ENERGA Group 2013 results 10 March 2014 This graph shows the - - PowerPoint PPT Presentation

ENERGA Group – 2013 results

10 March 2014

This graph shows the contribution of the individual business segments to adjusted EBITDA of the Group in 2013.

Summary of 2013

Individual net profit of ENERGA SA was PLN 499 m in 2013 and consequently the Management Board of ENERGA SA recommended payment of dividend of PLN 414 million, or PLN 1 per share Group's net profit reached PLN 743 million and was 63% higher y/y Group's EBITDA was approx. PLN 2 billion, increasing by PLN 336 million, or 21% y/y; this growth was driven mainly by the improved performance of the Distribution and Generation Segments Increase in non-current assets up to PLN 12,650 million in 2013, vs. PLN 10,697 million in 2012 Annual capital expenditures of the Group amounted to PLN 2,802 million, compared to PLN 1,849 million in 2012 As a result of the Group's focus on improving efficiency, the asset value per employee ratio improved by about 30% y/y

3

Draft no. 3[PL]

 Hydro power plants

• Włocławek (160 MW)
• Smaller generating entities (41 MW)
• Pumped storage plant in Żydowo (160MW)

 3 wind farms

• Karcino (51 MW)
• Karścino (90 MW)
• Bystra (24 MW)

 System power plant in Ostrołęka (647 MW)  CHP plant in Ostrołęka (75 MW, 394 MWt)  Other CHP plants (49 MW, 353 MWt) 4

Key assets of the ENERGA Group

Generation1 Distribution

• 194 thous. km of power lines
• 20.44 TWh of electricity delivered
• geographical coverage of 77 thous. km2

1 Achievable capacity

Sales

• 2.9 million customers
• 31.01 TWh of electricity sold (18.2 TWh in retail

sales)

February 2014

Key operational and financial data

6

Q4 2012

Q4 2013 Dynamics Distribution of electricity (TWh) 5.2 5.3 2% Gross production of electricity (TWh) 0.8 1.2 50%

• Incl. RES1 (TWh)

0.3 0.5 67% Retail sales of electricity (TWh) 5.4 4.6

• 15%

2012 2013 Dynamics Distribution of electricity (TWh) 20.1 20.4 1% Number of customers – distribution (000s) 2,917 2,946 1% Gross production of electricity (TWh) 4.1 5.0 22%

• Incl. RES1 (TWh)

1.3 1.9 46% Retail sales of electricity (TWh) 20.5 18.2

• 11%

1 Includes biomass, wind power plants and run-of-river plants. Does not include the pumped storage power plant.

ENERGA Group has stable foundations of the business

983 733 1 008 147 198 309 552 692 129 185 151 109

1 292 1 285 1 851 276 492

2011 2012 2013 Q4 2012 Q4 2013

Run-of-river hydro Biomass Wind Biomass 28% Run-of- river hydro 40% Wind 32%

Installed capacity 2013 (MWe) Certificates of orgin (green) on electricity generated (GWh) Gross electricity production (GWh) Total: 508 MWe

• Better water and weather condition for hydro power plants y/y (gross increase in production by 38%)
• Acquisition of wind farms, which increased the Group's generating capacity by approx. WM 165.

983 733 1 008 309 552 692

151

1 292 1 285 1 851

200 400 600 800 1 000 1 200 1 400 1 600 1 800 2 000 2011 2012 2013

Run-of-river hydro Biomass Wind 7

This covers 88% of ENERGA-OBRÓT's demand for the mandatory redemption

• f green proprietary

rights

We are increasing electricity production from renewable energy sources

1 520 1 629 1 965 297 464 91 235 255 96 75 1 611 1 864 2 220 393 539 2011 2012 2013 Q4 2012 Q4 2013

Revenue (PLN m) EBITDA (PLN m) Net profit (PLN m) CAPEX (PLN m)

8

Adjustment by effect of material one-off events Adjusted EBITDA 10 368 11 177 11 429 2 936 2 892 2011 2012 2013 Q4 2012 Q4 2013 703 456 743

• 74

145 2011 2012 2013 Q4 2012 Q4 2013 1 446 1 849 2 802 656 698 2011 2012 2013 Q4 2012 Q4 2013

The ENERGA Group has been consistently improving the EBITDA margin

954 1 318 1 587 276 378 375 263 404 44 91 120 17

• 28

2

• 25

14 9 30 5 17 207 264 267 52 79

• 59
• 7
• 40

14

• 1

∑ 1 611 ∑ 1 864 ∑ 2 220 ∑ 393 ∑ 539

2011 2012 2013 Q4 2012 Q4 2013

Distribution RES Segment System Power Plants CHP Sales Services, other and adjustments

Adjusted EBITDA (PLN m)

* In 2011, the Generation Segment was not presented as a whole in the Consolidated Financial Statements, but rather divided into Subsegments: RES, System Power Plants and CHP. Accordingly EBITDA of the Generation Segment presented in the graph above is the sum of those individual subsegments.

