Letter from the Management Board of the TAURON Polska Energia S.A.

Dear Stakeholders,

On behalf of the TAURON Group, we have the honor to present this Integrated Report of the TAURON Group describing our financial and operational performance and key events of the past year.

In 2019, the TAURON Group ran its business in a favorable macroeconomic environment. The Polish economy performed better than most of its European Union counterparts, with a relatively rapid increase in domestic demand acting as the primary growth driver. Disadvantageous trends started to prevail in the second half of the year.

In 2019, the Group generated robust financial results. Sales revenues reached PLN 20.5 billion, up 13% from 2018. The improvement in revenues resulted chiefly from the market situation, specifically from the increase in wholesale electricity prices. EBITDA stood at PLN 3.6 billion, up 3% year-on-year. The net result was largely affected by impairment losses on assets in the Mining and Generation segments.

Worth emphasizing is the fact that last year we intensified efforts that are expected to result in a significant increase in electricity generation from zero-emission sources, such as wind and sun, in the following years.

Our endeavors to transform the Group, defined as TAURON’s Green Turn, are based on strategic directions updated last year. By 2025, we plan to invest in onshore wind farms and photovoltaic farms and start the construction of offshore wind farms. These investments and the commissioning of the 910 MW unit in Jaworzno, compliant with the stringent environmental protection standards, will enable the Group to reduce its carbon intensity by over 20% by 2025 and over 50% by 2030.

The acquisition of five wind farms with a total capacity of 180 MW may serve as evidence for the efficient pursuit of our strategic objectives. This investment enabled us to double our capacity installed in wind technology, ranking us second among Polish utility groups in terms of generation capacity from wind sources. Of key significance is the fact that these new assets will contribute over PLN 100 million to EBITDA annually.

Moreover, last December, we signed an agreement for the acquisition of a photovoltaic farm construction project in Choszczno with a planned generation capacity of 6 MW. Let me also assure you that we keep reviewing on an ongoing basis wind and solar project acquisition opportunities appearing on the market and continue to develop our own environmentally friendly projects, especially in areas owned by the TAURON Group.

Also worth highlighting is TAURON’s role as an active participant in the process of transformation of the national power sector toward the development of zero-emission sources. In 2019, the Group connected a record number of over 30,000 micro-installations to its distribution network, with a total capacity of 206 MW. This is almost four times the number achieved in 2018.

In addition to capital expenditures associated with the implementation of TAURON’s Green Turn, we were also involved in efforts aimed at improving the reliability of our distribution network and the construction of modern energy sources. The Group’s total capital expenditures in 2019 reached PLN 4.1 billion.

In 2019, we set out to optimize our investment portfolio containing mining and heating assets. As part of this undertaking, bidders interested in the acquisition of these assets conducted a due diligence of TAURON Ciepło.

Traditionally, the TAURON Group was also very active in research, development and innovation activities.

We launched 18 projects in all our lines of business. At the end of last year, we had 67 projects underway in 4 research and innovation portfolios. We obtained external funding for the execution of some of these projects.

It is worth highlighting that certain measurable results of these activities have already seen the light of day: owing to the introduction of new sorbents in the electricity generation process, TAURON will reduce by over PLN 100 million its capital expenditures related to the adjustment of the 460 MW block at the Łagisza Power Plant to what is known as the BAT (best available techniques) conclusions.

Continuing our previous years’ efforts, also in 2019 we embarked on a number of initiatives to secure funding required for sustainable development. In this context, successfully completed capacity market auctions come to mind immediately as they will generate a total of PLN 5.5 billion in additional revenues for the TAURON Group in 2021-2037.

Secondly, we signed a PLN 750 million loan agreement with Intesa Sanpaolo to finance expenditures related to renewable energy projects, investments in distribution networks and refinancing of existing debt.

Thirdly, under the financial framework 2014-2020, we obtained PLN 195 million of EU funds for the construction and modernization of the medium and low voltage distribution network. These efforts provided an additional guarantee of the Group’s financial stability, as was soon confirmed by Fitch with a BBB rating and a stable outlook.

Despite numerous challenges facing the Polish power sector, we are confident that our comprehensive transformation and relentless execution of projects under TAURON’s Green Turn will provide a favorable stimulus to the Group’s continued growth. We are sure that the outstanding professional competence and experience of our employees will translate into significant strengthening of our key lines of business. We are at the avant-garde of changes in the Polish power sector. At the same time, our social dialog initiatives contribute to the establishment of partnership-based long-term relationships with all stakeholder groups.

 

Respectfully yours,
The Management Board
of the TAURON Polska Energia S.A.

 

Respectfully yours,
The Management Board of the TAURON Polska Energia S.A.

Search results: