02/12 DTEK 9 months of 2019: performance indicators for DTEK Group

In the first 9 months of 2019, DTEK Group produced 18.2 mln tons of coal (-8.9% versus January-September 2018) and 1 224.7 mln cubic meters of natural gas (-1.6%). Also, 23.6 bln kWh of electric power was supplied to the Unified Energy System of Ukraine (-5.9%). 31.3 bln kWh of electricity distributed (-2.8%). The volume of electricity supply in the domestic market to end consumers was 30.4 bln kWh.

"Investors are bullish on Ukraine. They acknowledge the trend of structural changes in the country, and they are ready to support further progress. One of the signs is our successful placement of a debut issue of green Eurobonds. This event brings Ukrainian green energy to the world capital market and is a benchmark for the industry", - stated Maksym Timchenko, DTEK CEO, commenting on the company`s operations for the first 9 months of 2019. "Today, we are also creating a benchmark in the retail electricity market thanks to the introduction of the YASNO brand. We set ourselves the task to provide a truly European level of service, so we are undertaking a lot of work to change business processes and approaches towards customer service. Today, global structural changes are necessary throughout the Ukrainian energy sector, where the state and the players will have joint responsibility for the result. This will make it possible for Ukraine to be a full participant in the European market".

Main performance indicators of DTEK Group

Indicators	Unit of measurement	9 months of 2019	9 months of 2018	Change, (+/-)	Change, (%)
Coal production	ths. tons	18 196.5	19 987.3	-1 790.8	-8.9
including:
-grade G, DG (Ukraine)	ths. tons	16 497.2	17 711.7	-1 214.5	-6.9
-grade A (Obukhiv Mine Group)*	ths. tons	1 699.3	2 275.6	-576.3	-25.3
Concentrate output	ths. tons	8 151.4	8 995.2	-843.8	-9.4
including:	ths. tons
-outside central concentrating plants (Ukraine)	ths. tons	270.7	902.7	-632.0	-70.0
- Obukhiv Mine Group*	ths. tons	1 174.4	1 420.8	-246.4	-17.3
Generation (supply) of electricity	mln. kWh	23 638.8	25 122.7	-1 483.9	-5.9
including:
-thermal power plants and thermoelectric stations	mln. kWh	22 764.0	24 645.4	-1 881.4	-7.6
-wind farms and solar farms	mln. kWh	874.8	477.3	+397.5	+83.3
Electricity distribution	mln. kWh	31 310.9	32 225.5	-914.6	-2.8
Electricity supply in the domestic market**	mln. kWh	30 350.4	32 225.5	-1 875.1	+5.8
Electricity supply to foreign markets	mln. kWh	4 216.5	4 312.3	-95.8	-2.2
Import of electricity	mln. kWh	232.1	-	+232.1	+100.0
Export of coal***	ths. tons	562.0	344.5	+217.5	+63.1
Import of coal	ths. tons	1 576.8	1 974.3	-397.5	-20.1
Trading natural gas	mln. kWh	1 488.7	1 408.3	+80.4	+5.7
Natural gas production	mln. kWh	1 224.7	1 244.4	-19.7	-1.6
Condensate production	ths. tons	46.0	38.1	+7.9	+20.7

*As of 1 September 2016 performance indicators of Obukhiv Mine Group are not consolidated in the reporting of DTEK Energy, because it has been transferred into the direct management of DTEK B.V. strategic holding. The transaction took place within the framework of restructuring DTEK Energy`s loan portfolio and is aimed at balancing the capacities for developing enterprises and loan servicing.

**Within the first stage of the energy reform, the unbundling has been finalized - companies have divided the functions of production, distribution and supply of electricity by creating separate companies for each such function.

***Including trading operations outside Ukraine.

DTEK Energy

Coal production and refining

In the first 9 months of 2019, DTEK Energy produced 16.5 mln tons of coal, which is 6.9%, or 1.2 mln tons lower as compared to the same period last year. DTEK Energy-owned and third-party processing plants processed 11.8 tons of rough coal and output of concentrate was 7.0 mln tons. In fact, the full volume of coal was processed and refined by the company-owned central concentrating plants, which has become possible after the implementation of a comprehensive program of capacities upgrading.

Main factors which affected performance indicators:

• DTEK Pavlohradcoal reduced coal production by 9.2%, or 1 336.3 ths tons however continues to keep high indicators of labour efficiency - 107.6 tons per person per month.