9

Regulatory business constitutes a stable source of the Group's EBITDA...

1 In its Consolidated Financial Statements for 2012, the Company recognized separately the RES, System Power Plants and CHP Subsegments.

In the Consolidated Financial Statements for 2013, the Company presents them as a single Generation Segment. Therefore, financial information for the subsegments in the Generation Segment was presented solely for the purposes of this presentation, but they do not originate from the Consolidated Financial Statements for 2013.

2 ENERGA Elektrownie Ostrołęka SA contributes the key part of the results of the System Power Plants subsegment.

10 PLN m Distribution Sales 2012 2013 Dynamics 2012 2013 Dynamics Revenues 3,684 3,796 3% 7,179 7,107

• 1%

EBITDA 1,218 1,561 28% 264 207

• 22%

EBITDA margin 33.1% 41.1% ∆ 8 p.p. 3.7% 2.9% ∆ -0.8 p.p. Net profit 320 612 91% 192 170

• 11%

Net profit margin 8.7% 16.1% ∆ 7.4 p.p. 2.7% 2.4% ∆ -0.3 p.p. CAPEX 1,364 1,397 2% 30 42 40% PLN m Generation incl.: RES1 System power plants1,2 2012 2013 Dynamic s 2012 2013 Change 2012 2013 Dynamic s Revenues 1,512 1,549 2% 352 545 55% 1,038 890

• 14%

EBITDA 157 223 42% 261 404 55%

• 107
• 205
• 92%

EBITDA margin 10.4% 14.4% ∆ 4 p.p. 74.1% 74.1% ∆ 0 p.p.

• Net result

23 67 191% 191 263 38%

• 163
• 203
• 25%

Net profit margin 1.5% 4.3% ∆ 2.8 p.p. 54.3% 48.2% ∆ -6 p.p.

• CAPEX

412 1,332 223% 67 1,064

• 213

133

• 38%

… and is supported by other Segments in the value chain

1 210 1 364 1 397 30 30 42 5 42 31 201 412 319 1 013

500 1 000 1 500 2 000 2 500 3 000 2011 2012 2013

CAPEX

Distribution Sales Other & adjustments Generation-other Generation-wind acquisitions

1 446 1 849 2 802

PLN m

Major investments in the electricity distribution segment:

• PLN 704 m - grid development to facilitate

connection of new customers and generators

• PLN 562 m - distribution network

modernization to improve reliability of supply; PLN 15 m - other expenditures for innovative grid technologies and solutions (Smart Grid, SID)

• incl. expenditures for AMI: PLN 118 m.

Major investments in the generation segment:

• PLN 1,013 m - acquisitions of wind farms

in the RES subsegment;return on investment* of acquired wind farms was 9.4% in 2013

• PLN 86 m - modernization and addition of

heat generation to the power units in Elektrownia Ostrołęka B In the Sales Segment, PLN 24 m was invested to improve efficiency of sales and customers service.

data according to IFRS

Acquisition

• f wind

farms from Dong and Iberdrola groups

11

Key investments

*Return on investment is calculated as annualized EBITDA of the operating three farms related to purchase prices allocated to these farms.

The ENERGA Group has been consistently implementing its investment plans

323 339 318 325 307 298

100 200 300 2011 2012 2013

Justified by ERO Actual

771 818 880 858 833 878 200 400 600 800 1 000 2011 2012 2013

Justified by ERO Actual opex net of profit from other activities2 Actual operating expenses of the Distribution Segment as % recognized by ERO

99% 102%

Investments and improvement of efficiency of the the Distribution Segment contributed to EBITDA growth

Investments in 2013

• Connection of new customers and generators to the

grid represented almost half of all expenditures:

• At the end of 2013, ENERGA-OPERATOR had a

58% market share in connected RES in Poland

• The number of connected customers increased by
• ver 29 thousand, or 1% of the overall number of

customers

• Over 40% of expenditures was made for grid

upgrades

• Approx. 1300 km overhead and cable power lines

were upgraded. Reduction of headcount: Headcount in the Distribution Segment fell from 6,954 in 2012 to 6,079 in 2013. Optimization of procurement: Cost per unit ratio fell by 13.6% y/y.

What reduced OPEX GAP:

In 2011, the difference between actual operating expenses and costs recognized by ERO as justified was 11% and fully eliminated in 2013.

12

Actual cost of grid losses as % recognized by ERO

101% 91% 94%

Cost of network losses (PLN m) Operating expenses (PLN m nominal)

1

1 Operating expenses excluding profit on other activity were PLN 898 m,

PLN 880 m and PLN 927 m in 2011, 2012 and 2013, respectively.

