management board’s report on the activities … · in may 2011, the remaining 49% ... the...
TRANSCRIPT
KOGENERACJA S.A. – Management Board’s Report on the Group Activities
for the period from 1 January to 30 June 2013
MANAGEMENT BOARD’S REPORT ON THE ACTIVITIES
OF KOGENERACJA GROUP
First Half of 2013
KOGENERACJA S.A. – Management Board’s Report on the Group Activities
for the period from 1 January to 30 June 2013
2
List of contents
I. Group profile ........................................................................................................................................ 3
1. Legal basis ........................................................................................................................................................................ 3
2. Group characteristics........................................................................................................................................................ 3
3. Shareholders of the Parent Company ............................................................................................................................... 4
4. Composition of the Management Board and the Supervisory Board of the Parent Company .......................................... 4
5. KOGENERACJA Group .................................................................................................................................................... 7
6. Employment ..................................................................................................................................................................... 10
II. Key production and financial figures ............................................................................................. 11
1. Key products ................................................................................................................................................................... 11
2. Key economic and financial figures of the Group ........................................................................................................... 13
3. Extraordinary circumstances which materially affected the Group’s trading performance ........................................... 21
4. Structure of assets and liabilities in the consolidated statement of comprehensive income ........................................... 22
5. Related party transactions .............................................................................................................................................. 24
6. Guarantees given and received ....................................................................................................................................... 25
7. Financial results presented in the report vs. the published performance forecast .......................................................... 26
8. Assessment of financial resources management.............................................................................................................. 26
9. Loan agreements ............................................................................................................................................................. 30
10. Loans granted ............................................................................................................................................................... 31
11. Events with significant impact on the Group’s activities .............................................................................................. 32
12. Factors that will affect the Group’s performance in the subsequent periods ............................................................... 33
13. Description of key risks and threats .............................................................................................................................. 33
14. Litigations ..................................................................................................................................................................... 35
15. Shares of KOGENERACJA S.A. or its subsidiaries held by directors .......................................................................... 35
16. Dividend declared or paid ............................................................................................................................................ 35
III. Share price ....................................................................................................................................... 36
1. Quotation of the KOGENERACJA shares on Warsaw Stock Exchange ......................................................................... 36
2. Respect Index .................................................................................................................................................................. 37
3. Ratio calculation methodology........................................................................................................................................ 37
KOGENERACJA S.A. – Management Board’s Report on the Group Activities
for the period from 1 January to 30 June 2013
3
I. Group profile
1. Legal basis
The Management Board’s Report on the Company’s Activities was prepared pursuant to § 90 section 1 point 3 of the
Finance Minister’s Ordinance of 19 February 2009, Journal of Laws No. 33, item 259 (“Ordinance”) as amended
2. Group characteristics
The parent company of the KOGENERACJA Group (“Group”) is Zespół Elektrociepłowni Wrocławskich
KOGENERACJA S.A. (KOGENERACJA S.A., “Parent”, “Company”), joint stock company registered in Poland. having
its registered office in Wrocław at ul. Łowiecka 24. The Company operates from three production plans with a joint electric
capacity of 363 MW and heat capacity of 1 089 MWt,, as per the licences held. The plants are located in Wrocław (EC
Wrocław and EC Zawidawie) and in Siechnice near Wrocław (EC Czechnica).
These heat and power plants are the central heat sources for Wrocław, providing the city with heating, domestic hot water
and industrial steam as well as with electricity as part of the national energy infrastructure. Heat and electricity are mainly
produced in co-generation, which ensures that the average yearly production capacity is high and the chemical energy of the
primary fuels is the most effective in the sector.
KOGENERACJA Group was established through the privatisation and restructure of the former ZEC Wrocław S.A., a
process initiated in 1992. In subsequent years, connected companies were hived off the Group, including: ZEC Service Sp. z
o.o., Diagpom Sp. z o.o., ZEC Hurt Sp. z o.o. and ESV S.A. The companies provide services to KOGENERACJA S.A. and
to other Group companies, and acquire customers from the market. The Company also gradually increased its stake in
VKN Polska Sp. z o.o. (now Renevis Sp. z o.o.) and Ekotrakt Sp. z o.o. The companies are located in Wrocław and Siechnice.
In 2009, the Group structure changed: ZEC Hurt Sp. z o.o. and Ekotrakt Sp. z o.o. became consolidated entities. The shares
in ZEC Service Sp. z o.o. were sold, so the company and its subsidiary ZEC Diagpom Sp. z o.o. were de-consolidated. In
2009, the Company acquired 100% stake in Z.C. "Term-Hydral” Sp. z o.o. of Wrocław. Since 1 July 2010, after the merger with
the Parent, the company has been a separate production facility of KOGENERACJA S.A. - EC Zawidawie. In 2010,
Ekotrakt Sp. z o.o. was merged with the Company’s subsidiary Renevis Sp. z o.o. and in 2011, liquidation process of ZEC
Hurt Sp. z o.o. (started on 29 July 2010) was completed.
Przedsiębiorstwo Produkcji Ogrodniczej Siechnice Sp. z o.o. is a company located in Siechnice, whose shares were acquired in
1996 in return for the receivables for the sale of heat. In May 2011, the remaining 49% shares were purchased from the State
Treasury, and KOGENERACJA S.A. became 100% owner of the company. On 30 April 2012, an agreement was signed with
Citronex I Sp. z o.o. to sell 100% of the shares. PPO Siechnice Sp. z o.o. remains the key buyer of heat as a result of the heat
contract signed with Citronex I Sp. z o.o., a deal combined with the share disposal transaction.
Another Group member is the heat and power plant EC Zielona Góra S.A., whose shares started to be acquired in 2001. The
company produces electricity and heat, and after the merger with Zielonogórska Energetyka Cieplna Sp. z o.o. in 2009 it
also began to distribute.
Since July 2010, co-operation has been strengthened with z EDF Polska CUW Sp. z o.o. (from January the branch included
in EDF Polska S.A.), which took over the technical and non-technical support functions from KOGENERACJA S.A. and,
since 1 January 2011, also from EC Zielona Góra S.A. This allowed the companies to focus on its core activities that are the
key sources of their revenue and profits.
Other companies of KOGENERACJA Group include: EDF Paliwa Sp. z o.o. (supply of coal and biomass) and
EDF Energia Sp. z o.o. (trading in electricity and property rights).
KOGENERACJA S.A. – Management Board’s Report on the Group Activities
for the period from 1 January to 30 June 2013
4
3. Shareholders of the Parent Company
(in accordance with § 87 section 7, point 5 of the Ordinance)
Below is a list of the shareholders holding directly or indirectly through subsidiaries at least 5% of the total voting power at
the General Meeting of KOGENERACJA S.A.
As at the day of publication of the report for H1 2013
EDF Polska S.A. 2 642 869 17,74 - 2 642 869 17,74
EDF International S.A.S. 2 483 830 16,67 - 2 483 830 16,67
EDF Investment III B.V. 2 323 302 15,59 - 2 323 302 15,59
OFE PZU "Złota Jesień" 1 300 000 8,72 (0,67) 1 200 000 8,05
OFE ING 1 300 000 8,72 (0,67) 1 200 000 8,05
Aviva OFE 1 076 000 7,22 - 1 076 226 7,22
change of %
in the period
15.05.2013-
30.08.2013
number of votes at the
GSM presented in the
1th quarter report
% of votes at the GSM
presented in the 1th
quarter report
% of votes at the GSM at
the report filing date
number of votes at the
GSM at the report filing
date
On 8 May 2013, under Article 492 § 1 (1) of the Commercial Companies Act, a merger took place between the EDF Group
companies in Poland: EDF Rybnik S.A. (Acquiring Entity) and EDF Kraków S.A., EDF Polska CUW Sp. z o.o., EDF
Polska Centrala Sp. z o.o. (Acquired Entities). The new entity was named as EDF Polska S.A. The number of shares and the
share in the registered capital and the total number of votes remain unchanged at 17.74% (Current Report 11/2013).
The share held by OFE PZU „ Złota Jesień”, OFE ING and Aviva OFE was updated as at registration date of the General
Meeting of the Company held on 13 June 2013 (Current Report 16/2013).
4. Composition of the Management Board and the Supervisory Board of the Parent Company
(in accordance with § 87 section 7, point 10 of the Ordinance)
a. Composition of the Management Board
Since the last change on 1 October 2012, the membership of the Management Board of the 8th
tenure has been follows:
(Current Report 29/2012):
1. Wojciech Heydel – President of the Management Board
2. Roman Traczyk – Management Board Member
3. Krzysztof Wrzesiński – Management Board Member
4. Henryk Zajas – Management Board Member
b. Changes in the Supervisory Board
Since 1 January 2013, the membership of the Supervisory Board of the 8th
tenure was as follows:
1. Marian Augustyn – Supervisory Board Member
2. Roman Cecota – Secretary of the Supervisory Board
3. Philippe Castanet – Supervisory Board Chairman
4. François Driesen – Supervisory Board Member
KOGENERACJA S.A. – Management Board’s Report on the Group Activities
for the period from 1 January to 30 June 2013
5
On 18 December 2012, Marian Augustyn filed his resignation from the Supervisory Board effective from 21 January 2013
(Current Report 34/2012).
On account of this resignation, on 22 January 2013, the EGM appointed to the Supervisory Board of KOGENERACJA S.A.
Mr Ryadh Boudjemadi (Current Report no. 2/2013).
Since 22 January 2013, the membership of the Supervisory Board of the 8
th tenure was as follows:
On 13 June 2013, due to the expiry of the Supervisory Board of the 8th tenure, as of the date of the AGM of
KOGENERACJA S.A., the mandates of the Supervisory Board members likewise expired.
The Annual General Meeting:
granted discharge to all the Supervisory Board members of the 8th
tenure;
established the number of the Supervisory Board members of the 9th
tenure;
acknowledged the selection by employees of 4 Supervisory Board members, under 14 section 4 of the Company's
Articles:
The persons were appointed to the Supervisory Board of the 9th tenure, and
appointed 8 other members of the Supervisory Board - representatives of the Company's shareholders:
5. Raimondo Eggink – Supervisory Board Member
6. Birgit Fratzke-Weiss
7. Mariusz Grodzki
– Supervisory Board Member
– Supervisory Board Member
8. Laurent Guillermin – Supervisory Board Member
9. Nicolas Mitjavile – Supervisory Board Member
10. Roman Nowak – Supervisory Board Member
11. Zbigniew Szymanek – Supervisory Board Member
12. Danuta Żeleźna – Vice-Chairman of the Supervisory Board
1. Ryadh Boudjemadi – Supervisory Board Member
2. Roman Cecota – Secretary of the Supervisory Board
3. Philippe Castanet – Supervisory Board Chairman
4. François Driesen – Supervisory Board Member
5. Raimondo Eggink – Supervisory Board Member
6. Birgit Fratzke-Weiss
7. Mariusz Grodzki
– Supervisory Board Member
– Supervisory Board Member
8. Laurent Guillermin
9. Nicolas Mitjavile
– Supervisory Board Member
– Supervisory Board Member
10. Roman Nowak – Supervisory Board Member
11. Zbigniew Szymanek – Supervisory Board Member
12. Danuta Żeleźna – Vice-Chairman of the Supervisory Board
1. Wojciech Asterski
2. Jerzy Michalik
3. Roman Nowak
4. Zbigniew Szymanek
5. Ryadh Boudjemadi
6. Philippe Castanet
7. François Driesen
8. Raimondo Eggink
9. Birgit Fratzke-Weiss
10. Mariusz Grodzki
11. Laurent Guillermin
12. Nicolas Mitjavile
KOGENERACJA S.A. – Management Board’s Report on the Group Activities
for the period from 1 January to 30 June 2013
6
Since 13 June 2013, the membership of the Supervisory Board of the 9th
tenure has been as follows:
In 2013, no changes were made to the rules of appointing and removing the executives and the rights vested in them,
particularly the rights to issue or redeem shares.
