Energa : Current Report No. 2/2018

Date of Preparation: 17.01.2018

Subject: Information about reversal of the impairment losses on assets

Legal Basis: Article 17, Section 1 of the Market Abuse Regulation - confidential information

ENERGA SA's Management Board hereby reports that in connection with the changes in the regulatory environment, in particular the signing, by the President of the Republic of Poland, of the Capacity Market Act which guarantees support for generation entities and the consequent update of product prices forecasts the Company has identified indications which may result in reversal of the impairment losses on certain ENERGA Group assets.

As a result of the asset impairment tests as at Q4 2017 it has been identified that the recoverable amount of wind and conventional assets has increased. On 17 January 2018 a decision was made to recognize reversal of the impairment losses s in the Generation Segment for the total amount of PLN 138 m, of which PLN 87 m is for wind assets, and PLN 51 m for the Ostrołęka B Power Plant. The total impact exerted by the aforementioned reversal of the impairment losses on the ENERGA Group's consolidated net profit for 2017 was PLN 114.9 m. The above operation is of a non-cash nature. It will be charged to the ENERGA Group's operating result, without impacting the EBITDA result.

After reversal of the impairment losses, the book value of the wind farms in the ENERGA Group's consolidated balance sheet is PLN 597.3 m, including PLN 8.1 m for future wind power plants, whereas the book value of the Ostrołęka B Power Plant amounts to PLN 635.8 m.

The presented items are estimates, are subject to audit and may change after the auditor verifies the tests and issues an opinion in this matter. The final result of the tests and the reversal amount will be presented in the Energa Group's consolidated financial statements for 2017 to be published on 15 March 2018.