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Poland. Tauron increases the value of assets in Renewable Energy

The state-owned energy company informed about the effects of tests carried out on impairment of assets at the end of 2018. The company will create a large write-off of assets in conventional energy, and at the same time will reverse the previously made write-down as regards the value of assets in the area of renewable energy sources.

Tauron reports that the performed analyzes have revealed significant changes in the recoverable amount of non-current assets in the Generation and Production segments, which are primarily affected by the following internal and external factors - including the resolution of three major power market auctions for the 2021-2023 supply years; a draft Regulation of the European Parliament and of the Council on the internal energy market which, for generating units that do not meet certain benchmarking criteria for CO2, provides for the exclusion of support in the form of payments from the capacity market; increase in the profitability of generating energy from renewable sources in relation to conventional generation (the effect of increasing market energy prices and green certificates); in addition, the increase in the cost of purchasing CO2 emission allowances.

With regard to the consolidated financial statements of Tauron Polska Energia S.A. for 2018, the analysis of assets in conventional energy was to prove the appropriateness of creating net write-offs for impairment of tangible and intangible assets in the amount of PLN 778.4 million.

On the other hand, tests carried out in the renewable energy industry belonging to Tauron were to prove the reversal of the write-off due to impairment of tangible and intangible assets in the amount of PLN 321.9 million.

The surplus of write-offs created over the reversed ones in the consolidated financial statements, i.e. the net value of impairment losses, is expected to amount to PLN 466.5 million, and the total estimated impact on the decrease in the consolidated net financial result will amount to PLN 377.9 million.

However, with reference to the separate financial statements of Tauron Polska Energia S.A. for 2018, the conducted analyzes showed: the appropriateness of creating impairment losses on shares in the company Tauron Wydobycie S.A. in the amount of PLN 54.1 million, and also the reasonableness of creating impairment losses on shares in Tauron Wytwarzanie S.A. in the amount of PLN 1 814.3 million.

On the other hand, in the case of Tauron Ekoenergia sp. O.o., which groups Tauron's assets in renewable energy, the reversal of write-offs for impairment of shares in the amount of PLN 402.4 million was found justified.

The excess of write-offs created over the reversed ones in the separate financial statements has been set at PLN 466 million, and the total estimated impact on the decrease in the net unit net profit will amount to PLN 1 466 million.

Tauron notes that the value of the above impairment losses will not affect the EBITDA result in the separate and consolidated financial statements.

In the third quarter of this year Tauron's revenues amounted to PLN 4.476 billion, and in the period from January to the end of September this year. they reached PLN 13.302 billion.

The largest share in the overall EBITDA result for the third quarter of PLN 778 million had a distribution segment (EBITDA of PLN 621 million), followed by sales (PLN 125 million) and production (PLN 57 million). In 2017, the Tauron Group achieved sales revenues of PLN 17.4 billion, compared to PLN 17.6 billion a year earlier, achieving a profit of PLN 1.38 billion net, ie over PLN 1 billion higher than in 2016.

In 2017, the company produced 18.4 TWh of electricity, or 9.6 percent. more than a year earlier. The volume of energy production from renewable sources amounted to 1.3 TWh.

The Tauron Group has 34 hydroelectric power plants, four wind farms and three biomass blocks among its generation assets. Currently, the total installed capacity in renewable energy sources belonging to Tauron is 439 MW. The final test results and the amount of impairment losses on assets will be presented in the financial statements of Tauron Polska Energia SA. and the Tauron Capital Group for 2018 source: gramwzielone.pl

Piotr Dunin-Kukurowski's picture

Thank Piotr for the Post!

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Matt Chester's picture
Matt Chester on February 21, 2019

Thanks for sharing, Piotr! You note:

In 2017, the company produced 18.4 TWh of electricity, or 9.6 percent. more than a year earlier. The volume of energy production from renewable sources amounted to 1.3 TWh

What was the volume of renewable energy production the year before the year of 1.3 TWh? How great was that growth?

Piotr Dunin-Kukurowski's picture
Piotr Dunin-Kukurowski on February 23, 2019

no such data was provided by the company. However, the Polish market is growing more and more every year

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