PannErgy : Quarterly production report

PannErgy Plc.

QUARTERLY PRODUCTION REPORT Q4 2021

and

2022 - 2023 EBITDA plan

14 January 2022

2021	PannErgy Plc.

Quarterly production report - Q4 2021

Introduction

PannErgy Plc. publishes a production report on a quarterly basis, presenting green energy production and utilisation. In its report, the Company presents the green heat sales figures of its key geothermal energy production systems in the reporting period, alongside additional useful information. Each year, the production report for the fourth quarter is supplemented with a preliminary, quarterly heat sales plan for the following year (Figure 2) and the preliminary annual EBITDA plan (Chapter II), the values of which are either confirmed or adjusted, as appropriate, at the Company's annual General Meeting.

1. Consolidated production information

Figure 1

Consolidated volume of heat sold (GJ)

The chart presents the aggregate volume of heat sold by the Miskolc, Győr, Szentlőrinc and Berekfürdő projects, in a

monthly breakdown.

	2017	2018	2019	2020	2021	2021	2022
	TARGET	TARGET
January	172,758	205,199	209,999	209,678	221,966
February	177,533	174,300	203,484	213,855	194,173
March	194,634	199,090	215,693	189,195	211,762

	Q1	544,925		578,589		629,176		612,728		627,901		660,769		646,020
	April	171,294	104,033		160,548		130,407	192,053
	May	79,700	56,758		129,300		89,190	96,333
	June	45,936	41641		50,780		53,394	38,595
	Q2	296,930		202,432		340,628		272,991		326,981		290,438		315,549
	July	44,865	51247		52,406		45,297	42,919
	August	36,709	36,794		42,415		39,205	48,023
	September	61502	53,650		63,731		64,096	53,870
	Q3	143,076		141,691		158,552		148,598		144,812		160,683		163,654
	October	141270	119,652		159,888		136,460	180,427
	November	204,045	180,263		206,686		205,417	197,872
	December	205,251	213,267		221,248		225,688	221,198
	Q4	550,566		513,182		587,822		567,565		599,497		620,679		626,790
	ANNUAL	1,535,497		1,435,894		1,716,178		1,601,882		1,699,190		1732,569		1,752,012
	TOTAL
						Figure 2
		Consolidated volume of heat sold, in a table format (GJ) and relevant target data

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2021	PannErgy Plc.

Quarterly production report - Q4 2021

30

25

20

15

10

5

0

-5

-10

2017

2018

2019

2020

2021

Figure 3

Average temperatures in 2017-2021

In the period under review the weather offered a heating potential at Group level comparable to the same period in 2020.

A comparison of the Q4 2021 heat sales figures with the average values of the same period in historical years indicates that the Company accomplished record heat sales in the period under review. The volume of heat sold in the quarter under review exceeded the corresponding value of the base period by 5.6%. However, it fell short of the quarterly target by approximately 3.4%, primarily due to the outage in Miskolc from 2-11 November as previously disclosed by the Company.

In consideration of the information presented in this production report, the Company confirms the expected fulfilment of the consolidated HUF 2,800-2,880 million EBITDA target range published previously for the 2021 business year.

1. EBITDA projection for 2022 and 2023

In respect of the 2022 business year, the Company's management confirms the previously published preliminary consolidated EBITDA target in the range of HUF 3,000 - 3,100 million under the IFRS. The planned quarterly heat sale volumes assigned to the target are presented in the table of Figure 2.

The abovementioned EBITDA target range for 2022 represents an increase of approximately 7% compared to the target range of the base period, primarily reflecting the effect of completed or in-progress capacity expansion and efficiency improving projects.

In terms of the EBITDA forecast for 2023, the Company also confirms the previously published preliminary consolidated EBITDA target in the range of HUF 3,150 - 3,250 million under the IFRS, which is subject to the boring and commissioning of the third production well of the Miskolc Project in the current year. In the event of the omission of boring the well, the EBITDA target level for 2022 is currently also the baseline for 2023.

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2021	PannErgy Plc.

Quarterly production report - Q4 2021

1. Main projects

Miskolc Geothermal Project

(Miskolci Geotermia Kft., Kuala Kft.)

Figure 4

Volume of heat sold in Miskolc (GJ)

The Geothermal System of Miskolc sold a total of 260,127 GJ of thermal energy in Q4 2021, down by 8.7% compared to the heat sales data of the same period in 2020, mainly due to the outage in November referred to previously.

Győr Geothermal Projects

(DD Energy Kft., Arrabona Koncessziós Kft.)

Figure 5

Volume of heat sold in Győr (GJ)

The Geothermal System of Győr sold a total record volume of 330,520 GJ of thermal energy in Q4 2021, representing an increase of 20.0% year-on-year. The reasons for the increase include

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2021	PannErgy Plc.

Quarterly production report - Q4 2021

the return on investment activity in recent periods and the operational difficulties presented in the base period production report.

Geothermal Facility of Szentlőrinc

(Szentlőrinci Geotermia Kft. - company form under registration)

Figure 6

Amount of heat sold in Szentlőrinc (GJ)

In Szentlőrinc, the volume of heat sold in the period under review was 22.2% higher than in the base period, amounting to 8,568 GJ. The Geothermal Facility of Szentlőrinc can fully meet the heat demand of the local district heating system on its own; thus, the weather sensitivity of the geothermal heat input may be significantly higher than that of district heating systems with complex heat resources.

IV. Miscellaneous

PannErgy for the prevention of climate change

In line with global efforts, Hungary intends to take resolute action against climate change. The key energy sector action plan for these efforts is the new National Energy Strategy (NES) published in January 2020, which supersedes a similar strategy published in 2011. The NES presents the future of the Hungarian energy sector for the period until 2030 and, at the same time, it provides an outlook for the following decade. The NES takes into account the requirement of the European Union stating that the economies of EU Member States must become climate-neutral, overall, by 2050.

The NES is committed to decarbonisation, providing ample leeway for the further proliferation of green and other, emission-free energy production solutions. NES goals to be highlighted from the perspective of the geothermal energy production represented by PannErgy:

• reducing Hungary's gas consumption and thus, its reliance on energy imports;
• giving preference to district heating systems;
• reducing the share of natural gas sources below 50% in district heating systems;
• increasing the utilisation of geothermal sources and urban waste in district heating systems, implementation of the Green District Heating Programme.

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