Enea Group recapitulates 2020 – increase in revenues and investments and stable EBITDA. The Group is getting ready for transformation
In 2020, the Enea Group recorded good financial and operational performance in an evolving and challenging market environment. The Group generated revenues of PLN 18.2 billion (up by 11% y/y) and an EBITDA of PLN 3.3 billion. The Group’s annual consolidated financial results, including net profit, were affected by non-recurring non-cash events. The Group increased its capital expenditures in the environmental protection area and attained record-high energy supply reliability indicators.
- In 2020, the Enea Group generated an EBITDA of PLN 3.3 billion and revenue from sales of PLN 18.2 billion.
- The volume of sales of electricity and gaseous fuel to retail customers rose by 3.8% y/y to 21.1 TWh.
- The Group’s net result (a loss of PLN 2.2 billion) was affected by non-recurring non-cash events. Its net profit, adjusted for the non-recurring events, would have been PLN 1 billion.
- Energy generation from renewable sources increased by 5% y/y.
- Throughout 2020, more than 43 thousand renewable energy sources (including micro-installations) with a total capacity of 546 MW were connected to Enea Operator’s distribution grid.
- Enea Operator once again improved its electricity supply reliability indicators in north-western Poland. In 2020, the average duration of unscheduled and scheduled interruptions on the high voltage and medium voltage network was 77 minutes.
In 2020, the Enea Group generated an EBITDA of PLN 3.3 billion (down by PLN 36 million, or 1%, y/y). Revenue from sales improved by 11% y/y, reaching PLN 18.2 billion. The Group recorded a net loss of PLN 2.2 billion as a result of recognized impairment allowances. These were all non-cash events and did not affect the Group’s EBITDA. The net debt/EBITDA ratio declined, but stood at a safe level of 1.95.
In 2020, the Enea Group earmarked PLN 2.4 billion for capital expenditures, thereby maintaining a high level of performance of its investment plan despite the challenging conditions for the conduct of modernization work during the pandemic. At the same time, capital expenditures on environmental protection projects increased by 14% y/y. In 2020, PLN 272.5 million was earmarked for this type of investment. These were chiefly modernization projects aimed at adapting the Group’s power plants to BAT conclusions and commercial connection of wind farms to the Enea Operator grid.
Distribution area with record-high reliability indicators and connections of RES installations
The EBITDA generated in the distribution area in 2020 reached PLN 1.3 billion (up by PLN 221 million, or 20%, y/y). This result was driven by higher margins on licensed activities and a higher result on other operating activities. Sales of distribution services to end users remained stable at 19.4 TWh. The number of buyers of distribution services – clients of Enea Operator – increased by 1.3% compared to 2019. At yearend 2020, there were nearly 2.7 million such clients.
From year to year, steadily, the electricity supply reliability indicators in north-western Poland are improved. In 2020, Enea Operator once again generated the best result in its history. The average duration of unscheduled and scheduled interruptions on the high voltage and medium voltage network – calculated in accordance with the quality regulations of the Energy Regulatory Office – was reduced from 98 to 77 minutes.
Last year was also record-breaking for the Enea Group in terms of the number of connections of renewable energy installations to the distribution grid. Enea Operator connected over 43 thousand renewable energy sources (including micro-installations) with a total capacity of 546 MW. In total, almost 63 thousand RES installations and micro-installations with a total capacity of over 2 GW have been connected to Enea Operator’s grid.
Generation area with a growing share of energy generated from renewable sources and environmental investments
The highest EBITDA of over PLN 1.5 billion was earned in the generation area. Compared to 2019, it was a y/y decrease by PLN 64 million, or 4%. This was caused by a decrease in the generation margin with a simultaneous increase in the margin on trading and the Balancing Market, coupled with the reversal of the provision for the acquisition of the Skoczykłody wind farm in the amount of PLN 129 million in 2019. EBITDA of the heat and RES segments went up by PLN 21 million and PLN 12 million y/y, respectively.
In 2020, the Group generated 22.5 TWh of electricity, down 3.5 TWh compared to the year before. The lower generation from conventional sources resulted, among other factors, from the ongoing planned upgrades of power units and the decrease in demand caused by the coronavirus pandemic. Sales of heat in the generation segment were 6,000 TJ.
Generation from renewable energy sources increased by 5% y/y to 2.4 TWh. Since 2020, the Group’s projects involving electricity generation from renewable sources have been developed and managed by a new company: Enea Nowa Energia.
For years, the Enea Group has been conducting numerous activities aimed at reducing its adverse environmental impact. In 2020, the following units were upgraded in the Kozienice Power Plant: wastewater treatment plant from the flue-gas desulfurization installation of the third 500 MW unit no. 10, electrostatic precipitators for 200 MW unit nos. 1, 4 and 5, and draft cooling towers for 500 MW unit nos. 9 and 10. In turn, the Połaniec Power Plant completed a large modernization project called Feniks, implemented since 2013, under which the maximum capacity of six out of the plant’s seven conventional units was increased from 225 MW to 242 MW each. The maximum capacity of the whole power plant was uplifted by 102 MW to 1,899 MW, and the plant’s emission parameters were reduced to meet the more stringent environmental standards currently in force.
