32
TAURON Group’s Q1-Q3 2014 financial results 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
2 * Net profit attributable to the parent company’s shareholders
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
Segment’s revenue 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
3 * Net profit attributable to the parent company’s shareholders
Highlights
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
TAURON
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
46
47
48
49
50
51
52
53
54
55
56
0%
1%
2%
3%
4%
5%
Q1 2
011
Q2 2
011
Q3 2
011
Q4 2
011
Q1 2
012
Q2 2
012
Q3 2
012
Q4 2
012
Q1 2
013
Q2 2
013
Q3 2
013
Q4 2
013
Q1 2
014
Q2 2
014
Q3 2
014
Q4 2
014
Poland’s GDP growth rate* and manufacturing PMI (quarterly average)
GDP growth rate Manufacturing PMI2
+0.3 p.p.
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
Q1 2
011
Q2 2
011
Q3 2
011
Q4 2
011
Q1 2
012
Q2 2
012
Q3 2
012
Q4 2
012
Q1 2
013
Q2 2
013
Q3 2
013
Q4 2
013
Q1 2
014
Q2 2
014
Q3 2
014
Q4 2
014
Increase of manufacturing production sold and electricity consumption (yoy change)*
increase of production sold change of domestic electricity consumption
+0.8 p.p.
forecast increase of production sold
Macroeconomic and market situation
62.63 58.95
42.29 40.57
5.73 7.17
9.09 8.38
0
20
40
60
80
100
120
Q1-Q3 2013 Q1-Q3 2014
other
renewable energysources
lignite fired thermalpower plants
hard coal firedthermal power plants
115.1 119.7
-3.9%
Yearly BASE contract prices on the Polish Power Exchange (TGE)
* Source: GUS, IBnGR , PSE
-5.9%
-4.1%
+25.1%
-7.9%
Structure of electricity generation in Poland [TWh]
PMI GDP
TWh
52.3%
35.3%
4.8%
7.6%
51.2%
35.2%
6.2%
7.3%
Average electricity sales prices on the competitive market (acc. to ERO):
2011: PLN 198.30/MWh
2012: PLN 201.36/MWh
2013: PLN 181.55/MWh
5
GDP growth rate forecast
Average price
[PLN/MWh]
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
13.37
9.94
0.91
1.33
10.59
8.78
0
2
4
6
8
10
12
0
2
4
6
8
10
12
14
electricity electricity - RES heat
14.28
11.27
3 572 35.74
5 324
5 369
5 200
5 250
5 300
5 350
5 400
0
5
10
15
20
25
30
35
electricity distribution number of customers
2.88 2.53
1.41
1.00
4.26 3.99
0,0
1,0
2,0
3,0
4,0
intra-Group hard coal sales hard coal sales outside the Groupcommercial hard coal production
Q1-Q3 2014 key operating data
Q1-Q3 2013 Q1-Q3 2014
Electricity [TWh] and heat [PJ] generation
Q1-Q3 2013 Q1-Q3 2014
Hard coal production and sales [tons m]
Q1-Q3 2013 Q1-Q3 2014
Electricity distribution [TWh] and number of customers [‘000]
30.71 28.39
0
7
14
21
28
electricity supply
-7.6 %
Q1-Q3 2013 Q1-Q3 2014
Electricity supply [TWh]
-12.2%
-29.1%
-6.3%
-25.7%
46.2%
-17.1%
0,1% 45 thou.
Mg m
customers TWh
TWh PJ
TWh
6
11.74 11.86
5 324
5 369
5 200
5 250
5 300
5 350
5 400
0
2
4
6
8
10
12
electricity distribution number of customers
4.22 3.56
0.31
0.42
1.16
0.95
0
1
0
1
2
3
4
5
electricity electricity - RES heat
4.53
3.98
0.83 0.93
0.50 0.42
1.26 1.44
0,0
1,0
intra-Group hard coal sales hard coal sales outside the Grouphard coal commercial production
Q3 2014 key operating data
Q3 2013 Q3 2014
Electricity [TWh] and heat [PJ] generation
Q3 2013 Q3 2014
Hard coal production and sales [tons m]
Q3 2013 Q3 2014
Electricity distribution [TWh] and number of customers [‘000]
9.85 9.13
0
7
electricity supply
-7.3%
Q3 2013 Q3 2014
Electricity supply [TWh]
12.0%
-16.0%
14.3% -15.6%
35.5%
-17.6%
1.0% 45 thou.
