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Current Report No.: 32/2013

Title: Approval of the Corporate Strategy of ENEA Capital Group for 2014-2020
Date: 2013.18.10
Report no.:  Current Report No.: 32/2013

Current Report No.: 32/2013

Date of preparation: 18.10.2013

Short name of issuer: ENEA S.A.

Subject: Approval of the Corporate Strategy of ENEA Capital Group for 2014-2020

Legal basis: Article 56 item 1(1) of the Act on Offerings - confidential information

Content of report:

The Management Board of ENEA S.A. (Issuer) informs that pursuant to the resolution of the Supervisory Board of ENEA S.A. of 18 October 2013 regarding approval of the "Corporate Strategy of ENEA Capital Group for 2014-2020" (Strategy) the Issuer adopted the Corporate Strategy of the ENEA Capital Group for realisation on the same date.

The ultimate development scenario for the ENEA Capital Group assumes that the superior idea of activity of ENEA CG will be building the value for shareholders and ensuring energetic safety for customers. The idea will be supported by: concentration of activities on the power engineering market, increasing value in all cells of the energy chain in order to build a strong position of ENEA CG on the market in the long run, the growth of the Group supported with acquisitions within arising market opportunities and ensuring a full operating integrity of the Group and constant undertaking of activities in order to improve the efficiency of its operations.

A new mission of ENEA CG is "Growth of the Group's value through building Customers' confidence", and the vision is: "Fully integrated energy group building its competitive advantage through elastic responding to the market needs and efficient resources management".

Pursuant to the approved Strategy, the ENEA Capital Group's strategic goals of activity in the upcoming years reflecting the formulated target growth scenario will be: higher value for shareholders, building long-lasting relations with customers, increase in profitable areas, improvement of efficiency and optimum use of the organisation potential.

The ultimate development scenario was cascaded into development scenarios for particular business areas: generation, wholesale trade, distribution and sales.

Within the superior goal, i.e. higher value for shareholders, the Group will pursue improvement of key financial indicators, including a growth in the equity profitability and asset profitability, with a concurrent building of customer confidence through an efficient product/service offering and servicing adapted to customers' needs.

The path of growth in profitable areas will be realised through the development of a competitive generation portfolio. The Group will pursue improvement of generating capacities to the level of additional 1,075 MWe in the segment of system power plants in 2017, and as a target (in 2020) of additional ca. 500 MWe in RES and ca. 300 MWe and 1,500 MWt in cogeneration sources and heating networks, however the choice of the fuel for cogeneration units, including a possibility of using biomass or RDF/pre-RDF, will be a derivative of an analysis of economic attractiveness of particular undertakings.

A growth in profitable areas will also take place through the allocation of the means in the distribution supporting an optimum use of resources. The realisation of the above objective will take place through the implementation of a programme of improving the reliability and diminishing the network failure frequency, programme of development of intelligent networks in order to gain advantage for the network operation and improving the customer service quality, and also through undertaking actions directed at decreasing volume of electricity needed for coverage of losses in the energy balance.

The last element of the development in profitable areas is the realisation of the goal within higher margins from product sales. The goal will be realised by initiatives undertaken both by the area of sales and the wholesale area.

Improvement of the Group's efficiency will be realised by focusing on core operations, improvement of internal and external customer service processes, which will lead to a yearly reduction in costs of customer service. Additionally, the Group will pursue optimisation of overhead costs.

The realisation of the indicated paths will be possible thanks to an optimum use of the organisation potential. Improvement of the management model will take place thanks to the Group's further integration through e.g. implementation of the business model covering the integration of business areas, centralisation within ENEA CG Corporate Centre of key managerial functions, and also reorganisation of support areas. Additionally, the Group will build organisational culture focused on the needs of internal and external customers.

The target capital structure of ENEA CG reflects the adopted area of concentration on the core operations. The Group will conduct restructuring activities within the functioning of entities whose scope of activities is not connected with operations of a power engineering company, in order to keep within the structure only companies from the fundamental chain of value and companies supporting them.

Realisation of investments planned by the ENEA Capital Group during 2014-2020 requires incurring total investment outlays in the amount of PLN 20 bln. Within the analysed volume of investment outlays what may be separated is e.g. the amount for the development of the area of generation and distribution in the so-called base quantity, i.e. PLN 11.8 bln (prices of 2013, with no costs of financing) and additional outlays covering the development of RES, cogeneration and heating networks, i.e. PLN 7.7 bln (prices of 2013, with no costs of financing).

The planned investment outlays will be covered from the equity and obtained debt financing.

The realisation of the anticipated activities within the Strategy will allow for a dynamic growth of the ENEA Capital Group, significant improvement of the market position and ensuring higher values for the Group's shareholders.

Having in mind the diverse and international nature of Enea SA's shareholding, and also the provisions of the Best Practices of WSE Listed Companies, Enea SA guarantees the availability of its website also in English. In case of any interpretation doubts and discrepancies between the Polish and English versions, the Polish version shall prevail.