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Enefit Green interim report for Q2 2023

Teade

The Enefit Green group's operating income for Q2 2023 decreased by 13% while
operating expenses for the period grew by 32% compared with Q2 2022. As a
result, EBITDA decreased by 37% to EUR19.3m. Net profit for the period fell by
EUR15.8m to EUR1.1m. The key factors which influenced the group's financial
performance are described below.

Aavo Kärmas, Chairman of the management Board of Enefit Green comments:

"Last year's rally in energy commodity prices has reversed with prices
normalising, average electricity prices in our core markets declined by almost
two times. Enefit Green's implied captured electricity price in the second
quarter was EUR90/MWh (-29%).

This was mainly due to lower natural gas prices, warmer than normal weather, the
start of the regular production at the Olkiluoto-3 nuclear reactor and strong
hydropower supply in the region.

Considering factors driving power generation and prices, Enefit Green's Q2
financial results were lower than expected. Mainly the decline in implied
captured electricity price, but also lower production volumes influenced by weak
wind conditions and higher fixed costs all left their marks on the results.
Although there was a 56GWh contribution from new wind and solar farms under
construction, our Q2 electricity production still decreased by 2% compared to
last year. The increase in fixed costs was driven by development activities and
related overheads and management expenses. The planned increase in fixed costs
is intended to support the implementation of our long-term growth plan. Higher
income tax expense related to the dividend payout put an additional dent on the
Q2 bottom line.

The electricity price outlook for autumn and winter will depend to a large
extent on how Europe manages its natural gas inventory and on the carbon price.
There is still a shortage of renewable power plants at the system level and the
Baltic region is heavily dependent on imported electricity. Forecasts indicate
that average electricity prices should remain higher in the second half of the
year than in the second quarter.

Enefit Green has a very clear growth plan up to 2026. In the first half of this
year, we invested nearly EUR166m in increasing our production capacity. This is
almost three times more than in the same period last year. When making new
investment decisions, we are guided by the market situation and the investment
criteria we have set to ensure the sufficient return on capital. In the second
half of the year, it is crucial to ensure high availability of our operating
assets in order to reach the production targets in key fall and winter months
ahead."



Webinar to present the results of Q2 2023

Today,  August 3, 2023 at 13.00 EEST Enefit Green will host a webinar in English
to  present and discuss its Q1  2023 results. To participate, please follow this
link (https://worksup.com/app/#/event/EGR13/agenda/plan).



Significant events

  * Final investment decision to build 74MW Sopi solar farm
  * 62MW operating capacity added (completion of Purtse and Zambrow)
  * The incident in Akmene wind farm in May and following activities to restart
    the wind farm and to complete the development
  * Submission of the Environmental Impact Assessment Report on North-West
    Estonia offshore wind farm to the Ministry of Climate



Key figures

                                               Q2 2023 Q2 2022 Change Change %

 PRODUCTION AND SALES VOLUMES

 Electricity production, GWh                       265     270    (6)     (2)%

 incl. new wind farms                               56       -     56        -

 Electricity sales                                 357     284     73      26%

 Heat energy production, GWh                       141     152   (11)     (7)%

 Pellet production, th t                            37      36      2       5%

 Pellet sales, th t                                 12       7      4      54%



 ELECTRICITY PRICES, EUR/MWh

 Core markets average*                            78.7   151.3   (73)    (48)%

 Implied captured price**                         89.9   126.8   (37)    (29)%



 OPERATING INCOME, mEUR                             41.2    47.3  (6.1)    (13)%

 Sales revenue, mEUR                                36.6    41.5  (4.9)    (12)%

 Renewable energy support and other income, mEUR     4.6     5.8  (1.2)    (20)%

 EBITDA, mEUR                                       19.3    30.7 (11.5)    (37)%

 NET PROFIT, mEUR                                    1.1    16.9 (15.8)    (93)%

 EPS, EUR                                          0.004    0.06 (0.06)    (93)%



 FINANCIAL LEVERAGE

 Net debt/EBITDA (LTM)                             2.2     0.4

* Production weighted average market price on group's core markets
** (electricity sales revenue + renewable energy support and efficient
cogeneration support + revenues from sale of guarantees of origin - day-ahead
and intraday purchases on Nord Pool - balancing energy purchases) / production



Sales revenues and other operating income

Total  operating income decreased by EUR6.1m year on year, the figure comprising a
decrease  in revenue  of EUR4.9m  and a  decrease in  renewable energy support and
other operating income of EUR1.2m. Out of the EUR4.9m decrease in revenue, EUR4.4m was
attributable to electricity sales. Results weakened because the market prices of
electricity were lower than a year earlier. The average electricity price in the
group's  core  markets  in  Q2  2023 was  78.7 EUR/MWh (Q2 2022: 151.3 EUR/MWh). The
group's average implied captured electricity price for the period was 89.9 EUR/MWh
(Q2  2022: 126.8 EUR/MWh). The implied captured electricity price differs from the
average  market price  in the  core markets,  because its calculation takes into
account long-term fixed-price power purchase agreements (PPAs), renewable energy
support, purchases of balancing energy, electricity purchases from the Nord Pool
day-ahead  and intraday markets, and the fact that wind farms do not produce the
same amount of electricity every hour.

