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1. Introduction

1.1. Letter of the President of the Board to Shareholders

I am delighted to submit the Annual Report constituting the summary of the year of 2012 within operations of ENEA S.A. and the companies of the ENEA Capital Group. It was a very important year of work directed at the realisation of strategie goals of ENEA S.A. and the Group, activities towards gaining financing for an ambitious investment plan, changes within the generation and energy trading. The year of 2012 will also go down in history as the one in which the most important investment for the Group commenced - a construction of a modern power unit No. 11 in Kozienice, the start-up of which will not only inerease our generating capacities but will also constitute a considerable stabiliser of the national energetic system.

In 2012 we managed to gain the financing enabling the realisation of the investment plan assuming a growth in generating capacities from traditional and renewable sources. To this end ENEA S.A. concluded a Programme Agreement which specifies the terms for the Bond Issue Programme of the value of up to PLN 4 bln. The parties to the agreement were banks - issue guarantors, i.e.: PKO Bank Polski, Pekao, Bank Zachodni WBK, Bank Handlowy and Nordea Bank Polska. The Company also concluded a lS-year Loan Agreement valued PLN 950 min with the European lnvestment Bank. The completion of projects of obtaining funds from external institutions was preceded with the maintenance of a long-term rating (awarded to the Company in April 2011 by Fitch Ratings) on the previous level of BBB (on the International scalę) and A (on the domestic scalę).

The Bond Issue Programme, supplemented with the funding from multilateral banks, shall cover all the investment needs of the ENEA Capital Group within the areas of generation, distribution and renewable sources of energy till 2020. The generał contractor of the construction of a new coal unit - Polimex-Mostostal and Hitachi Power Europę consortium - has been performing its works on the construction site sińce October 2012. This is the largest investment of the Polish power sector, as a result of which the biggest in Europę unit fired with bituminous coal will be developed (capacity of 1,075 MW gross). The termination of the construction is planned for Q2 2017.

The transaction of the purchase of a 50 MW wind farm in Bardy (the Zachodniopomorskie Province) was completed successfully. ENEA Operator continued investing within the development of the distribution network in order to satisfy the demand of recipients for power and electricity and create conditions enabling connecting new subjects to the network. It also conducted numerous investments which energetically secured the key sports event of the previous year - EURO 2012.

In 2012 the ENEA Capital Group reported a growth in net sales revenues and revenues from sales of electricity (electricity sales volumes grew by 188 GWh). The Group generated a positive financial result and achieved positive profitability ratios. The EBITDA profitability amounted to 15.8% and was similar to the performance level of 2011 (15.7%). The net profit generated by ENEA S.A. in 2012 amounted to PLN 522,680 thou. and was higher than the profit attained in 2011 by PLN 169,846 thou., i.e. by o 48.1%.

ENEA S.A. joined two strategie projects, the realisation of which will completely change the national power system and will enhance the energy security of Poland. Together with PGNiG, KGHM, PGE and Tauron it became a part of the alliance for the cooperation on the extraction of shale gas. The enterprises will jointly finance the exploration of shale gas and construction of mines, in consideration for the participation in profits