Key projects in January-September 2019:

• Upgrade of mining equipment: DTEK Pavlohradcoal purchased four new cleaning and three new tunnelling combines. Similarly, DTEK Dobropolyeugol added three tunnelling and three cleaning combines. The new equipment has improved performance characteristics, which ensures high rates of coal production in deteriorating mining and geological conditions.
• Upgrade of central concentrating plants: DTEK Pavlogradska central concentrating plant is completing the reconstruction of hydro-classification unit of coal sludge and screw separation waste to reduce the volume waste and reduce environmental footprint in the region. In general, the project will improve the closed-loop water-slurry scheme which allowed to exclude the use of the sludge tank and advance land restoration for the disposal of mud coal.
• Kurakhivska central concentrating plant completed the preparation of design documentation for the implementation of the unit for treatment and dehydration of liquid waste. The project is implemented as part of the transition of the enterprise to a closed-loop water-slurry scheme.
• Equipment for the enrichment of coal in heavy-medium hydro-cyclones has been delivered to the DTEK Oktyabrska central concentrating plant. Construction and installation works are planned for 2020.
• DTEK Dobropilska central concentrating plant has completed the second construction stage of the rock waste dump, which creates capacity for storing of mud coal for 10 years of operation. Innovative "green dump" technology was used during construction to reduce the environmental footprint. In particular, the formation of combustion sources and waste coal contact with the environment has been completely eliminated.

Conventional power generation

In the first 9 months of 2019, DTEK Energy dispatched 22.8 bln kWh into the Integrated Power System of Ukraine which is 7.6%, or 1.8 bln kWh lower as compared to the same period last year.

Main factors which affected performance indicators:

• Expiry of the agreement on management of Kyiv CHPP energy units 5 and 6 as from 31 July 2018 (1 615.0 mln kWh was produced in nine months of 2018).
• DTEK Energy is implementing a comprehensive program to increase the share of G-grade domestic coal in the fuel mix of electric stations to minimize the use of imported A-grade coal. Production of electricity from G-grade coal in the reporting period totalled 20 532.4 mln kWh. This allowed reducing the share of electricity from anthracite in the total production volume to 8.9% (12.0% in 9 months of 2018).

Key projects in January-September 2019:

• DTEK Prydniprovska thermal power plant: power unit No.10 has been converted to use domestic G-grade coal instead of anthracite. This is the fourth power unit at the plant, which does not use anthracite. An electric filter has been built in the power unit and dust emission has dropped to the level of European requirements - under 50 mg/m³;
• DTEK Kryvorizka thermal power plant: power unit No.1 has been converted to use G-grade coal instead of anthracite. The power unit was connected to the grid in October.

From 2008, the company has been reconstructing or constructing electric filters along with the upgrading and reconstruction of power units in order to reach the dust emission levels required by Directive 2001/80/EC.

• DTEK Kryvorizka thermal power plant, DTEK Zaporizhka thermal power plant and DTEK Burshtynska thermal power plant: testing on compliance with ENTSO-E European energy system has been successfully conducted.

DTEK Renewables: renewable power generation

In the first 9 months of 2019, DTEK Renewables dispatched 874.8 mln kWh into the Integrated Power System of Ukraine which is 83.3%, or 397.5 mln kWh higher as compared to the same period last year.

Main factors which affected performance indicators:

• Two new solar and three new wind farms have been commissioned in the first 9 months of 2019. In the reporting period Nikopolska Solar Farm dispatched 245.5 mln kWh into the Integrated Power System of Ukraine and the first stage of Prymorska Wind Farm - 164.9 mln kWh. The second stage of Prymorska Wind Farm produced 14.2 mln kWh.
• Tryfonivska Solar Farm increased production of electricity by 1.0%, or 104 ths kWh. The availability factor of the solar farm was 99.96%.
  • Botiivska Wind Farm reduced production of electricity by 5.8%, or 27.2 mln kWh, due to lower wind speed. The availability factors of the wind turbines and infrastructure were consistently high and correspond to the best global indicators of wind farms operation, 98.24% or 99.70%, respectively.

