TAURON Polska Energia S.A. · GPW:TPE
TAURON Polska Energia — FY2015 Earnings Presentation
43 slides from TAURON Polska Energia's earnings presentation, Mar 10, 2016
Slide 1: TAURON Group's 2015 Financial Results
TAURON Group’s 2015 Financial Results March 10, 2016
Slide 2: 2015 key financial parameters
2015 key financial parameters TAURON Group’s 2015 results [PLN m] Sales revenue 18 375 -1.1% yoy EBITDA 3 523 -4.6% yoy Net profit (1 804) - CAPEX 4 175 35.1% yoy Net debt/EBITDA 2.20x up 0.40 yoy Key segments’ 2015 results [PLN m] Distribution Supply Generation Mining Segment’s revenue 6 450 15 984
Slide 3: Q4 2015 key financial parameters
Q4 2015 key financial parameters TAURON Group’s Q4 2015 results [PLN m] Sales revenue 4 741 -2.4% yoy EBITDA 682 -11.3% yoy Net profit (2 883) - CAPEX 1 397 29.4% yoy Net debt/EBITDA 2.20x up 0.40 yoy Key segments’ Q4 2015 results [PLN m] Distribution Supply Generation Mining Segment’s revenue 1 657
Slide 4: Highlights summary
Highlights summary January 16 Expressing of initial interest in acquiring all or a part of the Brzeszcze Coal Mine (KWK Brzeszcze) assets 1July 10 Signature of an amendment to the agreement with Bank Gospodarstwa Krajowego on increasing the value of the bond issue program by PLN 700m. Current total
Slide 5: Macroeconomic and market situation
Macroeconomic and market situation Growth of manufacturing production sold and electricity consumption (change yoy)* 7% 5% 56 6% 6.0% 6.0% 5.6% 5.0% 5.3% 5.0% 4.2% 55 5% 4.5% 4.9% 3.7% 3.5% 3.7% 4% 3.6% 3.7% 3.8% 3.9% 3.6% 3.5% 54 4% 3.1% 3.9% 4.3% 3.2% 3.2% 3.3% 3.3% 53 3% 1.8% 3% 52 1.2% 2% 2.3% 5
Slide 6: 2015 key operating data
2015 key operating data Mg m Hard coal production and sales [tons m] Electricity [TWh] and heat [PJ] generation TWh PJ 6,0 18 14 16.64 4.88 5.09 16 15.37 1,59 12 5,0 14 1.79 -10.9% 1.33 10 1.36 -2.2% 4,0 12 10 8 3,0 5.40 13.41 8 6 4.91 15.04 11.51 13.58 2,0 3.76 6 3.52 4 4 1,0 6.8% -9.1% 2 2 10.8% -
Slide 7: Q4 2015 key operating data
Q4 2015 key operating data Mg m Hard coal production and sales [tons m] Electricity [TWh] and heat [PJ] generation TWh PJ 5 5 4,25 4,11 4 -8.7% 0,42 4 0,46 0.0% 3 3 4,64 2 3,83 3,92 2 3,64 1 1 8.1% 2.8% 5.2% -15.5% 0 0 Q4 2014 Q4 2015 intra-Group hard coal sales hard coal sales outside the commercia
Slide 8: 2015 key financial data
2015 key financial data Sales revenue [PLN m] Net profit attributable to the holding company’s shareholders [PLN m] 20 000 18 577 18 375 1 500 18 000 2 258 2 091 1 000 16 000 -7.4% 1 181 1 258* 500 14 000 5 817 6 185 12 000 6.3% 0 10 000 -500 8 000 6 000 -1 807 -1 000 10 503 10 099 4 000 -1 500 2 00
Slide 9: Q4 2015 key financial data
Q4 2015 key financial data Sales revenue [PLN m] PLN m Net profit attributable to the holding company’s PLN m shareholders [PLN m] 500 132 1.1% 192* 0 -500 6.2% -1 000 -2 884 -1 500 -2 000 -8.0% -2 500 -3 000 Q4 2014 Q4 2015 Q4 2014 Q4 2015 electricity distribution and commercial other revenue servi
Slide 10: 2015 EBITDA
2015 EBITDA PLN m -4.6% 4 500 19,9% 0,8% 14,0% 36,8% 2,4% 10,8% - 19,2% 4 000 200 3 500 3 695 -89 -38 -228 -6 -10 3 523 3 000 2 500 2 000 1 500 1 000 500 0 2014 EBITDA Mining Generation Distribution Supply Other Unassigned items 2015 EBITDA Segment's growth Segment's decline EBITDA margin Most impor
Slide 11: Q4 2015 EBITDA