111%

19 611 20 058 20 444 5 178 5 279 153 166 168 167 168

120 160 200 5 000 10 000 15 000 20 000 25 000 2011 2012 2013 Q4 2012 Q4 2013 Distribution volumes (GWh) Average tariff (PLN/MWh) ¹ Average tariff calculated as ratio of billed sales of distribution services and volume of electricity delivered to final customers (MWh);

Key operating data of the Distribution Segment

Volume and price of distributed energy1 Interruption indices

13

603 309 234 121 100 200 300 400 500 600 700 2011 2012 2013 SAIDI (unplanned, catastrophic and planned) SAIDI - hurricane Ksawery SAIDI (Number of minuntes outage duration per customer per year) 355 5,45 3,82 3,04 0,33 1 2 3 4 5 6 2011 2012 2013 SAIFI (unplanned, catastrophic and planned) SAIFI - hurricane Ksawery SAIFI (Interruptions per customer per year) 3.37

(2 004) (1 803) (2 787)

• 189
• 654
• 497

1 382 1 186 1 835 2011 2012 2013 Net cash on operating activities less interest paid Dividends paid Net cash on investing activities

Good financial position of the ENERGA Group has been confirmed by rating agencies

• Baa1 (outlook changed to stable)

Previous assessment confirmed in December 2013

• BBB (stable outlook)

Ratings awarded previously were upheld in October 2013

PLN m 14

Safe financial position of ENERGA Group

15

EBITDA Net debt/ EBITDA

(PLN m)

31 December 2011 0.11x

(PLN m)

31 December 2012 1,965 0.88x

(PLN m)

31 December 2013 1 629 1.49x 1,520 1 949 3 495 5 276

• 1 777
• 2 069
• 2 352

172 1 426 2 924 Interest bearing loans and borrowings plus bonds Cash and cash equivalents Net debt

Conservative indebtedness policy

16 Pillars of strategy Actions Goals

Minimization of impact on the environment  Increased profitability and generated cash flows  Continuous improvement of quality of services  Increase in customer satisfaction  Maintenance of strong long-term relations with customers Further development in the distribution segment Focus on customer service  Development of environmentally-friendly energy sources  Support for efficient use of energy  Modernization and extension of the distribution network  Continuous improvement of network reliability  Delivery of high quality products  High cost efficiency  Further investments in renewable energy sources  Use of tested technologies

Key development directions for the ENERGA Group

17

Investor Relations Bureau Contact for the media Joanna Pydo Beata Ostrowska Director of Investor Relations Spokesman for ENERGA Group Joanna.Pydo@energa.pl Beata.Ostrowska@energa.pl Tel.:(+48) 58 771 85 59 Tel.: (+48) 58 347 39 54 investor.relations@energa.pl

Thank you – Q&A

18

Disclaimer

This presentation is for information only and should not be treated as investment advice. This presentation has been prepared by ENERGA SA („Company”). Neither the Company nor any of its subsidiaries shall be liable for any loss arising from the use of this presentation or its contents or arising in any other way in relation to this presentation. Recipients of this presentation are solely liable for their own analysis and assessment of the market and the Company's market situation and its potential results in the future, based on information included in this presentation. To the extent this presentation contains forward-looking statements, in particular the words "projected", "planned", "envisaged" and other similar expressions (including their negation), those statements involve known and unknown risks, uncertainties and other factors, which may result in the actual results, financial standing, actions and achievements of the Company or industry results being significantly different from any future results, actions and achievements in such forward-looking statements. Neither the Company nor any of its subsidiaries are obligated to provide any information to the addressees of this presentation, any information or to update this presentation.

Additional information

19

20

Structure of cost by nature

Expenses by nature (PLN m) 2011 2012 2013 Q4 2012 Q4 2013 Depreciation and amortization expense 657 723 771 189 203 Materials and energy used 1,131 1,016 946 186 191 External services 1,199 1,219 1,127 329 320 Taxes and fees 260 278 364 42 138 Employee benefits expenses 1,097 1,012 921 270 223 Valuation allowance and impairment losses 44 184 215 21 46 Other expenses 75 84 83 47 31 Change in inventories, prepayments and accruals

• 21
• 11

8 12 50 Cost of producing services for own needs

• 244
• 153
• 101
• 29
• 32

Cost of merchandise and raw materials sold 5,162 5,815 5,828 1,677 1,436 Total operating expenses 9,361 10,167 10,162 2,744 2,606 Of which: Cost of sales 8,759 9,482 9,456 2,544 2,394 Selling and distribution expenses 188 308 294 101 80 General and administrative expenses 414 377 412 99 132