The group's average price of electricity sold to the market in Q2 2023 was 63.7
EUR/MWh  compared with 127.6 EUR/MWh a  year earlier. In Q2  2023, the group sold to
the market 139 GWh of electricity compared with 182 GWh in Q2 2022.

In Q2 2023, 218 GWh of the group's portfolio was covered with PPAs at an average
price  of 83.5 EUR/MWh. A year  earlier, 102 GWh of electricity  was sold under an
income  model based on PPAs and the Feed-in  Tariff (FiT) at an average price of
79.1 EUR/MWh.  The  share  and  prices  of  production covered with PPAs in future
periods are disclosed in the risk management chapter.

Another  factor which affected  revenue was lower  electricity production. In Q2
2023, the  group produced  265 GWh of  electricity, which  is 2% less than in Q2
2022 (270 GWh). The decline was due to weaker wind conditions.

Revenue from solar services in Q2 2023 was EUR2.2m smaller than in Q2 2022 because
we exited the turnkey solar solutions business in mid-2022.

Pellet  sales revenue grew  by EUR1.7m compared  with a year  earlier. The average
sales  price of  pellets increased  by 53%, rising  from 165.8 EUR/t in Q2 2022 to
253.6 EUR/t in Q2 2023. Pellet sales volume increased from 7 thousand tonnes in Q2
2022 to 12 thousand tonnes in Q2 2023.

The price of heat energy grew by 16% due to an increase in the price of biomass,
but  heat production  decreased by  7%. Heat sales  revenue remained  at a level
similar to Q2 2022.

Other  operating  income  for  Q2  2023 was  affected  the most by the change in
renewable  energy support  received by  Estonian wind  farms, which decreased by
EUR1.5m  compared with a year earlier. Renewable  energy support is related to the
quantity  of  electricity  produced  and  as  output  decreased,  the  amount of
renewable  energy support received decreased as well. The eligibility periods of
the  Vanaküla  and  Virtsu  III  wind  farms expired in Q3 2022. Other operating
income  was improved  by the  decrease in  the non-derivative contract liability
incurred  in 2021 by EUR0.2m in connection with the partial fulfilment of relevant
PPAs.  The non-derivative  contract liability  results from  earlier electricity
derivatives  (base load  swaps) which  were converted  into fixed-price physical
electricity  sales contracts (PPAs). The decrease in the non-derivative contract
liability does not affect cash flow and monetary settlement of electricity sales
takes place on the basis of PPAs.

EBITDA and segmental breakdown

The  factor with  the strongest  impact on  EBITDA development  was the price of
electricity  sold,  which  fell  steeply  compared with Q2 2022 (negative impact
EUR12.1m).  Due  to  PPAs  the  quantity  of  electricity  sold  grew considerably
(positive  impact EUR6.5m), which increased the volume of electricity purchased to
balance  the electricity portfolio (negative  impact EUR6.8m). The combined effect
of  the above  factors on  EBITDA is  influenced by  the quantity and profile of
electricity  produced during the period. Electricity production decreased by 2%
compared with Q2 2022.

Excluding  the effects of  the electricity price  and quantity, the Cogeneration
segment  had a positive impact on EBITDA. The calculation takes into account the
effects  of pellet sales revenue, the  change in inventories, technological fuel
and heat sales revenue.

The  change  in  the  non-derivative  liability  increased EBITDA. See the other
operating income chapter for further information.

Fixed  costs comprise  costs not  directly dependent  on the  production volume.
Fixed  costs grew by EUR1.6m  (18%) year on year.  The increase in fixed costs was
driven  by development activities and related overheads and management expenses,
including personnel and research and consulting expenses.

Based  on total operating income and EBITDA, the group's largest segment is Wind
energy,  which accounted  for 58% of  operating income  and 61% of EBITDA for Q2
2023. The  Cogeneration segment  contributed 34% to  operating income and 40% to
EBITDA. The smallest reportable segment is Solar energy, which accounted for 7%
the  group's operating  income and  10% of EBITDA  for Q2  2023. A more detailed
analysis by segment is presented in the attached report.

Net profit

The  group's net profit for Q2 decreased  by EUR15.8m y-o-y to EUR1.1m. The decrease
is  attributable  to  lower  electricity  prices, higher expenses on electricity
purchased  to balance  the electricity  portfolio, and  EUR4.7m higher  income tax
expense related to dividend payout.

Capital Expenditures

The  group invested EUR74.6m  in Q2 2023, which  is EUR33.6m more  than in Q2 2022.
Growth  resulted from development investments, which  extended to EUR74.0m. Of the
latter,  EUR48.0m was invested in the construction  of three wind farms: EUR31.7m in
the  Tolpanvaara wind farm, EUR13.9m in the Sopi-Tootsi wind farm and EUR2.4m in the
Akmene  wind farm. The largest solar farm development investment was made in the
Vändra solar project in the amount of EUR9.4m.

Base investments amounted to EUR0.5m in the reporting period.

