Ladies and gentlemen, welcome to the press conference of the TAURON Group where we will present the financial results for the first quarter of 2026. My name is [Cichon?]

and I am the representative of TAURON, I will moderate the meeting. The first part will present the financial results and the second part will be answering your questions that you ask through our form on our website.

Now I will introduce our participants: Mr. Krzysztof Śliwicki, the Vice President of the Management Board for Trade; Mr.

Krzysztof Surma, Vice President of the Management Board for Finance; and Mateusz Lewandowski, Executive Director for Investments in TAURON Polska Energia S.A. Please proceed with the presentation of the results.

Good morning. We are starting traditionally with the situation in the energy sector as several information, pieces of information are in the current quarter.

The increase of daily amplitudes increase. We can say that the highest price from January till today 2,000, more than 2,000, and the lowest 1,300.

We can see the discrepancy is increasing and it becomes the characteristic feature of our sector. We also in noted increase of installed power in the photovoltaic.

It is 25.7 GW, watts, and the increase as we don't yet have the information on the end of March, but we expect the increase. We noted slight decrease of the hours, but we expect the yearly increase in hours.

Last year we had 362 negative hours. This year I think it will be more than 400.

We also noted the decrease of the coal prices and, on the other hand, the increase of the power energy prices. In 2006, '26, we could say that the generation on coal was more competitive compared to gas.

We also noted the drop of average temperatures compared to last year, which increased the sale of heat. The negative negative phenomenon of worse conditions for wind generation, it was worst in a decade.

Now it's 23. Quarter-to-quarter it's a drop, and it is 8.3% drop.

Water generation by quarter quarter-by-quarter is slightly higher, 12.3 to 13% generation, but looking at the hydrologic conditions, we cannot expect good results. Increased production from hard coal and gas by 7.3% by the at the cost of the other sources.

In the same period, PKB grew by 33 point, more than 33% compared to last period, but the growth increased by 0.2%. It is it is also not advantageous that we we can expect increased power consumption in the nearest future.

RES dropped by 1.1%, but bearing in mind that we have increased installed power in the system, it was dropped by 13% about 30%. The hard coal and gas also dropped together with brown coal.

The balance balance between among the last and and this year, the import balance was in February is 414, in March in March and in April that was increased, the export balance was increased. Redisposition was this is increasing in the energy system, unfortunately.

The negative fact is that the compensations paid do not cover the lost revenue as the settlement is at the prices of the balancing market, it is a slightly not related, not closely related to the actual commercial conditions. The generation portfolio, what we observed in our case, the increase by in production generation by 18% and this is with RES increase by the 13% 7 we in this period, we have 24% increase in the installed power.

The productivity dropped a little. This is the characteristic feature of the whole energy sector and the RES units.

Increase of heat production due to the lower temperatures. CO2 emissions increased by 14%, mainly by the increased production from conventional sources, similarly in case of the consumption of coal, which is associated with increased generation from coal.

RES share 13% drop. It's it's lower compared to last year.

Limitation of 40% increase of the of the reduction in the RES. This is this has changed.

The limitation of this production has changed. Its structure changed.

It dropped compared to last year in the economy. It means generally it means that a big portion of energy is being lost.

This is the energy that cannot be used effectively. What else?

I assume this is the cost of transformation and a and a feature of the system. From the point of view of the group, it is the redisposition is more profitable than settling the production in negative prices.

Water plants, water electric plants slightly lower. Wind and heat, it's it's increased this availability.

Coal units are decreasing average 81% availability, mainly due to planned and non-planned stoppages in Jaworzno in 2025. Selling portfolio, sales of electricity sale increased by 9.3%, which is households and small business.

For households, we see increased number of collection points, consumption points. In small and medium enterprises, it is increased by the volumen.

The green sales ratio, it is an quotient of the purchased green energy divided by the total green energy sold. The decrease is caused by the fact that we have the increased total energy.

Number of Nowa Energia customers, as we can see, mostly it's households. 21% is the small businesses.

Large business is below 1%. Energy for fed into the grid by the prosumer, it's either in the drop is caused by either the increased self-consumption or lower production in that period.

As we know, in generally, RES was had lower production, these two can maybe combine. Heat sales to the market is increased in the first quarter because of the lower temperatures, cold weather.

Cheap hours customers, this is the tariff with differentiated, varied rates. It is dedicated for educated clients, for those who are aware how to adjust.

