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Adoption of the PGE Group Strategy for 2012-2035

  • No. of the report: 4/2012
  • Report date: 09.02.2012
  • Report legal ground: Art. 56 section 1 p. 1 of Act on Public Offering – confidential information

Contents of the report

The Management Board of PGE Polska Grupa Energetyczna S.A. (“PGE”) informs that on February 9, 2012 the Supervisory Board of PGE approved “PGE Group Strategy 2012-2035” presented by the Management Board of PGE. According to the adopted document, PGE will be consequently creating economic value for shareholders within the modern and fuel-diversified generation portfolio, focused on customers, increasing efficiency and implementing innovations, having a strong financial position and also utilizing its potential and market opportunities, both domestic and international.

PGE intends to create the economic value of the PGE Group by implementation of strategic objectives focused in four areas:

1. Customer: increased competitiveness of retail sales

2. Investments:

a) Growth in existing businesses

b) Growth on new markets

c) Innovations

3. Operational Efficiency

a) Sales margin maximization

b) Improved utilization of existing assets

c) Costs rationalization

d) IT systems improvement

e) Improved efficiency of PGE Group as a vertically integrated company

4. Human Capital

a) Ensuring necessary competencies

b) Building of corporate structure basing on engagement and goal-orientation

As a result of Strategy implementation, PGE assumes reaching the following financial and operational objectives by the PGE Group in 2020 and 2035 respectively:

- consolidated EBITDA (nominal): ca. PLN 12 billion in 2020 and ca. PLN 34 billion in 2035

- adjusted consolidated EBITDA margin (adjusted for power exchange trading effect on revenues): ca. 29% in 2020 and more than 50% in 2035

- net debt/consolidated EBITDA ratio: ca. 1.6x in 2020 and ca. 2.3x in 2035

- capital expenditures: ca. PLN 330 billion in period 2012-2035, including average yearly capex over PLN 9 billion in 2012-2020 and average yearly capex over PLN 16 billion in 2021-2035

- installed capacity (currently 13.1 GW): ca. 15.8 GW in 2020 and ca. 21.3 GW in 2035, including ca. 4.5 GW in nuclear power plants

- fuel mix:

Year 2020: ca. 55% - lignite, ca. 18% - hard coal, ca. 15% - gas, ca. 11% - renewables

Year 2035: ca. 36% - nuclear, ca. 33% - lignite, ca. 14% - renewables, ca. 11% - gas, ca. 5% - hard coal

- CO2 intensity: ca. 0.86 t/MWh in 2020 and ca. 0.27 t/MWh in 2035 (CO2 intensity in 2010: 1.06 t/MWh)

- share in domestic electricity generation market: ca. 44% in 2020 and ca. 46% in 2035 (42% in 2010)

Detailed information concerning the Strategy is presented in the attached document.

Publication of this confidential information was delayed pursuant to Art. 57 sec. 1 of Act on public offering, conditions governing the introduction of financial instruments to organised trading, and public companies (Dziennik Ustaw of 2009, no 185 item 1439).

Legal ground: Art. 56 section 1 point 1 of the Act on public offering, conditions governing the introduction of financial instruments to organised trading, and public companies (Dziennik Ustaw of 2009, no 185 item 1439).
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