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Transcription

ANNUAL
REPORT
2013
“TAURON Group”
I. GENERAL INFORMATION
1. About the Group
TAURON is one of Poland’s largest enterprises and one of leading energy holding companies in Central and Eastern
Europe with PLN 17.8bn in equity and headcount of 26 thousand employees.
The Group is operating in all major segments of the energy market, controlling the complete value chain – from hard
coal mining to supplying electricity to end customers. The Group’s vertical integration, including access to its own hard coal
resources and control over its own generation assets, enhances stability of its revenue and margins. Since 2010 TAURON
Polska Energia SA has been listed on the Warsaw Stock Exchange.
TAURON Group’s core operations include:
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Hard coal mining
Electricity and heat generation
Electricity distribution
Electricity supply
Heat distribution and supply
TAURON Group – key facts:
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No. 1 electricity distributor in Poland
47.9 TWh of electricity distributed
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No. 1 electricity supplier in Poland
41.3 TWh of electricity supplied
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No. 2 electricity generator in Poland – approx. 5.4 GWe
Group controls 20 percent of Poland’s thermal hard coal resources
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TAURON distribution grid covers 57.1 thousand km , i.e. 18.3 percent of Poland’s territory
TAURON POLSKA ENERGIA 2013 ANNUAL REPORT
TAURON Polska Energia SA Capital Group – integrated value chain
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2. Group’s structure
TAURON Polska Energia SA was formed on December 6, 2006. As a holding company it performs consolidation
and management functions within TAURON Group. The company is entered in the National Court Register (KRS) at number
KRS 0000271562, maintained by the Katowice-East District Court in Katowice, 8th Commercial Department of the National
Court Register. The share capital of TAURON Polska Energia SA as of December 31, 2013 was PLN 8,762,746,970 and it was
split into 1,752,549,394 shares with the nominal value of PLN 5 each.
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3. TAURON Group in numbers
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TAURON Group’s selected financial and operating data
Unit
2010
2011
2012
2013
Financial data
Sales revenue
PLN m
15 429
20 755
24 753
19 131
EBIT
PLN m
1 399
1 646
2 165
1 934
EBITDA
PLN m
2 758
3 057
3 852
3 661
Gross profit
PLN m
1 257
1 600
1 948
1 684
Net profit
PLN m
991
1 267
1 551
1 346
Net profit attributable to the holding
PLN m
859
1 245
1 476
1 308
Total assets
PLN m
23 430
28 527
31 274
32 356
Accounts payable and provisions
PLN m
8 218
12 440
14 474
14 562
Long term liabilities
PLN m
4 070
7 597
9 081
9 304
Short term liabilities
PLN m
4 148
4 843
5 392
5 258
Equity
PLN m
15 212
16 087
16 800
17 793
company’s shareholders
Financial position
for accounts payable
Financial ratios
Earnings per share (EPS)
PLN
0.54
0.71
0.84
0.75
Dividend per share (DPS)
PLN
0.15
0.31
0.20
0.19
14.30
8.10
5.50
5.50
6.4%
6.1%
6.3%
7.0%
Current ratio
1.23
1.05
1.07
0.90
Net debt/EBITDA
0.01
1.32
1.18
1.43
Price/Earnings (P/E)
Sales profitability
percentage
Return on assets (ROA)
percentage
4.2%
4.4%
5.0%
4.2%
Return on equity (ROE)
percentage
6.5%
7.9%
9.2%
7.6%
EBITDA margin
percentage
17.9%
14.7%
15.6%
19.1%
4.5
4.6
5.6
5.5
TWh
21.3
21.4
19.1
19.4
TWh
1.10
0.99
1.21
1.38
PJ
18.3
16.0
16.4
15.6
Electricity distribution
TWh
37.5
38.2
47.9
47.9
Electricity supply
TWh
34.3
35.5
44.7
41.3
Number of customers – Distribution
‘000
4 115
4 143
5 302
5 334
PLN m
1 603
2 504
3 472
3 780
Headcount (FTEs)
‘000
28.15
26.71
27.28
25.95
Number of shares
pcs
1 600 730 480
1 752 549 394
1 752 549 394
1 752 549 394
Operating data
Commercial coal production
Electricity generation
tonne m
(net production)
Electricity generation from renewable
energy sources
Heat generation
Other data
Capital expenditures
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4. 2013 highlights
TAURON Group’s 2013 highlights are presented below.
January
Adoption of TAURON Group’s 2013–2015 operational efficiency improvement program launched
in order to ensure growth of the Group’s value – 2013–2015 OPEX reduction is estimated to reach
approx. PLN 870m.
Selection of Rafako-Mostostal Warszawa consortium as the general contractor in a 910 MW power
generation unit construction project at Jaworzno III Power Plant.
Merger of TAURON Obs³uga Klienta with its seat in Wroc³aw with TAURON Obs³uga Klienta GZE
with its seat in Gliwice.
February
Signature by TAURON Dystrybucja and BIT Huachuang Electric Vehicle Technology with its seat
in China of the agreement on cooperation with respect to implementing state-of-the-art energy
storage technologies.
March
Signature by TAURON Polska Energia and Kompania Wêglowa of the 2013–2015 hard coal purchase
agreement.
Commissioning of a 20 MW biomass-fired unit at TAURON Wytwarzanie – Stalowa Wola Power Plant.
Signature by TAURON Polska Energia and Polska Telefonia Cyfrowa (T-Mobile) of a letter of intent
on strategic cooperation with respect to introducing new product and technology solutions on
the telecommunications and electricity markets.
April
Formation of TAURON Dystrybucja Serwis as a result of merging Przedsiêbiorstwo Us³ug
Elektroenergetycznych and TAURON Serwis GZE.
May
Decision of the Ordinary General Meeting of Shareholders of TAURON Polska Energia on
the dividend payout in the total amount of PLN 350.5m (PLN 0.20 per share) from the 2012 net
profit.
June
Fitch rating agency affirms the company’s BBB credit rating in domestic and foreign currencies
with a stable outlook.
Signature by the company and PGE, KGHM and ENEA of the agreement on continuing works related
to drafting the agreement on purchasing shares in a special purpose vehicle set up to build
and operate a nuclear power plant.
Commissioning of a 40 MW biomass-fired unit at Zak³ad Wytwarzania Tychy (TAURON Ciep³o).
Commissioning of a 50 MWe/106 MWt cogeneration unit at ZEC Bielsko-Bia³a (formerly TAURON
Wytwarzanie, currently TAURON Ciep³o).
July
Signature by TAURON Ciep³o and Control Process of the agreement on the construction of a 50 MW
turbo generator at Zak³ad Wytwarzania Nowa in D¹browa Górnicza.
Signature with ING Bank, PKO BP and BRE Bank of the agreement on an up to PLN 5bn bond issue.
Signature with Bank Gospodarstwa Krajowego of the agreement on organizing and underwriting
an up to PLN 1bn bond issue.
October
Commissioning of Marszewo (82 MW) and Wicko (40 MW) wind farms.
December
Court registration of the merger of TAURON Polska Energia and PKE Broker subsidiary.
Signature by TAURON Polska Energia and Kompania Wêglowa of the agreement on the acquisition
of 16 730 525 shares in Po³udniowy Koncern Wêglowy (currently TAURON Wydobycie) constituting
47.52 percent of the share capital.
Inclusion of TAURON Polska Energia’s shares in the group of companies included in RESPECT Index
– an index of socially responsible companies.
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5. 2013 prizes and awards
Apart from numerous business related highlights 2013 was also very successful for TAURON Group in terms of prizes
and awards received. Most significant ones are presented below.
March
TAURON Group was awarded Forbes Diamonds prize in the annual ranking of best companies.
TAURON Polska Energia’s website was also rewarded as the best website in the Silesia region,
winning the Forbes & Biznes.pl 2013 e-Diamonds ranking.
During 2013 Forbes’ Diamonds gala TAURON Distribution was awarded the first prize among
Ma³opolska region’s companies with revenue above PLN 250m.
April
TAURON Polska Energia finished first among entities making their debut in the ranking of
responsible companies, published by “Dziennik Gazeta Prawna”. In the overall ranking the company
finished 23rd, and in the oil and energy sector it was ranked 4th.
May
TAURON Polska Energia was no. 6 on “Polityka” weekly’s 500 List, maintaining last year’s ranking,
and it moved up one spot on the list of most profitable enterprises – to number five.
TAURON Group finished 13th in the ranking of twenty leaders for the 20th anniversary of the 500 List.
TAURON Polska Energia was no. 7 in the 15th edition of “Rzeczpospolita” daily’s 500 List, the same as
last year. The company got the same spot in the ranking of companies that improved their net result
most that accompanied the 500 List. TAURON Group was also ranked no. 5 among Poland’s largest
investors and no. 9 among the country’s largest employers.
June
TAURON Wytwarzanie became a laureate of the Silesian Team Quality Prize awarded by the
Regional Chamber of Commerce in Katowice in the Large Manufacturing Organizations category.
The competition’s jury appreciated the company’s cooperation with academic and research
communities nationwide and its involvement in pro-ecological investment projects.
TAURON Ekoenergia was awarded “Puls Biznesu” daily’s Pillars of the Polish Economy prize as one of
five most significant enterprises in the Lower Silesia. The jury took into consideration the companies’
scale of operations and their contribution to the local community.
September
TAURON Polska Energia moved up one spot to no. 17 on the List of 500 largest companies in Central
and Eastern Europe compiled by “Rzeczpospolita” daily and Deloitte. The company was also listed
among top 25 publicly traded companies.
October
TAURON Polska Energia was awarded the second main prize in the enterprise category for the 2012
annual report and two honorable mentions: for the useful value of the annual report and for
the best Management Board’s report on operations, by the board of The Best Annual Report
competition organized by the Institute of Accounting and Taxes.
November
rd
In the 3 edition of Stanis³aw Staszic competition for the best innovative products TAURON Polska
Energia received “2013 Laurel for Innovativeness” awarded by the Polish Federation of Engineering
Associations (NOT). One of the flagship projects taken into account was TAURON Group’s pilot
CCS system used to capture carbon dioxide from flue gases.
December
TAURON Group’s sustainable growth report was awarded a prize by internet users in the seventh
edition of the Social Reports competition, organized by the Responsible Business Forum. The report
is a review of practices and projects addressed, among others, to customers and local communities,
carried out by both TAURON Group’s subsidiaries, as well as TAURON Foundation.
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6. History
TAURON Group’s history
2006
TAURON Polska Energia SA was formed on December 6, 2006. The company’s founders were:
State Treasury, EnergiaPro, Enion and Elektrownia Stalowa Wola (ESW).
2007
The company was registered in the National Court Register on January 8, 2007 under the name of
Energetyka Po³udnie, while the change of the company’s name to TAURON Polska Energia SA was
registered on November 16, 2007.
In 2007 State Treasury contributed to Energetyka Po³udnie its majority stakes in Po³udniowy
Koncern Energetyczny (PKE), Enion, EnergiaPro, ESW, Elektrociep³ownia Tychy (EC Tychy) and
Przedsiêbiorstwo Energetyki Cieplnej Katowice (PEC Katowice).
2009
In July 2009, in exchange for an in-kind contribution in the form of the newly issued shares,
TAURON Polska Energia acquired from State Treasury a majority stake in Przedsiêbiorstwo
Energetyki Cieplnej in D¹browa Górnicza (PEC in D¹browa Górnicza) and a majority stake
in Elektrociep³ownia EC Nowa.
2010
In June 2010 TAURON Polska Energia was merged with its subsidiaries: Enion Zarz¹dzanie Aktywami
and Energomix Servis. As a result of this merger TAURON Group’s organizational structure was
simplified and the share capital of TAURON Polska Energia was increased by PLN 318,665,300.
On June 30, 2010, as a consequence of the Initial Public Offering conducted by State Treasury,
TAURON Polska Energia was floated on the Warsaw Stock Exchange.
2011
In September 2011 TAURON Ekoenergia acquired a company called Lipniki, including a wind farm
with a total capacity of 30.75 MW. It was TAURON Group’s first wind farm.
In 2011 the Group’s main lines of business were restructured and as a result the following
subsidiaries were established: TAURON Sprzeda¿, TAURON Obs³uga Klienta, TAURON Wytwarzanie,
TAURON Dystrybucja and TAURON Ciep³o.
In December 2011 TAURON Polska Energia acquired 99.98% of shares in Górnoœl¹ski Zak³ad
Elektroenergetyczny (GZE) from Vattenfall AB. The acquisition of GZE reinforced the Group’s leading
position in the electricity distribution and supply segments in Poland.
2012
In September 2012 the company signed a Letter of Intent with PGE, KGHM and ENEA on
the construction and operation of Poland’s first nuclear power plant.
2013
In 2013 the following projects were commissioned:
–
wind farms in Marszewo (82 MW) and Wicko (40 MW),
–
50 MWe/106 MWt cogeneration unit at ZEC Bielsko-Bia³a,
–
biomass-fired units at Jaworzno III Power Plant (50 MW), Zak³ad Wytwarzania Tychy (40 MW)
and Stalowa Wola Power Plant (20 MW).
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II. CORPORATE BODIES
1. Management Board
Members of the Management Board (as of June 2, 2014)
Dariusz Lubera – President of the Management Board (CEO)
Master of Science in Electrical Engineering. A graduate of AGH University of Science
and Technology in Cracow and Cracow University of Economics.
He began his professional career at Zak³ady Mechaniczne Tarnów in 1983. Since 1985
his career has been linked to electricity distribution. At Zak³ad Energetyczny Tarnów,
and then at Enion he climbed the entire corporate ladder, starting from a clerk, up to
the President of the Management Board.
In 2001–2003 Mr. Lubera was a member of the Supervisory Board of PSE (TSO).
For many years an active member of: Ministry of Economy’s Energy Sector Transfer Pricing
Council, Polish Cogeneration Club KOGEN Polska and Polish Electricity Committee.
Since 1998 until 2008 Chairman of the Polish Power Transmission and Distribution
Association. Since 2008 he has been the Head of the Management Board of the Power
Sector and Environment Protection Chamber of Commerce. Vice President of the Board of
the Polish Chamber of Commerce. President and then a member of the International
Steering Committee of Live Working Association (LWA), and also of the Technical Committee
on System Aspects of Electrical Energy Supply System of the Polish Standardization
Committee. Since May 2013 a member of the Supervisory Board of the Polish Power
Exchange (Towarowa Gie³da Energii SA).
Mr. Lubera has been the President of the Management Board (CEO) of TAURON Polska
Energia since March 8, 2008. Currently he oversees the following departments: Corporate
Bodies, Legal, Human Resource Management, Internal Audit, Market Communications and PR,
Risk Management. He also supervises Plenipotentiary for Classified Information Protection
and Plenipotentiary for Labor Hygiene and Safety.
Aleksander Grad – Vice President of the Management Board for Corporate Affairs
A graduate of the Faculty of Industrial Geodesy of AGH University of Science
and Technology in Cracow.
Before 1997 a private entrepreneur. 1990–1994: in local government. 1997–1999:
Governor of Tarnów Province. Between 1999 and 2000 Under Secretary of State
in the Ministry of Health where he was responsible, among others, for budget, finances
and investment projects. At the same time a consultant of the World Bank, Head of
the Steering Committee for PHARE Inred Tourin III Program. 2007–2011: Minister of State
Treasury where he oversaw, among others, public market listing of PZU, GPW, TAURON Polska
Energia, PGE, Enea, Bogdanka, JSW and Zak³ady Azotowe in Tarnów. Author of the “Public
Shareholding Program” – a comprehensive program dedicated to attract individual investors
to capital markets. 2012–2014: President of the Management Board of PGE EJ 1 sp. z o.o.
(Ltd.), responsible for preparing the investment process and construction of Poland’s first
nuclear power plant. Between February and March 2014 a Member of the Supervisory Board
of TAURON Polska Energia. In February 2014 delegated by the Supervisory Board to perform
the duties of a Member of the Management Board. Since February 2014 a member of
the Supervisory Board of the Polish Power Exchange (Towarowa Gie³da Energii SA).
Currently Mr. Grad oversees the following departments: Corporate Governance,
Purchasing, Reorganization.
Katarzyna Rozenfeld – Vice President of the Management Board for Trading
A graduate of economics at the Faculty of Foreign Trade of the University of £ódŸ and
of Catholic University in Nijmegen in Holland. She also completed a course for investment
advisors.
Professional career: 1994–1999: PriceWaterhouseCoopers (PwC) in Warsaw
– an executive in the financial advisory services department, where, among others, she was
in charge of Vattenfall’s project to acquire Europe’s largest combined heat and power plant;
1999–2001: PwC in London – a manager at the department of privatization and corporate
finance; 2001–2005: PwC in Warsaw – a manager/deputy director at the department of
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corporate finance and restructuring where she worked on introducing Europe’s top
companies to the Polish energy market, including, among others, EdF, Vattenfall and RWE;
2005–2008: PwC in Warsaw – director of the advisory services department where she
created and managed PwC Poland’s first energy sector team; 2009–2012: Vattenfall Energy
Trading – Member of the Management Board, managing director for trading; since 2013
a partner at Telos Partners where she was involved in providing support for enterprises
in the transformation processes, as well as coaching and mentoring activities.
Currently Ms. Rozenfeld oversees the following departments: Trading, Supply
and Customer Service, Market Operator and Trading Operations.
Stanis³aw Tokarski – Vice President of the Management Board for Strategy
and Development
A graduate of the Faculty of Electrical Engineering, Automatics and Electronics of
AGH University of Science and Technology in Cracow. Completed a number of post-graduate
studies, including, among others, in nuclear power engineering in modern power
engineering industry (AGH University of Science and Technology in Cracow), European Union
legislation (Jagiellonian University) and management (Warsaw School of Economics).
He began his professional career in the energy sector at Jaworzno III Power
Plant, where, among others, he held various positions in production (1992–1996),
and subsequently became deputy director for strategy and management (1996–1997)
and director for strategy and management (1997–2001). In 2001–2008 he worked at
Po³udniowy Koncern Energetyczny SA as director for management strategy. In 2008–2010
Mr. Tokarski was the Vice President of the Management Board – director for strategy
and development of TAURON Polska Energia SA. In 2010–2014 he was the President of
the Management Board of TAURON Wytwarzanie SA.
Mr. Tokarski is a member of a number of organizations, among others: Eurelectric
and Polish Committee of the World Energy Council. Since 1998 he has participated
in the works of many European institutions that provide opinions on legal acts related to
the oil and energy sector. Mr. Tokarski is a member the Polish Electricity Association Managing
Committee and a member of VGB Board of Directors. He is active in KIC InnoEnergy,
an international company that runs research and development projects. Mr. Tokarski is the
Chairman of the Economic Society Polish Power Plants and a member of the Management
Board of the Energy Sector and Environment Protection Chamber of Commerce.
Currently Mr. Tokarski oversees the following departments and organizational units:
Development Strategy, Strategic Projects, Regulations and External Funds, Investment
Process Efficiency.
Krzysztof Zawadzki – Vice President of the Management Board for Economic
and Financial Affairs (CFO)
A graduate of the Faculty of Economics of the University of Economics in Katowice.
Graduate of doctorate studies at the Cracow University of Economics. Completed, among
others, post-graduate studies in International Financial Reporting Standards, European
Accounting and Financial Standards and taxes. Mr. Zawadzki is a certified auditor.
Mr. Zawadzki has been working in the energy sector continuously since the
beginning of 1996. He began his professional career at Elektrownia £agisza SA in Bêdzin
in the economic and financial department, and subsequently continued as the deputy chief
accountant at Po³udniowy Koncern Energetyczny SA. For two years until August 2009
he had been the director of the Department of Accounting and Taxes – chief accountant
at TAURON Polska Energia SA. In parallel, at various times, he was a member of supervisory
boards of commercial law companies. Since August 21, 2009 Mr. Zawadzki has been
the Vice President of the Management Board of TAURON Polska Energia SA.
Currently Mr. Zawadzki oversees the following departments: Accounting and Taxes,
Finance Management, Controlling, Portfolio Management, Fuels.
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2. Supervisory Board
Members of the Supervisory Board (as of June 2, 2014)
Antoni Tajduœ – Chairman of the Supervisory Board
A researcher and lecturer at Stanis³aw Staszic AGH University of Science and Technology in Cracow. During his tenure
at AGH University of Science and Technology he received the following academic degrees: PhD. in technical sciences (1977),
doctor habilitatus of technical sciences (1990) and professor of technical sciences (1998). In 2005–2012 Professor Tajduœ
was the Rector of AGH University of Science and Technology.
