisza Power Plant
413
266
Construction of the 800m level at
Janina coal mine
-
-
Construction of Grzegorz shaft at
Sobieski coal mine
-
-
Design has been prepared and the process of approving a sector wide notice on
the construction of the CCGT unit is underway. Environmental impact assessment
report has been compiled. Process of preparing documentation required to obtain
the construction permit and design works related to the generation unit have been
commenced. Deadline for submission of Contract Engineer bids elapses on
November 3
Janina VI shaft deepening and drilling of the development headings underway. As
part of the Hard Coal Mechanical Processing Unit’s upgrade the construction of the
stone transportation and storage system is carried out
Drilling of the 830 m deep test exploration borehole completed. Construction of the
electric distribution sub-station commenced. Investment project’s basic design
accepted
15
CAPEX – by segment
Main investment projects completed in Q1Q3 2014:
CAPEX by segment [PLN m]
2 368
-15.1%
2 010
46
59
1 192
1 286
116
439
225
80
403
235
173
125
Q1-Q3 2013
Mining
Generation
Q1-Q3 2014
RES
Heat
Distribution
Supply and other
 Distribution – construction of new
connections (PLN 338m) and upgrade
and restoration of grid assets (PLN
803m)
 RES – construction of the Marszewo
wind farm’s 2nd stage (PLN 20m),
upgrade of hydroelectric power plants
(PLN 54m)
 Generation – construction of the NOx
emission reduction system (PLN 130m)
 Heat – construction and upgrades of the
heat transmission pipeline networks
(PLN 56m), restoration of ZW Tychy’s
capacity (PLN 91m) and construction of
the 50 MW turbogenerator set at ZW
Nowa (PLN 28m)
 Mining – construction of the 800 m level
and launch of the fourth coal face at the
Janina coal mine (PLN 55m)
* CAPEX does not include PLN 330m of capital costs including PLN 310m spent to purchase TAURON Mining shares
16
OPEX reduction program
Segment
Savings realized
in 2013 and in Q1-Q3 2014
Savings planned in
2013-2015
Progress %
Distribution
PLN 272m
PLN 416m
65%
Generation
(including RES)
PLN 279m
PLN 387m
72%
Heat
PLN 35m
PLN 33m
107%
Mining
PLN 24m
PLN 28m
85%
Other segments
PLN 29m
Total
PLN 639m
PLN 864m
Main initiatives






















Implementation of the ultimate business model, elimination of the redundant functions
Change of the way expenses are classified as CAPEX or OPEX
Optimization of the balancing difference
IT processes optimization
Integration of business functions in the support (maintenance) area
Optimization of external services
Employment restructuring and process optimization
Reduction of upgrades (maintenance) for the least efficient units
Overhead cost optimization
Outsourcing of some functions, mainly in the maintenance area
Improvement of the devices’ efficiency, optimization of the production volume and operating
expenses at hydroelectric power plants
Reduction of the costs of support and maintenance of the wind farm’s operation
Employment restructuring
Compressed air losses reduction
Asset restructuring
External services’ costs optimization
Procurement policy optimization
Nitrogen production system construction
Coal sludge (slurry) dewatering station expansion
Potable water treatment
Electronic auctions in public procurement
Use of the mechanical lining when drilling headings

Employment restructuring, reduction of external services’ costs
74%

In 2013 and Q1-Q3 2014 the voluntary redundancy program (PDO) covered 556 persons. Over that period employment contracts were terminated with 1 131 persons (3 625
persons in total since the program’s launch in 2010). Savings resulting from redundancies, decreased by costs incurred to generate those savings, are included in the amounts
presented per segment

No threat for the plan’s implementation is envisaged

Structure of savings in 2013 and Q1-Q3 2014: 60% comes from employment restructuring, 40% from the other initiatives

Estimated structure of savings in the 2013-2015 time frame: 73% to come from employment restructuring, 27% from the other initiatives
17
Legal disclaimer
This presentation serves for information purposes only and should not be treated as investment-related advice.
This presentation has been prepared by TAURON Polska Energia S.A. (“the Company”).