Supervisory Board Committees
On 14 June 2013, the Supervisory Board of the 9th
tenure, appointed, through a secret ballot, Audit Committee from
amongst its members. The appointees were as follows (Resolution no. 14/530/2013):
- Laurent Guillermin – Audit Committee Chairman
- Ryadh Boudjemadi
- Raimondo Eggink
- Mariusz Grodzki
(EBI System – Current Report no. 1 /2013).
At the same time, the Supervisory Board of the 9th tenure, appointed, through a secret ballot, Remuneration Committee from
amongst its members. The appointees were as follows (Resolution no. 13/529/2013):
- Birgit Fratzke-Weiss – Remuneration Committee Chairman,
- Philippe Castanet.
c. Emoluments of the Management Board and the Supervisory Board
The remuneration of the Management Board and the Supervisory Board members for the first half of 2013 and 2012 was
presented in the Condensed Interim Financial Statements of KOGENERACJA Group for the 6 months ended 30 June 2013,
Chapter B point V 16 Transactions with related parties; b. Transactions with directors.
d. The Extraordinary General Meeting of KOGENERACJA S.A.
On 22 January 2013, the Company’s EGM made changes to the composition of the Supervisory Board.
e. Annual General Meeting of KOGENERACJA S.A.
On 13 June 2013, an AGM of the Company was held, solely to transact the business stipulated in Article 395 para. 2 of the
Commercial Companies Code (Current Report no. 15/2013) and to determine the number and composition of the
Supervisory Board of the 9th
tenure.
1. Wojciech Asterski
2. Ryadh Boudjemadi
– Supervisory Board Member
– Supervisory Board Member
3. Philippe Castanet – Supervisory Board Chairman
4. François Driesen – Vice-Chairman of the Supervisory Board
5. Raimondo Eggink – Supervisory Board Member
6. Birgit Fratzke-Weiss
7. Mariusz Grodzki
– Supervisory Board Member
– Supervisory Board Member
8. Laurent Guillermin
9. Jerzy Michalik
10. Nicolas Mitjavile
– Supervisory Board Member
– Supervisory Board Member
– Supervisory Board Member
11. Roman Nowak – Secretary of the Supervisory Board
12. Zbigniew Szymanek – Supervisory Board Member
KOGENERACJA S.A. – Management Board’s Report on the Group Activities
for the period from 1 January to 30 June 2013
7
5. KOGENERACJA Group
(in accordance with § 87 section 7, point 2 and 3 of the Ordinance)
a. Ultimate parent
The ultimate parent for KOGENERACJA S.A. is EdF S.A., France.
b. Group structure
Graphical structure of the Group and KOGENERACJA’s share in the net worth of its individual subsidiaries are presented
in the chart below.
As at 30 June 2013
The key financials of the subsidiaries are presented in section II 2b Impact of the performance of the Group companies on
the consolidated net profit in H1 2013 and 2012 in this report.
Even though KOGENERACJA S.A. does not have any direct capital ties with EDF Energia Sp. z o.o. the company is
reported as a connected company because the two entities carry out material transactions with each other.
c. Companies covered by the consolidated financial statements
KOGENERACJA S.A. – Parent of the Group, as at 30 June 2013 included the following 2 subsidiaries in the consolidated
financial statements:
EC Zielona Góra S.A. – subsidiary (full consolidation)
Renevis Sp. z o.o. – subsidiary (full consolidation)
At the same time, in the report for the first half of 2013, the Company provided comparative data for the first half of 2012,
specifically for:
Przedsiębiorstwo Produkcji Ogrodniczej Siechnice Sp. z o.o. – subsidiary (full consolidation for the period of
control, i.e. from 1 January to 30 April 2012). On 30 April 2012, KOGENERACJA S.A. sold its 100% stake in
PPO Siechnice Sp. z o.o. to Citronex I Sp. z o.o.
Subsi
dia
ries
- conso
lidate
d
Connecte
d e
ntitie
s -n
ot c
onso
lidate
d
KOGENERACJA S.A.
EC Zielona Góra S.A. 98,40%
Renevis Sp. z o.o. 100% EDF Energia Sp. z o.o.
EDF Paliwa Sp. z o.o. 12,40%
KOGENERACJA S.A. – Management Board’s Report on the Group Activities
for the period from 1 January to 30 June 2013
8
d. Subsidiaries
The tables below show the percentage share in the share capital of the Group subsidiaries and the nominal value of the
shares held by KOGENERACJA S.A. as at 30 June 2013 and 31 December 2012.
As at 30 June 2013
Number of shares
Nominal
value of
shares (PLN)
% of
capital
EC Zielona Góra S.A. 13 853 150 554 126 25 545 277 13 631 925 98,4
Renevis Sp. z o.o. 29 100 000 58 200 500 58 200 29 100 000 100,0
Share capitalNumber of
shares
Nominal value
of a share
No of shares held by KOGENERACJA S.A.
(directly)
As at 31 December 2012
Number of shares
Nominal
value of
shares (PLN)
% of
capital
EC Zielona Góra S.A. 13 853 150 554 126 25 545 277 13 631 925 98,4
Renevis Sp. z o.o. 29 100 000 58 200 500 58 200 29 100 000 100,0
Share capitalNumber of
shares
Nominal value
of a share
No of shares held by KOGENERACJA S.A.
(directly)
e. Activities of the subsidiaries
EC ZIELONA GÓRA S.A.
The core business of EC Zielona Góra S.A. is:
Production of electricity;
Production of heat;
Distribution of heat and supply of network heat.
Until the end of July 2004, electricity and heat were co-generated in EC Zielona Góra using coal as production fuel. When
in August 2004 the CC Gas Unit was commissioned, with the capacity of 190 MW and 95 MWt, the proportions of
electricity and heat reversed and currently predominantly electricity is produced in the CC Gas Unit in the process of partial
co-generation using gas fuel (natural gas from local sources).
The company is the key provider of heat and heated domestic water for the city of Zielona Góra.
In June 2008, a decision was made to merge Zielonogórska Energetyka Cieplna Sp. z o.o. with EC Zielona Góra S.A. The
merger was effected on 1 April 2009 under section 492 §1 point 1 of the Commercial Companies Code by transferring the
whole assets of ZEC Sp. z o.o. to EC Zielona Góra S.A. in return for the shares in the increased share capital of the
acquiring company. After the merger, the share capital of EC Zielona Góra S.A. increased by PLN 653 thousand to
PLN 13,853 thousand. In connection with the share capital increase, the company issued 26,130 series D ordinary registered
shares, which were acquired by KOGENERACJA S.A. (17,978 shares) and by the Munipality of Zielona Góra (8,152
shares). The former ZEC Sp. z o.o. is a part of the structure of EC Zielona Góra S.A. as a heat distribution plant.
Renevis Sp. z o.o.
The company was established in 1995 for the economic use of the combustion waste from KOGENERACJA S.A.
The core business of Renevis Sp. z o. o. is:
Sale of coal combustion waste (UPS) complying with the relevant standard for the construction, road building and
ceramics sector in Poland and abroad;
KOGENERACJA S.A. – Management Board’s Report on the Group Activities
for the period from 1 January to 30 June 2013
9
Managing the area of ash and slag removal for KOGENRACJA S.A. in Wrocław, waste dump in Kamień (gmina of
Długołęka); Communal Waste Processing and Recycling in Sulęcin (gmina of Święta Katarzyna);
Transport services, including transport of products and waste, also for third parties;
Supply of biomass for power companies as part of production of energy from renewable sources (OZE);
Sale of road bases and stabilisers;
Provision of professional services in waste management and environmental protection.
Company consolidated in the comparative period
PPO Siechnice Sp. z o.o.
KOGENERACJA S.A. acquired stake in Przedsiębiorstwo Produkcji Ogrodniczej Siechnice Sp. z o.o. on 29 June 1996. The
shares were acquired from State Treasury Agricultural Property Agency in return for the receivables for the heat supplied by
KOGENERACJA S.A. to PPO Siechnice in 1992-1995. On 11 May 2011, KOGENERACJA S.A. purchased the remaining
49% stake from the State Treasury and became a full owner of the company. On 2 May 2012, the ownership of the shares in
PPO Siechnice Sp. z o.o. was transferred to Citronex I Sp. z o.o. under the sales agreement of 30 April 2012.
PPO Siechnice is one of the biggest gardening firms in Poland. The company’s core business is gardening production,
currently mainly cultivation of tomatoes and cucumbers.
f. Other connected entities
The tables below show the structure of the share capitals of other connected entities, and the nominal value of the shares
held by KOGENERACJA S.A. as at 30 June 2013 and 31 December 2012.
Number of sharesNominal value
of shares
%
of capital
EDF Paliwa Sp. z o.o. 415 000 830 500 103 51 500 12,40
Share capital Number of sharesNominal value
of a share
No. of shares held by KOGENERACJA S.A.
(directly)
As at 30 June 2013 and as at 31 December 2012
Until 10 September 2012, EDF Paliwa Sp. z o.o. traded as Energokrak Sp. z o.o.
On 22 July 2013, the Company’s Management Board decided to enter into a conditional agreement for the sale of shares of
EDF Paliwa Sp. z o.o. (Resolution no. 83/2013) hence in the Condensed interim financial statements for the period ended 30
June 2013, these shares were classified as available-for-sale assets.
g. Activities of the other connected entities
EDF Paliwa Sp. z o.o.
The core business of the company is:
supply of power coal and biomass for EDF Group companies in Poland;
disposal of combustion waste.
EDF Energia Sp. z o.o.
EDF Energia is an electricity trading company owned by the EdF Group. It was established through the merger of the
Trading Division of Rybnik S.A. power plant and the energy trading company EDF-EnBW Polska Sp. z o.o. The core
business of the company is:
trading in electricity;
trading in energy certificates.
KOGENERACJA S.A. does not have any stake in EDF Energia Sp. z o.o. but due to the material transactions with Group
companies, the company was classified as a connected entity.
KOGENERACJA S.A. – Management Board’s Report on the Group Activities
for the period from 1 January to 30 June 2013
10
h. Changes in the Group structure
In H1 2013, no transactions or events took place that would affect the Group structure.
i. Equity investments within the Group
In H1 2013, the Parent Company did not make any equity investments.
j. Other equity investments
As at 30 June 2013, the Company did not have other equity deposits.
6. Employment
(in accordance with § 87 section 7, point 10 of the Ordinance)
As at 30 June 2013 and 31 December in the years 2008-2012, the employment levels in Parent Company were as shown in
the diagram below.
As at 30 June 2013 and 31 December in the years 2008-2012, the employment levels in the KOGENERACJA Group were
as shown in the diagram below.
The decrease in employment in the Group is a result of the restructure in the Parent Company and in EC Zielona Góra S.A.
(establishment of the Shares Services Centre for EDF Group in Kraków, Poland, and transfer of employees under
Article .231) and results from changes in the Group structure (including the sale of PPO Siechnice Sp. z o.o. in May 2012).
500
540
580
620
660
700
2008 2009 2010 2011 2012 June2013
687
650
598
559
536
518
Nb
of
em
plo
yes
Year
600
800
1000
1200
1400
1600
1800
2000
2008 2009 2010 2011 2012 June2013
1867
1406
1245 1151
877 843
Nb
of
em
plo
yes
Year
KOGENERACJA S.A. – Management Board’s Report on the Group Activities
for the period from 1 January to 30 June 2013
11
II. Key production and financial figures
1. Key products
(in accordance with § 87 section 7, point 10 of the Ordinance)
a. Key products - KOGENERACJA S.A.
The Company’s key products are: heat and electricity as well as energy origin certificates: green and red certificates.
The sales of both products (in production units) in the first half of 2013 and 2012 are presented in the table below.
For 6 months ended
30 June 2013
For 6 months ended
30 June 2012
Sales of heat TJ 5 508 5 275 233
Sales of electricity MWh 616 030 603 828 12 202
Totale sales of products in units TJ 7 725 7 448 277
J.m.Change
(number)
Sale of heat in the first half of 2013 was 5,508 TJ and increased by 4% year-on-year. The increase was caused by the lower
temperatures noted in the heating period compared with the previous year.