Q4 2015 EBITDA -11,3% mln zł 1 200 1 000 15,8% 9,8% 13,0% 32,1% -1,7% 0,9% - 14,4% 138 800 18 5 769 -68 600 -178 -2 682 400 200 0 Q4 2014 EBITDA Mining Generation Distribution Supply Other Unassigned items Q4 2015 EBITDA Segment's growth Segment's decline EBITDA margin Most important factors affecti
Slide 12: Debt and financing
Debt and financing Maturity of TAURON Group’s debt drawn as of December 31, 2015 4 000 3 153 Net debt/EBITDA=2.20x 3 000 2 020 2 000 1 000 716 339 339 288 191 165 187 211 130 130 115 100 - 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 credits, loans and leases obligacje bonds
Slide 13: Debt and financing
Debt and financing Maturity of TAURON Group’s debt drawn as of February 29, 2015 3 000 1 000 2 589 826 2 500 800 2 020 600 2 000 1 500 400 1 000 898 200 735 25 24 27 25 39 74 23 500 339 - 165 288 281 261 200 marzec 2Q 3Q 4Q 1Q 2Q 3Q 4Q 187 130 115 100 March - 2016 2016 2016 2016 2016 2017 2017 2017
Slide 14: CAPEX – projects' work progress
CAPEX – projects’ work progress Planned Capacity Capacity Work progress Investment project completion (MWe) (MWt) (percentage) data Construction of the hard coal-fired unit at Jaworzno 910 - 14 2019 III Power Plant Construction of the CCGT unit at Stalowa Wola 450 240 85 2018/2019* Combined Heat and
Slide 15: CAPEX – by segment
CAPEX – by segment CAPEX by segment [PLN m] Key investment projects executed in 2015: Mining: 4 175 construction of the 800 m level at Janina coal mine 35,1% (PLN 67m) 105 purchase of an additional longwall roof support and furnishing set for Janina coal mine (PLN 71m) 3 090 Generation: 111
Slide 16: Efficiency improvement program
Efficiency improvement program Savings realized Savings planned Segment Progress % Main initiatives in 2013 – 2015 in 2013-2015 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 b
Slide 17: Outlook for 2016
Outlook for 2016 Obszar Positive factors Negative factors RAB increase by approx. PLN 720m (including WACC decline from z 7.197 percent to 5.675 AMI) percent Distribution stable volume of electricity delivered drop of the average distribution service rate by efficiency improvement programs
Slide 18: Key challenges
Key challenges TAURON Group – key challenges Strategy and business model Financial stability Update of TAURON Group’s corporate Bond issue on the domestic market, targeted strategy primarily to financial institutions Revision of investment projects / capex Unification of the net debt/EBITDA
Slide 19: TAURON Group's 2016-2018 Efficiency Improvement Program
TAURON Group’s 2016-2018 Efficiency Improvement Program
Slide 20: TAURON Group's past Efficiency Improvement Programs
TAURON Group’s past Efficiency Improvement Programs Savings exceeded the amount initially announced at the Program’s launch by approx. PLN 300m PLN m 2013-2015 Efficiency Improvement Program’s 2010-2012 Efficiency Improvement Program’s performance performance Mining Generation, Heat Distribution Oth
Slide 21: New Program's background
New Program’s background Over the last few years the deterioration of the general condition of both the entire energy sector as well as the individual utilities can be observed MARKET AND REGULATORY TRENDS tightening of the European Union’s climate policy – increasing CO2, emission allowances purc
Slide 22: 2016-2018 Efficiency Improvement Program