Neither the Company nor any of its subsidiaries shall be held accountable for any damage resulting from the use of this presentation or a
part thereof, or its contents or in any other manner in connection with this presentation.
The recipients of this presentation shall bear exclusive responsibility for their own analyses and market assessment as well as evaluation of
the Company’s market position and its potential results in the future based on information contained in herein.
To the extent this presentation contains forward-looking statements related to the future, in particular such terms as ”designed”, ”planned”,
”anticipated”, or other similar expressions (including their negation), they shall be connected with the known and unknown risks, uncertainty
and other factors which might result in actual results, financial situation, actions and achievements being materially different from any future
results, actions or achievements expressed in such forward-looking statements.
Neither the Company nor any of its subsidiaries shall be obliged to provide the recipients of this presentation with any additional information
or to update this presentation.
18
Thank you – Q&A
Investor Relations
Marcin Lauer
[email protected]
tel. + 48 32 774 27 06
Paweł Gaworzyński
[email protected]
tel. + 48 32 774 25 34
Magdalena Wilczek
[email protected]
tel. + 48 32 774 25 38
19
Mining
Q1-Q3 2014 EBIT bridge [PLN m]
Q1-Q3 2014 financial data [PLN m]
1 093
1 100
100
871
900
-94.3%
89
50
700
138
0
500
300
5
-3
-50
168
89
83
100
5
-100
-183
-100
Q1-Q3 2013
Q1-Q3 2014
Sales revenue
EBITDA
-35
-150
Q1-Q3 2013 EBIT
Hard coal sales
volume
Hard coal sales price Own cost of hard coal
sold
Other factors
Q1-Q3 2014 EBIT
EBIT
Q3 2014 financial data [PLN m]
Q3 2014 EBIT bridge [PLN m]
+570.9%
35
400
344
28
341
30
300
1
29
Other factors
Q3 2013 EBIT
25
20
200
15
5
10
100
55
31
29
4
5
-6
4
0
0
Q3 2013
Sales revenue
Q3 2014
EBITDA
Q3 2013 EBIT
Hard coal sales
volume
Hard coal sales price Own cost of hard coal
sold
EBIT
20
Generation (conventional sources)
Q1-Q3 2014 EBIT bridge [PLN m]
Q1-Q3 2014 financial data [PLN m]
4 000
3 340
3 500
3 000
-50
2 305
2 500
+39.3%
237
0
-100
2 000
1 500
-150
1 000
-200
500
200
117
34
116
16
10
-154
-176
-250
-254
0
-300
-500
-254
Q1-Q3 2013
Sales revenue
-137
-154
-350
Q1-Q3 2014
Q1-Q3 2013
EBIT
EBITDA
EBIT
Generation
assets
impairment
charge
(Q2 2013)
Electricity sales Electricity sales Variable unit
price
volume
electricity cost
Margin on
electricity
trading
CO2 costs
Other factors
Q1-Q3 2014
EBIT
Q3 2014 EBIT bridge [PLN m]
Q3 2014 financial data [PLN m]
-84.7%
1 200
0
1 069
1 000
832
-24
19
29
-60
89
3
-44
-12
400
73
-80
0
-200
21
-40
600
200
-34
-20
800
-24
Q3 2013
Sales revenue
-44
Q3 2014
EBITDA
EBIT
-46
-100
EBIT
Cena
Wolumen
Q3
Electricity
Electricity
III kw. 2013
sprzedaży
sprzedaży
2013
sales
price
sales
volume
energii el.
energii el.
EBIT
Jednostkowy
Marża na
Koszty
CO2CO2
Variable
Margin
on
koszt zm. obrocie energią
costs
unit
electricity
energii el.
el.