Sale of electricity in the first half of 2013 was at 616,030 MWh and was higher by 12,202 MWh, i.e. 2 % year-on-year. The
increase is a result of lower air temperatures compared with the previous year.
Total sale of finished goods in the reporting period was 7,725 TJ (including 5,508 TJ for heat), up 4% on the corresponding
period of the previous year.
Revenues from the sale of finished goods in H1 2013 and in H1 2012 were as presented in the table below.
Value
( in PLN thousand)
Structure
(%)
Value
( in PLN thousand)
Structure
(%)
Change
(value)
Sales of heat 180 980 57 159 312 47 21 668
Sales of electricity 121 816 39 124 866 37 (3 050)
Ancillary services-
sales of electricity5 643 1 236 0 5 407
Certificates 3 499 - 47 562 14 (44 063)
CO2 sales - 1 1 446 - (1 446)
Other revenues 3 681 1 5 126 2 (1 445)
Revenues from the sale of
finished goods315 619 100 338 548 100 (22 929)
For 6 months ended
30 June 2013
For 6 months ended
30 June 2012
KOGENERACJA S.A. – Management Board’s Report on the Group Activities
for the period from 1 January to 30 June 2013
12
b. Key products of EC Zielona Góra S.A.
The Company’s key products are: heat and electricity as well as energy origin certificates: so called yellow certificates. Like
KOGENERACJA S.A., EC Zielona Góra S.A. produces electricity and heat, but in different proportions, i.e. with the
predominance of electricity. EC Zielona Góra S.A. produces energy based on natural gas in the CC Gas Unit.
The sales of both products in EC Zielona Góra in the first half of 2013 and 2012 are presented in the table below.
J.m.For 6 months ended
30 June 2013
For 6 months ended
30 June 2012
Sales of heat TJ 848 790 58
Sales of electricity MWh 706 736 727 462 (20 726)
-coal unit MWh - 3 056 (3 056)
-cc gas unit MWh 706 736 724 406 (17 670)
Totale sales of products
in unitsTJ 3 394 3 408 (14)
Change
(number)
Sale of heat in the first half of 2013 was at 848 TJ and increased by 58 TJ (7%) year-on-year. The higher sales of heat
primarily resulted from the increased demand for network heat (lower air temperatures in March and April).
Sale of electricity in the first half of 2013 was at 706,736 MWh and was lower by 20,726 MWh, i.e. by 3%, year-on-year.
The decrease in the sale of electricity concerned both the coal unit (its decommissioning) and the CC Gas Unit. Electricity
production in the CC Gas Unit was lower by 17,670 MWh. The lower production of the electricity sold was primarily due to
the use of the gas & oil units in the winter seasons as they use gas fuel for heat production and thus affected a decrease in
electricity production in the CC Gas Unit. Effectively, the sale of such energy on the Energy Exchange was lower (limited
by the gas intake capacity). Another key reason for this was the early (2 days ahead of schedule) shut-down of the CC Gas
Unit for the planned maintenance.
Total sale of finished goods in the reporting period was 3,394 TJ, down 0.4% (14 TJ) on the first half of 2012.
Value
( in PLN thousand)
Structure
(%)
Value
( in PLN thousand)
Structure
(%)
Change
(value)
Sales of heat 46 210 27 40 606 18 5 604
Sales of electricity 127 125 73 145 557 65 (18 432)
Certificates - - 38 887 17 (38 887)
Other revenues 247 0 287 0 (40)
Revenues from the sale of
finished goods173 583 100 225 337 100 (51 754)
For 6 months ended
30 June 2013
For 6 months ended
30 June 2012
KOGENERACJA S.A. – Management Board’s Report on the Group Activities
for the period from 1 January to 30 June 2013
13
2. Key economic and financial figures of the Group
(in accordance with §87 section 6, point 10 of the Ordinance)
a. Elements of the consolidated income statement
In the first half of 2013, the Group’s consolidated net income increased by PLN 42,005 thousand (PLN 116,687 thousand in
the first half of 2013 and PLN 74,682 thousand in the first half of 2012), i.e. up 56%, with the change being mainly driven
by the increase in the net income of the Parent Company (+PLN 21,803 thousand) and the subsidiary EC Zielona Góra S.A.
(+PLN 18,460 thousand).
In the analysed period, the net income of the Group was mainly impacted by the gross profit on sales, which increased by
19% on H1 2012 and was mainly driven by the higher income from the compensations for termination of the PPAs
(+PLN 71,638 thousand) earned by EC Zielona Góra S.A. (see point 3. Extraordinary circumstances which materially
affected the Group’s trading performance).
in PLN thousand
Revenue from sales 503 500 569 402 (65 902)
Revenue from compensation for PPAs 81 301 9 663 71 638
Cost of sales (434 301) (453 114) 18 813
Gross profit on sales 150 500 125 951 24 549
Distribution expenses (3 299) (3 231) (68)
General and administrative expenses (10 959) (14 424) 3 465
Other operating revenues/costs 13 767 (4 045) 17 812
Operating profit (EBIT) 150 009 104 251 45 758
Net finance costs (6 123) (7 194) 1 071
Income tax (27 199) (21 208) (5 991)
Net profit from continuing operations 116 687 75 849 40 838
Net loss from discontinued operations - (1 167) 1 167
Net profit 116 687 74 682 42 005
For 6 months ended
30 June 2013
For 6 months ended
30 June 2012
Change
(value)
b. Impact of the performance of the Group companies on the consolidated net income in H1 2013 and 2012
01.01.2013-30.06.2013
Co
nso
lid
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d d
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KO
GE
NE
RA
CJ
A
EC
Zie
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a G
óra
Ren
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Eli
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of
inte
rco
mp
an
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tra
nsa
cti
on
s
Unconsolidated net profit/(loss) 175 700 98 808 77 549 (657) -
Revaluation to fair values (672) - (672) - -
Adjustments to Group accounting policy 409 - 564 (155) -
Reclassification 584 - 575 9 -
Other adjustments 43 243 (200) - -
Net profit after adjustments 176 064 99 051 77 816 (803) -
Elimination of intercompany transactions (59 377) - - - (59 377)
Capital adjustments - - - - -
Consolidated net profit/(loss) 116 687 99 051 77 816 (803) (59 377)
KOGENERACJA S.A. – Management Board’s Report on the Group Activities
for the period from 1 January to 30 June 2013
14
01.01.2012-30.06.2012
Co
nso
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d d
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KO
GE
NE
RA
CJ
A
EC
Zie
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a G
óra
PP
O S
iech
nic
e -
dzia
łan
ośc
acti
vit
y
Ren
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Eli
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on
of
inte
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mp
an
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tra
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s
Unconsolidated net profit/(loss) 134 617 77 005 59 089 (1 167) (310) -
Revaluation to fair values (672) - (672) - - -
Adjustments to Group accounting policy 443 - 569 - (126) -
Reclassification 576 - 576 - - -
Other adjustments 47 247 (200) - - -
Net profit after adjustments 135 011 77 252 59 362 (1 167) (436) -
Elimination of intercompany transactions (53 525) - - - - (53 525)
Capital adjustments (6 804) (6 804) - - - -
Consolidated net profit/(loss) 74 682 70 448 59 362 (1 167) (436) (53 525)
*) On 2 May 2012, the ownership of the shares in PPO Siechnice Sp. z o.o. was transferred to Citronex I Sp. z o.o. under the sales agreement of 30 April
2012. The data in the report relate to the control period, i.e. until 30 April 2012, and were presented in the consolidated financial statements as discontinued
operations.
In the first half of 2013, the Group’s performance was affected by the results of the two companies: KOGENERACJA S.A.
and EC Zielona Góra S.A. Other Group companies have negligible impact on the consolidated result.
In the first half of 2013, the consolidated net income was also significantly affected by the related-party transactions, mainly
the dividend of PLN 59,435 thousand paid to the Parent Company by EC Zielona Góra S.A. (in H1 2012 the pay-out
amounted to PLN 53,982 thousand).
c. Impact of the net income of KOGENERACJA S.A. on the Group’s net income
In the first half of 2013, the Company generated a net income of PLN 98,808 thousand, up by PLN 21,803 thousand
compared with the corresponding period of the previous year. The key financials of the Company are presented and
discussed below.
Selected items of the profit and loss account of KOGENERACJA S.A.
in PLN thousand
Revenue from sales 315 886 338 666 (22 780)
Cost of sales (267 468) (302 777) 35 309
Gross profit on sales 48 418 35 889 12 529
Distribution expenses (775) (690) (85)
General and administrative expenses (2 407) (3 358) 951
Other operating revenues/costs 5 617 (4 630) 10 247
Operating profit (EBIT) 50 853 27 211 23 642
Net finance revenues 57 540 57 698 (158)
Income tax (9 585) (7 904) (1 681)
Net profit 98 808 77 005 21 803
For 6 months ended
30 June 2013
For 6 months ended
30 June 2012
Change
(value)
KOGENERACJA S.A. – Management Board’s Report on the Group Activities
for the period from 1 January to 30 June 2013
15
Revenues – KOGENERACJA S.A.
in PLN thousand
Revenues from sales 315 886 338 666 (22 780)
Revenues from the sale of finished goods 315 619 338 548 (22 929)
including certificates 3 499 47 562 (44 063)
including ancillary services 5 643 236 5 407
Revenues from the sale of merchandise and raw
materials267 118 149
Change
(value)
For 6 months ended
30 June 2013
For 6 months ended
30 June 2012
In the first half of 2013, the Company generated revenues from sales of PLN 315,886 thousand, including the revenues
from the sale of finished goods of PLN 315,619 thousand and the revenues from the sale of merchandise and raw materials
of PLN 267 thousand. In the first half of 2012, the revenues from sales were PLN 338,666 thousand, including the revenues
from the sale of finished goods of PLN 338,548 thousand and the revenues from the sale of merchandise and raw materials
of PLN 118 thousand.
The lower revenues from the sale of finished goods achieved in the first half of 2013 (down by PLN 22,929 thousand)
resulted from:
▪ lower revenues from the sale of certificates (down by PLN 44,063 thousand);
▪ lower revenues from the sale of electricity (down by PLN 3,050 thousand)
▪ higher revenues from the sale of heat (up by PLN 21,668 thousand)
▪ higher revenues from the sale of additional system services (up by PLN 5,407 thousand).
The total value of electricity sold incresed by PLN 2,357 thousand vs. H1 2012, because of higher sales volume,
compensated by 1.7% decrease in electricity price. The increase in the price of heat was 8.5% and the price of heat power
increased by 10.2%; this is an effect of the heat prices and heat tariffs for KOGENERACJA, which became effective on 1
August 2012 following approval of the President of the Energy Regulatory Office. At the same time, the volume of heat sales
increased by 4% in the analysed period compared with the first half of 2012.
In the first half of 2013, KOGENERACJA S.A. obtained revenues from the certificates for co-generated energy (red
certificates) and energy from renewable sources, from co-firing of biomass (green certificates) for an amount of PLN 3,499
thousand. Production of electricity through co-firing of wooden biomass fell by 86% in the analysed period of 2013 vs.
2012: “green” energy production in H1 2013 was 23,106 MWh compared with 159,331 MWh in H1 2012. The prices of
green certificates fell by 39%, while the prices of red certificates fell by 63% year-on-year. The volume of red certificates
fell by 31%.
In the first half of 2012, the Company sold its surplus CO2 emission allowances, generating an income of PLN
1,446 thousand while no such income was posted in the first half of 2013.
Revenues from the sale of merchandise and raw materials in the first half of 2013 were PLN 267 thousand.
d. Fixed costs and variable costs – KOGENERACJA S.A.
In the first half of 2013, variable costs relating to the generation of the sold products were 19% lower
(PLN 38,817 thousand) year-on-year amounting to PLN 162,859 thousand. In the first half of 2012, these costs stood at
PLN 201,676 thousand. The lower level of variable costs year-on-year results from the lower cost of fuel (down by PLN
40,742 thousand) caused by a change in the production profile and lower production from biomass in 2013, as well as an
increase in the price of the core production fuel (coal) by 8% (PLN 33,439 thousand).