21

EBITDA adjusted for significant non-recurring events

Adjusted EBITDA of the Group (PLN 000s) 2012 2013

EBITDA 1,629,246 1,965,469 Revaluation allowances for property, plant and equipment and intangible assets 123,951 149,974 Income and expenses related to the litigation between ENERGA-OPERATOR and PSE with PKN ORLEN S.A. 62,514

• Employment restructuring costs (including due to voluntary departure programs and rules)

60,428 140,509 Dissolution of provisions for employee benefits for persons leaving the Group (12,185) (54,269) Gains from bargain purchases arising from the acquisition of related companies (DONG)

• (17,907)

Additional provision for CO2 emissions pertaining to unobtained free allowances

• 35,800

Adjusted EBITDA 1,863,954 2,219,577

The Company defines and calculates EBITDA as operating profit /(loss) (calculated as net profit /(loss) on continuing operations for the financial period/year, adjusted by (i) income tax, (ii) the share of profit of the associate, (iii) financial income and (iv) financial costs) adjusted by depreciation (posted to the profit and loss account). The Company defines and calculates adjusted EBITDA as EBITDA adjusted for non-recurring events. Neither EBITDA nor Adjusted EBITDA have been defined in the IFRS and should not be treated as an alternative for measures and categories consistent with IFRS. Additionally, both EBITDA and Adjusted EBITDA do not have a uniform

• definition. The method of calculating EBITDA and Adjusted EBITDA by other companies may differ materially from the method used by

ENERGA SA. As a result, EBITDA and adjusted EBITDA presented herein as such do not constitute the basis for comparison with EBITDA and adjusted EBITDA reported by other companies.

22

1 In its Consolidated Financial Statements for 2012, the Company recognized separately the RES, System Power Plants and CHP Subsegments.

In the Consolidated Financial Statements for 2013, the Company presents them as a single Generation Segment. Therefore, financial information for the subsegments in the Generation Segment was presented solely for the purposes of this presentation, but they do not originate from the Consolidated Financial Statements for 2013.

2 ENERGA Elektrownie Ostrołęka SA contributes the key part of the results of the System Power Plants subsegment.

PLN m Distribution Sales Q4 2012 Q4 2013 Dynamics Q4 2012 Q4 2013 Dynamics Revenues 977 997 2% 1,964 1,858

• 5%

EBITDA 181 425 135% 63 19

• 70%

EBITDA margin 18.5% 42.6% ∆ 24.1 p.p. 3.2% 1.0% ∆ -2.2 p.p. Net result

• 66

161 343% 38 12

• 68%

Net profit margin

• 16.2%
• 1.9%

0.6% ∆ -1.3 p.p. CAPEX 472 554 17% 13 22 69% PLN m Generation incl.: RES1 System power plants1,2 Q4 2012 Q4 2013 Dynamics Q4 2012 Q4 2013 Dynamics Q4 2012 Q4 2013 Dynamics Revenues 353 434 23% 71 158 123% 248 242

• 2%

EBITDA 42 24

• 43%

43 90 109%

• 1
• 79
• EBITDA

margin 12.0% 5.6% ∆ -6.4 p.p. 61.1% 57.2% ∆ -3.9 p.p.

• Net result

19

• 16
• 184%

31 48 55%

• 11
• 71
• 545%

Net profit margin 5.4%

• 44.0%

30.6% ∆ -13.4 p.p.

• CAPEX

190 114

• 40%

38 0.2

• 99%

105 74

• 30%

Key segment results

23

Financial results of the Distribution Segment

265 320 612

• 66

161 2011 2012 2013 Q4 2012 Q4 2013

Revenues (PLN m) Net profit (PLN m) Capex (PLN m)

3 389 3 684 3 796 977 997 2011 2012 2013 Q4 2012 Q4 2013 916 1 218 1 561 181 425 2011 2012 2013 Q4 2012 Q4 2013 1 210 1 364 1 397 472 554 2011 2012 2013 Q4 2012 Q4 2013

• Dispute with PSE S.A.

(PLN -63 m, principal)

• Provision for reduction of

services by EOiS: PLN -31 m

• ENERGA-OPERATOR's

transition to IFRS Dispute with PSE S.A. (PLN -123 m, principal and interest)

EBITDA (PLN m)

24

EBITDA Bridge of the Distribution Segment

• PLN -64 m - recognition in 2013 of restructuring costs in grid companies (payments and provisions established)
• PLN +67.3 m - dissolution of actuarial provisions due to departures of employees in grid companies and change of

actuarial assumptions

• PLN +30.9 m - establishment in 2012 of a provision for the reduction of customer service-related services provided

by Energa Obsługa i Sprzedaż

1 218 1 447 1 447 1 498 1 561 194 63 61 15 18 17 13 51 63

200 400 600 800 1 000 1 200 1 400 1 600 1 800

EBITDA Jan- Dec 2012 Change in RAB effectively remunerated Change in WACC Revenue growth due to change in depreciation included in the tariff Deviation of actual distribution margin vs. tariff Deviation of actual grid losses with estimates vs. tariff Change of OPEX GAP Change of revenues from new connection DS’s result on

