tauron group results for q1 2012en.tauron.pl/sitecollectiondocuments/prezentacja wynikowa...this...

TAURON Group Results for Q1 2012

10 May 2012

1

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.

Key events

2

19 January Concluding the agreement for the construction of a 82 MW wind farm in Marszewo

with the consortium of companies: Iberdrola Engineering and Construction Poland

(leader) and Iberdrola Ingenieria Y Construction

19 January Concluding a PLN 40 million worth agreement for co-financing of the biomass-burning

boiler at Elektrownia Jaworzno III – Elektrownia II with the Ministry of Economy (as

the intermediary institution for the Operational Program Infrastructure and

Environment 2007-2013)

4 April Concluding a PLN 20 million worth agreement with NFOŚiGW (National Fund of

Environmental Protection and Water Management) concerning co-financing of the

project for modernisation of the heat generation unit at EC Tychy. After the

modernisation, the unit will be adjusted to burn only biomass .

24 April Decision of the Ordinary General Meeting on the dividend payout in the amount of

PLN 543 million, i.e. PLN 0.31 per share

25 April Decision of the Court of Appeal, in favour of TAURON, on the determination of annual

adjustment of stranded costs for the year 2008

26 April

Concluding of agreement with the company Abener Energia as the general contractor

of the CCGT unit’s construction at Stalowa Wola. The PLN 1.57 billion net worth

contract is for the construction of the largest gas fired co-generation plant in Poland

Electric energy market price trends

3

Platforms:

TGE, TFS, GFI,

GPW-POEE

Forward BASE (Y+Q+M)

Forward PEAK (Y+Q+M)

Forward (weighted average)

SPOT (TGE + GPW-POEE)

Total weighted average

Price

PLN/MWh

Volume

GWh

Price

PLN/MWh

Volume

GWh

Price

%

Volume

%

195.36 106,812 201.71 123,400 + 3.2% + 15.5%

219.01 14,744 227.17 14,510 + 3.7% - 1.6%

198.23 121,555 204.39 137,911 + 3.1% + 13.5%

199.08 18,905 190.22

(Forecast)

19,695 (Forecast)

- 4.4% + 4.2%

198.34 140,460 202.62 157,606 + 3.2% + 12.2%

Electric energy

CO2 emission allowances (EUR/t) Certificates (PLN/MWh)

Type of

certificate

Estimates

of market

prices for

December 2012

Substitution fee

for 2012

RES (green) 283.72 286.74

Coal co-generation (red)

7.92 29.30

Gas co-generation (yellow)

126.12 128.80

Methane (violet) 58.40 60.00

2011 2012 2012/2011

Questionnaire of CO market

analysts2 *

Price (EUR/t)

Average in 2012 6 – 8 EUR/t



Average EUA price

forecast by TAURON

in 2012 7 – 8 EUR/t

*Source: Deutsche Bank, Barclays Capital, Point Carbon

Restructuring of the Group – Q1 2012

4

Ownership structure rearrangement

Sale of non-core business assets:

15 recreational facilities, planned completion – 2013

shares/stocks of 12 companies outside the value chain and 7 under

trustee management; planned completion - 2013

Consolidation of medical activity, streamlining of the Group’s structure and

preparation for sale of PŚZiPZ ELVITA, scheduled disposal of shares – 2012

Analysis of legitimacy of separation, integration and supervision of the Group’s

non-core business operations

Analysis of merger possibilities of companies of the same profile (dealing with

repairs, transportation, measurements and metering), or disposal of

shares/stocks of companies in these business lines

Outsourcing processes for cleaning and security services in other companies of

TAURON Group

Business model implementation

Co

mp

lete

d

In

pro

gre

ss

Redemption of minority shareholders of Górnośląski Zakład

Elektroenergetyczny S.A.

Completion of the process of assets integration in the Heat

Segment. Acquisition of the following companies by TAURON

Ciepło S.A.: EC Tychy S.A., EC Nowa sp. z o.o., Energetyka

Cieplna w Kamiennej Górze sp. z o.o.