Mg m
customers TWh
TWh PJ
TWh
7
1 264
1 053
0
200
400
600
800
1 000
1 200
1 400
8 349 7 765
4 166 4 327
1 699 1 511
0
2 000
4 000
6 000
8 000
10 000
12 000
14 000
16 000
I-III kw. 2013 I-III kw. 2014
electricity distribution and commercial services other revenue
14 214 13 603
Q1-Q3 2014 key financial data
Q1-Q3 2013 Q1-Q3 2014
Sales revenue [PLN m]
Q1-Q3 2013 Q1-Q3 2014
Net profit [PLN m]
-16.7% -7.0%
3.9%
-11.1%
3 001
+237 +42 +19 3 298
2 915
0
500
1 000
1 500
2 000
2 500
3 000
3 500
Q1-Q3 2013 EBITDAreported
Asset impairmentcharge
Inventory impairmentcharge
LTC (PPA) revenue(final settlement)
Q1-Q3 2013 EBITDAcomparable
Q1-Q3 2014 EBITDAreported
/comparable
No one-off events occurred in Q1-Q3 2014
Q1-Q3 2013 EBITDA vs Q1-Q3 2014 EBITDA [PLN m]
-11.6%
8
6% 3% 4% 7%
3% 5% 5% 6%
57% 61%
25% 17% 2% 3%
0.5% 0.8%
-2% -3%
-500
0
500
1 000
1 500
2 000
2 500
3 000
3 500
Q1-Q3 2013 Q1-Q3 2014
Mining Generation RESHeat Distribution SupplyCustomer service Other Unassigned items
2 915 3 001 mln -2.8%
Q1-Q3 2013 EBITDA vs Q1-Q3 2014 EBITDA structure
947 +19 966 921
0
500
1 000
1 500
Q3 2013 EBITDA reported LTC (PPA) compensationrevenue (final settlement)
Q3 2014 EBITDA comparable Q3 2014 EBITDA reported/comparable
No one-off events occurred in Q3 2014
372
319
0
50
100
150
200
250
300
350
400
2 692 2 529
1 347 1 400
468 448
0
1 000
2 000
3 000
4 000
5 000
6 000
Q3 2013 Q3 2014
electricity distribution and commercial services other revenue
4 5 4 377
Q3 2014 key financial data
Q3 2013 Q3 2014
Sales revenue [PLN m]
Q3 2013 Q3 2014
Net profit [PLN m]
-14.3% -6.1%
3.9%
-10.6%
Q3 2013 EBITDA vs Q3 2014 EBITDA [PLN m] Q3 2013 EBITDA vs Q3 2014 EBITDA structure [PLN m]
-4.7%
9
3% 6% 9% 8% 2% 5%
3% 2%
63% 66%
16% 12% 4% 3%
0.8% 1.2%
-2% -3%
-200
0
200
400
600
800
1 000
1 200
Q3 2013 Q3 2014
Mining Generation RESHeat Distribution SupplyCustomer service Other Unassigned items
921 947 -2.8%
1 713 1 547
1 287 1 368
83 59 17 77
15
-15 -85 -246
9
21.1% 9.6% 8.7% 65.9% 18.8% 39.3% 4.5% 19.0% 11.3% - 21.4%
0
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
Q1-Q3 2013EBITDA
Mining Generation RES Heat Distribution Supply Customerservice
Other Unassigneditems
Q1-Q3 2014EBITDA
EBIT Depreciation Growth per segment Drop per segment EBITDA margin
2 915
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
PLN m -2.8%
3 001
10
Q3 2014 EBITDA
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
524 464
423 456
25 24 12 3
-16 -16 -42 -7 -10
20.9% 16.2% 8.8% 64.3% 6.7% 41.1% 3.0% 20.1% 14.1% - 21.0%
0
200
400
600
800
1 000
1 200
1 400
Q3 2013EBITDA
Mining Generation RES Heat Distribution Supply Customerservice
Other Unassigneditems
Q3 EBITDA2014
EBIT Depreciation Growth per segment
921
PLN m -2.8%
947
11
Q1-Q3 2014 prime costs structure
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
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
20%
19%
23%
21%
24%
27%
7%
6%
25%
26%
1%
1%
0% 20% 40% 60% 80% 100% 120%
Q1-Q32013
Q1-Q32014
Depreciation Consumption of materials and energy External services Taxes and fees Employee benefit costs Other prime costs
Prime costs structure PLN m
7 292
7 773
-6.2%
Fixed costs 62%
Variable costs 37% Fixed costs 63%
Variable costs 38%
1 373 1 501 1 944 467 1 895
1 532 1 786 1 837 580 1 925
Q3 2014 prime costs structure
Q3 2014 costs comparable to Q3 2013 costs as a result of:
declining costs of consumption of materials and energy
rising costs of:
depreciation
external services
employee benefit costs – implementation of the remuneration
agreement in Q3 2014
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%
Most important reasons for the changed cost structure:
lower fuel cost
lower cost of CO2 emission allowances’ provision
higher cost of energy certificates of origin
13
18%
19%
23%
20%
26%
27%
7%
7%
24%
25%
2%
2%
0% 20% 40% 60% 80% 100% 120%
Q32013
Q32014
Depreciation Consumption of materials and energy External services Taxes and fees Employee benefit cost Other prime costs
Prime costs structure PLN m
2 440
2 441
0.0%
Fixed costs 60%
Variable costs 36% Fixed costs 64%
Variable costs 40%
456 489 655 179 619
432 553 645 179 593
Debt and financing
Structure of TAURON Group’s debt [PLN m]
Financing available toTAURON Group [PLN m]
