TAURON Group results 1H 2011en.tauron.pl/SiteCollectionDocuments/TAURON 1H 2011... · 2012-09-06 · This presentation is for information purposes only and should not be treated as

TAURON Group results – 1H 2011

18 August 2011

1

Disclaimer

This presentation is for information purposes only and should not be treated as an investment-related advice.

This presentation has been prepared by TAURON Polska Energia S.A. (“the Company”).

Neither the Company nor its subsidiaries shall be held responsible for any damage resulting from use of this

presentation or a part thereof or from its contents or in any other manner in connection with this presentation.

The recipients of this presentation are solely responsible for their analyses and market evaluation as well as

evaluation of the Company‟s market position and possible results of the Company in the future. made based

on information contained herein.

This presentation includes forward-looking statements such as “planned”, “anticipated”, “estimated” and other

similar expressions (including their negations). These expressions involve known and unknown risks,

uncertainties and other factors that may result in the actual results, financial condition, actions and

achievements of the Company and the industry‟s results being materially different from any future results,

actions or achievements included in the forward-looking statements.

Neither the Company nor any of its subsidiaries are obliged to update this presentation or provide any

additional information to the recipients of this presentation.

Key events

2

3 January Registration of two companies: TAURON Sprzedaż and TAURON Obsługa Klienta in

the National Court Register

11 March Signing a set of agreements concerning new steam and gas-fired unit at Stalowa Wola:

agreement for operation of CHP Elektrociepłownia Stalowa Wola, agreement for gas

supply and agreement for electricity supply

23 March Sale by the State Treasury of 11.9% of the Company‟s shares at PLN 6.15 each –

lowering the share of the State Treasury to 30%; increasing the share of Polish and

international financial investors in the Company‟s share capital

13 April Signing an agreement with KGHM Polska Miedź on choosing gas as fuel for the

Elektrownia Blachownia project

28 April The Management Board and the Supervisory Board of the Company adopted "The

Corporate Strategy of the TAURON Group for 2011-2015 with a perspective until 2020”,

which is an update of the 2008 strategy

6 May The Ordinary General Meeting approved financial statements and adopted a resolution

concerning distribution of net profit for 2010. The OGM decided to pay dividends in the

total sum of PLN 262.9 million (PLN 0.15 per share) which took place on 20 July

1 July Fitch rating agency affirmed the rating for the Company in the domestic and foreign

currency at BBB level with a stable outlook

Platforms:

TGE, TFS, GFI,

GPW-POEE

Forward BASE (Y+Q+M)

Forward PEAK (Y+Q+M)

Forward (weighted av.)

SPOT (TGE + GPW-POEE)

Total weighted average

Price

PLN/MWh

Volume

GWh

Price

PLN/MWh

Volume

GWh

Price

%

Volume

%

186.26 37 034 194.78 100 524 +4.6% +171.4%

208.22 4 432 218.70 14 230 +5.0% +221.1%

188.62 41 466 197.74 114 754 +4.8% +176.7%

191.86 13 061 199.30 19 592 +3.9% +50%

189.40 54 527 197.97 134 346 +4.5% +146.4%

Electric energy market price trends

Electric Energy

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

December

2011

Estimated

market

price

Substitution

fee for 2011

RES (green) 279.13 274.92

Coal cogeneration (red) 21.04 29.58

Gas cogeneration (yellow)

122.50 127.15

Methane (violet) 55.35 59.16

2010 2011 2011/2010

3

CO2 market analysts’ survey Price

Average in 3Q – 2011 14.00

Average in 4Q – 2011 15.00

Average expected price EUA DEC-11 for

the end of 201115.00

Group restructuring – 1H 2011

Ownership structure rearrangement

Sale of assets unrelated to the core operation

(recreational facilities); scheduled completion – 4Q

2011

Sale of stock/shares of 13 companies from outside the

TAURON Group„s value chain; scheduled completion –

2012

Coordination and integration of medical business in

PŚiPZ ELVITA company; scheduled completion – 4Q

2011

Process of integration of the Group‟s asset covering:

