TAURON Group’s Q1 2019 Financial Results May 28, 2019 tauron.pl
Agenda a Key financial and operating data Filip Grzegorczyk Highlights CEO Investment projects and CAPEX Macroeconomic and market situation Marek Wadowski CFO Financial data and the results of individual segments Debt and financing 2/28 2 tauron.pl
Key Q1 2019 data a Financial results Operating data [PLN m] Q1 2019 vs Q1 2018 Q1 2019 vs Q1 2018 Electricity distribution 5 313 15% 13.54 1% Sales revenue [TWh] Electricity production 1 212 (9)% 3.82 (3)% EBITDA [TWh] 524 (18)% 4.76 (16)% Net profit* Heat generation [PJ] Retail electricity supply 727 20% 8.93 (4)% CAPEX [TWh] up 0.2x Commercial coal production 2.74x 1.26 (11)% Net debt/EBITDA [ton m] (vs 31.12.2018) * Attributable to the shareholders of the parent company 3/28 tauron.pl
Highlights Summary January 10 Launching of the first stationary electric vehicles charging station in cooperation with KGHM Connecting to the power grid of almost 2.5 thousand renewable energy sources with the total capacity of Q1 approximately 35 MW (above 100 percent growth rate y/y) Affirming by Fitch Ratings of the BBB long term ratings in the domestic and foreign currency with a stable April 17 outlook and granting the hybrid bonds of the BB+ rating in the domestic and foreign currency and the BBB+ domestic rating April Commencement of regular hard coal shipments to the 910 MW power generating unit at Jaworzno May 8 Ordinary General Meeting of TAURON Polska Energia S.A. 4/28 4 tauron.pl
Macroeconomic and market situation a Poland’s GDP growth rate* and manufacturing PMI Increase of industrial production sold* PMI PKB (quarterly average)** and electricity consumption (change yoy)*** 58 9% 10% 8% 8,5% 56 7,3% 7,0% 7% 8% 6,4% 5,7% 5,3% 5,5% 6,1% 6,0% 4,4% 4,0% 5,2% 4,9%5,3% 5,1% 5,1% 4,9% 4,6% 5,5% 6% 5,3% 4,6% 6% 54 3,9% 4,3% 4,2% 5% 3,8% 3,6% 3,1% 3,4% 2,7%2,7% 4% 3,0% 2,5% 1,5% 4% 3,3% 52 3% 2% 2% 50 0% 1% -2% 0% 48 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 GDP growth rate Manufacturing PMI Sold production growth Domestic electricity consumption change Electricity prices under one-year BASE contracts Structure of electricity production in Poland*** [TWh] Average price Volume [GWh] [PLN/MWh] 50 43,54 -1,9% 42,71 Y-13 191,60 108 861 Y-14 160,40 142 841 2,80 -0,6% 2,78 Industrial power plants Y-15 168,11 146 932 40 6,5% 6,4% 4,02 37,5% 5,53 13,0% Y-16 166,47 147 923 9,2% 2,60 8,4% 6,0% 6,6% 2,82 Y-17 160,27 76 729 Renewable energy 30 28,2% Y-18 165,98 65 227 25,8% sources 12,28 -10,3% 11,01 Y-19 237,44 133 170 Gas-fired thermal Y-20 261,14 45 123 power plants 20 Y-21 260,73 3 609 Lignite-fired thermal -5,8% power plants 48,2% 50,2% Average electricity sales prices on the competitive market (acc. to 21,84 10 20,57 Hard coal-fired thermal ERO): power plants 2014: 163.58 PLN/MWh 2015: 169.99 PLN/MWh 0 2016: 169.70 PLN/MWh Q1 2018 Q1 2019 2017: 163.70 PLN/MWh 2018: 194.30 PLN/MWh 2019: 250.00 PLN/MWh (estimate) Source: * GUS ** Bankier.pl ***PSE 5/28 5 tauron.pl
Q1 2019 financial data Net profit attributable to the parent company’s Sales revenue [PLN m] shareholders [PLN m] 5 313 700 4 637 173 600 101 96 636 147 236 70 500 155 258 1 593 524 400 1 589 300 200 3 114 2 417 100 0 Q1 2018 Q1 2019 Electricity Distribution and trading services Heat Hard coal Gas Other revenue Q1 2019 EBITDA vs Q1 2018 EBITDA [PLN m] 1 400 1 200 1 326 1 212 1 161 1 000 1 096 800 600 400 200 0 Reported Q1 2018 EBITDA Dissolving of the provision Comparable Q1 2018 EBITDA Comparable Q1 2019 EBITDA Consumption of the provision Reported Q1 2019 EBITDA related to the employee related to the agreements benefits in the Generation giving rise to charges Segment 6/28 tauron.pl
Individual segments’ Q1 2018 results Other [PLN m] Distribution Generation Supply Mining and exclusions* 1 681 1 389 3 911 292 (1 961) Revenue 681 387 165 (44) 24 EBITDA 387 280 155 (96) 1 EBIT 351 236 4 119 17 CAPEX Individual segments’ contribution to EBITDA [%] PLN m 1 600 1 326 1 212 1 400 0,1% 2% 14% Other and exclusions 1 200 14% 1 000 Supply 47% 800 56% Distribution 600 Generation 400 35% 200 32% Mining 3% 0 -4% -200 Q1 2018 Q1 2019 * Items not included in the segments presented 7/28 tauron.pl