TAURON Group’s debt maturity [PLN m]
financial debt (debt due to investment loans, loans, leases and bonds)
as of September 30, 2014: PLN 6 552m
average weighted debt maturity as of September 30, 2014:
including all BGK bonds – 43 months
EUR debt constitutes 0.04% of the total debt
structure of debt by interest rate:
19% – fixed interest rate, i.e. PLN 1 226m
81% – floating interest rate, i.e. PLN 5 326m, including:
- unsecured amount – PLN 1 886m
- secured amount – PLN 3 440m
6 552
3 445
14
86
1 453
3 153
150 158 240 240 240 189 182 161 100 100 100 -
500
1 000
1 500
2 000
2 500
3 000
3 500
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
obligacje kredyty, pożyczki i leasingibonds
5 198 79%
1 226 19%
60 1%
68 1%
obligacje
kredyty z EBI
pożyczkipreferencyjne zNFOŚiGW/WFOSiGW
pozostałe kredyty,pożyczki i leasingi
bonds
EIB loans
National/Regional
Environment Protection
and Water
Management Fund
loans on preferential
terms
other credits, loans
and leases
2 750 80%
100 3%
295 8%
300 9%
obligacje obejmowaneprzez konsorcjumbanków
obligacje BGK
kredyt EBI
cashpooling
EIB loans
bonds underwritten by
the consortium of
banks
BGK bonds
Net debt / EBITDA:
1.73x
credits, loans and leases
CAPEX – key projects’ work progress
Investment project
Capaci
ty
(MWe)
Capac
ity
(MWt)
Project status Work progress Planned
completion date
Construction of the hard coal-fired unit
at Jaworzno III Power Plant 910 -
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
Construction of the CCGT unit at
Stalowa Wola Combined Heat and
Power Plant
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 co-
generation 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
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
66% 2016
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
85% 2015
Construction of the CCGT unit at
Łagisza Power Plant 413 266
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
1% 2018
Construction of the 800m level at
Janina coal mine - -
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 14% 2019
Construction of Grzegorz shaft at
Sobieski coal mine - -
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% 2022
15
CAPEX – by segment
CAPEX by segment [PLN m]
2 368
2 010
* CAPEX does not include PLN 330m of capital costs including PLN 310m spent to purchase TAURON Mining shares
Main investment projects completed in Q1-
Q3 2014:
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)
16
173 125
403
235
439
80
116
225
1 192
1 286
46
59
Q1-Q3 2013 Q1-Q3 2014Mining Generation RES Heat Distribution Supply and other
-15.1%
Segment Savings realized
in 2013 and in Q1-Q3 2014
Savings planned in
2013-2015 Progress % Main initiatives
Distribution PLN 272m PLN 416m 65%
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
Generation
(including RES) PLN 279m PLN 387m 72%
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
Heat PLN 35m PLN 33m 107%
Employment restructuring
Compressed air losses reduction
Asset restructuring
External services’ costs optimization
Procurement policy optimization
Mining PLN 24m PLN 28m 85%
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
Other segments PLN 29m Employment restructuring, reduction of external services’ costs
Total PLN 639m PLN 864m 74%
OPEX reduction program
17
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
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
tel. + 48 32 774 27 06
Paweł Gaworzyński
tel. + 48 32 774 25 34
Magdalena Wilczek
tel. + 48 32 774 25 38
19
1 093
871
168 83 89
5
-100
100
300
500
700
900
1 100
Q1-Q3 2013 Q1-Q3 2014
Sales revenue EBITDA EBIT
89
5
-3
138
-183
-35 -150
-100
-50
0
50
100
Q1-Q3 2013 EBIT Hard coal salesvolume
Hard coal sales price Own cost of hard coalsold
Other factors Q1-Q3 2014 EBIT
Mining
Q1-Q3 2014 financial data [PLN m] Q1-Q3 2014 EBIT bridge [PLN m]
344 341
31 55
4 29
0
100
200
300
400
Q3 2013 Q3 2014
Sales revenue EBITDA EBIT
Q3 2014 financial data [PLN m] Q3 2014 EBIT bridge [PLN m]
20
4
29
5
28
-6
1
0
5
10
15
20
25
30
35
Q3 2013 EBIT Hard coal salesvolume
Hard coal sales price Own cost of hard coalsold
Other factors Q3 2013 EBIT
-94.3%
+570.9%
-24
-44
21
29
19 3
-34
-12
-46 -100
-80
-60
-40
-20
0
EBITIII kw. 2013
Cenasprzedażyenergii el.