Sale of non-core business assets for the total amount of PLN 4 million in Q1

2012:

shares/stocks - in the amount of PLN 4 million

Mergers:

2 companies in the Distribution Segment (registration of the merger

in the National Court Register – January 2012)

Outsourcing processes for cleaning and security services at ZEW Rożnów sp.

z o.o. and TAURON Ciepło S.A.

Consolidation of companies: ZEW Rożnów sp. z o.o. and TAURON

Ekoenergia sp. z o.o.; scheduled completion – H1 2012

Merger of companies: Lipniki sp. z o.o. and TAURON Ekoenergia

sp. z o.o.; scheduled completion – 2012

GZE Group companies’ assets integration:

Incorporation of GZE S.A. by TAURON Polska Energia

S.A.; scheduled completion – Q3 2012

Integration in the following segments: Distribution, Supply,

Customer Service, RES; scheduled completion – Q3 2013

Implementation of investment program

5

Capacity – 50 MWe / 182 MWt

Scheduled commissioning – mid-2013

ZEC Bielsko Biała – new heating unit


Scheduled commissioning - end of 2015

Elektrociepłownia Tychy – new CHP unit


Scheduled commissioning – 2012

Elektrownia Jaworzno III – new fluidized bed boiler

(biomass burning)

Status as of 31 March 2012:

Construction works in progress. General contractor:

Polimex-Mostostal


Construction works in progress. General contractor:

consortium Rafako and Omis

On 19 January the agreement was signed with the Ministry

of Economy (as intermediary institution for Operational

Programme Infrastructure and Environment 2007-2013)

concerning co-financing of the new unit in the amount of

PLN 40 M


Selection of the contractor of the new unit is underway

Elektrociepłownia Tychy – reconstruction of fluidized bed

boiler (biomass burning)

Capacity – 40 MWe Scheduled commissioning – end of 2012


construction of biomass type boiler:

construction and assembly works in progress,

contractor: Metso Power Oy

construction of biomass feeding installation:

design and construction-building works are in

progress, contractor: Mostostal Warszawa

construction of WR 40 boiler

design works are in progress, contractor: SEFAKO

Elektrownia Stalowa Wola – modernisation of K-10 boiler

(biomass burning)

Capacity – 20 MWe Scheduled commissioning – 2012


Construction works in progress. General contractor: Rafako

Implementation of investment program (2)

6


Project launch – 2010; scheduled commissioning – H1

2015

Elektrownia Stalowa Wola – new CCGT unit


General contractor selected – Abener Energia Update: On 26 April the agreement with the general contractor of the unit -

Abener Energia - was signed


Scheduled commissioning – H2 2015

Elektrociepłownia Katowice – new CCGT unit


Contractor selection is ongoing

Capacity – 40 MWe


Wind Farm – Wicko


The process of selection of the contractor is underway. Update: on 7 May the best offer was selected, submitted by consortium of

companies: Aldesa Nowa Energia and Aldesa Construcciones

Capacity – approx. 850 MWe


Elektrownia Blachownia – new gas unit


Activities are underway aimed at the establishment of a

special purpose vehicle and obtaining a permit for

concentration (approval of the European Commission on

the establishment of the joint undertaking)

Wind Farm – Marszewo

Capacity – 100 MWe Scheduled commissioning – 2014


On 19 January agreement with general contractor was

signed – consortium of companies: Iberdrola Engineering

and Construction Poland (leader) and Iberdrola Ingenieria

Y Construction, on the construction of Marszewo I and II

wind farm of 82 MW capacity

Organizational and legal procedures aimed at takeover of

the construction site by the contractor and commencement

of the construction works are underway

Implementation of investment program (3)

7

Scope – adjustment of six OP-650k type boilers to the

standards of lower emission of nitrogen oxides which will

be binding in Poland starting from 2018

Commencement of the works – July 2010; scheduled

completion – January 2016

Elektrownia Jaworzno III – modernisation of boilers


Optimisation works at unit No. 2 are completed. Works at

unit No. 4 are in progress.

