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Current Report No.: 19/2020

Title: Information on preliminary financial and operating results for 2019
Date: 2020.26.05
Report no.:  Current Report No.: 19/2020

Current Report No.: 19/2020

Date of Preparation: 26 May 2020

Issuer's Abbreviated Name: ENEA S.A.

Subject: Information on preliminary financial and operating results for 2019

Legal Basis: Article 17 Section 1 of the Market Abuse Regulation - confidential information

Body of the report:

In connection with the adoption, on 26 May 2020, by the Management Board of ENEA S.A. ("Company", "Issuer"), of information on preliminary financial and operating results of the ENEA Group for 2019, the Company hereby publishes the said preliminary results.

Consolidated financial results of the ENEA Group for 2019:

- Net revenue from sales: PLN 15,796 million

- Revenue from sales and other income: PLN 16,401 million

- EBITDA: PLN 3,410 million

- Profit before tax: PLN 871 million

- Net profit for the reporting period: PLN 541 million

- Net profit attributable to shareholders of the parent company: PLN 423 million

EBITDA in the various operating areas:

- Mining: PLN 771 million

- Generation: PLN 1,594 million

- Distribution: PLN 1,090 million

- Trading: 23 million

Selected operating highlights:

- Net coal production: 9.5 million tons

- Total net electricity generation: 25.9 TWh

- Sales of distribution services to end users: 19.8 TWh

- Sales of electricity and gaseous fuel to retail customers: 20.3 TWh

The EBITDA result generated by the ENEA Group in 2019 was driven largely by the following factors (compared to 2018):

In the Mining Area, the segment's better performance resulted chiefly from the higher level of net production and higher revenue from the sale of coal.

In the Generation Area, the result was favorably affected by the increase in revenue from the sale of electricity and property rights despite the negative deviation in fuel costs and CO2 emission rights. In 2019, the following non-recurring was recognized: reversal of the provision for the Skoczykłody wind farm (PLN 129 million).

In the Distribution Area, the slightly lower result generated in 2019 compared to 2018 resulted from the increase in the costs of purchasing energy for own needs and to cover the balancing difference, coupled with the decrease in the result on other operating activities due to the recognition of the following non-recurring event in 2018: payment of compensation for damages caused by storms in 2017.

In the Trading Area, the improved result was driven by the compensation received, the price difference, the change in provisions related to onerous contracts and the increase in the average sales price of energy. At the same time, the result was affected by increasing energy purchase prices (mainly due to the increase in the price of CO2 emission allowances emission allowances) and the lower sales volume of energy.

Standalone financial results of ENEA S.A. for 2019:

- Net revenue from sales: PLN 5,100 million

- Revenue from sales and other income: PLN 5,697 million

- EBITDA: PLN -109 million

- Profit before tax: PLN 287 million

- Net profit for the reporting period: PLN 283 million

The difference between the net profit for the reporting period and the Company's operating loss resulted chiefly from dividend income paid by subsidiaries.

Moreover, the Issuer points out that, in the presented financial results of the ENEA Group and ENEA S.A. for 2019, the impact of the consequences of the Act of 28 December 2018 amending the Excise Duty Act and Certain Other Acts, as amended, was taken into account.

The preliminary results include the impact of impairment losses on shares in Elektrownia Ostrołęka sp. z o.o. (Elektrownia Ostrołęka) and the loans granted to it in the standalone financial statements of ENEA S.A. and in the consolidated financial statements of the ENEA Group, in accordance with Current Report No. 18/2020 of 19 May 2020. The estimated impact of these impairment losses on the Company's standalone net profit for 2019 and the consolidated net profit of the ENEA Group for 2019 was approx. PLN 521.1 million and approx. PLN 500.9 million, respectively. The aforedescribed events are of a non-cash nature and have no impact on either the consolidated or standalone EBITDA for 2019.

In order to maintain comparability of financial data for 2019 with data for previous periods, revenue in this current report is presented in two forms:

- Net revenue from sales, and

- Revenue from sales and other income.

Revenue from sales and other income is the sum of net revenue from sales, revenue from leases and operating subleases and compensation received.

The final results will be presented in the consolidated financial statements of the ENEA Group and the standalone financial statements of ENEA S.A. for 2019, the publication of which is scheduled for 4 June 2020.

Please note that the term EBITDA is defined as the value of operating profit (loss) + depreciation and amortization + impairment losses on non-financial non-current assets (values for the reporting period). The above definition and methodology for its calculation are the same as those for the calculation of this indicator in the Issuer's periodic reports. The definition in question is also provided in the glossary of terms and abbreviations available on the Company's website (https://ir.enea.pl/slownik).

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.