Wolumensprzedażyenergii el.
Jednostkowykoszt zm.energii el.
Marża naobrocie energią
el.
Koszty CO2 Odpisaktualizującynależności ztyt. KDT (3Q
2013)
Pozostałeczynniki
EBITIII kw. 2014
-254
-154
-176
237
10
34 116 16
-137
-350
-300
-250
-200
-150
-100
-50
0
Q1-Q3 2013EBIT
Generationassets
impairmentcharge
(Q2 2013)
Electricity salesprice
Electricity salesvolume
Variable unitelectricity cost
Margin onelectricity
trading
CO2 costs Other factors Q1-Q3 2014EBIT
Generation (conventional sources)
3 340
2 305
117 200
-254 -154 -500
0
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
Q1-Q3 2013 Q1-Q3 2014
Sales revenue EBITDA EBIT
Q1-Q3 2014 financial data [PLN m]
1 069
832
89 73
-24 -44 -200
0
200
400
600
800
1 000
1 200
Q3 2013 Q3 2014
Sales revenue EBITDA EBIT
Q3 2014 financial data [PLN m] Q3 2014 EBIT bridge [PLN m]
21
-84.7%
Q1-Q3 2014 EBIT bridge [PLN m]
+39.3%
Electricity
sales price
Q3
2013
EBIT
Q3 2014
EBIT Electricity
sales volume
Variable
unit
electricity
cost
Margin on
electricity
trading
CO2
costs
LTC (PPA)
receivables
impairment
charge (Q3
2013
Other
factors
57
82 32
28
37
- 2
- 1
- 7
- 33
- 27
0
20
40
60
80
100
120
140
160
Q1-Q3 2013EBIT
Electricitysales volumehydroelectricpower plants
Electricitysales volumewind farms
Property rightssales volumehydroelectricpower plants
Property rightssales volumewind farms
Property rightssales price
Electricitysales price
Depreciation Other Q1-Q4 2014EBIT
Renewable Energy Sources (RES)
129
216
84
142
57
82
0
50
100
150
200
250
Q1-Q3 2013 Q1-Q3 2014
Sales revenue EBITDA EBIT
+44.8%
Q3 2014 EBIT bridge [PLN m]
Q1-Q3 2014 financial data [PLN m]
Q1-Q3 2014 EBIT bridge [PLN m]
36
71
22
46
13
26
0
10
20
30
40
50
60
70
80
Q3 2013 Q3 2014
Sales revenue EBITDA EBIT
Q3 2014 financial data [PLN m]
+99.1%
22
13
26 9
2 6
7
11
- 11
- 13
0
10
20
30
40
50
60
EBITIII kw. 2013
Wolumensprzedaży
energiiel. wodne
Wolumensprzedaży
energiiel.wiatrowe
Wolumensprzedaży PM
el. wodne
Wolumensprzedaży PM
el.wiatrowe
Cenasprzedaży PM
Amortyzacja Pozostałeczynniki
EBITIII kw. 2014
Q3 2013
EBIT
Q3 2014
EBIT
Electricity
sales volume
wind farms
Electricity
sales volume
hydroelectric
power plants
Property
rights sales
volume
hydroelectric
power plants
Property
rights sales
volume
wind farms
Property
rights
sales
price
Depreciation Other
factors
1
-21
2
- 3
2
-8
-8
-7
-30
-20
-10
0
10
Q3 2013 EBIT Electricity salesvolume
Electricity salesprice
Variable unitgeneration costs
CO2 costs Depreciation Other factors Q3 2014 EBIT
76 71
33 11
8
18
2
- 8
- 27 - 20
- 22
0
20
40
60
80
100
120
Q1-Q3 2013EBIT
Red and yellowproperty rights
impairmentcharge (H1
2013)
Heat supply anddistribution
volume
Electricity salesvolume
Electricity salesprice
Heat sales price Margin oncertificates
Otheroperations
balance
Depreciation Other Q1-Q3 2014EBIT
Heat
926 967
165 182
76 71
0
200
400
600
800
1 000
Q1-Q3 2013 Q1-Q3 2014
Sales revenue EBITDA EBIT