General contractor: consortium Fortum Power and Heat

(consortium leader) and Zakłady Remontowe Energetyki

Katowice (consortium member)

Scope – adjustment of four OP-650k type boilers to the

standards of lower emission of nitrogen oxides which will

be binding in Poland starting from 2018

Commencement of the works – July 2010; scheduled

completion – January 2015

Elektrownia Łaziska – modernisation of boilers


Completion of the modernisation works and the works

connected with the construction of combustion gases

dentrification installation at Unit No. 12 – adjustment

operation is in progress

General contractor: STRABAG

Capacity – 910 MWe


Elektrownia Jaworzno III – new coal-fired unit


The process of selection of contractor and contract engineer

is underway

On 28 February, invitations to submit offers were sent,

including the final Terms of Reference to the tender

proceeding to select the Contractor. Invitations were sent to 5

bidders participating in the tender. Deadline for submission of

offers: 29 June this year

Capital expenditures

8

In Q1 2012, TAURON Group spent over PLN 0.5 bn for investment, about 81% of which were expenditures in the Generation and

Distribution lines of business. As compared to the corresponding period of 2011 the increase of CAPEX was about PLN 0.3 bn, mainly

in the Generation and Distribution segments

Strong CAPEX growth in Generation (by approx. PLN 0.13 bn) is due to the continued implementation of the investment projects

connected with capacity restoration (50 MW at EC Bielsko as well as 50 MW RES at Elektrownia Jaworzno – PLN 0.09 bn) as well as

other expenditures (including mainly NOx installations at Elektrownia Jaworzno and Łaziska as well as the biomass installation at K-10

boiler at ESW - approx. PLN 0.05 bn)

CAPEX increase in Distribution (by approx. PLN 0.1 bn) is due mainly to larger expenditures on modernisation and restoration of

existing grid assets

26 25

62

188 7

5

120

223

1

6

4

2

9

60

3

1

0

100

200

300

400

500

600

IQ 2011 IQ 2012

Mining Generation RES Distribution Sales Customer Service Heat Other

PLN M

231

510

120.7%

Customer

Service

SEGMENT

Supply

SEGMENT

Heat

SEGMENT

RES

SEGMENT

New reporting model

9

Mining

SEGMENT

RES Segment:

TAURON Ekoenergia

BELS INVESTMENT

MEGAWAT MARSZEWO

Lipniki

TAURON Ekoenergia GZE

Heat Segment:

TAURON Ciepło

EC Tychy

EC Nowa

Generation

SEGMENT

Other SEGMENT

Distribution

SEGMENT

Supply Segment: TAURON Sprzedaż

TAURON Sprzedaż GZE

TAURON Polska Energia

TAURON Czech Energy

Customer Service Segment: TAURON Obsługa Klienta

TAURON Obsługa Klienta GZE

Distribution Segment:

TAURON Dystrybucja

TAURON Dystrybucja GZE

TAURON Serwis GZE

Generation Segment:

TAURON Wytwarzanie

Other Segment :

Kopalnia Wapienia Czatkowice

PE-PKH

Mining Segment:

Południowy Koncern Węglowy

Q1

2011

Q1

2012

Change %

(Q1 2012/

Q1 2011)

Production of commercial coal

(million t) 1.15 1.21 + 5.2%

Electric energy generation (net production)

(TWh) 5.90 4.97 -15.8%

including: from renewable sources 0.23 0.30 30.4%

Heat Generation (PJ) 7.36 7.80 6%

Distribution (TWh) 9.89 12.70 28.4%

Electricity supply (TWh) 9.24 11.79 27.6%

Number of customers - Distribution 4,125 5,284 28.1%

Key operating data

10

Financial Results for Q1 2012

11

Profit share of minority shareholders

511

565

0

100

200

300

400

500

600

I kwartał 2011 I kwartał 2012

10.6%

TAURON Group’s EBIT [PLN M]

