PGE Polska Grupa Energetyczna : Analyst's kit - H1 2018

Details of the webcast from the meeting with CEO & CFOAugust 8, 2018 (Wednesday), 10.00 AM CEST

Link to the webcast:www.gkpge.pl/en

Questions for Q&A session allowed via email:[e-mail]

Investor Release

August 7, 2018

Investor relations contact:

Jakub Frejlich, Head of IR tel.: [phone] mob: [phone] e:[e-mail]

Operations: good performance on like for like basis, extra boost from acquire assets

Financials: good result boosted with acquisition under one-off impact

CAPEX: continuation of strategic projectsin Opole and TurówPGE in transition: underway plans for district heating initiatives

• Group H1'18EBITDA of PLN 3.7 bn (+7% y/y); Group recurring H1'18EBITDA of PLN 3.8 bn (+12% y/y),

• Power generation with +18% y/y growth - doubled volumes on coal; almost tripled volumes of heat sales,

• Update from construction sites: Opole ready in 92%, Turówwith approx. 66% of completed construction works,

• Responsible energy of tomorrow: further milestones in integration, Waste-to-Energy plant and investment plans.

Acquired assets supportive for stable growth of the Group

ConsolidatedEBITDA in H1'18 amounted to PLN 3.7 bn, higher by 7% y/y - achieved with support of acquired assets in heating season and despite higher level of overhauls of lignite-fired unitsin Q1'18. PLN 3.8 bn recurring EBITDA, 12% growth y/y. Conventional Generation in H1'18 supported with performance of acquired assets (+14% y/y, H1'18 EBITDA of PLN 1.8 bn). Distribution segment being the source of stable EBITDA growth (+4% y/y, H1'18 EBITDA of PLN 1.3 bn). High prices of electricity (spot) and property rights supported EBITDA of Renewables (+31% y/y, H1'18 EBITDA of PLN 222 m). Supply segment results (-28% y/y, H1'18 EBITDA of PLN 302 m) due to high base period effect.

Significantly better volumes due tonew asset'simpact

H1'18 with visible acquisition impact: almost tripled volume of heat sales: approx. 29 PJ in H1'18-effect of acquired assets and its performance in heating season.H1'18with almost doubled coal volumes y/y and sound growth in gas-fired units: approx. 4.5 TWh of additional power generation coming from acquired coal assets: +2.4 TWh from Rybnik power plant , +2.0 TWh from acquired coal CHPs and +0.9 TWh from acquired gas-fired CHPs. Weaker volumes from lignite-effect ofQ1'18 lower due to overhauls in Bełchatów and Turówpower plants. Lower volumes generated from renewable resources-mainly weaker wind generation.

CAPEX: continuation of Opoleand Turówprojects

Overall progress of works at Opole II project of approx. 92%. New commissioning dates and rescheduled payments influencing CAPEX realization. Ongoing further works on construction site. Progress of construction works inTurówreached 66%-completed construction of a cooling tower shell. Construction of a coal-feed system and technological feed system in progress as part of ancillary works.

Changing generation profile-further milestones of integration, Waste-to-Energy unit and other plans

Further implementation of District Heating Strategy of the Group: process of integration scheduled to be ended by January 2, 2019. Further cogeneration developments based on low-emission sources: new capacities within Czechnica CHP, smaller projects in Bydgoszcz, Kielce, Zgierz and Zielona GóraCHPs. Continuation of announced Rybnik project ensuring district heating for local citizens. Waste-to-Energy unitin Rzeszówto be commissioned soon. Letters of intent regarding the analysis of the development of district heating capacitiesfor Nowy Sącz and Wadowice(see the map of mentioned location on slide no 5 ofH1'18results presentation).

Published draft regulation on power market parameters, including the power demand in the main auction, in line with our expectations. We are pleased that the preparations for the introduction of the power market run smoothly.

August 7, 2018

Key Financials

PLNm

Q2 2018

Q2 2017

Sales

y/y [%]

5 734

H1 2018

4 879

18%

Sales recurring* EBITDA

5 831

4 879

1 461

20%

1 497

12 871

12 954

-2%

EBITDA recurring** EBIT

1 573

1 489

516

6%

731

3 675

-29%

EBIT recurring** Net profit (to equity)

714

758

346

-6%

533

3 775

1 831

-35%

Net profit (to equity) ex. Impairments ***

416

561

-26%

2 059

1 281

1 385

H1 2017

10 620

10 620

3 445

3 362

1 932

1 891

1 497

1 531

y/y [%]

22%

12%

9%

-10%

21%

7%

-5%

-14%

* adjusted for LTC compensations; **one-off items summary presented at pg. 21 of H1'18 presentation, ***adjusted for net impairments only

EBITDA by segments

PLNm

Q2 2018551 108 632 113

Q2 2017620 78 604 179

y/y [%]H1 2018

Conventional Generation Renewables

-11% 38% 5% -37%

1 839

222

Distribution Supply

1 270

H1 2017

302

1 612

169

1 222

422

y/y [%]

14% 31% 4% -28%

EBIT by segments

PLNm

Q2 2018-22 44 342 108

Q2 2017224 12 316 172

y/y [%]

H1 2018743 95 688 290

H1 2017855 37 642 409

y/y [%]

Conventional Generation Renewables

Distribution Supply

n/a 267% 8% -37%

-13% 157% 7% -29%

Key operating data

TWh

Net Generation Volume

Sales on the Wholesale Market Sales to End-users

Electricity Distribution Volume

Q2 201815.26 7.09 10.19 8.80

Q2 201712.88 4.51 9.74 8.54

y/y [%]

Electricity generation by source

TWh

Q2 2018

Q2 2017

y/y [%]

Lignite-fired power plants Hard coal-fired power plants Coal-fired CHPs

9.43

H1 2018

9.36

1%

H1 2017

19.25

3.98

2.30

73%

7.93

19.93

4.81

0.64

y/y [%]

-3%

65%

0.14

357%

2.44

0.52

Gas-fired CHPs Biomass-fired CHPs Pumped-storage Hydro

0.75

0.51

47%

2.24

0.03

1.46

0.05

369%

53%

-40%

0.08

0.10

0.09

0.08

13%

0.20

0.18

0.10

-20%

11%

0.14

-29%

0.25

0.26

Wind TOTAL

0.24

0.30

-20%

0.53

15.26

0.62

12.88

-4%

-15%

18%

32.92

27.88

Renewable generation incl. biomass co-combustion

0.41

0.51

-20%

0.92

0.04

1.04

0.02

18%

-12%

100%

0.06

0.06

0%

Details of the webcast from the meeting with CEOAugust 7, 2018 (Wednesday), 10.00 CEST

Link to the webcast:www.gkpge.pl/en

Questions for Q&A session allowed via email:[e-mail]

Further information:Jakub Frejlich, Head of IRtel: [phone] mob: [phone] e:[e-mail]