The company will suffer a PLN 1.213 bn negative impact on its 4Q12 attributable net result from non-cash one-offs. The negative impact on pre-tax profit as well as EBITDA has been estimated at around PLN 1.519 bn, while the impact on other comprehensive income adjusted for deferred tax - at around PLN 164 m. The one-offs, all pertaining to conventional energy segment, include revenues resulting from early termination of long-term contracts corrected after changing the forward long term electricity prices prediction (a positive PLN 1.253 bn on the EBITDA and revenue line), revaluation of Dolna Odra power plant assets (a negative of around PLN 1.486 bn), recultivation reserve increase (a negative of around PLN 886 m) and revaluation of spending on the CCS project (a negative of around PLN 156 m). PGE will also see two employment-related reserves increase by around PLN 244 m and PLN 202 m respectively, but these will not affect the bottom line, only the other comprehensive income line.
PGE will publish its 2012 financial report on March 14. We expect there will be no other negative surprises by that time and that the company has showed all possible one-offs yesterday. The changes related to the longterm contracts termination revaluation (positive) and the changes of the value of the ZEDO power plant (negative) are related to the recent decrease in the electricity prices. This has influenced the model of valuation of the future liabilities to URE and now PGE does not expect it will owe any money to URE (positive change). On the other hand the company has written off the value of ZEDO down to zero as the hard-coal power plant is not profitable at current electricity prices. Overall the 4Q12 result would be negative at aorund PLN 350m lowering the full year result to around PLN 3.3bn (-27% y/y). The write-offs can potentially threaten the dividend payout from the 2012 which we expected before at 65% and DPS at 1.56.