Mr. Tajduœ was appointed a member of the Supervisory Board of TAURON Polska Energia on January 31, 2008.
Agnieszka Woœ – Vice Chairman of the Supervisory Board
A graduate of University of Information Technology and Management in Rzeszów (major: accounting and finance)
and Cracow University of Economics (major: functioning and expansion of enterprises). In 2010 she was awarded a PhD.
degree in economics and management science at Cracow University of Economics.
Ms. Woœ was appointed a member of the Supervisory Board of TAURON Polska Energia on January 22, 2014.
Jacek Szyke – Secretary of the Supervisory Board
A graduate of the Economics Department of £ódŸ University and the Electrical Department of Poznañ University of
Technology where he was also awarded a PhD. degree in technical sciences.
Mr. Szyke was appointed a member of the Supervisory Board of TAURON Polska Energia on September 14, 2010.
Marek Œci¹¿ko – Member of the Supervisory Board
A graduate of the Chemical Technology and Engineering Department of the Silesian University of Technology in Gliwice
– major: chemical engineering. He was also awarded a PhD. degree at the same department. Furthermore, Mr. Marek
Œci¹¿ko holds a degree of doctor habilitatus, full (ordinary) professor.
Mr. Œci¹¿ko was appointed a member of the Supervisory Board of TAURON Polska Energia on January 31, 2008.
Andrzej Gorgol – Member of the Supervisory Board
A graduate of the Law and Administration Department at Maria Curie-Sk³odowska University. Mr. Andrzej Gorgol holds
a degree of doctor habilitatus of law and is a legal counsel.
Mr. Gorgol was appointed a member of the Supervisory Board of TAURON Polska Energia on May 15, 2014.
Micha³ Michalewski – Member of the Supervisory Board
A graduate of Karol Adamiecki Academy of Economics in Katowice, major: Finance and Banking. In 2004
Mr. Michalewski acquired an MBA degree at Nottingham Trend University. He is also a graduate of numerous post-graduate
management studies.
Mr. Michalewski was appointed a member of the Supervisory Board of TAURON Polska Energia on May 15, 2014.
The detailed description of the experience and competences of members of the Management Board and
the Supervisory Board is published on the company’s website http://www.tauron-pe.pl/.
14
Letter from the President of the Management Board to shareholders
Ladies and Gentlemen,
I have the pleasure to present to you TAURON
Group’s Annual Report that summarizes the highlights
and financial results of 2013. Due to the slower economic
growth rate and adverse market conditions last year was
much more challenging for the energy sector than 2012.
First of all the economic downturn resulted in a small,
only 0.6 percent increase of demand for electricity and
led to a further decline of its price.
In such unfavorable market environment TAURON
Group’s financial results can be considered satisfactory
and well above estimates. Sales revenue was more than
PLN 19.1bn. It was more than 20 percent lower than
the revenue reported in 2012, however the drop was
mainly due to the changed model of trading electricity
generated by the Group. In 2012 most of electricity
was sold via the public power exchange, while in 2013
electricity sales outside the Group was reduced in favor
of direct transactions between the Group’s subsidiaries
which were subject to exclusion from consolidation.
Reported 2013 EBITDA was PLN 3.66bn. Following
the exclusion of one-off events, generation assets’ and
color certificates’ impairment charges and the provision
for the shortage of CO2 emission allowances comparable
EBITDA would have reached PLN 4.2bn which means
an approx. 30 percent increase year-on-year.
“Achieving solid financial
results in a difficult
macroeconomic and market
environment was possible
thanks to effective
management and flexible
approach to changing
conditions, and also effective
implementation of the
strategy.”
Reported net profit was PLN 1.35bn (a 13.2 percent
decline year-on-year), while net profit, excluding one-off
events, reached PLN 1.94bn, i.e. 25 percent more than
last year.
Despite the worse shape of the Polish economy our
shareholders, just like every year, received a dividend.
In 2013 the company allocated PLN 350m for that
purpose, which meant a dividend of PLN 0.20 per share.
Our efforts in 2013 were primarily targeted
at achieving long term growth of the Group’s value
and bringing satisfaction for our customers. The most
important activities aimed at increasing the company’s
value involved investing in new generation capacity,
including in renewable energy sources, as well as further
upgrading the existing distribution and generation
assets. New projects are also a reaction to regulations
related to European Union’s restrictive climate policy
and the need to accomplish ambitious goals with respect
to reducing CO2 emission and increasing the share of
electricity generation from renewable energy sources.
Last year we commissioned wind farms in Marszewo
(82 MW) and Wicko (40 MW), which means that currently
15
TAURON Group is operating four wind farms with total
capacity of 183 MW. Furthermore, we completed the
construction of two biomass-fired units in Tychy
(40 MW) and Stalowa Wola (20 MW), which along with
a 50 MW unit commissioned in Jaworzno in 2012 brings
the Group’s total biomass-fired capacity to 110 MW.
In mid-2013 we commissioned a modern heat generation
unit at Bielsko-Bia³a Combined Heat and Power Plant
our number one position on the ever more competitive
electricity supply market. Enhancing competence in the
supply segment will help TAURON Group prepare
effectively for the full liberalization of the energy market.
It is worth to bring up here the presence of
TAURON Polska Energia's shares on the Warsaw Stock
with the capacity of 50 MWe/106 MWt and a 91 percent
efficiency, and with carbon dioxide emission 25 percent
Exchange. Good news is the inclusion of TAURON’s
shares in RESPECT Index that groups companies
managed in a responsible and balanced manner, and
lower versus the parameters of the unit it replaced.
In 2013 we also continued works on the construction of
a 450MWe/240 MWt CCGT unit at Stalowa Wola.
their investment attractiveness is measured by, among
others, quality of reporting and investor relations,
as well as high standards in terms of corporate
Additionally,
governance and corporate social responsibility.
corporate
decisions
were
taken
on
constructing a twin gas-fired unit at £agisza Power Plant.
We believe that in 2014 economy will be growing at
CAPEX program, which reached PLN 3.8bn in 2013,
is very large, therefore our priority is to secure
appropriate and safe level of financing expansion
investment projects. We secured our financing needs by
signing agreements on corporate bond issues with banks
for up to PLN 6bn, while conservative approach to debt
financing means that the Group’s debt ratios are and will
continue in the future to be at the safe level.
Achieving solid financial results in a difficult
macroeconomic and market environment was possible
thanks to effective management and flexible approach to
changing conditions, and also effective implementation
of the strategy. One of its elements was and continues to
be restrictive cost reduction policy. Successfully
completed 2010–2012 OPEX reduction plan (realized
savings of one billion PLN) was replaced with another one
for 2013–2015 timeframe that should bring close to
PLN 900m in cumulative savings. In 2013 alone savings of
PLN 320m were generated due to improved operational
efficiency.
a faster pace than it did in 2013, and market environment
will be more stable than before. Nevertheless we must
keep in mind further challenges for the energy sector
looming ahead – we are still waiting for the legal
regulations related to the support for renewable energy
sources to come into force. An enormous challenge,
especially for the Generation segment’s earnings, will be
electricity prices that will be approx. 20 percent lower
year-on-year. However, I would like to assure our
shareholders that the Management Board of TAURON
Polska Energia will do its utmost to achieve the best
possible results even on such a challenging market.
On behalf of the Management Board I would like
to thank our shareholders, Supervisory Board and
personnel for their commitment to strategic goals
and reinforcing the market position of TAURON Group.
2013 was a year of the Capital Group’s further
restructuring in order to ensure full organizational and
operational coherence and integrity. TAURON Polska
Energia was merged with PKE Broker, TAURON Obs³uga
Klienta was merged with TAURON Obs³uga Klienta GZE,
and also TAURON Serwis GZE was merged with
Przedsiêbiorstwo Us³ug Elektroenergetycznych. As part
of the process to establish the Heat segment an
Dariusz Lubera
President of the Management Board
TAURON Polska Energia
organized part of the enterprise in the form of Zak³ad
Wytwarzania Katowice was moved from TAURON
Wytwarzanie to TAURON Ciep³o. At the end of 2013
TAURON Polska Energia acquired 47 percent of shares
in Po³udniowy Koncern Wêglowy (currently TAURON
Wydobycie) which now gives us full control over that
company.
Actions aimed at developing and maintaining good
relationships with customers were focused on expanding
product portfolio, making customer service channels
more efficient and running numerous promotional
and educational campaigns. This allowed us to retain
16
Letter from the Chairman of the Supervisory Board to shareholders
Ladies and Gentlemen,
2013 brought more challenges for energy companies.
Economic slowdown had an adverse impact on demand
for electricity and its prices. In such unfavorable market
environment TAURON Group found it difficult to maintain
its 2012 growth rate. Taking into consideration such
circumstances small declines in operating profit and net
profit should be regarded as solid results, especially that to
large degree they were caused by one-off events.
TAURON Group was effectively implementing
its assumed strategy with the goal of achieving further
growth of shareholder value and maintaining the position
of one of the largest enterprises both in Poland, as well as
in our region. CAPEX remains high and the Group’s new
assets are not only more efficient, but also much less taxing
for the environment. Furthermore, the company did not
have a problem financing its CAPEX and its debt level at the
end of 2013 was still safe. Additionally, further financing
was secured through an up to PLN 6bn bond issue.
In line with its strategy the Group was also watching
its costs, introducing another savings program (this time for
the 2013–2015 timeframe), that will allow for generating
another PLN 900m in savings.
I can also assert, with enormous satisfaction, that
TAURON Group is running its operations in compliance
with all business ethics rules and corporate governance
principles. Such approach was noticed and appreciated
by the capital market – in December 2013 the Company’s
shares were included in RESPECT Index, grouping
companies that are managed in a responsible and
balanced manner. Such reputation is definitely a valuable
strength that will also contribute to increasing
shareholder value and raising the company’s credibility
in the eyes of its business partners.
I would like to emphasize that TAURON Group’s
accomplishments would not have been possible
without the company’s Management Board’s dedication
and commitment. I would like to thank the entire
Management Board, as well as all the other employees of
the Group. I would also like to extend special thanks to
members of the Supervisory Board for their engagement
in the company’s affairs and efforts. I am confident
that further joint and hard work will allow for further
strengthening of TAURON Group’s position on the energy
market, as well as on the capital market in 2014.
Prof. Antoni Tajduœ, PhD. Eng.
Chairman of the Supervisory Board
TAURON Polska Energia
17
III. STAKEHOLDERS
1. Customers and vendors
1.
2.
3.
TAURON Group supplies electricity to customers mainly via three companies:
TAURON Sprzeda¿ – supplying electricity to customers in all tariff groups, including households,
TAURON Sprzeda¿ GZE – supplying electricity to customers in all tariff groups, including households,
TAURON Polska Energia – supplying electricity to strategic customers.
In 2013 total electricity supplied by these companies to TAURON Group’s customers reached approx. 41 TWh,
i.e. 92.3 percent of the 2012 volume. Declining supply volume was mainly the result of falling demand from A and B tariff
groups’ customers, partly compensated by the growing supply to TAURON’s strategic customers, and also of the observed
declining average consumption in the mass customer segment.
Volume supplied in 2012 by the Group to strategic accounts was approx. 10.4 TWh. TAURON’s largest customers
in this group include: ArcelorMittal Poland, CMC Poland, Góra¿d¿e Cement, ISD Huta Czêstochowa, KGHM Polska MiedŸ,
Kompania Wêglowa, Grupa Azoty, Jastrzêbska Spó³ka Wêglowa, ZGH Boles³aw, Katowicki Holding Wêglowy and PKP
Energetyka.
Energy market’s progressing liberalization process and growing awareness with respect to its mechanisms among
customers is reflected in the degree of customer loyalty in specific market segments. In case of TAURON Group’s business
customers more than 90 percent of volume is contracted on individually negotiated commercial terms.
One of the most important changes in terms of customer service in 2013 was the implementation of
Electronic Customer Service Office – currently more than 70 thousand of individual customers have online access
to information on invoices, electronic agreement or meter readings history. Additionally, works were commenced
with T-Mobile on a combined “energy and telecommunications” offering. 2013 sales campaigns were targeted at maintaining
the budgeted level of sales margins and developing potential for selling services and value added products.
18
Electricity and heat generation by TAURON Group’s generation units is dependent primarily on the supply of hard coal
and biomass. In 2012 approx. 37 percent of the Group’s requirements for fuel to be used to generate electricity and heat
were fulfilled with hard coal from its own coal mines, operating as part of TAURON Wydobycie. The balance came from
external sources with Kompania Wêglowa providing the biggest share (48 percent). On the other hand biomass was supplied
under one year or multiple year contracts signed with its domestic producers and suppliers.
2. Personnel
TAURON Group’s headcount at the end of 2013 reached approximately 26 thousand employees and it was roughly
5 percent lower than in 2012. The largest number of people work for Distribution, Mining and Generation.
TAURON Group’s subsidiaries are offering a broad range of initiatives that provide their personnel with a number of
career development options. As a result TAURON Group is considered to be one of Poland’s most attractive employers.
Randstad recruitment agency placed TAURON Polska Energia on the list of the most attractive employers in “Randstad Award
2013” ranking. Additionally, for the first time TAURON Polska Energia found itself among the most desired employers
according to HR Antal International recruitment and consulting agency, which was confirmed by the results of the research
“The most desired employers in 2013 in the opinions of professionals and managers” conducted by this agency.
Career development and labor safety
One of the key aspects of TAURON Group’s approach to its personnel is making sure our staff’s competence level
is high. Professionally prepared training offer, opportunity for employees to engage in innovative educational undertakings
and participation in talent development programs indicate the weight assigned to activities in this area.
In 2013 TAURON Group carried out five training projects co-financed using European Union funds. Training was
continued as part of “Company with energy” and “TAURON Heat Academy” projects. Also three new projects were launched:
“Program for development of management teams of TAURON Dystrybucja SA”, “Competence as a source of energy” and “Growing
competences and skills of personnel a key to the success of TAURON Dystrybucja SA”.
A significant element of activities aimed at benefitting personnel is maintaining the highest labor safety and hygiene
standards by providing staff with appropriate work conditions and access to modern technologies.
Ethics
TAURON Group’s ambition is to develop coherent and integral corporate culture based on ethical values. The sign of
our care in this respect is developing awareness among personnel how they can get involved in accomplishing business
and social goals in line with common values in force in the Group’s subsidiaries described in the “Business Ethics Code”.
Group’s integrity
TAURON Group is implementing solutions aimed at facilitating information exchange and developing company-wide
knowledge base. The best example of such approach is the 2013 launch of common intranet for the Group’s staff which
constitutes one of the main internal communications channels. This is Poland’s largest project in terms of the number of
users and functionality. Common intranet’s task is to support the development of brand awareness among employees
and enable creating the knowledge base for the entire organization.
TAURON Group is launching numerous initiatives aimed at integrating the staff of specific subsidiaries that involve
recreation activities and sports competitions. Examples include such undertakings as “TAURON Bachleda Ski” or “Safe Winter”.
The staff’s participation in such events has a positive impact on building relationships inside the Group, and at the same time
makes employees identify themselves with TAURON brand better.
3. Stakeholder relationships
TAURON Polska Energia’s communications with stakeholders is one of the main factors affecting the Group’s
relationships with stakeholders. Therefore the Group is doing its best to make sure that its communications should meet
the highest standards with respect to each group of stakeholders. Clarity and transparency is particularly important
because since mid-2010 TAURON Polska Energia has been a public company listed on the Warsaw Stock Exchange.
The Group’s organizational structure includes Press Office and Investor Relations Office that are parts of
the Communications and PR Department. Press Office is responsible for, among others, providing communications
on events to the media (including cooperation with the media, organizing meetings with the company for journalists,
such as press conferences). On the other hand, Investor Relations Office is responsible for compliance with information
disclosure obligations applicable to a public company listed on the stock exchange and for active cooperation with all capital
market participants – analysts, fund managers and individual investors.
Internet is a very important communications channel for companies. TAURON runs an extensive and content rich
website where all information relevant for its stakeholders is regularly posted.
19
Since 2009 the Group has implemented a functional public relations and communications strategy which is closely
linked to its corporate strategy. Based on this strategy we are promoting TAURON brand’s image around the following
four values:
–
safety,
–
taking care of local communities,
–
sustainable development,
–
ecology.
One of the key features of our public relations and communications strategy is corporate social responsibility.
Furthermore, we publish “Polska Energia” monthly in which readers can find information on events related to TAURON
Group’s operations and the latest trends in the energy sector in Poland and worldwide.
4. CSR
TAURON Group is a socially responsible company and it is not indifferent to the needs of our environment.
The company is seeking to combine ethical and ecological aspects of business operations with their efficiency. This is why
the company gets involved in campaigns conducted by various types of organizations working for public benefit and also
undertakes its own initiatives.
Challenges with respect to sustainable development are defined in the document entitled “Corporate Social
Responsibility, i.e. TAURON Group’s 2012–2015 Sustainable Development Strategy with an outlook until 2020”.
Sustainable development strategy outlines two leading directions:
–
ensuring energy supply security,
–
customer orientation.
Also three auxiliary directions are defined: personnel’s commitment towards growth of the organization, environment
protection throughout the value chain and managing economic and social impact.
The first sustainable development report was published in 2013 and it presented TAURON Group’s commitments
stemming from the sustainable development strategy and data summarizing year 2012. The report was subjected to
external verification by an independent auditor. The company was also audited in conjunction with its inclusion in RESPECT
Index – an index that groups public companies acting in accordance with the sustainable development principles. As a result
TAURON Polska Energia has been included among the companies grouped in this index since December 2013.
One of the sustainable development strategy’s directions is managing economic and social impact. The goals
in this area are realized through, among others, activities of TAURON Foundation, which allows for effective performance of
tasks related to taking care of local communities’ safety and pro publico bono activities.
In 2013 TAURON Foundation, along with the company, carried out, based on employee volunteering activities,
another edition of “Houses of Positive Energy” campaign targeted at 24x7 orphanage centers. Its main objective is to improve
living conditions of children staying at orphanages in the area of the Group’s operations. The undertaking enjoyed great
popularity – 87 such facilities, taking care of almost 3,000 children, took part in this campaign.
In 2013 the Foundation also continued “Overnight Heroes” project with its goal of developing awareness of bone
marrow donor activities and increasing the number of potential bone marrow donors. TAURON Foundation’s volunteers
organized more than a dozen information campaigns and the bone marrow donor days at TAURON Group’s subsidiaries
and during events sponsored by TAURON, as a result of which more than 2,300 potential donors were registered.
TAURON Group, operating in the south of Poland, is supporting projects that are important for the inhabitants of
Upper and Lower Silesia, Opole, Ma³opolska and Podkarpacie Regions. TAURON, as a strategic partner, is, among others,
cooperating with the Volunteer Mountain Rescue Service (Górskie Ochotnicze Pogotowie Ratunkowe – GOPR), with
the objective of improving safety in the mountains.
Also worth noting are projects implemented by the Group’s subsidiaries. “TAURON fuses” campaign was continued
in 2013. The campaign conducted by TAURON Sprzeda¿ was aimed at increasing customers’ awareness of the way
the electricity market is functioning and its main goal was to provide protection against practices of dishonest salespersons.
On the other hand, a part of the project related to education of youth and children was conducted by TAURON Dystrybucja,
teaching the principles of safe electricity use.
TAURON is also a signatory of the declaration signed on June 17, 2009 during the national “Responsible Energy”
conference, containing sustainable development principles in the energy sector in Poland. In 2013 the company joined
the signatories of the “Declaration of business for sustainable development”, thus undertaking to accomplish strategic
objectives of the “Vision of sustainable development for the Polish business 2050”.
5. Environment protection
TAURON Group pays a lot of attention to environment protection by minimizing environmental burdens and limiting
the quantities of discharged pollutants, including emissions of such gases as, for example, carbon dioxide. All TAURON
Group’s subsidiaries hold permits for the use of the environment, sector specific permits and water permits.
20
The most important activities that TAURON Group undertook with respect to environment protection in 2013
included:
1.
installing flue gas denitrification systems for 200 MW units at £aziska Power Plant and Jaworzno III Power Plant: in 2013
such systems were installed on units no. 10 and 11 at £aziska Power Plant and on units no. 4 and 6 at Jaworzno III
Power Plant, works on further units are underway,
2.
decommissioning old generation units at ZEC Bielsko-Bia³a EC I and commissioning a new, low emission and high
efficiency 50 MW unit,
acquiring licenses for electricity generation from renewable energy sources at biomass-fired units at Jaworzno III
3.
