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Enea is building strong foundations for further development of an innovative raw materials and energy group

Enea Group closes the first half of the year with good financial results building foundations for the further development of an innovative raw materials and energy group. The company becomes part with the new energy security policy of the state and finalises works over the current strategy’s update.

Enea Group’s main goal is to build solid foundations for a long-term development. The changes observed in the national and global economy force adaptation of market behaviour to them. External and internal conditions are subject to considerable transformations.

- Enea Group must act well in advance and have solutions prepared to what will occur in 5, 10 or even 15 years. Obviously, we are not able to fully project the future in long time limits. We can, however, build a company which will faster and more effectively than the competition, use the chances occurring in its environment. Therefore we are working over the update of our corporate strategy, looking at our future in the 2030 perspective - said Mirosław Kowalik, president of Enea.

In relation to the dynamic situation in areas which are core for Enea Group the company plans to present the updated strategy during the next several weeks. The document is to introduce evolutionary changes adjusting the Group’s operations to the demanding conditions both on the energy market and fuel market. Thus, Enea will optimally use the potential of each business area.

We are part of the new energetic security policy of the state

In the works over Enea’s updated strategy Enea identified challenges and chances faced by the national energy and raw materials sector. The company notices that the power industry must undergo a transformation. It is necessary to undertake intense actions for the account of the modernisation and sector development.

- Application of clear coal-based technologies will increase the sector’s efficiency and reduce burdens for the environment. Coal still is and will be the basis of energy mix in Poland and in our company. In order to use it more effectively, we are verifying various possible methods of obtaining energy from this raw material. We are aware of the need of deep changes. In the currently updated strategy of our company we are verifying various scenarios which will allow the Group to build long-lasting competitive advantages, contributing thus to the development of the national economy - underlined Mirosław Kowalik.

Optimisation of processes and exploitation of synergies enabled generation of good financial results

In H1 2016 Enea Group reported PLN 5,599 mln net sales revenue, i.e. by 21.4 per cent more than in the same period of 2015. The consolidated EBITDA, after a growth by 34.9 per cent yoy, amounted to PLN 1,207 mln. Net profit totalled to PLN 471 mln, i.e. by 12.7 per cent more than in H1 2015.

The results were negatively affected by the establishment in Q2 of an impairment write-down of non-financial assets of the area dealing with generation of energy from renewable sources in the amount of PLN 42 mln (impact on operating profit). The write-down was established in relation to the entry into force of the act of 20 May 2016 on investments within wind power plants. It is accounting in nature and has no impact on the liquidity standing of the Group. After its exclusion the consolidated net result grew in H1 2016 by 20.8 per cent yoy and amounted to PLN 505 mln (impact on net result PLN -34 mln).

In the period of the first six months 2016 the highest EBITDA, PLN 571 mln (growth by 5.0 per cent yoy), was realised in the area of distribution. The greatest EBITDA growth - by PLN 42 mln - was reported in the area of generation (growth by 14.7 per cent yoy). Adverse conditions on the electricity market affected the result of the area of trade which in H1 2016 generated EBITDA totalling to PLN 51 mln. In relation to the acquisition of LW Bogdanka, Enea CG’s operations in Q4 2015 were extended with the area of mining, which in January - June 2016 generated PLN 283 mln EBITDA.

The Group has consistently implemented the planned investments - in H1 2016  CAPEX amounted to PLN 1,171 mln, which is by 4.3 per cent more than in the same period last year. Net debt/EBITDA as at the end of June 2016 was on a safe level of 1.7.

- We are thoroughly controlling each coin within investment and expenses. In H1 2016 we saved PLN 202 mln out of PLN 362 planned for the whole 2016 year. Due to an optimum allocation of resources, continuously implemented activities directed at the improvement of efficiency and flexible adjustment to the demanding market and legal environment, the Group generates satisfactory financial results and has possibilities of further development - commented Mikołaj Franzkowiak, vice-president of Enea for financial affairs.

LW Bogdanka Capital Group after H1 2016: mining according to the plan, good financial performance 

The Capital Group of Lubelski Węgiel Bogdanka in H1 2016 generated sales revenue on the level of over PLN 848.9 mln and net profit in the amount of almost PLN 75 mln. It means that despite further drop in prices, both the revenue and net profit were kept on the level close to the same period of the previous year. EBIT result in the said period amounted to PLN 96.6 mln (drop by 4.7 per cent yoy) and EBITDA: PLN 277.4 mln (drop by 4.9 per cent).

The company estimates the generated financial results as good. Their generation, despite a negative impact of the unstable situation on the market and persistent low coal prices was possible due to a constant cost control and optimisation of capital expenditures. In result, EBITDA profitability in H1 2016 was maintained on an over average level for the global industry, namely 32.7 per cent.

In H1 2016 the production of commercial coal reached the level of 4.3 mln tonnes, and sales of 4.4 mln tonnes. The length of corridor excavations performed in that period amounted to 12.1 km, which means a growth by 18.6 per cent as compared to H1 2015.

The company maintains a strong market position and in Q2 2016 returned to the share in steam coal sales market to commercial power industry achieved in 2014 on the level of ca. 25 per cent. Similarly, the total share of the steam coal market achieved again the level of ca. 16 per cent. According to the earlier announcements, the Company estimates coal sales in 2016 ranging from 8.5 to 9.0 mln tonnes.

- I estimate the financial results generated in H1 2016 as good. Their generation in extremely unfavourable market conditions was possible due to a continuous and consistent cost control and optimisation of capital expenditures. We are upholding a safe financial liquidity and remain the most efficient and modern bituminous coal mine in Poland. Even though in the second quarter coal price increases were observable on international markets, the prices of this material in Poland remain on a very low level and oversupply on the coal market is persistent. Therefore, at the moment we cannot yet see grounds for expecting any change in the present market trends in a close perspective. According to the earlier announcements, we estimate our annual coal sales on the level of 8.5-9.0 mln tonnes - said Krzysztof Szlaga, the president of Lubelski Węgiel Bogdanka.

We are maintaining long-lasting relations with Customers, investing and implementing innovative technologies

In H1 Enea changed thinking of a Customer. The company completed the implementation process for all Customers of an electronic Customer Service Centre and Connection Portal for Customers from its distribution area. The company wants Customers to be able to manage as many matters as possible on-line, sitting comfortably at home.

In the period of the first six months of 2016 a modern control station of Traffic Engineers on Duty was launched in Kozienice Power Plant. New posts are equipped with the most modern appliances, which enhances the safety and facilitates the work. On the construction site of the new 1,075 MW power unit the first feeding of power from the reserve and starting transformer was performed
in the switching station of Polskie Sieci Elektroenergetyczne - 110 kV voltage was fed. The whole investment’s progress is 88 per cent.

An event which was important for the Group was prolongation by the President of ERO the validity term of Enea Operator’s licence for distribution of electricity. The previous one was valid until 1 July 2017. The works over the preparation of the application and all the required documents lasted from March 2015. Currently, the licence is valid until 1 July 2030. Also in Q2 2016 Enea Operator introduced innovative technology allowing for an automatic fault detection (short circuits) and limitation of their reach to the place of their occurrence. The application of an innovative solution was possible due to launching by the company of another function of SCADA dispatcher system, and more accurately the so-called FDIR model (Eng. Fault Detection, Isolation and Restoration), which is able to "omit" the damaged section of the grid.

Having in mind the diverse and international nature of Enea SA's shareholding, and also the provisions of the Best Practices of WSE Listed Companies, Enea SA guarantees the availability of its website also in English. In case of any interpretation doubts and discrepancies between the Polish and English versions, the Polish version shall prevail.