2016-2018 Efficiency Improvement Program Distribution of the planned savings under the new efficiency improvement program Savings will be distributed uniformly in 2016-2018 Distribution, Generation Approx. 80% Ultimate impact on EBIT will be achieved and Mining in 2018 Almost 60% Distribution an
Slide 23: 2016-2018 Efficiency Improvement Program
2016-2018 Efficiency Improvement Program SAVINGS RANGE PLN m 1 400 116 1 303 401 1 200 1 000 786 800 600 400 200 0 Reorganizacja procesów Reorganization of basic Podniesienie efektywności Asset utilization Poprawa Purchasingefektywności policy Razem Total oszczędności savings podstawowych wykorzysta
Slide 24: 2016-2018 Efficiency Improvement Program
2016-2018 Efficiency Improvement Program TAURON GROUP IS PLANNING TO IMPLEMENT ANOTHER EFFICIENCY IMPROVEMENT PLAN, MAINLY BY OPTIMIZING OPERATING EXPENSES AND CAPEX SPENDING Mining (PLN 255m) Distribution (PLN 390m) Reorganization, employment restructuring Employment restructuring, reduction of
Slide 25: 2016-2018 Efficiency Improvement Program
2016-2018 Efficiency Improvement Program SAVINGS PER LINE OF BUSINESS PLN m 1 400 291 1 303 1 200 390 1 000 800 367 600 400 255 200 [6,6] 0 Wydobycie Mining Wytwarzanie Generation Dystrybucja Distribution Pozostałe Other Grupa TAURONTAURON [4,3] Group [2,5] [2,3] 25
Slide 26: 2016-2018 Efficiency Improvement Program
2016-2018 Efficiency Improvement Program SAVINGS PER YEAR PLN m 1 400 1 303 465 1 200 1 000 432 800 600 406 400 200 [6,6] 0 [4,3] 2016 2017 2018 2016-2018 [2,5] [2,3] 26
Slide 27: 2016-2018 Efficiency Improvement Program
2016-2018 Efficiency Improvement Program EFFICIENCY IMPROVEMENT PROGRAM HAS BEEN PLANNED, FORMALLY PASSED AND WILL BE SUBJECT TO THE ONGOING MONITORING TAURON Group’s 2016-2018 Efficiency Improvement Program was passed based on the resolution of the Management Board of TAURON Polska Energia Savi
Slide 28: Thank you – Q & A
Thank you – Q & A Communications and PR Department : Investor Relations Office Marcin Lauer marcin.lauer@tauron.pl tel. + 48 32 774 27 06 Paweł Gaworzyński pawel.gaworzynski@tauron.pl tel. + 48 32 774 25 34 Magdalena Wilczek magdalena.wilczek@tauron.pl tel. + 48 32 774 25 38 28
Slide 29: Legal disclaimer
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
Slide 30: Mining
Mining 100 2015 financial data [PLN m] 2015 EBIT bridge [PLN m] 49 50 0 -29 -7 -50 104 -79 -100 -24 -104 -47 -150 -39 -200 -31 EBIT I-XII 2014 Jan-Dec 2014 Wolumen Hard coal Cena Coal sales Own Koszt cost of Różnice Inventory Różnice Inventory of setting Rozwiązanie CostKoszt Dissolving of Pozostałe
Slide 31: Generation
Generation 2015 financial data [PLN m] 2015 EBIT bridge [PLN m] 5 376 4 964 138 87 112 72 100 89 793 -161 755 -20 72 -143 -97 - 3 566 RAT Odpis and WNRAT i WN write-down -3 477 2014 2015 2014 EBIT TAMEX (ZW Nowa and Electricity sales volume Generation unit Margin on electricity Operating Capacity CO
Slide 32: Distribution
Distribution 2015 financial data [PLN m] 2015 EBIT bridge [PLN m] 13.4% 6 450 6 075 2 172 2 372 1 209 1 372 2014 2015 2014 Price Volume Cost of grid Cost of grid Purchase of OPEX Tax on Grid assets Other factors 2015 EBIT : losses -: losses - DSO/TSO grid assets depreciation EBIT Sales revenue EBITD
Slide 33: Distribution – volumes