Q1 2011 Q1 2012

5 299

6 455

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000


21.8%

TAURON Group’s Revenue [PLN M]

Q1 2012

1,4% 3,3%

388 400

0

100

200

300

400

500


3.1%

TAURON Group’s net profit [PLN M]

Q1 2011 Q1 2012

3% 5%

36% 26%

5% 5%

38% 46%

10%

10% 1%

1% 9%

8% 1%

1%

-2% -3%

-200

0

200

400

600

800

1 000

1 200

Q 1 2011 Q 1 2012

Mining Generation RES Distribution Sales Customer Service Heat Other Not allocated/exclusions

TAURON Group’s EBITDA by segments [PLN M]; EBITDA structure

861 975

13.3

Q1 2011

Financial Results for Q1 2012 – EBITDA

EBIT

Amortisation

Increase in segment

Decrease in segment

Change in segment in %

EBITDA Margin

Change in EBITDA by segments [PLN M and %]; EBITDA margin by segments [%]

12

861

975

26,8 (53,6) 13,5

116,0 15,0 7,1 0,3 2,7 (13,3)

0

100

200

300

400

500

600

700

800

900

1 000

EBITDA I kwartał 2011

Wydobycie Wytwarzanie OZE Dystrybucja Sprzedaż Obsługa klienta

Ciepło Pozostałe Pozycje nieprzypisane / wyłączenia

EBITDA I kwartał 2012

511 565

PLN M 22.4% 17.3% 15.8% 16.2% 2.2% 80.4% -

16.2% 15.1%

9.8% 28.5%

124% -17% 34% 35% 109% 0% 17% 34%

EBITDA Customer Not allocated EBITDA

Q1 2011 Mining Generation RES Distribution Supply Service Heat Other items/

exclusions Q1 2012

13

Increase Decrease

Changes in cash flow level Cash flow – changes in Q1 2012

506 542

506

410

(529) (132) (969)

(31)

150 (12)

-101

542

254

(868)

649

-400

-200

0

200

400

600

800

1 000

1 200

1 400

1 600

PLN M

Group's debt level

14

Net financial debt (PLN M), net financial debt/EBITDA (x)

0.3x 0.01x -0.02x*

net financial debt / EBITDA

* in relation to EBITDA value for 2010

** in relation to EBITDA value for 2011

0.16x* 1.33x* 1.56x**

1 899 1 492 1 320 1 321

4 537 5 264

1 032 1 474 1 376

885 506 546

0

1 000

2 000

3 000

4 000

5 000

6 000

31.12.2009 31.12.2010 30.06.2011 30.09.2011 31.12.2011 31.03.2012

financial debt cash

30

145

164

145

74

147

129

88

73

95 108

138

121

0

20

40

60

80

100

120

140

160

180

Q 1

2009

Q 2

2009

Q 3

2009 Q 4 2009

Q 1

2010 Q 2

2010 Q 3 2010

Q 4 2010

Q 1 2011

Q 2 2011

Q 3

2011 Q 4 2011

Q 1 2012

Compensation due to termination

of Long-Term Contracts

15

Indexed advance payments under the Act on LTC Termination

Annual adjustments of these advance payments

Part of the final adjustment

-9.5%

Revenue due to

compensation consists of:

0.8%

4.5%

5.0%

4.0%

1.9%

4.2%

3.5%

1.4%

1.9%

XX% Share of LTC in quarterly revenue

484 438

2.0%

2.2%

415 -5.3%

Revenue due to compensation

2.5%

1.9%

16

Prime costs structure

Cost increase in Q1 2012 applies mainly to:

costs of employees' benefits – recognising of provision for severance payments for employees leaving the company due to implementation of labour costs reduction programs

external services, especially due to increased cost of distribution and repair services

Similar to Q1 2011, in Q1 2012, variable costs constituted approx. 46%, and fixed costs constituted 54% of the total costs

