Current Report No. 14/2014

Date of preparation: 25 February 2014

Subject: Information on the impact exerted by non-recurring, non-pecuniary events on the ENERGA Group’s 2013 consolidated financial results.

Legal basis: Art. 56 section 1 sub-section 1 of the Act on Offerings – confidential information

The Management Board of ENERGA SA („Company”) hereby publishes information concerning the expected impact exerted on the ENERGA Group’s 2013 consolidated financial statements by the following non-recurring, non-pecuniary events: 

1. establishing a provision for CO₂ emission allowances in the Generation Segment exerting an impact on: (a) the EBITDA result in the amount of approximately (minus) 35.7 million PLN and (b) the ENERGA Group’s net financial result in the amount of approximately (minus) 28.9 million PLN;
2. taking an impairment charge on the value of the plant, property and equipment in the subsidiary ENERGA Elektrownie Ostrołęka (Generation Segment) exerting an impact on: (a) the EBITDA result in the amount of approximately (minus) 28.2 million PLN and (b) the ENERGA Group’s net financial result in the amount of approximately (minus) 22.8 million PLN.

In accordance with the provisions of directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC (hereinafter referred to as the: „directive”), the ENERGA Group is entitled to receive CO₂ emission allowances for free in connection with the expenditures incurred for investments notified to the National Investment Plan. The ENERGA Group performed the duties ensuing from the legal norms and transmitted on a timely basis the pertinent information concerning the indicators of compliance for investment projects and documented the incurred capital expenditures in the investment completion reports and financial statements. As of the date of publishing this report, the CO₂ emission allowances due to the ENERGA Group for free for 2013 have not been allocated.

In accordance with the adopted accounting policy, the provision for the obligation by virtue of the emission of gases covered by the emission allowance scheme is expensed (taxes and fees) in the event that the actual emission exceeds the quantity of free emission allowances held by the ENERGA Group on the balance sheet date. The provision for the cost of covering the deficit is captured in the value of the allowances acquired or contracted for this purpose and at market prices on the balance sheet date in reference to the unsecured deficit of allowances (in the event that such a situation occurs).

On account of the conditions in existence in reference to Power Plant B operating in the subsidiary ENERGA Elektrownie Ostrołęka SA, which may precipitate a decline in the utility value of this entity’s property, plant and equipment, an impairment test was conducted as at 30 November 2013, which demonstrated the necessity to take an impairment charge against Power Plant B’s property, plant and equipment totaling 151.6 million PLN, of which:

• 123.4 million PLN was charged in Q1 2013, as a result of the impairment test conducted as at 31 March 2013.
• 28.2 million PLN was charged in Q4 2013, as a result of the impairment test conducted as at 30 November 2013.

The Company would like to stipulate that the ENERGA Group’s 2013 consolidated financial statements are undergoing an audit by the statutory auditor, which means that the amounts presented above are not final and may change. The ENERGA Group’s consolidated report for 2013 will be published on 10 March 2014.