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Current Report No. 30/2016

26.07.2016 17:50

Information about planned write-off of impaired generation assets in financial statements for the first half of 2016

Following completion of main works related to asset impairment tests in line with the requirements of IAS 36 Impairment of assets, the Management Board of TAURON Polska Energia S.A. (“Company”, “TAURON”) presents information on the expected impact of non-cash one-off in the form of write-off of impaired generation units in the Generation segment. The Generation segment comprises companies that produce electricity and heat from conventional and renewable sources.

The reason behind the write-offs lies primarily in changes in regulatory environment that have been unfavorable for electricity generators and must have been taken into account for test purposes, including drop of prices of certificates of electricity origin from renewable sources and new regulations in the renewables segment. The amount of write-off related to conventional sources results from continued unfavorable trend in electricity prices and expected increasing supply of electricity from sources competitive to Polish coal-fired plants. At the same time, in the forecast assumptions account has been taken of estimated impact of introduction of the so-called capacity market. The abovementioned market conditions have impact on decrease of cash flows that determine the recoverable amount of individual units on the one hand, and lead to reversal of impairment write-offs made previously for heat and electricity generation units on the other.

In reference to consolidated financial statements of TAURON Polska Energia S.A. Capital Group for the first half of 2016 ended on 30 June 2016 the conducted tests indicated that it was necessary to write-off the impairment of tangible and intangible assets and company value as well as to reverse the write-off made previously in the Generation segment. Total net write-off (i.e. the excess of write-offs over reversals) amounts to approx. PLN 0.7 billion. This amount includes impairment write-off for wind farms for approx. PLN 0.5 billion and impairment write-off for electricity and heat generation assets for approx. PLN 0.2 billion net. Total estimated impact on reduction of financial net result is approx. PLN 0.6 billion. The value of the abovementioned write-offs will have no impact on EBITDA understood by the Group as EBIT increased by amortization, depreciation and write-offs for non-financial assets.

In reference to standalone financial statements of TAURON Polska Energia S.A. for the first half of 2016 ended on 30 June 2016 the conducted tests indicated that it was necessary to write-off the impairment of shares in the companies TAURON Wytwarzanie S.A. and TAURON Ekoenergia Sp. z o.o. as well as to reverse the write-off previously made for the company TAURON Ciepło Sp. z o.o. in the total amount of approx. PLN 1.0 billion. Expected estimated impact of the above write-offs on the net result presented in standalone financial statements is approx. PLN 1.0 billion.

The Company indicates that the values presented above are estimated values and may change. Final results of tests and amounts of impairments will be presented in the financial statements of TAURON Polska Energia S.A. and TAURON Capital Group for the first half of 2016 which will be published on 17 August 2016.

Article 17 paragraph 1 MAR – inside information
 

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