• ther
• perations

Dispute with PSE EBITDA Jan- Dec 2013

PLN m

25

Regulatory Asset Base

2 149 2 071 502 563 713 844 3 365 3 478 2012 2013 Other costs Depreciation Return on RAB

Return on RAB "Standard"

WACC

9.62% 8.95%

Extra WACC Smart Meters

2.00% 2.00%

Return on capital based

• n new RAB

907 897 "Transition period"

Allowed return on capital

713 844 Effective return on RAB 7.57% 8.42% New RAB Regulated Revenue RAB effectively remunerated

7 413 9 428 2 006 588 1 352 754

New RAB 2012 Capital expenditures recognized by ERO Reductions New RAB 2013

2012 2013

26

Financial results of the Sales Segment

Revenues (PLN m) EBITDA (PLN m) Net profit (PLN m) Capex (PLN m)

6 804 7 179 7 107 1 964 1 858 2011 2012 2013 Q4 2012 Q4 2013 168 264 207 63 19 2011 2012 2013 Q4 2012 Q4 2013 130 192 170 38 12 2011 2012 2013 Q4 2012 Q4 2013 30 30 42 13 22 2011 2012 2013 Q4 2012 Q4 2013

27

EBITDA Bridge of the Sales Segment

264 232 221 214 214 219 210 207 32 11 7 5 6 15 3 207

30 60 90 120 150 180 210 240 270

EBITDA Jan-Dec 2012 Variable margin - electricity (retail+wholesale) Result on trading certificates of

• rigin

Result on trading CO2 emission allowances (CER/EUA) Reduction of general and administrative expenses + selling cost Impairment allowance for receivables and inventories Restructuring provision less compensation from ENERGA-OPERATOR Other income/ cost EBITDA Jan-Dec 2013

PLN m

28

Key operating data of the Sales Segment

* Sales of electricity outside the Group are different from sales outside the Sales Segment. Sales outside the Group do not include sales of electricity to ENERGA-OPERATOR to cover grid losses, which is included in sales outside the Sales Segment. Furthermore, sales of electricity in both approaches do not include sales of electricity outside the Group by the generators. ** Variable margin calculated as the ratio of the result on electricity sold to revenues on electricity sold

Material factors affecting Segment results  Increasing competition in electricity sales to end customers;  Adjustment in minus of electricity prices to strategic customers by EOB (since there is no

• bligation

to redeem red and yellow certificates of

• rigin);

 Reduction of tariff G by ERO President from July 2013 by about 4% (contribution of PLN -28 m to the result).

2012 2013 Dynamics Number of customers (thous.) 2,894 2,909 1% Electricity sales outside of the Segment (in TWh)* 28 31 10%

• inc. retail sales

20 18

• 11%

Electricity sales outside of the Group (in TWh)* 26 29 12% Average selling price of electricity (PLN/MWh) 253.7 228.6

• 10%

Cost of electricity purchase (PLN 000s) 5,743 5,823 1% Cost of electricity purchase with certificates of origin (PLN 000s) 6,395 6,375 0% Average purchase price of electricity w/o certificates of origin (PLN/MWh) 201.7 187.7

• 7%

Average purchase price of electricity w/ certificates of origin (PLN/MWh) 224.6 205.5

• 9%

Variable margin** 6.14% 6.02% ∆ -0.12 p.p. Purchase of electricity by the Sales Segment (TWh) 2012 2013 Dynamics Electricity purchases from ENERGA Group generators 2.39 1.98

• 17%

Electricity purchases on the wholesale market – exchange 12.49 5.72

• 54%

Electricity purchases on the wholesale market –

• ther

13.35 23.03 73% Electricity purchases abroad 0.02 0.03 81% Electricity purchases on the balancing market 0.22 0.27 23% Total electricity purchases 28.47 31.02 9%

29

Key operating data of the Sales Segment cont.