Q3 2014 EBIT bridge [PLN m]
Q1-Q3 2014 financial data [PLN m] Q1-Q3 2014 EBIT bridge [PLN m]
Q3 2014 financial data [PLN m]
242 249
32 17
1
-21 -50
0
50
100
150
200
250
300
Q3 2013 Q3 2014
Sales revenue EBITDA EBIT
23
-6.5%
Distribution
4 451 4 529
1 701 1 778
1 024 1 071
0
1 000
2 000
3 000
4 000
Q1-Q3 2013 Q1-Q3 2014
Sales revenue EBITDA EBIT
1 024 1 071
64
147
8 36
-170 -31 -8
0
200
400
600
800
1 000
1 200
1 400
Q1-Q3 2013 EBIT Distributionservice price
Balancingdifference
DSO/TSOservices purchase
OPEX Depreciation Other operations Other Q1-Q3 2014 EBIT
+4.5%
Q1-Q3 2014 financial data [PLN m] Q1-Q3 2014 EBIT bridge [PLN m]
1 440 1 480
597 608
368 371
0
400
800
1 200
1 600
Q3 2013 Q3 2014
Sales revenue EBITDA EBIT
Q3 2014 financial data [PLN m]
368 371 20 13
41
-53 -12 -6
0
100
200
300
400
500
Q3 2013 EBIT Distribution serviceprice
Distribution servicevolume
Cost of grid losses- price
DSO/TSO servicespurchase
Connection fees Other factors Q3 2014 EBIT
Q3 2014 EBIT bridge [PLN m]
+0.7%
24
Distribution – volumes
10 392
11 427
1 985
3 013
7 260
Group A
Group B
Group C2
Group C1+R+D
Group G
Q1-Q3 2014 electricity distribution [GWh]
3 596
3 851
654
941
2 269
Group A
Group B
Group C2
Group C1+R+D
Group G
34 077
11 311
Q3 2014 electricity distribution [GWh]
10 236
11 090
1 946
3 078
7 430
Group A
Group B
Group C2
Group C1+R+D
Group G
Q1-Q3 2013 electricity distribution [GWh]
3 529
3 705
626
934
2 333
Group A
Group B
Group C2
Group C1+R+D
Group G
33 778
11 127
Q3 2013 electricity distribution [GWh]
Data related to the distribution of electricity to end users 25
142
105 4
-12
29
-5 -13
-40
0
20
40
60
80
100
120
140
160
180
Q3 2013 EBIT Electricity salesvolume
Electricity price Price of green,violet and whiteproperty rights
Increased greenand violet property
rights obligation
Red and yellowproperty rights
obligation
Otherrevenue/costs
Q3 2014 EBIT
721
479
61
-51
-152 -44
-80
23
0
100
200
300
400
500
600
700
800
Q1-Q3 2013 EBIT Electricity salesvolume
Electricity price Price of green,violet and whiteproperty rights
Increased greenand violet property
rights obligation
Red and yellowproperty rights
obligation
Otherrevenue/costs
Q1-Q3 2014 EBIT
4 308
3 692
151 110 142 105
0
1 000
2 000
3 000
4 000
5 000
Q3 2013 Q3 2014Sales revenue EBITDA EBIT
Supply
13 301
11 267
747 501 721 479
0
2 000
4 000
6 000
8 000
10 000
12 000
14 000
Q1-Q3 2013 Q1-Q3 2014Sales revenue EBITDA EBIT
-33.6%
Q3 2014 EBIT bridge [PLN m]
Q1-Q3 2014 financial data [PLN m] Q1-Q3 2014 EBIT bridge [PLN m]
Q3 2014 financial data [PLN m]
-26.1%
26
7 356
7 706
4 408
7 356
3 657
Grupa A
Grupa B
Grupa C2+C1+R+D
Grupa G
Sprzedaż pozostała**
Q1-Q3 2013 electricity supply* [GWh]
Group A
Group B
Group C2+C1+R+D
Group G
Other supply**
Supply – volumes
27
30 483
* 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
6 497
7 676 4 094
7 134
2 717
Grupa A
Grupa B
Grupa C2+C1+R+D
Grupa G
