Polenergia S A : Consolidated report 2023

Independent	Grant Thornton Polska P.S.A.
ul. Abpa Antoniego Baraniaka 88 E
61-131 Poznań
Auditor's Report on	Polska
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Annual Consolidated	F [phone]
www.GrantThornton.pl
Financial Statements
For the Shareholders of Polenergia Spółka Akcyjna
Report on the Annual Consolidated Financial Statements
Opinion

We have audited the annual consolidated financial statements of the Group (the Group), in which the parent entity is Polenergia Spółka Akcyjna (the Parent) with its registered office in Warsaw, Krucza 24/26 Street, which comprise the consolidated balance sheet as of December 31, 2023, and the consolidated statement of profit or loss, consolidated statement of comprehensive income, consolidated statement of changes in equity, consolidated statement of cash flows for the financial year then ended, and notes to the consolidated financial statements, comprising material accounting policy information and other explanatory notes.

In our opinion, the accompanying annual consolidated financial statements:

• • give a true and fair view of the financial position of the Group as of December 31, 2023 and of its financial performance and of its cash flows for the financial year then ended in accordance with the International Accounting Standards, International Financial Reporting Standards and related interpretations published in the form of European Commission regulations and adopted accounting principles (policy),

• • comply with the laws affecting the content and form of the annual consolidated financial statements and the provisions of the Parent's articles of association.

The audit opinion is consistent with the additional report to the Audit Committee submitted on the same day as this audit report.

Audit - Tax - Accounting - Advisory Member of Grant Thornton International Ltd

Grant Thornton Polska Prosta spółka akcyjna. Audit Firm No. 4055.

Management Board: Tomasz Wróblewski - President of the Board, Dariusz Bednarski - Vice-President of the Board, Jan Letkiewicz - Vice-President of the Board.

Registered office address: ul. Abpa Antoniego Baraniaka 88 E, 61-131 Poznań, Poland. Tax identification number NIP: 782-25-45-999. REGON: 302021882. Bank account: 31 1090 1476 0000 0001 3554 7340. District Court Poznań - Nowe Miasto i Wilda in Poznań, 8th Commercial Division of the National Court Register, KRS No. 0001002477.

Basis for Opinion

We conducted our audit in accordance with

• • the Act of May 11, 2017 on statutory auditors, audit firms, and public supervision (the Act on Statutory Auditors),

• • National Standards on Auditing in the wording of International Standards on Auditing adopted by resolutions of the National Council of Statutory Auditors and the Council of Polish Agency for Audit Oversight (NSA) and

• • Regulation (EU) No. 537/2014 of the European Parliament and of the Council of April,16 2014 on specific requirements regarding statutory audit of public-interest entities and repealing Commission Decision 2005/909/EC (the Regulation 537/2014).

Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Annual Consolidated Financial Statements section of our report.

We are independent of the entities comprising the Group in accordance with the International Ethics Standards Board for Accountants' International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code) adopted by the National Council of Statutory Auditors' resolution together with the ethical requirements that are relevant to our audit of the financial statements in Poland. In particular, in conducting the audit the Key Audit Partner and the Audit Firm remained independent of the entities comprising the Group in accordance with the provisions of the Act on Statutory Auditors and the Regulation 537/2014. We have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the annual consolidated financial statements of the current period. They include the most significant assessed risks of material misstatement, including assessed risk of material misstatement due to fraud. These matters were addressed in the context of the audit of the annual consolidated financial statements as a whole, and in forming the auditor's opinion thereon Below, we provided a summary of our response to those risks and where relevant, key observations arising with those risks. We do not provide a separate opinion on these matters.

GOODWILL: IMPAIRMENT

Description

The carrying amount of goodwill recognised in the consolidated financial statements is PLN 157,338 thousand.

The risk in this area is impairment of the goodwill caused by the failure to achieve financial results by the cash-generating unit to which goodwill has been allocated. The Management Board of the Parent Company carried out an annual impairment test with regard to goodwill based on which there was no requirement to recognize impairment.

Goodwill disclosures, including impairment testing description, are provided in Note 14 of the consolidated financial statements

We consider the assessment of impairment to be a key audit matter due to the significant element of judgment, in particular regarding the assumptions made in the discounted cash flow model, affecting the estimation of goodwill in use as part of the impairment test performed.

Auditor's response

Audit procedures performed in this area included, among others:

• • obtaining from the Management of the Parent documentation confirming the performance of the impairment test,

• • verification of the reasonableness of the adopted valuation methodology and of the assumptions made in the provided impairment test by comparing the input data with the presented financial plans.

PROPERTY, PLAND AND EQUIPMENT: IMPAIRMENT

Description

The carrying amount of the property, plant and equipment (PPE) disclosed in the consolidated financial statements is PLN 3,273,092 thousand.