electricity
trading
cost
LTC (PPA)
Odpis
receivables
aktualizujący
impairment
należności z
charge (Q3
tyt. KDT (3Q
20132013)
Other
Pozostałe
factors
czynniki
Q3EBIT
2014
EBIT
III
kw. 2014
21
Renewable Energy Sources (RES)
Q1-Q3 2014 EBIT bridge [PLN m]
Q1-Q3 2014 financial data [PLN m]
+44.8%
250
216
160
200
150
37
140
142
129
-7
28
120
100
- 33
32
80
84
100
82
57
60
57
- 27
-2
40
50
82
-1
20
0
0
Q1-Q3 2013
Sales revenue
Q1-Q3 2013
Electricity
Electricity
EBIT
sales volume sales volume
hydroelectric wind farms
power plants
Q1-Q3 2014
EBITDA
EBIT
70
60
60
50
40
30
46
7
6
30
26
22
13
9
20
- 11
26
2
- 13
13
10
10
0
EBIT
Q3 2013
III kw. 2013
0
EBIT
Q3 2013
Sales revenue
Q1-Q4 2014
EBIT
11
40
36
20
Other
+99.1%
71
50
Depreciation
Q3 2014 EBIT bridge [PLN m]
Q3 2014 financial data [PLN m]
80
Property rights Property rights Property rights Electricity
sales volume sales volume sales price
sales price
hydroelectric wind farms
power plants
Q3 2014
EBITDA
EBIT
Wolumen
Electricity
sprzedaży
sales
volume
energii
hydroelectric
el. wodne
power plants
Wolumen
Wolumen
Wolumen
Cena
Electricity
Property
Property
Property
sprzedaży
sprzedaży PM sprzedaży
PM sprzedaży PM
sales
volume el.
rights
sales el.wiatrowe
rights
rights sales
energii
wodne
wind farms
volume
sales
volume
el.wiatrowe
hydroelectric
power plants
wind farms
Amortyzacja
Depreciation
Pozostałe
Other
czynniki
factors
EBIT
Q3 2014
III kw. 2014
EBIT
price
22
Heat
Q1-Q3 2014 EBIT bridge [PLN m]
Q1-Q3 2014 financial data [PLN m]
1 000
967
926
-6.5%
120
11
33
18
800
100
600
80
76
- 20
- 27
71
76
0
Sales revenue
Q1-Q3 2014
EBITDA
Other
Q1-Q3 2014
EBIT
20
0
Q1-Q3 2013
71
40
182
165
200
2
- 22
60
400
Q1-Q3 2013
EBIT
EBIT
Red and yellow Heat supply and Electricity sales Electricity sales Heat sales price
property rights
distribution
volume
price
impairment
volume
charge (H1
2013)
Q3 2014 financial data [PLN m]
Margin on
certificates
Other
operations
balance
Depreciation
Q3 2014 EBIT bridge [PLN m]
300
250
8
-8
10
249
242
1
2
0
-3
200
-10
150
100
50
-8
-8
-20
32
17
0
-7
2
Depreciation
Other factors
-21
-30
1
Q3 2013 EBIT
Electricity sales Electricity sales Variable unit
volume
price
generation costs
CO2 costs
Q3 2014 EBIT
-21
-50
Q3 2013
Sales revenue
Q3 2014
EBITDA
EBIT
23
Distribution
Q1-Q3 2014 EBIT bridge [PLN m]
Q1-Q3 2014 financial data [PLN m]
4 529
4 451
+4.5%
1 400
4 000
147
1 200
3 000
1 024
1 071
64
-170
1 000
1 778
1 701
2 000
-8
-31
800
1 071
1 024
1 000
36
8
600
400
200
0
Q1-Q3 2013
Sales revenue
Q1-Q3 2014
EBITDA
0
Q1-Q3 2013 EBIT
EBIT
Distribution
service price
Balancing
difference
Q3 2014 financial data [PLN m]
1 600
DSO/TSO
services purchase
OPEX
Depreciation
Other operations
Other
Q1-Q3 2014 EBIT
Q3 2014 EBIT bridge [PLN m]
1 480
1 440
+0.7%
500
41
1 200
400
368
20
13
-53
800
371
368
400
-6
300
608
597
371
-12
200
100
0
Q3 2013
Sales revenue
Q3 2014
EBITDA
EBIT
0
Q3 2013 EBIT
Distribution service Distribution service Cost of grid losses DSO/TSO services Connection fees