Power Plant, Stalowa Wola Power Plant and Zak³ad Wytwarzania Tychy. As a result of completed biomass-fired units’
investment projects TAURON Group has three biomass-fired renewable energy sources with the total installed
capacity of 110 MW,
4.
upgrading hydroelectric power plants aimed at, among others, reducing the threat of natural environment
contamination with natural oils.
TAURON Group’s subsidiaries implement responsible environment protection policy and act with due diligence
so that both the operations conducted by the company, as well as CAPEX projects implemented should be based on
the latest technological advancements with respect to environment protection.
6. Sponsoring
TAURON Group’s important sales promotion and support tools are sponsoring activities. Such activities have been
conducted since 2009. As a result TAURON brand is associated with the Olympic idea and values that are embodied by such
sports as basketball, road cycling, alpine skiing and volleyball.
In culture TAURON brand appears, among others, in the context of such events as TAURON New Music Festival or Life
Festival. TAURON Group supports renowned cultural institutions – Polish Radio National Symphonic Orchestra in Katowice,
Cracow’s STU Theatre or Wroc³aw Opera.
Sponsoring activities allow for a substantial reduction of the costs of promotion in comparison to the expenditures
that would have to be incurred for classic and traditional advertising. Thanks to professional implementation of sponsoring
activities in 2013 TAURON brand was number one in terms of accumulated media value on TV among energy brands
and number 8 among all brands in Poland.
Sponsoring activities conducted by TAURON Group provide support for the electricity sales process by making
customers loyal and providing a number of opportunities to become familiar with the Group’s commercial offering.
21
Operations and strategy
I. GROUP’S OPERATIONS OVERVIEW
1. Value chain
TAURON Group is one of Poland’s largest enterprises and one of the leading energy holding companies in Central
and Eastern Europe. The Group is operating in all of the main segments of the energy market, controlling the entire value
chain – from hard coal mining to the supply of electricity to end customers. The Group’s vertical integration, including access
to its own hard coal resources and control over its own generation, enhances the stability of its revenues and margins.
TAURON Group’s core operations include:
•
•
hard coal mining,
•
•
•
electricity distribution,
electricity supply,
electricity and heat generation,
heat distribution and supply
TAURON Group – key facts:
•
•
•
•
•
22
No. 1 electricity distributor in Poland
47.9 TWh of electricity distributed
No. 1 electricity supplier in Poland
41.3 TWh of electricity supplied
No. 2 electricity generator in Poland – approx. 5.4 GWe
Group controls 20 percent of Poland’s thermal hard coal resources
2
TAURON distribution grid covers 57.1 thousand km , i.e. 18.3 percent of Poland’s territory
TAURON Polska Energia SA Capital Group – integrated value chain
23
2. Assets
LOCATION OF TAURON GROUP’S KEY ASSETS
24
3. Lines of business
TAURON Group is a vertically
integrated utility that is one of
the leaders in electricity
distribution, supply
and generation both in Poland,
as well as in Central
and Eastern Europe.
TAURON Group is conducting
operations in the following
lines of business:
Mining – includes primarily hard coal extraction, enrichment and sales – operations
in this segment are conducted by TAURON Wydobycie.
Generation – includes mainly electricity and heat generation from conventional sources,
also in co-generation and using biomass co-firing technology – operations in this
segment are conducted by TAURON Wytwarzanie.
Renewable Energy Sources (RES) – include electricity generation from renewable
sources – operations in this segment are conducted by TAURON Ekonergia.
Heat – includes primarily generation, distribution and supply of heat, and to a lesser
degree also of other energy products – operations in this segment are conducted by
TAURON Ciep³o.
Distribution – includes electricity distribution using distribution grids located
in the south of Poland – operations in this segment are conducted by TAURON
Dystrybucja and TAURON Dystrybucja Serwis.
Supply – includes supply of electricity to end customers and electricity wholesale
trading, and also trading and management of CO2 emission allowances (carbon credits),
property rights related to certificates of electricity origin, as well as fuels – operations
in this segment are conducted by: TAURON, TAURON Sprzeda¿, TAURON Sprzeda¿ GZE
and TAURON Czech Energy.
Customer Service – includes customer service with respect to both supply, as well as
distribution of electricity, and also provision of support functions for TAURON Group’s
subsidiaries related to financial and accounting services, as well as ICT services
– operations in this segment are conducted by TAURON Obs³uga Klienta.
Other – operations related to stone (including limestone) extraction for the needs of
the power, steel, construction and road construction sectors and with respect to
the production of sorbents, and also operations with respect to trading of electricity
and derivative products.
25
Mining
The segment’s operations include hard coal extraction, enrichment and sales. TAURON Group has access to
2.5bn tons of recoverable hard coal resources which constitute approximately 20 percent of Poland’s overall hard coal
resources. In 2013 TAURON Group’s commercial hard coal output was 5.45m tons, with 67 percent used by the Group
and 33 percent sold to external customers.
26
Generation
Generation segment includes primarily electricity and heat generation from conventional sources, also
in co-generation and using biomass co-firing technology. Generation operates 6 hard coal-fired power plants: Jaworzno,
£aziska, £agisza, Stalowa Wola, Siersza, Blachownia.
TAURON Group is Poland’s second largest electricity generator. Total installed electric capacity of TAURON Group’s
generation units in this segment is 4.8 GWe. Main fuels used in the production process are hard coal, biomass, as well as
coke oven gas and methane-rich natural gas. In total Generation segment produced 17.6 TWh of electricity, including
0.55 TWh using biomass, in 2013.
27
28
Renewable Energy Sources (RES)
RES segment includes electricity generation from renewable sources, excluding generation using biomass co-firing.
Currently this segment includes 35 hydroelectric power plants with an installed capacity of 133 MWe and four wind farms
with a total capacity of 183 MWe. In 2013 TAURON Group produced approx. 1.4 TWh of electricity from renewable energy
sources in total, including 0.61 TWh generated by wind farms and hydroelectric power plants. Electricity generated
by RES segment constituted approx. 3 percent of the total energy generated by the Group in 2013.
29
Heat
Heat segment is responsible for the generation, distribution and supply of heat and other media. TAURON Group has
its own heat sources with total installed heat capacity of 1,475 MW. In 2013 the Heat segment produced approx. 8.4 PJ of
heat. As part of Heat segment’s assets TAURON Group operates four hard coal-fired combined heat and power plants
and heating pipelines with the total length of approx. 1,050 km.
30
Distribution
The segment’s operations include distribution of electricity using distribution grids located in the south of Poland.
TAURON Group is Poland’s largest distributor of electricity, both in terms of volume of distributed electricity, as well as
revenue from distribution operations. TAURON’s distribution grids cover an area of approx. 57.1 thousand km2,
i.e. 18.3 percent of Poland’s territory. In 2013 the Group distributed 47.9 TWh of electricity in total to approx. 5.3 million
customers.
31
Supply
The segment includes supply of electricity to end customers and wholesale trading of electricity and also trading
and management of CO2 emission allowances (carbon credits), property rights related to certificates of electricity origin,
as well as fuels. TAURON Group is Poland’s largest electricity supplier. In 2013 TAURON Group’s total electricity supply was
approx. 41.3 TWh, including Supply segment’s approx. 33.9 TWh supplied to roughly 5.3 million end customers.
32
Customer Service
The segment includes customer service with respect to supply and distribution of electricity, and also provision of
support functions for TAURON Group’s subsidiaries related to financial and accounting services, as well as ICT services.
The group of customers served by TAURON Obs³uga Klienta includes approx. 5.3m end users nationwide.
33
Other
The segment’s operations include stone extraction for the needs of the power, steel, construction and road
construction sectors, production of sorbents, and also other trading of electricity and derivative products.
34
4. TAURON versus other market players
TAURON Group’s biggest competitors continue to be other Polish large energy groups: PGE Polska Grupa
Energetyczna, ENEA, ENERGA and ZE PAK. All of the above mentioned companies are, similar to TAURON Polska Energia,
listed on the Warsaw Stock Exchange.
TAURON Group’s competitive landscape
According to the 2013 data Poland’s top five energy groups (PGE, TAURON, ENEA, ENERGA and ZE PAK) held a more
than 60 percent share in the electricity generation market. The market share of PGE, TAURON, ENEA and ENERGA
in electricity distribution was more than 93 percent.
TAURON Group is Poland’s largest electricity distributor – its distribution grids cover an area of approx.
57.1 thousand km2, i.e. 18.3 percent of Poland’s territory. In 2013 the Group’s share in the distribution of electricity
to end users was 37 percent, while its share in the supply of electricity to end customers market was approx. 34 percent.
According to the 2013 data TAURON Group was number two, both with respect to installed capacity (5.4 GW),
as well as gross electricity generation (21.7 TWh), behind only PGE (12.8 GW and approx. 62 TWh, accordingly)1.
In 2013 TAURON Group’s share in the domestic electricity generation market was 13 percent, while PGE held a 38 percent
market share.
Poland’s third largest utility is ENEA with installed capacity of 3.2 GWh and an 8 percent share (approximately 13 TWh)2
in the electricity generation market and a 14 percent share (17 TWh) in the distribution market.
ZE PAK and ENERGA have, accordingly, 2.5 GW and 1.3 GW of installed capacity. ZE PAK’s share in the Polish electricity
generation market was approximately 7 percent (roughly 11 TWh). According to the 2013 data ENERGA’s share
in the electricity generation market was 3 percent (5 TWh), while its share in the distribution market was approximately
17 percent (20.4 TWh).
1
2
Company publishes data on net production, gross production volume – own estimates
Company publishes data on net production, gross production volume – own estimates
35
Financial results of Polish energy groups in 2013
TAURON
PGE
ENEA
ENERGA
19.1
30.1
9.2
11.4
EBITDA (PLN bn)
3.7
8.0
1.6
2.0
Net profit (PLN bn)
1.3
4.1
0.7
0.7
32.4
60.8
16.3
17.0
5.3
5.2
2.4
2.9
Sales revenue (PLN bn)
Assets (PLN bn)
Number of customers (m)
Installed capacity and electricity production per energy group
Group
Installed capacity
Generation (gross production)
Volume (GW)
Share (%)
Volume (TWh)
Share (%)
12.8
33
62*
38
TAURON
5.4
14
22
13
ENEA
3.2
8
13*
8
ZE PAK
2.5
6
11*
7
ENERGA
1.3
3
5
3
Other
13.6
35
51
31
Total
38.7
100 percent
164.4
100 percent
PGE
* Company publishes data on net production, gross production volume – own estimates
Source: ARE, companies’ information published on websites (2013 data)
Distribution of electricity to end customers per energy group
Group
Distribution
Volume (TWh)
Share (%)
TAURON
45
37
PGE
32
26
ENERGA
20
17
ENEA
17
14
8
7
123
100 percent
Other entities
Total
Source: ARE, companies’ information published on websites (2013 data)
36
II. ENERGY MARKET OVERVIEW
1. Poland’s energy market
In 2013 signs of economic recovery were visible, both in the euro zone as well as in Poland. A strong decline of inflation
rate, down to less than 1 percent in Q4, and a significant drop of interest rates were important elements of the 2013
economic landscape. These two factors had a stimulating impact on the consumers’ demand. Ultimately 2013 GDP growth
rate was 1.6 percent versus 2 percent reached in 2012.
Economic growth had a small impact on increases of production and consumption of electricity. Full year 2013
electricity production in Poland was 162.5 TWh. According to the transmission system operator (PSE SA) 2013
saw an insignificant, just by approx. 0.6 percent, growth of domestic electricity consumption while production rose
by approx. 1.76 percent. The electricity surplus was exported to neighboring countries and the volume exported in 2013
was almost 60 percent higher than in 2012. Low electricity generation costs led to a shift of production towards lignite-fired
sources (up by approx. 2.5 percent), at the expense of gas-fired power plants (down by approx. 30 percent). No significant
changes to the position of generators using hard coal (up by approx. 0.1 percent) were observed. 2013 was another year
that saw rising installed capacity of wind farms – reaching 3,462 MW at the end of December versus 2,580 MW a year earlier
(up by 41 percent).
Year
Gross production of electricity
in Poland (TWh)
Year
Consumption of electricity
in Poland (TWh)
2003
151.6
2003
140.5
2004
154.2
2004
144.0
2005
156.9
2005
144.8
2006
161.7
2006
149.8
2007
159.3
2007
154.1
2008
155.5
2008
154.8
2009
151.7
2009
148.7
2010
157.7
2010
156.3
2011
163.5
2011
158.3
2012
162.1
2012
159.2
2013
162.5
2013
157.9
Source: Energy Market Agency, Polskie Sieci Elektroenergetyczne (TSO)
37
2013
(GWh)
Percentage
Hard coal-fired power plants
84 566
52.05 percent
Lignite-fired power plants
56 959
35.05 percent
Industrial power plants
9 171
5.65 percent
Wind farms
5 823
3.58 percent
Gas-fired power plants
3 149
1.93 percent
Hydroelectric power plants
2 762
1.69 percent
Other renewable power plants
Total production
72
0.05 percent
162 501
100 percent
Source: Own calculations based on PSE’s data
RES source type
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012 2013*
Wind farms
0.124
0.142
0.135
0.257
0.472
0.806
1.045
1.823
4.599
3.127
4.295
Hydroelectric power plants
1.672
2.081
2.176
2.029
2.253
2.153
2.376
2.922
2.317
2.032
2.108
Biomass co-firing
0.250
0.620
0.877
1.314
1.797
2.752
4.282
5.243
6.000
6.364
0.786
Biogas-fired power plants
0.056
0.082
0.104
0.117
0.162
0.221
0.301
0.364
0.431
0.529
0.515
Biomass-fired power plants
0.015
0.148
0.467
0.504
0.546
0.561
0.601
0.636
1.055
1.618
0.092
–
–
–
–
–
–
0.000
0.000
0.000
0.001
0.001
Solar power plants
* The above data is related to volumes of electricity generated from RES that were covered by certificates of electricity origin issued by the President of Energy
Regulatory Office (ERO)
Source: ERO, GUS (Central Statistics Office)
38
2. TPA (Third Party Access)
One of the key elements that have an impact on the shape and competitiveness of the energy market in Poland
is the so-called TPA (third party access) rule that enables free energy supplier selection by a customer. It provides an option
to use a utility’s grid without being obliged to purchase electricity from such company. Liberalization of the energy market,
growing competition and campaigns that promote the use of this regulation resulted in changes on the energy market
and a significant number of customer migrations.
In 2013 end customers that exercised the TPA rule were supplied approx. 44 percent of electricity. However, it should
be noted that the supplier switching customers’ growth rate was lower than in 2012. In tariff groups A, B and C the number of
migrations rose by more than 27 thousand customers, while in tariff group G (households) by more than 59 thousand.
At the end of 2013 the total number of customers who exercised their right to switch suppliers in tariff groups A, B and C
reached 92.6 thousand, and in the household segment – 135.6 thousand.
3. Prices of electricity and related products
Forecasts for 2013 envisioned significant drops of electricity prices, both on the spot market, as well as on the futures
market. Such situation was undoubtedly the consequence of oversupply on the CO2 emission allowances market and their
low market prices due to the expected further economic slowdown and a weaker demand for electricity. Additionally,
uncertain situation with respect to the legislature related to the support scheme for renewable energy sources (RES)
and co-generation led to a collapse of prices on the certificates’ market. All of these factors contributed to a challenging
situation on the market, especially in the generation segment.
In 2013 we observed strong declines of electricity prices on wholesale markets. Declining CO2 emission allowances
prices, falling thermal coal prices and rising electricity production from renewable energy sources had the biggest impact on
such situation. As a result the average next day market price for the entire 2013 was PLN 153.82/MWh, while its counterpart
on the balancing market (CRO price) was PLN 156.51/MWh. These levels were lower by, accordingly, PLN 19.76/MWh
and PLN 22.21/MWh than in 2012 (a drop by, accordingly, 12.8 percent and 12.4 percent).
The trend on the Polish electricity market was similar to what could have been observed on the European markets,
including in neighboring countries, for example in Germany and in the Czech Republic. Also on the neighboring countries’
markets substantially lower electricity prices were observed in 2013 than a year earlier. On the German EPEX spot market
prices fell 11.3 percent – from EUR 42.60 to 37.78/MWh. Similarly on the Czech OTE market where the average price
dropped 15.3 percent to EUR 36.74/MWh. Only on the Scandinavian NordPool market spot prices in 2013 were higher
than in 2012, due to lower availability of nuclear units’ capacity and adverse hydrological situation, and the average price
reached approx. EUR 38/MWh.
All contracts on the electricity futures market were declining from the beginning of the year. BASE Y-14 contract
from the beginning of the year went down from PLN 178/MWh to the minimum of PLN 145/MWh. The average price of such
contracts was PLN 160.40/MWh.
Prices of CO2 emission allowances
Economic slowdown and strong growth of renewable energy sources brought about a substantial oversupply of
the CO2 emission allowances. This led to strong declines of their prices already in Q1 2013, from slightly less than EUR 7/Mg
to approx. EUR 3.50/Mg. In April 2013 European Parliament rejected a proposal to temporarily withdraw 900 mln Mg of
carbon credits that were to be allocated in 2013–2015 from the system (backloading), which caused a further significant
drop of their prices. Ultimately the backloading of carbon credits was passed in December 2013. The average price of
EUA DEC-13 contracts concluded in 2013 reached EUR 4.51/Mg.
Prices of color certificates
Unstable legislative situation had the biggest impact on the market of property rights related to certificates of
electricity origin. Since the beginning of 2013 prices of property rights related to electricity produced from renewable
energy sources (RES) were falling dramatically, reaching even PLN 100/MWh, with the substitution fee set for 2013
at PLN 297.35/MWh. In the successive months of 2013 the prices of property rights stabilized, and by the end of the year
they went up to approx. PLN 194/MWh.
Lack of obligation to redeem property rights related to electricity generation using high efficiency co-generation units
(both hard coal-fired, as well as gas-fired) led to substantial declines of prices of red and yellow certificates. Prices of
property rights related to electricity generation using gas obtained through coal bed demethanization (coal bed methane
drainage) (so-called violet certificates) remained stable.
39
Certificate type
Price in December 2013
(PLN/MWh)
Price in December 2012
(PLN/MWh)
Change
(%)
Red certificates
0.85
2.25
-62.22
Green certificates
194.67
185.44
4.97
Yellow certificates
44.44
125.70
-64.64
Violet certificates
59.40
58.50
1.5
4. Energy sector expansion prospects
Economic growth is expected to accelerate in 2014, with its main drivers likely to be export and internal demand
(rising consumption and investments). On the demand side it should, however, be assumed that in the long run (i.e. over
the next 20 years) the demand for electricity in Poland will be growing. According to the latest forecasts of the Ministry of
Economy, provided in the updated Polish nuclear energy program, electricity consumption is to reach 161.4 TWh in 2030,
which means an annual average growth of 1.5 percent. It is estimated that the biggest increase of demand for electricity
will occur in the services and households sector (up 46 percent). On the other hand the biggest long term challenge for
the national power system will be how to replace approx. 12 GW of capacity to be decommissioned by 2030.
European Union’s environmental requirements for Poland mean that importance of renewable energy sources (RES)
versus other fuels used to generate electricity will substantially rise over the next few years. Currently RES share in Poland’s
overall electricity production is equal to a few percentage points. A reverse trend will be visible in electricity generation
using hard coal and lignite with their role in the power sector slowly decreasing.
RES law
In February 2014 a draft renewable energy sources law was presented and adopted by the Council of Ministers’
Standing Committee. The draft includes more detailed provisions related to the auction system which will replace
the existing support mechanism based on allocation of green certificates. According to the new law only installations with
a bidding price lower than the reference price set for specific technologies will qualify for the auction.
Existing installations will be receiving support for 15 years from the moment they produced electricity covered
by the support mechanism for the first time. In case of co-firing the proposals to limit support for the existing installations
to 0.5 of a certificate (excluding dedicated installations) until the end of 2020 were confirmed, with an option to set
another coefficient for the subsequent period. The law also introduces a substitution fee of PLN 297.35 and mechanisms
aimed at maintaining (supporting) appropriate prices of green certificates.
Nuclear energy program
At the beginning of 2014 another update of the Polish nuclear energy program was completed. The most important
change is a new schedule of investment project preparation and construction of a nuclear power plant in Poland.
Total CAPEX related to the construction of the first nuclear power plant, including costs of preparatory works, are estimated
to reach PLN 40-60bn.
Planned capital expenditures in power generation units
The need to decommission, by 2030, generation units with the total capacity of approx. 12 GW means that, apart
from nuclear energy, Poland must invest in new conventional power generation units. Total planned capital expenditures
in Poland’s new power generation units by 2030 include projects with the capacity of approx. 30 GW. The estimated value of
the CAPEX program is roughly EUR 65bn (including the nuclear project).