The increase in other variable costs (PLN 1,977 thousand) vs. H1 2012 resulted from:
- raising a provision of PLN 3,227 thousand for the shortage of CO2 emission allowances as a result of changes in the
production profile and consequently higher emissions of CO2 and decreasing limits of CO2 emission allowances;
- higher environmental protection fees (PLN 873 thousand) as a result of changes in the production profile;
- lower costs of biomass storage and feeding (PLN 2,279 thousand) as a result of changes in the production profile.
KOGENERACJA S.A. – Management Board’s Report on the Group Activities
for the period from 1 January to 30 June 2013
16
in PLN thousand
Variable costs (162 859) (201 676) - - - - (162 859) (201 676)
fuel costs (143 943) (184 685) - - - - (143 943) (184 685)
excise tax (212) (264) - - - - (212) (264)
other variable costs (18 704) (16 727) - - - - (18 704) (16 727)
Fixed costs (104 380) (101 008) (2 407) (3 358) (775) (690) (107 562) (105 056)
staff costs (32 556) (31 603) (2 177) (2 916) (427) (466) (35 160) (34 985)
overhauls (6 357) (10 968) - - - - (6 357) (10 968)
depreciation (35 333) (31 337) (25) (3) - - (35 358) (31 340)
services (21 637) (17 960) (32) (295) - - (21 669) (18 255)
other fixed costs (8 497) (9 140) (173) (144) (348) (224) (9 018) (9 508)
Value of goods and
materials sold(229) (93) - - - - (229) (93)
Total costs (267 468) (302 777) (2 407) (3 358) (775) (690) (270 650) (306 825)
from 1.01.2013
to 30.06.2013
from 1.01.2012
to 30.06.2012
Cost of salesAdministrative
expensesSelling expenses Total
from 1.01.2013
to 30.06.2013
from 1.01.2012
to 30.06.2012
from 1.01.2013
to 30.06.2013
from 1.01.2012
to 30.06.2012
from 1.01.2013
to 30.06.2013
from 1.01.2012
to 30.06.2012
Fixed costs were at PLN 107,562 thousand in H1 2012, with comparable staff costs (up PLN 175 thousand), lower cost of
overhauls of production equipment (down PLN 4,611 thousand), higher depreciation (up PLN 4,018 thousand), and higher
cost of services (up PLN 3,414 thousand). Fixed costs in the corresponding period of the previous year amounted to PLN
105,056 thousand.
Staff costs increased by PLN 175 thousand in H1 2013 as a result of:
- raising of restructuring provisions of PLN 1,150 thousand;
- the lower level of salaries and social insurance costs (down PLN 1,316 thousand), coupled with a decrease in
employment by 36 persons (effect of outsourcing of services in the area of Telecommunications, Communications and
Administration), reduced by the inflationary increase in salaries;
- increase of provisions for annual awards for employees (PLN 341 thousand).
The increase in external service costs (by PLN 3,414 thousand) was caused by emergence of new cost items associated with
the services rendered by the Shares Services Centre (agreements for the provision of services in the area of
Telecommunication, Communication and Administration). The total cost of consideration paid to EDF Polska CUW Sp. z
o.o. was PLN 9,279 thousand for H1 2013 vs. PLN 7,903 thousand in H1 2012. In H1 2013, the cost of services under the
biomass feeding agreement decreased by PLN 1,541 thousand as a result of changes in the production profile. Also, the cost
of advertising and market development fell by PLN 1,541 thousand.
The increase in the depreciation (+ PLN 4,044 thousand) is an effect of new fixed assets being put in use in H1 2012.
The decrease in the cost of overhauls (-PLN 4,611 thousand) is an effect of changes in the scope of overhaul works in 2013
compared with H1 2012.
e. Other operating profit of KOGENERACJA S.A.
In the first half of 2013, other operating profit was higher by PLN 10,247 thousand year-on-year. Other operating income
increased by PLN 12,500 thousand and other operating expenses by PLN 2,253 thousand.
In the first half of 2013, additional income of PLN 8,624 thousand was generated under the forward contract for the swap of
CO2 emission allowances (EUA/CER) for the settlement period 2010-2012, and PLN 3,977 thousand representing a reversal
of the valuation for this financial instrument. In H1 2013, also a gain of PLN 969 thousand was reported from the disposal
of properties. In H1 2012 no similar items were posted in the operating income, but a tax risk provision of
PLN 1,168 thousand was raised.
KOGENERACJA S.A. – Management Board’s Report on the Group Activities
for the period from 1 January to 30 June 2013
17
In H1 2013, other operating expenses were PLN 9,037 thousand, compared with PLN 6,784 thousand reported in H1 2012
(+PLN 2,253 thousand).
In the first half of 2013, the Company recognized in other operating expenses negative valuation of forward contracts the
purchase of CO2 (EUA / CER) in the amount of PLN 4,034 thousand (in the first half of 2012, PLN 3 467 thousand) and
incurred additional costs in connection with the termination of the purchase of biomass of PLN 2,600 thousand.
f. Net finance income - KOGENERACJA S.A.
The net finance income in the first half of 2013 was similar to the figure posted in the first half of 2012
(PLN 57,540 thousand and PLN 57,698 thousand). It is mainly a consequence of lower finance revenues (down by
PLN 1,003 thousand) and lower finance expenses (down by PLN 845 thousand). The decrease in revenues was also affected
by the lower interest on the loan given to the subsidiary EC Zielona Góra S.A. (down by PLN 875 thousand) as the loan was
repaid. In H1 2013, the Company also posted higher finance revenues from dividend (by PLN 5,365 thousand), while in H1 2012
an additional income of PLN 7,097 thousand was reported from the sale of financial assets (PPO Siechnice Sp. z o.o. and
TGE S.A.). Financial expenses fell mainly due to the lower interest on the incurred financial obligations after the Company had
joined the cash-pool system.
g. Net income of KOGENERACJA S.A.
In the first half of 2013, the Company earned a net income of PLN 98,808 thousand compared with PLN 77,005 thousand
earned in the corresponding period of the previous year (a decrease by PLN 21,803 thousand).
The increase in the net income of the Parent Company results from:
the higher EBIT as a result of:
a decrease in costs of PLN 35,309 thousand, i.e. by 12%, compared with the fall in revenues (down 7%), due
to the changes in the production profile (an increase in the coal-based production and a decrease of biomass
consumption);
a decrease in sales revenues of PLN 22,780 thousand (down 7%), mainly due to the lower volume of granted
green certificates (no relevant regulations in place), while at the same time the prices of red certificates and
green certificates fell by 63% and 39%, respectively);
a higher other operating profit by PLN 10,247 thousand, mainly on the back of the profit of PLN
8,624 thousand under the CO2 EUA/CER contract.
h. Key ratios: ROA, ROE, ROCE
(%)
Return on assets (ROA) 7,54 5,90 28
Return on equity (ROE) 9,57 8,17 17
Return on capital employed (ROCE) 5,64 3,33 69
For 6 months ended
30 June 2013
For 6 months ended
30 June 2012
Change
(%)
The profitability ratios achieved by the Company in H1 2013 were higher compared with H1 2012: ROA increased by 28%
while ROE by 17%, which is mainly the result of a stronger growth in the net profit earned by the Company in the reporting
period (an increase of 28%), which exceeded the assets growth and equity growth (which increased by 0.5% and 9%,
respectively). The increase in ROCE led to an increase in the operating profit by 87% with a simultaneous increase in the
employed capital (by 9%).
The ratio calculation methodology is presented in point III 3 of this report.
KOGENERACJA S.A. – Management Board’s Report on the Group Activities
for the period from 1 January to 30 June 2013
18
i. Impact of the net income of EC Zielona Góra S.A. on the Group’s net income
In the first half of 2013, the Company generated a net profit of PLN 77,549 thousand, up by PLN 18,460 thousand
compared with the corresponding period of the previous year. The key financials of the subsidiary are presented in the tables
below.
Elements of the profit and loss account – EC Zielona Góra S.A.
in PLN thousand
Revenue from sales 175 668 225 340 (49 672)
Revenue from compensation for PPAs 81 301 9 663 71 638
Cost of sales (160 324) (151 321) (9 003)
Gross profit on sales 96 645 83 682 12 963
Distribution expenses (1 253) (466) (787)
General and administrative expenses (4 654) (7 463) 2 809
Other operating revenues/costs 8 482 223 8 259
Operating profit (EBIT) 99 219 75 976 23 243
Net finance costs (4 027) (3 764) (263)
Income tax (17 644) (13 123) (4 521)
Net profit 77 549 59 089 18 460
For 6 months ended
30 June 2013
For 6 months ended
30 June 2012
Change
(value)
Revenues - EC Zielona Góra S.A.
in PLN thousand
Revenuse from sales 175 668 225 340 (49 672)
Revenues from the sale of finished goods 173 583 225 337 (51 754)
including certificates - 38 887 (38 887)
Revenues from the sale of merchandise and raw
materials2 085 3 2 082
Revenue from compensation for PPAs 81 301 9 663 71 638
For 6 months ended
30 June 2013
For 6 months ended
30 June 2012
Change
(value)
In the first half of 2013, EC Zielona Góra S.A. generated revenues from the sale of finished goods of PLN 173,583
thousand. In the corresponding period of 2012, the total revenues were higher by PLN 51,754 thousand, coming in at PLN
225,337 thousand. Revenues from the sale of merchandise and raw materials were higher as a result of the sale of the
electricity previously purchased from TGE and EDF Energia. The value of electricity (merchandise) sold was PLN 2,048
thousand. In the first half of 2013, a growth trend was also observed with regard to the revenues from the compensations for
stranded costs. The revenues from the PPA compensations in H1 2013 were higher by PLN 71,638 thousand compared
with H1 2012.
The revenues from the sale of finished goods were primarily affected by the revenues from the sale of heat, electricity and
energy origin certificates. In the first half of 2013, the revenue from the sale of heat was 14% higher year-on-year. The
increase resulted both from the higher sales price and the higher volume of heat sold in effect of favourable weather
conditions. In H1 2013, the revenue from the sale of electricity decreased year-on-year. The decrease was caused both by
the lower prices and the lower volume of electricity sales. Due to the lack of legislation that would permit the sale of yellow
certificates, in H1 2013 energy certificates were not sold.
The increase in the revenues from PPA compensations is a result of recognition in H1 2013 of the impact of the correction
to the stranded costs for 2012 (PLN 72,088 thousand) after receipt of the decision from the President of the Energy
Regulatory Office issued in July 2013 (see point 3. Extraordinary circumstances which materially affected the Group’s
trading performance).
KOGENERACJA S.A. – Management Board’s Report on the Group Activities
for the period from 1 January to 30 June 2013
19
Fixed costs and variable costs of EC Zielona Góra S.A.
in PLN thousand
Variable costs (113 081) (112 890) - - - - (113 081) (112 890)
fuel costs (105 479) (108 142) - - - - (105 479) (108 142)
excise tax - - - - - - - -
other variable costs (7 602) (4 748) - - - - (7 602) (4 748)
Fixed costs (45 753) (38 430) (4 654) (7 463) (1 253) (466) (51 660) (46 359)
staff costs (10 578) (8 797) (3 186) (4 377) (96) (301) (13 860) (13 475)
overhauls (4 147) (4 200) (38) (7) (3) - (4 188) (4 207)
depreciation (21 366) (16 911) (358) (407) (11) - (21 735) (17 318)
services (7 274) (5 588) (199) (1 330) (70) (8) (7 543) (6 926)
other fixed costs (2 388) (2 934) (873) (1 342) (1 073) (157) (4 334) (4 433)
Value of goods and
materials sold(1 490) (1) - - - - (1 490) (1)
Total costs (160 324) (151 321) (4 654) (7 463) (1 253) (466) (166 231) (159 250)
from 1.01.2013
to 30.06. 2013
from 1.01.2012
to 30.06. 2012
Cost of salesAdministrative
expensesSelling expenses Total
from 1.01.2013
to 30.06. 2013
from 1.01.2012
to 30.06. 2012
from 1.01.2013
to 30.06. 2013
from 1.01.2012
to 30.06. 2012
from 1.01.2013
to 30.06. 2013
from 1.01.2012
to 30.06. 2012
In the first half of 2013, variable costs relating to the generation of the finished goods sold amounted to
PLN 113,081 thousand, up by PLN 192 thousand on H1 2012 (when the level of PLN 112,890 thousand was recorded). The
increase in variable costs was also noted in the area of other variable costs (up by PLN 2,854 thousand). The biggest items
in the structure of other variable costs were the cost of water used for the core activities, the cost of energy consumption and
the cost of purchase of electricity in the balancing market and the fees connected with the electricity sale transactions. The
increase in other variable costs was mainly driven by the higher costs of fees on electricity sales through the Energy
Exchange. An increase was also noted in the fees related to the operations in the electricity market (purchase of electricity in
the balancing market). The company also raised a provision for the estimated shortage of CO2 emission allowances of PLN
992 thousand, which was charged into other variable costs.