Distribution – volumes 2014 electricity distribution [GWh] 2015 electricity distribution [GWh] Group A Group A Group B Group B 45 630 47 004 Group C2 Group C2 Group C1 + R + D Group C1 + R + D Group G Group G Q4 2014 electricity distribution [GWh] Q4 2015 electricity distribution [GWh] Group A Group
Slide 34: Supply
Supply 2015 EBIT bridge [PLN m] 2015 financial data [PLN m] -36,5% 15 984 43 15 277 582 5 -60 -112 -85 -23 370 19 -183 608 582 380 370 2014 2015 Sales revenue EBITDA EBIT 2014 EBIT 2014 RetailCeny energii PropertyCeny rights’ Obowiązek praw Property rights’PM Property Obowiązek PM Commercial rights
Slide 35: Supply – volumes
Supply – volumes 2014 retail electricity supply [GWh]* 2015 retail electricity supply [GWh] 4 135 3 691 6 840 8 620 Grupa A Grupa A Group A Group A Grupa GroupBB Grupa Group B 9 484 36 105 GroupC2+C1+R+D Grupa C2+C1+R+D 9 738 35 914 Grupa C2+C1+R+D Group G Group C2+C1+R+D Grupa G Other supply** Grup
Slide 36: 2015 prime costs structure
2015 prime costs structure 31.5% 10 291 13 534 PLN m 100% 2% 1% Increase of costs in 2015 was primarily due to: Variable costs 32% Variable costs 90% 2 561 impairment charges (shown jointly with the depreciation) due 26% 2 795 19% to completed impairment charges test related to the loss on 80% 27%
Slide 37: Q4 2015 prime costs structure
Q4 2015 prime costs structure 112.7% 2 999 6 380 PLN m Increase of costs in Q4 2015 was due to the completed 100% 2% 1% impairment charges tests and recognizing the impairment charges costs 14% Variable 767 related to the carrying amount of the Generation segment’s Variable costs 28% 90% 12% 901 222
Slide 38: Electricity market price trends
Electricity market price trends Electricity 2015 2016 (until February18, 2016) 2016/2015 (until February18, 2016) Platforms: TGE, TFS, GFI, GPW-POEE Price (PLN/MWh) Volume (GWh) Price (PLN/MWh) Volume (GWh) Price % Volume % Forward BASE (Y+Q+M) 167.51 201 870 165.98 163 068 -0.9% -19.2% Forward PEAK
Slide 39: 2016 BASE contracts
2016 BASE contracts PLN/MWh Volume Price Average Average price Volume [GWh] [PLN/MWh] Total 166.47 147 923 TGE 166.12 115 729 Including non TGE 167.70 32 193 Average electricity price that takes into account 2016 one year BASE and PEAK contracts: PLN 171.06/MWh, total 2016 BASE and PEAK volume: 164
Slide 40: 2017 BASE contracts
2017 BASE contracts PLN/MWh Volume Price Average Average price Volume [GWh] [PLN/MWh] Total 162.24 23 389 TGE 160.81 14 550 Including non TGE 164.59 8 839 Average electricity price that takes into account 2017 one year BASE and PEAK contracts: PLN 164.51/MWh, total 2017 BASE and PEAK volume: 24 519
Slide 41: 2018 BASE contracts
2018 BASE contracts PLN/MWh Volume Price Average Average price Volume [GWh] [PLN/MWh] Total 159.34 1 121 TGE 158.49 464 Including non TGE 159.93 657 Average electricity price that takes into account 2018 one year BASE and PEAK contracts: PLN 160.17/MWh, total 2018 BASE and PEAK volume: 1 136 GWh 41
Slide 42: TAURON's coverage by analysts
TAURON’s coverage by analysts Institution Analyst Institution Analyst BAML Denis Deruskhin ING Securities Maria Mickiewicz J.P. Morgan Cazenove Michał Kuzawiński DB Securities Tomasz Krukowski Pekao Investment Banking Łukasz Jakubowski Dom Maklerski BOŚ Michał Stalmach Raiffeisen Centrobank Teresa S
Slide 43: Thank you for your attention
Thank you for your attention 43