Investment projects currently underway in Poland are related to the construction of generation units with
the total capacity of more than 4,300 MW. The most important among them are: two hard coal-fired units in Opole with the
total capacity of 1,800 MW, 900-1,000 MW units in Jaworzno and Kozienice, a 450 MW CCGT unit in Stalowa Wola
and a gas-fired unit in W³oc³awek (463 MW). Furthermore, construction of several smaller units that use conventional fuels
with the total capacity of approx. 700 MW is also underway.
Challenges faced by the Polish energy sector
Long term goals of the Polish power sector have remained unchanged for several years. Priorities include reducing
carbon dioxide emissions and upgrading power sector’s infrastructure. In January 2014 European Commission presented
energy policy assumptions beyond 2020. They are based, among others, on reducing, by 2030, greenhouse gases emissions
by 40 percent versus 1990 levels. This means increasing annual linear emission reduction factor from 1.74 percent to
2.2 percent. In February 2014 European Parliament also adopted a resolution summoning European Commission
40
and member countries to increase energy efficiency by 40 percent and achieve the goal of generating 30 percent of
electricity from renewable energy sources in 2030.
III. CORPORATE STRATEGY
1. Mission, vision, strategic goals
TAURON Group’s mission is to ensure energy supply for customers based on best practices that guarantee
an increase of shareholder value, while the Group’s vision is to be one of the leading energy companies in the region.
The overall strategic objective remains the continuous growth of value to ensure return on capital invested for
shareholders. Accomplishment of the above goal is measured based on the basic value creation metrics, i.e.: growth of
EBITDA and ROIC.
In the coming years TAURON intends to focus on expanding operations in those lines of business that offer potentially
the highest rate of return on investment. Furthermore, the company will zero in on diversifying its generation portfolio,
improving efficiency and developing an effective organization. Cost discipline will also continue to be a priority in order to be
prepared for any adverse forward price evolution scenario.
In order to minimize risk and maximize rates of return TAURON Group is planning to diversify its generation portfolio,
selecting specific technologies accordingly, and develop an effective hedging policy, including electricity supply hedging.
Such policy will enable us to reduce volatility of the Group’s financial results.
In Generation, Heat and RES segments TAURON Group is planning to restore and increase its installed generation
capacity from the current 5.4 GW to approx. 6.15 GW in 2023. The growth will stem from commissioning new high efficiency
hard coal-fired and gas-fired generation units, as well as wind farms. Further down the line the fuel mix is planned to include
nuclear energy as a result of the Group’s involvement in the construction of such unit jointly with strategic partners.
Distribution and Supply segments are also important growth areas.
TAURON Group’s total CAPEX in 2014–2023 will reach approx. PLN 37bn. The objective is to commission generation
capacity in the region of 2,200 MW as a result of the planned investment projects, including in particular:
–
1,030 MW in coal based technology (910 MW at Jaworzno III Power Plant, cogeneration capacity: 55 MW at Zak³ad
Wytwarzania Nowa, 65 MW at Zak³ad Wytwarzania Tychy),
–
approximately 675 MW in gas based technology (225 MW at Stalowa Wola Combined Heat and Power Plant
and approximately 450 MW at £agisza Power Plant),
–
approximately 500 MW in wind based capacity.
In 2023 the Group will, in accordance with its assumptions, have wind farms with the total capacity of approx. 700 MW,
which will allow for achieving the Group’s goal of 800 MW from new renewable energy sources (including biomass). Investing
in further wind farms is conditional on support mechanisms included in the ultimate law on renewable energy sources
and any such projects will be financed off balance sheet.
92 percent of the Group’s installed capacity in 2014 is based on coal technologies. In 2023 their share will drop to
approx. 74 percent, including 25 percent based on modern, high efficiency hard coal-fired units. The share of low emission
technologies, i.e. gas, wind, hydro, biomass will be approx. 26 percent.
Total CAPEX in Distribution will reach approx. PLN 21.1bn, including mainly new customers and power sources
connections and grid construction related thereto, as well as upgrading and restoring the existing assets.
2. Strategy implementation in 2013
Corporate Strategy became focused on expanding operations in those lines of business that offered potentially
the highest rate of return on investment and on diversifying the generation portfolio. The objective to achieve
further efficiency improvements of the Group’s operations and to develop a streamlined organizational structure was
reaffirmed. Implementation of Corporate Strategy in 2013 allowed for achieving EBITDA budgeted for the year and ROIC of
approx. 8 percent.
The construction of Wicko (40 MW) and Marszewo (82 MW) wind farms was completed in 2013. Currently TAURON
Group offers 183 MW of wind based installed capacity.
Licenses for electricity production using biomass-fired units at Jaworzno III Power Plan (50 MW), Zak³ad Wytwarzania
Tychy (40 MW) and Stalowa Wola Power Plant (20 MW) were acquired last year. Commissioning of a 50 MWe/106 MWt heat
generation unit at ZEC Bielsko-Bia³a was also an important event. Construction of a 50 MW extraction and condensation
unit at Zak³ad Wytwarzania Nowa in D¹browa Górnicza was commenced. Also the construction of a 449 MWe CCGT unit
at Stalowa Wola Power Plant and of a new 50 MW unit at Zak³ad Wytwarzania Tychy was continued.
41
Furthermore, preparation works are underway to commence the construction of a 413 MWe CCGT unit at £agisza
Power Plant. In April 2014 TAURON signed a contract with Rafako-Mostostal Warszawa consortium for the construction
of a new approx. 910 MW power generation unit at Jaworzno III Power Plant. An important element of the strategy
implementation is also the Group’s participation in Poland’s first nuclear power plant construction project.
Budgeted efficiency improvement goals were achieved primarily as a result of restructuring programs implemented
in the following lines of business: Generation, Heat and Distribution. TAURON Capital Group took actions aimed
at improving organizational efficiency, continuing the development of the ultimate business model and integrating
individual subsidiaries. Customer Service segment was integrated and the final stage of establishing the Heat segment,
placing ZEC Bielsko-Bia³a within TAURON Ciep³o, was completed.
TAURON Group’s ultimate structure
The ultimate model of TAURON Group’s structure defined in the Corporate Strategy envisions setting up a single
leading subsidiary in each Line of Business. This model also enables functioning of subsidiaries formed or acquired for
the needs of strategic alliances, conducting operations on foreign markets, accomplishing business goals and implementing
investment projects. This is to allow for optimizing the operations of entities throughout the value chain in order to maximize
the margin generated by TAURON Capital Group.
I. Growth in the most attractive lines of business
Growth will be focused in the lines of business which offer potentially the highest rate of return on investment.
Due to the need to restore generation capacity and high capital expenditures related thereto TAURON Group’s priority
is investing in generation assets (and potential acquisition opportunities in this respect) on the domestic market.
In Generation, Heat and Renewable Energy Sources (RES) segments TAURON Group is planning to restore
and increase installed generation capacity from the current 5.4 GW to approx. 6.15 GW in 2023. The growth will stem
from commissioning new high efficiency hard coal-fired and gas-fired generation units, as well as wind farms. Further
down the line the fuel mix is planned to include nuclear energy as a result of the Group’s involvement in the construction of
such unit jointly with strategic partners.
II. Operational and investment management efficiency in line with best practices
Strategy envisions achieving further synergies related to the integration of TAURON Group’s subsidiaries. Another
stage of restructuring is underway, involving improvement of management processes and integration of support functions.
Activities underway aimed at improving operational and investment management efficiency prepare TAURON Group for
operating in a volatile market environment, and in particular for dealing with high fluctuations of fuel, energy and emission
allowances prices.
In January 2013 TAURON’s Management Board adopted “TAURON Group’s 2013–2015 operating expenses
reduction program” which was developed with the goal of achieving growth of TAURON Group’s value in mind. As part of
this program consolidation and restructuring projects were prepared the implementation of which will bring a cost
reduction of approx. PLN 864m in 2013–2015. Savings realized in 2013 were PLN 320m. TAURON Capital Group is expecting
42
OPEX reduction in most lines of business – with the largest contribution coming from the Distribution and Generation
segments.
III. Market and regulatory risks exposure management
In order to optimize market and regulatory risks and in order to maximize rates of return TAURON Group
is diversifying its generation portfolio, selecting specific technologies accordingly, and developing an effective hedging
policy, including electricity supply hedging. Such policy will enable us to reduce volatility of TAURON Group’s financial
results through asset portfolio management and control of risk limits.
The company’s installed capacity breakdown changed in 2013. Hard coal based share in TAURON Group’s installed
capacity fell from 98 to 92 percent, in favor of rising renewable energy sources based capacity (biomass and wind).
Effective hedging strategy will cover all activities within TAURON Group’s value chain, starting from hedging the
budgeted volume of fuel supplies from the company’s sources up to covering a specific volume of electricity supplied to end
users from the company’s own generation units. The policy conducted will guarantee secure operation of the Generation
segment’s assets by securing fuel supplies and maintaining its price on acceptable level.
In 2013 the company continued its operations related to promoting and developing strategic power generation
technologies and preparing nuclear energy development program. In this respect activities related to the company’s
involvement in research and development works took place, co-financed using both domestic, as well as international
funds. As part of its research tasks TAURON Group carried out works aimed at, among others, completing a pilot CO2
capture installation and conducting tests on the facilities owned by TAURON Wytwarzanie. Among others a project related
to testing high temperature reactors in industrial applications, as well as with respect to hard coal gasification
and oxy-combustion.
IV. Developing a streamlined organizational structure
Developing a streamlined organizational structure involves increasing personnel competence level, implementing
management by objectives processes, improving productivity and raising TAURON Group’s customers’ satisfaction level.
Activities conducted in 2013 included continued implementation of the ultimate business model and organizational
structure, as well as completing the integration of corporate functions. In the Supply and Customer Service segments
numerous activities were carried out aimed at improving the quality and increasing customer satisfaction level. The process
of unifying customer service centers was continued, centralization of billing systems was conducted, e-commerce channel’s
implementation and development was completed. Centralization of financial and accounting processes, as well as IT support
functions was continued. Actions taken will help implement updated Corporate Strategy throughout the value chain
and strengthen TAURON Group’s position among leading energy companies in the region.
43
3. Key projects
TAURON Group’s CAPEX reached approx. PLN 14.5bn in 2008–2013. New hard coal, gas and biomass fired generation
units are planned to be commissioned by 2020. In line with the above assumptions TAURON Group’s 2013 CAPEX was
approx. PLN 3.8bn which meant an increase by approx. 9 percent versus 2012.
Most important investment projects underway and in preparation:
Elektrownia Stalowa Wola – construction of a 449 MWe/240 MWt CCGT unit – the Group’s first large gas-fired unit.
The project is carried out in cooperation with PGNiG. Abener Energia is the general contractor. Planned project’s
completion: 2015.
Elektrownia Jaworzno III – construction of a 910 MWe, ultra-super critical, hard coal-fired unit. The new unit is to be
characterized by high efficiency and availability, as well as low emissions of nitrogen oxides, SO2, CO2 and dust.
The consortium of Rafako (leader) and Mostostal Warszawa became the general contractor in this project. Planned
commissioning: 2019.
Elektrownia £agisza – construction of a 413 MWe CCGT unit, including a 266 MWt heating unit. Activities aimed at
acquiring the required permits and consents are underway. Planned project’s completion: 2018.
Elektrownia Blachownia – construction of a 850 MWe CCGT unit carried out jointly with KGHM Polska MiedŸ.
The agreement to temporarily suspend the project’s implementation was signed in December 2013. The reason
for the suspension is the current situation on the electricity and gas markets which leads to increased investment
risk. The parties to the agreement agreed that the decision on resuming the project’s implementation will be taken by
December 31, 2016.
Zak³ad Wytwarzania Tychy – construction of a 50 MWe/86 MWt cogeneration unit. In June 2013 the agreement
with Elektrobudowa SA as the general contractor responsible for the construction of the new unit (50 MWe) was signed.
Design, construction works, as well the process of contracting machines and devices by the contractor is underway.
Planned project’s completion: 2016.
Elektrownia Jaworzno III/ Elektrownia £aziska – installation of the flue gas denitrification systems for six units of
Jaworzno III Power Plant and for four units of £aziska Power Plant. This investment project will enable to reduce emission
of nitrogen oxides by these units to the levels in force in Poland starting from 2018. By the end of 2013 works on six out
of ten units had been completed, the upgrades will be completed in 2016.
Zak³ad Górniczy Sobieski – construction of “Grzegorz” shaft including infrastructure and headings. The investment
project will be of strategic importance for the operations of TAURON Wydobycie. It is to provide access to resources for
the subsequent years and eliminate sublevel caving. Planned project’s completion: 2022.
Zak³ad Górniczy Janina – construction of the 800 m level including launching of the fourth coal face. The investment
project will allow for increasing hard coal production versus the current output. Planned project’s completion: 2019.
4. Key factors affecting the Group’s growth
TAURON Group’s results are affected by the following significant factors:
•
macroeconomic environment, including changes to interest rates, FX rates, etc., that have a direct impact on
the valuation of the Group’s assets and obligations,
•
political environment, especially in Poland and in the European Union, e.g.: Energy Regulatory Office (URE), European
Commission and Office of Competition and Consumer Protection (UOKiK),
•
situation in the power sector, including competition activities on the energy market,
•
restoration of a scheme that would support electricity generation using high efficiency co-generation units (“red”
and “yellow” certificates),
44
•
geological and mining conditions for hard coal extraction,
•
number of CO2 emission allowances allocated free of charge beyond 2013, and also prices of purchased allowances,
•
changes to the power sector’s regulations, including: tax law, commercial law, environment protection,
•
demand for electricity and other energy market products, including changes due to seasonal factors and weather
conditions,
•
electricity and fuel prices,
•
URE decisions, including decisions on tariffs for electricity supply to consumers and for electricity and heat
distribution,
•
environment protection requirements,
•
progress in science and technology.
5. Risk management
TAURON Polska Energia is managing business risks related to TAURON Group’s entire operations. The objective of
the business risk management process is to help achieve TAURON Group’s budgeted business goals while not exceeding
the acceptable risk level approved by the Company’s Management Board. The process of developing the risk management
system in the Group’s key subsidiaries in line with “TAURON Group’s Corporate Risk Management Policy” was continued
in 2013.
The nature of risk is defined by determining its significance level and probability of materializing. For this purpose
the system engages and puts in order (systematizes) the Group’s resources, creating the corporate risk management
infrastructure (strategy, processes, authorizations, reporting, methodologies and IT tools). The risk management system
covers all elements of TAURON Group’s value chain, and all the Group’s employees are involved in the process.
The company is actively managing all risks, seeking to reduce or eliminate their potential negative impact, in particular
on TAURON Group’s earnings. The list of risks was updated based on the Company’s current decisions and the periodic
process of identifying TAURON Group’s business risks was conducted in 2013.
Most important risks include:
I. Market risks:
Price risk – related to volatility of prices of electricity and property rights, as well as CO2 emission allowances. Electricity
price fluctuations may have a significant impact on TAURON Group’s earnings leading to increased costs, reduced margin
and lower revenue.
Volume risk – related to volatility of volume of electricity traded during specific periods of time which may have
an adverse impact on TAURON Group’s operations because of reduced margin or financial loss incurred as a result of
a change to the volume of purchase, sale of electricity and related products.
Risk associated with the obligation to redeem certificates of origin or pay the substitution fee – related to the lack of
obligation to redeem certificates of origin or pay the substitution fee as a result of limited availability of certificates of origin
on the market, changes of the support policy for electricity generated from renewable energy sources and in cogeneration
or redeeming the wrong number of certificates of origin, the consequence of which can be increased costs of fulfilling
the statutory obligation, penalties imposed by the President of URE and higher costs of generating electricity sold.
Risk of weather conditions and climatic changes in the Heat segment – related to the volatility of air temperature which
has a significant impact on the demand for heat and electricity, in the long run causing a corresponding significant increase
or decline of such demand, the result of which can be a failure to realize the production plan for the given period or reduced
capabilities to satisfy the demand due to hydraulic constraints of the connection network, fittings and increased number of
failures related to the supply process.
II. Strategic risks:
Political risk – State Treasury as a majority shareholder may make changes to the Company’s corporate bodies in case
the country’s ruling coalition changes, which may lead to a change of the Company’s strategy, deterioration of the results
due to the modification of its plans and strategic business goals, a slower pace of the Company’s expansion, a change of
the dividend paid out to the shareholders.
45
Risk associated with TAURON Group’s organization and corporate management – related to inefficient cooperation
between TAURON Group’s subsidiaries with respect to management processes, reporting and information management.
This can have a negative impact on the Company’s operations due to a failure to fully accomplish strategic goals
or an extension of the process of accomplishing such goals, delays in decision taking or wrong decisions.
Risk of unstable legal system and EU regulations related to the functioning of the power sector, including environment
protection – risk related to adverse changes of law, Polish and EU regulations and uncertainty of the legislative environment.
Risk of non-compliance with URE requirements /UOKIK requirements/ Distribution Grid Code (Instrukcja Ruchu i Eksploatacji
Sieci Dystrybucyjnej – IRIESD) – related to the above offices’ ability to question the correctness of the operations conducted
with respect to independence and equal treatment of entities operating on the market, compliance with antitrust
regulations and abuse of market power.
Risk due to the obligation to redeem CO2 emission allowances – related to discharging CO2 into the atmosphere
and the need to redeem the applicable number of CO2 emission allowances. This may result in a penalty being imposed
for each unit of unredeemed allowance (carbon credit) or a reduction of the planned electricity sales profitability.
Risk associated with obtaining financing and servicing the financing – related to inability to obtain financing for
the operating and investment needs or high cost of obtaining such financing due to the tightening of banks’ credit policies,
unfavorable market conditions, unstable macroeconomic environment.
Risk associated with purchasing thermal fuels – related to significant and/or unexpected changes of prices of hard coal
and other fuels, as well as a shortage of hard coal, including coal of appropriate quality. This may lead to increased costs,
among others related to the need to comply with the requirements of the production process and with the legal
requirements associated with maintaining appropriate fuel inventory or a penalty being imposed in case the above
mentioned requirements are not complied with.
Risk associated with fixed asset management – related to inability to use fixed assets as a result of inefficient
management leading to their poor technical condition, inadequate costs of insuring fixed assets due to them being
undervalued or overvalued, as well as costs of maintaining redundant assets.
Environmental risk, including risk related to weather conditions – involving the possibility of incurring losses due to
non-compliance with legal regulations (including ones related to the way European law is implemented in the national law,
administrative decisions), as well as a possibility of environmental damage or major industrial failure occurring. This may
lead to incurring substantial costs in order to comply with the requirements, paying damages or posing a threat for
the performance of production tasks.
Risk associated with unregulated legal status of real estate used – related to the possibility of land owners filing financial
claims on a large scale due to unregulated legal status of structures erected on third party owned land, disputing legal status
and third party claims with respect to some assets.
Risk associated with the process of conducting strategic investment projects – related to inefficient process of conducting
strategic investment projects including planning, implementing, monitoring and closing, due to the wrong selection of
investment projects included in the investment project portfolio, lack of sufficient diversification of investment projects,
wrong assumptions, underestimated outlays, inability to provide financing from own sources, more difficult access to
external financing.
III. Operational risks:
Risk of having tariffs approved by the President of URE – related to the lack of approval by the President of URE of
submitted tariffs for the products offered and services provided, limited ability to introduce changes to the earlier approved
tariffs and the lack of approval of capital expenditures envisaged in the expansion plan or approval of such expenditures
in the amount that would not cover their actual costs.
Risk of asset failures – related to the occurrence of major and/or permanent failures and damage of the devices used.
Risk associated with the variable cost of generation – related to any errors in the dispatch of units and load sharing
in the process of scheduling specific units (merit order). Dispatch of units is based on the Transmission System Operator’s
(Operator Systemu Przesy³owego – OSP) data and decisions, operational information from power plants, units’ schedules,
variable costs and data published by the TSO (OSP).
Risk of the occurrence of natural threats (disasters) or adverse geological and mining conditions – related to a threat
for the performance of production tasks, threats for safety of the coal mine’s operations and safety of the personnel
as a result of natural disasters arising from the expansion of mining works, difficulties associated with bottom of the layer
conditions that hinder the mining process, as well as natural threats occurring in coal mines (hydrological conditions,
fire protection, rock bursts).
Risk associated with planning – related to making wrong assumptions as a result of uncertain or incomplete planning
data or a change to the market environment due to, in particular, a change of the inflation rate, GDP fluctuations, change of
demand or economic downturn.
