Financial results

EBITDA and statement of profit and loss

2017 was a successful year for PGE Group. Key metrics in the statement of profit and loss show stable growth of several percent. Consolidated EBITDA reached PLN 7,650 million, operating profit PLN 3,620 million and net profit PLN 2,660 million.  On a year over year basis, the reported results exhibited stability, however their composition changed. The 2017 results were to a lesser degree supported by one-off events.

In 2017, recurring EBITDA reached PLN 6,481 million, compared to PLN 6,151 million in the preceding year. The +5% y/y growth resulted from a higher volume of lignite-based production, the recognition of acquired assets (proportionally), higher return on distribution and lower costs of redeeming property rights in the Sales segment.

It should be emphasised that the assets purchased from French group EDF, currently operating under the name PGE Energia Ciepła, are recognised for the period from 14 November 2017. Therefore, the impact of this acquisition on the 2017 EBITDA (PLN +193 million) does not reflect this transaction's entire potential. 

^{* Excluding significant one-offs
** Including environmental costs related to generation
*** From the third quarter of 2016 includes the cost of blue certificates
**** Includes network losses}

Balance of one-off events (EBITDA level)

Reported EBITDA for 2017 included PLN 1,169 million in one-off events (with one event having dominant impact: final settlement of LTCs). 2016 was characterised by higher support from one-off events (PLN 1,225 million), with the largest one being related to a change of a reclamation provision, which added PLN 643 million.

Reported EBITDA, by segment

The largest EBITDA growth dynamic in y/y terms was recorded in the Supply segment (+62%) and was mainly related to the cost of property right redemptions being lower by PLN 233 million.

Reported EBIT, by segment

At operating result level, we recognised a decline in the Conventional Generation segment due to impairment of non-current assets. At Group level, the value of impairment was comparable in both of the years. In 2016, the majority of impairments were recognized in the Renewables segment, which in 2017 improved the operating result.

It should be added that the operating result is affected by the same set of one-off events that affects EBITDA and additionally by impairment of non-current assets.

Balance sheet

The effect of the acquisition of PGE Energia Ciepła assets is visible in the 2017 balance sheet. Equity attributable to non-controlling interests increased as a result of the consolidation of KOGENERACJA S.A., in which PGE Group had a 50% stake plus one share at the end of 2017.

Investment expenditures (organic CAPEX)

Organic capex in 2017 reached PLN 6.7 billion and was focused in the Conventional Generation segment and the Renewables segment.

Cash flows and net debt

Net debt increased in the course of 2017 by PLN 2.6 billion. This results from the fact that in the past year aside from organic investments the Group also incurred acquisition-related expenditures amounting to PLN 4.1 billion (after subtracting the acquired cash). It should be added that at the beginning of the year PGE had a long-term bank deposit amounting to PLN 2.3 billion and that withdrawing from this deposit made it possible to finance the acquisition without increasing gross financial debt. Net debt to EBITDA came close to 1. Positive impact on the debt ratio came from the final settlement of LTCs thanks to which the Group received nearly PLN 1 billion.

Balance of one-off events (EBITDA level)

Reported EBITDA for 2017 included PLN 1,169 million in one-off events (with one event having dominant impact: final settlement of LTCs). 2016 was characterised by higher support from one-off events (PLN 1,225 million), with the largest one being related to a change of a reclamation provision, which added PLN 643 million.

Reported EBITDA, by segment

The largest EBITDA growth dynamic in y/y terms was recorded in the Supply segment (+62%) and was mainly related to the cost of property right redemptions being lower by PLN 233 million.

Reported EBIT, by segment

At operating result level, we recognised a decline in the Conventional Generation segment due to impairment of non-current assets. At Group level, the value of impairment was comparable in both of the years. In 2016, the majority of impairments were recognized in the Renewables segment, which in 2017 improved the operating result.

It should be added that the operating result is affected by the same set of one-off events that affects EBITDA and additionally by impairment of non-current assets.

Balance sheet

The effect of the acquisition of PGE Energia Ciepła assets is visible in the 2017 balance sheet. Equity attributable to non-controlling interests increased as a result of the consolidation of KOGENERACJA S.A., in which PGE Group had a 50% stake plus one share at the end of 2017.

Investment expenditures (organic CAPEX)

Organic capex in 2017 reached PLN 6.7 billion and was focused in the Conventional Generation segment and the Renewables segment.

Cash flows and net debt

Net debt increased in the course of 2017 by PLN 2.6 billion. This results from the fact that in the past year aside from organic investments the Group also incurred acquisition-related expenditures amounting to PLN 4.1 billion (after subtracting the acquired cash). It should be added that at the beginning of the year PGE had a long-term bank deposit amounting to PLN 2.3 billion and that withdrawing from this deposit made it possible to finance the acquisition without increasing gross financial debt. Net debt to EBITDA came close to 1. Positive impact on the debt ratio came from the final settlement of LTCs thanks to which the Group received nearly PLN 1 billion.