Key projects in January-September 2019:

• Nikopolska Solar Farm (200 MWac capacity). From 1 March, the solar farm is connected to the grids. Nikopolska Solar Farm will produce 290 mln kWh annually, which will reduce CO₂ emissions by 300 ths tons per year;
• Prymorska Wind Farm (200 MW capacity). The wind farm was constructed in two stages, each stage included 26 wind turbines manufactured by GE. The first stage has been producing electricity from the first half of 2019, and the second stage was commissioned in September. Since November, all wind turbines have been connected to the Integrated Power System of Ukraine;
• Orlivska Wind Farm (100 MW capacity). The construction of the infrastructure has been completed and all 26 wind turbines manufactured by Vestas (Denmark) have been installed. The farm annually produces 380 mln kWh of electricity, which will decrease the emission of greenhouse gases by over 400 ths tons per year;
• Pokrovska Solar Farm (240 MWac capacity). The solar farm was commissioned in September and has been despatching into the Integrated Power System of Ukraine since October. Pokrovska Solar Farm has 874 ths solar panels manufactured by Risen Energy (China). The farm was built on the reclaimed land which previously was a manganese quarry. The new solar farm will annually produce 400 mln kWh, resulting in the reduction of CO₂ emissions by 420 ths tons;
• Long-term development strategy of DTEK Renewables includes Tylihulska Wind Farm with designed capacity of 565 MW. The company has assessed the effect on the environment and received positive opinions of the Ministry of Energy and Environmental Protection. The construction site is located in Mykolaiv region, on the shore of the Tylihul Estuary. The farm will produce c. 2 bln kWh per year, reducing CO₂ emissions by over 2 mln tons.

Additionally, the company is engaged in the development of new smaller renewable projects: Vasylkivska, Pavlohradska, Troyitska, Bandurovska and Shchaslyve solar farms, and Berdianska Wind Farm. These projects are to be located in Dnipropetrovsk and Zaporizhia regions and is planned for 2020-2022.

DTEK Oil&Gas: production of natural gas and gas condensate

In the first 9 months of 2019, DTEK Oil&Gas produced 1 224.7 mln cubic meters of natural gas which is 1.6%, lower as compared to the same period last year. Gas condensate production increased by 21%, to 46.1 ths tons.

Main factors which affected performance indicators:

• The completion of drilling three wells at the Semyrenkivske field - No.61 with depth of 5 456 meters and reach of 380 meters; No.43 with depth of 5 605 meters and reach of 370 meters; No.72 with depth of 5 420 meters;
• Capital repairs and operations to increase well yields with available well stock.

Key projects in January-September 2019:

• drilling of well No. 53 (5 704 meters deep) has been completed at the Machukhske field;
• drilling of well No. 72 (5 420 meters deep) and No. 75 (5 470 meters deep) has been completed at the Semyrenkivske field. Both wells were drilled in record time of 3.5 months;
• construction of booster compressor stations and a nitrogen unit at the Semyrenkivske field has commenced to improve the extraction and quality of commercial gas;
• obtained a license for subsoil use at the Svitankovo-Lohivska site (Kharkiv region). The company won the license at an open online auction held by the State Service of Geology and Subsoil of Ukraine in March, 2019;
• won an auction for developing of the Zinkovska site (Sumy and Poltava regions) through the Ukraine's largest tender process thus far. The company plans to invest UAH 1.2 bln in the exploration and development of this site.

DTEK Grids: electricity distribution and electricity grids operation

In the first 9 months of 2019, DTEK Grids distributed 31.3 bln kWh to their clients, which is 2.8%, or 0.9 bln kWh lower as compared to the same period last year.

Main factors which affected performance indicators:

• in the 3^rd quarter of 2019 Ukraine reduced the consumption of electricity (gross) by 2%, or 0.7 bln kWh;
• DTEK Dnipro Grids and DTEK High-voltage Grids reduced the volume of electricity distributed by 22.3%, or 5.1 bln kWh. This was caused by a decrease in the number of customers, as the result of implementation of a new territorial licensing decree for enterprises;
• completion of the purchase of Odesaoblenergo and Kyivoblenergo, the performance indicators of which have been consolidated since May 2019. The companies distributed 4.3 bln kWh in May-September.