46
Risk of losing the Tax Capital Group (Podatkowa Grupa Kapita³owa – PGK) status – related to the possibility of losing such
status by PGK due to non-compliance with legal requirements. Varying interests of individual participants, human error,
incomplete information, lack of regulations may lead to materializing of the risk the consequence of which will be the lack of
an option to take advantage of tax optimization processes available to PGK.
Risk associated with the process of awarding orders /purchasing supplies/ services – related to the possibility of
the occurrence of a significant increase of prices of supplies/services provided by contractors or a reduction of their
availability.
Risk associated with performing customers’ electricity supply contracts, including combined (distribution and supply)
contracts – related to unfavorable provisions of electricity supply contracts, including combined (distribution and
supply) contracts for customers, inefficient handling of electricity supply contracts, including combined (distribution
and supply) contracts. Failure to meet quality standards related to customer service and electricity delivery quality
parameters may lead to an increase in the number of discounts awarded and penalties imposed, rising number of
complaints, proceedings conducted by URE or UOKiK and tarnishing of the Company’s corporate image.
Risk associated with measurements and billing data – related to erroneous or delayed settlement of electricity
distribution services by the Distribution System Operator (Operator Systemu Dystrybucyjnego – OSD), the consequence
of which can be wrongly issued invoices and sales values, no possibility to issue invoices, deviation from the budgeted
revenue and cost levels, problems with the correct accounting for taxes and customer complaints.
47
TAURON on WSE
1. INVESTOR RELATIONS
Effective and transparent information policy is a motto that the company has proclaimed from the beginning of
its stock market history. Therefore TAURON Group places a lot of weight on communications with the investor community.
We communicate not only through mandatory activities required by law (current and periodic regulatory filings) but also
through many additional undertakings targeted directly at institutional and individual investors. The company is organizing
events and participating in multiple conferences for investors, road shows in Poland and abroad, during which capital
market participants can become familiar with the situation in TAURON Group and in the power sector, as well as with
its prospects.
Each periodic report published by the company in 2013 was unveiled at a conference for analysts and fund managers
during which members of TAURON’s Management Board discussed financial results provided in the reports and presented
highlights of the reported periods. Following the presentations the Management Board provided exhaustive answers to
numerous questions. The conferences were broadcast over the internet in Polish and in English, it was also possible to listen
in to them over the phone. Thanks to that investors interested in the company were able to follow these events live
and have access to information at the same time as persons physically present at the conferences.
In 2013 members of the Management Board took part in eight conferences and road shows during which
approximately 100 meetings were held with more than 120 fund managers and analysts. Meetings with institutional
investors took place not only in Poland but also in European and North American financial centers, among others
in New York, London, Paris, Vienna.
In May 2013 the company organized the second edition of the event addressed to capital market participants – Analyst
and Institutional Investor Day. During the event invited guests had an opportunity to meet TAURON’s Management
Board and management team, as well as take part in the presentation session covering three main topics:
–
directions of changes on electricity markets in Poland and in the European Union,
–
–
approach to forecasting in the power sector,
910 MW hard coal fired unit construction project at Jaworzno III Power Plant.
In 2013 the company continued its activities addressed to another extremely important group of shareholders
– individual investors. TAURON has been a strategic partner of the “Public Shareholding Program” initiated by the Ministry of
State Treasury for several years. Its goal is to encourage Poles to actively and consciously participate in the country’s
economic life by actively managing their savings and investing in shares of privatized companies and other stock market
instruments. As part of the “Public Shareholding Program” the company’s representatives took part in meetings with
individual investors during which they were conducting presentations and answering investors’ questions related to
TAURON Group’s operations.
A lot of emphasis was also placed on promoting the “Public Shareholding Program” during conferences and events
attended by the company. TAURON was also involved in the production of an educational film “Everything you would like to
know about the stock market” and conducted image building and advertising activities on the corporate website and
in TAURON Group’s magazine – “Polska Energia”.
The company also participated in other initiatives addressed to individual investors, among others as a partner of
“Capital Market Games”, and supported the “WallStreet” conference for individual investors held in Karpacz.
TAURON provides quality and up to date content on its investor relations website which for a number of investors
is the first point of contact with TAURON Group. Investor Relations’ section is updated on an ongoing basis and it includes
a lot of useful information on important events, financial results, general meetings of shareholders, recommendations
for the company issued by stock market analysts, as well as video broadcasts from earnings conferences.
2013 highlights and investor relations activities are presented in the below table.
48
2013 highlights and most important investor relations activities
#
Date
Event
1.
January 21
Participation in Citi/DM Bank Handlowy conference
2.
March 15
Full year 2012 stand-alone and consolidated earnings reports published
3.
March 15
Management Board’s meeting with analysts and fund managers to present the FY 2012
earnings report
4.
April 5
Participation in KBC conference, Warsaw
5.
April 9
Participation in DM PKO BP conference, Warsaw
6.
April 11
Management Board’s recommendation on the dividend payout for 2012
7.
April 11–12
Participation in Raiffeisen Institutional Investors’ Conference, Zürs, Austria
8.
May 16
Ordinary Meeting of Shareholders of TAURON Polska Energia SA
9.
May 9
Extended Q1 2013 consolidated earnings report published
10.
May 9
Management Board’s meeting with analysts and fund managers to present the Q1 2013
earnings report
11.
June 3
2012 dividend record date
12.
June 18
2012 dvidend paid out
13.
June 18
Participation in UniCredit/Kepler Cheuvreux Polish Day Conference in Paris
14.
June 24
Analyst and Individual Investor Day at TAURON Polska Energia Dzieñ
15.
August 22
H1 2013 earnings report published
16.
August 22
Management Board’s meeting with analysts and fund managers to present the H1 2013
earnings report
17.
September 9
Management Board’s meetings with investors at DM PKO BP
18.
September 16–17
th
Participation in the 10 Annual Emerging Europe Investment Conference UniCredit/Kepler
Cheuvreux, Warsaw
19.
October 28
DI BRE Roadshow, Vienna
20.
November 14
Extended Q3 2013 consolidated earnings report published
21.
November 14
Management Board’s meeting with analysts and fund managers to present the Q3 2013
earnings report
22.
December 3–5
Participation in UBS Global Emerging Markets Conference, New York
49
2. SHAREHOLDERS
50
TAURON Polska Energia shareholders
holding between 0.2 and 5 percent of the total number of voting shares
Shareholder
Number of shares/
Number of votes at GM
Share in share capital/
share in the total number
of votes in percentage
Aviva Powszechne Towarzystwo Emerytalne Aviva BZ WBK
58 981 562
3.37
Powszechne Towarzystwo Emerytalne PZU SA
34 840 285
1.99
The Vanguard Group, Inc.
30 062 919
1.72
Dimensional Fund Advisors, L.P.
22 199 508
1.27
BlackRock Institutional Trust Company, N.A.
18 698 841
1.07
PKO BP BANKOWY Powszechne Towarzystwo Emerytalne SA
15 911 772
0.91
Amplico Powszechne Towarzystwo Emerytalne SA
14 375 058
0.82
Mellon Capital Management Corporation
13 461 310
0.77
AXA Powszechne Towarzystwo Emerytalne SA
12 142 879
0.69
PTE Allianz Polska SA
9 343 960
0.53
Raiffeisen Kapitalanlage-GesellschaftmbH
8 786 200
0.50
Parametric Portfolio Associates LLC
8 570 444
0.49
BZ WBK AIB Asset Management SA
7 474 616
0.43
LyxorAsset Management
7 432 912
0.42
AEGON Powszechne Towarzystwo Emerytalne SA
7 425 349
0.42
State Street Global Advisors (US)
7 069 092
0.40
ING Investment Management (Polska) SA
6 798 162
0.39
Legg Mason Zarz¹dzanie Aktywami SA
6 404 629
0.37
Nordea Powszechne Towarzystwo Emerytalne SA
5 813 153
0.33
AcadianAsset Management LLC
5 615 687
0.32
Pocztylion - Arka Powszechne Towarzystwo Emerytalne
5 352 759
0.31
Pekao Pioneer PTE SA
5 181 396
0.30
BlackRockAdvisors (UK) Limited
5 129 547
0.29
PGGM Vermogensbeheer B.V.
4 952 420
0.28
APG Asset Management
4 280 774
0.24
SEB Asset Management (Stockholm)
4 095 761
0.23
Swedbank Robur AB
4 012 934
0.23
Powszechne Towarzystwo Emerytalne Polsat SA
4 010 580
0.23
338 424 509
19.31
TOTAL
Source: Thomson One (as of 31.12.2013)
51
3. DIVIDEND POLICY
In line with the dividend policy of TAURON Polska Energia starting from 2013 the Management Board should
recommend the dividend payout of 40–50% of the consolidated net profit attributable to the shareholders of the
holding company. However, the ultimately proposed dividend will take into account the needs related to the expansion of
the company and TAURON Group – in particular planned implementation of the adopted CAPEX program, as well the need to
maintain an appropriate liquidity level of the company and TAURON Group.
The Management Board’s recommendation on the dividend payout will be influenced by the following factors:
net profit shown in the company’s stand-alone financial statements, current cost of acquiring debt financing and ability to
obtain such financing on the market, as well as the company’s current investment needs. The Management Board’s
recommendation on the dividend payout will also be dependent on the structure of financing.
In accordance with the resolution of the Ordinary General Meeting of Shareholders of TAURON Polska Energia SA
of May 15, 2014, PLN 332,984,384.86 was allocated to be paid out as the dividend to the shareholders for 2013.
The dividend per share was PLN 0.19.
Dividend for
year:
Dividend
amount
Dividend
per share
Dividend
yield
Dividend
record date
Dividend
payout date
2013
PLN 332 984 384.86
PLN 0.19
3.7 percent
August 14, 2014
September 4, 2014
2012
PLN 350 509 878.80
PLN 0.20
4.6 percent
June 3, 2013
June 18, 2013
2011
PLN 543 290 312.14
PLN 0.31
6.5 percent
July 2, 2012
July 20, 2012
2010
PLN 262 882 409.10
PLN 0.15
2.8 percent
June 30, 2011
July 20, 2011
4. SHARES
TAURON Polska Energia shares have been listed on the primary market of the Warsaw Stock Exchange since June 30,
2010.
In 2013 the company’s share price fluctuated between PLN 3.85 and PLN 5.39. During the last session of 2012
the share price was PLN 4.75. A year later the price reached PLN 4.37.
The rate of return on a TAURON share in 2013 was -3.64 percent*. This performance should viewed in the context of
the entire market’s performance last year which was far from stellar for WIG20 and WIG30 companies.
WIG20 index dropped 8.58 percent during that time and WIG30, the largest companies’ index introduced in 2013,
declined 3.31 percent. One of the main reasons was the Q4 2013 bear market caused primarily by the lack of certainty
with respect to the future shape of the capital part of the pension system.
Additionally, adverse climate for investing in energy sector companies continued and led to the decline of WIG-Energia
index by more than 10 percent in 2013. This was primarily due to falling electricity prices and uncertainty surrounding
the ultimate shape of the renewable energy source law and support mechanisms for cogeneration sources.
* Rate of return calculated taking into account investor’s dividend income and assuming that such additional income is reinvested. Methodology in line with WSE’s
Statistics Bulletin.
52
53
As of December 31, 2013 the company’s stock was included in the following stock exchange indices:
WIG – including all companies listed on the WSE’s primary market that meet basic criteria for inclusion in indices.
TAURON’s share in WIG: 1.713 percent.
WIG-Poland – national index that groups solely shares of domestic companies listed on the WSE’s primary market that
meet basic criteria for inclusion in indices. TAURON’s share in WIG-Poland: 1.824 percent.
WIG20 – calculated on the basis of the value of the portfolio of shares of 20 largest and most liquid companies listed
on the WSE’s primary market. TAURON’s share in WIG20: 2.718 percent.
WIG30 – including 30 of the largest and most liquid companies listed on the WSE’s primary market. TAURON’s share
in WIG30: 2.551 percent.
WIG-Energia – sector based index that comprises companies included in the WIG index and are also qualified to
the energy sector. TAURON’s share in WIG-Energia: 18.132 percent.
RESPECT Index – index grouping companies that operate in accordance with the highest corporate social
responsibility standards. TAURON’s share in RESPECT Index: 5.364 percent.
MSCI Poland Standard Index – index that includes more than 20 key companies listed on WSE. TAURON’s share
in MSCI Poland Standard Index: 2.4 percent.
CECE Index – Vienna Exchange index that includes the largest Central and Eastern European companies. TAURON’s
share in CECE index: 2.33 percent.
54
5. STOCK MARKET INDICATORS
Stock market indicators and data related to TAURON shares
2011
2012
2013
Maximum price (PLN)
6.81
5.61
5.39
Minimum price (PLN)
4.65
4.08
3.85
Last day’s price (PLN)
5.35
4.75
4.37
9 376
8 325
7 659
2.10
1.59
1.29
15 922.47
16 839.41
17 675,34
P/E
8.10
5.50
5.50
P/BV
0.59
0.49
0.43
-16.73
-5.03
-3.64
5 574.82
3 198.94
3 103.56
Volume share (%)
2.21
1.70
1.41
Share turnover (%)
58.80
41.80
43.90
3 721 539
2 667 725
2 793 020
1 373
960
1 022
End-of-period market capitalization (PLN m)
End-of-period market capitalization (%)
Book value (PLN m)
Rate of return at the end of period (%)
Volume (PLN m)
Average volume per session
Average number of transactions per session
Source: WSE’s Statistics Bulletin
6. KEY FINANCIAL DATA
Sales revenue
TAURON Group posted sales revenue of PLN 19.1bn in 2013, i.e. a 22.7 percent decline year-on-year.
The primary reason for falling revenue is a change of the model employed to trade electricity generated by the Group.
In 2012 most of electricity was sold via the Polish Power Exchange, meanwhile in 2013 electricity sales outside the
Group were significantly reduced in favor of direct sales between the Group’s subsidiaries that are subject to exclusion
from consolidation.
Increased revenues were reported by Heat (up by 4.6 percent) and Customer Service (up by 45.5 percent). Mining’s
revenue dropped due to lower hard coal prices. A decline was also observed in the Generation segment (as a result of
a lack of compensations due to the termination of the so-called Long Term Power Purchase Contracts and lower
sales prices of electricity and color certificates). Revenues close to 2012 levels were posted by the following segments:
Distribution, Supply and RES.
55
EBITDA
TAURON Group’s reported EBITDA (EBIT plus depreciation) reached PLN 3.66bn in 2013 versus PLN 3.85bn in 2012.
However, it is important to note that, had it not been for one-off events (impairment charges related to generation
assets and color certificates, provision for the shortage of CO2 emission allowances), EBITDA would have reached
PLN 4.27bn which means a surge, versus the adjusted – comparable – 2012 EBITDA, of almost 30 percent.
As the company’s scale of operations grew the EBITDA margin increased, reaching 19.1 percent in 2013 versus
15.6 percent in 2012. EBITDA rose in most of the Group’s lines of business. In percentage terms the biggest gains
were observed in Supply (EBITDA surged 88 percent) and Distribution (EBITDA rose 13 percent). Generation was
the only segment that reported a substantial drop of EBITDA year-on-year. The main reasons for the deterioration of
the results are one-off events such as impairment charges related to generation assets and color certificates, provision
for the shortage of CO2 emission allowances and no revenue related to compensations due to the termination of Long
Term Power Purchase Contracts.
Net profit
TAURON Group’s 2013 net profit reached PLN 1.35bn and it was approx. 13 percent lower than a year earlier.
97 percent of the 2013 net profit was attributed to the shareholders of the holding company – TAURON Polska
Energia SA.
Balance sheet and capital expenditure
TAURON Group’s balance sheet total at the end of December 2013 was PLN 32.4bn versus PLN 31.3bn at the
end of 2012, i.e. an increase by more than 3 percent. TAURON Group’s 2013 CAPEX reached PLN 3.78bn and it was
approx. 9 percent higher than in 2012. Higher CAPEX was mainly due to accelerating strategic investments in the following
lines of business: Generation, Heat, RES and Distribution.
56
Debt
At the end of December 2013 TAURON Group’s net financial debt reached approximately PLN 5.23bn versus roughly
PLN 4.54bn at the end of December 2012. The net debt to EBITDA ratio also rose slightly – to 1.43 from 1.18 in 2012.
It should be emphasized that the leverage ratio still remains at a very safe level.
Cash flow
Total net cash flow from TAURON Group’s operating, investing and financing activities was negative and reached
(PLN 350.5m) in 2013 versus the positive cash flow of PLN 385.8m in 2012.
Cash flow from operating activities was approx. PLN 4.1bn, while cash flow from investing activities was negative
(PLN 4,2bn) due to the CAPEX program underway.
The nature of cash flow streams indicates the company’s expansion in progress – capital expenditures incurred
are financed from operating cash flow and external sources of financing.
Bond issue program
TAURON Polska Energia signed a bond issue program agreement with a group of banks for up to PLN 5bn in July 2013.
The term of the agreement is three years and the funds acquired from the bonds will be used to finance TAURON
Group’s CAPEX program. Also in July 2013 the company signed long term PLN 1bn bond issue program agreements
with Bank Gospodarstwa Krajowego. As of December 31, 2013 funds available under bond issue programs amounted to
PLN 3.75bn.
As of the end of 2013 TAURON’s total debt due to bonds issued was PLN 4.3bn. The overwhelming majority of this
amount came from bonds issued in December 2011 for the total value of PLN 3.3bn to finance the acquisition of Górnoœl¹ski
Zak³ad Elektroenergetyczny (GZE) from Vattenfall AB.
Rating
TAURON Polska Energia has a credit rating assigned by an international rating agency Fitch Ratings. In June 2013
Fitch reaffirmed the company’s BBB rating in domestic and foreign currencies with a stable outlook. According to
Fitch the rating affirmation reflects TAURON Group’s leading position in electricity distribution and strong position
in generation.
7. RECOMMENDATIONS
Analysts from brokerage houses and investment banks issued, in total, 38 recommendations (excluding target price
updates) for the shares of TAURON Polska Energia in 2013, including:
–
nine “buy” recommendations,
–
thirteen “hold” recommendations,
–
twelve “sell” recommendations.
The list of recommendations issued in 2013 is presented in the below table.
#
Date of issuing recommendation
Recommendation / target price
Institution
1.
January 9
Sell / PLN 4.10
Ipopema Securities
2.
January 15
Buy / PLN 5.90
Credit Suisse
3.
January 18
Reduce / PLN 4.50
Raiffeisen Centrobank
4.
January 28
Sell / PLN 4.20
ING Securities
5.
January 30
Hold / PLN 4.60
Deutsche Bank
6.
January 31
Sell / PLN 4.40
Wood & Company
7.
February 13
Underweight / PLN 4.20
HSBC
8.
February 25
Sell / PLN 3.80
Goldman Sachs
9.
March 6
Hold / PLN 4.80
Espirito Santo
10.
March 21
Sell / PLN 3.90
Goldman Sachs
57
#
Date of issuing recommendation
Recommendation / target price
Institution
11.
April 2
Reduce / PLN 4.20
12.
April 22
Hold / PLN 4.30
DM BZ WBK
13.
April 24
Hold / PLN 4.40
Deutsche Bank
14.
April 26
Hold / PLN 4.65
Goldman Sachs
15.
May 14
Buy / PLN 4.60
DM PKO BP
16.
May 14
Hold / PLN 4.80
Goldman Sachs
17.
June 12
Buy / PLN 5.94
DI BRE
18.
June 26
Buy / PLN 5.10
Societe Generale
19.
July 5
Hold / PLN 4.85
Goldman Sachs
20.
July 10
Buy / PLN 5.00
DM BPS
21.
July 22
Hold / PLN 3.90
ING Securities
22.
July 23
Hold / PLN 4.40
DM BZ WBK
23.
August 12
Hold / PLN 5.05
Goldman Sachs
24.
August 23
Sell / PLN 3.70
Espirito Santo
25.
August 23
Hold / PLN 4.40
DM BZ WBK
26.
September 11
Buy / PLN 5.00
Societe Generale
27.
September 17
Buy / PLN 5.40
Deutsche Bank
28.
October 15
Reduce / PLN 4.60
29.
October 15
Sell / PLN 4.40
Goldman Sachs
30.
October 23
Buy / PLN 5.20
Societe Generale
31.
October 24
Sell / PLN 4.70
DM BZ WBK
32.
October 24
Sell / PLN 4.04
UniCredit
33.
