Increasing the competitiveness and securing the long-term development - these are Enea’s and Bogdanka’s goals

Enea’s new management board intends to build an innovative raw materials and energy group. It’s priority is improvement of the reliability and security of energy supply, based on the Polish fuel, namely bituminous coal. In the nearest future, the Group will increase the operating efficiency building optimum synergies. It means e.g. a closer operating and corporate relations of Bogdanka and Enea.

Balanced development of an innovative raw material and energy Group

The new management board sets its priority to be the further development and strengthening of the Group’s position on  the Polish electricity and fuel market.

- We have commenced works over the new strategy to include the fact of incorporating Bogdanka under Enea Group in our development programmes and investments on the long‑term and short-term run - emphasises Enea’s president of the board, Mirosław Kowalik. - Many changes are occurring to our company’s immediate and farther environment. They also relate to national and EU regulations which have a direct impact on the sector in which the Group operates. We should be well prepared to these changes and become a part of the Ministry of Energy’s plans and the governmental “Responsible Development Plan”. We wish to focus on the building and development of a strong innovative raw materials and energy group, having a financial potential to realise the development and innovation programmes ‑ declares Kowalik.

In October 2015, Enea Group became the owner of a total of 66 per cent of LW Bogdanka’s shares. The mine from Lublin is an outstanding producer of bituminous coal in the industry. Due to the transaction the Group may realise a range of synergies on the operating, financial and organisational level. In the next months it will concentrate on the preparation of the integration of the both enterprises and identifying long-term value increasing initiatives. It shows that the relevant business model of the cooperation between power engineering and mining may have a deep economic interest and build the Group’s value for its shareholders.

Financial results determined by assets impairment write-downs in the segment of generation and mining

In 2015, Enea Capital Group’s net sales revenue was closer to that of 2014 and amounted to PLN 9,848 mln. Consolidated EBITDA, after a growth by 9.5 per cent, amounted to PLN 2,130 mln. In the previous year, the highest EBITDA was generated in the segment of distribution and amounted to PLN 1,139 mln. The highest growth in EBITDA - by PLN 157 mln, i.e. 21.2 per cent - was reported in the segment of generation. The results of the segment of generation in 2014 and 2015 were affected the most by one-off events being the recognition in Q2 2014 of PLN 257 mln and in Q3 2015 of PLN 293 mln revenue from long-term agreements. After the exclusion of the impact of these events EBITDA of the segment of generation grew yoy by PLN 121 mln, i.e. 25.2 per cent. The segment of trade, reporting a growth by 18.4 per cent yoy, generated EBITDA in the amount of PLN 126 mln. In relation to the acquisition of LW Bogdanka, the Group’s operations were extended with the segment of mining, which, for the last two months of 2015 being subject to consolidation, generated PLN 156 mln EBITDA.

The consolidated net loss in the amount of PLN 399 mln was a consequence of the recognition of the Group’s generating assets impairment write-down whose impact on the net result amounted to PLN -1,418 mln. After the exclusion of the write-down, Enea Group’s net result grew by 12.0 per cent yoy and totalled o PLN 1,019 mln.

- In Q4, in relation to the information and analyses concerning e.g. changes in the market prices of electricity, certificates of origin for energy and changes in the projections of macroeconomic factors, we performed tests for the fixed assets impairment. We decided to make write-downs relating to our assets impairment within the areas dealing with the generation of electricity, heat energy and coal mining. These write-downs did not affect the liquidity situation of our Group ‑ emphasises Mikołaj Franzkowiak, Enea’s vice-president for financial affairs.

From the beginning of 2014, Enea Group has been consistently realising the programme of optimisation of fixed costs which in 2014-2015 allowed for the generation of PLN 604 mln savings (PLN 252 mln in 2014 and PLN 352 mln in 2015).

LW Bogdanka generated sales revenue on the level close to PLN 1,885 mln and EBITDA result in the amount of PLN 686 mln in 2015. It means that despite a difficult market situation and the pressure of lower coal prices on the results, EBITDA profitability ratio of the company, reaching 36 per cent in the previous year, remains on an outstanding for the industry level. The results generated in 2015 were charged with the write-down in the amount of PLN -625 mln due to assets impairments. The write-down recognition did not affect the current operations of the company or its liquidity position. LW Bogdanka’s net result for 2015, without the recognition of the write-down, amounted to PLN 226 mln. Bogdanka realised the anticipated for the previous year plan of production of commercial coal on the level of ca. PLN 8.5 mln tonnes and sales on the level of ca. 8.6 mln tonnes.

- Taking into account a very difficult market situation, durable oversupply of fuel coal and its explicitly dropping prices, the results not charged with the write-down must be recognised as good. Their generation was possible mainly due to a consistently realised programme adjusting the company’s operations to the sales capabilities. It included the mining optimisation, further reduction of costs and optimisation of capital expenditures and employment. We confirmed and strengthened our position as the most efficient and most effectively responding to the market conditions mine in Poland - said Zbigniew Stopa, Bogdanka’s president of the board.

The Client in the centre of attention - improved service quality and market offer 

Assuming that the demand for electricity in Poland will grow, Enea Group intends to continue to focus on a good Customer service and high quality of the market offer. The key is here its adaptation to Customer expectations. Enea takes care so that its products are diversified and price-attractive, and concurrently connected sales of electricity with packages of additional values. In the area of wholesale trade the company wants to be an important player on the market of energy and fuels. It considers to increase its activity beyond the national market.

Reliability and security of energy supplies based on own fuel. A further improvement of the operating efficiency in all the business areas.

The Group invests in the modernisation and development of generation capacities, including renewable sources. In 2015 it spent PLN 1,955 mln for that purpose, of which almost PLN 1,386 mln was expenditures on the implementation of the key investment - a modern 1,075 MW power unit. The construction of Baczyna wind farm and the extension of Bardy farm are in progress. At the same time, Enea is constantly analysing the market as regards potential acquisitions which will be business-effective and will become a part of the Polish energy policy.

Additionally, what is very important for the Group is investments in the maintenance, modernisation and development of the distribution network and thus improvement of the quality parameters of the supplied energy. In 2015, PLN 925 mln was allocated to this purpose. During the following years the outlays will range from PLN 800 - 1,000 mln annually.

Investments in innovations and new technologies

Enea will still act actively in the area of innovation and supporting new technologies, becoming thus a part of the programme of the national economy development. Changing market conditions and legal environment have impact on the development of technologies. The Group notices that research and development projects have a potential of solving important problems of the power industry. However, they require considerable amounts of funds and time to be engaged along with effective methods and structures of managing this area. We will build a relevant potential within this field. In the area of energy sales the Group wants to search for new products and services increasing Customer commitment in the conscious consumption of electricity. In Enea’s experts’ assessment, solutions in the field of smart grids have a great potential in the area of distribution and an important direction within generation will be the so called clean coal technologies. The Group intends to participate in the sectoral programme being prepared for the power engineering of the National Centre for Research and Development.

Corporate Social Responsibility Dialogue with the Community Side

As a responsible company, Enea will still act for the benefit of the environment and surroundings. One of the important elements of an efficient Group development management is relevant communication with its key Stakeholders and building trust to the company and its operations. Enea Foundation’s operations within the community involvement and projects resulting from the strategy of the Group’s sustainable development serve that goal. One of the priorities is an open dialogue with local communities and local governments and public institutions representing them. Since the human capital constitutes the most important assets of the company, the Group’s management board wants to continue the dialogue with the Community Side in an open and businesslike manner.

We recommend watching the latest video from the construction of the new power unit: