TRANSLATORS’ EXPLANATORY NOTE
The English content of this report is a free translation of the registered auditor’s report of the below-mentioned Polish Company. In Poland statutory accounts as well as the auditor’s report should be prepared and presented in Polish and in accordance with Polish legislation and the accounting principles and practices generally adopted in Poland.
The accompanying translation has not been reclassified or adjusted in any way to conform to the accounting principles generally accepted in countries other than Poland, but certain terminology current in Anglo-Saxon countries has been adopted to the extent practicable. In the event of any discrepancies in interpreting the terminology, the Polish language version is binding.
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Independent Registered Auditor’s Report
To the Shareholders’ Meeting and the Supervisory Board of KGHM Polska Miedź Spółka Akcyjna
Report on the audit of separate financial statements
Our opinion
In our opinion, the accompanying annual separate financial statements :
• give a true and fair view of the financial position of KGHM Polska Miedź S.A. (the “Company”) on a standalone basis as at 31 December 2023 and the Company’s financial performance and the cash flows for the year then ended in accordan ce with the applicable International Fin ancial Reporting Standards as adopted by the European Uni on and the adopted accounting pol icies ;
• comply in terms of form and content with the laws applicable to the Company and the Company’s Articles of Association
• have been prepared on the basis of properly maintained books of account in accordance with the provisions of Chapter 2 of the Accounting Law of 29 September 1994 (the “Accounting Act”).
Our opinion is consistent with our additional report to the Audit Committee issued on the date of this report.
What we have audited
We have audited the annual separate financial statements of KGHM Polska Miedź S.A. which comprise :
• the separate statement of financial position as at 31 December 2023 r.;
as well as the following statements covering the financial year ended on that day :
• the separate statement of profit or loss
• the separate statement of comprehensive income
• the separate statement of changes in equity
• the separate statement of cash flows; and
• the notes comprising a description of the significant adopted accounting policies and other explanations.
Basis for opinion
We conducted our audit in compliance with the National Standards on Auditing (“NSA”) as adopted by the resolution of the National Council of Statutory Auditors and the resolution of the Council of the Polish Audit Supervision Agency (“NSA”) and pursuant to the Law of 11 May 2017 on Registered Auditors, Registered Audit Companies and Public Oversight (the “Law on Registered Auditors”) and Regulation (EU) No. 537/2014 of the European Parliament and of the Council of 16 April 2014 on specific requirements regarding statutory audit of public-interest entities (“EU Regulation”). Our responsibility under NSA are further described in section ‘Auditor's Responsibility for Audit’.
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We believe that the evidence that we have obtained in the audit is sufficient and appropriate to constitute a basis of our opinion.
Independence
We are independent of the Company in accordance with the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code) as adopted by resolution of the National Council of Statutory Auditors and other ethical requirements that are relevant to our audit of the financial statements in Poland. We have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. During the audit, the key registered auditor and the registered audit firm remained independent of the Company in accordance with the independence requirements set out in the Act on Registered Auditors and in the EU Regulations .
Our Audit Approach
Overview
• The overall materiality threshold adopted for the purposes of our audit has been determined at PLN 359 m, i.e. 4.5% of the arithmetic average of financial result before tax for the last three financial years, adjusted for effects of the applicable mineral production tax and for the amount of the impairment loss recognized in 2023 on tangible and intangible mining and metallurgical assets .
• All material items included in the separate financial statements were subject to our audit procedures.
• Recognition of revenues from contracts with customers;
• Assessment of the recoverability of investments in shares of subsidiaries;
• Assessment of the recoverability of mining and metallurgical production assets of KGHM Polska Miedź S.A.
• Assessment of the recoverability of loans granted to the KGHM International LTD. Group and Future 1 Sp. z o. o.;
• Fair value measurement of derivatives and hedge accounting.
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As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the separate financial statements. In particular, we considered where the Company’s Management Board made subjective judgements; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits we also addressed the risk of management override of internal controls, including among other matters, consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud .
Materiality
The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether the separate financial statements are free from material misstatement. Misstatements may arise due to fraud or error.
They are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the separate financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall materiality for the separate financial statements as a whole, as set out in the table below. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, if any, both individually and in aggregate on the separate financial statements as a whole .
Overall Company materiality
PLN 359 million.
How we determined it
4.5% of arithmetic average of financial result before tax for the last three financial years, adjusted for effects of the applicable mineral production tax and for the amount of the impairment loss recognized in 2023 on tangible and intangible mining and metallurgical assets .
