Improvement in ENEA Group's financial results after three quarters of 2014

During the first 9 months of 2014 ENEA Group generated PLN 7.23 bln net sales revenue, which is a growth by 6.5% in relation to the same period of the previous year. Consolidated EBITDA amounted to PLN 1.52 bln, and net profit to PLN 836 mln, which is by 8.7% and 26.4% more, respectively, than a year before. Due to the cost optimisation programme being in progress, the Group reduced costs by PLN 124 mln during the first three quarters of 2014

The results for Q1-Q3 2014 were supported by e.g.:

• higher volumes of sales of energy to end users in ENEA S.A. by 2.2 TWh,
• lower average purchase price for electricity,
• recognition of revenue from recovery of stranded costs, 
• lower costs of materials and goods resulting mainly from lower average coal price including transport. 

Due to the cost optimisation, including costs of employee benefits (Programme of Voluntary Redundancy), lower cost of energy purchase for coverage of the book-tax difference and lower grid assets liability  during January - September 2014, the highest EBITDA was realised in the segment of distribution - and amounted to PLN 895 mln (growth by 11.0% yoy). The greatest growth in EBITDA, by PLN 134 mln yoy, was reported in the segment of generation, which ended the three quarters of 2014 with EBITDA totalling to PLN 553 mln. The result of the segment was supported with higher revenue from recovery of stranded costs. The segment of trade was under the pressure of market conditions and its result after 9 months of 2014 amounted to PLN 88 mln.

 "Just within one year from the announcement of the new corporate strategy we managed to build the organisation which is managed in the most modern way and which flexibly reacts to the market needs. We are developing in accordance with the precise plan, due to which, despite the demanding situation on the energy market, we regularly report good financial results. A stable financial situation is a necessary condition for further development of the Group"– says Krzysztof Zamasz, President of the Board of ENEA S.A.

In Q3 2014 alone the Group generated: PLN 2.39 bln net sales revenue (growth by 8.9% yoy), PLN 412 mln EBITDA (drop by 9.7% yoy), PLN 211 mln net profit (growth by 2.2% yoy).

ENEA Group has been consistently implementing the investment plan. During the three quarters of 2014 the Group spent PLN 1.58 bln on investments, of which over PLN 1.1 bln in the segment of generation. The key investment in the area is obviously the construction of the new unit in Kozienice. The project is realised in a timely fashion - so far, 12 of 26 main stages of the construction have been completed. Higher CAPEX in the reporting period by PLN 258 mln yoy took place with the secure value of the net debt/EBITDA ratio, which at the end of September 2014 amounted to 0.2. Thanks to the cost discipline during 9 months of 2014 the Group made PLN 124 mln savings (including: PLN 86 mln in the segment of generation, PLN 29 mln in the segment of distribution).

"Currently, we are at the stage of an intensive growth, we have firmly prepared to finance the projects strategic for the Group. We obtained credits, under favourable conditions, from the European Investment Bank. We also signed agreements with selected banks relating to the bond issue programme. We executed huge changes within the finance management. First of all, we have one centre for managing cash for the whole Group. The Tax Capital Group which has been operating since the beginning of the year enables us to operate more efficiently as regards the tax law" - emphasises Dalida Gepfert, Vice-President of the Management Board of ENEA S.A. for Financial Affairs.

During the three quarters of 2014 ENEA Group increased the generation of electricity both from the conventional sources (growth by 4.3% yoy) and from RES (growth by 16.2% yoy) generating a total of 9.5 TWh electricity (growth by 5.2% yoy). Sales of conventional electricity grew by 1,566 TWh, and sales of electricity from RES grew by 108 GWh yoy. In the reporting period the Group sold 12 TWh electricity to end users, i.e. by 22.9% more than in the previous year. The Group completed the process of reconstruction of its corporate governance which lasted for over a year.

"We have made the decision making process more efficient and reduced the bureaucracy. The Board transferred many competences to the Group's Committees. Management Departments were established which order the key business processes and allow for a greater control. We prepared and implemented the strategy using own efforts” – emphasises Paweł Orlof, Vice-President of the Board of ENEA S.A. for Corporate Affairs.

As of 1 October in the Group's structures there are 6 Committees operating (Management, Compliance, Investment, Trade and Promotion, Finance and IT, Risk) and 5 Management Departments (Audit, Security and Legal Service, Communication, Purchases, HR).

In Q3 2014 ENEA Wytwarzanie finalised the takeover transaction of 85% shares in MPEC Białystok. The agreement was signed already in May 2014. At the beginning of September the transaction was approved by the Office of Competition and Consumer Protection. Entry of the agreement into force means that the Company which owns the key producer of heat for the city, Elektrociepłownia Białystok, becomes also its supplier for the citizens. Cooperation of Elektrociepłownia Białystok with MPEC district network will enable optimisation of heat production in the city. ENEA has been regularly researching the market as regards new acquisitions. Takeovers of wind farms are mainly considered, and also engagement in the cogeneration sources and heating networks.