Current Report No.: 17/2024

Current Report No.: 17/2024

Date of Preparation: 3 April 2024

Issuer's Abbreviated Name: ENEA S.A.

Subject: Information on preliminary financial and operating results for 2023

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

Body of the report:

In connection with the adoption, on 3 April 2024, by the Management Board of ENEA S.A. ("Company", "Issuer"), of information on preliminary financial and operating results of the ENEA Group for 2023, the Company hereby publishes the said preliminary results.

Consolidated financial results of the ENEA Group for 2023:

- Revenue from sales and other income: PLN 48,183 million,

- EBITDA: PLN 6,298 million,

- Loss before tax: PLN -508 million,

- Net loss in the reporting period: PLN -443 million,

- Net loss attributable to shareholders of the parent company: PLN -704 million,

- Capital expenditures on property, plant and equipment and intangible assets: PLN 3,279 million,

- Net debt / EBITDA ratio: 0.85.

EBITDA in the distinct operating areas:

- Mining: PLN 1,326 million,

- Generation: PLN 3,605 million,

- Distribution: PLN 1,822 million,

- Trading: PLN -30 million.

Selected operating highlights:

- Net coal production: 7.1 million tons,

- Total net electricity generation: 21.3 TWh, of which 2.3 TWh from RES,

- Sales of distribution services to end users: 20.0 TWh,

- Sales of electricity and gaseous fuel to retail customers: 22.8 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 4,146 million in 2023 and PLN 1,136 million in Q4 2023.

ENEA Group companies were 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 3,214 million for 2023 and in the amount of PLN 1,012 million for Q4 2023.

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

The improved EBITDA in the Mining Area resulted from an increase in revenue from sales of coal driven by the higher realized sales price. At the same time, a decline was recorded in the coal sales volume along with a hike in operating expenses (an increase in the unit mining cost).

In the Generation Area, the higher EBITDA was largely driven by improved EBITDA in the System Power Plants Segment and the RES Segment. There was an increase in margins from generation concessions (among other things, the effect of the year-ago base for forward power supply contracts, for which the costs required to fulfill the contracts exceeded the expected benefits), an increase in revenues from the Capacity Market, an increase in revenues from Regulatory System Services, and an increase in Green Unit margins (mainly the effect of higher electricity prices, with an increase in the unit cost of biomass). The Heat Segment saw a decline in EBITDA, which was influenced by, among other things, a decline in the unit margin on heat. In addition, there was an increase in costs due to the write-off for the Price Difference Fund and fixed costs across the Generation Area.

In the Distribution Area, the improvement in EBITDA was driven by the higher margin realized on the concession business, with a simultaneous increase in operating expenses and a decrease in the result on other operating activities.

In the Trading Area, the higher EBITDA result (lower loss) is mainly due to the use of provisions related to onerous contracts and higher revaluation of CO2 contracts. At the same time, despite the operation of the compensation system, margins in the retail market declined.

Consolidated financial results of the ENEA Group for Q4 2023:

- Revenue from sales and other income: PLN 12,281 million,

- EBITDA: PLN 2,858 million,

- Loss before tax: PLN -1,284 million,

- Net loss in the reporting period: PLN -1,105 million,

- Net loss attributable to shareholders of the parent company: PLN -1,263 million,

- Capital expenditures on property, plant and equipment and intangible assets: PLN 1,180 million.

- Net debt / EBITDA ratio: 0.85.

EBITDA in the distinct operating areas:

- Mining: PLN 652 million,

- Generation: PLN 1,866 million,

- Distribution: PLN 513 million,

- Trading: PLN 37 million.

Selected operating highlights:

- Net coal production: 2.5 million tons,

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

- Sales of distribution services to end users: 5.1 TWh,

- Sales of electricity and gaseous fuel to retail customers: 5.9 TWh.

Standalone financial results of ENEA S.A. for 2023:

- Revenue from sales and other income: PLN 19,502 million,

- EBITDA: PLN -756 million,

- Loss before tax: PLN -1,637 million,

- Net loss in the reporting period: PLN -1,603 million.

The preliminary results take into account the impairment of assets, which the Issuer announced in Current Report No. 15/2024 dated 14 March 2024.

Please be advised that the foregoing figures are estimates and as such are subject to change, and the final results will be presented in the periodic reports of ENEA S.A. and the ENEA Group for 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.