Pannergy Group: Consolidated Heat Sales Exceeding Plans

In H1 2025, the PannErgy Group focused mainly on the successful commissioning of the third production well of the Miskolc Geothermal Project. Primarily due to this successful integration, PannErgy achieved record heat input in Q1 2025, exceeding both base quarter heat sales and the target for the period, the company has reported on the website of the Budapest Stock Exchange.

In addition to this capacity expansion in Miskolc, Q2 performance was also positively affected by the significantly more favourable weather conditions in terms of heating potential compared to the base period.

Based on the prevailing weather conditions and capacity assumptions for the period under review, the PannErgy Group's consolidated heat sales for H1 2025 amount to 982 TJ, which is about 6% higher than the 927 TJ consolidated heat sales figure in H1 of the previous year and 4% higher than the projected value of 941 TJ.

PannErgy indicated in several of its previous disclosures (quarterly production reports) how the new district heating regulation structure, effective from 1 October 2024, will change the Company's business and how it will affect the weighting of the profitability of each half of the financial year compared to previous periods.

As of October 1, 2024, in contrast to previous regulation and practice, the Decree set district heating producer tariffs for PannErgy's subsidiaries subject to the district heating price regulation not only in the form of a sales heat tariff for the heat volume sold, but also in the form of a split heat supply tariff for the heat volume sold, and a monthly supplier base tariff, i.e. using a so-called two-element pricing system.

In line with PannErgy's previous public communications, with the introduction of two-element pricing above, the sustainable profitability of the Company – derived from regulatory pricing – becomes more predictable. Also, the impact on the Company’s profitability of changes in the demand for heat affected by the regulatory pricing (e.g. the weather) is minimized.

It is important to emphasize that in the case of lower heat supply tariff (HUF/GJ) and higher supplier base tariff in the fourth quarter of the year compared to other quarters, the weight and
share of the first half of the year in the operating profit generation capacity decreases in the financial year, while it increases in the second half of the year.

The Company's H1 2025 management data reflects the intra-year rate change in its profitability described above, which due to the transition to the new regulation will only be reflected in the current half-year as a structural difference when compared to the base halfyear ('Transition Effect').

The Company's EBITDA for the period under review was HUF 1,672 million, down HUF 233 million or 12% from HUF 2,265 million in the same period of the previous year, due to the Transition Effect detailed above. However, it is important to note that the Company has taken into account the Transition Effect in determining the range of the EBITDA plan for 2025, and therefore has no unplanned impact on its achievement.