Q1 2019 EBITDA a PLN (114)m, (9)% PLN m 1 800 1 600 28,6% 40,5% 27,8% 4,2% -15,2% 17,9% 22,8% * 53 1 400 23 1 326 -78 1 200 -23 -88 1 212 1 000 800 600 400 200 0 Q1 2018 EBITDA Distribution Generation Supply Mining Other and exclusions Q1 2019 EBITDA EBITDA Segment's increase Segment's decrease EBITDA margin * Other operations segment’s EBITDA margin 8/28 tauron.pl
Distribution Segment 9/28 tauron.pl
Distribution Segment – Q1 2019 EBITDA change [PLN m] Financial data [PLN m] 800 681 2 1 4 47 6 628 a 2 000 600 1 681 -7 1 571 294 259 400 1 000 681 628 351 269 200 387 369 387 369 0 0 Q1 2018 Price Volume Purchase of Cost of grid Other Other Q1 2019 Q1 2018 Q1 2019 DSO/TSO losses distribution Sales revenue EBITDA EBIT CAPEX services services EBIT depreciation and impairment charges Electricity distribution [TWh] √ Q1 • Increase of electricity services sales volume by 121 GWh 3,53 4,66 2,02 2,71 13,42 2018 0,50 √ • Lower balancing difference costs Q1 3,56 4,72 2,05 2,76 13,54 2019 0,45 - • Delay of the 2019 distribution tariff’s approval by the President of ERO 0 5 10 Group A Group B Group C2+C1+R+D Group G Other* * Neighboring DSOs and exports 10/28 tauron.pl
Distribution Segment – key parameters Regulatory Asset Base [PLN bn] Customer Connection Time [%] 100% 20 99,23% 99,30% 93,50% 93,30% 80% 17,5 16,9 15 16,3 60% 10 40% 5 20% 0 0% 2017 2018 2019 CRP gr. IV CRP gr. V LTM 2019 LTM 2019 target LTM – last 12 months ’ period ending on March 31, 2019 Interruption Duration Time [min/consumer] Frequency of Interruptions [no. of interruptions/ consumer] 80 1,5 82,8 1,39 1,2 60 0,9 1,05 53,9 40 0,6 34,6 0,65 28,3 20 24,8 0,3 0,44 0,42 20,2 0,38 17,8 0,32 13,2 0,21 0 0,0 big cities city counties other towns villages big cities city counties other towns villages Q1 2019 Q1 2019 target Q1 2019 Q1 2019 target 11/28 11 tauron.pl
Generation Segment 12/28 tauron.pl
Generation Segment – Q1 2019 Financial data [PLN m] EBITDA change [PLN m] a 1 389 1 500 45 600 89 1 172 -33 1 000 49 400 465 -230 243 236 387 465 500 372 387 200 280 0 0 Q1 2018 Q1 2019 Q1 2018 Margin on Margin on Margin on heat Provision related Other Q1 2019 electricity electricity to employee (conventional) (RES) benefits Sales revenue EBITDA EBIT CAPEX Gross production of electricity [TWh] and heat [PJ] RES and high efficiency cogeneration production [TWh] 6 √ 0,7 • Higher electricity prices 5 0,6 3,94 3,82 4 • Higher electricity production volume √ 0,5 0,24 0,39 by hydroelectric power plants and 0,39 0,4 3 wind farms 5,68 0,65 4,76 - 0,3 0,17 0,24 2 0,54 • Increase of the prices of fuels and 3,70 3,44 0,2 CO 2 emission allowances 0,11 1 0,12 0,1 0,11 0,09 • Higher temperatures y/y, lower heat - 0,02 0 0,0 production and partial passing on the Q1 2018 Q1 2019 Q1 2018 Q1 2019 increase of the prices of fuels and CO 2 in the heat tariffs Electricity (excl. RES) Electricity (RES) Heat Biomass Water Wind High efficiency cogeneration 13/28 tauron.pl
Supply Segment 14/28 tauron.pl
Supply Segment – Q1 2019 Financial data [PLN m] EBITDA change [PLN m] 3 911 200 4 000 188 9 3 384 A 3 500 165 4 9 5 160 10 92 3 000 2 500 120 51 2 000 179 80 155 1 500 1 000 -39 40 -145 500 188 155 165 179 0 0 Q1 2018 Q1 2019 Q1 2018 Electricity Consumption of Property Property rights Other market TDS EBITDA Other Q1 2019 price and provision related rights obligation products change volume to the agreements price Sales revenue EBITDA EBIT giving rise to losses EBIT depreciation and impairment charges Retail electricity supply [TWh] - • Increase of electricity and PMOZE purchase prices 9,27 1,54 2,50 1,51 2,61 Q1 2018 1,11 √ • Positive impact of the lack of the obligation to redeem certificates of origin of electricity produced in cogeneration 1,30 2,50 1,53 2,69 8,92 Q1 2019 0,91 √ • Dissolving of the provision related to the agreements giving rise to charges and lower costs of the excise tax 0 2 4 6 8 Group A Group B Group C2+C1+R+D Group G Other 15/28 tauron.pl
a Mining Segment 16/28 tauron.pl
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