October 25
Buy / PLN 5.80
Citi
34.
October 25
Sell / PLN 4.00
ING Securities
35.
November 26
Sell / PLN 5.00
DM IDMSA
36.
December 9
Sell / PLN 4.33
Ipopema Securities
37.
December 18
Hold / PLN 5.50
Goldman Sachs
38.
December 19
Hold / PLN 5.00
DM IDMSA
8. RATING
TAURON Polska Energia has a credit rating assigned by an international rating agency Fitch Ratings.
Long term rating
Rating outlook
BBB
stable
Date of assigning rating
April 8, 2010
In subsequent years Fitch Ratings revised the rating and each time the same rating level was affirmed.
58
Corporate Governance
1. TAURON’S CORPORATE GOVERNANCE
As a public company we make sure we develop partnership and transparent relationships with our stakeholders,
based on corporate governance rules. Corporate governance encompasses all activities and regulations aimed at ensuring
balancing of interests of all stakeholder groups engaged in the company’s operations: shareholders, management board,
supervisory board, personnel, customers, suppliers.
In accordance with the disclosure rules in force and in line with the comply-or-explain approach the company shall
report cases of permanent or incidental breaches of the rules defined in Good Practices of Companies Listed on
the Warsaw Stock Exchange. Reports on corporate governance rules are published in a similar way as current regulatory
filings and posted on the company’s website.
The confirmation of high standards with respect to corporate governance was the 2013 inclusion of TAURON Polska
Energia in RESPECT Index – an index of socially responsible companies operating based on the best standards with
respect to information policy, investor relations, social relations and environment protection.
Compliance with corporate governance rules
The company was subject to corporate governance rules described in Good Practices of Companies Listed on
the Warsaw Stock Exchange (Good Practices) in 2013. This document also includes corporate governance rules that
the company decided to comply with voluntarily. Good Practices were adopted for use by the company’s Management
Board.
Good Practices that the company is subject to and to comply with which the company could decide voluntarily are
published on the Warsaw Stock Exchange website (http://www.corp-gov.gpw.pl).
Non-compliance with corporate governance rules
The only rule that the company did not comply with in 2013 was the rule included in Section IV clause 10 of Good
Practices (in the version in force since January 1, 2013), related to providing shareholders with an opportunity to take part
in a general meeting using electronic communications means, based on:
1.
broadcasting the proceedings of the general meeting (GM) in real time,
2.
two-way communications in real time, using which shareholders may take the floor during the proceedings of
a general meeting, while being physically present at a different place.
In order to enable compliance with the above rule the company’s Management Board asked the Ordinary General
Meeting to pass a resolution on a change to TAURON’s Articles of Association, proposing provisions that would enable
shareholders to take part in a general meeting using electronic communications means, including in particular: broadcasting
the proceedings of the general meeting (GM) in real time, two-way communications in real time, using which shareholders
may take the floor during the proceedings of a general meeting, while being physically present at a different place, exercising
the voting right, in person or through a power of attorney, prior to or during the General Meeting. The company’s Ordinary
General Meeting that took place on May 16, 2013 did not pass the above mentioned resolution. In conjunction with
the above in 2013 the company did not comply with the rule included in Section IV clause 10 of Good Practices and
the recommendation provided in Section I clause 12 of Good Practices.
The company complied with the other rules detailed in Sections II, III and IV of Good Practices. No cases of breaches of
the adopted corporate governance rules were detected during the period running from the day the company’s shares
were admitted to be traded on the public exchange until December 31, 2013.
Recommendation on remuneration policy
Seeking to comply with recommendation I.5 of Good Practices the company is applying Policy on remunerations of
members of supervision and management bodies including the description of the rules it is based on at TAURON Polska Energia SA
(Remuneration Policy), taking into account the recommendations of the European Commission of December 14, 2004
on fostering an appropriate regime for the remuneration of directors of listed companies (2004/913/EC), complemented
with the recommendation of the European Commission of April 30, 2009 (2009/385/EC). This Policy defines objectives
and rules of remunerating members of the Management Board and Supervisory Board in the company, in compliance
with the common regulations in force, as well as applicable resolutions of General Meeting and the Supervisory Board of
the company. The goals of the Remuneration Policy are, among others:
1.
ensuring a motivational and coherent regime for the remuneration of members of the Management Board and
Supervisory Board,
59
2.
linking the remuneration rules with monitoring of the implementation of adopted strategic plans and the performance
of financial plans,
3.
linking the remuneration of members of the company’s corporate bodies with the performance of their tasks.
Recommendation on the balanced participation of women in the performance of the management board and supervision
functions
In accordance with recommendation I.9 of Good Practices WSE is recommending that public companies and their
shareholders should ensure balanced participation of women and men in the performance of the management board
and supervision functions in their companies. Members of the company’s Supervisory Board shall be appointed,
in accordance with the provisions of Articles of Association, by the General Meeting of Shareholders and the State Treasury
– within its personnel related entitlements, while members of the Management Board shall be appointed by the Supervisory
Board. The company’s rules in force in this respect do not impose restrictions on participation in the company’s bodies
or qualification proceedings based on the candidates’ sex. Acting in compliance with the requirement defined in Section II
clause 1 sub-clause 2a) of Good Practices, in Q4 2013 the company posted on its corporate website information on
the participation of women and men in, accordingly, TAURON’s Management Board and Supervisory Board over the last
two years.
2. SHAREHOLDERS
2.1. Shareholders
The below table presents shareholders that hold, as of December 31, 2013 and the publication date of 2013 Annual
Report directly or indirectly, large blocks of the company’s shares.
Shareholders that hold, directly or indirectly, large blocks of the company’s shares
#
Shareholders
Number of
shares held
Percentage of
share capital
Number of
votes
Percentage of
total number of
votes
1.
State Treasury*
526 848 384
30.06%
526 848 384
30.06%
2.
KGHM**
182 110 566
10.39%
182 110 566
10.39%
3.
ING Open Pension Fund***
88 742 929
5.06%
88 742 929
5.06%
* In accordance with the shareholder’s notification of February 28, 2013
** In accordance with the shareholder’s notification of March 23, 2011
*** In accordance with the shareholder’s notification of December 28, 2011
2.2. Restrictions on exercising the voting right
Restrictions on exercising the voting right are provided in § 10 of the company’s Articles of Association which are
available on the company’s website.
Restrictions on exercising the voting right:
1.
The voting right of shareholders holding over 10% of total votes in the company shall be limited so that none of them
2.
The restriction on exercising the voting right mentioned in clause 1 above shall not apply to the State Treasury
and entities controlled thereby in the period during which the State Treasury, together with entities controlled
can exercise more than 10% of the total votes in the company at the General Meeting of Shareholders.
thereby, hold a number of the company’s shares that entitle them to exercise at least 25% of the total votes
in the company.
3.
Votes of shareholders who have a parent/subsidiary relationship in the understanding of § 10 of the Articles of
Association (Shareholder Cluster) shall be aggregated; in case the aggregate number of their votes exceeds 10%
of total votes in the company it shall be subject to reduction. Rules of votes’ aggregation and reduction are defined
in clauses 6 and 7 below.
4.
A shareholder, in the understanding of § 10 of the Articles of Associations, shall be any party (entity), including
its parent and subsidiary company, entitled directly or indirectly to a voting right at the General Meeting of
Shareholders on the basis of any legal title; it shall also be applicable to a party (entity) that does not hold
the company’s shares, and in particular to a user, lien holder, party (entity) entitled on the basis of a depositary
60
receipt under regulations of the Act of July 29, 2005 on financial instruments trading, as well as a party (entity)
entitled to take part in the General Meeting of Shareholders in spite of disposing of its shares after the date of
5.
establishing (registering) the right to take part in the General Meeting of Shareholders.
A parent company and subsidiary company, for the purposes of § 10 of the Articles of Association, shall be understood
as a party (entity):
•
having the status of a controlling undertaking, controlled undertaking or, at the same time, both the status of
a controlling undertaking and controlled undertaking in the understanding of the Act of February 16, 2007
on the protection of competition and consumers, or
•
having the status of a parent company, higher level parent company, subsidiary company, lower level subsidiary
company, co-controlled company or one that has both the status of a parent company (including a higher level
parent company) and the status of a subsidiary (including a lower level subsidiary company and a co-controlled
•
company) in the understanding of the Act of September 29, 1994 on accounting, or
which has (parent company) or one which is under controlling influence (subsidiary company) in the
understanding of the Act of September 22, 2006 on transparency of financial relationships between public bodies
and public undertakings and on financial transparency of some undertakings, or
•
6.
7.
offering and conditions of introducing financial instruments to an organized trading system and on public companies
in connection with holding, disposing of or acquiring large blocks of the company’s shares.
Aggregation of votes is based on totaling the number of votes held by individual shareholders that are members of
the Shareholders’ Cluster.
Reduction of votes involves decreasing the total number of votes in the company that shareholders that are members
of the Shareholders’ Cluster, are entitled to exercise at the General Meeting of Shareholders to the level of 10%
of total votes in the company. Reduction of votes shall take place in accordance with the following rules:
number of votes of a shareholder who holds the largest number of votes in the company among all
•
shareholders that are members of the Shareholders’ Cluster shall be reduced by a number of votes equal to
a surplus above 10% of total votes in the company held by all shareholders that are members of
the Shareholders’ Cluster,
•
if, despite the aforementioned reduction, the total number of votes that shareholders that are members of
the Shareholders’ Cluster are entitled to exceeds 10% of the total votes in the company, a further reduction
of votes held by other shareholders that are members of the Shareholders’ Cluster shall be made. The further
reduction of individual shareholders’ votes shall take place in an order established on the basis of the
number of votes that individual shareholders that are members of the Shareholders’ Cluster hold (from
the highest to the lowest one). The further reduction shall take place until the total number of votes held by
shareholders that are members of the Shareholders’ Cluster does not exceed 10% of the total votes
in the Company,
•
in any case a shareholder whose voting rights have been reduced shall have the right to exercise at least
•
8.
9.
whose votes due to the company’s shares owned directly or indirectly are subject to aggregation with votes of
another party (entity) or other parties (entities) on conditions defined in the Act of July 29, 2005 on a public
one vote,
restriction on exercising the voting right shall also apply to a shareholder absent at the General Meeting of
Shareholders.
Each shareholder who is going to take part in the General Meeting of Shareholders, in person or through a proxy,
shall be obliged to, without a separate notice mentioned in clause 9 below, notify the Management Board
or the Chairperson of the General Meeting of Shareholders that she/he holds, directly or indirectly, more than 10% of
the total votes in the company.
Notwithstanding the provisions of clause 8 above, in order to establish the basis for aggregating and reducing
the votes, a company’s shareholder, Management Board, Supervisory Board and individual members of such bodies
shall have the right to demand that a shareholder of the company provide information whether she/he is a party
(entity) having the status of a parent or subsidiary company towards another shareholder in the understanding of § 10
of the Articles of Association. The aforementioned entitlement shall also include the right to demand the revealing of
the number of votes that the company’s shareholder holds on its own or jointly with other shareholders of
the company.
10.
A party (entity) that has failed to fulfill or has fulfilled the information obligation mentioned in clauses 8 and 9 above
improperly, shall, until the failure to fulfill the information obligation has been remedied, be able to exercise its
voting right with respect to one share only; exercising voting rights with respect to other shares by such party (entity)
shall be null and void.
61
3. MANAGEMENT BOARD
3.1. Management Board’s procedure
Management Board of the company shall be composed of one to six persons, including the President and
Vice Presidents. Members of the Management Board shall be appointed for a common term of office lasting three years.
Members of the Management Board or the entire Management Board shall be appointed and dismissed by the Supervisory
Board. The Supervisory Board shall appoint the President and Vice Presidents. Each member of the Management Board can be
dismissed or suspended from office by the Supervisory Board or the General Meeting of Shareholders.
Management Board of the company shall act on the basis of the Code of Commercial Companies and other legal
regulations, provisions of the company’s Articles of Association and provisions of the Bylaws of the Management Board
of TAURON Polska Energia Spó³ka Akcyjna with its seat in Katowice which are available on the company’s website
http://tauron-pe.pl/. When performing their duties members of the Management Board shall be acting in accordance with
the principles included in Good Practices.
Two members of the Management Board or one member of the Management Board together with a proxy shall be
entitled to make valid statements on behalf of the company. In case the Management Board includes one person,
one member of the Management Board or a proxy shall be entitled to make valid statements on behalf of the company.
Meetings of the Management Board shall be convened by the President of the Management Board or a Vice President
of the Management Board appointed thereby. Meetings of the Management Board shall also be convened on the motion of
the majority of Vice Presidents of the Management Board as well as on the motion of the Chairperson of the Supervisory
Board. The meetings shall be held at the company’s seat in Katowice on the date set by the person that convened
the meeting. In justified cases the Management Board’s meetings may be held outside the company’s seat. The President
of the Management Board or a Vice President of the Management Board appointed thereby shall chair the meetings of the
Management Board.
Management Board shall vote in an open ballot. The result of the ballot shall be recorded in the minutes
of the meeting. President of the Management Board shall order a secret ballot at the request of a Vice President of
the Management Board.
Resolutions of the Management Board shall be passed by an absolute majority of votes in the presence of 3/5
of the members of the Management Board. In case of an equal number of votes the President of the Management
Board shall have a casting vote. Management Board may pass resolutions by voting in writing (by circulation) or using means
of direct remote communications. Voting in accordance with the above procedures shall be ordered by the President
of the Management Board or a Vice President of the Management Board appointed thereby, including setting the
deadline for casting votes by members of the Management Board. Submission of a dissenting opinion shall be allowed.
Such dissenting opinion shall be recorded in the minutes of the meeting, including the justification thereof. Decisions
of the Management Board related to ongoing issues that do not require passing of a resolution shall be recorded solely
in the minutes of the meeting.
In case there are fewer Vice Presidents of the Management Board than the foreseen number of divisions (areas of
responsibility), Vice Presidents of the Management Board may combine performing duties related to managing two
divisions or introduce a different split of competences that would not be in conflict with the assignment of competences
made by the Supervisory Board.
The scope of responsibilities of the President of the Management Board shall include competences with respect
to the operations of organizational units assigned to the President of the Management Board’s division, in line
with the company’s organizational structure. The scope of responsibilities of the Vice Presidents of the Management
Board shall include competences with respect to the operations of organizational units assigned to the Vice Presidents of
the Management Board’s divisions, in line with the company’s organizational structure.
3.2. Competence
Management Board shall conduct the company’s affairs and represent the company in all court and out of court
proceedings. Any issues related to conducting the company’s affairs, not assigned, based on the legal regulations
or the provisions of the Articles of Association, to the scope of competence of the General Meeting of Shareholders
or Supervisory Board, shall be within the scope of competence of the Management Board.
On January 7, 2014 TAURON’s Extraordinary General Meeting of Shareholders introduced amendments to
the company’s Articles of Association aimed at updating the scope of responsibilities and the split of competences
between the company’s corporate bodies, i.e. Supervisory Board and Management Board, as well as systematizing
the content of the Articles of Association and adapting it to the current needs of the company.
In accordance with the company’s Articles of Association all affairs beyond the scope of the company’s ordinary
activities (ordinary management) shall require a resolution of the Management Board, in particular the issues listed
in the below table:
62
#
Issues that require a resolution of the Management Board
as of December 31, 2013
as of the publication date of 2013 Annual Report
1.
Management Board bylaws,
Management Board bylaws,
2.
company’s organizational regulations,
company’s organizational regulations,
3.
establishment and liquidation of branches,
establishment and liquidation of branches,
4.
appointment of a proxy,
appointment of a proxy,
5.
taking on credits and loans,
taking on credits and loans,
6.
approving annual material and financial plans as well as
approving annual material and financial plans of the
long-term plans and the company’s strategy,
company and the Group as well as the Group’s
Corporate Strategy,
7.
8.
9.
assuming contingent liabilities in the understanding of
assuming contingent liabilities in the understanding of
the Act of September 29, 1994 on accounting, including
the Act of September 29, 1994 on accounting, including
granting guaranties and sureties by the company
granting guaranties and sureties by the company
as well as issuing bills of exchange, subject to § 20
as well as issuing bills of exchange, subject to § 20
clause 2 item 4 and 5 of the company’s Articles of
clause 2 item 4 and 5 of the company’s Articles of
Association,
Association,
making donations, cancelling interest or releasing
making donations, cancelling interest or releasing
from debt, subject to § 43 clause 3 items 1 and 2 of
from debt, subject to § 43 clause 3 items 1 and 2 of
the company’s Articles of Association,
purchase of real estate, perpetual usufruct or shares purchase of real estate, perpetual usufruct or shares
in real estate or in perpetual usufruct, subject to § 20 in real estate or in perpetual usufruct, subject to § 20
clause 2 item 1 of the company’s Articles of Association,
10.
clause 2 item 1 of the company’s Articles of Association,
purchase of fixed assets excluding real estate, perpetual purchase of fixed assets excluding real estate, perpetual
usufruct or share in real estate or perpetual usufruct usufruct or share in real estate or perpetual usufruct
with the value equal to or exceeding the PLN equivalent with the value equal to or exceeding the PLN equivalent
of EUR 10,000, subject to the provisions of § 20 clause 2 of EUR 10,000, subject to the provisions of § 20 clause 2
item 2 of the company’s Articles of Association,
item 2 of the company’s Articles of Association,
11.
disposal (control) of fixed assets including real estate,
disposal (control) of fixed assets including real estate,
perpetual usufruct or share in real estate or perpetual
perpetual usufruct or share in real estate or perpetual
usufruct with the value equal to or exceeding
usufruct with the value equal to or exceeding
the PLN equivalent of EUR 10,000, subject to
the PLN equivalent of EUR 10,000, subject to
the provisions of § 20 clause 2 item 3 of the company’s
the provisions of § 20 clause 2 item 3 of the company’s
Articles of Association,
Articles of Association,,
defining the way the voting right will be exercised
defining the way the voting right will be exercised
at the General Meeting of Shareholders or Meeting
at the General Meeting of Shareholders or Meeting of
of Shareholders of companies in which the company
Shareholders of companies in which the company
holds shares, on issues within the scope of competence
holds shares, on issues within the scope of competence
of the General Meeting of Shareholders or Meeting of
of the General Meeting of Shareholders or Meeting
Shareholders of such companies, subject to the
of Shareholders of such companies, subject to the
provisions of § 20 clause 3 item 9 of the company’s
provisions of § 20 clause 3 item 9 of the company’s
13.
rules of conducting sponsoring activities,
rules of conducting sponsoring activities,
14.
adoption of the annual plan of sponsoring activities,
adoption of the annual plan of sponsoring activities,
15.
issues which the Management Board refers to
issues which the Management Board refers to
the Supervisory Board or the General Meeting of
the Supervisory Board or the General Meeting of
Shareholders for review.
Shareholders for review.
12.
63
3.3. Members of the Management Board
The third term of the Management Board commenced on May 6, 2011, i.e. on the day the company’s Ordinary General
Meeting of Shareholders that approved the financial statements for the last full financial year of the tenure of the members
of the Management Board of the second term, namely 2010, was held. In accordance with the company’s Articles of
Association it is a three-year common term.
Members of the Management Board from January 1, 2013 till December 31, 2013
1.
Dariusz Lubera
– President of the Management Board (CEO) responsible for the President of
the Management Board’s division,
2.
Joanna Schmid
3.
Dariusz Stolarczyk
– Vice President of the Management Board responsible for the Vice President of
the Management Board for Strategy and Development’s division,
4.
Krzysztof Zawadzki
the Management Board for Corporate Affairs’ division,
– Vice President of the Management Board (CFO) responsible for the Vice President
of the Management Board for Economic and Financial Affairs’ division.
Changes to the membership of the Management Board
No changes to the membership of the Management Board were made in 2013.
Members of the Management Board as of the publication date of 2013 Annual Report:
1.
Dariusz Lubera
2.
Joanna Schmid
3.
Dariusz Stolarczyk
4.
Krzysztof Zawadzki
5.
Aleksander Grad
– President of the Management Board (CEO) responsible for the President of
the Management Board’s division,
the Management Board for Strategy and Development’s division,
the Management Board for Trading’s division,
– Vice President of the Management Board (CFO) responsible for the Vice President
of the Management Board for Economic and Financial Affairs’ division,
– Member of the Supervisory Board, delegated to temporarily perform the duties
of the Vice President of the Management Board responsible for the Vice President
of the Management Board for Corporate Affairs’ division.
3.4. Remuneration
Remuneration of members of the Management Board
Total amount of remunerations understood as the value of remunerations, bonuses and benefits received in cash,
in kind or in any other form, paid out by the company to members of the Management Board for 2013 was PLN 7,113,000.