distribution companies

generation companies

heat generation companies

Scheduled completion – 3Q 2011

Business model implementation

4

Fin

ish

ed

In p

rog

res

s

Registration of TAURON Sprzedaż (Supply) and

TAURON Obsługa Klienta (Customer Service) in the

National Company Register (KRS) which completed

the process of restructuring the Group in the areas of

supply and customer service

Sale of fixed assets unrelated to the core operation for the

total sum of PLN 6.2 million, including:

leisure businesses (recreational facilities; dwellings)

stock/shares of 8 companies with equity holding of the

TAURON Group companies

merger of 2 companies from the field of electric network

renovation

Capacity – 50 MWe / 182 MWt

Scheduled completion – mid 2013

ZEC Bielsko-Biała – new heating unit


Scheduled completion – end of 2015 (new unit) and end of

2012 (boiler reconstruction)

Tychy – new CHP unit and fluidized bed boiler reconstruction

(biomass burning)

Implementation of investment programme


Scheduled completion – 2012

Jaworzno III – new fluidized bed boiler (biomass burning)

Status as of 30 June 2011:

Investment carried out according to schedule – construction

works under way. General contractor: Polimex-Mostostal

15 June – boiler drum installation completed


Investment carried out according to schedule – construction

works under way. General contractor: Rafako and Omis

2 June – boiler drum installation completed


29 March – agreement signed with Metso Power for boiler

reconstruction

16 May – agreement signed for construction of a biomass

feeding unit with the consortium of: Mostostal Warszawa,

P.M.U.E. Remak, P.R.B. Erbud

27 June – agreement signed with Energopomiar for

engineering supervision for investments related to rebuilding

and modernisation of generation units at EC Tychy S.A.

(stage I)

Wind farm – Marszewo

Capacity – 100 MWe



Preparation of documentation necessary for a tender for the

general contractor

Stalowa Wola – K-10 boiler modernisation (biomass

burning)

Capacity – 20 MWe



Investment carried out according to schedule –

construction design completed, preparatory construction

work in progress. General contractor: Rafako

5

Implementation of investment programme (2)


Project commencement – 2010; scheduled completion –

2014

Stalowa Wola – new gas and steam unit


General contractor selection in progress

6



Katowice – new gas and steam unit


Preparation for contractor selection in progress

Capacity – 40 MWe


Wind Farm – Wicko


Contractor selection in progress

20 June – first contractor selection procedure was

cancelled

21 June – new contractor selection procedure was opened

Capacity – about 850 MWe


Elektrownia Blachownia – new gas unit


Special purpose vehicle is being established

Implementation of investment programme (3)

7

Scope – adaptation of six OP-650k type boilers to lower

nitrogen oxides emission standards which will be binding

from 2018

Project commencement – July 2010, scheduled completion

– January 2016

Jaworzno III – modernization of boilers


Modernization works and construction works connected

with nitrogen removal system construction at unit No. 2

have been completed

General contractor: consortium of Fortum Power and Heat

(leader) and Zakłady Remontowe Energetyki Katowice

(member)

Scope – adaptation of four OP-650k type boilers to lower

nitrogen oxides emission standards which will be binding

from 2018

Project commencement – July 2010, scheduled completion

– January 2015

Łaziska – modernization of boilers


Design work related to the execution of the contract for

supply of nitrogen removal system in progress

General contractor: STRABAG

Capacity – 910 MWe


Jaworzno III – new coal-fired unit


Selection of the contractor and engineer in progress

Application for construction permit has been submitted

44 51

153

32613

17291

369

18

11

10

14

0

100

200

300

400

500

600

700

800

900

(PLN million)

530

789

48.8%

1H 2010 1H 2011

Mining Generation Renewable sources Distribution Supply Other

Investment expenditure

8

In 1H 2011 the Group invested approx. PLN 789 million, of which almost 90% were Generation and Distribution expenditures

