Current Report No: 59/2018

Title: Information on preliminary financial results for Q1-Q3 2018
Date: 2018.08.11
Report no.:  Current Report No: 59/2018

Current Report No: 59/2018

Date of preparation: 8 November 2018

Short name of issuer: ENEA S.A.

Subject: Information on preliminary financial results for Q1-Q3 2018

Legal basis: Article 17 item 1 of MAR - confidential information

Content of report:

In relation to the information obtained by the Management Board of ENEA S.A. ("Company") on 8 November 2018 concerning preliminary financial results and operating data of ENEA Capital Group for Q1-Q3 2018, the Company hereby makes public the preliminary results, as presented hereinbelow.

Consolidated financial results of ENEA Capital Group for Q1-Q3 2018:

Net sales revenue: PLN 9,384 million

EBITDA: PLN 1,973 million

EBIT: PLN 920 million

Net profit: PLN 620 million

Net profit attributable to shareholders of the Parent: PLN 584 million

EBITDA in individual areas of operations:

Trading: PLN 38 million

Distribution: PLN 872 million

Generation: PLN 663 million

Mining: PLN 400 million

Selected operating data:

Net coal production: 6.82 million tonnes

Net total generation of electricity: 19.94 TWh

Sales of distribution services to end users: 14.935 TWh

Sales of electricity and gaseous fuel to retail customers: 15.862 TWh

The preliminary EBITDA generated by ENEA Capital Group in Q1-Q3 2018 was affected by the following events:

- Trading Area - throughout the entire 2018, the most important for the retail trade was the fact that the increased volume and higher prices of electricity sold to end users did not compensate for the rising costs of environmental obligations and of electricity purchase; the wholesale trade remained under pressure to growing price of CO2 emission allowances;

- Distribution Area - the stable result generated in this area was traditionally supported by an increase in the volume of sales of distribution services; in the reported period, the result of other operating activities improved mainly due to the compensations received, lower provisions for grid assets and higher revenues from gratuitously acquired non-current assets as a result of rectifying conflicts on grid assets;

- Generation Area - the result was affected by a number of factors:

a)conventional generation: in addition to the increased generation capacity as compared to 2017, a number of limitations in the availability of generation units related to planned overhauls, upgrade works related to the adaptation of units to the BAT conclusions, warranty inspections, about which the Issuer also informed in previous quarters of 2018, the result of the area remained under pressure from the market conditions concerning electricity trading, rising variable production costs (primarily with respect to the prices of power coal, the cost of transport thereof and the prices of CO2 emission allowances), with the decreasing number of free carbon dioxide emission allowances not being without significance;

b)throughout the entire 2018, generation based on renewable energy sources posted higher results than in the corresponding period of 2017, which was most significantly influenced by growing revenues from the sale of electricity backed by higher prices of green certificates;

- Mining Area - after the difficulties experienced in the first quarter, the subsequent periods, on the back of the stabilization of the production level and the increased sales price, helped restore the results to the level recorded in the corresponding period of 2017.

Non-consolidated financial results of ENEA S.A. for Q1-Q3 2018:

Net sales revenue: PLN 3,423 million

EBITDA: PLN - 18 million

EBIT: PLN - 19 million

Net profit: PLN 712 million

The non-consolidated net financial result generated by ENEA S.A. in Q1-Q3 2018 was mostly affected by two factors:

- the negative result on operating activities related to the sale of electricity to end users, where the increase in the volume and prices of electricity sales did not compensate for significant cost hikes in relation to environmental obligations and electricity prices on the wholesale market;

- the positive result on financial activities being the effect of the stable activity of subsidiaries belonging to ENEA Capital Group.

At the same time, the Issuer hereby informs that, as a result of IFRS 15 implementation, the effects of contracts, for which Companies belonging to ENEA Capital Group serve as agents, are recognised in revenues in net values, which significantly reduces the relevant income and expense items as compared to the corresponding period of the previous year, but does not affect the operating results of the individual Companies.

The final results will be published in the extended consolidated quarterly report of ENEA Capital Group for Q3 2018, which is scheduled to be released on 23 November 2018.

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.