5 445 5 419 5 374 1 389 1 376 4 133 4 020 3 993 1 036 1 048 7 324 8 215 6 672 2 197 1 704 2 426 2 905 2 219 768 501 19 328 20 559 18 258 5 389 4 629 4 000 8 000 12 000 16 000 20 000 24 000 2011 2012 2013 Q4 2012 Q4 2013 Tariff G Tariff C Tariff B Tariff A

GWh

Electricity sales by tariffs Electricity sales volume for 20131

1 Sales outside of the Sales Segment, including sales to Group companies

• utside of the Segment

18,2 TWh 59% 1,6 TWh 5% 0,8 TWh 3% 10,3 TWh 33% 12,8 TWh 41% Retail sales Sales to cover network losses Sales to the balancing market Other wholesale trade Wholesale trade

30

Financial results of the Generation Segment

Revenues1 (PLN m) EBITDA1 (PLN m) Net profit1 (PLN m) Capex1 (PLN m)

1 Data for 2011 and 2012 does not include exclusions between subsegments

346 23 19 13 17 67

• 16

2011 2012 2013 Q4 2012 Q4 2013 1 826 1 512 353 57 46 1 549 434 2011 2012 2013 Q4 2012 Q4 2013 201 412 190 114 346 667 1 332 2011 2012 2013 Q4 2012 Q4 2013 499 157 223 42 24 123 41 152 28 2011 2012 2013 Q4 2012 Q4 2013 Asset impairment allowance – Ostrołęka C Asset impairment allowance – Ostrołęka B Wind Farms Wind Farms Wind Farms Acquisition from Iberdrola Renovables Acquisition from the DONG Group

31

EBITDA Bridge of the Generation Segment

157 84 84 214 224 236 173 223 73 130 10 41 29 63 50 20 40 60 80 100 120 140 160 180 200 220 240 260 280

EBITDA Jan-Dec 2012 Change in electricity selling price Change in volume of electricity sold from

• wn generation

Revenues on sales of certificates of origin EBITDA of wind farms Change in impairment allowance for property plant and equipment CO2 provision Other operating income and expenses EBITDA Jan-Dec 2013

PLN m

• PLN +10 m – damages due from the contractor building the BB20 biomass power unit
• PLN +11 m – lower costs of voluntary departure programs
• PLN +25 m – lower cost of salary and employee benefits in Segment companies
• PLN +7 m – lower cost of fuel consumption in the CHP Subsegment
• PLN +3 m – increase in heat sales in the Generation Segment
• PLN -16 m – increase in advisory service costs relating to the purchase of wind farms
• PLN -11 m – impairment allowance for an amount due to ESP Żydowo from PSE on account of reimbursement of

incurred costs of distribution fee

32

Key operating data of the Generation Segment

3 368 2 765 3 088 514 706 1 006 755 1 037 155 212 309 552 692 129 185

151 109 4 682 4 072 4 967 798 1 212

1 000 2 000 3 000 4 000 5 000

2011 2012 2013 Q4 2012 Q4 2013 Coal Hydro Biomass Wind

Gross heat production (in TJ) Gross electricity production by fuel (GWh)

• y/y better water and weather condition for hydro power plants (gross production increase by 37%)
• Acquisition of wind farms, which increased the Group's generating capacity by approx. WM 165.

2011 2012 2013 Q4 2012 Q4 2013 System power plants 1,449 1,604 1,468 456 430 CHP 2,450 2,496 2,480 824 762 Total 3,899 4,100 3,948 1,280 1,191

37% 63%

Gross heat production in 2013 System power plants CHP

33

Key operating data of the Generation Segment cont.

1,764 CO2 emission allowances in the allocation plan [KPRU] – not yet awarded Provision established for the above allowances PLN 36 m Total provision established for PLN 63 m

CO2 emission allowances in generation companies (thous. tons CO2) 2012* 2013 CO2 emission allowances received free of charge (KPRU) 3,080.4 0.0 CO2 emission allowances purchased on secondary market 564.9 0.0 Sum of CO2 allowances 3,645.3 0.0 CO2 emission allowances related to electricity generation 2,497.6 2,718.6 CO2 emission allowances related to heat generation 444.8 466.0 Surplus (+)/ shortage (-) of CO2 emission allowances in current period 702.9

• 3,184.6

Surplus (+)/ shortage (-) of CO2 emission allowances from previous years

• 672.5

30.4

Surplus (+)/ shortage (-) of CO2 emission allowances (status at the end of the period)

30.4

• 3,154.2

*In 2012 the 5-year settlement period for CO2 emission allowances came to an end. Purchases made in 2013 to cover the previous year’s losses in the foregoing table were included in 2012.

Consumption of fuel Coal Dynamics Dynamics (%) Biomass Dynamics Dynamics (%) 2012 2013 2012 2013 Quantity (000s tons) 1,429.0 1,576.2 147.2 10% 403.4 454.7 51.3 13% Cost (PLN m) 457.9 455.1

• 2.8
• 1%

186.3 198.0 11.7 6% Cost per unit (PLN/ton) 320.4 288.7

• 31.7
• 10%

461.8 435.5

• 26.4
• 6%

Cost per unit (PLN/MWh) 120.1 110.2

• 9.9
• 8%

290.3 266.0

• 24.4
• 8%

34

EBITDA in Generation Subsegments

EBITDA (PLN m) 2012 2013 Q4 2012 Q4 2013 RES 261 404 43 91 CHP 4 25 1 13 System power plants

• 107
• 205*
• 1
• 79

Segment adjustments

• 1
• 1
• 1
• 1

Total Generation 157 223 42 24

* Recognition of an impairment allowance for property, plant and equipment in Ostrołęka Plant B in the amount of PLN 152 m.