The risk in this area is the impairment of the value of PPE including PPE under construction caused by a decrease in the recoverable amount of assets.

Determining the recoverable amount requires adopting a number of significant assumptions and making judgments for each of the tested cash-generating units, including, in particular, the Group's strategy, macroeconomic and market assumptions, and legal predictions. The assumptions and judgments made also include financial plans and cash flow projections.

Disclosures related to the assessment of impairment of PPE are presented in Notes 12 and 15 to the consolidated financial statements.

We consider the assessment of impairment to be a key audit matter due to the significant element of judgment regarding, in particular, the assumptions made in the discounted cash flow model affecting the estimation of the value in use of assets as part of the impairment test performed.

Auditor's response

Audit procedures performed in this area included, among others:

• • understanding and assessment of the policy adopted by the Management Board of the Parent Company for identifying indications of impairment,

• • obtaining from the Management Board of the Parent documentation confirming the performance of the impairment test, understanding and analysis of the assumptions used and judgments presented by the Management Board in relation to individual assets,

• • verification of the validity of the adopted valuation methodology and analysis of the rationality of the assumptions made in the presented impairment test by comparing the input data with the presented financial plans.

SALES REVENUE

Description

The sales revenues of the Group in 2023 amounted to PLN 5,615,412 thousand. Revenues from contracts with customers constitute over 99% of this amount. Recognition of revenues in the annual consolidated financial statements of the Group required the Management Board of the Parent Company to make numerous judgments, including the nature of the revenues and the method of their recognition. In addition, the recognition of some items of sales revenue was largely based on accounting estimates.

The risk in this area is the complete recognition of sales revenues in the correct amount and in the correct period.

Disclosures related to sales revenues are presented in points 8.25 and 8.26 as part of the description of the adopted accounting principles (policy) of the Group, as well as in note 35 of additional information and explanations to the annual consolidated financial statements.

We consider the recognition of sales as a key audit matter due to the size of this position in the consolidated income statement and the importance of judgments and estimates in the revenue recognition process in the consolidated financial statements.

Auditor's response

Audit procedures performed in this area included, among others:

• • review of the accounting policy in the part concerning the recognition of revenues and related estimates,

• • test of details, including cut-off analysis at the end of reporting periods, confirmation transactions with selected contractors,

• • verification of the assumptions of the estimates, analysis of the accuracy of the estimates made in the previous reporting period,

• • verification of completeness and valuation of provisions related to the sales recognized ,

• • analytical procedures involving, in particular, the analysis of monthly data and trends

MANAGEMENT OVERRIDE OF CONTROLS

Description

This risk is generally present in every company and occurrence of fraud may have a significant impact on the financial statements.

Auditor's response

Audit procedures performed in this area included, among others:

• • we made inquiries of the key management about the areas which, in their opinion, are identified as the most exposed to the risk and about the safety measures implemented in these areas,

• • journal entry testing,

• • in individual areas, by performing tests regarding existence, completeness, and valuation - we took into account the test results affecting the possibility of occurrence of fraud.

Responsibilities of Management Board and Supervisory Board of the Parent for the Annual Consolidated Financial Statements

The Management Board of the Parent is responsible for the preparation of these annual consolidated financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Group in accordance with the International Accounting Standards, International Financial Reporting Standards and related interpretations published in the form of European Commission regulations, adopted accounting principles (policy), legal regulations, and the Parent's articles of association. The Management Board of the Parent is also responsible for such internal control as the Management Board determines is necessary to enable the preparation of annual consolidated financial statements that are free from material misstatements, whether due to fraud or error.

In preparing the annual consolidated financial statements, the Management Board of the Parent is responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Management Board of the Parent either intends to liquidate the Group or to cease the operations, or has no realistic alternative but to do so.

In accordance with the Accounting Act of September 29, 1994 (the Accounting Act), the Management Board and the Supervisory Board of the Parent are obliged to assure compliance of the annual consolidated financial statements with the requirements of the Accounting Act. The Supervisory Board of the Parent is responsible for overseeing the Group's financial reporting process.

Auditor's Responsibilities for the Audit of the Annual Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the annual consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with NSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these annual consolidated financial statements.

The scope of the audit does not include assurance on the future viability of the Group or on the efficiency or effectiveness with which the Management Board of the Parent has conducted or will conduct the affairs of the Group.

As part of an audit in accordance with NSAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• • Identify and assess the risks of material misstatement of the annual consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control.

• • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Management Board of the Parent.

• • Conclude on the appropriateness of the Management Board of the Parent's use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the annual consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the

  Group to cease to continue as a going concern.

