Lubelski Wegiel Bogdanka S A : Operating results of LW Bogdanka S.A. influenced by temporary deterioration of market conditions as well as technical and geological difficulties

Bogdanka, 27 November 2020

PRESS RELEASE

OPERATING RESULTS OF LW BOGDANKA S.A. INFLUENCED BY TEMPORARY DETERIORATION OF MARKET CONDITIONS AS WELL ASTECHNICAL AND GEOLOGICAL DIFFICULTIES

LW Bogdanka S.A., the most modern and effective hard coal mine in Poland, making part of the Enea Group, one of the leaders in Poland's power market, published its consolidated financial results after three quarters of 2020. Consolidated revenue for that period amounted to PLN 1,353.5 million (decrease by 16.8%), EBITDA - PLN 317.6 million (down by 48%), operating profit - PLN 50.7 million (down by 84.1%), and net profit - PLN 34.8 million (down by 86.8%).

Financial results in Q3 2020 are a consequence of decreased sales stemming from COVID-19 pandemic as well as technical and geological issues. After the economic slowdown period in the first half of 2020, the demand for power coal has returned to normal and sales have returned to the levels recorded in previous years. The necessary limitation of progress on longwalls was followed by the issue of deforming pressure increment, which temporarily limited the operational capacity of longwall workings in September, hence limiting the wall progress. Such instances are, however, typical of mining operations and are temporary - said Artur Wasil, President of the Management Board of LW Bogdanka S.A.

After 3Qs of 2020, Bogdanka built 19.7 km of galleries, of which 6.6 km were built in Q3 2020 alone. Production of commercial coal after the first nine months of the year amounted to 5.5 million tonnes, which is 22.3 % less year-on-year (in Q3 alone, production amounted to nearly 1.8 tonnes). Coal sales after 3Qs of 2020 reached 5.7 million tonnes. At the end of September 2020 the average yield amounted to 64.5%, in comparison to 65% the year before, and in Q3 2020 alone it amounted to 60.2% (compared to 64.6% in Q3 2019).

In the period under analysis, LW Bogdanka S.A. also retained its market position reaching a high 27.4% share in the sales of coal to commercial power plants. The share in total power coal sales accounted for 20.8%. Approximately 85% of sales generated in the three quarters were performed to Enea Wytwarzanie and Enea Elektrownia Połaniec.

In three quarters of 2020, the LW Bogdanka Group's capex approached to PLN 495.9 million. The largest portion of this sum, i.e. PLN 223.5 million, was used for new excavations and modernisation of the existing ones.

The financial results of the LW Bogdanka Group for Q3 2020 and 3Qs 2020 are presented in the table below:

[PLN`000]	Q3 2019	Q3 2020	Zmiana	Q1-Q3 2019	Q1-Q3 2020	Change
Net revenue	527,776	504,522	- 4.4%	1,626,112	1,353,533	- 16.8%
EBITDA	176,927	96,540	- 45.4%	611,346	317,648	- 48.0%
EBIT	77,872	842	- 98.9%	319,679	50,742	- 84.1%
Net profit/(loss)	66,031	- 1,830	-	263,954	34,839	- 86.8%

LW BOGDANKA - HIGHLIGHTS

Bogdanka is one of the leading hard coal producers in Poland, standing out in the industry in terms of modernity and efficiency of extraction. It is the most modern and one of the largest hard coal mines.

Lubelski Węgiel Bogdanka S.A. conducts primarily mining operations with respect to extraction, agglomeration and sale of hard coal. In 2019, the production of Bogdanka's commercial coal amounted to 9.4 million tonnes.
Bogdanka supplies raw material mainly to industrial customers. Supplies are delivered based on long-term agreements with the sales made to commercial and industrial power sectors.

The Company has been listed on the Warsaw Stock Exchange since July 2009.

Since October 2015, Bogdanka has been part of the Enea Group, the second leading producer of electrical energy in the Polish power market. It manages the whole value chain in the power market: from fuel, through the production of electrical energy, its distribution, sales to customer service.