35

Financial results of the RES Subsegment

288 191 31 13 17 263 48 2011 2012 2013 Q4 2012 Q4 2013

Revenues1 (PLN m) EBITDA1 (PLN m) Net profit1 (PLN m) Capex1 (PLN m)

1 Data for RES, System Power Plant and CHP Subsegments were presented only for the purposes of this presentation; in the Consolidated Financial Statements for

2013, the Company presents them as a single Generation Segment.

458 352 71 57 46 545 158 2011 2012 2013 Q4 2012 Q4 2013 372 261 43 41 33 404 90 2011 2012 2013 Q4 2012 Q4 2013 201 412 190 114 346 667 1 064 2011 2012 2013 Q4 2012 Q4 2013 Wind Farms Wind Farms Wind Farms

Acquisition from Iberdrola Renovables Acquisition from the DONG Group

36

EBITDA Bridge of the RES Subsegment

261

404 4 51 17 73 41 9

40 80 120 160 200 240 280 320 360 400 440 480

EBITDA Jan-Dec 2012 Change in selling price of eelctricity Change in volume

• f electricity sold

from own generation Change in selling price of green certificates Change in volume

• f green

certificates sold EBITDA of wind farms Other operating income and expenses EBITDA Jan-Dec 2013

• PLN -11 m – impairment allowance for an amount due to ESP Żydowo

from PSE S.A. on account of reimbursement of incurred costs of distribution fee

• PLN -16 m – advisory service costs relating to the purchase of wind

farms

PLN m

37

Financial results of the System Power Plants Subsegment

116

• 1
• 152
• 28
• 107
• 205
• 79

2011 2012 2013 Q4 2012 Q4 2013

• 123

EBITDA1 (PLN m)

Asset impairment allowance – Ostrołęka C

1 Data for RES, System Power Plant and CHP Subsegments were presented only for the purposes of this presentation; in

the Consolidated Financial Statements for 2013, the Company presents them as a single Generation Segment.

1 218 1 038 890 248 242 2011 2012 2013 Q4 2012 Q4 2013 53

• 163
• 203
• 11
• 71

2011 2012 2013 Q4 2012 Q4 2013 92 213 133 105 74 2011 2012 2013 Q4 2012 Q4 2013

Revenues1 (PLN m) Net profit1 (PLN m) Capex1 (PLN m)

Asset impairment allowance – Ostrołęka B

38

Financial performance of ENERGA Elektrownie Ostrołęka SA

PLN m 2012 2013 Change Revenues 1,079 933

• 14%

EBITDA 47

• 101
• 315%

EBITDA margin 4.4%

• Net result
• 12
• 119
• 892%

Net profit margin

• CAPEX

106 121 14%

*Data based on individual financial statements of the company for 2013 The 2013 results were affected by an impairment allowance in of PLN 152 m, recognized for property, plant and equipment in Ostrołęka Plant B.

39

EBITDA Bridge of the System Power Plants Subsegment

* adjustment of the stock of certificates of origin to market prices on the date of production

PLN m

2 236 1 474 1 624 2 335

500 1 000 1 500 2 000 2 500 3 000 3 500 4 000 2012 2013 Must-run elektricity sales Other elictricity sales 3 861 3 809

Own electricity production

2 866 3 321

Own electricity production

40

Key operating data of the System Power Plants Subsegment

System Power Plants: Ostrołęka

Source: Company *Average price for all biomass types used by Ostrołęka Power Plants in 2013

Fuel consumption volumes and costs 2013

Must run production at Ostrołęka B

Unit 2012 2013 Electricity generation cost per unit*

[PLN/MWh]

197.5 184.4 Variable unit cost of generation from coal

[PLN/MWh]

161.9 152.2 Average price of must run electricity sales

[PLN/MWh]

196.3 180.9 Average electricity selling price

[PLN/MWh]

206.7 183.0 Coal Biomass* Ostrołęka A (000s tons) 115 38 Ostrołęka B (000s tons) 1,290 417 Total consumption (000s tons) 1,405 454 Consumption cost per unit (PLN/ ton) 285.7 435.5 Total fuel cost (PLN m) 401 198

*includes the cost of all types of fuels without revenue from certificates

41

Financial results of the CHP Subsegment

Revenues1 (PLN m) Net profit1 (PLN m) Capex1(PLN m)

Including damages from the contractor building the BB20 biomass unit (PLN 10 m)

1 Data for RES, System Power Plant and CHP Subsegments were presented only for the purposes of this presentation; in the Consolidated Financial Statements

for 2013, the Company presents them as a single Generation Segment.

