Current Report No. 12/2018

Date of preparation: 26 March 2018

Short name of Issuer: ENERGA SA

Legal basis: Art. 17 section 1 of MAR – confidential information

Subject: Signing of an Annex to the Investment Agreement regarding involvement in the preparation for construction,  construction and operation of a new power unit at Ostrołęka Power Plant and sale of shares in Elektrownia Ostrołęka sp. o.o.

Content of report:

The Management Board of ENERGA SA (“Issuer”), in relation to the Current Report No. 49/2016 of 8 December 2016 and the Current Report No. 3/2017 of 17 December 2017, hereby informs that on 26 March 2018 the Issue concluded Annex No. 1 (“Annex”) to the Investment Agreement  with the companies ENEA S.A. and Elektrownia Ostrołęka Sp. z o.o. (“Company”, “Ordering party”) concerning the execution of the Ostrołęka C project.

In accordance with the concluded Annex, the parties have increased the estimate total capital expenditure arising from their obligations to be undertaken at the Development Stage of the Ostrołęka C project, that is until a notice to proceed (NTP) is issued to the General Contractor. The capital expenditure attributable to the Issuer shall amount to PLN 226,5 million.

The capital expenditure has been increased in order to provide the resources, amongst others, for organisational works which will result from the contract with the general contractor, related investments and the operations of the Company.

Moreover, the Issuer hereby informs that in the course of performance of the Investment Agreement the Issuer sold on 23 March 2018 to the benefit of ENEA S.A. a stake of 1,201,036 shares in the Company for approx. PLN 58 million. As a result of this operation, the Issuer's shares constitute in total 50% Company’s share capital.

The conclusion of the said Annex is not equivalent to:

• the decision being taken by the Company's Management Board to select the General Contractor, hence it does not mean the conclusion of the public contract awarding procedure under the name of “Construction of Ostrołęka Power Plant with approx. 1,000 MW power output” by the Ordering Party;
• the consent given to enter into a contract with the General Contractor – in order to give such a consent it is necessary to obtain the required corporate approvals, including the consent of the Issuer's Supervisory Board;
• the agreement to issue a notice to proceed (NTP) – the issue of NTP requires, among others, prior consent of the Issuer’s Supervisory Board and prior qualified consent of the Issuer's General Meeting to commence the Construction Stage.

It is estimated that the capital expenditure related to the conclusion of the agreement between the Ordering party and the General Contractor until the NTP is issued will not exceed the equivalent of 4% of the price under the contract.