We had 25%, 1,000, 25,000 customers at the end of last year, we have about 40% increased. What we do with regard to educating our clients, we conduct educating campaign with regard to the knowledgeable use of energy.

We propose products with dynamic prices. We propose our advisor, and we we our attitude is to, our approach is to educate customers to lower their bills.

Now we can go to the second part. I give floor to my colleague.

Ladies and gentlemen, the results of the group for the first quarter are good base, of course, compared to the record results of the last year. They are slightly lower, but these are still very good results and effects.

Revenues dropped slightly compared to last year. The drop caused by the slowly lower energy rates, but if we remove compensations, we would have an increased revenue.

'25 was the last year of the compensations. More than 300 million revenue was from that last year.

EBITDA it was 10% lower compared to last year. It reached 2 billion 40 million zlotys in the first quarter of this year.

When we compare it and deduct the one-off events in 2025, it's a year-over-year comparison. In '25, we had one-off events.

One was concerning the compensation in the generation segment, and the other event concerned the tariff. It's even one year before, mid-'24, the tariff was set untypically for a year and a half, and the costs were unevenly distributed on our side.

The costs weren't transferred fully, and they were recovered in '25. That's why we had abnormally good results, and that's why this quarter seems not to be so good.

The analytical consensus was exceeded by 150 million in the group. Net profit was related to the operating results, and it is connected with the increasing depreciation level.

It's the derivative of the investments in the group. This result was adjusted in plus due to the lower interest and tax.

CAPEX increased slightly by 7%. Mateusz will talk about it in more detail, but the net debt to EBITDA from the point of view of our financial institutions and from the estimate performed by them, it is the same as at the end of '25 and slightly better compared to the first quarter of '25.

If we go to the segments slide, we have unchanged leader, the distribution, close to 1 billion 200 million. If we look at the further places, they are pretty equal.

EBITDA of about 200 million is the next three segments. It's sales, generation, and heat, more than 200 EBITDA for all of them.

The last one, the heat has had the best quarter in history. Since our publication for generation and heat are published, then heat is the first time when the heat is higher than RES.

We will talk about it in more detail later. Another slide shows the differences over year-over-year.

Let's start from distribution. The difference is minus 42 million zlotys.

There were two positive and two negative factors. The negative factors were the regulation account settlement.

Last year we had the positive balance of the regulation account. This year it's negative, and it's 111 million difference, more or less.

Generally, as I said before, the regulation account is the difference between the actually executed volumen and the volumen allocated in the tariff. If the actually performed volumen is higher than the volumen allocated in the tariff, then it sets negatively on the regulation account, and vice versa.

Over the years, it's then settled. This balance of the regulation account will be slightly positive next year.

The other negative factor of that segment is the WACC drop by one more than 1.3 percentage point. It's right now 9.5%.

The positive factors is the increase of the value of the regulated assets. It's 2 billion increase year-over-year.

Another positive influence is the increase of volumen by 2 percentage points year-by-year, and it mitigated the negative regulation account. When we look at the RES segment, I start to say that this is the weakest segment in this quarter, but of course, it's still with positive results.

It was mostly affected by the lower market prices, both in the energy market and in the green certificates market. They were the dominant factor.

Of course, we also counted for a better result based on historical data, but these wind conditions were much lower right now. If it wasn't for the new power, we would have a drop of 7% from the wind production.

With heat segment, we can say it's only good news. Here we had a significantly lower temperatures this year, this winter.

As Krzysztof said, the volumes of heat sales were higher, and it positively affected the results, added to the better tariff. We had a 50 million increase of EBITDA year-by-year, and we also consume results from TAMEH Polska, which received means from the TAMEH Czech, which was a positive effect on the whole segment.

Sales segment, I've touched that a little. We had a very good first quarter in tariff G last year.

This year it will be the opposite phenomenon. We will have no margin, and it will determine our results.

This result will certainly be strongly dependent on the cost of the profile that will affect the company in the quarters two and three. The results of the pricing differences will strongly determine the results of this segment in the latter part of the year.

Then we also show that we changed the reserve. Last year we concluded a reserve for tariff G.

We estimated it for 150 million, and it will be released in individual quarters. It will positively affect the EBITDA of this year.

As far as the generation segments are, we have good results, slightly more than 40 million lower than last year. Two key factors: the one-off event of the compensation payment, it concerned the previous years' compensations paid in the first quarter of '25, and slightly lower margin caused by the lower level of sales, as Krzysztof also mentioned.

This year we had the phenomenon of much higher production versus repurchase from last years. In previous years, we had much more repurchase, which was at much higher margin.

