Shareholders and investors

PGE S.A. is a stock exchange listed company from 2009. PGE S.A. shares are listed in the main market of the Warsaw Stock Exchange, in the continuous trading system. PGE has the biggest market capitalisation among the Polish power companies in the Warsaw Stock Exchange. PGE’s stock liquidity provides investors with the opportunity to freely buy and sell our securities.

The PGE Group’s capital is divided into 1 869 760 829 stocks. An issue of 373,952,165 E shares was carried out in 2022, following which the number of shares is 2,243,712,994.

Our main shareholder is the State Treasury represented by the Minister of State Assets. The State Treasury at year-end 2021 held 1 072 984 098 of the Company’s common stocks, representing 57.39% of the Company’s share capital and entitling to exercise the same number of votes at the General Meeting. Following the acquisition of part of the new issue shares, the State Treasury currently holds 1 365 601 493 shares representing 60.86% of the share capital.

The other part, i.e. 878 111 501 of shares, constituting 39,14% % of ownership, is specified as shares in free float.

On 18 January 2022, PGE’s Management Board passed a resolution on commencing the company’s recapitalisation in connection with planned investment projects in the area of renewable energy, decarbonisation and distribution.

The issue proceeds are intended to support PGE Group’s investments in three areas:

• development of renewable energy sources,
• decarbonisation through development of low-carbon sources,
• development of distribution

The Extraordinary General Meeting on March 7, 2022 did not adopt a resolution due to the break in the proceeding announced until April 6, 2022. After resuming the proceedings on April 6, 2022 the resolution was adopted.

The resolution provided for a proposal to the Extraordinary General Meeting of the Company to adopt a resolution on lowering the share capital by way of reducing the par value of shares (from PLN 10.25 to PLN 8.55) and simultaneously increasing the share capital by way of issuing series E shares under the private subscription procedure, depriving the existing shareholders entirely of the pre-emptive right to all series E shares, applying for admission and introduction of series E shares or rights to series E shares to trading on the regulated market of Giełda Papierów Wartościowych w Warszawie S.A. [Warsaw Stock Exchange], dematerialising series E shares or rights to series E shares, as well as amending the Company Statutes. The shares were to be offered to qualified investors holding over 0.1% company shares.

After the resolution was adopted by the general meeting, PGE S.A. started the book-building process, during which investors expressed their willingness to acquire all offered shares. As part of the process, an issue price of PLN 8.55 was determiden, what allowed for the total value of the issue of series E shares to reached the level of PLN 3.2 billion.

April 22, 2022 The Management Board of PGE S.A. adopted a resolution on the allocation of all series E shares to investors participating in the subscription process. The State Treasury, which is PGE’s majority shareholder, acquired shares with an issue value of approximately PLN 2.5bn. Open pension funds took up shares with an issue value of approx. PLN 450 million, and other investors were allocated shares with an issue value of approx. PLN 250 million.

The court registered the share capital increase on May 18, 2022.

Currently, the share capital of the Company amounts to PLN 19 183 746 098.70 and is divided into 2 243 712 994 shares with a par value of PLN 8.55, including:

1. 1,470,576,500 series “A” bearer shares,
2. 259,513,500 series “B” bearer shares,
3. 73,228,888 series “C” bearer shares,
4. 66,441,941 series “D” bearer shares,
5. 373,952,165 series “E” bearer shares.

Thanks to the funds obtained from the issue of shares, PGE plans to accelerate the transformation in three main areas: distribution grid (approx. PLN 1.61 billion), renewable sources (approx. PLN 0.47 billion) and decarbonisation by building low-emission sources (approx. PLN 1.11 billion). In the case of the network it is, inter alia, o increasing the share of cable lines, accelerating the process of introducing smart meters and increasing the efficiency of connection processes for new consumers and energy sources. PGE plans to accelerate the photovoltaic capacity development program and obtain funds for the acquisition of onshore wind farm projects and PV farms. In the area of decarbonisation, PGE plans to raise money to finance the gas-steam unit project in Rybnik, which would be commissioned in 2026, and decarbonisation of the district heating segment by building gas-fired CHP plants in Zgierz, Kielce and Bydgoszcz.

