Integrated report 2021

Financial results

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.

Wojciech Dąbrowski CEO, PGE Polska Grupa Energetyczna

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.

01
04
52 730
PLN million
Revenue from sales
01
04
3 609
PLN million
Gross profit on sales
01
04
5 123
PLN million
Operating profit
01
04
4 871
PLN million
Gross profit

[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%
1Impairment losses on property, plant and equipment, intangible assets and right-of-use assets.

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.

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