A dynamic increase in expenditure on Generation results from an increase in expenditure on new generation units (from PLN 51 to

122 million) and other expenditures (including mainly NOx units and adaptation of the existing boilers to biomass burning)

The increase of expenditures on Distribution resulted from the increase of expenditures on modernisation of network assets

(approx. PLN 70 million). The increase in expenditure on new connections amounts to approx. PLN 8 million

2Q

2010

2Q

2011

Change

(dynamics)1H 2010 1H 2011

Change

(dynamics)

Production of coal (million tons) 0.86 1.44 67.9% 2.22 2.60 17.0%

Electricity generation

(net production) (TWh)4.90 5.31 8.3% 10.21 11.21 9.8%

Including RES (TWh) 0.30 0.23 -23.2% 0.53 0.46 -13.1%

Heat Generation (PJ) 2.41 2.04 -15.4% 10.52 9.40 -10.6%

Distribution (TWh) 9.11 9.41 3.3% 18.76 19.42 3.5%

Supply (TWh) 8.27 9.34 12.8% 16.90 18.57 10.2%

Number of clients – Distribution

(thousands)4 118 4 128 0.3% 4 118 4 128 0.3%

Key operational data

9

Financial results for 1H 2011

The above data is presented in a comparable form:

Due to the change of electric energy supply model, the value of revenues from obligatory supply generated by public trade in 1H 2010 was treated

as internal supply in the Group and was consolidated

7 260

8 086

2 245

0

2 000

4 000

6 000

8 000

10 000

12 000

I półrocze 2010 I półrocze 2011

11.4%

42.3%

TAURON Group revenues (PLN million)

10 331

1H 2010 1H 2011

11.4%

42.3%


10 331

1H 2010 1H 2011

783

938

0

200

400

600

800

1 000


TAURON Group EBIT (PLN million)

19.8%

1H 2010 1H 2011

6%

43% 40%

4%

37%41%

12%

8%3%

3%

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800


EBITDA by segments (PLN million); EBITDA structure

4%

1 4701 635

11.2%

4%

1H 2010 1H 2011


10

1 470

641

1 635

15.9%*

3.3%*

0

200

400

600

800


TAURON Group net profit (PLN million)

1H 2010

27.1%573

728

1H 2011* Share of minority shareholders in net profit

Financial results for 2Q 2011


Due to the change of electric energy supply model, the value of revenues from obligatory supply generated by public trade in 2Q 2010 was treated

as internal supply in the Group and was consolidated

3 466

3 941

1 091

0

1 000

2 000

3 000

4 000

5 000

6 000

II kwartał 2010 II kwartał 2011

45.2%


13.7%

5 032

Q2 2010 Q2 2011

307

427

0

100

200

300

400

500


TAURON Group EBIT (PLN million)

39.2%

Q2 2010 Q2 2011

213

340

0

100

200

300

400


TAURON Group net profit (PLN million)

59.3%

Q2 2010 Q2 2011

11

10%

48%39%

5%4%

42%43%

10%

7%1%

1%

-200

0

200

400

600

800

1 000


EBITDA by segments (PLN million); EBITDA structure

-1%

19.5%

Q2 2010 Q2 2011


775

648

Financial results for 1H 2011 - EBITDA

EBIT

Depreciation

Increase in segment

Decrease in segment

Change in the segment in %

EBITDA margin

Changes in EBITDA by segments (PLN million and %), EBITDA margin per segment (%)

* In 1H 2010 in Supply segment the valuation of RES (green) energy certificates is recognized in the amount of approx. PLN 32.8 million. This did not occur

in 1H 2011.


Due to the change of electric energy supply model, the value of revenues from obligatory supply generated by public trade in 1H 2010 was treated as

internal supply in the Group and was consolidated.

