Estimated financial and operational data of the Energa Group for H1 and Q2 2021

Current report No. 30/2021

Date: 28 July 2021

Subject: Estimated financial and operational data of the Energa Group for H1 and Q2 2021

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

The Management Board of Energa SA hereby reports estimated selected financial and operational data of the Energa Group ("Group") for the first half of 2021 and for the second quarter of 2021.

Selected data for H1 2021:

Revenues of the Group: PLN 6,669 million (vs. PLN 6 095 million in H1 2020).

EBITDA of the Group: PLN 1,417 million (vs. PLN 1 055 million in H1 2020), including:

EBITDA of the Distribution Business Line: PLN 1,079 million (vs. PLN 940 million in H1 2020),

EBITDA of the Generation Business Line: PLN 149 million (vs. PLN 98 million in H1 2020),

EBITDA of the Sales Business Line: PLN 211 million (vs. PLN 52 million in H1 2020).

Operating result (EBIT) of the Group: PLN 807 million (vs. PLN 63 million in H1 2020).

Net result of the Group: PLN 668 million (vs. PLN -767 million in H1 2020).

CAPEX of the Group: PLN 945 million (vs. PLN 815 million in H1 2020).

Distribution of electricity: 11,567 GWh (vs. 10,668 GWh in H1 2020).

Gross production of electricity: 1,922 GWh (vs. 1,425 GWh in H1 2020).

Retail sales of electricity: 9,315 GWh (vs. 9,275 GWh in H1 2020).

In H1 2021, the Energa Group generated PLN 1,417 million in EBITDA (operating profit before amortization and impairment of non-financial non-current assets), up by 34% from the same period last year. This result was mainly influenced by:

a) The EBITDA achieved by the Distribution Business Line, which amounted to PLN 1,079 million (an increase of PLN 139 million y/y). The reason for the increase in EBITDA was a higher distribution margin (accounting for grid losses) due to higher distribution volumes and lower OPEX (including a one-off event in the form of the release of actuarial provisions established under the Company Social Benefit Fund for old age and disability pensions, and a decrease in expenses related to some work being postponed due to the pandemic).

b) The EBITDA achieved by the Generation Business Line, which amounted to PLN 149 million (an increase of PLN 51 million y/y). The increase in EBITDA of this Line was mainly due to higher revenues from electricity sales and from system services provided to Polskie Sieci Elektroenergetyczne, but those were partially offset by significantly higher costs of CO2 emission allowances caused by an increase in the market price of the allowances, and higher fuel costs.

c) The EBITDA achieved by the Sales Business Line, which amounted to PLN 211 million (an increase of PLN 159 million y/y). This was primarily due to the low base effect. In 2020, an unfavourable household tariff imposed by the President of the Energy Regulatory Office had been in force, and 2020 results (especially in Q2) were also down due to the pandemic. In addition, there was an overall improvement in the margin on electricity sales to end users in 2021. As a consequence of both these factors (low base and improvement in profitability), there was a rapid increase in the margin on electricity sales and thus also in EBITDA.

The Group's net result in H1 2021 amounted to PLN 668 million as compared to PLN -767 million in the corresponding period of 2020. The year-on-year increase in the result was primarily driven by:

a) Lower asset impairment levels (in H1 2020, impairment losses amounted to PLN 470 million, while in the period reported they amounted to PLN 72 million).

b) An improvement in the result on financial operations, which was mainly due to the low base effect - in H1 2020, high financial costs had been recorded (primarily as the effect of the write-down on the loan granted to the company Elektrownia Ostrołęka Sp. z o.o. in connection with the decision to discontinue the construction of the Ostrołęka C Power Plant in the coal-based technology ("Coal Project"), and also the write-down on the investment in the joint venture with PGG).

c) An improvement in the results of associates and joint ventures. In H1 2021, part of the provision was released that had been established a year earlier (what significantly decreased the net result in H1 2020) in connection with the settlement of the Coal Project.

Selected data for Q2 2021:

Revenues of the Group: PLN 3,228 million (vs. PLN 2,842 million in Q2 2020).

EBITDA of the Group: PLN 659 million (vs. PLN 487 million in Q2 2020), including:

EBITDA of the Distribution Business Line: PLN 559 million (vs. PLN 447 million in Q2 2020),

EBITDA of the Generation Business Line: PLN 45 million (vs. PLN 29 million in Q2 2020),

EBITDA of the Sales Business Line: PLN 67 million (vs. PLN 18 million in Q2 2020).

Operating result (EBIT) of the Group: PLN 323 million (vs. PLN -244 million in Q2 2020).

Net result of the Group: PLN 284 million (vs. PLN -878 million in Q2 2020).

CAPEX of the Group: PLN 600 million (vs. PLN 484 million in Q2 2020).

Distribution of electricity: 5,761 GWh (vs. 4,974 GWh in Q2 2020).

Gross production of electricity: 895 GWh (vs. 624 GWh in Q2 2020).

Retail sales of electricity: 4,398 GWh (vs. 4,354 GWh in Q2 2020).

In Q2 2021, the Group's EBITDA was PLN 659 million compared to PLN 487 million in Q2 2020. All Business Lines generated higher EBITDA figures in year-on-year terms. The highest growth was recorded by the Distribution Business Line (with an EBITDA higher by PLN 112 million), which resulted mainly from a higher distribution margin (the effect of higher distribution volumes). At the same time, a one-off event took place in Q2 2020 concerning a change in the recognition of infrastructure received free of charge, which improved the Line's results for that period. The higher level of the Generation Business Line (by PLN 16 million y/y) was mainly due to higher revenues from electricity sales and from system services. In Q2 2021, Sales Business Line EBITDA was higher by PLN 49 million y/y, which was mainly due to the low base effect (in 2020, an unfavourable household tariff imposed by the President of the ERO had been in force, and Q2 2020 results had been reduced due to the pandemic as losses were realised on the sale of surplus energy) and also to a general improvement in the profitability of electricity sales to end users in 2021.

The data presented are estimates and are subject to review by the auditor, therefore they may change. The final financial and operational data of the Energa Group for H1 2021 and for Q2 2021 for will be presented in the consolidated financial statements of Energa Group for H1 2021.