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Enea Group implements development plans based on a stable financial and operating position. The Group summarised its results after three quarters of 2017

The first nine months of 2017 for Enea Group are a period of a stable development of an innovative commodity and energy group. The most important event of the last months was the successful synchronisation of the new 1,075 MW unit at Kozienice Power Plant with the Public Power System.  The most powerful and largest power unit in Poland will be officially commissioned on 19th December, and thus Enea will finalise its largest investment project in its history. The Group is pursuing ambitious development plans based on stable financial and operating conditions - after three quarters, EBITDA increased by 6.5% yoy and net profit increased by 16.3% yoy to PLN 838 million.

In the period from January to September 2017 Enea Group generated 15,178 GWh electricity (growth by 49.3% yoy), of which 13,834 GWh (growth by 41.6% yoy) derived from conventional sources. Sales of distribution services to end users amounted to 14,322 TWh, i.e. increased by 2.9% in relation to the same period of 2016. During the first nine months of 2017 Enea SA considerably increased sales volumes of electricity to retail users by 942 GWh, which is 7.6% yoy. In the same period, production and sales of commercial coal in the Group were comparable to the yoy level of the previous year and amounted to 6.7 million tonnes, respectively.

-We have built solid foundations for the entire Group. At present, by implementing synergies and optimising each link in our value chain, we consistently increase the financial potential and market strength of our Group. We focus on further synergies between segments and on operational efficiency. Generated operating and financial results confirm our belief that we are moving in the right direction. Our goals are to increase the Group's value, implement our strategy and strengthen our market position – said Mirosław Kowalik, president of Enea.

– The developed stable financial situation allows us to implement our development plans, including balancing within the framework of the Group in the scope of production and sale of electricity. The acquisition of Połaniec Power Plant increased the installed capacity of Enea Group to 5.2 GW. In a few weeks we will put into operation our new 1,075 MW power unit. Thanks to these investments, we are approaching the planned increase of our own annual electricity production to about 24 TWh by 2025. At the same time, we are successfully increasing our energy sales heading our next target, i.e. selling electricity on the level of 20.1 TWh per year. Last year we sold 16.7 TWh.  This year, if we keep the trend from the first 9 months of 2017, we have a good chance of significantly exceeding this level – added Mirosław Kowalik, president of Enea.

The financial results of the three quarters of 2017 confirm the good shape of Enea Group

In the three quarters of 2017, Enea Group generated PLN 8,398 mln net sales revenue. After a growth by 6.5% yoy consolidated EBITDA amounted to PLN 1,947 million. Net profit grew by 16.3% yoy and amounted to PLN 838 mln. In the reporting period, the highest EBITDA, PLN 798 mln, was realised in the area of distribution.  
The greatest growth in EBITDA, totalling PLN 144 million (growth by 31.1% yoy), was generated in the area of generation, which in Q1-Q3 2017 closed with EBITDA amounting to PLN 610 million. The basic driver for EBITDA change in this area was a growth in the generation capacity resulting from the acquisition of Połaniec Power Plant. The EBITDA result of the area of trade, after a growth by PLN 13.3 million (11.3% yoy), reached the level of PLN 131 million, and the area of mining in that period reported EBITDA amounting to PLN 451 million (growth by 3.2% yoy).

The financial results for the three quarters of 2017 confirm the good financial condition of our Group.  Despite demanding market conditions, the Group develops in accordance with the set strategy directions. We are constantly working to improve the efficiency of our four major business areas, by working together and maximising the synergies ocurring between them. Our financial position is stable, as evidenced by the safe level of net debt/EBITDA ratio at the end of September 2017 at 2.1 – said Piotr Olejniczak, vice-president of Enea for Financial Affairs.

Enea one step away from completing the most important investment of the Group and one of the largest projects in the history of the Polish power industry

In Q1-Q3 2017 Enea Group spent PLN 3,123 million on investments, of which PLN 1,610 million was spent on equity investments, PLN 625 million on investments in the area of generation, PLN 593 million in the area of distribution, and PLN 254 million in the area of mining.

In the third quarter of 2017, on the construction of the high efficiency supercritical 1,075 MW unit at Kozienice Power Plant, coal was fed into the boiler for the first time, the boiler was started, the boiler deslagging system was started, the power supply grid protections were checked and the transformers were protected. Hot phase commissioning was conducted of coal mills, electrostatic precipitator, electrostatic precipitator ash removal system and IOS installation. The completion of all these activities was a successful synchronisation of the unit with the Public Power System, which took place on 1 September 2017.

- The 1,075 MW unit of Kozienice Power Plant passed a series of tests and trials after the synchronisation with the PPS. Part of it was also the adjustment operation. At that time we initiated the first GWh generated in this modern and high-performance unit. The unit during tests also reached the target capacity of 1,075 MW.  
In November, we reached a 100% progress in building a new unit, and in mid-month a 720-hour Test Run of the unit began.
We are on the last line to complete the investment which is important not only for our Group but also for the energy security of Poland – said Zbigniew Piętka, vice-president of Enea for Corporate Affairs.

