Enefit Green — Interim / Quarterly Report 2022

Aug 4, 2022

Enefit Green Q2 2022

Interim results presentation

Results are presented by:

Aavo Kärmas CEO

Veiko Räim CFO

Enefit Green

By 2026 we will be the largest renewable energy producer in the Baltics and a rapidly growing renewable energy company in Poland.

Regulatory developments

• The Riigikogu adopted amendments to the Natural Gas Act. From July 2023, the owners of new wind farms will have to pay local authorities and residents wind farms compensation.
• The government used the opportunity in the regulation of national reverse auction and increased the amount of renewable electricity procured from 450 GWh to 540 GWh.

• The new coalition set the goal that by 2030 Estonia should produce at least as much renewable energy as it consumes (the previous goal was 50% of consumption). Various measures are being implemented to accelerate the green transition.

• The court of first instance ruled against Latvian subsidiary SIA Technological Solutions in the latter's dispute with BVKB over the fixed electricity price. We filed an appeal.

• The parliament continued to discuss amendments to laws that should create preconditions for the construction of onshore wind farms of around 1 GW

• The parliament passed a package of energy law amendments ,,Breakthrough Package" to accelerate the implementation of renewable energy projects

• Discussions on the development of offshore wind farms continued.
• We applied for the exit of the Šilale and Mockiai wind farms from the Lithuanian FiT support scheme

The government submitted a proposal to

Parliament to remove the restriction that significantly hinders the construction of onshore wind farms, which prohibits the construction of a wind farm closer than 10 times the height of the wind turbine to residential buildings

Rules for the certification and supervision of offshore wind farms were adopted.

Consultations are ongoing on the possible introduction of additional restrictions on the planning of solar parks with a capacity of more than 1MW.

Wind conditions remained similar to Q2 2021

Average recorded wind speed in Enefit Green wind farms, m/s

Good availabilities achieved

8 Enefit Green Q2 2022 interim results presentation

STRATEGY 2026

Accelerated adoption of green energy is the path to CO2 free way of life

MISSION

We produce renewable energy and deliver green transition based on electrification.

VISION By 2026 we will be the largest renewable energy producer in the Baltics and a rapidly growing renewable energy company in Poland.

• Portfolio: 800 MW • Fastest growth in Estonia and Lithuania

• Portfolio: 600 MW • Client solutions: 100 MW • Focus on Baltics and Poland

Key strengths

• ✓ Dedicated and experienced team
• ✓ Strong capability to operate and develop renewable energy assets
• ✓ Strong Enefit brand
• ✓ Synergies with Eesti Energia
• ✓ 60,000 shareholders

4×

growth in green generation

Investments EUR 1.5 billion

Number of employees 220

We will quadrupl e production capacity to accelerate the deployment of renewable electricity and to reduc e carbon footprint in the region

Projects under construction

Near term development portfolio

Targeted investment decisions until end of 2023

NB! Development projects are in continuous change.

The presented information is management team's best assessment of the current status of the near term development portfolio as of 31 July 2022

Complete view of the development portfolio

NB! Development projects are in continuous change.

• * Various onshore wind and solar farm developments that are not expected to get final investment decision before 2024.
• ** Liivi Offshore wind farm development is owned by Eesti Energia. Eesti Energia is willing to offer Enefit Green a possibility to participate in the project and/or acquire the project based on market terms.

2Q 2022 Key highlights

ELECTRICITY HEAT PRODUCTION 270 GWh +6% 152 GWh +4% PRICE (average sales price incl subsidies) 127 €/MWh +46% 12 €/MWh +8%

Updated strategy

€39.9m Dividend distribution (€0.151 / share)

Revenue growth driven by high electricity prices in Estonia

Total revenues by segment, €m

Total revenues €47.3m +30%
Wind Implied captured Estonian average electricity price* 144 €/MWh (+66%) Higher electricity production in Estonian wind parks
CHP Implied captured average electricity price* 175 €/MWh (+80%) Pellet sales shift from June to July
Solar Solar services volume growth
*(Total electricity revenues - balancing energy purchase + renewable energy support)/production

EBITDA growth driven by strong NP Estonia prices

Group's EBITDA development by drivers, €m

*Calculated based on Estonian wind parks, Iru CHP and Paide CHP implied electricity prices in 2021 and 2022 and respective electricity quantities

**Impact of balancing energy purchases is included in NP Estonia price and Estonian electricity quantity. Therefore, it is not part of Variable expenses impact nor Remaining income impact.

