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2018-03-23

LW Bogdanka after 2017 - high market share and sound financial results

LW BOGDANKA S.A., the most modern and efficient hard coal mine in Poland, making part of the Enea Group, has published its results for 2017. The consolidated revenue amounted to PLN 1,780.3 million while a year before the figure was PLN 1,786.3 million. The net profit, net of one-off events, amounted to PLN 173.1 million, EBIT was PLN 236.4 million, and EBITDA – PLN 594.0 million (in 2016 the values were PLN 182.0 million, PLN 237.0 million and PLN 606.5 million, respectively).
 
The Company believes the financial results achieved in 2017 are good. The Company continues to distinguish itself in the industry with its sound results thanks to a permanent cost control and optimisation of capital expenditure.


In the fourth quarter the Company extracted more than 2.3 million tonnes of the raw material. Its sales stood at a level of 2.5 million tonnes. In that period, the yield was approx. 62.0% compared to 64.5% in the analogous period of 2016, which is attributable to difficulties of geological and mining nature.

In the whole 2017 LW Bogdanka S.A. maintained a high – 25.3% – share in the sales of coal to commercial power plants thus retaining its strong market position. The Company extracted 9.1 million tonnes of coal, compared to 9.0 million tonnes a year before. An average annual yield in 2017 accounted for 64.7% and was higher than in 2016 (62.8%).

We find 2017 a good year in terms of results. They were achieved partly due to cost control and optimisation of capital expenditure. Our operations are based on long-term agreements therefore we sold coal at prices close to those applicable a year before, despite increases observed on the spot market. We assume that in 2018 our coal sale prices will increase by several per cent, said Sławomir Karlikowski, Vice-President of the Management Board, Production – Head of Mining Supervision in Mining Facility. We completed the production plan assumed for 2017. The extraction forecast for 2018 stands at a level of approx. 9.0 million tonnes, he added.
 
The capital expenditure at the LW Bogdanka Group amounted to PLN 373.4 million in 2017. We assume that in 2018 CAPEX will be at a higher level, i.e. PLN 496.0 million. The highest amount, i.e. PLN 291.0 million, will be consumed by the construction of new excavation pits and upgrade of the existing ones.  PLN 143.0 million will be required for the maintenance of the machinery. We also plan minor expenditure in other areas, including ICT or obtaining new licences, the Vice-President said.

DETAILED INFORMATION ON RESULTS FOR 2017

The preliminary consolidated financial highlights of the LW Bogdanka Group for 2017 are as follows:

in PLN '000 2017 2017
(net of one-off events)
2016 Change (2017/2016
  net of one-off events)
Net revenue 1,780.3 1,780.3 1,786.3 -0.3%
EBITDA 708.9 594.0 606.5 -2.1%
EBIT 847.3 236.4 237.0 -0.3%
Net profit 667.9 173.1 182.0 -4.9%

 

The separate financial highlights of LW Bogdanka S.A. for 2017 are as follows:

 

in PLN '000 2017 2017
(net of one-off events)
2016 Change (2017/2016
  net of one-off events)
Net revenue 1,777.3 1,777.3 1,781.8 -0.3%
EBITDA 694.3 579.3 586.1 -1.2%
EBIT 840.9 230.0 225.8 +1.9%
Net profit 673.3 178.4 175.9 +1.4%

In the financial statements for 2017, Bogdanka made a reversal of the impairment loss of non-current assets, created in 2015. Its gross value was PLN 624.8 million. The Company made this decision having observed an increase in prices of coal, a lower supply of the raw material on the part of domestic producers and having assumed that an average production in 2016–2025 will stand at a level of approx. 9.2 million tonnes.

In 2017, the Company published the Strategy for LW Bogdanka S.A. – Mining Area of the Enea Group until 2025, within a 2030 framework. It assumes average annual production of 9.2 million tonnes under a flexible scenario, which the Company intends to implement, while maintaining capital expenditure at a level of PLN 4 billion from 2016 to 2025. As a consequence of tasks included in the Strategy, the Unit Mining Cash Cost is to be reduced by 10% by 2025.

In November 2017, the Company obtained a mining licence for extraction of hard coal from the Ostrów deposit in the Ludwin Mining Area. The exploitable resources are assumed to reach 172 million tonnes of coal. In the first stage, mining in the deposit will be based on the existing underground infrastructure.