1 470

1 63537.0 22.6 15.2

115.0

(23.3)

1.7

(3.3)

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

EBITDAI półrocze

2010

Wydobycie Wytwarzanie OZE Dystrybucja Sprzedaż Pozostałe Pozycje nieprzypisane / wyłączenia

EBITDAI półrocze

2011

PLN million

783

938

4% -14%21%29% -4%

Generation Distribution Supply Other Unassigned

items/

Exclusions

EBITDA

1H 2010

EBITDA

1H 2011

12

61%

13.9%20.6%14.9% 2.2%28.7%73.0% -

20.2%15.8%

20,2%

MiningMining RES

783

938

25 30

(77)

91

54 32

0

100

200

300

400

500

600

700

800

900

1 000

EBITI półrocze 2010

Wolumen sprzedaży

energii

Ceny sprzedaży energii

Ceny zakupu energii

Wolumen i cena usług

dystrybucyjnych

Zwiększenie wydobycia

Pozostałe EBITI półrocze 2011

PLN million

ENERGY SUPPLY

VOLUME

ENERGY SUPPLY PRICES

ENERGY PURCHASE

PRICES

VOLUME AND PRICE OF

DISTRIBUTION SERVICES

OUTPUT INCREASE

OTHER

EBIT change vs. operational factors (PLN million); EBIT margin (%)

Increase in segment

Decrease in segment

EBIT

Financial results for 1H 2011 - EBIT

EBIT

margin

13


Due to the change of electric energy supply model, the value of revenues from obligatory supply generated by public trade in 1H 2010 was treated as

internal supply in the Group and was consolidated

10.8%9.1%

11.6%

EBIT1H 2010

EBIT 1H 2011

14

Cash flow level changes

Increase

Decrease

Cash – changes in 1H 2010 vs. 1H 2011

1 472 1 376

915

698

24 76

(495)

(54)(933)

(236)

(89)

1 063 (909)

(249)

0

500

1 000

1 500

2 000

2 500

3 000

3 500

PLN million

Group‟s debt

1 899

1 492 1 403 1 320

1 032

1 474

850

1 376

0

500

1 000

1 500

2 000

31.12.2009 31.12.2010 31.03.2011 30.06.2011

zadłużenie finansowe środki pieniężne

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

0.3x 0.01x 0.2x*

Zadłużenie finansowe netto / EBITDA

A decrease in debt as of 30 June 2011 in relation to the introduction of central finance management in the

Group, which reduced the need for external financing (cash surplus)

* In relation to EBITDA for 2010

-0.02x*

15

Financial debt Cash Net financial debt/EBITDA

30

145

164

145

74

147

129

88

73

95

0

20

40

60

80

100

120

140

160

180

I kwartał

2009

II kwartał

2009

III kwartał

2009

IV kwartał

2009

I kwartał

2010

II kwartał

2010

III kwartał

2010

IV kwartał

2010

I kwartał

2011

II kwartał

2011

Przychody z tytułu rekompensat

Compensation for termination of long-term

agreements

-9,5%

0,8% 4,5% 5,0% 4,0% 1,9% 4,2% 3,5% 1,4% 1,9%

XX% PPA share in quarterly revenue

484 438

16

2,0%

Revenue from compensation

1Q 2009 2Q 2009 3Q 2009 4Q 2009 1Q 2010 2Q 2010 3Q 2010 4Q 2010 1Q 2011 2Q 2011

Indexed advanced payments under PPA Termination Act

Annual adjustments of these advance payments

Part of the final adjustment

Revenue from

compensation

includes:

15% 15%

27% 28%

23%22%

6%8%

27%25%

1%1%

0

1 000

2 000

3 000

4 000

5 000

6 000


Amortyzacja i odpisy aktualiz. Zużycie materiałów i energii Usługi obce

Podatki i opłaty Koszty świadczeń pracowniczych Pozostałe koszty rodzajowe

mln zł

4 4964 796

6.7%

17

Cost increase in H1 2011 applies mainly to:

use of consumables and energy, including mainly coal consumption caused by the increase in electricity generation

increase of taxes and other charges, including environmental fees related to the increase in electricity generation