According to an ordinance of the Prime Minister (document: Dziennik Ustaw of 2017 pos. 95), PGE Polska Grupa Energetyczna S.A. is included in the list of enterprises of special significance to the national economy. According to the act on rules for managing state property as of December 16, 2016 (document: Dziennik Ustaw of 2016 pos. 2259), PGE shares may not be sold by the State Treasury. This is a stabilising factor for the shareholding structure. The State Treasury is a shareholding with special control rights. The Company’s articles of association provide special rights for the State Treasury in the following scope:

• motion to convene a General Meeting,
• influence over the General Meeting agenda,
• appointment of a Supervisory Board member through a written statement, with no General Meeting resolution needed.

In 2021 PGE shares quotation were in range PLN 6.30-10.75. Average market capitalisation (value of all shares of the Company) in 2021 amounted to PLN 16.1 billion. Average trading volume amounted to 2.5 million shares per session and average trading amount reached approx. PLN 21.3 million.

According to the laws in Poland (Act on trade as of July 29, 2005:  Dziennik Ustaw of 2005 no. 183 pos. 1538), shareholder identities are publicly disclosed when the 5% threshold is exceeded. If a shareholder has less than a 5% stake, there is no requirement to disclose identity.

This means that precise identification of the shareholding structure is not possible. Participation in General Meetings is voluntary, whilst dividends are paid out through the National Depository of Securities and brokerage firms. In practice, as a listed company, we treat every investor as a potential shareholder. According to regulations and best practices, we ensure that all investors have equal access to information.

Open pension funds (OFE) are considered, as a rule of thumb, long-term investors – as a part of shareholder ID research, we identified OFE in PGE’s shareholding (as at the data for 2020) – details are presented on the diagram above.

On December 31, 2021, open-ended pension funds held a total of 341.8 million shares of PGE (i.e. 18.3%). According to data from December, Aviva OFE had the largest stake, with approx. 4.1% %, followed by NN OFE with approx. 3.8%.

In aggregate, domestic pension funds and the State Treasury held approximately 75% of shares. Thus, the remaining 24% was divided between retail investors (presumably mostly domestic) and institutional investors – – TFI investment funds and their foreign equivalents (mutual funds). Shares of PGE Polska Grupa Energetyczna are included in stock market indexes, such as WIG20 – which is why PGE Group’s shareholding structure also includes ETF funds, which replicate the index composition in their portfolios. Moreover, continuously since 2011, PGE S.A.’s shares were also listed in the RESPECT Index – index including Polish companies operating in compliance with best corporate governance, information governance and investors relations standards. As of January 1, 2020, the WSE stopped calculating and publishing the RESPECT Index. On September 3, 2019, the WSE started to publish the WIG-ESG (Environment, Social, Governance) index which includes companies from WIG20 and mWIG40 indices, who carry out socially responsible activities. Companies are assessed in terms of managing ESG (environmental, social, governance) factors, i.e. environmental factors, social responsibility and corporate governance, information governance and investors relations.

The main objectives of PGE’s information policy are transparency and cooperation based on mutual trust.

Effective communication with investors and transparency are in the Company’s best interest and contribute to building value for its stockholders. The activities taken up by us in terms of investor relations are more than regulation requirements. These regulations oblige the Company to meet information duties in terms of periodical and on-going reporting with special consideration of inside information. In order to satisfy demanding stockholders and investors, we launched a series of additional tools, the aim of which is to eliminate the information asymmetry between the Company and the capital market. These tools are available on the Company’s website, in the Investor Relations’ section in Analyst’s zone https://www.gkpge.pl/en/for-investors/shares/analyst-s-zone:

• Presentation of “PGE Group’s strategy 2030 with 2050 perspective”, along with an one pager with summary of strategic objectives – it is a determinant of the directions of the group’s development for the next decades;
• Investor presentation – updated periodically as market needs and expectations arise;
• Presentation of the “Program for the Construction of Offshore Wind Farms in the Baltic” – PGE Group’s flagship investment project;
• Presentation from the WallStreet retail investor conference;
• The Company has also prepared an editable xls file, which includes financial and operating data presented in the form of time series starting from the first quarter of 2011 until the latest reporting period.
• In addition, the Company publishes preliminary estimated results in periods preceding quarterly reporting. These publications include key financial values, operating volumes and information on important one-offs.
• For investors sensitive to social and environmental issues, who seek interactions between business, finances and the Company’s engagement for the benefit of its surroundings, we are publishing an online integrated report of PGE Capital Group from 2015 and this year, an online version of the non-financial report was additionally published http://sprawozdanieniefinansowe2020.gkpge.pl/en

After the pandemic, we are gradually returning to participating in investor conferences in Poland and Europe. In May 2022, we took part for the first time as a company in the WallStreet conference organised by the Association of Individual Investors, participating in the debate “National champions in the face of price shocks and major economic turbulence. Will they come out stronger or weaker?” and presented PGE Group during the “Shareholder Forum.” The WallStreet conference was also an opportunity to talk to individual investors, exchange experiences in the area of investor relations and ESG with other listed companies, stock market educators, as well as financial journalists.

