Financial statements and notes

1. General information
   1. Information on the parent company
   2. Information on the PGE Capital Group
   3. Composition of the PGE Capital Group
      1. Direct and indirect subsidiaries under consolidation under the full method
      2. Joint operations subject to consolidation with respect to assets and liabilities, revenue and expenses attributable to the PGE Capital Group
      3. Associates and jointly-controlled companies consolidated under the equity method
   4. Settlement of the new acquisitions
2. Basis for preparation of the financial statements
   1. Statement of compliance
   2. Presentation and functional currency
   3. New standards and interpretations published, not yet effective
   4. The Management Board’s professional judgement and estimates
3. Impairment tests for property, plant and equipment, intangible assets, rights to use assets and goodwill
   1. Description of assumptions for the Conventional Generation segment
   2. Description of assumptions for the Railway Power Engineering segment
   3. Analysis of the circumstances of the Heat Generation sector
   4. Analysis of the circumstances of the Renewable Power Generation segment
   5. Analysis of the circumstances of the CCGT units construction project in Nowy Czarnów to be implemented by PGE Gryfino 2050 sp. z o.o.
   6. Analysis of the circumstance of the Offshore Wind Energy project
   7. Property, plant and equipment in the Distribution segment
4. Selected significant accounting principles
5. Changes in accounting principles and data presentation

EXPLANATORY NOTES TO THE CONSOLIDTED FINANCIAL STATEMENTS

EXPLANATORY NOTES TO THE OPERATING SEGMENTS

6. Information on the business segments
   1. Information concerning the operating segments
   2. Information on geographical areas

EXPLANATORY NOTES TO THE CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

7. Revenue and expenses
   1. Sales revenue
   2. Expenses by kind and function
      1. Depreciation, liquidation and write-downs
      2. Consumption of materials and energy
      3. Third party services
      4. Taxes and charges
      5. Costs of employee benefits and structure of employment
   3. Other operating income and expenses
   4. Finance income and expenses
   5. Share in the result of entities accounted for using the equity method
8. Income tax expense
   1. Tax in the statement of comprehensive income
   2. Effective tax rate

EXPLANATORY NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION

9. Property, plant and equipment
10. Intangible assets and goodwill
11. Rights to use assets
12. Shares and interests accounted for using the equity method
13. Deferred tax in the statement of financial position
    1. Deferred income tax assets
    2. Deferred tax liabilities
14. Inventories
15. CO₂ emission allowances for captive use
16. Other current and non-current assets
    1. Other non-current assets
    2. Other current assets
17. Cash and cash equivalents
18. Assets and liabilities of the Company Social Benefits Fund
19. Equity
    1. Share capital
    2. Supplementary capital
    3. Hedging reserve
    4. Foreign exchange differences from translation
    5. Undistributed financial result and dividend payment restrictions
    6. Equity attributable to non-controlling interests
    7. Earnings/(loss) per share
    8. Dividends paid and proposed
20. Provisions
    1. Provision for land rehabilitation
    2. Provision for costs of CO₂ emissions
    3. Provision for energy origin rights to be redeemed
    4. Provision for onerous contracts
    5. Other provisions
21. Employee benefits
22. Deferred income and government grants
    1. Long-term deferred income and government grants
    2. Short-term deferred income and government grants
23. Other non-financial liabilities
    1. Other non-current non-financial liabilities
    2. Other current non-financial liabilities

EXPLANATORY NOTES TO FINANCIAL INSTRUMENTS

24. Financial instruments
    1. Description of significant items within the particular categories of financial instruments
       1. Financial receivables and other financial receivables
       2. Derivatives and other instruments measured at fair value through profit or loss
       3. Bank credits, loans, bonds and leases
       4. Trade payables and other financial liabilities
    2. Fair value of financial instruments
    3. Fair value hierarchy
    4. Statement of comprehensive income
    5. Security for payment of receivables and payables
25. Objectives and principles of financial risk management
    1. Market risk
       1. Commodity risk
       2. Interest rate risk
       3. Currency risk
    2. Liquidity risk
    3. Credit risk
       1. Trade receivables. Other loans and financial receivables
       2. Deposits, cash and cash equivalents
       3. Derivative instruments
       4. Granted guarantees and sureties
    4. Climate risk
    5. Market (financial) risk – sensitivity analysis
    6. Hedge accounting

EXPLANATORY NOTES TO THE STATEMENT OF CASH FLOWS

26. Statement of cash flows
    1. Cash flows from operating activities
    2. Cash flows from investing activities
    3. Cash flows from financing activities

OTHER EXPLANATORY NOTES

27. Contingent receivables and payables. Litigation
    1. Contingent liabilities
    2. Other significant issues related to contingent liabilities
    3. Contingent receivables
    4. Other court cases and disputes
28. Future capital expenditure commitments
29. Tax settlements
30. Information on related entities
    1. Associates and jointly controlled entities
    2. Companies controlled by the State Treasury
    3. Management remuneration
31. Remuneration of the audit firm
32. Significant events during and after the reporting period
    1. Impact of the war on the territory of Ukraine on the activity of the PGE Group
    2. The coal asset spin-off project
    3. Implementation by PGE Paliwa sp. z o.o. of decisions related to the purchase and sale of coal
    4. Regulatory changes in the electricity market
    5. Acquisition of 100% of shares in PKP Energetyka Holding
    6. Concluding an agreement and establishing a special purpose vehicle for the nuclear power plant project
33. Approval of the financial statements
34. Glossary of terms and abbreviations