Rationale for the materiality benchmark applied
We have adopted financial result before tax as the basis for determining materiality because, in our opinion, this measure is commonly used to assess the Group's operations by financial statements users and is a generally accepted benchmark. We used the arithmetic average of the last three years due to the volatile nature of the financial result. We made adjustments for the impact of the tax on specific mineral production as this levy is not dependent on the Group's performance. We have excluded the impairment loss recognized in 2023 on tangible and intangible mining and metallurgical assets due to the fact that it is a significant amount and is not of a regular nature. We assumed the level of materiality at 4.5% as based on our professional judgement it falls within the acceptable quantitative range of materiality.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above PLN 31 million, as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons .
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Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the separate financial statements of the current period. They include the most significant identified risks of material misstatements, including the identified risks of material misstatement resulting from fraud. These matters were addressed in the context of our audit of the separate financial statements as a whole, and in forming our opinion thereon. We do not provide a separate opinion on these matters.
Key audit matter
How our audit addressed the key audit matter
Recognition of revenues from contracts with customers
In 2023 the Company recognized revenues from contracts with customers in the amount of PLN 29 084 million, which were described in part 2 of the separate financial statements.
The Company generates revenues mainly from sales of copper (76,6%), silver (15,0%) and gold (3,2%). Revenues are recognized when the Company meets the obligation to perform the service in the form of transferred good or services with simultaneous acquisition of control over this asset by the buyer. Revenue is recognized at an amount equal to the transaction price representing the consideration for the goods and services provided, including the pricing formulas used.
Bearing in mind the importance of revenues item in the separate financial statements of the Company, as well as the susceptibility of the item to the risk of misstatement, we recognized that this is a key matter for our audit .
Our testing procedures included in particular :
● determining whether, in relation to the previous audited year, there were changes to the internal control system or the principles adopted by the Company in terms of recognizing revenue from contracts with customers and identifying the moment of passing control over the good or service provided, and understanding of any changes in the above-mentioned scope ,
● analysis of the conditions contained in significant sales contracts ,
● conducting, on a selected sample, efficiency tests of selected internal controls, important for determining the correct moment of revenue recognition and the correct value of revenues from contracts with customers ,
● analysis of trends in recognized revenues from contracts with customers and explanation of unusual events and one-off transactions ,
● conducting tests of details on a selected sample, the selection of which used quantitative and qualitative criteria, including agreeing price rates and quantities used on issued sales invoices to contracts with customers, delivery documents and payment documents ,
● confirmation of selected sales transactions directly with the Company's customers ,
● verification, on a selected sample, of revenue
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recognition in the proper reporting period, taking into account Incoterms and other terms and conditions of contracts concluded with the Company's customers ,
● assessment of the correctness and completeness of disclosures in the separate financial statements regarding revenues from contracts with customers .
Assessment of the recoverability of investments in subsidiaries' shares
The net value of investments in subsidiaries as at 31 December 2023 was PLN 4 807 million, which represents 9,8 % of the Company’s total assets, including:
- investments in shares in Future 1 Sp. z o. o. amounted to PLN 2,852 million ,
- investment in shares in KGHM Metraco S.A., amounted to PLN 421 million,
- remaining investment in stock and shares of other entities - PLN 1 534 million.
Investments in subsidiaries are carried at acquisition cost less impairment losses. Accounting policies and disclosures regarding investments in subsidiaries are disclosed in note 6.1 to the annual separate financial statements .
As at December 31, 2023, the Company identified triggers for impairment in relation to the following investments in subsidiaries:
a) investment in shares in Future 1 Sp. z o. o.,
b) investment in shares in KGHM Metraco S.A.,
c) investment in shares in Zagłębie Lubin S.A.
As a result of the tests, in the separate financial statements:
- the recoverable value of the investment in shares in the company Future 1 Sp. z o. o. was determined at the level of PLN 2,852 million, which was higher than the carrying amount of this asset, which was the basis for reversing the
Our testing procedures included in particular :
● verification of compliance of the adopted valuation principle with applicable accounting standards,
● understanding and assessing the process of identification by the Management Board of triggers for occurrence or reversal of impairment of investments in subsidiaries,
● understanding and assessing the correctness of the methods used to conduct impairment tests in accordance with the relevant financial reporting standards,
● checking mathematical correctness and methodological consistency (using internal valuation experts) of the recoverable amount valuation models prepared by the Company's Management Board,
● ritical assessment of the assumptions adopted by the Company's Management Board and estimates made to determine the recoverable amount, including, among others:
○ the projection period of future cash flows based on the approved budgets for companies for which an impairment test was performed and the level of revenues, operating margin and future investment expenditures assumed therein,
○ discount rate used (based on the weighted average cost of capital),
○ residual value, including the residual growth rate after the forecast period.
