DTEK Energy EBITDA decreases 32% in 2020 based on consolidated report

Ukraine’s leading coal and power producer DTEK Energy
(DTEKUA) provided its consolidated audited report for 2020 on April 30. With
this report, the company for the first time presented publicly its consolidated
numbers for 2019. Based on the updated report, its net revenue decreased 28%
yoy to UAH 47.24 bln in 2020, operating loss reached UAH 5.47 bln (increasing
16x yoy) and net loss reached UAH 19.28 bln (vs UAH 1.84 bln profit in 2019).

The company’s EBITDA, based on Concorde Capital
estimates, reached UAH 9.87 bln in 2020, which is 32% less yoy. Its operating
cash flow before working capital changes fell 46% yoy to UAH 9.43 bln and net
cash from operations decreased 28% yoy to UAH 4.02 bln in 2020. Its investing
cash outflow halved yoy to UAH 2.69 bln and financing cash outflow was minimal,
which allowed the company to increase its end-2020 cash balance to UAH 1.62
bln, or six-fold yoy.

DTEK Energy’s end-2020 debt reached UAH 59.58 bln (USD
2.11 bln), which was 32% higher yoy (and 10% higher in USD terms). The
company’s end-2020 net debt reached UAH 57.97 bln (up 29% yoy) and net debt to
EBITDA ratio increased to 5.9x (from 3.1x a year ago).

The company’s end-2020 book value of loans provided to
a subsidiary of DTEK Oil&Gas was UAH 14.51 bln (USD 513 mln). Recall, in
the process of its debt restructuring, DTEK Energy is going to exchange this debt
for USD 425 mln notes of the related party which will be issued to DTEKUA
creditors.

Alexander Paraschiy: DTEK
Energy’s detailed 2020 financial data does not differ much from what the company represented in early March.
As before, we expect the company’s profitability will improve in 2021 on higher
coal and power prices, as well as on the company’s continuing cost cutting
measures.

Regarding the company’s debt restructuring operation,
which has been nearly completed, we are concerned about the fact that DTEK
Energy will effectively forgive its related oil and gas company about USD 88
mln of debt, which looks suboptimal for the distressed company.