Title: Information on preliminary financial results and operating data for 2018
Date: 2019.06.03
Report no.:  Current Report No: 4/2019

Current Report No: 4/2019

Date of preparation: 6 March 2019

Short name of issuer: ENEA S.A.

Subject: Information on preliminary financial results and operating data for 2018

Legal basis: Article 17 item 1 of MAR - confidential information

Content of report:

In relation to the information obtained by the Management Board of ENEA S.A. ("Company", "Issuer") on 6 March 2019 concerning preliminary financial results and operating data of ENEA Capital Group for 2018, the Company hereby publishes the preliminary financial results and operating data, as presented hereinbelow.

Consolidated financial results of ENEA Capital Group for 2018:

- Net sales revenue: PLN 12,673 million,

- EBITDA: PLN 2,427 million,

- EBIT: PLN 1,116 million,

- Net profit: PLN 783 million,

- Net profit attributable to shareholders of the Parent: PLN 751 million.

EBITDA in individual areas of operations:

- Mining: PLN 470 million,

- Generation: PLN 869 million,

- Distribution: PLN 1,111 million,

- Trading: PLN 3 million.

Selected operating data:

- Net coal production: 9 million tonnes,

- Net total generation of electricity: 26.5 TWh,

- Sales of distribution services to end users: 19.9 TWh,

- Sales of electricity and gaseous fuel to retail customers: 21.5 TWh.

The EBITDA generated by ENEA Capital Group in 2018 was affected, i.a., by the following events:

- Mining Area - the lower result of the area y/y was influenced by geological and hydrological events in Q1 and Q4 2018, as a result of which the production and sales of commercial coal reached lower values than in the preceding year, with a simultaneous increase in production costs (i.a., higher costs of labour, external services, consumption of materials); the scope of preparatory works aimed at increasing production in subsequent years also rose y/y,

- Generation Area - the result of the area was affected mainly by:

a) in conventional generation: the increased generation capacity as compared to 2017, coupled with the simultaneous occurrence of limitations in the availability of coal-fired units due to extension of planned overhauls and one-off events, upgrade works related to the adaptation of units to the BAT conclusions and warranty inspections; the result of the segment remains under pressure from the market conditions concerning electricity trading, rising variable production costs, primarily with respect to CO2 and a smaller number of free carbon dioxide emission allowances;

b) in RES generation: the higher result y/y stems from noticeably higher prices of electricity and certificates of origin of electricity in H2 2018, coupled with higher electricity generation from these sources,

- Distribution Area - the stable result generated in this area is traditionally supported by an increase in the sales volume of distribution services; in the reported period, also an increase in the result on other operating activities was recorded;

- Trading Area - the result on retail trading, despite the increased volume and price of electricity sold to end users, did not offset the rising costs related to environmental obligations (mainly, the green obligation) and purchase of electricity due to higher market prices; the wholesale trade remains under pressure of rising prices of CO2 emission allowances.

At the same time, in relation to Current Report No. 2/2019 of 18 January 2019 concerning the impact analysis of preliminary financial results of the Mining area on the financial statements of ENEA Capital Group, the Company hereby informs that these results will have a negative impact on the consolidated results for 2018 as compared to the results generated in the corresponding period of the preceding year. The Mining area recorded an EBITDA decrease of PLN 239 million y/y.

Non-consolidated financial results of ENEA S.A. for 2018:

- Net sales revenue: PLN 4,702 million,

- EBITDA: PLN (-)63 million,

- EBIT: PLN (-)66 million,

- Net profit: PLN 791 million.

The non-consolidated net financial result generated by ENEA S.A. in 2018 was mostly affected by two factors:

- the negative result on operating activities related to the sale of electricity to end users, where the increase in the volume and prices of electricity sold did not offset significant increases in costs related to environmental obligations and purchase prices of electricity on the wholesale market,

- the positive result on financial activities being the effect of the stable activity of subsidiaries belonging to ENEA Capital Group.

At the same time, the Issuer hereby informs that, as a result of IFRS 15 implementation, the effects of contracts, for which companies belonging to ENEA Capital Group serve as agents, are recognised in revenues in net values, which significantly reduces the relevant income and expense items as compared to the corresponding period of the previous year, but does not affect the operating results of the individual companies.

Moreover, the Company notes that the presented preliminary results of ENEA Capital Group and ENEA S.A. for 2018 do not take into account the possible impact of the Act of 28 December 2018 amending the Act on Excise Duty and certain other acts, as subsequently amended. The Company is currently conducting relevant analysis in this matter.

The final results will be published in the consolidated financial statements of ENEA Capital Group and non-consolidated financial statements of ENEA S.A. for 2018, which are scheduled to be released on 21 March 2019.