price
volume
- price
purchase
Other factors
Q3 2014 EBIT
24
Distribution – volumes
Q1-Q3 2013 electricity distribution [GWh]
Q1-Q3 2014 electricity distribution [GWh]
7 260
7 430
10 236
10 392
Group A
Group B
Group C2
33 778
3 078
Group B
3 013
Group C2
34 077
Group C1+R+D
Group G
Group A
Group C1+R+D
Group G
1 985
1 946
11 090
11 427
Q3 2013 electricity distribution [GWh]
Q3 2014 electricity distribution [GWh]
2 333
2 269
3 596
3 529
Group A
Group B
934
Group A
Group C2
11 127
Group B
941
Group C2
11 311
Group C1+R+D
Group G
626
3 705
Data related to the distribution of electricity to end users
Group C1+R+D
Group G
654
3 851
25
Supply
Q1-Q3 2014 EBIT bridge [PLN m]
Q1-Q3 2014 financial data [PLN m]
14 000
-33.6%
800
13 301
61
721
700
11 267
12 000
-51
600
10 000
-152
500
23
-44
8 000
400
6 000
479
-80
300
4 000
200
2 000
747
721
501
479
100
0
0
Q1-Q3 2013 EBIT
Q1-Q3 2013
Sales revenue
Q1-Q3 2014
EBITDA
EBIT
Electricity sales
volume
Q3 2014 financial data [PLN m]
Electricity price
Price of green,
violet and white
property rights
Increased green
and violet property
rights obligation
Red and yellow
property rights
obligation
Other
revenue/costs
Q1-Q3 2014 EBIT
Q3 2014 EBIT bridge [PLN m]
-26.1%
5 000
180
4 308
29
160
3 692
4 000
142
-5
140
3 000
-13
-12
120
4
100
2 000
105
-40
80
60
1 000
151
142
110
105
40
20
0
Q3 2013
Sales revenue
EBITDA
Q3 2014
EBIT
0
Q3 2013 EBIT
Electricity sales
volume
Electricity price
Price of green,
violet and white
property rights
Increased green
and violet property
rights obligation
Red and yellow
property rights
obligation
Other
revenue/costs
Q3 2014 EBIT
26
Supply – volumes
Q1-Q3 2013 electricity supply* [GWh]
Q1-Q3 2014 electricity supply* [GWh]
2 717
3 657
6 497
7 356
7 134
GroupAA
Grupa
GroupAA
Grupa
7 356
30 483
Grupa
GroupBB
28 118
GroupBB
Grupa
Grupa
GroupC2+C1+R+D
C2+C1+R+D
Grupa
GroupC2+C1+R+D
C2+C1+R+D
Grupa
GroupG
G
Grupa
GroupGG
Sprzedaż
pozostała**
Other supply**
Sprzedaż pozostała**
Other supply**
7 706
7 676
4 094
4 408
Q3 2013 electricity supply* [GWh]
Q3 2014 electricity supply* [GWh]
1 027
671
2 530
2 380
2 225
2 311
GroupAA
Grupa
9 795
Group A
Grupa A
GroupBB
Grupa
9 055
Group B
Grupa B
Grupa
GroupC2+C1+R+D
C2+C1+R+D
Group C2+C1+R+D
Grupa
C2+C1+R+D
Grupa
GroupGG
Group G
G
Grupa
Sprzedaż pozostała**
Other supply**
1 306
2 621
Sprzedaż
pozostała**
Other supply**
1 222
2 557
* Volumes of electricity supply to the strategic customers (key accounts) of TAURON Polska Energia S.A. are included in groups A and B
** Own needs and balancing differences of the Group’s subsidiaries, balancing differences to other DSOs, other
27
Customer service
Q1-Q3 2014 financial data [PLN m]
500
Q1-Q3 2014 EBIT bridge [PLN m]
-5.8%
456
160
450
400
350
120
300
100
250
80
200
60
150
72
100
33
140
375
60
11
56
6
-92
40
87
60
39
56
20
50
0
0
Q1-Q3 2013
Sales revenue
EBITDA
Q1-Q3 2013 EBIT Revenue of Customer
Revenues of
Revenue of IT Shared
Service Shared
Accounting Shared
Services Center
Services Center