This year the production, in fact, eliminated part of the repurchase due to the market situation because we always analyze whether repurchase or production is more beneficial. That's why the margin this year is slightly lower.

If we move on to the debt and financing slide, as I mentioned before, the ratio is in quite a good level, 1.4, relatively low, especially when we look at the historical record of the group. What influenced that then?

I believe mainly EBITDA for the last 12 months because it was a bit higher when we compare the quarters, and of course, the 12 months back, and especially the first quarter 2025 versus 2026. You can see 400 million on the right-hand side.

The second factor is a decrease in the debt, I believe the net debt that we report to the bank as well as the economic debt, which we can see here in this graph. In both cases, it's about 100 million year-over-year.

I would like to draw your attention to the graph and especially to those factors. I mentioned them in the previous conferences as well, but I believe that this increasing funds coming from KPO, National Recovery Plan, are high.

This is 2.2 billion of zlotys at the end of the first quarter 2026. 1 million 354 was in kind of subsidy, which is a kind of interperiod settlements after discounting the debt, which was granted with the 0.5% rate.

It was discounted with the market rate, and it comes also from the result between the nominal value and the discounted value. This interperiodical settlement, and they are going to be depreciated just like the assets financed by this loan.

The second factor is, as we promised, we paid back all the debt. At the end of the first quarter, we have no stocks, no bonds.

It was the biggest part of our debt, everything has been paid back in first deadlines according to the contracts on the bonds or the loans. The third point I would like to draw your attention to is leasing.

It's increasing gradually, but I believe this is a natural derivative of the business growing, especially in the distribution sector. All the property agreements are included here in this category, in the leasing category as debt.

I would like to emphasize that the group has a very good position when we consider the cash flow, the liquidity. The company has 6.3 billion of funds, according to our policy, this resources are always guaranteed to cover investment in the next 12 months.

That's all what I would like to present, and now Mateusz is going to talk about our investment program.

When it comes about investment, we have realized the CAPEX and 1 point 164 billion zlotys. It's more than in previous year quarter-over-quarter.

No surprises, as you can say, 70% in the distribution sector, then RES assets. It's about 80% of our investment in the first quarter.

Now talking about each segment, I would like to start with the biggest one, which is distribution, 800 million zlotys in the CAPEX. This is 100% of our realization.

We met the targets in this period of time. Then when talking about the investment directions, about the connections that we built, about the modernization and replacement of grid assets, I believe that was the majority of our CAPEX.

Thanks to that, we could connect about 400 MW of RES installations, 900 km of new energy lines, and we follow this direction right now. Our customers covered by intelligent smart meters is about 47%.

That's the coverage. Right now in this segment, it's more than 95% of the CAPEX, which means that we are pretty optimistic about our plan for this year.

Then RES, the CAPEX was related to realization of three big wind farms: Nowa Brzeźnica, Sieradz, and Miejska Górka. The two first were commissioned in the first quarter of this year, and they started working and generating EBITDA effectively.

Miejska Górka, our biggest project, we are really advanced into implementation of this project, I hope that if there is nothing unexpected, then that the commissioning of the object will take place in this half of the year. As far as the cash flows are concerned, this moment is crucial.

What I would like to draw your attention to is also our program of batteries, energy storage facilities. I'm going to talk about it later on as well.

In this segment, there was also modernization of hydro power plants, and one of our crucial plants in Pilchowice in the first quarter of this year. There have been several investment decisions related by the KPO funding, we have started with the tendering procedure for big photovoltaic farms in Ogrodzieniec, Mysłowice.

Now let's talk about heat segment. I'm going just to summarize it, the CAPEX in this segment mostly related to modernization and generation and connections.

We have some existing generating units, but those CAPEXes now are related to these facilities where these assets are placed. What else?

The decarbonization of these projects, there are a few of them, but I'm going to talk about them later on. When we talk about supply and other segments, I would like to focus on the investment in the infrastructure, IT infrastructure, street lighting, and fiber optic network.

Now I would like to pay more attention to particular projects. As I talked before about photovoltaic farms, now you could see everything on the former slide.

Now I would like to take one of our key element in our investment portfolio, BESS projects. As you can see, it's 558 MW under construction, and eight of them have already been commissioned.

This portfolio is full of projects, but besides those standard expositions, generating profits related to the volatility of the prices, whether this is the power market or the investment support market, the cash flows related to these projects will have this kind of stable investment support. I've mentioned two projects that have already been commissioned, in Bytom and in Trzebusz.