Gross amount of remunerations and bonuses paid out or due from January till December 2013 is provided as the total
amount of remunerations and bonuses paid out or due for 2013.
Model of remuneration for members of the Management Board is based on a two-component system for
determining remuneration, composed of a fixed part (monthly basic wage) and a variable part dependent on achieving
specific performance criteria (completion of tasks to be performed).
Members of the Management Board shall neither be covered by an incentive program based on the company’s equity,
nor shall they receive remuneration or bonuses for performing functions in the corporate bodies of TAURON Group’s
subsidiaries.
The remuneration of members of the company’s Management Board in 2013, broken down into components,
is presented in the below table.
Remuneration of members of the company’s Management Board in 2013 broken down into components (PLN ‘000)
#
Name
1.
Dariusz Lubera
Period of holding
the position in 2013
Remuneration*
Bonus*
Other
benefits*
Total
From January 1, 2013
1 190
525
204
1 919
900
428
135
1 463
till December 31, 2013
2.
Joanna Schmid
from January 1, 2013
64
#
Name
Period of holding
Remuneration*
Bonus*
Other
benefits*
Total
3.
Dariusz Stolarczyk
1 076
495
194
1 765
1 080
495
150
1 725
4 246
1 943
683
6 872
4.
Krzysztof Zawadzki
Total
* Excluding markups (surcharges)
4. SUPERVISORY BOARD
4.1. Rules of appointing and dismissing members of the Supervisory Board
Supervisory Board shall be composed of five to nine persons, appointed for a common term of office lasting three
years. In accordance with the company’s Articles of Association members of the Supervisory Board shall be appointed
and dismissed by the General Meeting of Shareholders, subject to the following:
1.
during the time when the State Treasury, together with the State Treasury controlled entities in the understanding of
§ 10 clause 5 of the Articles of Association, hold a number of the company’s shares that entitle them to exercise
at least 25% of the total votes in the company, the State Treasury, represented by the minister competent to handle
the State Treasury’s affairs, shall be entitled to appoint and dismiss members of the Supervisory Board in the number
equal to half of the maximum number of members of the Supervisory Board defined in the Articles of Association
(in case such number is not integral it shall be rounded down to an integral number, for example 4.5 shall be rounded
down to 4 and then increased by 1), provided that the State Treasury:
–
shall be obliged to vote at the General Meeting of Shareholders on establishing the number of members
in the Supervisory Board that would correspond to the maximum number of members of the Supervisory Board
defined in the Articles of Association or in case such a motion is submitted to the Management Board by
a shareholder or shareholders who hold a number of votes that entitle them to exercise at least 5% of the total
number of votes in the company,
–
2.
shall be excluded from the voting at the General Meeting of Shareholders on appointing and dismissing
other members of the Supervisory Board, including independent members of the Supervisory Board;
this shall not, however, apply to the case when the Supervisory Board can not act due to its membership
being smaller than required by the Articles of Association, and the shareholders present at the General
Meeting of Shareholders, other than the State Treasury, do not supplement the membership of the Supervisory
Board in accordance with the distribution of seats on the Supervisory Board defined in this section;
during the time when the State Treasury, together with the State Treasury controlled entities in the understanding of
§ 10 clause 5 of the Articles of Association, hold a number of the company’s shares that entitle them to exercise less
than 25% of the total number of votes in the company, the State Treasury, represented by the minister competent
to handle the State Treasury’s affairs, shall be entitled to appoint and dismiss one member of the Supervisory Board;
3.
appointing and dismissing members of the Supervisory Board by the State Treasury pursuant to the aforementioned
clause 1) or 2) shall take place by means of a statement submitted to the company.
At least two members of the Supervisory Board shall meet the criteria of independence in relation to the company
and entities that have material relationships therewith (independent members of the Supervisory Board). Phrase
an ”independent member of the Supervisory Board” shall denote an independent member of the Supervisory Board
in the understanding of the European Commission’s Recommendation of February 15, 2005 related to the role of
non-executive directors or members of a supervisory board of listed companies and a supervisory board’s committee
(2005/162/EC) taking into account Good Practices.
Independent members of the Supervisory Board shall submit to the company, prior to their appointment as members
of the Supervisory Board, a written statement on compliance with the independence criteria. In case a situation occurs
where the independence criteria are not complied with members of the Supervisory Board shall be obligated to forthwith
inform the company thereof. The company shall inform shareholders of the up to date number of independent members of
the Supervisory Board.
4.2. Supervisory Board’s procedures
Detailed description of the Supervisory Board’s operations is provided in the Code of Commercial Companies,
the company’s Articles of Association which are available on the company’s website and in the “Regulations of the Supervisory
Board of TAURON Polska Energia SA with its seat in Katowice”.
65
The main form of the Supervisory Board overseeing the company’s operations shall be meetings of the Supervisory
Board. Supervisory Board shall perform its obligations collectively. Meetings of the Supervisory Board shall be convened
by the Chairperson of the Supervisory Board or Vice Chairperson of the Supervisory Board by presenting a detailed
agenda:
1.
in accordance with the decisions taken by the Supervisory Board,
2.
on its own initiative,
3.
at a written request of each member of the Supervisory Board,
4.
at a written request of the Management Board.
Meetings of the Supervisory Board shall be held at the company’s seat. In justified cases the venue of the meeting
may be changed.
In order to convene a meeting all members of the Supervisory Board must be invited in writing at least 7 days before
the date of the Supervisory Board’s meeting. For material reasons the Chairperson of the Supervisory Board may shorten
this period to 2 days, defining the way the invitations should be distributed. Notifications of the Supervisory Board’s meeting
shall be sent by fax or electronic mail and confirmed by phone. In the notification of the Supervisory Board’s meeting
the Chairperson shall define the date of the meeting, venue of the meeting and the detailed draft agenda. Supervisory
Board shall meet on as needed basis, however not less frequently than once every two months. Supervisory Board
may meet without convening a formal meeting if all members of the Supervisory Board are present and nobody objects
against the fact of holding the meeting or against the agenda.
A change to the proposed agenda may occur when all members of the Supervisory Board are present at the meeting
and no one raises an objection with respect to the agenda. An issue not included in the agenda should be included
in the agenda of the next meeting.
Participation in a meeting of the Supervisory Board shall be a Supervisory Board member’s duty. A member of
the Supervisory Board shall provide information on the reason for his/her absence in writing. Excusing an absence
of a member of the Supervisory Board shall require a resolution of the Supervisory Board. Members of the Management
Board of the company may take part in the Supervisory Board’s meetings unless the Supervisory Board raises an objection.
Participation of the Management Board’s members in the Supervisory Board meetings shall be mandatory if they
have been invited by the Chairperson of the Supervisory Board. Other persons may also take part in the meetings
if they have been invited in the above mentioned way.
Supervisory Board may seek opinions of legal counsels who provide regular legal advice for the company, as well as,
in justified cases, it may appoint and invite to meetings of the Supervisory Board appropriate experts in order to ask
for their opinion and make the right decision. In the above mentioned cases the Supervisory Board shall pass a resolution
on commissioning the selected expert (auditor, consulting company) to carry out the work, obligating the company’s
Management Board to conclude an applicable agreement.
Meetings of the Supervisory Board shall be chaired by the Chairperson of the Supervisory Board, and in case of his/her
absence by the Vice Chairperson. For important reasons, with the consent of the majority of members of the Supervisory
Board present at the meeting, the chairperson chairing the meeting shall be obligated to subject to a vote a motion to
interrupt the meeting and set the date of resuming the meeting of the Supervisory Board. Supervisory Board shall make
decisions in the form of resolutions. Supervisory Board’s resolutions shall be passed mainly at its meetings. Supervisory
Board shall pass resolutions if at least half of its members are present at the meeting and all its members have been
invited in the appropriate way defined in the Regulations. Subject to the mandatory legal regulations in force, including
the Code of Commercial Companies and the provisions of the company’s Articles of Association, the Supervisory Board
shall pass resolutions by an absolute majority of votes of the persons present at the meeting where the absolute majority of
votes shall be understood as more votes cast “for” than “against” and “abstain”. Resolutions shall not be passed on issues
not included in the agenda unless all members of the Supervisory Board are present and nobody raises an objection.
This shall not apply to resolutions on excusing a Supervisory Board’s member’s absence at the meeting. Resolutions shall be
voted on in an open ballot. A secret ballot shall be ordered:
1.
at the request of at least one member of the Supervisory Board,
2.
in personnel related issues.
In accordance with the company’s Articles of Association the Supervisory Board may pass resolutions in writing
or using means of direct remote communications. Passing a resolution in such way shall require a prior submission of
the draft resolution to all members of the Supervisory Board. Passing resolutions this way shall not apply to appointing
the Chairperson, the Vice Chairperson and the Secretary of the Supervisory Board, appointing or suspending from office
a member of the Supervisory Board and dismissing these persons, as well as other issues that require a secret ballot.
When voting on a resolution in the aforementioned way a member of the Supervisory Board shall indicate his/her vote,
i.e. “for”, “against” or “abstain”. In case a member of the Supervisory Board fails to indicate his/her vote by the time defined
by the Chairperson the resolution shall not be passed. A resolution with a note that it has been passed in writing
or by voting using means of direct remote communications shall be signed by the Chairperson of the Supervisory Board.
66
Resolutions passed this way shall be presented at the forthcoming meeting of the Supervisory Board along with the result
of the voting.
Members of the Supervisory Board shall be allowed to take part in the meeting and vote on resolutions during
such meeting using means of direct remote communications, i.e. tele- or video-conferences, subject to a proviso that
at least half of its members are present at the meeting’s venue indicated in the notification of the meeting and a secure
communications link is technically possible.
Members of the Supervisory Board shall take part in meetings and exercise their rights and responsibilities in person,
and while performing their duties they shall be obliged to act with due diligence. Members of the Supervisory Board shall be
obliged to keep confidential information related to the company’s activities that they have acquired in connection
with holding their seat or on another occasion. Supervisory Board shall perform its activities collectively.
Supervisory Board may, for material reasons, delegate its individual members to perform certain supervision actions
on their own for a defined period of time. Supervisory Board may delegate its members, for a period not longer than three
months, to temporarily perform duties of members of the Management Board who have been dismissed, submitted
their resignation or if for other reasons they cannot perform their functions. The aforementioned delegation shall require
obtaining a consent of the member of the Supervisory Board who is to be delegated.
Detailed description of the activities of the Supervisory Board in the last financial year is provided in the Report
on the Activities of the Supervisory Board, submitted on annual basis to the General Meeting of Shareholders and published
on the company’s website.
Supervisory Board may appoint from among its members permanent or temporary working groups, committees
to perform specific actions. Supervisory Board’s permanent committees shall be:
1.
2.
3.
Audit Committee of the Supervisory Board of TAURON Polska Energia,
Nominations and Remunerations Committee of the Supervisory Board of TAURON Polska Energia,
Strategy Committee of the Supervisory Board of TAURON Polska Energia.
4.3. Competence
Supervisory Board continuously oversees the company’s activities in all areas of its operations.
On January 7, 2014 TAURON’s Extraordinary General Meeting of Shareholders introduced amendments to
the company’s Articles of Association aimed at updating the scope of responsibilities and the split of competences between
the company’s corporate bodies, i.e. Supervisory Board and Management Board, as well as systematizing the content of
the Articles of Association and adapting it to the current needs of the company.
Based on the ruling of January 15, 2014 Katowice-East District Court in Katowice, 8th Commercial Department of
the National Court Register, entered the above mentioned amendments to the company’s Articles of Association into
the register of undertakings of the National Court Register.
Supervisory Board’s tasks and competences shall include in particular the issues listed in the below table.
Supervisory Board’s competence
#
Issues that require a resolution of the Supervisory Board
Competences related to providing opinions
1.
2.
3.
evaluating
the
Management
Board’s
report
on
evaluating
the
Management
Board’s
report
on
the company’s operations (Directors’ Report) as well as
the company’s operations (Directors’ Report) as well as
the financial statements for the last financial year with
the financial statements for the last financial year with
respect to their compliance with books, documents
respect to their compliance with books, documents
as well as with the actual status. This shall also apply to
as well as with the actual status. This shall also apply to
the consolidated financial statements of the Group,
the consolidated financial statements of the Group,
provided they are prepared,
provided they are prepared,
evaluating the Management Board’s recommendations
evaluating the Management Board’s recommendations
on profit distribution or loss coverage,
on profit distribution or loss coverage,
submitting a written report to the General Meeting of
submitting a written report to the General Meeting of
Shareholders on the outcome of activities covered
Shareholders on the outcome of activities covered
in clauses 1 and 2,
in clauses 1 and 2,
67
#
4.
5.
preparing, along with the report on the results of
preparing, along with the report on the results of
the evaluation of the company’s annual financial
the evaluation of the company’s annual financial
statements, the Supervisory Board’s opinion on the
statements, the Supervisory Board’s opinion on the
financial viability of the company’s capital investments
financial viability of the company’s capital investments
in other commercial law entities made in the given
in other commercial law entities made in the given
financial year,
financial year,
providing opinions on long-term plans and strategies of
providing opinions on the Group’s Corporate Strategy,
the company and the Group,
6.
7.
providing opinions and approving rules of conducting
providing opinions and approving rules of conducting
sponsoring activities,
sponsoring activities,
providing opinions on the annual plan of conducting
providing opinions on the annual plan of conducting
sponsoring activities as well as on quarterly reports on
sponsoring activities as well as on quarterly reports on
its implementation.
its implementation.
Competences that constitute
1.
2.
3.
selecting a certified auditor to carry out an audit of
selecting a certified auditor to carry out an audit of
the company’s financial statements and the Group’s
the company’s financial statements and the Group’s
consolidated financial statements,
consolidated financial statements,
defining the scope and deadlines for submitting
defining the scope and deadlines for submitting
annual material and financial plans as well as long-term
the company’s and the Group’s annual material and
strategic plans by the Management Board,
financial plan by the Management Board,
adopting the consolidated text of the company’s Articles
adopting the consolidated text of the company’s Articles
of Association, prepared by the company’s Management
of Association, prepared by the company’s Management
Board,
Board,
4.
approving the Management Board’s bylaws,
approving the Management Board’s bylaws,
5.
approving the organizational regulations of the company’s approving the organizational regulations of the company’s
6.
enterprise,
enterprise,
purchasing real estate, perpetual usufruct or shares
purchasing real estate, perpetual usufruct or shares
in real estate or in perpetual usufruct with the value
in real estate or in perpetual usufruct with the value
exceeding the PLN equivalent of EUR 5,000,000,
except for real estate, perpetual usufruct or shares
in real estate or in perpetual usufruct purchased from
the Group’s subsidiaries,
7.
purchasing fixed assets, excluding real estate, perpetual
purchasing fixed assets, excluding real estate, perpetual
usufruct or share in real estate or perpetual usufruct,
bonds issued by the Group’s subsidiaries of the value
bonds issued by the Group’s subsidiaries and other fixed
assets purchased from the Group’s subsidiaries of the
value exceeding the PLN equivalent of EUR 5,000,000,
8.
disposing of fixed assets, including real estate, perpetual
disposing of fixed assets, including real estate, perpetual
of the value equal to or exceeding the PLN equivalent
of the value equal to or exceeding the PLN equivalent
of EUR 5,000,000,
of EUR 5,000,000, except for real estate, perpetual
usufruct or shares in real estate or in perpetual usufruct,
and also other fixed assets that as a result of disposing
will be sold or encumbered in favor of the Group’s
subsidiaries,
68
#
9.
10.
11.
12.
13.
assuming
contingent
liabilities,
including
granting
assuming
contingent
liabilities,
including
granting
guaranties and sureties by the company with the value
guaranties and sureties by the company with the value
issuing bills of exchange of the value exceeding the PLN
issuing bills of exchange of the value exceeding the PLN
equivalent of EUR 5,000,000,
equivalent of EUR 5,000,000,
making an advance payment on account of the expected making an advance payment on account of the expected
dividend,
dividend,
taking over or purchasing shares in other companies
taking over or purchasing shares in other companies
with the value exceeding the PLN equivalent of
with the value exceeding the PLN equivalent of
EUR 5,000,000, except for situations when taking
EUR 5,000,000, except for situations when taking
over shares in such companies takes place in exchange
over shares in such companies takes place in exchange
for the company’s liabilities as a part of composition
for the company’s liabilities as a part of composition
or bankruptcy proceedings,
or bankruptcy proceedings,
disposing of shares with the value exceeding the PLN
disposing of shares with the value exceeding the PLN
equivalent of EUR 5,000,000 along with defining
equivalent of EUR 5,000,000 along with defining
the conditions and procedure to be applied in their
the conditions and procedure to be applied in their
disposal, except for:
disposal, except for:
a)
a)
disposal of shares which are traded on the regulated
market,
disposal of shares which are traded on the regulated
market,
b) disposal of shares that the Company holds in the
b) disposal of shares that the company holds in the
amount not exceeding a 10% interest in the share
amount not exceeding a 10% interest in the share
capital of particular companies,
capital of particular companies,
c)
disposal of shares in favor of the Group’s
subsidiaries,
14.
15.
granting a permission to establish the company’s
granting a permission to establish the company’s
branches abroad,
branches abroad,
defining the way of exercising the voting right at
defining the way of exercising the voting right at
the General Meeting of Shareholders or at the Meeting
the General Meeting of Shareholders or at the Meeting
holds more than 50% of shares, with respect to:
holds more than 50% of shares, with respect to:
a)
a)
disposing and leasing out of the company’s
disposing and leasing out of the company’s
enterprise or its organized part as well as
enterprise or its organized part as well as
establishing a limited proprietary right on them if
establishing a limited proprietary right on them if
their
their
value
exceeds
the
PLN
equivalent
of
EUR 5,000,000,
value
exceeds
the
PLN
equivalent
of
EUR 5,000,000,
b) dissolving and liquidation of the company.
b) dissolving and liquidation of the company.
Competences of the Supervisory Board related to the Management Board
1.
2.
3.
appointing and dismissing members of the Management appointing and dismissing members of the Management
Board,
Board,
establishing the rules of remuneration and the amounts
establishing the rules of remuneration and the amounts
of remuneration for the members of the Management
of remuneration for the members of the Management
Board, subject to § 43 clause 2 item 1 of the company’s
Board, subject to § 43 clause 2 item 1 of the company’s
suspending members of the Management Board from
suspending members of the Management Board from
office for material reasons,
office for material reasons,
69
#
4.
delegating members of the Supervisory Board to
delegating members of the Supervisory Board to
temporarily perform duties of the members of the
temporarily perform duties of the members of the
Management Board who cannot perform their duties Management Board who cannot perform their duties
and establishing their remuneration subject to the and establishing their remuneration subject to the
provision that the total remuneration of the person provision that the total remuneration of the person
delegated as the Supervisory Board’s member as well as delegated as the Supervisory Board’s member as well as
on account of being delegated to temporarily perform
on account of being delegated to temporarily perform
duties of a member of the Management Board shall not
duties of a member of the Management Board shall not
exceed the remuneration established for the member of
exceed the remuneration established for the member of
the Management Board to replace whom the member the Management Board to replace whom the member
of Supervisory Board was delegated,
of the Supervisory Board was delegated,
5.
6.
conducting a recruitment process for the position of
conducting a recruitment process for the position of
a member of the Management Board,
a member of the Management Board,
conducting a competition in order to select a person conducting a competition in order to select a person
with whom an agreement to perform the management with whom an agreement to perform the management
functions in the company shall be concluded and functions in the company shall be concluded and
concluding such agreement to perform the management concluding such agreement to perform the management
functions in the company,
7.
granting
a
functions in the company,
permission
to
the
members
of
granting
a
permission
to
the
members
of
the Management Board to take positions in governing
the Management Board to take positions in governing
bodies of other companies.
bodies of other companies.
Other competences of the company’s Supervisory Board
1.
2.
preparing reports on overseeing the implementation
preparing reports on overseeing the implementation
of investment projects by the Management Board,
of investment projects by the Management Board,
including fixed asset purchases, and in particular
including fixed asset purchases, and in particular
providing opinions on the correctness and effectiveness
providing opinions on the correctness and effectiveness
of expenditures related thereto,
of expenditures related thereto,
passing bylaws describing in detail the Supervisory
passing bylaws describing in detail the Supervisory
Board’s procedures.
Board’s procedures.
