Current Report No. 69/2020

Date: 28 October 2020

Subject: Selected financial and operational data of the Energa Group for Q3 and 9 months of 2020

Legal basis: Article 17 (1) of MAR - inside information

The Management Board of Energa SA hereby reports selected financial and operational data of the Energa Group (“Group”) for the third quarter and 9 months of 2020.

Selected data for Q3 2020:

Revenues of the Group: PLN 3,030 million (vs. PLN 3,035 million in Q3 2019).

EBITDA of the Group: PLN 501 million (vs. PLN 484 million in Q3 2019), including:

EBITDA of the Distribution Business Line: PLN 412 million (vs. PLN 327 million in Q3 2019),

EBITDA of the Generation Business Line: PLN 37 million (vs. PLN 54 million in Q3 2019),

EBITDA of the Sales Business Line: PLN 62 million (vs. PLN 118 million in Q3 2019).

Operating result (EBIT) of the Group: PLN 236 million (vs. PLN 221 million in Q3 2019).

Net profit of the Group: PLN 85 million (vs. PLN 103 million in Q3 2019).

CAPEX of the Group: PLN 374 million (vs. PLN 332 million in Q3 2019).

Distribution of electricity: 5,443 GWh (vs. 5,396 GWh in Q3 2019).

Gross production of electricity: 783 GWh (vs. 827 GWh in Q3 2019).

Retail sales of electricity: 4,611 GWh (vs. 4,863 GWh in Q3 2019).

In Q3 2020, the Energa Group generated PLN 501 million in EBITDA (operating profit before amortization and impairment of non-financial non-current assets), a 4% increase compared to the corresponding period of the previous year. This result was largely impacted by the following factors:

1. a) EBITDA achieved by the Distribution Business Line in the amount of PLN 412 million (an increase by PLN 85 million y/y). EBITDA growth was owed to the higher margin on distribution (including grid losses) attributable to the higher average selling price of the distribution service and higher volume.
2. b) EBITDA achieved by the Generation Business Line in the amount of PLN 37 million (a decrease by PLN 17 million y/y). The Line’s lower performance was mainly due to the factors related to revenues, i.e. decreased revenues from electricity sales, heat sales and distribution, and system services provided to the Transmission System Operator, partially compensated by the lower cost of consumption of key production fuels.
3. c) EBITDA achieved by the Sales Business Line in the amount of PLN 62 million (a decrease by PLN 56 million y/y). Compared to the corresponding period of the previous year, the decline in the Q3 2020 result was driven by the shrinking margins on electricity sales due to the need to sell electricity to some households at disadvantageous pricing terms under a tariff approved by the President of the Energy Regulatory Office as well as lower margins in the business customer segment.

The estimated impact of the ongoing COVID-19 pandemic on the Group’s EBITDA in Q3 2020, reflected, among other things, in the reduced energy sales volume, amounted to ca. PLN 5 million.

The Group’s net profit in Q3 2020 amounted to PLN 85 million compared to PLN 103 million in the corresponding period of 2019. Higher financial costs (the outcome of valuation of the block of shares held by the Energa Group and the related impairment write-down) contributed to the decline in the y/y result.

Selected data for 9 months of 2020:

Revenues of the Group: PLN 9,175 million (vs. PLN 9,065 million in 9M 2019).

EBITDA of the Group: PLN 1,556 million (vs. PLN 1,742 in 9M 2019), including:

EBITDA of the Distribution Business Line: PLN 1,352 million (vs. PLN 1,303 million in 9M 2019),

EBITDA of the Generation Business Line: PLN 135 million (vs. PLN 226 million in 9M 2019),

EBITDA of the Sales Business Line: PLN 114 million (vs. PLN 258 million in 9M 2019).

Operating result (EBIT) of the Group: PLN 299 million (vs. PLN 675 million in 9M 2019).

Net result of the Group: PLN -682 million (vs. PLN 355 million in 9M 2019).

CAPEX of the Group: PLN 1,189 million (vs. PLN 1,108 million in 9M 2019).

Distribution of electricity: 16,110 GWh (vs. 16,558 GWh in 9M 2019).

Gross production of electricity: 2,207 GWh (vs. 2,776 GWh in 9M 2019).

Retail sales of electricity: 13,886 GWh (vs. 14,667 GWh in 9M 2019).

During the first nine months of 2020, the Energa Group generated EBITDA in the amount of PLN 1,556 million, which represents a decline by PLN 186 million (11%) y/y. The Group’s lower performance is attributable to the Sales Business Line (EBITDA lower by PLN 144 million as a result of disadvantageous G tariff in 2020 and the COVID-19 pandemic), and to the Generation Business Line (EBITDA lower by PLN 91 million as a result of decreased revenues from energy sales and shrinking revenues from system services).

The estimated impact of the ongoing COVID-19 pandemic on the Group’s EBITDA in the first nine months of 2020 reflected, among other things, in reduced energy sales volume, amounted to ca. PLN 100 million.

The consolidated quarterly report of the Energa Group for Q3 2020 will be published on 5 November 2020.