The increase in variable costs was compensated for by the lower cost of production fuel. The decrease in the cost of gas
consumption resulted from the lower volume of gas consumed (down by 2%) due to the lower sale of electricity. In turn, the
higher price of purchase of the commodity affected a decrease in the cost of gas consumption.
In the first two quarters of 2013, fixed costs stood at PLN 51,660 thousand and were higher by 11% compared with
H1 2012. In the first half of 2012, these costs stood at PLN 46,359 thousand. Staff costs, overhaul costs and other fixed
costs were similar year-on-year. A major increase was noted in the area of depreciation costs (up by PLN 4,417 thousand).
Staff costs were similar to H1 2012 despite a strong decrease in the remuneration costs as a result of the diminution of
workforce. This was mainly affected by the payouts to staff under the Voluntary Terminations Programme. The cost of
overhauls was also similar year-on-year, as in H1 2012 no more costs were spent on the overhaul of the coal part.
Depreciation costs were much higher due to the shorter period of economic usefulness of material fixed assets and the once-
off impairment charge on account of decommissioning of the production equipment of the Coal Unit. The increase in the
third party services mainly resulted from the higher cost of services rendered under SLAs.
In the first half of 2013, actions were taken to review the structure of the cost of sales. Based on these analysis, the sales
structure was revised to include the costs associated with the electricity trade on the Energy Exchange, which previously
were classified as the general and administrative expenses.
The value of materials and merchandise sold (excluding the electricity acquired for repurchase) was insignificant in the
analysed periods. In the first half of 2013, the company purchased electricity for PLN 1,469 thousand from EDF Energia
and TGE.
KOGENERACJA S.A. – Management Board’s Report on the Group Activities
for the period from 1 January to 30 June 2013
20
Other operating profit (loss) of EC Zielona Góra S.A.
In the first half of 2013, other operating profit was at PLN 8,482 thousand compared with PLN 223 thousand achieved in
the first half of 2012. Thus, the other operating profit in the current period was by PLN 8,259 thousand higher. The higher
other operating profit was also an effect of recognition of the impact of the valuation of the forward contract for the
purchase of CO2 emission allowances and the SWAP contract. The combined impact of the two instruments for the first half
of 2013 period in relation to the first half of 2012, and the execution of the EUA/CER swap transaction for 2010-2012 was
PLN 5,756 thousand.
Such result was also an effect of recovery by the company of its tax claims originated in August 2001. The value of the
cancelled tax liabilities and was PLN 2,929 thousand. The positive effect of the these events was compensated by creation
of impairment losses on doubtful receivables in H1 2013 (PLN 1,793 thousand).
Net finance income of EC Zielona Góra S.A.
In the first half of 2013, EC Zielona Góra S.A. generated finance revenue of PLN 1,854 thousand compared with
PLN 4,076 thousand achieved in the the first half of 2012. Finance expenses in H1 2013 were at PLN 5,881 thousand while
in the corresponding period of H1 2012 they amounted to PLN 7,840 thousand. Thus, the net finance income in the first half
of 2013 was PLN 4,027 thousand compared with PLN 3,764 thousand in the first half of 2012.
The financial activity in the first half of 2012 was, on the income side, only driven by interest on bank deposits, and, on the
cost side, by bank debt interest. After repayment of the investment loans and following changes in the method of financing,
the net finance income in the reporting period was driven by the finance revenue in respect on interest on late payments of
receivables and interest from the cash-pool system. The finance expenses in the analysed period mainly represented
a discount of liabilities in respect of stranded costs.
Net income of EC Zielona Góra S.A.
In the first half of 2013, the company generated a net profit of PLN 77,549 thousand. In H1 2012, the company’s net income
was PLN 59,089 thousand, down by PLN 18,460 thousand year-on-year. The net income in H1 2013, was mainly driven by
the revenue from the settlement of the stranded costs correction for 2012. The correction caused the revenues to increase by
PLN 72,088 thousand. The total increase of the discounted compensations for stranded costs in relation to H1 2012 was
PLN 71,638 thousand. The positive effect achieved on stranded costs was reduced by the lower sales of electricity and the
lack of revenues from the sale of energy certificates (yellow certificates). In H1 2012, the revenues from the sale of yellow
certificates were PLN 38,887 thousand.
The other key drivers of the net income for the reporting period included the executed SWAP contract of
PLN 5,742 thousand and the higher fixed costs, mainly due to the commenced depreciation of the gas and oil boilers. .
Key ratios: ROA, ROE, ROCE – EC Zielona Góra S.A.
(%)
Return on assets (ROA) 10,82 9,13 19
Return on equity (ROE) 25,91 22,48 15
Return on capital employed (ROCE) 32,95 23,12 42
For 6 months ended
30 June 2013
For 6 months ended
30 June 2012
Change
(%)
ROA achieved by the company in H1 2013 was higher year-on-year. The increase in ROA was an effect of the higher net
income. ROE was higher year-on-year as a result of the higher value of equity. ROCE increased on account of the higher
operating profit.
Ratio calculation methodology is shown in point III 3 of this report.
KOGENERACJA S.A. – Management Board’s Report on the Group Activities
for the period from 1 January to 30 June 2013
21
3. Extraordinary circumstances which materially affected the Group’s trading performance
(in accordance with § 87 section 4 point 2 of the Ordinance)
a. Annual correction to the stranded costs for 2012 for EC Zielona Góra S.A.
On 31 July 2013, the President of the Energy Regulatory Office issued a decision establishing the annual correction to
stranded costs for 2012 at PLN 134,089 thousand. Taking into account the correction for 2012, the value of liabilities on
account of stranded costs as at 30 June 2013 was PLN 164,347 thousand. The revenues from the PPA compensations were
the sum of: value of discount on the advance payment in the year it was received (PLN 5,258 thousand); a part of the annual
correction for 2013 falling due for the first half of the year (PLN 720 thousand); annual correction for 2012 (PLN 72,088
thousand) and the correction for 2012 of PLN 3,235 thousand, which is an effect of the revision of the model assumptions in
the process of determining revenues and expenses from the PPA compensations. The total revenues from PPA
compensations were PLN 81,301 thousand as at 30 June 2013.
b. Valuation of the CO2 forward contracts
In 2012, the Parent Company entered into forward transactions for the purchase of CO2 emission allowances. The transactions for
the purchase of 382 thousand tons will be finalised in December 2013. For the purpose of the financial statements, as at 30 June
2013, they were recognised under Other short-term financial liabilities. The value of the negative valuation was increased from
PLN 2,097 thousand as at 31 December 2012 to the amount of PLN 6,131 thousand as at 30 June 2013 (the increase was
reported under Other operating costs of PLN 4,034 thousand).
As part of the forward agreements concluded in 2012, EC Zielona Góra S.A. made a valuation of the transaction of purchase
of CO2 emission allowances. The purchase of 136 thousand tons will be completed in December 2013, and for the purpose
of the financial statements as at 30 June 2013 the transaction was presented in Other short-term financial liabilities. The
value of the valuation was increased from PLN 656 thousand as at 31 December 2012 to PLN 2,058 thousand as at 30 June
2013 (the increase was reported under Other operating costs of PLN 1,402 thousand).
The total impact of the forward agreements on the consolidated net profit in H1 2013 was PLN 4,403 thousand (including:
PLN 5,436 thousand as Other operating costs and PLN 1,033 thousand as a deferred tax).
Due to the change of the method of management of the forward contracts, the forwards for the sale / purchase of CO2
emission allowances concluded in 2013 were not subject to valuation. Currently, the Parent Company qualifies forward
contracts concluded in 2013 as a standard purchase/sale transactions for their own which will be reflected in the financial
statements on dates of deliveries.
c. Execution of the EUA/CER SWAPS for 2010-2012
As part of the EUA/CER SWAP contracts concluded for 2010-2012, in April 2013, the Parent Company and the subsidiary
EC Zielona Góra S.A. entered into swap transactions whereby the Group achieved a positive result on other operations of
PLN 14,369 thousand (PLN 8,627 thousand attributable to the Parent Company and PLN 5,742 thousand attributable to
EC Zielona Góra S.A.).
KOGENERACJA S.A. – Management Board’s Report on the Group Activities
for the period from 1 January to 30 June 2013
22
4. Structure of assets and liabilities in the consolidated statement of comprehensive income
(in accordance with § 87 section 7, point 10 of the Ordinance)
a. Structure of the Group assets
In the first half of 2013, the total assets fell by PLN 54,782 thousand. Non-current assets accounted for 78.4% of total
assets. Tangible assets accounted for the major part (73.5%) of non-current assets. As at 31 December 2012, non-current
assets accounted for 77.8% of total assets, while tangible assets accounted for 73.0% of total assets.
The structure of current assets saw a decrease in the share of inventory by 3.9 p.p., (5.3% in H1 2013 and 9.2% in 2012),
mainly due to the lower volume of coal purchased in summer caused by the seasonality of production as well as an increase
in the trade and other receivables in total assets, in particular other receivables in the subsidiary Zielona Góra for adjustment
of stranded costs for 2012 considered by the Energy Regulatory Office (see point 3a).
in PLN thousand As at
30 June 2013
% of balance sheet
total
As at
31 December 2012
% of balance sheet
total
current period current period copmarative period copmarative period
ASSETS
I. Non-current assets
1. Property, plant and equipment 1 319 492 73,5 1 349 762 73,0
2. Intangible fixed assets, including: 48 948 2,7 48 984 2,6
- goodwill on related parties 41 601 2,3 41 601 2,2
3. Perpetual usufruct of land 12 382 0,7 12 430 0,7
4. Investment properties 18 194 1,0 19 193 1,0
5. Long-term receivables 9 253 0,5 6 978 0,4
6. Shares in other related entities - - 378 0,0
7. Other long-term investments 4 0,0 4 0,0
8. Deferred tax assets 917 0,1 807 0,1
Total non-current assets 1 409 190 78,4 1 438 536 77,8
II. Current assets
1. Inventory 94 747 5,3 169 698 9,2
2. Short-term investments 602 0,0 670 0,0
3. Income tax receivables 2 979 0,2 8 418 0,5
4. Trade and other receivables 224 783 12,5 220 887 11,9
5. Cash and cash equivalents 61 817 3,5 11 069 0,6
Total current assets 384 928 21,6 410 742 22,2
III. Assets held for sale 378 0,0 - -
Total Assets 1 794 496 100 1 849 278 100
KOGENERACJA S.A. – Management Board’s Report on the Group Activities
for the period from 1 January to 30 June 2013
23
b. Structure of the Group equity and liabilities
In the structure of equity and liabilities, equity increased by PLN 115,722 thousand, and liabilities fell by
PLN 162,814 thousand.
