INITIAL SELECTED CONSOLIDATED FINANCIAL RESULTS FOR 2022

The Management Board of company operating under the business name Polenergia S.A. with its registered office in Warsaw, Poland (“Issuer”) hereby publicly announces the selected initial and estimated consolidated financial results of the Capital Group of Polenergia S.A. (“Group”) for 2022.

The Group’s results accomplished in 2022 (in particular in the second and third quarter) were affected by the unprecedented scale of volatility of electric energy and natural gas prices, as well as the difficult situation of the electric power systems in Europe. It resulted, among others, in a significant increase of the cost of profile, negatively affecting the margin from sale of electric energy from wind farms and photovoltaic farms and the result on sale of electric energy to recipients. In spite of the demanding market and regulatory environment, the Group accomplished a higher EBITDA result in the fourth quarter of 2022 as compared to the analogous period of the previous year and retained the EBITDA result for the entire 2022 on a level similar to the EBITDA result for 2021.

In the course of twelve months ended on 31 December 2022, the adjusted EBITDA of the Group was PLN 354.4 million and was lower by PLN 6.8 million as compared to the result in an analogous period of the previous year. This was primarily caused by:

– lower result on optimisation of electric energy production in the Nowa Sarzyna Combined Heat and Power Plant (‘CHP’) in 2022 as compared to the greatly positive result in 2021;

– no revenues from the CHP compensation system related to the end of the system of support;

– lower result on sale of heat in the CHP following higher prices of gas and the CO2 emission allowances in 2022 (the set off of settlements pertaining to higher gas prices was recognised in December 2021);

– lower result on sale of electric energy from the RES assets (owned by the Group and external ones) in consequence of a significant growth in the cost of profile and volume divergences of asset production from the sale hedging position.

The effects above were considerably compensated by a higher result in the segment of onshore wind and photovoltaic farms, caused by a higher volume of production related to better wind conditions in the first quarter of 2022 and an increase in the generating capacity as compared to the analogous period of the previous year.

The adjusted EBITDA result of the Group in the fourth quarter of 2022 only was PLN 110.0 million and was higher by PLN 31.2 million in comparison to the result in the analogous period of the previous year. This was primarily caused by:

– higher result in the segment of onshore wind and photovoltaic farms caused by an increase in the generating capacity as compared to the analogous period of the previous year;

– higher result on sale of electric energy from the RES assets (owned by the Group and external) in consequence of higher sale prices of electric energy and lower impact of costs of the wind profile (with respect to the hedged sale price) and higher serviced volume on account of growth of the portfolio of generation projects and in consequence of entering into agreements with clients partially compensating the negative margin of prior periods of 2022;

– result on sale of solutions in the area of prosumer energy, including photovoltaic panels and heat pumps.

The effects above were partially compensated by the lower result of the CHP resulting from lower result on optimised operation of the heat and power plant (in relation to absence of advantageous market conditions in 2022) and a lower result on sale of heat following higher gas prices and CO2 emission allowances (compensation of settlements pertaining to higher gas prices was recognized in December 2021).

In the course of twelve months ended on 31 December 2022, the Group’s adjusted net profit was PLN 162.0 million, which is a drop as compared to the result in an analogous period of the previous year by PLN 25.2 million. In the fourth quarter of 2022 only, the Group’s adjusted net profit was PLN 54.3 million, which is an increase as compared to the result in an analogous period of the previous year by PLN 15.9 million. Change of the adjusted net profit in the period of four quarters of 2022 and in the fourth quarter of 2022 only was primarily caused by the factors described above, affecting the adjusted EBIDTA, higher amortisation resulting from increase of generation capacity, higher revenues from interest on deposits and significant growth of financial costs resulting from growth of the level of debt, higher interest rates and higher use of instruments financing hedge deposits for transactions entered on the regulated market and settlements with clients.

The presented values are estimates and may change. The final consolidated results will be presented in detail in the consolidated annual report of the Group for 2022; its publication is scheduled for 30 March 2023.

Legal basis: Art. 17(1) of Regulation of the European Parliament and Council (EU) No. 596/2014 on market abuse and repealing Directive 2003/6/EC of the European Parliament and Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC (Journal of Laws of the European Union L of 2014, No. 173, p. 1 as amended).