PGE Polska Grupa Energetyczna S A : Presentation - preliminary results for Q3 2020

Q3 2020 preliminary results

November 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 Q3 2020 will be released on November 17, 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.

3 Estimated operating volumes and sales data

[TWh]	Q3 2020	Q3 2019	y/y	9M 2020	9M 2019	y/y
Net electricity generation. by
fuels:	14.27	13.94	2%	42.85	43.44	-1%
Lignite	7.73	7.76	0%	22.45	24.82	-10%
hard coal (including):	4.77	4.82	-1%	14.60	13.54	8%
Conventional Generation	4.41	4.41	0%	12.17	10.97	11%
segment
incl. Opole 5/6 units	1.90	1.25	52%	5.23	1.94	170%
District Heating segment	0.36	0.41	-12%	2.43	2.57	-5%
natural gas	1.23	0.86	43%	3.62	3.12	16%
pumped-storage plants	0.13	0.12	8%	0.50	0.45	11%
hydro	0.08	0.05	60%	0.33	0.32	3%
wind	0.27	0.23	17%	1.05	0.91	15%
biomass	0.05	0.09	-44%	0.27	0.25	8%
municipal waste	0.01	0.01	0%	0.03	0.03	0%
Sales of heat [PJ]	3.79	3.88	-2%	31.54	32.45	-3%
including Conventional
Generation segment	0.43	0.47	-9%	3.11	3.35	-7%
Sales of electricity to final off-
takers	10.34	10.89	-5%	30.46	32.78	-7%
Distribution of electricity	8.98	8.99	0%	26.27	27.12	-3%
Average realized wholesale price of electricity

[PLN/MWh]	Q3 2020	Q3 2019	y/y	9M 2020	9M 2019	y/y
Conventional Generation	281.26	246.31	14%	286.10	244.66	17%
segment
District Heating segment	253.75	261.26	-3%	247.88	254.52	-3%
Total (Conv. Gen. and District	278.37	247.21	13%	281.11	245.66	14%
Heating)

4 Estimated key financial data

[PLN m]	Q3 2020	Q3 2019	y/y	9M 2020	9M 2019	y/y
EBITDA PGE Group. including:	1 546	1 677	-8%	4 351	6 072	-28%
Conventional Generation	484	659	-27%	1 258	2 765	-55%
District Heating	115	93	24%	608	865	-30%
Renewables	110	100	10%	411	410	0%
Distribution	611	599	2%	1 738	1 810	-4%
Supply*	299	59	407%	486	532	-9%
Other + consolidation adjustments	-73	167	-144%	-150	-310	-52%
One-off items. including:	-28	43		-340	1 139
LTC compensations	-	1		41	-14
Change of reclamation provision	-	-		-434	-246
Change of actuarial provision	-	-		-40	-36
Provision for the risk of returning the	-	-		121	-
equivalent of EUA received by ZEDO
Additional EUA emission rights	-	42		-	1 435
Voluntary Leave Programme	-28	-		-28	-
Recurring EBITDA	1 574	1 634	-4%	4 691	4 933	-5%

*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.

5 Estimated CAPEX. net debt and EPS

[PLN m]	Q3 2020	Q3 2019	y/y	9M 2020	9M 2019	y/y
CAPEX*	1 264	1 911	-34%	3 768	4 468	-16%
Net debt (end of period)	8 557	11 703	3 146	8 557	11 703	3 146
Consolidated net result to equity	273	471	-42%	-415	2 173	n/a
Computation of net result to equity ex. impairments
Assets impairment (pre-tax)**	48	297		-1 058	202
Assets impairment (after tax)**	72	241		-916	164
Consolidated net result to equity - ex.	201	230	-13%	501	2 009	-75%
Impairments**
Earnings per share [PLN]	0,15	0,25	-42%	-0,22	1,16	n/a
Earnings per share - ex. impairment	0,11	0,12	-13%	0,27	1,07	-75%

*Capital expenditures and increases in ROUA

**Impairment of Property, Plant and Equipment, Intangible Assets, Right-of-Use Assets and shares in associated companies.

6 Drivers of periodic results

Key factors that influenced y/y results dynamics:

Q3 2020	9M 2020

Recurring EBITDA declined by 4% y/y

• Average realized wholesale price of electricity in Conventional Generation segment higher by 35 PLN/MWh (positive effect of approx. + PLN 440m according to the volume generated in Q3 2020)
• Higher revenues from heat sales, higher electricity production in gas CHP's in District Heating segment, total effect of + PLN 120m
• Additional margin in Supply segment (result on trading in CO2 rights, adjustement of compensations for electricity prices for 2019 due to the Act on electricity prices) approx.
• PLN 150m

• Cost of CO2 emission higher by approx. PLN 740m

Recurring EBITDA declined by 5% y/y

• Average realized wholesale price of electricity in Conventional Generation segment higher by 41 PLN/MWh (positive effect of approx. + PLN 1.4bn according to the volume generated in 9M 2020)
• Higher revenues from heat sales, higher electricity production in gas CHP's, lower gas price in District Heating segment, total effect of approx. + PLN 250m
• Additional margin in Supply segment (result on trading in CO2 rights, adjustement of compensations for electricity prices for 2019 due to the Act on electricity prices) approx.
• PLN 120m

• Cost of CO2 emission higher by approx. PLN 1.9bn
• Employment cost up by approx. PLN 120m
• Higher cost of hard coal consumption by approx. PLN 100m in Conventional Generation segment due to increse in electricity production in Opole power plant

Reported EBITDA declined by 8% y/y

Negative balance of one-offs y/y PLN -74m as a result of the provision for Volunatry Leave Programme (PLN -31m) and positive impact of valuation of additional EUA allowances granted in 2019 on Q3'19 results (PLN +42m).

Reported EBITDA declined by 28% y/y

Negative balance of one-offs y/y PLN -1482m impacted mainly by absence of additional EUA allowances granted in 2019, increasing financial results for 9M'19 by PLN +1 435m.

7

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