Enefit Green — Interim / Quarterly Report 2022

Feb 28, 2023

Enefit Green

Unaudited interim report Q4 and 12 months 2022

2

Results are presented by:

Aavo Kärmas Chief Executive Officer

Veiko Räim Chief Financial Officer

Enefit Green

By 2026 we aim to be the largest renewable energy producer in the Baltics and a fast growing one in Poland

Over 20 years renewableenergy experience	Largest wind energy producer in Baltic countries	178 employees in Estonia, Latvia, Lithuaniaand Poland
Production 2022 1.12 TWh (El) 565 GWh (Heat)	2022 operatingrevenue €257.0m EBITDA €154.8m Net profit€110.2m	60 000 ~ investors

Our journey to 4x growth

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.

• Portfolio: 800 MW • Fastest growth in Estonia and Lithuania • Portfolio: 600 MW

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

High electricity prices* signal the need for more renewable generation capacity in our region

	Annual** Production (TWh)	Annual** Consumption (TWh)	Annual** Net export (TWh)
Norway	144.1	131.6	+12.5
Sweden	165.6	132.1	+33.5
Finland	67.0	79.2	-12.2
Estonia	7.3	8.2	-0.9
Latvia	4.5	6.8	-2.3
Lithuania	4.4	12.2	-7.8
Poland	162.7	172.4	-9.7
Denmark	32.9	34.3	-1.4

* 2022 averages and yoy growth rates shown on the graph ** 2022 data

Sources: ENTSO-E, Nord Pool

Regulatory developments

Electricity market model

Preparations by the European Commission for a reform, which seems to aim for decreasing role of day -ahead market and increasing role of PPAs

+

– The uncertain regulation of renewable energy subsidies in Latvia caused us to abandon the support scheme at Valka cogeneration plant

– Uncertainty regarding fixed price electricity contracts for private individuals – reduces the potential of the market model based on PPAs to support the development of new capacities

A revenue cap of 180 €/MWh for low -variable cost electricity producers (including those using wind, solar, waste and biomass as an energy source). A measure of a temporary nature for 7 months from 1 December 2022 to 30 June 2023, but with a possible extension

–

+

–

+

Implementation of the 180 €/MWh revenue cap in Estonia and Latvia, which enables to direct excess revenue to investments

Acceleration of renewable energy investments

+ Increasing national targets for renewable electricity production for 2030: Estonia 40% -> 100% Lithuania 45% -> 70%

+ REPowerEU: A plan of the European Commission to speed up permitting procedures for renewable energy

National reverse auctions for renewable electricity in 2023 2025 in the total amount of 1650 GWh p.a., focusing on wind energy

A joint venture between the national energy and forestry companies getting an exclusive right to develop renewable energy capacities on state land

Wind energy

+ Preparations for the announcement of the auction for 700MW offshore wind farm in the second half of 2023

The introduction of a tolerability fee for wind farms in all Baltic States, which has increased the interest of local governments and communities towards wind farm development +

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–

–

–

Solar energy

+ Preparation of regulation of direct electricity lines between producers and consumers

Limiting development of solar farms with over 100kW capacity to avoid exceeding the 2GW total capacity target. Restricts the development of hybrid farms.

Developments on fuel markets

+ Natural gas price volatility has increased public support for renewables, including biomass

Recognition of natural gas and nuclear energy as sustainable under the EU taxonomy

Delays and ambiguities in sustainability regulation for biomass

production capacity growth by 2026 4x

Operating capacity Projects under construction

										Enefit Green unaudited interim report Q4 and 12m2022	8
	Projects under construction					546 MW				50 MW
Operating capacity Under construction					21MW	6MW	32MW	3MW	80MW	255MW	1,053MW
	43MW	75MW	9MW	72MW							596MW
457MW								715MW			457MW
Operating capacity 4Q 2022	Šilale II	Akmene	Zambrow PV	Tolpanvaara	Purtse	Debnik PV	Purtse PV	Estonia PV	Kelme I	Sopi-Tootsi	Operating capacity + under construction
Country
Final Investment Decision	2Q 21	3Q 21	3Q 21	4Q 21	1Q 22	1Q 22	2Q 22	4Q 22	4Q 22	4Q 22
Expected completion	2Q 23	2Q 23	1Q 23	1Q 24	2Q 23	3Q 23	2Q 23	4Q 23	1Q 25	2Q 25