In current liabilities, a decrease was noted in trade and other payables, and their share in the balance sheet total decreased
from 9.1% in 2012 to 5.5% in H1 2013, which is mainly connected with the seasonality of production.
in PLN thousand
As at
30 June 2013
% of balance sheet
total
As at
31 December 2012
% of balance sheet
total
current period current period copmarative period copmarative period
EQ UITY AND LIABILITIES
I. Equity
1. Share capital 252 503 14,0 252 503 13,7
2. Share premium 251 258 14,0 251 258 13,6
3. Other reserve capital 406 546 22,7 313 143 16,9
4. Retained earnings 319 082 17,8 297 043 16,1
Equity attributable to ordinary shareholders 1 229 389 68,5 1 113 947 60,2
Non- controlling interests 5 417 0,3 5 137 0,3
Total equity 1 234 806 68,8 1 119 084 60,5
II. Liabilities
Non-current liabilities
1. Loans, borrowings and other debt securities 1 220 0,1 1 089 0,1
2. Other long-term financial liabilities - - - -
3. Employee benefits 37 321 2,1 37 499 2,0
4. Deferred income 57 317 3,2 59 755 3,2
5. Deferred tax liability 73 109 4,1 64 651 3,5
6. Other non-current liabilities 166 387 9,2 95 963 5,2
Total non-current liabilities 335 354 18,7 258 957 14,0
Current liabilities
1. Loans, borrowings and other debt securities 79 691 4,4 257 332 13,9
2. Other short-term financial liabilities 9 637 0,5 9 390 0,5
3. Income tax liabilities 10 158 0,6 9 313 0,5
4. Trade and other payables 98 016 5,5 168 858 9,1
5. Employee benefits 17 577 1,0 21 668 1,2
6. Short-term provisions 9 257 0,5 4 676 0,3
Total current liabilities 224 336 12,5 471 237 25,5
Total liabilities 559 690 31,2 730 194 39,5
Total equity and liabilities 1 794 496 100,0 1 849 278 100,0
KOGENERACJA S.A. – Management Board’s Report on the Group Activities
for the period from 1 January to 30 June 2013
24
c. Liquidity ratios of the Group
Current liquidity 1,72 1,00 72
Quick liquidity 1,29 0,71 82
As at
30 June 2013
Change
(%)
As at
30 June 2012
In the first half of 2013, current liquidity ratio increased by 72%, while the quick liquidity ratio increased by 82% year-on-
year as a result of a 48% decrease in the current liabilities.
Ratio calculation methodology is shown in point III 3 of this report.
5. Related party transactions
(in accordance with § 87 section 7, point 8 of the Ordinance)
a. Transactions made by the Parent Company
The key transactions between the Parent Company and its related parties in H1 2013 are presented in the table below. Also,
EDF Energia Sp. z o.o. was classified as a related party. The company has no direct capital ties with KOGENERACJA S.A.,
but is a member of the EDF Group in Poland, and there are significant transactions being made between the companies.
For 6 months ended 30 June 2013
in PLN thousand
Revenues earned
from related party
transactions
in the current period
Costs incurred
in related party
transactions
in the current period
EDF Paliwa Sp. z o.o.* 153 105 261
EDF Energia Sp. z o.o.* 146 009 7 919
EDF Polska S.A. ** 259 12 363
EC Zielona Góra S.A. 59 611 -
Renevis Sp. z o.o. 502 4 963
EDF Assurances - 1 158
206 534 131 664
*) Transactions within EDF Group relate to: EDF Polska S.A., EDF International S.A.S., EDF S.A., EDF Assurance.
**) On 8 May 2013, after the merger of: EDF Polska Centrala Sp. z o.o., EDF Polska CUW Sp. z o.o. and EDF Kraków S.A., the entity
was renamed as EDF Polska S.A.
KOGENERACJA S.A. – Management Board’s Report on the Group Activities
for the period from 1 January to 30 June 2013
25
b. Group transactions
The key transactions with related parties in H1 2013, taking into account intercompany eliminations, are presented in the
table below.
For 6 months ended 30 June 2013
in PLN thousand
Revenues earned
from related party
transactions
in the current period
Costs incurred
in related party
transactions
in the current period
Non-consolidated entities
EDF Paliwa Sp. z o.o.* 162 105 273
EDF Energia Sp. z o.o.* 209 202 11 088
EDF Polska S.A. ** 419 18 029
EDF Assurances - 1 767
209 783 136 157
6. Guarantees given and received
(in accordance with § 87 section 7, point 9)
a. Guarantees given
The Parent Company provided loan guarantees under the cash-pooling system for a total value of more than 10% of
KOGENERACJA’S equity on 25 July 2012. In the first half of 2013, annexes 3 and 4 to the agreements were included and
they have changed the structure of the companies involved in the cash-pool and extended the term of the contract, without
changing the value of granted guarantees for KOGENERACJA S.A.:
a. Guarantee up to the maximum amount of PLN 77,000 thousand to ING Bank Śląski S.A. securing against default on the
existing obligations, including in respect of the Daily Limits under the Daily Limits Liquidity Management Agreement,
by the debtors - the EDF Group companies in Poland, namely:
- EDF Wybrzeże S.A.,
- EDF PolskaS.A.,
- EDF Energia Sp. z o.o.,
- EDF Rybnik New Coal Sp. z o.o.,
- EDF Paliwa Sp. z o.o.,
- EDF Toruń S.A.,
- FENICE Poland Sp. z o.o.
- Elektrociepłownia „Zielona Góra” S.A.;
The guarantee expires on 31 August 2015.
The total amount of the obligations that are partly guaranteed by the Company is PLN 989,000 thousand.
b. Guarantee up to PLN 33,000 thousand in favour of ING Bank Śląski S.A. as security against default of the Group
companies in Poland specified above, under the Framework Agreement, for repayment of all the obligation, including
those in respect of the guarantee line, interest, fees and other costs, including the cost of debt enforcement, should any
EDF Group company in Poland listed above fail to meet its obligations by the deadline specified in the Framework
Agreement.
The guarantee expires on 31 August 2016.
The total amount of the obligations that are partly guaranteed by the Company is PLN 150,000 thousand.
KOGENERACJA S.A. – Management Board’s Report on the Group Activities
for the period from 1 January to 30 June 2013
26
c. Guarantee for the obligations of EDF Polska CUW Sp. z o.o. under the Loan Agreement between EDF Polska
CUW Sp. z o.o. and ING Bank Śląski S.A., whereby ING Bank Śląski S.A. gave EDF Polska CUW Sp. z o.o. a credit line
of PLN 150,000 thousand, up to the maximum amount of PLN 33,000 thousand, securing the obligations of EDF Polska
CUW Sp. z o.o. under the Loan Agreement, and in particular the obligations in respect of the credit line, interest, fees and
other costs, including debt enforcement costs, if EDF Polska CUW Sp. z o.o. fails to meet its obligations towards ING Bank
Śląski S.A. by the deadline specified in the Loan Agreement.
The guarantee expires on 31 August 2015.
The guarantees were provided for a fee, which corresponds to the fees normally payable for such services provided in the
financial services sector, and was calculated pro-rata to the participation in the risk attached to the guarantee. For issuing the
guarantee under the Loan Agreement, the Parent Company will receive a fee of PLN 18 thousand, and in respect of the
Daily Limits Liquidity Management Agreement and the Framework Agreement the Issuer will receive a fee of PLN 18
thousand (Current Report no. 15/2012).
According to the operating model of the cash-pool service, EDF Group companies in Poland will provide cross-guarantees
to each other, whereby cash transfers will be made. All the agreements with ING Bank Śląski S.A., i.e. the daily limits
liquidity management agreement, loan agreement and the framework agreement, concluded under the cash-pool system, are
secured through cross-guarantees.
A detailed list of all guarantees given by the Group companies is presented in the Interim Consolidated Financial Statements
of KOGENERACJA S.A. for H1 2013, B V Selected notes to the interim condensed financial statements, point 15 Claims
and contingent liabilities, and C V Selected notes to the interim condensed financial statements, point 8 Claims and
contingent liabilities.
b. Guarantees received
In H1 2013, the Parent Company did not receive any guarantees (for loans or other), whose total value would exceed 10%
of its equity.
7. Financial results presented in the report vs. the published performance forecast
(in accordance with § 87 section 7, point 4 of the Ordinance)
The Company did not publish its forecast for the first half of 2013.
8. Assessment of financial resources management
(in accordance with § 87 section 7, point 10 of the Ordinance)
a. Elements of the consolidated cash flow statement
In the first half of 2013 and 2012, the Group's cash flows were as follows (selected data):
in PLN thousand
Net cash from operating activities 269 106 273 392 (4 286)
Net cash used in investing activities (50 321) (40 252) (10 069)
Net cash from financing activities (168 037) (128 871) (39 166)
Total net cash flows 50 748 104 269 (53 521)
Cash and cash equivalents at the beginning
of the financial year11 069 96 551 (85 482)
Cash and cash equivalents at the end
of the financial year61 817 200 820 (139 003)
As at
30 June 2013
Change
(value)
As at
30 June 2012
KOGENERACJA S.A. – Management Board’s Report on the Group Activities
for the period from 1 January to 30 June 2013
27
1) Operating activities
In the first half of 2013, the operating cash flows of the Group were PLN 269,106 thousand, down by PLN 4,286 thousand
year-on-year (PLN 273,392 thousand in the first half of 2012), e.g. due to the higher tax paid (up PLN 9,279 thousand) and
an increase of PLN 42,005 thousand in the Group's net income compared with the previous year.
2) Investing activities
The negative cash flows from investing activities increased by PLN 10,069 thousand (PLN 50,321 thousand in the first half
of 2013 and PLN 40,252 thousand in the first half of 2012), due to the lower investment inflows (down by PLN 10,579
thousand) in 2013. The inflows from the sale of financial assets were lower by PLN 6,811 thousand. In 2013, inflows were
posted in respect of the sale of the shares in PPO Siechnice Sp. z o.o. in 2012. In the first half of 2013, the Company
received the second tranche of PLN 3,000 thousand representing payment for the shares in PPO Siechnice Sp. z o.o.
Investment outflows were comparable year-on-year (PLN 55,545 thousand in H1 2013 and PLN 56,055 thousand in
H1 2012).
3) Financing activities
The negative net cash flows from financing activities increased by PLN 39,166 thousand (PLN 168,037 thousand in H1
2013 vs. PLN 128,871 thousand in H1 2012), driven by:
an increase in financial outflows by PLN 8,328 thousand (main changes included a material decrease of
PLN 111,220 thousand in the cost of redemption of debt securities – reported by the Parent Company) and a
simultaneous increase in the repayment of loans (down by PLN 106,077 thousand);
a decrease in financial inflows by PLN 47,494 thousand, due to the lower inflow of funds under the cash-pool system in
the Parent Company (PLN 55,015 thousand), reduced by the inflow of a subsidy of PLN 7,521 thousand in EC Zielona
Góra S.A.
Below are the cash flow statements of KOGENERACJA S.A. and EC Zielona Góra S.A, as they are key to the Group’s cash
flows.
b. Cash flows of KOGENERACJA S.A.
In the first half of 2013 and 2012, the Company’s cash flows were as follows (selected data):
in PLN thousand
Net cash from operating activities 221 064 146 274 74 790
Net cash used in investing activities (38 482) (27 646) (10 836)
Net cash from financing activities (182 333) (116 932) (65 401)
Total net cash flows 249 1 696 (1 447)
Cash and cash equivalents at the beginning
of the financial year151 3 381 (3 230)
Cash and cash equivalents at the end
of the financial year400 5 077 (4 677)
As at
30 June 2013
As at
30 June 2012
Change
(value)
The effective financial management in the first half of 2013 allowed the Company (like in the first half of 2012) to balance
its cash flow position, i.e. to fund its investment and financial expenses from operating cash flows.
KOGENERACJA S.A. – Management Board’s Report on the Group Activities
for the period from 1 January to 30 June 2013
28
1) Operating activities
In the first half of 2013, the operating cash flows increased by 51% year-on-year. In the first half of 2013, net cash flows
from operating activities were at PLN 221,064 thousand vs. PLN 146,274 thousand in the first half of 2012.
The key drivers of the operating cash flows included:
- An increase of PLN 21,803 thousand in the net income (PLN 98,808 thousand in H1 2013 vs. PLN 77,005 thousand in H1
2012);
- An increase in working capital (change in receivables, inventory and liabilities) of PLN 50,055 thousand (change in
working capital in H1 2013: PLN 127,494 thousand; change in H12012: PLN 77,439 thousand), caused by the increase in
trade debtors by PLN 18,559 thousand, the increase in inventory by PLN 32,124 thousand, and a change in the balance of
short-term liabilities, excluding bank and non-bank loans by PLN 1,376 thousand.