The new unit will become an important pillar of our country's energy security and will at the same time be one of the most efficient of the kind in the world. Unit 11 is a key investment for Enea Group , important for the entire Polish power industry. The project is characterised by state-of-the-art technical solutions used in boiler, turbine and environmental protection. With a high efficiency of 45.6% of electricity generation and a high availability of over 92%, it will be the largest and the most efficient coal-fired power unit in the Polish history.

In the distribution area, Enea Operator continues to modernise and expand its distribution network.  
The Company, implementing the planned investments has successfully used the Community funds. In the period from January to September 2017 Enea Operator concluded agreements for co-financing in the total amount of anticipated subsidy totalling PLN 81.5 million.

LW Bogdanka after three quarters of 2017 - improvement of financial results with similar level of output and sales

Lubelski Węgiel Bogdanka, after three quarters of 2017, generated sales revenue on the level of PLN 1.3 billion (drop by 0.6% yoy) and net profit in the amount of PLN 143.7 mln (growth by 19.6% yoy). EBIT in  
the reporting period amounted to PLN 191.9 mln (growth by 24.1% yoy), and EBITDA to: PLN 452.5 mln (growth by 4.7% yoy).

 - After three quarters of this year, I estimate the generated financial results as good - I underline the increase in profitability with comparable levels of mining and sales and the practically flat level of realised prices. Our continuous work on cost effectiveness is clearly visible. Our production target for this year: about 9 million tons - remains unchanged – said Krzysztof Szlaga, president of LW Bogdanka.

The Company invariably stands out from the industry with good performance thanks to continuous cost control and optimisation of capital expenditures. Bogdanka maintains a strong market position. After Q1-Q3 2017, its share in the market of steam coal sales was on the level of 17.7% and in steam coal for commercial power industry market on the level of 25.5%.

In the reporting period, both commercial coal production and sales reached the level of about 6.7 million tonnes, i.e. they were comparable to those generated in the same period a year earlier. The length of corridor excavations made in the first nine months of this year amounted to 22.5 km, which represents an increase of 22.3% compared with the same period of 2016. LW Bogdanka, after three quarters of 2017, maintained a high level of output (65.8%, compared to 62.2% in the same period last year), despite the output decline in Q3 2017 due to difficult mining and geological conditions.

The most important events of the third quarter include Bogdanka's application for a licence for hard coal mining from the "Ostrów" coal field in the "Ludwin" mining area, which resulted in the Company obtaining the licence in November this year. In October LW Bogdanka also concluded an agreement on coal allowances paid to pensioners of the company. As a result, the balance of provisions held by the company will change, which will result in a one-off positive impact on the operating result in the fourth quarter of 2017 of approximately PLN 110 million.

- In the third quarter, following the announcement of our Strategy, we applied for a mining license for "Ostrów" deposit and in November we received it. Nearly doubling the resource base as a result of its acquisition means long-term planning and securing the development of the mine. In October this year, we have concluded an agreement with the trade unions on coal allowances, which means that the issue of coal allowances for the current and future pensioners have been resolved in Bogdanka –  added Krzysztof Szlaga.

Enea's pro-customer activitis bring positive effects

Enea's customer service and product offering are constantly being improved and adapted to the changing environment. In the first three quarters of 2017, the Company introduced a number of facilities for Customers who have gained additional contact opportunities, such as through an internet chat. Knowing the needs of its Customers, Enea simultaneously modernises the network of stationary Customer Service Centres by arranging space for the visitors.

Enea has been awarded the "New Impulse" distinction for its modern model of customer relations and operation in the market. The Company was appreciated for the successful implementation of the ENERGY + concept, that is combining electricity sales with a wide range of additional services and benefits.

- The Customer is the most important for us  and we provide them with high-quality products to meet their needs. We are constantly working on new ideas and solutions. Our achievements are also noticed by our customers, which we see after the increase in the volume of electricity sales in the last quarters, especially in the business segment. This shows that our offer is competitive said Piotr Adamczak, vice-president of Enea for Commercial Affairs.

Corporate Social Responsibility is a part of the entire Enea Group and is an important part of its business

Enea Group is an active participant in the life of local communities. The Company helps the needy, promotes physical activity, and supports numerous scientific and cultural initiatives. Enea seeing the scale of damages after the August storms decided to transfer, through Enea Foundation, up to PLN 1 million to help the affected communities. The support has reached 11 communes most affected after the August storms. The funds will be used by local governments to renovate and rehabilitate the public infrastructure and public buildings, as well as support local communities and provide Voluntary Fire Brigades with additional specialised equipment needed to remove catastrophic effects.

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.