								Enefit Green unaudited interim report Q4 and 12m2022
Near term development portfolio		Targeted investment decisions until the end of 2023		240 MW				240 MW
operating under construction near term dev portfolio			up to	up to ~150MW	up to ~6MW	up to ~11MW	up to ~35MW	up to ~92MW	up to ~1,533 MW
	up to	up to ~21MW	~90MW						up to ~480MW
1,053MW	~75MW
596MW									596MW
457MW									457MW
Operating + under construction capacity (28 Feb 2023)	Sopi PV	Šilale PV	Kelme II	Kelme III	Carnikava Austrumi PV	Carnikava Dzerves PV	Seinapalu PV	Vändra PV	Operating + under construction + near term pipeline capacity
Country									(28 Feb 2023)
Final Investment Decision	Q2 2023	Q2 2023	Q2 2023	Q2 2023	Q2 2023	Q2 2023	Q4 2023	Q4 2023
Expected completion	2024	2024	2025	2025	2024	2024	2024	2025

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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 28 Feb 2023

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 (Gulf of Riga) Offshore wind farm development is owned by Eesti Energia as of the reporting date. Eesti Energia has agreed to offer Enefit Green a possibility to participate in the project and/or acquire the project based on market terms.

Weakest wind conditions in last three years

Average wind speed in Enefit Green's wind parks, m/s

Challenges with availabilities in 2H 2022

Q4 2022 key highlights

+80 MW Kelme

(final investment decision)

325 + 100 m€ debt financing

(new loans SEB & NIB + refinancing SEB & Swedbank )

*(Electricity sales revenue + renewable energy support and efficient cogeneration support – electricity purchases on the Nord Pool day-ahead and intraday market – balancing energy purchases) / production

2022 key highlights

+4.9 TWh PPAs new contracts signed during 2022

6 final investment decisions

value of 2022 final investment decisions

Revenue growth driven by strong NP prices

Total revenues by segment, €m

Total revenues €257.0m +40%

Wind

• Implied captured electricity price* in Estonia 175 €/MWh (+41%) and in Lithuania 87 €/MWh (+9%)
• Lower electricity production in Estonian and Lithuanian wind frams

CHP

• Implied captured electricity price* 213 €/MWh (+84%)
• Higher pellet revenues
• Lower heat and electricity procuction

Solar

Growing revenues in solar services "Turnkey" business

*Implied captured electricity price = (electricity sales revenue + renewable energy support and efficient cogeneration support – electricity purchases on the Nord Pool day-ahead and intraday market – balancing energy purchases) / production

EBITDA growth driven by strong NP prices

Group's EBITDA development by drivers, €m

*Calculated based implied electricity prices in 2021 and 2022 and respective electricity quantities. Also included PPA revenues. **Purchase of balance power is excluded form vabiable costs, because it is already included in electricity price and electricity production columns.

Wind energy segment: high prices, lower wind speeds

*(Electricity sales revenue + renewable energy support and efficient cogeneration support – electricity purchases on the Nord Pool day-ahead and intraday market – balancing energy purchases) / production

+40.3 (+37.1%) +19.6 (+21.8%) Total revenues and EBITDA, €m

+0,4 (+1,1%) Operating expenses per MW for last 4 quarters, €k/MW*

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

EBITDA €109.4m +22%

• High NP electricity prices in Estonia and bigger NP price impact to Lithuanian parks
• Stable wind farm operating expenses
• Lower production volume due to weak wind conditions

Cogeneration segment: higher income, slightly lower production

Implied captured electricity price,

34.7

14.2

30,2

5.3

2.6

94.3

16.4

15.4

7.2

5.5

2.5

69.5

7.2 22,5

Total revenues, €m +24.8 (+35.7%)

2021 2022

EBITDA €49.6m +41%

• Implied captured electricity price driven by NP prices
• Higher pellet revenue
• Heat energy revenue stable, despite lower production
• Variable costs increased from higher biomass prices
• Iru stoppage, which decreased electricity and heat production

Solar segment growth on weather driven production increase

*(Electricity sales revenue + renewable energy support and efficient cogeneration support – electricity purchases on the Nord Pool day-ahead and intraday market – balancing energy purchases) / production

+1.9 (+118.3%) EBITDA, €m

3.6

Total revenues, €m

+8.7 (+187.6%)

EBITDA €3.6m (+118%)

• Production higher due to good weather conditions
• Higher solar energy implied captured electricity price in Estonia
• Exit from Solar services "turn-key" solution business

2022 Earnings Per share €0.417 Management's dividend proposal: €0.208 per share

Dividend proposal

In coordination with the Supervisory Board, the Management Board proposes to distribute to shareholders EUR 55.0 million in dividends (0.208 euros per share) from earnings of previous periods in 2022, which is equivalent to 49.9% of group´s unaudited net profit in 2022.