2) Investing activities
The negative balance of cash flows from investing activities in the first half of 2013 is mainly the result of the lower
investment inflows and higher outflows. In the first half of 2013, cash flows from investing activities were negative at
PLN (- 38,482) thousand compared with PLN (-27,646) thousand in the first half of 2012.
In the analysed periods the cash flows from investing activities were as follows:
- spend on purchase of tangible and intangible fixed assets increased by PLN 8,738 thousand (PLN 47,761 thousand in
H1 2012 vs. PLN 39,023 thousand in H1 2012);
- the outflows in respect of the purchase of financial assets decreased by PLN 5,461 thousand; In H1 2012, the Company
purchased shares in its subsidiary PPO Siechnice Sp. z o.o., and short-term financial assets; In H1 2013 no short-term
financial assets were purchased;
- The investment inflows in H1 2013 decreased by PLN 7,559 thousand as a result of lower revenues from financial assets;
in H1 2012, financial assets of PLN 15,811 thousand were sold (PPO Siechnice Sp. z o.o. and TGE S.A.), in the
corresponding period an inflow of PLN 3,000 thousand was reported (2nd
tranche of the payment for the shares in PPO
Siechnice SP. z o.o. sold in 2012).
3) Financing activities
The cash flows from financing activities in the first half of 2013 were negative at PLN (-182,333) thousand while in the first
half of 2012 the balance was also negative at PLN (-116,932) thousand. The change of PLN 65,401 thousand was caused by
the following factors:
- an increase of PLN 9,142 thousand in the finance expenses, mainly caused by repayment of an overdraft and
discontinuation of the bonds financing system (PLN 0 in H1 2013 vs. PLN 111,220 thousand in H1 2012);
- a decrease of PLN 56,259 thousand in financial inflows, resulting from the debt position (cash-pool) and the need to repay
an overdraft in June 2012 due to the change of financing structure of the Parent Company.
4) Net cash flows
In the first half of 2013, total net cash flows were positive and amounted to PLN 249 thousand. In the comparative period,
the value was negative at PLN 1,696 thousand. At the end of H1 2013, the balance of cash was PLN 400 thousand (PLN
5,077 thousand at the end of H1 2012).
KOGENERACJA S.A. – Management Board’s Report on the Group Activities
for the period from 1 January to 30 June 2013
29
c. Financial liquidity – KOGENERACJA S.A.
Current liquidity 1,12 1,00 12
Quick liquidity 0,65 0,54 21
As at
30 June 2013
As at
30 June 2012
Change
(%)
Liquidity ratios of KOGENERACJA S.A. in the first half of 2013 were as follows: current liquidity of 1.12, quick liquidity
of 0.65. The increase in current liquidity vs. H1 2012 was mainly caused by a decrease of 24% in current liabilities, with a
concurrent decrease of 14% in current assets.
As at 30 June 2013, the Company’s non-current liabilities in respect of bank loans were PLN 156 thousand (PLN 170
thousand in 2012).
d. Cash flows of EC Zielona Góra S.A.
in PLN thousand
Net cash from operating activities 47 444 124 471 (77 027)
Net cash used in investing activities (5 445) (12 592) 7 147
Net cash from financing activities 9 588 (9 826) 19 414
Total net cash flows 51 587 102 053 (50 466)
Cash and cash equivalents at the beginning
of the financial year9 611 90 956 (81 345)
Cash and cash equivalents at the end
of the financial year61 198 193 009 (131 811)
As at
30 June 2013
As at
30 June 2012
Change
(value)
1) Operating activities
In H1 2013, operating cash flows decreased vs. H1 2012 by PLN 77,027 thousand, mainly as a result of a significant
increase (by PLN 102 170 thousand) of changes in accounts receivable at June 30, 2013, compared with December, 31
2012, mainly due to stranded costs. The positive result on the operating activities was limited by the decrease in the value of
inventories, mainly energy origin certificates, and the lower liabilities, mainly trade debtors and taxes.
2) Investing activities
Cash flows from investing activities in H1 2013 were negative at PLN (-5,445) thousand. Investment outflows of
PLN 6,209 thousand were slightly offset by investment inflows from bank deposits (PLN 764 thousand). The key
investments included modernisation and construction of heating networks.
KOGENERACJA S.A. – Management Board’s Report on the Group Activities
for the period from 1 January to 30 June 2013
30
3) Financing activities
In the first half of 2013, the cash flows from financing activities were mainly affected by:
interest on investment and other loans (PLN 816 thousand);
repayment of investment and other loans (PLN 2,910 thousand);
a part of the subsidy received for the construction of gas & oil boilers (PLN 13,314 thousand).
In the first half of 2013, the company achieved positive cash flows from financing activities. This was an effect of the part
of the subsidy received, and lower principal instalments on financial debt.
4) Net cash flows
In the first half of 2013, total net cash flows were positive and amounted to PLN 51,587 thousand. In the comparative
period, the value was much higher and amounted to PLN 102,053 thousand. At the end of June 2013, the balance of cash
was PLN 61,198 thousand vs. PLN 193,009 thousand at the end of H1 2012.
e. Financial liquidity - EC Zielona Góra S.A.
Current liquidity 2,28 0,98 133
Quick liquidity 2,24 0,93 141
As at
30 June 2013
As at
30 June 2012
Change
(%)
Liquidity ratios of EC Zielona Góra S.A. in the first half of 2013 were as follows: 2.28 – current liquidity and 2.24 – quick
liquidity. In H1 2012, these ratios were 0.98 and 0.93, respectively. The increase in the ratios was mainly caused by the
lower short-term liabilities, especially bank and non-bank loans.
At the end of 30 June 2013, EC Zielona Góra S.A. did not have any overdue liabilities. Short-term debts are repaid on an
on-going basis – there is no risk of liquidity loss.
9. Loan agreements
(in accordance with § 87 section 7 point 10 of the Ordinance)
a. Loans incurred
In the period from 1 January 2013 to 30 June 2013, the Parent Company continued using the cash-pool system after
conclusion, on 25 June 2012, of the agreement on comprehensive financial liquidity management by ING Bank Śląski S.A.
for EDF Group companies in Poland. Following the signing of annexes on 14 June 2013, the following limits were changed:
PLN 360,000 thousand (previous limit: PLN 296,000 thousand); maximum value of bank guarantees: PLN 60,000 thousand
(previous limit: PLN 40,000 thousand). As at 30 June 2013, the debt on this account was PLN 78,224 thousand.
b. Repayment of loans
In the period from 1 January 2013 to 30 June 2013, the Group repaid borrowings in the total amount of
PLN 178,021 thousand (consolidated data), including:
a) PLN 178,021 thousand – KOGENERACJA S.A.
Debt repayment by the Parent Company included payment of the debt of PLN 149,482 thousand under the cash-pool
system; full prepayment of the investment loan of PLN 26,715 thousand and repayment of the last instalment
(PLN 1,824 thousand) of the loan from WFOŚiGW (Provincial Environmental Protection and Water Management Fund).
KOGENERACJA S.A. – Management Board’s Report on the Group Activities
for the period from 1 January to 30 June 2013
31
c. Issue of bonds
In the first half of 2013, KOGENERACJA S.A. did not issue or redeem any debt securities.
10. Loans granted (in accordance with § 87 section 7 point 10 of the Ordinance)
a. Loans given in the first half of 2013
The Company did not grant any loans in H1 2013.
b. Loans given in the previous years
KOGENERACJA S.A. received quarterly financial income from the loans given to EC Zielona Góra S.A. The loan
agreements were signed on 3 June 2002 for a total amount of PLN 69,700 thousand. The loans were to be repaid by 2016
and financed construction of the CC Gas Unit in EC Zielona Góra, which was commercially commissioned in 2004.
According to the new loan schedule included in amendment 3 to the loan agreement of PLN 60,000 thousand of
2 November 2011, the subsidiary EC Zielona Góra S.A. repaid the loan principal of PLN 26,592 thousand in 2011. The
balance of PLN 3,712 thousand was repaid in January 2013, in accordance with Annex 2 of 18 January 2013. As at June 30,
2013, the loan of subsidiary Zielona Góra S.A. was fully repaid.
As at 30 June 2013
Loans
EC Zielona Góra S.A. 69 700 WIBOR + 1,3% PLN 03-06-2002 - 30-06-2016
in PLN thousand Date grantedBalance with
interestsDue dateAmount Interest rate CCY
c. Loans granted to members of the Supervisory Board
As part of the Company Social Fund, in the first half of 2013 loans were given to the following members of the Supervisory
Board:
As at 30 June 2013
Michalik Jerzy 6 000 1% PLN 01-07-2011 2 216 31-07-2014
Roman Nowak 6 000 1% PLN 01-05-2012 3 936 31-07-2015
Zbigniew Szymanek 8 000 1% PLN 01-05-2013 8 000 31-05-2016
Henryk Zajas 30 000 1% PLN 04-09-2009 13 500 30-09-2015
Henryk Zajas 8 000 1% PLN 01-09-2011 3 630 31-12-2014
Due datein PLN Amount Interest rate CCY Date grantedBalance with
interests
KOGENERACJA S.A. – Management Board’s Report on the Group Activities
for the period from 1 January to 30 June 2013
32
11. Events with significant impact on the Group’s activities (in accordance with § 87 section 7 point 10 of the Ordinance)
1) Events significantly affecting the Group’s activities in the reporting period
In the first half of 2013, the following events significantly affected the Group’s business:
In H1 2013, the Group’s net income increased by PLN 42,005 thousand, amounting to PLN 116,687 thousand vs.
PLN 74,682 thousand in H1 2012;
- On 22 January 2013, the Company’s Extraordinary General Meeting appointed Mr. Ryadh Boudjemadi to the
Supervisory Board (Current Report no. 1,2,3/2013).
- On 27 February 2013, an annex was signed to the significant agreement for the supply of biomass of
27 September 2012 concluded with EDF Paliwa Sp. z o.o. The amendments relate to liquidated damages and the
volume of biomass supplies (Current Report no. 5/2013).
- On 29 March 2013, KOGENERACJA S.A. made a voluntary prepayment of the investment loan of
PLN 26,715 thousand to Bank Ochrony Środowiska S.A. (Current Report no. 6/2013).
- On 15 April 2013, The Management Board of the Parent Company adopted a resolution on the proposed distribution of
profit for 2012, postulating allocation of the entire earnings to the reserve capital, which may be used in the future to
finance the Company's investments, including construction of the desulphurisation and denitrification installation in
EC Wrocław, and construction of new equipment in EC Czechnica. The reserves might also be used for the possible
payment of a future dividend (Current Report 7/2013). The Management Board’s report on the distribution of profit for 2012
was positively reviewed by the Supervisory Board at the meeting on 25 April 2013 (Current Report no. 10/2013) and
adopted by the General Meeting (Current Report 17/2013).
- The employees of KOGENERACJA S.A. elected Supervisory Board members acting on their behalf. The persons
elected by the employees became part of the Supervisory Board following adoption of the relevant resolutions by the
General Meeting of KOGENERACJA S.A. (Current Report no. 9/2013).
- On 8 May 2013, under Article 492 § 1 (1) of the Commercial Companies Act, a merger took place between the EDF
Group companies in Poland: EDF Rybnik S.A. (Acquiring Entity) and EDF Kraków S.A., EDF Polska CUW Sp. z o.o.,
EDF Polska Centrala Sp. z o.o. (Acquired Entities). The new entity was named as EDF Polska S.A. The number of shares
in the registered capital and the total number of votes at the General Meeting of KOGENERACJA S.A., acquired through
the universal succession by EDF Polska S.A. did not change and stands at 17.74% (Current Report no. 11/2013).
