Financial capital

TAURON Group’s business model assumptions Natural capital
Financial capital Financial capital

TAURON Group creates value for shareholders, inter alia, by investing in modern energy and shoring up the financial position. Value creation is possible thanks to the processing and transformation of TAURON Group’s capitals – financial, natural, production, human, intellectual and social.

Financial capital is extremely important, both for the current operations of TAURON Group, as well as its expansion in the future. The sources of financing are: the Company’s equity, funds generated from business operations conducted and liabilities. Currently, the Group is implementing a number of capital-intensive investment projects, mainly in the electricity distribution line of business. The capital expenditures came in at more than PLN 4 billion in 2020.

Investments in the electricity sector and activities aimed at the transition towards a low-emission economy are and will be supported by the EU funds. It is imperative that the support received should enable the development of zero-emission production technologies while maintaining competitiveness. The financial sector is increasingly reducing its involvement in financing activities related to greenhouse gas emissions. This is the result of new regulations supporting the financing of environmentally sustainable activities.

TAURON Group is using external financing in the form of loans and bond issues, as well as special-purpose funds and other instruments supporting modern, environmentally friendly investment projects.

In 2020, TAURON Group issued bonds worth PLN 1 billion, with the proceeds to be used for the Group’s energy transition. It was the first Sustainable Development bonds issue in Poland. The funds obtained from this operation will be allocated to the implementation of the Green Turn of TAURON.

TAURON is generating financial results that enable its further expansion and implementation of strategic projects. In spite of changes in the business environment, the growing revenues and cost optimization allow the Company to continue to continue generating a stable result and maintain the net debt to EBITDA ratio at a safe level.

Key data on TAURON Capital Group’s financial capital in 2018-2020

Export to Excel
Key capital data 2020
2019 2018
Equity [PLN m] 16,412 19,093 18,428
Fixed assets [PLN m] 31,736 35,052 32,596
Distribution segment’s RAB [PLN m] 18,255 17,470 16,940
Net debt [multiple] 2.5x 2.8x 2.5x
Capital expenditures [PLN m] 4,039 4,128 3,838

TAURON Group’s management of financial capital is performed as follow:

  • maintaining financial stability thanks to activities aimed at optimizing expenses and the structure of assets,
  • implementation of the investment program and rationalizing the capital expenditures incurred,
  • steadfast implementation of the financing optimization plan,
  • developing capital (equity) partnership as part of the Corporate Venture Capital initiatives,
  • increasing the share of revenue from the regulated market (capacity market),
  • cooperation with banks and financial institutions,
  • searching for optimal sources of financing,
  • preferential loans to finance environmental investment projects,
  • financial risk hedging,
  • efficient liquidity management through the cash pooling service.

Results achieved by TAURON Capital Group in 2018-2020 as part of the management of financial capital

Export to Excel
Results achieved 2020
2019 2018
Sales revenue [PLN m] 20,850 19,558 18,122
EBITDA [PLN m] 4,223 3,599 3,492
EBITDA margin [%] 20.3% 18.4% 19.3%
Cash flow from operating activities [PLN m] 4,042 2,036 2,223
Net debt/EBITDA ratio [multiple] 2.5x 2.8x 2.5x
Net profit (loss) [PLN m] (2,488) (12) 207
Long term rating* BBB- BBB BBB

* On May 21, 2020, Fitch ratings agency affirmed TAURON Polska Energia’s long term foreign and local currency ratings of “BBB-” with a stable outlook.