Strong operating cash flows

Operations Strong operating cash flow supports growing investments Investments 2022 investements in the amount of €194.6m, majority into wind developments: Akmene €62.5m Šilale II €30.7m Acquisition of Tootsi windpark €26.9m Tolpanvaara €18.3m Purtse windpark €14.6m Investments €194.6m +154%

Strong capital structure

Loan repayment schedule, €m

Financial leverage 17%

Capital structure

Increasing but still low leverage and net debt / EBITDA levels

Financing

• Balance of outstanding loans €275m
• Average interest rate 2.60%, including interest rate swaps (2021: 1.44%). Swaps cover 61% of loans.
• Unutilised revolving credit facilities €50m
• Refinanced €100m of loans (2023 maturity) in December
• Signed €325m of new loans with SEB & NIB in January

Return on equity 15.3%

Returns

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

Power sales portfolio: PPAs support new development

Expected production from current and newly constructed assets and coverage by PPAs and renewable energy support measures, GWh Power Purchase Agreements

2023-2026

• 5,317 GWh PPAs signed (58% of expected production)
• Average locked price 69.4 €/MWh

2027+

• Longest PPA contracts span to 2033
• Of the production expected after 2026 5,209 GWh is fixed with PPAs with an average price of 75.4 €/MWh

New contracts in 2022

During 2022, we signed new PPAs with terms of up to 10 years in the volume of 4,949 GWh at an average price of 108,5 €/MWh.

Sustainable Enefit Green

• At Enefit Green we are committed to operating sustainably and reducing our environmental footprint
• Our sustainability principles are in alignment with UN Sustainable Development Goals
• We will gradually integrate selected environmental, social and governance criteria into our business goals

Building a greener future in balance with the environment

• We are focusing on wind and solar energy
• More sustainable cogeneration of heat and power
• Sustainable pellet production
• Overall energy efficiency

2022 developments

• Publishing Enefit Green's carbon footprint

• An employee-centric culture
• Attracting future talent
• Cooperation with local communities and partners

2022 developments

• Employee engagement index: 86 -> 91
• Management quality index: 84 -> 95
• Zero workplace accidents

Building a better future through trust and transparency

• Rule of law and fight against corruption
• Supervisory board and audit committee independence
• Protection of labour and human rights
• Sustainable supply chain

2022 developments

• Raising the topic of supply chain sustainability
• Code of Ethics for Partners

2022 summary

• Clear pipeline to deliver on strategy to quadruple operating capacity by 2026
• 6 new FIDs for 394MW taken (~€500m)
• €100m of 2023 loans refinanced and €325m of new debt raised (Jan '23)
• 4.9TWh PPAs signed in 2022
• €0.208 per share dividend proposed for 2022
• Sustainability principles set, working on details and goals