Services Center and
HR Shared Services
Center
Q1-Q3 2014
EBIT
Q3 2014 financial data [PLN m]
Costs of services
provided
Other factors
Q1-Q3 2014 EBIT
2
19
Other factors
Q3 2014 EBIT
Q3 2014 EBIT bridge [PLN m]
-41.0%
60
180
150
7
50
155
11
140
40
120
33
30
-1
90
60
20
38
33
-32
31
19
30
10
0
0
Q3 2013 EBIT
Q3 2013
Sales revenue
Q3 2014
EBITDA
EBIT
Revenue of Customer
Revenue of
Revenue of IT Shared
Service Shared
Accounting Shared
Services Center
Services Center
Services Center and
HR Shared Services
Center
Costs of services
provided
28
Electricity market price trends
Electricity
Platforms: TGE, TFS, GFI,
GPW-POEE
2013
2014 (until 4.11.2014)
2014/2013
Price PLN/MWh
Volume GWh
Price PLN/MWh
Volume GWh
Price %
Volume %
Forward BASE (Y+Q+M)
184.92
140 488
161.01
187 965
-12.9%
33.8%
Forward PEAK (Y+Q+M)
204.35
14 855
184.21
19 007
-9.9%
27.9%
Forward (weighted average)
186.78
155 343
163.14
206 972
-12.7%
33.2%
SPOT (TGE)
153.91
19 930
177.07
17 978
15.0%
-9.8%
Weighted average total
183.04
175 273
164.26
224 950
-10.3%
28.3%
CO2 emission allowances (EUA/t)
Property rights (PLN/MWh)
Price (EUR/t)
Certificate type
Market prices (2014
average) (until 4.11.2014)
Substitution fee and
obligation for 2014
2013 average
4.48 EUR/t
RES (green)
187.48
300.03 (13.0%)
2014 average
6.0 EUR/t
Hard coal-fired cogeneration (red)
10.45
11.00 (23.2%)
2015 average
8.2 EUR/t
Gas-fired cogeneration (yellow)
104.65
110.00 (3.9%)
6.0 – 6.5 EUR/t
Methane (violet)
59.48
63.26 (1.1%)
CO2 market analysts’ survey*
Average 2014 EUA price forecast by
TAURON
* Sources: Point Carbon, TAURON
29
2015 BASE contracts
PLN/MWh
Trading volume
Total
including
TGE
non TGE
Average price
[PLN/MWh]
167.03
167.13
166.74
Price
Average
price
Volume
[GWh]
126 004
94 599
31 405
Average electricity price that takes into account 2015 one year BASE and PEAK contracts: PLN 170.89/MWh, total 2015 BASE and PEAK volume: 141 438 GWh
30
2016 BASE contracts
PLN/MWh
Trading volume
Total
including
TGE
non TGE
Average price
[PLN/MWh]
175.39
175.76
174.69
Price
Average price
Volume
[GWh]
20 774
13 562
7 212
Average electricity price that takes into account 2016 one year BASE and PEAK contracts: PLN 175.79/MWh, total 2016 BASE and PEAK volume: 20 918 GWh
31
TAURON's coverage by analysts
Institution
Analyst
Institution
Analyst
DB Securities
Tomasz Krukowski
Ipopema Securities
Piotr Zielonka
Dom Maklerski mBanku
Kamil Kliszcz
Raiffeisen Centrobank
Teresa Schinwald
Dom Maklerski Banku Handlowego
Piotr Dzięciołowski
Renaissance Capital
Vladimir Sklyar
Dom Maklerski BZ WBK
Paweł Puchalski
Societe Generale
Bartłomiej Kubicki
Dom Maklerski PKO BP
Stanisław Ozga
UBS Investment Research
Michał Potyra
J.P. Morgan Cazenove
Michał Kuzawiński
Patrick Hummel
Erste Group
Tomasz Duda
Tomasz Walkowicz
Espirito Santo Investment Poland
Maria Mickiewicz
UniCredit CAIB
Flawiusz Pawluk
Goldman Sachs
Fred Barasi
WOOD & Company
Bram Buring
HSBC
Dmytro Konovalov
DM BOŚ
Andrzej Bernatowicz
ING Securities
Milena Olszewska
32
`