150 158 166 52 50 2011 2012 2013 Q4 2012 Q4 2013 10 4 25 1 13 2011 2012 2013 Q4 2012 Q4 2013 5

• 4

9 1 6 2011 2012 2013 Q4 2012 Q4 2013 56 135 138 50 41 2011 2012 2013 Q4 2012 Q4 2013

EBITDA1 (PLN m)

150 158 166 52 50 2011 2012 2013 Q4 2012 Q4 2013

42

EBITDA Bridge of the CHP Subsegment

4 3 7 7 6 16 25 5 10 15 20 25 30 EBITDA Jan- Dec 2012 Electricity sales Heat sales Cost of fuel consumption CO2 provision Other operating income and expenses EBITDA Jan- Dec 2013 7

• PLN +10 m – damages due from the contractor

building the BB20 biomass power unit

• PLN 7 m - lower cost of payroll and employee benefits

PLN m

43

Key operating data of the CHP Subsegment

140 146 144 43 39

2011 2012 2013 Q4 2012 Q4 2013

CHP  2 CHP power plants: Elbląg (49 MWe, 293 MWt), Kalisz (8 MWe, 128 MWt) and 3 small heat plants with a combined capacity of (28.9MWt)  ENERGA is the owner and operator of two integrated heat networks in Ostrołęka and Kalisz  Almost 100% of heat is generated from coal Gross heat production (TJ) Gross electricity Production (GWh) Coal consumption cost

2012 2013 Dynamics Volume (000s tons) 181.1 171.1

• 6%

Cost (PLN m) 60.8 53.7

• 12%

2 450 2 496 2 480 824 762

2011 2012 2013 Q4 2012 Q4 2013

44

Average cost of debt for ENERGA Group

2 4 6 2012 2013

%

4.91% 3.03%

Main reasons for changes:

 Decline in average WIBOR 3M by 1.88 p.p. in 2013  Change in financing structure  Transactions hedging the cost of debt associated with an eurobond issue of EUR 400 m expressed in PLN at a fixed level of 5.17% annually

Average cost of debt at ENERGA CG Average WIBOR 3M Structure of financing in 2013

Floating rate

61%

Fixed rate

39%

6,13% 4,95%* 0% 1% 2% 3% 4% 5% 6% 7% 2012 2013

*Average cost of debt w/o one-time commission was 4.66% Source: Bloomberg

45

Key macroeconomic data

• 6,0
• 4,0
• 2,0

0,0 2,0 4,0 6,0 8,0 10,0 2011 1Q 2011 2Q 2011 3Q 2011 4Q 2012 1Q 2012 2Q 2012 3Q 2012 4Q 2013 1Q 2013 2Q 2013 3Q 2013 4Q 2011 2012 2013

Domestic demand Balance of foreign trade (net exports) Increase of tangible current assets (increase of invetories) Gross expenditures for fixed assets Public consumption Retail consumption GDP

• 3
• 2
• 1

1 2 3 4 5 6 7 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 forecast Q1 forecast Q2 forecast Q3 forecast Q4 forecast 2009 2010 2011 2012 2013 2014

GDP Domestic demand

Rate of growth of GDP and domestic demand in Poland on a quarterly basis in 2009-2014 (%)

Quarterly GDP structure in Poland in the years 2011-2013 (pp)

46

Key market data

Average electricity and green certificate prices at TGE (PLN/MWh)

*** Source: Towarowa Giełda Energii S.A. 100,87 90,11 90,86 88,76 86,27 80,11 77,24 83,83

Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 ARA coal Index (USD/Mg)

7,69 7,11 7,62 7,11 4,52 3,74 4,62 4,70

Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 EUA – CO2 emission allowances (EUR/Mg)

3,97 3,82 2,82 0,92 0,16 0,24 0,67 0,38

Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 CER - CO2 emission allowances (EUR/Mg)

188,87 174,44 183,14 171,50 162,37 150,79 163,62 149,54

Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Electricity – base (SPOT) (PLN/MWh)

206,12 185,20 192,95 187,93 175,87 162,04 174,37 163,11

Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Electricity PEAK (SPOT) (PLN/MWh)

279,97 271,27 239,80 213,79 144,21 148,78 170,68 197,93

Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Green certificates PMOZEX_A (PLN/MWh)

* Source: ARA Index Amsterdam-Rotterdam-Antwerp ** Source: Dom Maklerski CONSUS SA ***