Letter of the CEO of PGE Polska Grupa Energetyczna S.A.

Ladies and Gentlemen,

The first year of the term of office of the current Management Board of PGE Polska Grupa Energetyczna is behind us. From the very beginning we have been pursuing the objective of transforming the PGE Capital Group into a low- and zero-carbon power utility. This is why we started intensive work on a new strategy.

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We were aware that it had to address the dynamic changes taking place in the market, regulatory and social environment. After 8 months the document was ready. Marked with the tag #PGE2050, the new strategy provides for investments in renewable energy sources, modern distribution networks and the separation of coal assets.

One of the key tasks of the Management Board was to restore the confidence of investors and lending institutions with a view to ensuring further financing for PGE’s operations. The new vision for the development of the PGE Group met with a positive response from the market. The stock price has more than doubled since annual lows. Today, at the beginning of 2021, it is over 20% higher than the levels before the outbreak of the pandemic at the beginning of the term of the current Management Board.

Thanks to tight cost discipline in the entire PGE Group, we reduced debt by over PLN 2 billion. We focused on investments with the highest rate of return. We accurately managed our resources.

The direction established by the PGE Management Board was assessed as credible by rating agencies, which maintained the highest credit ratings for PGE among fuel and energy groups operating on the Polish market. In such difficult market conditions, this was an unquestionable success. The agencies also maintained a stable rating outlook, which allows us to look forward with optimism to the possibility of financing PGE’s PLN 75 billion investment programme at a competitive cost. We have already started to implement the investment programme. In early 2021, PGE entered into an agreement with Ørsted for the construction of wind farms in the Baltic Sea with a total capacity of up to 2.5 GW. In December 2020, we launched the first modular electricity storage facility in Poland. In 2020, we increased our portfolio of onshore wind farms by 140 MW. We have also developed an investment plan to switch from coal to gas fuel in cogeneration plants with a capacity of close to 1 000 MWe. We are beginning the transformation of our operational regions. We have prepared a concept of transformation for the Bełchatów region, as well as a number of transformation projects for the Turów region. In both regions, the processes of transformation and energy transition will be based on investments in renewable energy sources. An important element will be a comprehensive employee retraining programme oriented towards jobs connected with low- and zero-carbon power generation.

By making concrete decisions and taking consistent actions, the PGE Group is prepared for the energy transition. In the energy industry, decisions are made with a long-term perspective. What is important is perseverance in their implementation. Despite difficult external conditions, the successes achieved in 2020 strengthen the conviction of the PGE Management Board that the decisions concerning the Group’s investments and management were correct. We will continue in this direction, counting on further good cooperation with the investor community and the management boards of the PGE Group companies.

Wojciech Dąbrowski
President of the Management Board
PGE Polska Grupa Energetyczna SA

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