- Due to the merger of the EDF Group companies in Poland, the Parent Company entered into Annex 3 to the Agreement
of the Participants in the Daily Limits Liquidity Management Agreement and to the Agreement of the EDF Group
Companies in Poland, members of the former agreement, as part of the cash-pool service agreement package. The list
of entities participating in the cash-pool system changed. Other terms of the cash-pool agreement package remained
unchanged (Current Report no. 12/2013).
- On 14 June 2013, the Parent Company entered into Annex 4 to the Agreement of the Participants in the Daily Limits
Liquidity Management Agreement and to the Agreement of the EDF Group Companies in Poland. The annex changed
the debt limits (Current Report no. 19/2013).
- Due to the lack of relevant legislation, neither the Parent Company nor EC Zielona Góra posted any income from the
sale of certificates in H1 2013 produced in 2013.
2) Events significantly affecting the Group’s activities after the end of the reporting period until approval of the
financial statements
On 5 July 2013 the Parent Company concluded an agreement with the National Environmental Protection Fund and Water
Management in Warsaw for co-financing the project “Combustion fumes’ denitrification installation for the boiler No. 3 of
the heat and power plant in Wrocław”, realized within the Operation Program Infrastructure and Environment 2007-2013,
Priority IV, activity 4.5. The expected cost of the project amounts to PLN 44 286 thousand of which PLN 36 000 thousand
will be co-financed. First motion for payment will be filed by the Company in October 2013.
On 31 July 2013, EC Zielona Góra received a decision of the President of the Energy Regulatory Office on the annual
stranded costs correction for 2012 – the value of the correction was established at PLN 134,089 thousand. After the
discount, the correction had an impact of PLN 72,088 thousand on the net income - it was posted in June 2013.
On 24 July 2013, the Parent Company called an EGM, which was held on 20 August 2013 (Current Report no.
20/2013) and adopted resolutions amending the articles of the Statutes of the Company concerning the remuneration
rules for the Members of the Supervisory Board (Current Report 22/2013).
On 22 August 2013, the Parent Company received a dividend of PLN 59,435 thousand from EC Zielona Góra S.A.
(PLN 53,982 thousand in 2012).
KOGENERACJA S.A. – Management Board’s Report on the Group Activities
for the period from 1 January to 30 June 2013
33
12. Factors that will affect the Group’s performance in the subsequent periods
(in accordance with § 87 section 4, point 11 of the Ordinance)
According to the Group, the key drivers of the Group’s performance in the subsequent periods will include:
a) The planned legislation changes in relation to the revision of the Energy Law and associated acts (a system of support
for red, green and yellow certificates);
b) Volume of production and the related volume of CO2 emissions;
c) Profitability of production of renewable energy in the context of legislative changes;
d) The value of the subsidies towards the stranded costs connected with termination of the PPA of EC Zielona Góra on
1 April 2008;
e) Weather conditions (external temperature);
f) Investment decision regarding development of the plant in EC Czechnica.
13. Description of key risks and threats
(in accordance with § 90 section 1, point 3 of the Ordinance)
Key risks and threats relating to the operations of KOGENERACJA S.A.:
1) Dependence on buyers
The Company’s operations are to a large extent dependent on Fortum Power and Heat Polska, the operator of the heat
distribution network. A key risk source for the Company is the project of Fortum Power and Heat Polska to construct a heat
and power plant with CC Gas Unit with a capacity of 400 MWe, located in Wrocław at ul. Obornicka 195.
In response to this threat, the Company took a number of steps to make the city and province authorities, and the public
alike, about the impact of the construction of such heat source and its connection to the heating system in Wrocław, namely
the expected higher cost of heat delivered from the system.
To determine the demand for network heat for the next years in Wrocław, the Company ordered and received two
projections regarding development of the heat market in Wrocław until 2025. The Company also co-operates with an
advisor selected by the city authorities, who is working on a update to the document Assumptions for the heat, gas and
electricity supply plan for Wrocław”, adopted by the City Office in 2004.
The update developed by the contractor was passed on for social consultations. In July 2013, the Company sent its
comments to the updated "Assumptions (...)”.
2) Change of Energy Law
The Energy Law and its subordinate acts give shape to Poland's power sector as they lay down the terms and conditions for
sourcing and using fuels and energy and define the authorities regulating the management of fuels and energy.
In accordance with the Ordinance of the Economy Minister of 18 October 2012, new definitions were introduced – auxiliary
fuel and round timber. Due to these new provisions, the Energy Regulatory Office requires that any requests for the issue of
green certificates filed from December 2012 should be supported by a detailed documentation confirming the origin of the
timber and the volume of the combusted auxiliary fuel (ignition oil).
3) Other legal developments
On 1 January 2013, a revised act on trading in the allowances for emission of greenhouse gases came into force. The act
regulates in more details the aspects related to the trading in emission allowances post 2013 (e.g. the system of emission
auctions). Nonetheless, no implementing regulations have yet been adopted for the act.
Furthermore, work is underway on an act on renewable energy sources (bill dated 26 July 2012), which is going to affect the
Company's business in the following years.
KOGENERACJA S.A. – Management Board’s Report on the Group Activities
for the period from 1 January to 30 June 2013
34
4) Amendment of the IPPC Directive – proposal for a Directive of the European Parliament and of the Council on
industrial emissions (integrated pollution prevention and control) (Recast) (COM(2007)/844/Final)
6 January 2011 saw implementation of the Directive on industrial emissions, replacing the IPPC and LCP directives. The
directive should be implemented in the Polish law by 6 January 2013. The direction of the legislative changes clearly
indicates a major tightening of the requirements to reduce the emissions of SO2, NOx and dust starting from 1 January 2016.
This means the need to incur high costs of construction of installations to reduce emissions or early replacement of the
existing equipment. Another solution might be a derogation whereby an acceptable number of operating hours would be
allocated to such sources without complying with the new requirements. Potentially the most favourable solution seems to
be adoption of the Interim National Plan that for 2013-2020 would establish emission limits permitting operation of the
installation with the existing emission standards, but at a limited emission load. Currently, preparatory work is underway to
determine possible adoption of such regulations for the individually specified installations.
The active steps taken by KOGENERACJA S.A. include the acquisition of new buyers. In this context, particularly
important is the co-operation with the Wrocław Municipality with regard to connection of new and existing municipal
buildings to the network, which helps compensate for the reduced demand and stabilise the sale of heat.
5) Factors connected with changes in the demand for heat by buyers
In the recent year, the demand for heat decreased, which is due to, among other things, restructure of the industry, upgraded
insulation of houses and apartments, reduced heat losses during transmission, installation of weather sensors in the central
heat stations and the effects of global warming. KOGENERACJA S.A. is actively looking for new buyers, particularly in
co-ordination with the City of Wrocław with respect to connecting new buildings and existing communal buildings. These
actions help partly counterbalance the reduced demand and stabilise heat sales.
6) Factors connected with fluctuating levels of heat and electricity sales
The trading business of KOGENERACJA S.A. is subject to significant seasonality. In the period from October to April the
demand for heat is much higher than in other months.
This means that the possibility to generate electricity in the combined system is also seasonal. The Company does have the
technological capacity to generate electricity also in the period of a lower demand for heat (through the so called “pseudo-
condensation”), but this has been limited since 1 July 2007 due to the requirement to keep the minimum gross efficiency of
transformation of chemical energy into electricity and heat in the cogenerated system at 75%.
The observed reduction in electricity prices in the wholesale market reduced the capacity of production in pseudo-
condensation due to the high variable costs.
7) Long-Term Power Purchase Agreement (PPAs)
On 1 April 2008, the PPAs of EC Zielona Góra S.A. were terminated.
The company uses public aid in the form of compensations for covering stranded costs that are a consequence of the PPAs
termination, and the gas allowances resulting from the higher cost of gas vs. the cost of coal incurred in the production of
electricity. The revenues and expenses of EC ZG S.A. are by law closely controlled by the Energy Regulatory Office, and
are the basis for payment of the provisional compensations and their subsequent settlement.
The presented analyses clearly show that PPAs termination based on the ratified Act did not impair the company's
performance compared with the situation that would exist if the PPAs were still in place.
KOGENERACJA S.A. – Management Board’s Report on the Group Activities
for the period from 1 January to 30 June 2013
35
8) CO2 emission
Until the date of publication of the report, no new National Plan had been ratified that would set CO2 emission limits for
2013-2020. Work is under way to determine the possible adoption of new regulations for individually named installations.
In its planning process, the Company uses the projected volumes adopted by the Management Board.
The legislative uncertainty connected with the lack of the expected act on renewable energy sources and the low valuation
of the green certificates, combined with the low electricity prices, resulted in reduction of energy production in the process
co-firing of biomass.
14. Litigations
(in accordance with § 87 section 7 of the Ordinance)
In 2013, there were no litigations pending before any court, arbitration or administration bodies involving KOGNERACJA S.A. or
its Group companies involving any liabilities or receivables exceeding 10% of the Parent's equity.
15. Shares of KOGENERACJA S.A. or its subsidiaries held by directors
(in accordance with § 87 section 7, point 6 of the Ordinance)
Mr. Raimondo Eggink, Supervisory Board Member, holds 25,000 shares with a nominal value of PLN 125,000, including:
24,000 shares of the Company held directly, and 1,000 shares held through a subsidiary. In 2013, no changes occurred in the
shareholdings of executive and non-executive directors.
16. Dividend declared or paid
(in accordance with § 87 section 4 point 5 of the Ordinance)
In accordance with Resolution no. 6/2013 of the Annual General Meeting of KOGENERACJA S.A. of 13 June 2013, the
Parent Company allocated its net income for 2012 to reserves, to be potentially used for a future dividend payment.
KOGENERACJA S.A. – Management Board’s Report on the Group Activities
for the period from 1 January to 30 June 2013
36
III. Share price
1. Quotation of the KOGENERACJA shares on Warsaw Stock Exchange
At the first session in 2013, on closing, the share price was PLN 86 per share and the trading volume was 1,140 shares. The
highest price in the analysed period of 2013, i.e. PLN 86.50 was achieved on 22 January 2013, while the lowest price,
PLN 45.52, was recorded on 29 April 2013. The first half of 2013 ended with the price of PLN 55.91 per share, with the
volume of trading of 417 shares.
Quotations of KOGENERACJA Shares on Warsaw Stock Exchange in the first half of 2013
40
50
60
70
80
90
100
2013-01-02 2013-01-27 2013-02-21 2013-03-18 2013-04-12 2013-05-07 2013-06-01 2013-06-26
From 16 March 2013 to 21 June 2013, KOGENERACJA S.A. was quoted in the mWIG40 index. After the quarterly review
of the index members, the Company was re-introduced to the sWIG80 index (announcement of the Management Board of
the Warsaw Stock Exchange of 13 May 2013).
Quotations of sWIG80 in the first half of 2013
10200
10600
11000
11400
11800
12200
2013-01-02 2013-01-27 2013-02-21 2013-03-18 2013-04-12 2013-05-07 2013-06-01 2013-06-26
KOGENERACJA S.A. – Management Board’s Report on the Group Activities
for the period from 1 January to 30 June 2013
37
2. Respect Index After the session on 31 January 2012, the list of participants of the Respect Index (4
th edition) was revised.
KOGENERACJA S.A. met the high requirements and criteria for the Respect Index, and found itself among the 23
members of the new portfolio of the stock exchange index of socially responsible companies. In the 6th
edition of the
Respect Index, whose results were announced on 24 January 2013, KOGENERACJA S.A. maintained its position in the RI
index.
3. Ratio calculation methodology
ROA = Net income /Total assets
ROE = Net income / Equity
ROCE =EBIT/capital employed defined as equity + (long term and short term borrowings less short term investments less long term investments).
Current liquidity = Current assets / C urrent liabilities
Quick liquidity = (Current assets – Inventories ) / Current liabilities
KOGENERACJA S.A. – Management Board’s Report on the Group Activities
for the period from 1 January to 30 June 2013
38
Wrocław, 29 August 2013
...................................................
Wojciech Heydel
President of the Management Board
...................................................
Roman Traczyk
Management Board Member
...................................................
Krzysztof Wrzesiński
Management Board Member
...................................................
Henryk Zajas
Management Board Member