Over a billion worth of investments in Enea in H1

From January to June 2015 Enea Group generated over PLN 4.6 billion net sales revenue, its EBITDA amounted to PLN 894 mln and net profit to PLN 418 mln. The current year is the time of the company's greatest investment efforts, and expenditures for that purpose exceeded the level of PLN 1.1 billion. Due to that fact, the project of the construction of a unit in Kozienice, being realised on the schedule, has already reached 64 per cent in advancement. Yesterday, Enea obtained an advantageous decision of the President of ERO relating to the final settlement of long-term agreements. It means the end of multiannual court disputes and a total of over a half of a billion of additional cash.

A high base of H1 2014 affected the dynamics of financial results

The greatest impact on the comparison of the Group's results yoy has the recognition in June 2014 of revenue from Long‑term Agreements in the amount of PLN 258 mln. EBITDA adjusted with the impact of this one-off event in H1 2015 increased by PLN 43 mln, i.e. 5 per cent. The highest EBITDA was realised in the segment of distribution and amounted to PLN 544 mln. After the exclusion of revenue from Long-term Agreements, the highest growth in EBITDA (by 57.7% yoy) was reported in the segment of generation which in the reporting period generated PLN 289 mln EBITDA. In the segment of trade EBITDA amounted to PLN 81 mln.

- Acting in a demanding environment we generated good financial results. Their comparison yoy was distorted mainly by a one-off event being the PLN 258 mln of recognised revenue from Long-term Agreements in 2014. We have a hedged advantageous financing for the realised strategic development investments, guaranteeing our Customers energy security and high level of service. Our financial position is safe - the net debt/EBITDA ratio as at the end of H1 2015 was 0.8. It is much below the average for the European utilities sector companies - comments Dalida Gepfert, vice-president of Enea for financial affairs.

In H1 2015 Enea continued the implementation of an ambitious programme of fixed costs optimisation. From January to June 2015 the Group saved PLN 158 mln, and from the beginning of the programme - as much as PLN 410 mln.

A total of PLN 552 mln from Long-term Agreements settlement will go to the Group

Yesterday, on 27 August, Enea received a decision from the President of the Energy Regulatory Office regarding the determination of the amount of the final adjustment of stranded costs. The amount of the final adjustment amounted to PLN 316 mln and will be paid until the end of the year. The total nominal value of compensations for termination of Long‑term Agreements for Enea for the whole adjustment period will amount to PLN 552 mln.

- We made a huge effort together with the President of ERO to end the court proceedings being in progress for many years in this matter. Due to the agreement reached, we finally end the issue of stranded costs with a decision which is very advantageous for us. The Group will thus obtain a total of over a half of a billion zloty – emphasises Krzysztof Zamasz, president of Enea.

Long-term Agreements for sale of power and electricity concluded in the 90s. of the 20th century were deemed a prohibited public aid by the European Commission. Therefore, the LTPPA Termination Act was adopted in Poland. Pursuant to its provisions, since 1 April 2008 to 31 December 2014 Enea was entitled to receive compensations from the so called stranded costs. The yesterday's decision of the President of ERO determines the final amount of compensations and enables the termination of the proceedings relating to the determination of their amount.

The company should and is able to guarantee deliveries of cheap coal for itself

On 21 August Enea terminated a long-term agreement for coal supplies with LW Bogdanka. The reason for this decision was a lack of agreement between the parties as regards coal prices in 2016, and specifically, too high a price offered by the supplier under the agreement and lack of flexibility in negotiations relating to its performance.

- We have satisfied all, multi-stage, contractual requirements which enable the termination. After several months of negotiations the term which enabled the both parties to take such a decision expired. Thus, there was no place for any surprise - both we, and LW Bogdanka's Management Board, perfectly know the conditions which needed to be satisfied to terminate the agreement – explains Grzegorz Kinelski, vice-president of Enea for commercial affairs.

Enea is searching for other methods of guaranteeing coal supplies at competitive prices. It does not rule out any scenario, including the return to the talks with Bogdanka. However, for that to be possible, the mine must take into account the market situation, both the present and the future. 

The Group develops through investment and structure optimisation

Investments in the area of generation focus on enhancing the efficiency and diminishing the impact on the natural environment. The progress of the project of the construction of a new unit is already 64 per cent. Enea modernises the existing energy grid and builds new lines, in order to improve the quality of energy distribution to Customers and concurrently prepare possibly the best to the introduction of the quality tariff. In H2 a pilot programme will commence of mounting intelligent meters (AMI). In the segment of trade, the company invests in the construction and development of modern channels of communication and service of Customers who are guaranteed a wide range of products with additional benefits. The Group is implementing the migration process of its Customers' data to the new billing system. Until the end of the year all Customers from the distribution area of Enea Operator will be able to settle most matters on‑line. 

In H1 2015 subsequent stages of building the optimum Group's structure were realised. The key competences were transferred to companies conducting the core operations and rendering support services. The Companies not related to the core business of the Group are designated for sale or their operations are being phased out. In H1 2015 Ecebe and TARPAN were removed from the National Court Register, and Energo-Tour was put under liquidation.

- In June we established a new company within the Group - Przedsiębiorstwo Energetyki Cieplnej Zachód in Białystok. PEC Zachód will allow for the optimisation of the heat segment's organisation structure. It will e.g. render services within the exploitation and construction of a heating network and servicing Ciepłownia Zachód belonging to MPEC. The new company will be also able to extend the range of its operations, going out to an external market with services within the construction and repair of water installations and heating networks - says Paweł Orlof, vice-president of Enea for corporate affairs.

Energy sector's future is innovations

Enea pays a great attention to supporting and introduction of innovations. As a part of activities promoting and developing the innovativeness of the Polish economy, including the energy sector, Enea joined the Technology Transfer Programme launched by the Industrial Development Agency. It is based on the model of open innovations and its task is joining inventors, research units and enterprises.

- Innovations is a key direction of development for us. We get engaged in numerous projects aiming at encouraging innovations on the energy sector and the whole economy and building the commercial potential of development and use of new ideas. We wish to create and strengthen the relations of science and business – emphasises Krzysztof Zamasz, president of Enea.

Enea became a strategic partner in ENERGY+ Innovations contest. The task of its participants is proposing an innovative solution which will be finally applied in Enea Group. The main award is one million zloty designated for the development of the innovative technology for the power engineering sector.

The company also launched a blog on which it informs its Customers on innovations, novel solutions and personalities who managed to become known on the market. The blog is available at www energia.innpoland.pl.