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Integrated report 2020

Financial results

Contents

In 2020, the electricity market experienced a decline in energy consumption due to the economy being frozen by the Covid-19 pandemic, which was particularly visible in business customer groups. Energy prices declined considerably due to this decreased demand.

The pandemic did not affect PGE Group’s financial results because energy sales on the wholesale market had been contracted in previous years. Thanks to government support programs for businesses, we did not record any major delays in customer payments for energy. An increase in the price of energy sold caused PGE Group’s revenue to go up by 22% in 2020. Reported EBITDA reached PLN 6.0 billion, a 16% decline y/y, caused primarily by a lower balance of one-off items and an increase in the cost of CO2. EBITDA adjusted for one-off items reached PLN 6.2 billion.

Consolidated statement of profit and loss

Net profit reached PLN 148 million in 2020. Net profit was influenced by: an impairment loss on assets in the Conventional Generation segment and an increase in a land rehabilitation provision. These items were non-monetary and did not affect cash flows from operating activities, which reached PLN 10.3 billion.

Data in numbers:
PLN 45,766 m
Sales revenue
PLN 4,155 m
Gross profit /(loss) on sales
PLN 1,408 m
Operating profit/(loss)
PLN 314 m
Gross profit / (loss)
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[PLN m] 2020 2019 y/y
Cost of goods sold -41,611 -40,134 4%
GROSS PROFIT / (LOSS) ON SALES 4,155 -2,507 n/a
Distribution and selling expenses 1,492 1,361 10%
General and administrative expenses 1,189 1,099 8%
Net other operating income/(expenses) -66 792 n/a
OPERATING PROFIT/(LOSS) 1,408 -4,175 n/a
Net finance costs, including: -542 -471 n/a
Share of profit / (loss) of entities accounted for using the equity method -552 -57 n/a
GROSS PROFIT / (LOSS) 314 -4,703 n/a
Income tax expense -166 775 n/a
NET PROFIT/(LOSS) FOR THE REPORTING PERIOD 148 -3,928 n/a

Balance of one-off items (EBITDA level)

One-off items in 2020 had a negative impact on the reported result (unlike in the previous year). The balance of one-off items was PLN -218 million.

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[PLN m] 2020 2019
Revenue from PPA compensation 31 -8
Effect of revaluation of provisions for costs of land rehabilitation -306 -835
Change in actuarial reserve -36 -99
Provision for the shortage of CO2 emission allowances 121 0
Additional CO2 emission allowances 0 1,446
Voluntary Leave Program -28 0
One-off items – EBITDA level -218 504
Recurring EBITDA 6,184 6,637

The 40% y/y decline in EBITDA in the Conventional Generation segment and the 20% decrease y/y in the District Heating segment was due to proceeds from the allocation of additional EUAs in 2019, worth PLN 1 061 million in Conventional Energy and PLN 281 million in District Heating, respectively.

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 Key segment data 2020 2019 y/y
Conventional Power Generation 1,725 2,880 -40%
Distribution 947 1,186 -20%
Renewable Power Generation 597 517 15%
Distribution 2,306 2,306 0%
Trade 612 280 119%
EBITDA [in PLN M] including: 5,966 7,141 -16%

 Key segment data 2020 2019 y/y
EBITDA [in PLN M] including: 1,408 -4,175 n/a
Conventional Power Generation -647 -7,109 n/a
District heating 304 595 -49%
Renewable Power Generation 405 657 -38%
Distribution 1,093 1,101 -1%
Trade 577 247 134%

[PLN million] 2020 2019 y/y
One-off items – EBITDA level -218 504 n/a
Impairments of TFA and IA (pre-tax) -948 -7,520 n/a
One-off items – EBIT level -1,166 -7,016 n/a
Recurring EBIT 2,574 2,841 -9%

Consolidated balance sheet (main categories)

The increase in the carrying amount results from the on-going investment program and a higher balance of cash. Non-current assets increased by PLN 2.1 billion y/y due to capital expenditures (PLN +5.5 billion). Development was mainly financed with cash generated from operating activities (PLN +10.3 billion). During the period, net debt declined substantially, from PLN 11.4 billion at the end of 2019 to PLN 8.4 billion at the end of 2020. The decline in debt was caused by a lower level of capital expenditures, proceeds from the sale of additional CO2 emission allowances and the optimisation of operating costs at PGE Group companies.

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[PLN m] 31 December 2020 31 December 2019 31 December 2018
CURRENT ASSETS, INCLUDING: 66,498 65,055 66,765
Property, plant and equipment 61,741 59,690 62,274
Intangible assets and goodwill 646 735 1,046
Financial receivables 191 180 168
Derivatives and other assets measured at fair value through profit or loss 132 93 117
Shares and interests accounted for using the equity method 152 715 776
Other non-current assets 839 676 528
CO2 emission allowances for captive use 39 240 1,203
Deferred income tax assets 1,351 1,318 552
CURRENT ASSETS, INCLUDING: 15,089 12,593 9,131
Inventories 3,123 4,509 2,699
CO2 emission allowances for captive use 1,735 965 408
Trade receivables and other financial receivables 4,812 4,815 4,102
Other current assets 799 605 458
Cash and cash equivalents 4,189 1,313 1,281
TOTAL ASSETS 81,594 77,650 75,905
Share capital 19,165 19,165 19,165
Reserve capital 18,410 19,669 19,872
Retained earnings 4,951 3,779 7,743
EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF THE PARENT COMPANY 42,518 42,289 46,727
Equity attributable to non-controlling interests 983 848 1,074
TOTAL EQUITY 43,501 43,137 47,801
NON-CURRENT LIABILITIES, INCLUDING: 23,075 22,687 15,578
Non-current provisions 11,207 9,652 6,428
Credits, loans, bonds and leases 10,025 10,859 6,361
Deferred income tax liabilities 345 920 1,616
Deferred income and government grants 600 616 611
CURRENT LIABILITIES, INCLUDING: 15,018 11,826 12,526
Current provisions 7,311 4,366 2,608
Credits, loans, bonds and leases 1,384 1,449 4,347
Trade payables and other financial liabilities 3,504 3,636 3,613
Other non-financial liabilities 2,203 1,865 1,747
TOTAL LIABILITIES 38,093 34,513 28,104
TOTAL EQUITY AND LIABILITIES 81,594 77,650 75,905
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[PLN m] 2020 2019 y/y
Investment expenditure, including: 5,495 7,009 -22%
Conventional Generation 2,372 4,018 -41%
District Heating 671 548 22%
Renewables 715 151 374%
Distribution 1,680 2,225 -24%
Supply 16 30 -47%
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[PLN m] 2020 2019 y/y
Operating 10,256 6,820 50%
Investment -6,037 -6,865 -12%
Financial -1,357 77 n/a
Change in cash and its equivalents 2,862 32 8,844%
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[PLN m] EOP 2020 EOP 2019 ∆ 2020
Cash and equivalents 4,189 1,313 2,876
Short term deposits 46 8 38
Restricted cash (adjustment) -1,239 -428 -811
Disposable cash of PGE Group 2,996 893 2,103
Short term financial debt -1,384 -1,449 65
Long term financial debt -10,025 -10,859 834
Total financial debt (gross) -11,409 -12,308 899
Net debt -8,413 -11,415 3,002
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Investments in 2020
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Consolidated financial statements

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