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Current Report No. 5/2020

04.03.2020 18:25

Impairment test results

TAURON Polska Energia S.A. (”Issuer”, ”TAURON”) announces that the main analyses conducted as part of the impairment tests related to TAURON Capital Group’s assets carrying amount as of December 31, 2019, were completed on March 4, 2020.

The analyses demonstrated material changes to the recoverable carrying value of the Generation and Mining segments’ fixed assets that were primarily a consequence of the following factors:
- European Union’s climate policy which has an impact on the forecast level of margins on the sales of electricity coming from conventional sources,
- change of the market conditions related to electricity generation from renewable sources, resulting in increase of the competitiveness of renewable energy sources as compared to conventional generation sources,
- change of the assumptions related to the cost of capital.

With respect to the 2019 consolidated financial statements of TAURON Polska Energia S.A.:
- completed analyses related to the Mining segment demonstrated that the booking of the write-down related to the loss of the carrying amount of tangible and intangible fixed assets and the rights to use assets in the amount of PLN 425 million had been justified,
- completed analyses related to the Generation segment demonstrated that the booking of the net write-down related to the loss of the carrying amount of tangible and intangible fixed assets and the rights to use assets in the amount of PLN 489 million had been justified.

The net amount of the write-downs booked in the consolidated financial statements is PLN 914 million, and the total estimated impact on the reduction of the consolidated net financial result will reach PLN 741 million.

With respect to the 2019 standalone financial statements of TAURON Polska Energia S.A. the completed analyses demonstrated that:
- write-downs booked due to the loss of the carrying value of the shares in TAURON Ciepło sp. z o.o.
in the amount of PLN 168 million, which reduces the gross financial result by PLN 168 million, had been justified,
- reversals of the write-downs booked due to the loss of the carrying value of the shares in TAURON Ekoenergia sp. z o.o. in the amount of PLN 185 million, which increases the gross financial result by PLN 185 million, had been justified,
- reduction of the balance sheet value of the financial assets (shares and debt financial instruments) related to the engagement in TAURON Wydobycie S.A. subsidiary had been justified. As a result of the impairment tests conducted in 2019 and the valuation of the above financial assets as of the balance sheet day the 2019 gross financial result was reduced by PLN 1 510 million.

The amount of the above write-downs and reversals will not impact EBITDA in the standalone and consolidated financial statements (EBITDA shall be understood by the Issuer as EBIT increased by deprecation and charges related to non-financial assets).
The Issuer makes a caveat that the values provided above are estimates and may be subject to change. The final results of the impairment tests and the amounts of write-downs related to the loss of the assets carrying amount will be presented in the 2019 financial statements of TAURON Polska Energia S.A. and TAURON Capital Group.

 

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