EBITDA €30.7m +51% Revenue impact +€8.8m* Change in inventories +€7.8m: Higher pellet production, sales shift to Q3 Impact of variable expenses** - €4.7m: Higher biomass prices Higher electricity cost (incl. change in

• accounting principles, no EBITDA impact)
• Impact of fixed expenses - €1.4m:

Increased labor cost Increased development related costs

Wind energy segment: high prices, volume growth

80

2021 Q2 2022 Q2

*(Total operating expenses - balancing energy purchase - D&A) / operating capacity. Only operating wind assets are included: Enefit Wind OÜ and Enefit Wind UAB

EBITDA €20.5m +55.6%

• High electricity prices in Estonia
• Strong Estonian production volume due to good wind conditions
• Stable operating expenses

Cogeneration segment: stable production, improved margins

EBITDA €10.8m +44.0%

• Stable production volumes, average realised electricity price driven by NP Estonian prices (Iru & Paide)
• Fixed costs stable
• Pellet sales shift from June to July

Solar segment: higher production due to good weather conditions

2021 Q2 2022 Q2 Solar services revenues Operating parks' revenues

(1) (Total electricity revenues - balancing energy purchase + renewable energy support)/production

EBITDA, €m

+0.5 (+59.7%)

EBITDA €1.2m +59.7%

• Higher production due to good weather conditions
• Higher solar energy average sales price in Estonia
• Solar services volume growth

Q2 2022 Earnings per share €0.06

Dividends for financial year 2021

General meeting of shareholders held on 17 May 2022, approved management board's proposal to pay dividends in the amount of €39.9m (0,151 euros per share). Dividends were paid out on 8 June 2022.

Growing importance of investment cash flow

Investments €40.9m +13%

Operating cash flow

One-off negative influence from marked growth in (pellet) inventories

Investments

• Q2 2022 investments in the amount of
• €40.9m, majority into wind developments:
• Akmene €24.9m
• Šilale II €6.9m
• Tolpanvaara €6.0m
• Sopi PV €1.1m

Strong capital structure

Return on invested capital = LTM operating profit / (net debt + equity) Return on equity = LTM net profit / equity

Loan repayment schedule, €m

Financial leverage 9%

Capital structure

Low leverage and net debt / EBITDA levels

Financing

• Undrawn credit facilities €180m
• Average effective interest rate increased 1.13% -> 1.30% (primarily due to PLN rates)
• Since Q1 2022 interest rate swaps are used to hedge interest rate risk of investment loans (interest rates fixed between 1.049%-1.125%, plus margin 0.78- 0.80%)

Return on equity 16.3%

Returns

• Return on invested capital improved due to higher operating profit
• Return on equity increased due to higher net profit

Overview of power portfolio hedging

Power Purchase Agreements

2022-2026

• 3,786 GWh PPAs signed (29% of expected production)
• Average locked price 49.7 EUR/MWh

2027+

• Longest PPA contracts span to 2033
• Production fixed with PPAs after 2026 in the amount of 3,039 GWh with average price of 47.7 EUR/MWh

Q2 2022 Summary

• Updated strategy until 2026
• Final investment decision on 32MW Purtse PV
• High electricity prices
• Stable wind conditions
• Good availabilities
• 74MW Tootsi development acquisition (July)
• Change in the management board (July)

Total renewable capacity under construction

258 MW

+56% additional capacity when completed

Aavo Kärmas, CEO Veiko Räim, CFO

Q&A

Enefit Green Q2 2022 interim results presentation

24

Appendix

Condensed consolidated interim financial statements Q2 2022

Condensed consolidated interim income statement

€ thousand	Note	Q2 2022	Q2 2021	1H 2022	1H 2021
Revenue	9	41,505	29,408	99,646
Renewable energy support and other income	10	5,773	6,833	14,352
Change in inventories of finished goods and work-in-progress		4,646	(3,158)	2,579
Raw materials, consumables and services used	11	(16,365)	(9,508)	(30,499)
Payroll expenses		(2,169)	(1,477)	(4,612)
Depreciation, amortisation and impairment		(9,644)	(9,547)	(19,292)
Other operating expenses		(2,645)	(1,772)	(5,150)
OPERATING PROFIT		21,101	10,778	57,025
Finance income		1,117	50	1,525
Finance costs		(626)	(1,022)	(1,188)
Net finance costs		491	(972)	337
Profit (loss) from associates under the equity method		(76)	(58)	(72)
PROFIT BEFORE TAX		21,516	9,748	57,290
Corporate income tax expense		(4,592)	(328)	(5,441)
PROFIT FOR THE PERIOD		16,924	9,420	51,849
Basic and diluted earnings per share
Weighted average number of shares, thousand	6	264,276	4,793	264,276
Basic earnings per share, €	6	0.06	1.97	0.20
Diluted earnings per share, €	6	0.06	1.97	0.20
Basic earnings per share based on post-IPO number of shares
Post-IPO number of shares, thousand	6	264,276	264,276	264,276
Basic earnings per share, €	6	0.06	0.04	0.20