Financing

During Q2 2023, to finance its continuing investment activity Enefit Green drew
down credit facilities raised earlier in the amount of EUR90m. The amortised cost
of the group's interest-bearing liabilities at 30 June 2023 was EUR358.9m (31
December 2022: EUR279.6m). Loan liabilities to banks accounted for EUR353.9m of the
total.

The average interest rate of bank loans drawn down at 30 June 2023 was 3.44% (31
December 2022: 2.60%). For about 46% of loan liabilities, the interest rate risk
has been hedged until maturity of the respective loan contracts.

Investment loans raised but not drawn down at 30 June amounted to EUR285m.



Condensed consolidated interim income statement

 EUR thousand                                Q2 2023  Q2 2022    H1 2023  H1 2022

 Revenue                                    36,556   41,505    105,341   99,646

 Renewable energy support and other
 operating income                            4,610    5,773     13,329   14,352

 Change in inventories of finished goods
 and work in progress                        4,892    4,646      (168)    2,579

 Raw materials, consumables and services
 used                                     (20,583) (16,365)   (45,375) (30,499)

 Payroll expenses                          (2,905)  (2,169)    (5,391)  (4,612)

 Depreciation, amortisation and
 impairment                                (9,707)  (9,644)   (19,522) (19,292)

 Other operating expenses                  (3,274)  (2,645)    (7,329)  (5,150)

 OPERATING PROFIT                            9,589   21,101     40,885   57,025

 Finance income                              1,191    1,117      1,598    1,525

 Finance costs                               (402)    (626)      (782)  (1,188)

 Net finance income                            789      491        816      337

 Profit (loss) from associates under the
 equity method                                  22     (76)         41     (72)

 PROFIT BEFORE TAX                          10,400   21,516     41,742   57,290

 Income tax expense                        (9,260)  (4,592)   (10,080)  (5,441)

 PROFIT FOR THE PERIOD                       1,140   16,924     31,662   51,849



 Basic and diluted earnings per share

 Weighted average number of shares,
 thousand                                  264,276  264,276    264,276  264,276

 Basic earnings per share, EUR                 0.004     0.06       0.12     0.20

 Diluted earnings per share, EUR               0.004     0.06       0.12     0.20



Condensed consolidated interim statement of financial position

  EUR thousand                                    30 Jun 2023   31 Dec 2022

  ASSETS

  Non-current assets

  Property, plant and equipment                     899,039       776,870

  Intangible assets                                  60,304        60,382

  Right-of-use assets                                 4,510         4,239

  Prepayments for non-current assets                 45,462        19,412

  Deferred tax assets                                 1,751         1,321

  Investments in associates                             547           506

  Derivative financial instruments                    8,866        11,277

  Non-current receivables                                40            40

  Total non-current assets                        1,020,519       874,047



  Current assets

  Inventories                                        14,265        14,227

  Trade and other receivables and prepayments        37,304        41,091

  Cash and cash equivalents                          52,996       131,456

  Derivative financial instruments                    4,887         3,349

  Total current assets                              109,452       190,123

  Total assets                                    1,129,971     1,064,170



 EUR thousand                                             30 Jun 2023 31 Dec 2022

 EQUITY

 Equity and reserves attributable to shareholders of
 the parent

 Share capital                                              264,276     264,276

 Share premium                                               60,351      60,351

 Statutory capital reserve                                    5,555       3,259

 Other reserves                                             166,959     166,419

 Foreign currency translation reserve                         (361)       (762)

 Retained earnings                                          199,586     225,190

 Total equity                                               696,366     718,733



 LIABILITIES

 Non-current liabilities

 Borrowings                                                 283,032     255,755

 Government grants                                            6,879       7,115

 Non-derivative contract liability                           18,086      18,086

 Deferred tax liabilities                                    12,482      12,326

 Other non-current liabilities                                3,000       3,000

 Provisions                                                       9           9

 Total non-current liabilities                              323,488     296,291

 Current liabilities

 Borrowings                                                  75,818      23,808

 Trade and other payables                                    31,698      20,215

 Provisions                                                       2           2

 Non-derivative contract liability                            2,599       5,121

 Total current liabilities                                  110,117      49,146

 Total liabilities                                          433,605     345,437

 Total equity and liabilities                             1,129,971   1,064,170



Further information:
Sven Kunsing
Head of Finance Communications
[email protected]
(https://www.globenewswire.com/Tracker?data=eahglFI0K4UUxwsmqXkQdO3N_ld1uojlGTE_
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Enefit Green is one of the leading diversified renewable energy producers in the
Baltic Sea area. The Company wind farms in Estonia and Lithuania, cogeneration
plants in Estonia and Latvia, solar farms in Estonia and Poland, a pellet plant
in Latvia and a hydroelectric plant in Estonia. In addition, the Company is
developing several wind and solar farms in the mentioned countries and Finland.
As of the end of 2022, the Company had a total installed electricity production
capacity of 457 MW and a total installed heat production capacity of 81 MW.
During 2022, the Company produced 1,118 GWh of electricity, 565 GWh of heat
energy and 154 thousand tonnes of wood pellets.