PGE Polska Grupa Energetyczna S A : Presentation Preliminary results for year 2019

FY 2019 preliminary results

February 4, 2020

Disclaimer: estimated data

The Management Board of PGE Polska Grupa Energetyczna (the "Company" or "PGE") emphasize that figures presented hereby are preliminary estimates, which may change. The financial statements of PGE Group are still in the preparation process. Consolidated report for 2019 will be released on March 10, 2020.

This presentation has been prepared by the Management of PGE. This presentation does not constitute or form part of and should not be constructed as an offer to sell or the solicitation or invitation of any offer to buy or subscribe for securities of the Company, any of its subsidiaries in any

jurisdiction. No part	of this presentation, nor the fact of its
distribution, should	form the	basis of,	or	be relied on
in connection with, any	contract	or	commitment
or investments decision whatsoever.

3Estimated operating volumes and sales data

[TWh]	Q4 2019	Q4 2018	y/y	2019	2018	y/y
Net electricity generation, by fuels:	14.88	16.82	-12%	58.32	65.91	-12%
lignite	7.38	9.60	-23%	32.20	38.98	-17%
hard coal	5.40	5.33	1%	18.94	20.66	-8%
natural gas	1.37	1.25	10%	4.49	4.12	9%
pumped-storage plants	0.20	0.12	67%	0.65	0.39	67%
hydro	0.05	0.05	0%	0.37	0.37	0%
wind	0.36	0.32	13%	1.27	1.06	20%
biomass	0.11	0.14	-21%	0.36	0.32	13%
Sales of heat [PJ]	16.31	17.28	-6%	48.76	49.66	-2%
Sales of electricity to final off-takers	11.23	11.06	2%	44.01	42.57	3%
Distribution of electricity	9.26	9.33	-1%	36.38	36.41	0%
Average realized wholesale price of electricity
[PLN/MWh]	Q4 2019	Q4 2018	y/y	2019	2018	y/y
Conventional Generation segment	250.6	183.3	37%	246.1	176.9	39%
District Heating segment	253.4	164.1	54%	254.2	164.5	55%
Total (Conv. Gen. and District Heating)	251.0	180.4	39%	247.0	175.7	41%

4Estimated key financial data

	[PLN m]	Q4 2019	Q4 2018	y/y	2019	2018	y/y
	EBITDA PGE Group, including:	1 046	1 231	-15%	7 118	6 375	12%
	Conventional Generation	114	300	-62%	2 880	2 101	37%
	District Heating	321	276	17%	1 186	852	39%
	Renewables	126	109	16%	536	463	16%
	Distribution	496	570	-13%	2 306	2 463	-6%
	Supply*	-252	-193	31%	280	227	23%
	Other + consolidation adjustements	240	169	42%	-70	269	n/d
	One-off items
	LTC compensations	5	-37		-8	-120
	Change of reclamation provision	-589	-129		-835	-146
	Change of actuarial provision	-63	-71		-99	-71
	Additional EUA emission rights	10	0		1 446	0
	Recurring EBITDA	1 683	1 468	15%	6 614	6 712	-1%

*According to accounting standards (IAS 37), Supply segment created provisions in years 2018 and 2019 for onerous contracts, resulting from the Act on electricity prices (2018) and from approval of the price of electricity for households -G Tariff for 2020 (2019). However, PGE Group made respective simultaneous adjustment on the consolidated result which reverses the impact of provision.

5Estimated CAPEX, net debt and EPS

[PLN m]	Q4 2019	Q4 2018	y/y	2019	2018	y/y
CAPEX	2 541	3 097	-18%	7 009	6 856	2%
Net debt (end of period)				11 415	9 600	1 815

Consolidated net result to equity

-309

-199

n/a

1 864

1 498

24%

Computation of net result to equity ex. impairments
Fixed assets impairment (pre-tax)*	-223	-200		-410	-402
Fixed assets impairment (after tax)*	-181	-162		-332	-326
Consolidated net result to equity - ex.	-128	-37	n/a	2 196	1 824	20%
Impairments*

Earnings per share [PLN]	-0.17	-0.11	n/a	1.00	0.80	24%
Earnings per share - ex. impairment	-0.07	-0.02	n/a	1.17	0.98	20%

*Impairment of Property, Plant and Equipment, Intangible Assets and Right-of-Use Assets

6Drivers of periodic results

Key factors that influenced y/y results dynamics

Q4 2019	2019

Recurring EBITDA increased by 15%y/y

• Average realized wholesale price of electricity in Conventional Generation segment higher by67 PLN/MWh
• Increased margin on electricity generated by District Heating segment (electricity price higher by89 PLN/MWh)

• Generation volume lower by1.9 TWh, including 2.2 TWh lower generation from lignite
• Cost of CO2 emission higher by approx.PLN 0.11bn
• Personnel expenses higher by approx.PLN 0.29bn
• Support forhighly-efficient cogeneration decreased by PLN 0.14bn
• Sales of heat declined by1.0 PJ

Recurring EBITDA decreased by 1%y/y

• Average realized wholesale price of electricity in Conventional Generation segment higher by69 PLN/MWh
• Increased margin on electricity generated by District Heating segment (electricity price higher by90 PLN/MWh)

• Generation volume lower by7.6 TWh, including 6.8 TWh lower generation from lignite
• Cost of CO2 emission higher by approx.PLN 1.64bn
• Personnel expenses higher by approx.PLN 0.58bn
• Support forhighly-efficient cogeneration decreased by PLN 0.36bn
• Sales of heat declined by0.9 PJ

Reported EBITDA lower by 15%y/y	Reported EBITDA higher by 12%y/y
Negative balance of one-offs y/y PLN-400mmainly as a	Positive balance of one-offs y/y PLN +841mimpacted by
result of higher reclamation provision.	additional EUA allowances granted in HY'19, increasing
	financial results by PLN +1 446m.

7

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