Current Report No.: 40/2023

Current Report No.: 40/2023

Date of Preparation: 17 November 2023

Issuer's Abbreviated Name: ENEA S.A.

Subject: Information on preliminary financial and operating results for Q1-Q3 2023

Legal Basis: Article 17(1) of the Market Abuse Regulation - inside information

Body of the report:

In connection with the adoption of information on preliminary financial and operating results of the ENEA Group for Q1-Q3 2023 by the Management Board of ENEA S.A. ("Company", "Issuer") on 17 November 2023, the Company hereby publishes the said preliminary results.

Consolidated financial results of the ENEA Group for Q1-Q3 2023:

- Revenue from sales and other income: PLN 35,903 million,

- EBITDA: PLN 3,440 million,

- Profit before tax: PLN 776 million,

- Net profit for the reporting period: PLN 662 million,

- Net profit attributable to shareholders of the parent company: PLN 558 million,

- Capital expenditures on property, plant and equipment and intangible assets: PLN 2,098 million,

- Net debt / EBITDA ratio: 0.48.

EBITDA in the distinct operating areas:

- Mining: PLN 674 million,

- Generation: PLN 1,740 million,

- Distribution: PLN 1,309 million,

- Trading: PLN -67 million.

Selected operating highlights:

- Net coal production: 4.6 million tons,

- Total net electricity generation: 16.0 TWh, of which 1.6 TWh from RES,

- Sales of distribution services to end users: 14.9 TWh,

- Sales of electricity and gaseous fuel to retail customers: 17.0 TWh.

On account of the application of settlements with eligible offtakers pursuant to the Act of 7 October 2022 on special solutions to protect electricity offtakers in 2023 in connection with the situation on the electricity market and on account of the application of the maximum price in accordance with the Act of 27 October 2022 on emergency measures to reduce electricity prices and support certain consumers in 2023, the ENEA Group recognized compensation revenues in the total amount of PLN 3,010 million in the period of Q1-Q3 2023 and PLN 895 million in Q3 2023.

ENEA Group companies are obliged to transfer charges to the Price Difference Fund pursuant to Article 21 of the Act of 27 October 2022 on emergency measures to reduce electricity prices and support certain consumers in 2023 - as electricity producers and as energy companies engaged in electricity trading business. The ENEA Group recognized the cost of charges to the Price Difference Fund in the amount of PLN 2,203 million in the period of Q1-Q3 2023 and in the amount of PLN 621 million for Q3 2023.

The EBITDA result generated by the ENEA Group in Q1-Q3 2023 was driven largely by the following factors (compared to Q1-Q3 2022):

In the Mining Area, the decrease in EBITDA was caused primarily by a decline in the coal sales volume and an increase in operating expenses (an increase in the unit mining cost). Despite the decline in the production and sales volumes, higher revenue from sales of coal was recorded due to the higher realized sales price.

In the Generation Area, EBITDA increased in the System Power Plants Segment (mainly due to the lower base in the corresponding period of the previous year (as a result of the provision for onerous contracts recognized in Q1-Q3 2022)) and an increase in the unit generation margin, the repurchase and Balancing Market margin, while a new cost item was added, namely costs of a charge for the Price Difference Fund), and in the RES Segment (mainly due to the lower base in the corresponding period of the previous year (as a result of the provision for onerous contracts recognized in Q1-Q3 2022) and higher electricity prices; at the same time, the cost of biomass increased and costs of a charge for the Price Difference Fund were recognized). At the same time, there was a decrease in EBITDA in the Heat Segment (mainly a decrease in the unit margin on heat, an increase in fixed costs and recognition of costs of the charge for the Price Difference Fund).

In the Distribution Area, the higher EBITDA is mainly due to the higher margin realized from the concession business, with simultaneous increase in operating expenses.

In the Trading Area, the lower EBITDA was mainly due to a decrease in the margin on the retail market. At the same time, compensation income was recognized, the use of provisions related to onerous contracts was recorded as well as lower provisions for expected losses and potential claims.

Consolidated financial results of the ENEA Group for Q3 2023:

- Revenue from sales and other income: PLN 11,881 million,

- EBITDA: PLN 1,124 million,

- Profit before tax: PLN 899 million,

- Net profit for the reporting period: PLN 716 million,

- Net profit attributable to shareholders of the parent company: PLN 703 million,

- Capital expenditures on property, plant and equipment and intangible assets: PLN 897 million,

- Net debt / EBITDA ratio: 0.48.

EBITDA in the distinct operating areas:

- Mining: PLN 151 million,

- Generation: PLN 673 million,

- Distribution: PLN 450 million,

- Trading: PLN -138 million.

Selected operating highlights:

- Net coal production: 1.3 million tons,

- Total net electricity generation: 5.4 TWh, of which 0.6 TWh from RES,

- Sales of distribution services to end users: 4.8 TWh,

- Sales of electricity and gaseous fuel to retail customers: 5.4 TWh.

The preliminary results take into account the provision related to the introduction of a mechanism for reducing the amounts payable by households to electricity trading companies for 2023, in the amount of approx. PLN 264 million, on which the Issuer reported in its current report no. 39/2023 of 20 October 2023.

Standalone financial results of ENEA S.A. for Q1-Q3 2023:

- Revenue from sales and other income: PLN 14,796 million,

- EBITDA: PLN -308 million,

- Profit before tax: PLN 259 million,

- Net profit for the reporting period: PLN 289 million.

The Company reports that the foregoing figures are estimates and as such are subject to change, and that their final amounts will be presented in the periodic report of the ENEA Group for Q3 2023, which is expected to be published on 22 November 2023.

The Company clarifies 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 Net debt / EBITDA ratio is equal to (loans, borrowings and non-current and current debt securities + non-current and current finance lease liabilities + non-current and current financial liabilities measured at fair value - cash and cash equivalents - non-current and current financial assets measured at fair value - non-current and current debt financial assets measured at amortized cost - other short-term investments) / EBITDA LTM. EBITDA LTM means EBITDA for the last 12 months.

The above definitions and calculation methodologies are the same as those used to calculate these ratios in the Issuer's periodic reports. The definitions of these terms are also included in the glossary of terms and abbreviations available on the Company's website (https://ir.enea.pl/slownik).