Key projects in January-September 2019:

• DTEK Grids implemented a simplified automated procedures for connection to grids which reduced the time for fulfilling customer requests. Due to this, DTEK Grids increased the number of standard connections by 30% in in Dnipropetrovsk region in the first 9 months of 2019 when compared to the same period last year, similarly the growth of connections in Donetsk region was 33%, and Kyiv 19%. Moreover, DTEK Grids expanded the capacity of call centres, which increased availability and the level of convenience for customers.
• DTEK Dnipro Grids: "Naddnipriansk" substation has been built and put into commission in Dnipro and has become one of the most state-of-the-art energy facilities in Ukraine. The substation provides electricity to 300 ths people of the central parts of the city and two new metro stations;
• DTEK Donetsk Grids: the project of establishing the central dispatching point in Kramatorsk, which will improve the management of the energy infrastructure of Donetsk region, has been completed;

Technical refitting of "Gorod 2 - 35 kv" and "Dnipropillia - 35 kv" substations is currently underway in order to improve the quality of electric supply in Mariupol and Dobropillia.

• DTEK Kyiv Grids: in Kyiv, preparations for the introduction of "smart" grids technology have commenced - supervisory systems have been installed in over 300 substations and distribution points. The systems transmit data on the state of the infrastructure, record voltage and consumption levels. This allows remote analysis of equipment operation, which increases the reliability and stability of the power distribution;

Large-scale reconstruction of "Bortnychi" and "Vulkan" substations has begun. This will create the capacity to connect new facilities and the base for the upgrading of the cooling station.

D.Trading

Coal supply

Export operations are carried out from the resource of Obukhivska Mine Group. In January-September 2019, sales increased to 562.0 ths tons (+63.1% or 217.5 ths tons, compared to the same period last year). At the same time, the company reduced supplies to the Ukrainian market to 840.9 ths tons (-29.5% or -352.3 ths tons), due to the lack of a quota for the export of coal and the termination of shipments as from June 1.

To supply coal for the operation of thermal plants and industrial consumers, the D.Trading imported 1 576.8 ths tons of coal products, including from Colombia and South Africa. Purchases of coal from foreign markets decreased by 20.1%, or 397.5 ths tons, due to the implementation of the strategy on transferring generation capacities to the use of domestic grade G coal.

A total of 1 139.0 ths tons were delivered to Ukrainian industrial consumers from own and external resources.

Electricity supplies to foreign and domestic markets

D.Trading delivered 4.2 bln kWh to the export markets, which is almost equal to the same period last year. Electricity was exported to Hungary, Poland and Moldova.

On 1 July, Ukraine switched to a new model of the electricity market, which opened the possibility for consumers to freely buy electricity from any supplier. D.Trading has operated in free market segment and delivered 16.6 bln kWh to industrial consumers, universal electricity suppliers and traders. The total electricity supply increased by 59% in the third quarter compared to the second quarter 2019.

Import and supplies of natural gas in the domestic market

The company increased sales of natural gas from its own and external resources acquired in the domestic market up to 1 488.7 mln cubic meters (+5.7% or 80.4 mln cubic meters) through increased sales to industrial and energy sector enterprises.

D.Solutions

D.Solutions supplied 13.7 mln kWh to its customers in January-September 2019.

Three electricity suppliers constitute D.Solutions: Kyiv Energy Services, Dnipro Energy Services and Donetsk Energy Services, which provide services to 3.5 mln Ukrainian households.

The company is actively developing high-speed charging stations for electric vehicles. Year to date, 12 stations have been installed on routes, connecting Dnipro with Poltava, Kyiv with Odesa and Lviv. The company operates a total of 23 stations.

Since November 2019, the company provides services under the brand name YASNO. Under this brand, the following services are combined: YASNO Smart solutions for households (previously the product was provided under the Rozumny WATT brand), YASNO E-mobility network of express stations for electric vehicles (formerly STRUM), YASNO Efficiency - roof solar panels, energy storage systems, energy audit, energy service and energy management

See also

15/11

DTEKDTEK reaches 1 GW of Renewable Energy Generation

06/11

DTEKDTEK Group is the first Ukrainian business to issue Green Eurobonds

06/11

DTEKDTEK RENEWABLES FINANCE B.V. prices EUR 325,000,000 8.50 per cent. Senior Notes due 2024

Reference

DТЕК is the largest private investor in Ukraine's energy sector.
DTEK Group produces coal and natural gas, generates electricity at the termal, solar and wind power plants, distributes electricity, supplies electricity to end consumers, provides energy efficient solutions and develops a network of EV charging stations.
In 2018, DTEK's capital investments totalled UAH 20 bln. besides, the company paid UAH 27 bln of taxes. DTEK employs 80 thousand people. The company is 100% owned by SCM Limited. Ultimate beneficial owner - Rinat Akhmetov.

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