They were commissioned this year. I would like to mention that really fast implementation projects because it took about half a year only, and this year we are going to add 16 more megawatts to this eight one from the project in Proszówek and Kuźnia Raciborska.

They should be finalized by the second quarter, next month. Then the portfolio of projects of more than 500 MW, which are in the first preliminary phase of implementation, but still really advanced.

I believe that we are going to gradually open the procurement procedures, so that this year we can sign the contracts and realize our targets. Moving on to next projects in the heat and generation segments, the key information here is that in the first two auctions that took place this year, we managed to have the support, operational support for five projects, and the biggest one is the project in Łagisza, which is based on two cogeneration turbines, about 100 MW of energy.

It's worth underlining that the configuration of this project is much wider, and our model for this assets should include also some other constructions and more support. The realization of this project right now is also in the phase of contracting the turbines because, as in the project in Jaworzno, we are going to use this investor-sourced model as far as the supplies are concerned.

Then construction of gas engines at Bielsko-Biała and the Jaworzno heat unit. Right now we are about 35% of the implementation of this project, and to the best of my knowledge and our assessments, actually, as far as this timeline is concerned, there are no threats to it.

In Jaworzno, there is some kind of hybrid project which is supposed to combine two functions: the heat source for the city of Jaworzno is one of them. Right now we are at the stage of contracting it, and we are trying to work on this procurement process.

Of course, each year such situations are included in our timelines, and we are ready for such obstacles. To finalize this investment segment, I would like to talk about our biggest project in this generation segment, this construction of a boiler house in Jaworzno which works in the open cycle.

Mid-April, unfortunately, we had to cancel it due to a lack of bids, but somehow we were ready, and it was nothing surprising for us because there was a kind of scenario which somehow predicted such situations. Finally, it was decided that the best model, especially when we talk about the supply imbalance, we believe that a new single-source procurement procedure should be initiated.

It's, of course, possible due to this law, we invited a company from Italy to participate in this project, and it's based on two turbines that work in an open cycle and in the outdoor construction facility. Right now we are negotiating, but somehow it's a kind of solution which will enable our key parameters to be implemented, the CAPEX, the buying this technology, and of course, the timeline of our implementation, which is clue when we think about the contract.

We believe in the few next weeks the project will be finalized.

Thank you so much, gentlemen, for your presentation. Now it is the Q&A session.

The first question is, when we're talking about the power supply market, at which stage are the works right now? What can we expect?

Right now we run a consultation with the European Commission. We don't know the effects and details of this consultation, but we believe that the solutions will be very close to the current mechanism, maybe with some modifications.

However, I will refer to the details after it will be published after consultation with the European Commission.

What about the government commission related to tariffs? Where are we now, at which stage?

This topic is quite comprehensive. The special team that's been involved to cope with this issue, coordinated by the Ministry of Energy, and we've got some assumptions.

The work is now going towards the division of the costs between the customers, and we want to increase the safety of the electricity systems. Of course, all the work also aim at the infrastructure and increasing it.

I can say that right now the market is volatile. Maybe the volatility is a little bit higher, and our hedging strategy is based on quite conservative assumptions.

On an ongoing basis, we try to follow the trends, especially the price trends. We include the volatility of the market, and I believe we try to adjust the strategy to minimize the risk and the chances on the market.

We monitor the market, the regulatory aspects, we try to just adjust this strategy to the market.

What about the contracting in Jaworzno, and what kind of costs can we expect? What about other gas projects?

Does this delay in this project will influence other units?

OCGT project in Jaworzno has already been commented, maybe I can refer it again. Currently, we are going to address a single contractor with Ansaldo company from Italy, and we believe that it's going to take about several weeks.

The level of costs that we can expect, we have no doubt that probably it won't exceed this levels that we assumed, especially in the unit aspects. They are being prepared right now.

Probably you know that two of these projects were really effective and ready to be commissioned, now we are ready to commission them. Still nothing changed, but I believe it's also important whether we get this mechanism of support or not.

Talking about other project, we don't assume any problems. This project is being contracted right now, and consequently, I don't believe this is a base scenario for us.

If so, probably we'll need to carry on further discussions. Thank you so much.

Can we comment please on CAPEX on this year talking about each particular segment?

I'm not going to refer to values. However, talking about segment, let me talk about distribution first, we can see that it's related to seasons.

The CAPEX is related to seasons, and usually in the first quarter, it's lower than in next quarters. Somehow, as you can see, this implementation is multilinear.