Total renewable capacity currently under construction

596 MW

+130% additional capacity when completed

Aavo Kärmas, CEO Veiko Räim, CFO

Q&A

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Appendices

Condensed consolidated interim financial statements 2022

Condensed consolidated interim income statement

€ thousand	Q4 2022	Q4 2021	2022	2021
Revenue	76 381	59 346	233 280	153 002
Renewable energy support and other income	6 372	9 562	23 735	30 705
Change in inventories of finished goods and work in progress	-1 304	-1 468	3 303	-3 708
Raw materials, consumables and services used	-30 486	-13 854	-85 954	-44 038
Payroll expenses	-2 470	-1 781	-9 111	-6 713
Depreciation, amortisation and impairment	-8 847	-9 553	-37 777	-38 146
Other operating expenses	-2 690	-2 236	-10 411	-7 790
OPERATING INCOME	36 956	40 016	117 065	83 312
Finance income	240	503	337	721
Finance costs	-1 688	-669	-2 342	-2 833
Neto finance costs	-1 448	-166	-2 005	-2 112
Profit from associates under the equity method	27	36	714	46
PROFIT BEFORE TAX	35 535	39 886	115 774	81 246
Income tax expense	-126	-516	-5 567	-1 585
PROFIT FOR THE PERIOD	35 409	39 370	110 207	79 661
Basic and diluted earnings per share
Weighted average number of shares, thousand	264 276	256 405	264 276	86 707
Basic earnings per share, €	0.13	0.15	0.42	0.92
Diluted earnings per share, €	0.13	0.15	0.42	0.92
Basic earnings per share based on post-IPO number of shares
Post-IPO number of shares, thousand	264 276	264 276	264 276	264 276
Basic earnings per share, €	0.13	0.15	0.42	0.30

Condensed consolidated interim statement of financial position

€ thousand	31 Dec 2022	31 Dec 2021
ASSETS
Non-current assets
Property, plant and equipment	776 870	612 503
Intangible assets	60 382	68 239
Right-of-use assets	4 239	2 750
Prepayments for property, plant and equipment	19 412	20 710
Deferred tax assets	1 321	442
Investments in associates	506	578
Derivative financial instruments	11 277	0
Long-term receivables	40	78
Total non-current assets	874 047	705 300
Current assets
Inventories	14 227	9 529
Trade and other receivables and prepayments	41 091	22 373
Cash and cash equivalents	131 456	80 454
Derivative financial instruments	3 349	0
Total current assets	190 123	112 356
Total assets	1 064 170	817 656

€ thousand	31 Dec 2022	31 Dec 2021
EQUITY
Equity and reserves attributable to owners of the parent
Share capital	264 276	264 276
Share premium	60 351	60 351
Statutory capital reserve	3 259	479
Other reserves	166 419	151 793
Foreign currency translation reserve	-762	-965
Retained earnings	225 190	157 673
Total equity	718 733	633 607
LIABILITIES
Non-current liabilities
Borrowings	255 755	93 884
Government grants	7 115	7 458
Non-derivative contract liability	18 086	23 207
Deferred tax liabilities	12 326	12 568
Other non-current liabilities	3 000	3 000
Provisions	9	13
Total non-current liabilities	296 291	140 130
Current liabilities
Borrowings	23 808	29 572
Trade and other payables	20 215	14 291
Provisions	2	56
Non-derivative contract liability	5 121	0
Total current liabilities	49 146	43 919
Total liabilities	345 437	184 049
Total equity and liabilities	1 064 170	817 656

Condensed consolidated interim statement of cash flows

€ thousand	Q4 2022	Q4 2021	2022	2021
Cash flows from operating activities
Cash generated from operations	30 481	48 634	136 223	121 532
Interest and loan fees paid	-1 360	-1 016	-3 202	-3 377
Interest received	239	3	251	25
Corporate income tax paid	-829	-270	-7 046	-970
Net cash generated from operating activities	28 531	47 351	126 226	117 210
Cash flows from investing activities
Purchase of property, plant and equipment and intangible assets	-60 487	-23 119	-190 436	-74 844
Proceeds from sale of property, plant and equipment	0	74	3	96
Dividends received from associates	0	0	62	0
Proceeds from sale of shares in an associate	0	0	724	68
Net cash used in investing activities	-60 487	-23 045	-189 647	-74 680
Cash flows from financing activities
Change in overdraft(net)	0	0	0	33 312
Bank loans received	100 000	0	270 000	10 000
Repayments of bank loans	-100 131	-52 529	-115 277	-83 634
Repayments of lease liabilities	-168	-291	-431	-262
Dividends paid	0	0	-39 906	-27 100
Proceeds from issue of shares	0	100 000	0	100 000
Share issue costs paid	0	-5 166	0	-5 166
Other adjustments	0	0	37	0
Net cash used in financing activities	-299	42 014	114 423	27 150
Net cash flow	-32 255	66 320	51 002	69 680
Cash and cash equivalents at the beginning of the period	163 711	14 134	80 454	10 774
Cash and cash equivalents at the end of the period	131 456	80 454	131 456	80 454
Net increase (decrease) in cash and cash equivalents	-32 255	66 320	51 002	69 680