Trading area with a higher volume of sales of electricity and gaseous fuel
In 2020, the volume of sales of electricity and gaseous fuel to retail customers reached 21.1 TWh, up by 774 GWh, or 3.8%, compared to the previous year. An increase in electricity sales was recorded in both the business customer segment (by 371 GWh, or 2.5%) and the household segment (by 133 GWh, or 2.9%). The sales volume of gaseous fuel increased by 270 GWh y/y, or 25.5%, of which in the business customer segment by 264 GWh, or 24.9%.
Total revenue from sales of electricity and gaseous fuel increased in 2020 by PLN 618 million y/y, or 11%. This increase affected revenues in both the business customer segment and in the household segment. The trading area posted an EBITDA of PLN -15 million (up by PLN 35 million y/y). The result of this segment was favorably affected by an increase in the average sales price of energy and a revaluation of CO2 contracts, partially offset by a negative effect of an increase in the cost of energy purchases and environmental obligations.
In 2020, sales of a new product, Enea Optima, were launched. This is a system used to acquire metering data remotely, which allows business clients to monitor and optimize their energy and power consumption. The Group is also involved in activities aimed at deploying new technological and organizational solutions and developing remote customer contact channels and modern sales channels.
Mining area operating in a tough market environment
In 2020, LW Bogdanka generated revenue from sales of PLN 1.8 billion and a net profit of PLN 73 million. The company’s EBIT and EBITDA in this period reached PLN 95.2 million and PLN 466.2 million, respectively. The company’s weaker operating performance was driven down primarily by the reduced demand for steam coal from the commercial power and heat generation sectors as well as temporary difficulties of a geological nature.
In 2020, extraction of steam coal was 7.6 million tons. The average yield was at 64.0%, compared to 64.1% the year before. PLN 614 million was earmarked for investments. The largest chunk of this amount, nearly PLN 293.6 million, was spent on new excavations and modernization of existing ones. In 2020, the company’s share in Poland’s steam coal market was 19.7%. In turn, the company’s share in total coal supplies to the power sector stood at 25.3%, confirming Bogdanka’s robust position on this market. More than 85% of the company’s sales volume was purchased by the Enea Group, of which LWB is a member.
COMMENTS ON THE ENEA GROUP’S PERFORMANCE IN 2020:
Paweł Szczeszek, President of the Enea Management Board:
“2020 was a tough period for the whole economy. Our domestic power sector experienced a major decline in the activity of large businesses, which triggered a decline in demand for electricity. In this volatile market environment, we generated robust financial and operating results. In the mining area, a decline in demand for coal was recorded (by approx. 18% y/y). In the generation area, the lower electricity generation from coal firing (by approx. 15% y/y) was offset by a strong increase in sales of electricity in trading, the combined effect of which was an increase in the segment’s revenues (by approx. 4% y/y). In the distribution area, we observed a slight decline in sales of distribution services to end users by approx. 2%.
The coronavirus pandemic forced us to quickly and efficiently reorganize our work, ensuring a stable energy supply to our recipients, along with the safety of our employees and clients. In addition to guaranteeing energy security, we also provide financial and material aid to centers fighting the dissemination of the coronavirus.
We are getting ready for the challenges faced by the domestic power sector today. The Enea Group is also updating its strategy. We want it to be fully aligned with the new external conditions and to enable a reliable and effective transformation of the Group towards carbon neutrality. Our development plans, rooted predominantly in renewable energy sources, go hand in hand with the pursuit of Poland’s Energy Policy until 2040. Our withdrawal from the financing of the gas-fired project at the Ostrołęka C Power Plant and the establishment of strategic cooperation with partners with a view to developing wind farm projects in the Baltic Sea are important steps aimed at boosting our efforts in the Enea Group’s transformation process,” said Paweł Szczeszek, President of the Enea Management Board.
Rafał Mucha, Vice-President of the Enea Management Board for Financial Matters:
“Last year, the Enea Group generated stable financial results, including an 11% y/y increase in revenue from sales. The highest EBITDA of PLN 1.5 billion was earned in the generation area. The largest increase in EBITDA, by 20% y/y, was recorded in the distribution area. This result stood at PLN 1.3 billion. The Group’s bottom line was affected by the non-recurring impairment allowances recognized during the year. Non-cash events did not affect the Group’s EBITDA, which in 2020 reached PLN 3.3 billion. The Group’s safe financial standing is confirmed by the net debt/EBITDA ratio, which declined by 2% y/y and stood at 1.95. The Group’s financial standing creates a strong foundation for the pursuit of our transformation plans. The Group’s objective is to ensure the most effective use of investment funds. Moreover, from this year on, the Group’s cash flows will be supported by the capacity market mechanism. As a result of successful auctions, we are in possession of guaranteed capacity contracts for conventional units and renewable sources,” said Rafał Mucha, Vice-President of the Enea Management Board for Financial Matters.
Artur Wasil, President of the Lubelski Węgiel Bogdanka Management Board:
“It was a difficult year not only for Bogdanka, but also for the whole economy, which remained under an strong influence of the slowdown caused by the restrictions imposed in connection with the coronavirus epidemic. Despite these difficulties, the year should be assessed as positive for the company. In the second half of 2020, we launched mining operations on a longwall with a record-breaking seven-kilometer run. We had been preparing for the mining operations on this longwall for several years, both by performing excavation works and by developing digital tools. At the end of the year, we announced a new development strategy for Lubelski Węgiel Bogdanka S.A., which provides us with reasons for an optimistic view of the future,” said Artur Wasil, President of the Lubelski Węgiel Bogdanka Management Board.