Sprzedaż pozostała**
Q1-Q3 2014 electricity supply* [GWh]
Group A
Group B
Group C2+C1+R+D
Group G
Other supply**
28 118
2 530
2 621 1 306
2 311
1 027
Grupa A
Grupa B
Grupa C2+C1+R+D
Grupa G
Sprzedaż pozostała**
Q3 2013 electricity supply* [GWh]
Group A
Group B
Group C2+C1+R+D
Group G
Other supply**
9 795
2 380
2 557
1 222
2 225
671
Grupa A
Grupa B
Grupa C2+C1+R+D
Grupa G
Sprzedaż pozostała**
Q3 2014 electricity supply* [GWh]
Group A
Group B
Group C2+C1+R+D
Group G
Other supply**
9 055
33
19
11
7
2
-1
-32
0
10
20
30
40
50
60
Q3 2013 EBIT Revenue of CustomerService SharedServices Center
Revenue ofAccounting Shared
Services Center andHR Shared Services
Center
Revenue of IT SharedServices Center
Costs of servicesprovided
Other factors Q3 2014 EBIT
375
456
72 87 60 56
0
50
100
150
200
250
300
350
400
450
500
Q1-Q3 2013 Q1-Q3 2014
Sales revenue EBITDA EBIT
60 56 11
39
33
6
-92
0
20
40
60
80
100
120
140
160
Q1-Q3 2013 EBIT Revenue of CustomerService SharedServices Center
Revenues ofAccounting Shared
Services Center andHR Shared Services
Center
Revenue of IT SharedServices Center
Costs of servicesprovided
Other factors Q1-Q3 2014 EBIT
Customer service
-5.8%
Q1-Q3 2014 financial data [PLN m] Q1-Q3 2014 EBIT bridge [PLN m]
Q3 2014 financial data [PLN m] Q3 2014 EBIT bridge [PLN m]
-41.0%
140
155
38 31 33
19
0
30
60
90
120
150
180
Q3 2013 Q3 2014
Sales revenue EBITDA EBIT
28
Electricity market price trends
* Sources: Point Carbon, TAURON 29
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)
CO2 market analysts’ survey* 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%)
Average 2014 EUA price forecast by
TAURON 6.0 – 6.5 EUR/t Methane (violet) 59.48 63.26 (1.1%)
2015 BASE contracts
30
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
Average price
[PLN/MWh]
Volume
[GWh]
Total 167.03 126 004
including TGE 167.13 94 599
non TGE 166.74 31 405
Trading volume Price Average
price
PLN/MWh
2016 BASE contracts
31
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
Average price
[PLN/MWh]
Volume
[GWh]
Total 175.39 20 774
including TGE 175.76 13 562
non TGE 174.69 7 212
Trading volume Average price Price
PLN/MWh
TAURON's coverage by analysts
Institution Analyst
DB Securities Tomasz Krukowski
Dom Maklerski mBanku Kamil Kliszcz
Dom Maklerski Banku Handlowego Piotr Dzięciołowski
Dom Maklerski BZ WBK Paweł Puchalski
Dom Maklerski PKO BP Stanisław Ozga
J.P. Morgan Cazenove Michał Kuzawiński
Erste Group Tomasz Duda
Espirito Santo Investment Poland Maria Mickiewicz
Goldman Sachs Fred Barasi
HSBC Dmytro Konovalov
ING Securities Milena Olszewska
Institution Analyst
Ipopema Securities Piotr Zielonka
Raiffeisen Centrobank Teresa Schinwald
Renaissance Capital Vladimir Sklyar
Societe Generale Bartłomiej Kubicki
UBS Investment Research Michał Potyra
Patrick Hummel
Tomasz Walkowicz
UniCredit CAIB Flawiusz Pawluk
WOOD & Company Bram Buring
DM BOŚ Andrzej Bernatowicz
32
