Annual report 2019

Table. Basic figures from separate statement of comprehensive income

Exchange rates of euro used for translation of selected financial data

• Statement of financial position items - average exchange rate announced by NBP as at 31 December 2019 - 4,2585
• Statement of comprehensive income and cash flows items - arithmetic average of average exchange rates announced by NBP as at the end of each mont of the period from 1 January to 31 December 2019 - 4,3018
• Statement of financial position items - average exchange rate announced by NBP as at. - 4,3000
• Statement of comprehensive income and cash flows items - arithmetic average of average exchange rates announced by NBP as at the end of each mont of the period from 1 January to 31 December 2018 - 4,2669

Table. Basic ratios

Chart. Net profit analysis

Lower net profit 26,5 MPLN as compared to 2018 by 50,5 MPLN (-66%), mainly due to the following:

• -21,5 MPLN lower profit on sales due to:
  • +77,2 MPLN lower revenue from sales (mainly due to lower volume of heat sales)
  • -109,3 MPLN higher manufacturing costs:
    • -72.6 MPLN higher variable costs (increase in the provision for the purchase of CO₂ allowances by 45.4 MPLN due to more than twofold increase in the average purchase price of CO₂ allowances than in 2018, increase in fuel costs by 26.8 MPLN due to increased coal prices),
    • PLN -21.7 MPLN higher fixed costs (mainly an increase in the cost of services by PLN 12.3 MPLN and depreciation by PLN 8 MPLN),
    • -15.0 MPLN higher value of goods and materials sold due to higher volume of resale of purchased electricity.
• +0,9 MPLN - higher result on financial operation, i.e.:
  • +2.6 MPLN increase in the valuation of the surplus of contracted CO₂ emission allowances to be executed in March 2020,
  • -2,0 MPLN increase in the provision for reclamation of landfills
  • + 0,3 MPLN other increases.
• -25,8 MPLN - a lower result on financial activities:
  • -25,0 MPLN lower revenues from the lack of dividend received from EC Zielona Góra S.A. (PLN 25.1 MPLN in 2018 and PLN 0 MPLN in 2019),
  • -0,8 MPLN: +0,9 MPLN higher interest on the cash-pool, -PLN 1.5 MPLN interest on the liability for perpetual usufruct of land, i.e. items reported so far off-balance sheet, and after the change in IFRS 16 disclosed in the company's books, -PLN 0.2 MPLN other decreases,
• +6,5 MPLN - lower income tax.

Chart. Revenues

Revenue increased by PLN 77.3 MPLN (13%) compared to 2018, mainly due to:

• +63,6 MPLN - higher revenues from electricity sales; higher electricity sales prices by about 38% and higher sales volume by 6%,

• +3,4 MPLN - higher revenues from heat sales; comparable sales volume at 1% higher prices resulting from the heat tariff,

• -10,7 MPLN - lower revenues from certificate sales; no red certificates since 2019. The existing system of support for electricity from high-efficiency cogeneration based on certificates of origin for electricity from cogeneration expired at the end of 2018,

• +21,3 MPLN - higher revenues from sales of goods and materials due to higher volume of resale of purchased electricity,

• -0,3 MPLN – other revenue reductions.

Fixed and variable costs

Chart. Fixed costs

Fixed costs increased by PLN 21.7 MPLN compared to 2018.

Personnel costs increased by PLN 1.9 MPLN:

• -1,5 MPLN higher salary costs, e.g. due to the change of the limit of contributions under the Employee Pension Plan as of 1 May 2019 in order to adjust it to the assumptions of the Employee Capital Plans,
• -0,4 MPLN higher costs of social insurance and other employee benefits.

Maintenance costs increased by 1,2 MPLN: an effect of a wider scope of maintenance in 2019 in accordance to 2018.

Depreciation increased by PLN 8.2 MPLN due to: purchase of new fixed assets (increase by PLN 10 MPLN), application of IFRS 16 (increase by PLN 1 MPLN) and changes in the useful life of fixed assets (decrease by PLN 2.8 MPLN).

Services and other fixed costs increased by PLN 12.3 MPLN due to the agreement with PGE S.A. for the management of commercial generation capacities effective from January 1, 2019.

Other fixed costs decreased by PLN 1.9 MPLN.

Chart. Variable costs

Fixed costs increased by PLN 21.7 MPLN compared to 2018.

CO₂ deficiency and purchase costs increased by 45.4 MPLN (181%) as a result of two factors: higher purchase price of missing allowances and higher shortage of allowances.

The shortage of CO₂ allowances amounted to 1 174 828 Mg and was about 6% higher than in 2018. (in 2018, 1 113 372 Mg). The average allowance purchase price was more than twice as high as in 2018. The limit of free CO₂ allowances allocated to generating units was 374 649 Mg in 2019. (477 859 Mg in 2018). CO₂ emissions in 2019 were slightly lower due to lower gross energy production. Free CO₂ allowances received in 2019 covered 24% of emissions, CO₂ allowances received in 2018 covered 30% of emissions.

Fuels costs increased by 26,9 MPLN:

• -20,9 MPLN; higher coal purchase costs: +5,4 MPLN lower volume of burnt coal (in 2019: 16,600 TJ, in 2018: 17,053 TJ), -26,3 MPLN higher coal price by approx. 13%,
• -3,6 MPLN; higher costs of biomass consumption: -2,2 MPLN higher volume of burnt biomass (in 2019: 415 TJ, in 2018: 349 TJ), -1,4 MPLN higher biomass price by about 25%,
• -1,0 MPLN; higher costs of gas consumption; higher gas price,
• -1,4 MPLN; higher costs of liquid fuels and chemicals consumption.

Other variable costs increased by 0,4 MPLN:

• -0,3 MPLN; increase in certificate redemption costs,
• -0,4 MPLN; increase in other costs related to the purchase of energy,
• +0,2 MPLN; ecrease in environmental protection costs,
• +0,1 MPLN; other decreases.

Chart. Cash flow