The year 2017 was very successful for the Energa Group. In conditions of very strong competition, the Group achieved better results in all Business Lines. The production, distribution and sale of electricity was higher than last year. The Group recorded higher revenues, net profit and EBITDA.
Stable situation in the Distribution Business Line - achieved due to an increase in the average distribution rate, higher volume of distributed electricity and an increase in the distribution margin and a favorable sales structure of services. The increase in revenues was partially offset by higher costs of property tax and OPEX expenses.
Growth in the Sales Business Line - was achieved despite the drop in the margin on the sale of electricity and gas. The result of this Business Line improved the dissolution of impairment losses for disputable receivables and the release of some provisions for administrative and court proceedings established in December 2016.
Growth in the Generation Business Line - resulting mainly from higher revenues from the sale of electricity, property rights and regulatory system services. Good results were also affected by the increase in electricity sales prices by the Ostrołęka Power Plant.
The increase in revenue of the Distribution Business Line by PLN 249 million (6% y / y) was influenced mainly by: an increase in the average distribution rate (by nearly 5 percent) and a higher volume of distributed electricity (by 2 percent). The Distribution result was also positively influenced by the increase in the distribution margin and the beneficial structure of sales of services.
The increase in revenues in the Business Line of Wytwarzanie was influenced by: increase in electricity production in owned water sources (by 26%) and wind (by 27%) and Group heat and power plants (by 13%) possible to obtain due to high availability of generation sources. The above increases were also influenced by higher prices of electricity sales in the Generation Area of the Power Plant in Ostrołęka. The revenue increases were offset, among others lower cost of fuel consumption, eventually reaching a level higher by 1% y / y.
The decline in revenues in the Business Line Sales by PLN 310 million (6% y / y) was mainly due to lower revenues from the sale of electricity on the wholesale market and lower revenues from gas sales - mainly due to a decrease in volume.
Download: Consolidated statement of profit or loss
In addition to operating factors, the most significant EBIT impact on EBIT was:
change in the level of impairment losses on non-financial fixed assets (presented primarily in the Generation Business Line);
dissolution of write-offs for disputable receivables in Business Lines Sales and Distribution.
The Group's EBITDA in 2017 amounted to PLN 2,160 million compared to PLN 2,027 million in 2016.
The increase was primarily driven by the EBITDA increase of the Business Line of Wytwarzanie by PLN 83 million (i.e. by 26%) and the Business Line by Sales by PLN 45 million (i.e. by 112%).
EBITDA of the largest Business Line Distribution remained stable at PLN 1.72 billion and was responsible for 80% of the Group's EBITDA.
* zysk netto i EBITDA za ostatnie 12 miesięcy
* EBITDA za ostatnie 12 miesięcy
In 2017 on October 9 this year Energa paid its shareholders a dividend of PLN 0.19 per share. For the closing price on the last day with the right to dividend, the dividend rate was 1.4%. It's 10 percent. the unit net profit generated in 2016.
In September this year Energa - Obrót SA decided that long-term contracts for the purchase of green certificates will be void due to the mode of their conclusion (without a tender), including contracts generating huge losses for the segment (settlements were based on a substitute fee, not market prices). This decision did not affect the results of the Business Line due to redemption of the vast majority of certificates for 2017. Positive impact on the results should be expected in the following years. However, it will depend on court decisions. In 2017, this had a positive impact on the cash flow of the Business Line due to the cessation of purchase of certificates under long-term contracts.
Thanks to the signing of hybrid financing agreements with the European Investment Bank, Energa has raised 250 million euros to implement the investment program in distribution. It will cover the modernization and expansion of distribution assets in 2017-2019 (estimated eligible expenditure in this period is approximately EUR 814 million). Thanks to new investments, the security of electricity supply will improve, the network losses will be reduced and the service quality of the existing over 3 million recipients will be improved.
Due to amendments to the Act on Renewable Energy Sources, on August 16, 2017, the Company published estimates of the potential positive impact of reducing costs and revenues from the taxation of the substitution fee, as well as acting as the obligated seller at PLN 150 million in 2018. This range includes both cost and revenue constraints on the role of the obliged seller and the marketization of the substitute fee in some long-term contracts for the purchase of green certificates. The above calculations do not constitute a forecast of future results of the Energa Group and are based on the assumption of the volume of retail sales at the level of 2016 (19 TWh) and the level of the substitution fee in 2018 in the amount of PLN 43 / MWh (current report No. 34/2017).
On 11 May 2017, the Management Board of the Company adopted a resolution to resign from the participation of Energa SA in the purchase of Polish assets belonging to EDF International SAS and EDF Investment II B.V. The decision was supported by in-depth analyzes carried out in the Group, which support the targeting of Energa Group's investments and acquisitions to projects that are more synergistic with its current asset base and competence area, as well as enabling a stronger strengthening of the Group's balance sheet and asset management efficiency.
In March, the Management Board of Energa SA took the decision to recapitalize Polska Grupa Górnicza Sp. z o.o. ("PGG") in the amount of PLN 100 million by the subsidiary Energa Kogeneracja Sp. z o.o .. As part of the PGG investment, Energa Kogeneracja undertook to subscribe for new shares with a total nominal value of PLN 100 million in exchange for a cash contribution of PLN 100 million, in three tranches. Following the recent recapitalization, the company will have a 15.32% share in PGG's share capital. The purpose of the investment was to obtain funds from PGG to finance the acquisition of Katowicki Holding Węglowy S.A. and expenses related to the planned PGG investment outlays.
On 1 March 2017, the Management Board of Energa SA announced the closing of the book of demand regarding Eurobonds under the updated Eurobond Issue Program. Information on the announcement of the intention to conduct a public subscription of Eurobonds by Energa Finance AB (publ) was submitted on 20 February 2017. The funds raised will be used for general corporate purposes, excluding investments in carbon assets. In this context, they will support the implementation of the Strategy of the Energa Group 2016-2025, in which over 60% of expenditures are directed to the development and modernization of distribution networks, and will serve to improve the Group's financial security.
On 20 January 2017, in connection with the fulfillment of the conditions precedent set forth in the in-vestment agreement signed on 18 January 2017, the Company accepted an offer made by the Polimex Mostostal S.A. management board to subscribe for 37,500,000 series T common bearer shares with a par value of PLN 2 each issued by Polimex at the issue price of PLN 2 each and for the total issue price of PLN 75,000,000 in private subscription. On the same day, the Company purchased 1,500,000 shares of Polimex from SPV Operator (Current Report No. 6/2017).