2021 was a period of strong economic recovery after the economy froze in 2020 due to the Covid-19 pandemic. GDP growth of 5.7% and industrial production growth of 14.9% translated into demand for electricity and, together with increased foreign demand, drove a surge in energy production in Poland.
PGE Group’s increased power generation is responsible for a 15% y/y increase in sales revenue in 2021. Reported EBITDA amounted to PLN 9.5 billion and grew by 60% y/y due to higher power generation and distribution volumes, revenues from the Capacity Market and higher energy prices on the spot market. The result was also significantly improved by one-off events, the balance of which amounted to PLN 1.4 billion. Recurring EBITDA amounted to PLN 8.1 billion.
In light of Russia's aggression against Ukraine and its possible repercussions, the good results generated by PGE Group last year only gain in importance. They increase the stability of the organisation, which has to face new challenges in parallel with the energy transition processes. It is with particular satisfaction that we present the record financial results of the Renewables segment. They testify to the growing role played by renewable energy sources at PGE Group.
Consolidated statement of profit and loss
Net profit generated in 2021 amounted to PLN 3.95 billion. Net profit was significantly impacted by non-recurring events in the form of the release of a reclamation provision and also asset impairment losses. The one-off events were of a non-cash nature and did not affect cash flow from operating activities, which amounted to PLN 7.46 billion.
| [PLN million] | As at | As at |
|---|---|---|
| December 31, 2021 | December 31, 2020 | |
| NON-CURRENT ASSETS | ||
| Property, plant and equipment | 60,817 | 61,741 |
| Investment property | 39 | 41 |
| Intangible assets | 682 | 646 |
| Right-of-use assets | 1,257 | 1,309 |
| Financial receivables | 204 | 191 |
| Derivatives and other assets measured at fair value through profit or loss | 364 | 132 |
| Shares and other equity instruments | 117 | 57 |
| Shares accounted for using the equity method | 156 | 152 |
| Other non-current assets | 873 | 839 |
| CO2 emission allowances for captive use | 797 | 39 |
| Deferred income tax assets | 933 | 1,351 |
| 66,239 | 66,498 | |
| CURRENT ASSETS | ||
| Inventories | 2,189 | 3,123 |
| CO2 emission allowances for captive use | 4,106 | 1,735 |
| Income tax receivables | 144 | 8 |
| Derivatives and other assets measured at fair value through profit or loss | 575 | 423 |
| Trade and other financial receivables | 7,727 | 4,812 |
| Other current assets | 1,240 | 799 |
| Cash and cash equivalents | 6,733 | 4,189 |
| 22,714 | 15,089 | |
| ASSETS CLASSIFIED AS HELD FOR SALE | 13 | 7 |
| TOTAL ASSETS | 88,966 | 81,594 |
| EQUITY | ||
| Share capital | 19,165 | 19,165 |
| Reserve capital | 20,154 | 18,410 |
| Hedging reserve | 609 | -13 |
| Foreign exchange differences from translation | 2 | 5 |
| Retained earnings | 7,564 | 4,951 |
| EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT | 47,494 | 42,518 |
| Equity attributable to non-controlling interests | 797 | 983 |
| TOTAL EQUITY | 48,291 | 43,501 |
| NON-CURRENT LIABILITIES | ||
| Non-current provisions | 8,559 | 11,207 |
| Loans, borrowings, bonds and lease | 8,666 | 10,025 |
| Derivatives | 1 | 385 |
| Deferred income tax liabilities | 402 | 345 |
| Deferred income and government grants | 600 | 600 |
| Other financial liabilities | 517 | 448 |
| Other non-financial liabilities | 133 | 65 |
| 18,878 | 23,075 | |
| CURRENT LIABILITIES | ||
| Current provisions | 12,600 | 7,311 |
| Loans, borrowings, bonds and leases | 2,160 | 1,384 |
| Derivatives | 82 | 63 |
| Trade and other financial liabilities | 4,601 | 3,504 |
| Income tax liabilities | 20 | 476 |
| Deferred income and government grants | 76 | 77 |
| Other non-financial liabilities | 2,258 | 2,203 |
| 21,797 | 15,018 | |
| TOTAL LIABILITIES | 40,675 | 38,093 |
| TOTAL EQUITY AND LIABILITIES | 88,966 | 81,594 |
Balance of non-recurring events (EBITDA level)
Non-recurring events in 2021 had a positive impact on the reported result (opposite to the previous year). The balance of events amounted to PLN 1,406 million and consisted mainly of the release of a reclamation provision totalling PLN 1,463 million.
Reported EBITDA by segment
In 2021, all operating segments with the exception of the District Heating segment recorded an increase in reported EBITDA. In the Conventional Generation segment, results were positively impacted by higher generation volumes and revenues from the Capacity Market. In the Distribution segment, results were supported by higher volumes of distributed energy. In the Supply segment, there was an increase in margins on energy sales against a low 2020 base. In the District Heating segment, results declined under the impact of rising costs of CO2 emission allowances and natural gas.
Reported EBIT by segment
One-off items and recurring EBIT
| [PLNm] | 2021 | 2020 | y/y |
| One-off items – EBITDA level | 1,406 | -218 | – |
| Impairment losses on property, plant and equipment, intangible assets and right-of-use assets (gross)1 | -216 | -948 | – |
| One-off items – EBIT level | 1,190 | -1,166 | – |
| Recurring EBIT | 3,933 | 2,574 | 53% |
Consolidated balance sheet (key categories)
The increase in the balance sheet total is the result of growth in current assets, including CO2 inventories and a higher cash balance. The company’s operations were mainly financed by funds generated from operating activities (+PLN 7.5 billion). During the period, there was a significant decrease in net debt from PLN 7.3 billion at the end of 2020 to PLN 4.2 billion at the end of 2021. The decrease in debt was due to lower capital expenditure and the optimisation of operating costs of PGE Group companies.