In 1H 2011 variable costs constituted 45% and fixed costs 55% of total costs. In 1H 2010 variable costs constituted 41% and fixed costs 59%

Prime costs structure

Depreciation and impairment

Tax and other payments

Use of consumables and energy

Employee benefits costs

Outsourced services

Other prime costs

1H 2010 1H 2011

Reduced heat losses

Reduced employment costs

Reduced energy purchase costs

Reduced lateral development costs

Increased production efficiency

Increased by-product utilization

Reduced expenditure related to emission of pollution

As of the end of 2Q 2011, 1172 persons participated in the

programme (since its implementation), out of which 499

terminated their employment contracts in 2011 (total since the

programme implementation: 1057 persons). Savings resulting

from reduced employment have been included in the amounts

shown for individual segments.

Purchase costs optimization

Improvement of management and operating processes

Optimization of balance sheet differences

Change of consumers settlement system

Optimization of mail service costs

Efficiency improvement programmeTAURON Group implements cost efficiency improvement plan

The savings programme for the years 2010-2012 which assumes operational costs reduction by

approx. PLN 1 billion has been implemented according to the plan

GENERATION – result in 2Q 2011: – PLN 61 million;

cumulated result since programme implementation – PLN 310

million

RES + OTHER – result in 2Q 2011: – PLN 1 million;


million

MINING – result in 2Q 2011: – PLN 4 million;


million

VOLUNTARY REDUNDANCY PROGRAMME

SUPPLY – result in 2Q 2011: – PLN 0 million;


million

DISTRIBUTION – result in 2Q 2011: – PLN 46 million;


million

18

Implementation of the efficiency improvement

programme

19

35

310 8

133

8

506

0

200

400

600

800

1 000

Wydobycie Wytwarzanie OZE + Pozostałe Dystrybucja Sprzedaż oszczędności pozostałe do

realizacji

planowane oszczędności 2010-

2012

PLN million

Efficiency improvement programme 2010-2012cumulated savings OPEX

Mining Generation RES+Other Distribution Supply Savings Savings plan

to be achieved 2010-2012

PLN 1 bn

30.06.2011

Continuation of costs efficiency improvement programme

Achieving synergies from integration of areas

Implementing liquidity management policy in the Group

Participation in the sale of Zespół Elektrowni Wodnych Niedzica by

the Minister of State Treasury

Obtaining financing from the European Investment Bank for

execution of the projects of construction of the new co-generation

unit at ZEC Bielsko-Biała and biomass burning boiler in Jaworzno

and projects in the distribution area

Obtaining financing for potential acquisition opportunities

Obtaining preferential financing/subsidies from EU funds and

environmental funds (NFOŚiGW and WFOŚiGW)

20

Key directions of development and growth in 2011

Increased

Group’s value

Acquisition

opportunities

Obtaining

financing

Thank you – Q&A

21

TAURON Polska Energia S.A., ul. Lwowska 23, 40-389 Katowice

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

Investor Relations Section

Marcin Lauer

[email protected]

tel. (32) 774 27 06

Paweł Gaworzyński

[email protected]

tel. (32) 774 25 34

Magdalena Wilczek

[email protected]

tel. (32) 774 25 38

22

mailto:[email protected]









Additional information

23

BASE 2011 transactions

24

Transaction average price [PLN/MWh]: Volume [GWh]

Yearly 193.48 75 914

Quarterly 198.76 17 327

Monthly 198.82 7 283

TOTAL 194.78 100 524

175

180

185

190

195

200

205

210

215

220

2009-02-16 2009-06-06 2009-09-24 2010-01-12 2010-05-02 2010-08-20 2010-12-08 2011-03-28 2011-07-16

Pri

ce

[PL

N/M

Wh

]

Base 2011 contract prices

Y-11 Q1-11 Q2-11 Q3-11 Q4-11

PEAK 2011 transactions

25

Transaction average price [PLN/MWh]: Volume [GWh]