• • Evaluate the overall presentation, structure and content of the annual consolidated financial statements, including the disclosures, and whether the annual consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

• • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the annual consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with the Supervisory Board of the Parent regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the Supervisory Board of the Parent with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From matters communicated with the Supervisory Board of the Parent, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that the matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Other Information including the Report on the Group's operations

The other information comprises the Report on the Group's operations for the financial year ended

December 31, 2023, the Corporate Governance Statement which is a separate part of the Report on the Group's operations and the separate Statement on non-financial information specified in Article 55 clause 2c of the Accounting Act and the Annual Report for the year ended December 31, 2023 (but does not include the consolidated financial statements and our auditor's report thereon).

Responsibilities of the Management Board and the Supervisory Board of the Parent

The Management Board of the Parent is responsible for the preparation of the other information in accordance with the Accounting Act and other legal regulations. The Management Board and the Supervisory Board of the Parent are obliged to assure compliance of the Report on the Group's operations with the requirements of the Accounting Act.

Responsibilities of the Auditor

Our opinion on the annual consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon that results from NSAs. In connection with our audit of the annual consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether it is materially inconsistent with the annual consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of the other information, we are required to report that fact. Additionally, according to the Act on Statutory Auditors, our responsibility is to express an opinion on whether the Report on the Group's operations has been prepared in accordance with legal regulations and whether information included therein is consistent with the accompanying annual consolidated financial statements. Moreover, we are obliged to report on whether the Parent prepared the separate Statement on non-financial information and to express an opinion on whether the Parent included the required information in the Corporate Governance Statement. We obtained the Report on the Group's operations prior to the date of this auditor's report, while the remaining parts of the Annual Report will be delivered later. If we conclude that there is a material misstatement in the Annual Report, we are required to communicate the matter to the Supervisory Board of the Parent.

Opinion on the Report on the Group's operations

In our opinion, the Report on the Group's operations has been prepared in accordance with the applicable legal regulations, i.e. Article 55 clause 2a of the Accounting Act and Paragraph 71 of the Regulation of the Minister of Finance of March 29, 2018 on current and periodic information disclosed by issuers of securities and the conditions for recognition as equivalent of the information required by law of a non-member state (the Regulation on current and periodic information), and information included therein is consistent with the accompanying annual consolidated financial statements. Moreover, taking into account our knowledge of the Group and its environment obtained during the audit of the annual consolidated financial statements, we state that we have not identified any material misstatements in the Report on the Group's operations.

Opinion on the Corporate Governance Statement

In our opinion, the Corporate Governance Statement includes the information required by Paragraph 70 clause 6 point 5 of the Regulation on current and periodic information. The information specified in Paragraph 70 clause 6 point 5 letters c-f, h and i of the Regulation on current and periodic information included in the Corporate Governance Statement complies with applicable regulations and is consistent with the information included in the annual consolidated financial statements.

Information on the preparation of the separate Statement on non-financial information

As required by the Act on Statutory Auditors, we report that the Parent informed in its Report on the Group's operations that it prepared the separate Statement on non-financial information specified in Article 55 clause 2c of the Accounting Act, and that the Parent prepared such a separate statement.

Report on Other Legal and Regulatory Requirements

Opinion on the compliance of marking up of the consolidated financial statements prepared in a single electronic reporting format with the requirements of the regulation on technical standards on the specification of a single electronic reporting format

In connection with the audit of the annual consolidated financial statements, we have been engaged to perform a reasonable assurance engagement to express an opinion on whether the annual consolidated financial statements of the Group as at and for the year ended December 31, 2023, prepared in a single electronic reporting format contained in the file named 259400CXBGPCDXIXSM81-2023-12-31-pl.zip (consolidated financial statements in the ESEF format) have been marked up in accordance with the requirements set out in the Commission Delegated Regulation (EU) 2019/815 of December 17, 2018 supplementing Directive 2004/109/EC of the European Parliament and of the Council with regard to regulatory technical standards on the specification of a single electronic reporting format (ESEF Regulation).

Identification of the criteria and description of the subject matter of the engagement

The consolidated financial statements in the ESEF format were prepared by the Management Board of the Parent in order to meet the marking requirements and technical requirements for the specification of a single electronic reporting format, as set out in the ESEF Regulation.

The subject matter of our assurance engagement is to verify the compliance of marking up of the consolidated financial statements in the ESEF format with the requirements of the ESEF Regulation, and we believe that the requirements set out in the regulations form appropriate criteria for expressing our opinion.

Responsibility of the Parent's Management Board and Supervisory Board

The preparation of consolidated financial statements in the ESEF format in accordance with the marking requirements and technical requirements for the specification of a single electronic reporting format, as set out in the ESEF Regulation, is the responsibility of the Parent's Management Board. The responsibility includes the

selection and application of appropriate XBRL markups with the use of the taxonomy defined in those regulations.

The responsibility of the Parent's Management Board also includes the design, implementation and

maintenance of an internal control system to ensure the preparation of consolidated financial statements in the

ESEF format free from material non-conformities with the requirements of the ESEF Regulation.