14% 12%

31% 27%

21% 24%

8% 6%

24% 29%

1% 1%

0

500

1 000

1 500

2 000

2 500

3 000

Q1 2011 Q1 2012

Amortisation and impairment Consumption of energy and materials Outsourced services

Taxes and fees Costs of employee benefits Other prime costs

PLN M

2,486 2,612

5.1%

Implementation of efficiency improvement

program

17

54

435

225 11

275

0

200

400

600

800

1 000

Wydobycie Wytwarzanie, Ciepło, OZE

Dystrybucja Sprzedaż oszczędności pozostałe do realizacji

planowane oszczędności 2010-

2012

PLN M Efficiency improvement program 2010-2012

cumulated OPEX savings

Mining Generation, Distribution Supply Other savings Planned

Heat, RES for implementation savings 2010-2012

PLN 1 bn

PLN 54 M (cum.);

including

PLN 6 M in 2012

PLN 435 M (cum.);

including

PLN 26 M in 2012

PLN 11 M (cum.);

including

PLN 1 M in 2012

PLN 225 M (cum.);

including

PLN 31 M in 2012

31/03/2012

Voluntary Redundancy Program – as of the end of Q1 2012, 1907 persons joined the program (since its launch), among which

employment contracts were terminated with 62 persons in 2012 (in total, since the program launch: 1739 persons). Savings

resulting from redundancies, decreased by costs incurred to gain savings, are included in the amounts presented in individual

segments

18

Key directions for development and growth

Fund raising

Group’s Value

Increase

Continued process of integration with GZE Group companies

Achievement of synergies due to integration of segments

Completing the first cost efficiency improvement program and

commencement of another one

Increased investment, particularly in the Generation segment

Obtaining of preferential funding from EBI/EBOiR for projects in

Distribution and Generation segments

Obtaining of preferential financing/ subsidies from the EU funds and

environmental funds (NFOŚiGW and WFOŚiGW)

Continued optimisation of the funding used

Thank You – Q&A

19

20

TAURON Polska Energia S.A.

ul. ks. Piotra Ściegiennego 3, 40-114 Katowice

tel: +48 32 774 27 06, fax +48 32 774 25 24

Investor Relations Section 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

mailto:[email protected]









Additional Information

21

BASE transactions for 2012

22

Average price of transactions concluded [PLN/MWh]: Volume [GWh]

Annual 202.61 100,796

Quarterly 199.14 16,741

Monthly 193.49 5,863

TOTAL 201.71 123,400

179

184

189

194

199

204

209

2011-01-01 2011-05-01 2011-08-29 2011-12-27 2012-04-25

Pri

ce [

PL

N/M

Wh

]

Prices of Base contracts concluded for 2012

Y-12 Q1-12 Q2-12 Q3-12 Q4-12

PEAK transactions for 2012

23


Annual 228.52 11,616

Quarterly 223.32 1,686

Monthly 219.47 1,208

TOTAL 227.17 14,510

205

210

215

220

225

230

235

2011-01-01 2011-05-01 2011-08-29 2011-12-27 2012-04-25

Pri

ce [

PL

N/M

Wh

]

Prices of Peak contracts concluded for 2012

Y-12 Q1-12 Q2-12 Q3-12 Q4-12


24


Annual 213.71 19,920

Quarterly 211.61 318

Monthly

TOTAL 213.68 20,238

208

210

212

214

216

218

220

222

2011-01-01 2011-05-01 2011-08-29 2011-12-27 2012-04-25

Pri

ce [

PL

N/M

Wh

]


Y-13 Q1-13 Q2-13 Q3-13 Q4-13

PEAK transactions for 2013

25


Annual 244.28 715

Quarterly 238.96 28

Monthly

TOTAL 244.08 743

232

234

236

238

240

242

244

246

248

250

2011-10-04 2012-02-01

Pri

ce [

PL

N/M

Wh

]

