TAURON Polska Energia : Current Report No. 25/2018

27.07.2018 17:00

Management Board of TAURON Polska Energia S.A. ('Issuer', 'TAURON') informs that the main analyses conducted as part of TAURON Capital Group's assets impairment tests as of June 30, 2018, were completed on July 27, 2018.

The analyses demonstrated significant changes with respect to the recoverable value of the fixed assets in the Mining and Generation segments that were impacted primarily by the following internal and external factors:

- high volatility of the mining and geological conditions at TAURON Capital Group's coal mines that has an adverse impact on the commercial coal production volumes achieved,

- adverse configuration of the coal faces (short runs of the walls) which generates additional costs of longwall retooling,

- limited competition on the mining materials and services market resulting in a significant increase of their prices,

- rising costs of CO2 and coal prices,

- changes to the regulations related to renewable energy sources (with respect to substitution fee and taxes for wind farms) having a positive impact on the financial results generated by assets based on renewable energy sources.

With respect to the H1 2018 consolidated financial statements of TAURON Polska Energia S.A. the analyses completed demonstrated the validity of booking write-downs due to the impairment of tangible and intangible fixed assets and the goodwill impairment in the Mining segment in the amount of PLN 733m, and also of reversing the earlier booked write-downs in the Generation segment in the amount of PLN 345m.

The surplus of the booked impairment charges over the reversed ones in the consolidated financial statements (net impairment) is PLN 388m, and the total estimated impact on the reduction of the consolidated net financial result will reach PLN 303m.

With respect to the H1 2018 standalone financial statements of TAURON Polska Energia S.A. the analyses completed demonstrated the validity of booking write-downs due to the impairment of the shares in the company of the Mining area in the amount of PLN 1,041m. Whereas in the Generation area the surplus of the reversed impairment charges over the booked ones regarding shares and stakes amounts PLN 65m.
The surplus of the booked impairment charges over the reversed ones in the standalone financial statements (net impairment) is PLN 976m, and the total estimated impact on the reduction of the standalone net financial result will reach PLN 976m.

The above impairment charges will not have an impact on the EBITDA in the consolidated and the standalone financial statements (EBITDA is understood by the Issuer as EBIT increased by the depreciation and write-downs related to non-financial assets).

The Issuer states that the above presented values are estimates and may be subject to change. The final results of the impairment tests and the write-downs related to the impairment of assets will be presented in the H1 2018 financial statements of TAURON Polska Energia S.A. and TAURON Capital Group to be published on August 22, 2018.