Condensed consolidated statement of other comprehensive income

€ thousand	Note	Q2 2022	Q2 2021	1H 2022
PROFIT FOR THE PERIOD		16,924	9,420	51,849
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Revaluation of hedging instruments in a cash flow hedge	5,7	5,586	(2,981)	6,524
Exchange differences on the translation of foreign operations	7	(106)	326	(244)
Other comprehensive income/(loss) for the period		5,480	(2,655)	6,280
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD		22,404	6,765	58,129

Condensed consolidated interim statement of financial position

€ thousand	Note	30 June 2022	31 Dec 2021
ASSETS
Non-current assets
Property, plant and equipment	4	647,634	612,503
Intangible assets		68,578	68,239
Right-of-use assets		4,298	2,750
Prepayments	4	20,030	20,710
Deferred tax assets		734	442
Investments in associates		427	578
Derivative financial instruments	5,7	6,703	-
Long-term receivables		40	78
Total non-current assets		748,444	705,300
Current assets
Inventories		16,267	9,529
Trade and other receivables and prepayments		23,479	22,373
Cash and cash equivalents		90,845	80,454
Derivative financial instruments	5	12	-
Total current assets		130,603	112,356
Total assets		879,047	817,656

€ thousand	Note	30 June 2022	31 Dec 2021
EQUITY
Equity and reserves attributable to equity holder of the parent
Share capital		264,276	264,276
Share premium	6	60,351	60,351
Statutory reserve capital		3,259	479
Other reserves	5,7	158,317	151,793
Foreign currency translation reserve	7	(1,209)	(965)
Retained earnings		166,836	157,673
Total equity		651,830	633,607
LIABILITIES
Non-current liabilities
Borrowings	8	132,297	93,884
Goverment grants		7,344	7,458
Non-derivative contract liability	5,7	23,207	23,207
Deferred tax liabilities		12,384	12,568
Other long-term liabilities		3,000	3,000
Provisions		12	13
Total non-current liabilities		178,244	140,130
Current liabilities
Borrowings	8	22,936	29,572
Trade and other payables		25,791	14,291
Provisions		55	56
Derivative financial instruments	5	191	-
Total current liabilities		48,973	43,919
Total liabilities		227,217	184,049
Total equity and liabilities		879,047	817,656

Condensed consolidated interim statement of cash flows

€ thousand	Note	Q2 2022	Q2 2021	1H 2022
Cash flows from operating activities
Cash generated from operations	12	22,898	17,516	68,915
Interest and loan fees paid		(495)	(852)	(997)
Interest received		3	-	6
Corporate income tax paid		(1,001)	(391)	(1,501)
Net cash generated from operating activities		21,405	16,273	66,423
Cash flows from investing activities
Purchase of property, plant and equipment and intangible assets	4	(34,739)	(30,806)	(47,048)
Proceeds from sale of property, plant and equipment		-	23	3
Proceeds from repurchased of shares and liguidation of associate		718	-	718
Net cash used in investing activities		(34,021)	(30,783)	(46,327)
Cash flows from financing activities
Change in overdraft(net)		-	33,312	-
Received bank loans	8	40,000	10,000	40,000
Repayments of bank loans	8	(5,027)	(9,676)	(9,670)
Repayments of leases	8	(47)	(48)	(129)
Dividends paid		(39,906)	(27,100)	(39,906)
Net change in an intragroup liablity		-	(55)	-
Net cash used in financing activities		(4,980)	6,433	(9,705)
Net cash flows		(17,596)	(8,077)	10,391
Cash and cash equivalents at the beginning of the period		108,441	19,217	80,454
Cash and cash equivalents at the end of the period		90,845	11,140	90,845
Net increase / (-) decrease in cash and cash equivalents		(17,596)	(8,077)	10,391

2022	1H 2021
68,915	43,897
(997)	(1, 577)
6	23
(1, 501)	(394)
66,423	41,949
(47, 048)	(38, 747)
3	23
718
(46, 327)	(38, 724)
	33,312
40,000	10,000
(9,670)	(18, 962)
(129)	(109)
(39, 906)	(27, 100)
(9,705)	(2,859)
10,391	366
80,454	10,774
90,845	11,140
10.391	366