Current Report No. 18/2016

Topic: ENERGA SA Management Board’s dividend payment recommendation

Date: 11 May 2016

Legal basis: Article 56 Section 1 Item 1 of the Act on Offerings – confidential information

The Management Board of ENERGA SA (“Company”) reports that on 11 May 2016 it adopted a resolution on the distribution of net profit for the 2015 financial year.

The Company’s Management Board has declared that it will recommend to the Shareholder Meeting the following distribution of net profit for 2015 in the amount of PLN 841,165,914.38:

1)      payment of a dividend to shareholders in the amount of PLN 202,892,885.86, i.e. PLN 0.49 per share (24.1% of profit),

2)      designation of profit in the amount of PLN 570,979,755.36 to reserve capital (67.9% of profit),

3)      designation of profit in the amount of PLN 67,293,273.16 to supplementary capital (8.0% of profit).

According to the long-term dividend policy presented to investors in the Prospectus approved by the Polish Financial Supervision Authority on 15 November 2013, the Management Board declared that the dividend amounts recommended to the Shareholder Meeting will be PLN 500 million starting with the dividend for 2014 and adjusted for the relevant inflation rate for a given year.

Analyzing the Company’s financial results, observing the changing market and regulatory environment and having regard for the ENERGA Group’s current and planned investments, we propose to pay a lower dividend to shareholders than the dividend policy indicates.

The payment of a dividend in the proposed amount will exert a positive influence on the ENERGA Group’s financial and liquidity position, its ability to execute its current investment plans and the ENERGA Group’s growth strategy while maintaining its investment grade rating of its creditworthiness by rating agencies and limiting the risk of breaching the financial covenants defined by the terms and conditions for the debt funding the Company has acquired. At the same time, the ENERGA SA Management Board moves to designate a portion of the profit to reserve capital that could be transferred to make a dividend payment in subsequent years according to art. 348 § 1 of the Commercial Company Code (“CCC”).

According to art. 396 § 1 of CCC the Company is obligated to form supplementary capital and allocate at least 8% of its profit for a given financial year until such time that it becomes equal to one-third of share capital (that means the amount of PLN 1,507,204,294.96 for ENERGA SA). As at 31 December 2015, it is PLN 660,754,045.64, i.e. 14.6% of share capital, while upon incorporating the proposed distribution of profit, it will be 16.1% of share capital (i.e. 48.3% of the required amount).

Legal basis: § 38 Section 1 Item 11 of the Regulation issued by the Finance Minister on 19 February 2009 on the Current and Periodic Information Transmitted by Securities Issuers and the Conditions for Recognizing the Information Required by the Regulations of a Non-Member State as Equivalent