However, in the quarter three, four, it's higher than in quarter one and two. Then talking about RES segment, I believe there should be some kind of impact of Miejska Górka project.

Let me talk about maybe CAPEX of wind farms more. You cannot see that, but there are some advance payments right now, we've got funds for it, and the values in the next parts are going to be visible in CAPEX, we can expect some additional values.

In further segments, as it goes about generation, I believe that our two huge projects, the heat system and OCGT block, are going to influence our CAPEX, especially as it goes about advance money. I believe that there are going to be some significant values seen.

Other segments, I believe that heat segment should be concerned as well, especially if we talk about CAPEX and our decarbonization program. It's speeding up.

We are starting new procurement programs, new tenders procedures, new projects, I guess those CAPEXes are going to relate to properties, to sites, and future construction works, and this development work.

Thank you very much. How do you assess the consensus of EBITDA at 6.5 billion zlotys?

Is it ambitious or basic?

That we don't publish forecasts, but if you try to say anything, first of all, the quarters are unevenly distributed along the year. It from history.

Is it ambitious or basic scenario? It's not a certain scenario, but to achieve this level of EBITDA, many factors would have to happen.

The key factors first of all is the issue of cost of the profile. The second and third quarters will significantly tell us how the profile cost will be higher or similar to the previous one.

The profile cost will be a challenge to the group. The second issue, independent of us, the weather conditions.

As we said, the wind conditions low in the first quarter. We will see what it will look like further in the year.

Of course, we know that the wind is crucial here in addition to water and so on, but wind conditions are the most important. Depending on the situation in this segment, then the EBITDA will depend on that strongly.

The last item that is not fully controlled by the group is the issue of temperature. Right now we are talking mostly about the autumn and winter heating season.

It will determine the heating conditions. It would also depend with the weather.

Next question in English.

It seems that in reality the group results went to the possibility of regulating EBITDA. The previous question touched that problem.

The factors of the possibilities of generating profits,

what are the indications?

We have stable segments like distribution. The tariff is known.

The assets value is known. The issue of the balance differences, it is not fully controlled.

The other thing is the volumes of the distributed energy, but it seems to be predictable results. With regard to RES segment, as I said, the wind conditions.

The heat segment is the temperatures in the fourth quarter. The results should be better.

We expect them to be better. The generation segment, it all mainly concerns the market prices.

The Middle East conflict may determine the spot market, and the prices in the spot market will, in fact, determine the value of production versus repurchase. We will see what it will look like in the fourth quarter about the gas availability, the prices.

It will definitely determine the results in this segment. For generation, we must say that the lower wind conditions in the whole country, then our generation assets will work and generate EBITDA because they are completing the system in Poland.

With the sales segment, here we have the profile issue. Second and third quarter, the profile costs will determine EBITDA with this regard.

Thank you. Next question: How much has been left to spend the CAPEX for Miejska Górka?

We have incurred about 80% of the planned expenditures on that project. As we already said, we can see these expenditures in the presentation of CAPEX, but with regard to the finance flow, it's 20% of the budget.

What about the safety of turbine supply to new units?

Let's split it into two parts. We contract turbines to various units, and these are different cases.

With regard to Jaworzno, a lot has been already said. I can add that it seems that we are close to the situation when we are finished with the high risk of the contractation, and it should be cleared in the next weeks.

Other cases is the Łagisza and Katowice. With these procedures all still open, these machines are different.

These are medium power, medium capacity. They are serial production, and it's several hundreds of machines per year, and definitely the fluidity of the slots and the availability is much higher.

We want to have the situation that at least three leading manufacturers can fit our needs. Then also the share of the CAPEX in this project is not as strong as in the other cases, it's not that risky.

We, of course, are humble about the market situation, but I think we are moderately optimistic.

One more question: How can we include KPO in the investment budgets, projects, and so on?

As far as the information that we have is concerned, this team manages the with WACC, WACC is not concerned there because it's about the energy consuming issues. WACC is the discussion between the URE President and the and the other groups.

We had a yearly annual model, and we hope for hope to be able to work out some long-term mechanism for the distribution, but also, of course, and one of the elements of it is the discussion on using KPO. With regard to distribution, we have a negative cash flow.

Using the resources from KPO will let us use the technological gap and and for prosumers and provide basis for the energy transformation.

Thank you very much. Thank you that we have no further questions.

Thank you for your questions, for your attendance. See you at the next results conference to sum up the first half of this year.

Thank you very much. Goodbye.