Yearly 218.94 12 172

Quarterly 219.54 1 063

Monthly 214.82 995

TOTAL 218.70 14 230

200

205

210

215

220

225

230

235

2010-03-13 2010-06-21 2010-09-29 2011-01-07 2011-04-17 2011-07-26

Pri

ce [

PL

N/M

Wh

]

PEAK 2011 contract prices

Y-11 Q1-11 Q2-11 Q3-11 Q4-11

BASE 2012 transactions

26

Average price [PLN/MWh] 202.74 Contracts [MW] 6 185

Prices min-max [PLN/MWh] 192 – 210 Volume [GWh] 54 329Last price [PLN/MWh] 203.35

202,74

192,00

210,00

0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

190

193

196

199

202

205

208

211

2010-02-24 2010-04-29 2010-07-02 2010-09-04 2010-11-07 2011-01-10 2011-03-15 2011-05-18 2011-07-21

GWhPLN/MWh

Yearly contracts: BASE Y-12

Wolumen [GWh] Ceny notowań Y-12 Średnia cenaVolume [GWh] Y-12 transaction price Average price

PEAK 2012 transactions

27

Average price [PLN/MWh] 228.65 Contracts [MW] 1 047

Prices min-max [PLN/MWh] 224.65 – 232.50 Volume [GWh] 3 973Last price [PLN/MWh] 228.80

228,65

224,65

232,50

0

200

400

600

800

1 000

1 200

1 400

224

225

226

227

228

229

230

231

232

233

2011-01-20 2011-02-19 2011-03-21 2011-04-20 2011-05-20 2011-06-19 2011-07-19

GWhPLN/MWhYearly contracts: PEAK Y-12

Wolumen [GWh] Ceny notowań Y-12 Średnia cenaVolume [GWh] Y-12 transaction price Average price

Mining – key financial data

Change: Revenue EBITDA EBIT in the segment (in PLN million)

520

652

6097

545

0

100

200

300

400

500

600

700


28

220

368

-9

76

-38

49

-100

-50

0

50

100

150

200

250

300

350

400


1H 2010 1H 2011

2Q 2010 2Q 2011

Generation from conventional sources – key

financial data

2 712

3 180

632 655

361 377

0

500

1 000

1 500

2 000

2 500

3 000

3 500


29


1 296

1 499

310 303176 168

0

200

400

600

800

1 000

1 200

1 400

1 600

II kwartał 2010 II kwartał 20111H 2010 1H 2011 2Q 2010 2Q 2011

Generation from renewable sources – key

financial data

77

93

53

68

43

56

0

10

20

30

40

50

60

70

80

90

100


30


4541

33

2829

22

0

5

10

15

20

25

30

35

40

45

50

II kwartał 2010 II kwartał 20111H 2010 1H 2011 2Q 2010 2Q 2011

Distribution – key financial data

2 2292 310

549664

227338

0

500

1 000

1 500

2 000

2 500


31


1 083 1 121

270336

111170

0

200

400

600

800

1 000

1 200

II kwartał 2010 II kwartał 20111H 20111H 2010 2Q 2010 2Q 2011

Supply – key financial data

32

Change: Revenue EBITDA EBIT in the segment (in PLN million) EBIT and EBITDA – comparable data*

2 746

3 312

68 5166 480

500

1 000

1 500

2 000

2 500

3 000

3 500


5 840

6 784

169 146166 1410

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000


5 840

6 784

136 146133 1410

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000


* Made to make comparable, taking into account EBIT for 1H 2010, evaluation of ownership rights from RES (PLN -32,8 million)

1H 2011 1H 20111H 2010 1H 2010

2Q 2010 2Q 2011

Other – key financial data

316 318

42 4418 22

0

50

100

150

200

250

300

350


33


106 109

4 6

-9 -5-20

0

20

40

60

80

100

120


1H 20111H 2010

2Q 2010 2Q 2011