4.4. Members of the Supervisory Board
The third term of the Supervisory Board commenced on May 6, 2011, i.e. on the day the company’s Ordinary General
Meeting of Shareholders that approved the financial statements for the last full financial year of the tenure of the members
of the Supervisory Board of the second term, namely 2010, was held. In accordance with the company’s Articles of
Association it is a three-year common term.
Members of the Supervisory Board from January 1, 2013 till December 31, 2013
1.
Antoni Tajduœ
– Chairman of the Supervisory Board
2.
Rafa³ Wardziñski
– Vice Chairman of the Supervisory Board
3.
Leszek Koziorowski
– Secretary of the Supervisory Board
4.
Jacek Kuciñski
– Member of the Supervisory Board
5.
Marcin Majeranowski
6.
Jacek Szyke
7.
Marek Œci¹¿ko
8.
Agnieszka Trzaskalska
No changes to the membership of the Supervisory Board were made in 2013.
70
Changes to the Supervisory Board after December 31, 2013:
–
On January 7, 2014 Extraordinary General Meeting of Shareholders, based on resolution no. 7, appointed, as of
February 1, 2014, Aleksander Grad to be a member of the company’s Supervisory Board of the 3rd term.
–
On January 22, 2014 State Treasury, acting within personnel related entitlements defined in § 23 clause 1 item 3
of the company’s Articles of Association, dismissed Rafa³ Wardziñski from TAURON’s Supervisory Board, who had
performed the function of the Vice Chairman of the Supervisory Board.
On January 22, 2014 State Treasury, acting within personnel related entitlements defined in § 23 clause 1 item 3 of
–
the company’s Articles of Association, appointed Agnieszka Woœ to be a member of TAURON’s Supervisory Board,
who, on February 10, 2014 was entrusted by the Supervisory Board to perform the function of the Vice Chairwoman of
the Supervisory Board.
–
On February 10, 2014 TAURON’s Supervisory Board passed a resolution on delegating Aleksander Grad, a member of
the Supervisory Board, to temporarily perform the duties of the Vice President of the Management Board of TAURON
from February 11, 2014 till May 11, 2014.
1.
2.
Antoni Tajduœ
Agnieszka Woœ
– Chairman of the Supervisory Board
– Vice Chairwoman the Supervisory Board
3.
4.
Leszek Koziorowski
Aleksander Grad
– Secretary of the Supervisory Board
– Member of the Supervisory Board delegated to temporarily perform the duties of the
Vice President of the Management Board
5.
6.
7.
8.
9.
Jacek Kuciñski
Marcin Majeranowski
Jacek Szyke
Marek Œci¹¿ko
Members of the Supervisory Board as of the publication date of 2013 Annual Report:
4.5. Committees
Audit Committee
Audit Committee was appointed by the Supervisory Board from among its members on May 13, 2010. Audit Committee
was composed of four members.
Members of the Audit Committee as of December 31, 2013
1.
2.
3.
Marcin Majeranowski
Leszek Koziorowski
Jacek Kuciñski
– Head of the Audit Committee
– Member of the Audit Committee
4.
Jacek Szyke
On January 16, 2013 members of the Audit Committee elected, from among its members, Marcin Majeranowski to be
the Head of the Audit Committee.
No changes to the membership of the Audit Committee were made in 2013.
The tasks and competences of the Audit Committee are presented in the below table.
Competence of the Audit Committee
#
Issues that require a resolution of the Audit Committee
as of December 31, 2013 and as of the publication date of 2013 Annual Report
1.
monitoring the financial reporting process,
2.
monitoring the accuracy of financial information presented by the company,
3.
monitoring the effectiveness of internal control, internal audit and risk management systems existing in the company,
4.
monitoring the performance of financial audits,
5.
monitoring the independence and objectivity of the certified auditor and entity entitled to audit the financial
statements, including in case they provide services other than financial audit,
71
#
Issues that require a resolution of the Audit Committee
6.
recommending to the Supervisory Board an entity entitled to audit financial statements in order to perform
financial audit.
Detailed description of the activities of the Audit Committee in the last financial year is provided in the Report
on the Activities of the Audit Committee that constitutes an appendix to the Report on the Activities of the Supervisory Board
submitted on annual basis to the General Meeting of Shareholders and published on the company’s website.
Nominations and Remuneration Committee
Nominations and Remuneration Committee was appointed by the Supervisory Board from among its members
on August 27, 2010. As of January 1, 2013 the Nominations and Remuneration Committee was composed of three persons.
Members of the Nominations and Remuneration Committee as of January 1, 2013
1.
2.
Antoni Tajduœ
Jacek Kuciñski
– Head of the Nominations and Remuneration Committee
– Member of the Nominations and Remuneration Committee
3.
Changes to the Nominations and Remuneration Committee
Supervisory Board appointed Marek Œci¹¿ko to be a member of the Nominations and Remuneration Committee
during its March 13, 2013 meeting.
Members of the Nominations and Remuneration Committee as of December 31, 2013 and as of the publication date of 2013
Annual Report
1.
2.
3.
4.
Antoni Tajduœ
Jacek Kuciñski
Marek Œci¹¿ko
– Head of the Nominations and Remuneration Committee
The tasks and competences of the Nominations and Remuneration Committee are presented in the below table.
Competence of the Nominations and Remuneration Committee
#
Issues that require a resolution of the Nominations and Remuneration Committee
1.
recommending to the Supervisory Board a recruitment procedure for the positions of members of the company’s
Management Board,
2.
evaluating candidates for members of the Management Board and providing the Supervisory Board with opinions
in this respect,
3.
recommending to the Supervisory Board a form and content of agreements to be concluded with members of
the Management Board,
4.
recommending to the Supervisory Board a remuneration and bonus system for members of the Management
Board,
5.
recommending to the Supervisory Board the need to suspend a member of the Management Board for material
reasons,
6.
recommending to the Supervisory Board the need to delegate a member of the Supervisory Board to temporarily
perform the duties of members of the Management Board who cannot perform their duties, along with
a remuneration proposal.
72
Detailed description of the activities of the Nominations and Remuneration Committee in the last financial year
is provided in the Report on the Activities of the Nominations and Remuneration Committee that constitutes an appendix
to the Report on the Activities of the Supervisory Board submitted on annual basis to the General Meeting of Shareholders
and published on the company’s website.
Strategy Committee
Strategy Committee was appointed by the Supervisory Board from among its members on May 8, 2012. In 2013
the Strategy Committee was composed of five persons.
Members of the Strategy Committee from January 1, 2013 till December 31, 2013
1.
2.
Jacek Szyke
Jacek Kuciñski
– Head of the Strategy Committee
– Member of the Strategy Committee
3.
4.
5.
Marek Œci¹¿ko
Rafa³ Wardziñski
No changes to the membership of the Strategy Committee were made in the financial year 2013.
Changes to the Strategy Committee after December 31, 2013
In conjunction with the January 22, 2014 dismissal of Rafa³ Wardziñski from the Supervisory Board by the State
Treasury the Strategy Committee’s membership was reduced to four persons.
Members of the Strategy Committee as of the publication date of 2013 Annual Report
1.
2.
3.
4.
Jacek Szyke
Jacek Kuciñski
Marek Œci¹¿ko
– Head of the Strategy Committee
– Member of the Strategy Committee,
The tasks and competences of the Strategy Committee are presented in the below table.
Competence of the Strategy Committee
#
Issues that require a resolution of the Strategy Committee
1.
evaluating the Corporate Strategy and presenting the results of such evaluation to the Supervisory Board,
2.
recommending to the Supervisory Board the scope and deadlines for submitting the long term strategic plans
by the Management Board,
3.
evaluating the impact of planned and currently undertaken strategic investment projects on the company’s
assets,
4.
monitoring the implementation of strategic investment tasks,
5.
evaluating activities related to the use of significant company assets,
6.
providing opinions on strategic documents submitted to the Supervisory Board by the Management Board.
Detailed description of the activities of the Strategy Committee in the last financial year is provided in the Report on
the Activities of the Strategy Committee that constitutes an appendix to the Report on the Activities of the Supervisory Board
submitted on annual basis to the General Meeting of Shareholders and published on the company’s website.
73
4.6. Remuneration
Model of remuneration for members of the Supervisory Board is based on a single component system for determining
remuneration, composed of a fixed part.
The remuneration of members of the company’s Supervisory Board in 2013 is presented in the below table.
Remuneration of members of the company’s Supervisory Board in 2013 (PLN ‘000)
#
Name
Period of holding
Remuneration
and bonuses
Other benefits
Total
1.
Antoni Tajduœ
144
0
144
132
0
132
120
0
120
108
0
108
108
0
108
108
0
108
108
0
108
108
0
108
936
0
936
2.
Rafa³ Wardziñski
3.
Leszek Koziorowski
4.
Jacek Kuciñski
5.
Marcin Majeranowski
6.
Marek Œci¹¿ko
7.
Jacek Szyke
8.
Total
5. GENERAL MEETING OF SHAREHOLDERS
5.1. Procedures
General Meeting of Shareholders shall be convened by a notice published on the company’s website and in a manner
defined for providing current information by public companies. In case the General Meeting is convened by an entity
or a body other than the Management Board on the basis of regulations of the Code of Commercial Companies,
and convening a General Meeting requires the Management Board’s cooperation, the Management Board shall be
obligated to perform any activities required by law in order to convene, organize and conduct a General Meeting of
Shareholders that takes place either at the Company’s seat or in Warsaw.
General Meeting of Shareholders shall be opened by the Chairperson of the Supervisory Board, and in case he/she
is absent the following persons shall be entitled to open the General Meeting in the given order: Vice Chairperson
of the Supervisory Board, President of the Management Board, a person designated by the Management Board
or the shareholder who registered at the General Meeting such number of shares that provide the right to exercise
the highest number of votes. Then, the chairperson of the General Meeting shall be elected from among persons entitled to
participate in the General Meeting.
General Meeting of Shareholders shall pass resolutions irrespective of the number of shares represented at
the Meeting, unless regulations of the Code of Commercial Companies, as well as provisions of the company’s Articles of
Association state otherwise. General Meeting of Shareholders may order a break in the meeting by the majority of two thirds
of votes. The breaks shall not exceed 13 days in total.
The company’s General Meeting of Shareholders’ procedures and its empowerments are defined in the company’s
Articles of Association and in the “Regulations of the General Meeting of Shareholders of TAURON Polska Energia SA”
which are available on the company’s website http://www.tauron-pe.pl/.
74
5.2. Competence
In accordance with the company’s Articles of Association the issues listed in the below table shall require a resolution of
the General Meeting of Shareholders.
Competence of the General Meeting of Shareholders
#
Issues that require a resolution of the General Meeting of Shareholders
1.
reviewing and approving financial statements for the previous financial year as well as the Management Board’s
report on the Company operations (Directors’ Report),
2.
granting the acknowledgement of the fulfillment of duties to the members of the company’s corporate bodies,
3.
profit distribution and coverage of loss,
4.
appointing and dismissing members of the Supervisory Board,
5.
suspending members of the Management Board in performance of their duties,
6.
establishing the amount of remuneration for members of the Supervisory Board, subject to § 29 clause 4 of
7.
disposing and leasing out the company’s enterprise or its organized part as well as establishing a limited
proprietary right on them,
8.
concluding a credit, loan, surety agreement or any other similar agreement by the company with a member of
the Management Board, Supervisory Board, proxy and liquidator or for the benefit of any such person.
Concluding a loan, surety or any other similar agreement by a subsidiary with a member of the Management
Board, Supervisory Board, proxy, liquidator or for the benefit of any such person,
9.
increasing and lowering the company’s share capital,
10.
issuing convertible bonds or senior bonds as well as registered securities or bearer securities entitling their
holder to subscribe or acquire the shares,
11.
purchasing of treasury shares in cases required by the regulations of the Code of Commercial Companies,
12.
compulsory redemption of shares in accordance with the provisions of art. 418 of the Code of Commercial
Companies,
13.
setting up, using and liquidating reserve capitals,
14.
using supplementary capital,
15.
provisions related to claims to repair damage caused while establishing the company or serving on the management
board or performing supervision,
16.
merger, transformation and division of the company,
17.
redemption of shares,
18.
amendment to the Articles of Association and change of the subject of the Company’s operations,
19.
dissolving and liquidation of the company.
75
5.3. Shareholders’ rights
Description of the company’s shareholders’ rights related to the General Meeting of Shareholders in accordance
with the Articles of Association, Code of Commercial Companies and Regulations of the General Meeting of Shareholders of
TAURON Polska Energia SA is presented in the below table.
Description of the shareholders’ rights related to the General Meeting of Shareholders
#
Shareholders’ rights
Description of shareholders’ rights
1.
Convening the General
Shareholders representing at least one twentieth of the share capital, may request
Meeting of Shareholders
convening of an Extraordinary General Meeting of Shareholders. Such request should
include a concise justification. It may be submitted to the Management Board
in writing or in an electronic form, to the company’s e-mail address, provided by
the company on its website under the “Investor Relations” tab. Shareholders
representing at least a half of the share capital or at least a half of all votes
in the company may convene an Extraordinary General Meeting of Shareholders
and appoint a chairperson of such General Meeting.
2.
Including issues
Shareholders representing at least one twentieth of the share capital, may request
in the agenda of
that certain issues be included in the agenda of the forthcoming General Meeting of
the General Meeting of
Shareholders. Such request, including a justification or a draft resolution related to
Shareholders
the proposed item of the agenda, should be submitted to the Management Board
not later than 21 days prior to the set date of the General Meeting of Shareholders
in electronic form to the company’s e-mail address or in writing to the company’s
address.
3.
Becoming acquainted
Shareholders may become acquainted with the shareholders’ list at the company‘s
with the list of
Management Board’s seat for three weekdays preceding directly the General Meeting
shareholders
of Shareholders. Shareholders may also request that the list of shareholders be sent
to them free of charge by electronic mail, providing the address to which the list
should be sent.
4.
Participation
Only persons who are Shareholders sixteen days before the date of the General
in the General Meeting
Meeting of Shareholders (date of registering to participate in the General Meeting of
of Shareholders
Shareholders) shall have the right to take part in the General Meeting of Shareholders.
In order to participate in the General Meeting of Shareholders such Shareholders
should submit a request to issue a name bearing affidavit on the right to take part
in the General Meeting of Shareholders to an investment company running their
securities account. Such request should be submitted not earlier than following
the announcement on convening of the General Meeting of Shareholders and not
later than on the first weekday following the day of registering the participation
in the General Meeting of Shareholders.
5.
Representing
Shareholders may take part in the General Meeting of Shareholders as well as
a shareholder by a proxy
exercise the voting right in person or through a proxy. Shares’ co-owners may take
part in the General Meeting of Shareholders and exercise the voting right only
through a joint representative (proxy). A proxy may represent more than one
shareholder and vote differently based on shares of each shareholder.
6.
Electing the Chairperson
Shareholders shall appoint the Chairperson of the General Meeting of Shareholders
of the General Meeting of
from among persons entitled to take part in the General Meeting of Shareholders.
Shareholders
Each of the participants of the General Meeting of Shareholders shall have the right
to propose one candidate for the post of the Chairperson. Chairperson shall be
elected by a secret ballot, by an absolute majority of votes. In case there is just one
candidate for the Chairperson, election can take place by acclamation.
7.
Electing the Returning
Each Shareholder may propose no more than three candidates for members of
Committee
the Returning Committee to be elected by the General Meeting of Shareholders,
and vote for three candidates maximum.
76
#
8.
Shareholders’ rights
Description of shareholders’ rights
Submitting a draft
During the General Meeting of Shareholders a shareholder shall have the right,
resolution
until the discussion on a certain item of the agenda is closed, to submit a proposal of
changes to the content of a draft resolution proposed for adoption by the General
Meeting of Shareholders, as part of a given item of the agenda, or put forward
his/her own draft resolution. Proposals of changes or draft resolutions, including
justifications, may be submitted in writing to the chairperson or verbally to be
recorded in the minutes of the meeting.
9.
Raising an objection
Shareholders who voted against a resolution and, after the General Meeting of
Shareholders has adopted it, want to raise their objection, shall, immediately after
the results of the voting have been announced, raise their objection and request it be
included in the minutes of the meetings before proceeding to the next item of
the agenda. In case such objection is raised later, which however shall not take
place later than by the time the General Meeting of Shareholders is closed,
the shareholders shall indicate against which resolution passed by the General
Meeting they are raising their objection. Shareholders raising their objection against
a resolution of the General Meeting may request their concise justification of
the objection be recorded in the minutes of the meeting.
6. INTERNAL AUDIT
The internal audit and risk management system with respect to the process of preparing the financial statements
and consolidated financial statements is implemented through:
• Supervision over application of consistent accounting rules by TAURON Group’s subsidiaries when developing reporting
packages for the purpose of preparing TAURON Group’s consolidated financial statements
In order to ensure consistent accounting principles based on International Financial Reporting Standards approved
by the European Union the Accounting Policy of TAURON Polska Energia S.A. Capital Group was developed and implemented
in TAURON Group. This document shall be accordingly updated in case there are changes to the regulations. The rules
defined in the Accounting Policy shall be applicable to TAURON’s stand-alone financial statements and TAURON Group’s
consolidated financial statements. TAURON Group’s subsidiaries shall be obligated to apply the Accounting Policy of
TAURON Polska Energia S.A. Capital Group when preparing the reporting packages that provide the basis for preparing
TAURON Group’s consolidated financial statements. The reporting packages shall be validated by the holding company’s
Consolidation and Reporting Office and by an independent certified auditor during an audit or review of TAURON Group’s
consolidated financial statements.
• Procedures used to authorize and provide opinions on the financial statements of the company and consolidated financial
statements of TAURON Group
Financial statements’ authorization procedures have been implemented in the company. Quarterly, half year and full
year financial statements of the company and consolidated financial statements of TAURON Group shall be approved by
the company’s Management Board before being published. TAURON’s full year financial statements and TAURON Group’s
full year consolidated financial statements shall be additionally presented for evaluation to the company’s Supervisory
Board before being published. Vice President of the Management Board for economic and financial affairs (Chief
Financial Officer) shall oversee the preparation of financial statements, while Management Boards of subsidiaries included
in the consolidation shall be responsible for preparing the reporting packages for TAURON Group’s consolidated financial
statements.
Supervisory Board’s structure includes the Audit Committee, whose membership, competence and description of
activities are provided in clause 4.5 of this report.
• IT systems and financial and accounting processes
TAURON Group’s subsidiaries shall maintain accounting books which constitute the basis for preparing financial
statements using ERP financial and accounting computer systems. Consolidated financial statements shall be prepared
using an IT tool used to consolidate financial statements.
77
TAURON Group’s subsidiaries have implemented IT and organizational solutions that provide control of access to
the financial and accounting system and ensure adequate protection and archiving of the accounting books. Access
to IT systems shall be restricted based on applicable access rights assigned to authorized personnel.
TAURON Group’s subsidiaries have implemented their own procedures that govern the flow of financial
and accounting processes. The company’s efforts aimed at unifying TAURON Group’s financial and accounting processes
are underway. The process of gradually extracting the accounting functions out of TAURON Group’s individual subsidiaries
and placing them in a single entity dealing with providing financial and accounting services for TAURON Group has been
taking place since 2013.
• Internal audit
Internal Audit Department is functioning in the company. It shall be responsible for planning and implementing audit
tasks, among others, of advisory nature, as well as performing commissioned ad-hoc inspections. Methods and rules of
implementing the internal audit function shall be defined by the Regulations of Internal Audit at TAURON Group and the rules
of cooperation in force at TAURON Group’s individual subsidiaries. In implementing the internal audit function the company
shall be acting in compliance with the Code of Ethics and International Standards for the Professional Practice of Internal
Auditing.
• Subjecting the financial statements of the company and the consolidated financial statements of TAURON Group to
an audit or reviews by an independent certified auditor
Full year financial statements of the company and full year consolidated financial statements of TAURON Group shall
be subject to an audit by an independent certified auditor. Half year financial statements of the company and half year
consolidated financial statements of TAURON Group shall be subject to a review by a certified auditor. In 2013 the company
selected one entity authorized to audit and review financial statements for the material subsidiaries of TAURON Group
and the consolidated financial statements. The agreement was concluded with the entity authorized to audit financial
statements to conduct an audit of 2013–2015 financial statements.
• Rule on changing an entity authorized to audit the financial statements of the company and TAURON Group
By way of resolution of the company’s Supervisory Board no. 343/II/2010 the rule on changing an entity authorized to
audit the financial statements of the company and TAURON Group at least once every 5 financial years was adopted.
An entity authorized to audit the financial statements of the company and TAURON Group may perform such activities
again after two financial years have elapsed.
78

tauron interaktywny eng.vp

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