PGE Polska Grupa Energetyczna S.A.

M&A Activity • Apr 3, 2023

Closing of the transaction of acquisition of 100% shares in PKPE Holding

With reference to the current report no. 61/2022 of December 28, 2022and current report no. 12/2023 of March 31, 2023, the Management Boardof PGE Polska Grupa Energetyczna S.A. ("PGE") discloses that afterfulfilling the last of the conditions precedent on March 31, 2023, theclosing of the transaction of direct acquisition by PGE of 100% sharesin PKPE Holding sp. z o.o. (the "Company") and as a consequence indirectacquisition of 100% shares in PKP Energetyka S.A. and shares in othersubsidiaries of the Company took place on April 3, 2023.

PKPE Holding Sp. z o.o. is a holding company controlling a number ofentities the activities of which are concentrated around PKP EnergetykaS.A. (the "PKPE Group"). The PKPE Group is distributor and seller ofelectricity to the traction grid, and additionally provides tractiongrid maintenance.

The price to be paid at the closing for 100% shares in the Company (the"Shares") was determined to be PLN 1 913.5 million on the basis of theenterprise value as at March 31, 2022, and was settled using alocked-box mechanism assumed in the preliminary Shares purchaseagreement of December 28, 2022 and then it was subject to adjustments inaccordance with the locked-box mechanism, in particular price wasreduced by the amount of PLN 40.2 million constituting the outflow offunds (leakage) from the PKPE Group to the seller's group.

The final price paid by PGE to the seller on April 3, 2023 amounted toPLN 1 873.3 million.

Consolidated recurring (adjusted for non-recurring items) EBITDA of PKPEGroup for 2022 amounted to PLN 774 million, including PLN 536 millionfor Distribution segment. Revenues for 2022 amounted to PLN 4 341million and capital expenditures amounted to PLN 747 million, includingPLN 681 million in the Distribution segment. Net financial debt of PKPEGroup amounted to PLN 4 453 million at December 31, 2022.

Volume of distributed electricity of PKPE Group in 2022 amounted to 4.32TWh and the volume of electricity sold in 2022 amounted to 2.99 TWh.

The acquisition of PKPE Holding Sp. z o.o. is in line with PGE Group'sstrategy. As a result of the transaction, PGE Group gained access to thedistribution grid throughout the whole country which Regulatory AssetBase for 2023 amounts to PLN 3 421 million.