Prices of Peak contracts concluded for 2013

Y-13 Q1-13 Q2-13 Q3-13 Q4-13


26


Annual 221.65 2,015

Quarterly

Monthly

TOTAL 221.65 2,015

216

218

220

222

224

226

228

230

232

2011-06-26 2011-08-15 2011-10-04 2011-11-23 2012-01-12 2012-03-02 2012-04-21

Pri

ce [

PL

N/M

Wh

]


Y-14 Q1-14 Q2-14 Q3-14 Q4-14

Mining – key financial data

Change: Revenue EBITDA EBIT in segment (in PLN M )

27

284 307

22 48

- 4

23

- 50

0

50

100

150

200

250

300

350

Q1 2011 Q1 2012

* Volume of coal sales increased by 0.7% YoY, while production of commercial coal increased by 5.4%, which will result in growth of

sales in the subsequent months 28

Mining – EBIT bridge

-4.0

22.7

0.13

22.3

1.6

2.8

-5

0

5

10

15

20

25

Q1 2011 EBIT Coal sales volume Coal sale price Own cost of coal sale per unit

Result on other operating activity

Q1 2012 EBIT

PLN M

Generation from conventional sources – key

financial data

29

Change: Revenue EBITDA EBIT in segment (in PLN M)

1 538 1 469

308 254 174 121

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

Q1 2011 Q1 2012

30

Generation – EBIT bridge

174

121

60

48

19

(64) (67)

(41) (7)

0

20

40

60

80

100

120

140

160

180

200

Q1 2011 EBIT Energy sale volume

Energy sale price

Variable cost of energy per

unit

Revenue from LTC

compensation

Margin on other

operating activity

Restructuring costs

Other Q1 2012 EBIT

PLN M

Generation from renewable sources – key

financial data

31


52

67

40

54

34

43

0

10

20

30

40

50

60

70

Q1 2011 Q1 2012

32

RES – EBIT bridge

34

43

18,0 0,5

(3,3)

(4,4) (1,7)

0

10

20

30

40

50

60

Q1 2011 EBIT Supply volume - hydroelectric PP

Supply volume - wind farms

Sale price of energy and certificates

Amortization Other Q1 2012 EBIT

PLN M

Distribution – key financial data

33


1 190

1 562

329 445

167 231

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

Q1 2011 Q1 2012

Distribution – EBIT bridge

* include mainly fixed costs of the GZE distribution area 34

167

231

162

28 7

21

(31)

(52)

(72)

0

50

100

150

200

250

300

350

400

450

Q1 2012 EBIT Distribution services sale

volume

Distribution services sale

price

Connection charges

Other revenues related to

distribution

Unit cost of energy to cover

balancing differences

Amortization Other revenues / costs *

EBIT Q1 2012

PLN M

Sales – key financial data

35


3 388

4 505

86 101 85 96

0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

4 500

5 000

Q1 2011 Q1 2012

36

Sales – EBIT bridge

85

96

41

52

34 1

(117)

0

20

40

60

80

100

120

140

160

180

200

Q1 2011 EBIT Electricity sale volume Electricity sale prices Electricity purchase price

Carbon credit purchase price / substitution fee

Other revenues / costs Q1 2012 EBIT

PLN M

Heat – key financial data

37


319 342

76 77 58 59

0

50

100

150

200

250

300

350

400

Q1 2011 Q1 2012

38

Heat – EBIT bridge

58 60

2 1

6 3

2

2

(14)

0

10

20

30

40

50

60

70

80

Q1 2011 EBIT Heat distribution

volume

Transmission fee

Energy sale price

Margin on certificates

Furnace blast sale price

Unit costs of generation

Other Q1 2012 EBIT

PLN M

Customer Service – key financial data

39


78 84

6 14

6 10

0

10

20

30

40

50

60

70

80

90

Q1 2011 Q1 2012

Other – key financial data

40


111 112

8 11 6 9

0

20

40

60

80

100

120

Q1 2011 Q1 2012

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