Members of the Parent's Supervisory Board are responsible for overseeing the financial reporting process,

including the preparation of financial statements in accordance with the format resulting from applicable laws.

Auditor's Responsibility

Our objective was to express an opinion, on the basis of a reasonable assurance engagement, whether the consolidated financial statements in the ESEF format have been marked up in accordance with the requirements of the ESEF Regulation.

We performed the engagement in accordance with National Standard for Assurance Engagements other than Audits or Reviews 3001PL Audit of Financial Statements Prepared in a Single Electronic Reporting Format, which was adopted by resolution of the National Council of Statutory Auditors (NSAE 3001PL) and, where relevant, in accordance with National Standard for Assurance Engagements other than Audits or Reviews 3000 (R) in the wording of International Standard on Assurance Engagements (ISAE) 3000 (revised) Assurance Engagements other than Audits or Reviews of Historical Financial Information, which was adopted by resolution of the National Council of Statutory Auditors (NSAE 3000 (R)).

The standard imposes on a statutory auditor an obligation to plan and perform procedures in such a manner as to obtain reasonable assurance that consolidated financial statements in the ESEF format have been prepared in accordance with the specified criteria. Reasonable assurance means a high level of assurance, but it does not guarantee that an engagement performed in accordance with NSAE 3001PL and, where relevant, in accordance with NSAE 3000 (R), would always detect an existing material misstatement.

The selection of the procedure depends on the statutory auditor's judgement, including their estimation of the risks of material misstatement, whether due to fraud or error. When assessing the risk, the statutory auditor considers internal control associated with the preparation of consolidated financial statements in the ESEF format in order to plan the relevant procedures which are to provide the auditor with sufficient and appropriate evidence. The assessment of the functioning of the internal control system was not conducted for the purpose of expressing an opinion on the effectiveness of its functioning.

Summary of the work performed

The procedures planned and performed by us included, among others:

• • obtaining an understanding of the process of preparation of consolidated financial statements in the

  ESEF format, covering the process of the Parent's Management Board's selection and application of

  XBRL markups and ensuring compliance with the ESEF Regulation, including understanding of the internal control system mechanisms related to the process;

• • reconciliation of the marked up information contained in the consolidated financial statements in the ESEF format with the audited annual consolidated financial statements;

• • assessment of compliance with technical standards on the specification of a single electronic reporting format, including the application of the XHTML format, using specialist IT tools;

• • assessment of the completeness of marking of information in the consolidated financial statements in the ESEF format with XBRL markups;

• • assessment whether the XBRL markups from the taxonomy defined in the ESEF Regulation have been properly applied and whether extension taxonomies have been used in situations where the core taxonomy specified in the ESEF Regulation has not identified the relevant elements;

• • assessment whether the applied extension taxonomies have been properly anchored in the core taxonomy defined in the ESEF Regulation.

We believe that the evidence we have obtained provides sufficient and appropriate basis for us to express an opinion on the compliance of marking up with the requirements of ESEF Regulation.

Ethical requirements, including independence

In performing the engagement, the statutory auditor and the audit firm complied with the independence requirements and other ethical requirements set out in the IESBA Code. The IESBA Code is based on fundamental principles relating to integrity, objectivity, professional competencies and due diligence, confidentiality and professional conduct. We also complied with other independence and ethics requirements that apply to this assurance engagement in Poland.

Quality management requirements

The audit firm applies national quality control standards in the wording adopted by resolution of the Council of the Polish Audit Oversight Agency, which requires the audit firm to design, implement and operate a system of quality management including policies or procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.

Opinion on the compliance with the requirements of ESEF Regulation

The statutory auditor's opinion is based on the matters described above, therefore, the opinion should be read in consideration of these matters.

In our opinion, the consolidated financial statements in the ESEF format have been marked up, in all material respects, in accordance with the requirements of the ESEF Regulation.

Statement on non-audit services

To the best of our knowledge and belief we confirm that we have not provided non-audit services prohibited in accordance with the provisions of Article 136 of the Act on Statutory Auditors and Article 5 clause 1 of the Regulation 537/2014.

Appointment of the Audit Firm

We were appointed to audit the annual consolidated financial statements of the Group for the years 2022 and 2023 by the Parent's Supervisory Board's resolution of April 7, 2022. We have been auditors of the Group since the financial year ended December 31, 2020, i.e. for four consecutive financial years.

Jan Letkiewicz

Statutory Auditor No. 9530

Key Audit Partner performing the audit on behalf of Grant Thornton Polska Prosta spółka akcyjna,

Poznań, ul. Abpa Antoniego Baraniaka 88 E, Audit Firm No. 4055

Poznań, March 26, 2024.

THIS IS TRANSLATION ONLY. The Polish language version of the report is the only valid and legally binding version. This translation into English is provided to facilitate understanding of the report.