Investors act based on various strategies and investment horizons and the capital market, in most cases, is functioning in a rhythm of quarterly results. But energy is an industry which is characterised by long-term planning. This is why the Management Board’s point of view is naturally aligned with long-term shareholders’ perspective.
Of course, in order to implement long-term plans, day-to-day care for the company’s finances is required, which is reflected in quarterly results. Quarterly results publications are an opportunity to monitor the company’s situation and progress in its development.
Over the next few years, PGE also intends to publish information on the progress in the implementation of particular elements of the multi-annual strategy. Assumed PGE Group’s objective is to balance all aspects of the business, maximizing the added value for stakeholders.

As a company listed on the Warsaw Stock Exchange, we apply the rules of corporate governance as set out in the Best Practices for WSE-Listed Companies.

PGE Polska Grupa Energetyczna S.A., as a listed company, is obliged to obey the corporate governance rules set in Best Practices of WSE Listed Companies. You will find more information about corporate governance rules on  Warsaw Stock Exchange website: Best Practices of WSE Listed Companies

Best Practices for WSE-Listed Companies 2021 – the latest version of the Corporate Governance Rules, which applies to companies from July 1, 2021 – came into force. The new Best Practices reflect the current trends and follow European regulations in the area of corporate governance. The changes made take into account the current state of the law and the latest trends in the area of corporate governance, as well as responding to the demands of market participants interested in increasingly better corporate governance by listed companies.

In line with market expectations, ESG issues, including climate protection, sustainability, board diversity and equal pay, are addressed in the new best practices. The updated rules also cover topics such as the expected method of profit distribution, share issues with exclusion of pre-emptive rights or share buybacks. Also new are more precise rules for the submission of draft general meeting resolutions and candidates for the supervisory board.

As a result of the work to identify the current status of the application of the Best Practices for WSE-Listed Companies 2021, a report on the status of PGE’s application of the rules in best practices was prepared and published at the end of July 2021, which can be found at this address https://www.gkpge.pl/dla-inwestorow/lad-korporacyjny
During the company’s Ordinary General Meeting in June 2022, information on the status of PGE S.A.’s application of the Best Practices for WSE-Listed Companies 2021 was presented to shareholders, with emphasis on the rules whose compliance by the company also depends on the decisions or actions of the General Meeting or individual shareholders.

Aside from applying the rules set out in the Best Practices for WSE-Listed Companies 2021, PGE strives to carry on the best possible communication with capital market participants by publishing materials that meet the needs of investors, such as the earnings presentations made available each time after the publication of interim reports or the accompanying analyst toolbox with investor messaging and the most relevant financial data of the period. The Company also publishes financial and operating estimates for each reporting period in the form of current reports, and the Management Board’s earnings conferences are broadcast live online.

As of September 3, 2019, the Warsaw Stock Exchange has started publishing the WIG-ESG index. This index is published on the basis of the value of the share portfolio of companies considered to be socially responsible, i.e. those that adhere to the rules of socially responsible business, particularly with respect to environmental, social, economic and corporate governance issues. The weights of companies in the WIG-ESG index are determined on the basis of the number of free-floating shares taking into account the ESG Ranking (ESG coefficient) and the assessment of compliance with the Code of Best Practice (Code of Best Practice coefficient). PGE shares are included in the WIG-ESG index and their weight in the portfolio is approx. 1.8%.

The ESG ranking of companies, which is one of the criteria for determining the index weights, is created on the basis of Sustainalytics reports. Sustainalytics, an international firm specialising in providing services in the ESG area, determines companies’ scores on the basis of publicly available information published by companies. Data such as annual reports, reports on non-financial data and information provided on websites is analysed. The Sustainalytics methodology assesses ESG risks, measuring an industry’s exposure to specific risks related to ESG criteria and assesses how a company manages these risks.

The weights of companies in the index will also depend on the level of application of the corporate governance rules contained in “Best Practices for WSE-Listed Companies.” Based on the companies’ published statements in this regard, the WSE assigns weights to companies depending on the number of rules applied and the quality of the published statements.