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historically recognized impairment loss in the amount of PLN 741 million,
- the recoverable value of the investment in shares in KGHM Metraco S.A. was determined at the level of PLN 451 million, which was higher than the carrying amount of this asset, which was the basis for reversing the historically recognized impairment loss in the amount of PLN 86 million.
Disclosures regarding impairment tests of investments in subsidiaries are presented in part 3 of the separate financial statements (note 3.1).
The correct identification of impairment triggers and the recoverable value calculation are areas that requires significant estimates by the Management Board .
Considering the inherent risk of uncertainty associated with significant estimates made by the Management Board, as well as the significance of items in the separate financial statements, we have determined that this is a key issue for our audit .
● assessment of the sensitivity analysis of the adopted assumptions on the valuation result carried out by the Management Board,
● assessment of the correctness and completeness of disclosures regarding investments in subsidiaries and impairment tests.
Assessment of the recoverability of mining and metallurgical production assets of KGHM Polska Miedź S.A.
In the separate financial statements as at December 31, 2023, the Company disclosed tangible and intangible fixed assets with a carrying value of PLN 20,590 million, which constitutes 42.1% of the Company's total assets.
Tangible fixed assets, excluding the right to use assets, and intangible assets are valued by the Company at the purchase price/production cost less accumulated depreciation (amortization) and accumulated impairment losses.
As at December 31, 2023, the Company identified triggers for impairment tests of mining and metallurgical production assets.
As a result of the tests, the recoverable amount of the production assets (mining and
Our testing procedures included in particular :
● verification of compliance of the adopted valuation principle with applicable accounting standards,
● understanding and assessing the process of identification by the Management Board triggers for impairment of production assets,
● understanding and assessing the correctness of the methods used to conduct impairment tests in accordance with the relevant financial reporting standards,
● checking the mathematical correctness and methodological consistency (using internal valuation experts) of the recoverable amount valuation model prepared by the Company's Management Board,
● critical assessment of the assumptions
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metallurgical assets) of KGHM Polska Miedź S.A. was determined in the separate financial statements at the level of PLN 16,577 million, which was lower than the carrying amount of the tested assets, which was the basis for making an impairment loss on these assets in the amount of PLN 3,771 million.
The correct identification of impairment triggers and the recoverable value calculation are areas that requires significant estimates by the Management Board .
Considering the inherent risk of uncertainty associated with significant estimates made by the Management Board, as well as the significance of items in the separate financial statements, we have determined that this is a key issue for our audit .
adopted by the Company's Management Board and estimates made to determine the recoverable amount, including, among others:
○ the projection period of future cash flows based on the approved budgets of the cash-generating unit for which the impairment test was performed and the level of production volume, revenues, operating margin and future replacement and investment expenditures assumed therein;
○ used price paths for metal prices and the USD/PLN exchange rate;
○ discount rate used (based on the weighted average cost of capital).
● assessment of the sensitivity analysis of the adopted assumptions on the valuation result carried out by the Management Board,
● assessment of the correctness and completeness of disclosures regarding the impairment test performed.
Recoverability assessment of loans granted to the KGHM International LTD. Group and Future 1 Sp. z o. o.
As at 31 December 2023, the Company reported a balance of loans granted to subsidiaries Future 1 Sp. z o. o. and KGHM International LTD. in the amount of PLN 9 624 million, which represents 19,7% of the total assets of the Company. Receivables due to loans granted to Future 1 Sp. z o. o. and KGHM International LTD. depending on the classification made in accordance with IFRS 9 Financial Instruments, are measured at:
a) amortized cost, including an allowance for expected credit losses , including POCI loans (purchased or originated credit-impaired), or
b) fair value through profit or loss .
In the financial year, gains were recognized on the reversal of impairment losses on loans
Our testing procedures included in particular :
● understanding and assessing the correctness of the applied principle of measuring receivables from loans in accordance with the relevant financial reporting standards ;
● understanding and assessing the correctness of the classification made and the methods of valuation of receivables from loans granted in accordance with the relevant financial reporting standards ,
● checking the mathematical correctness and methodological consistency (using internal valuation experts) of the valuation model of the impairment loss on loans granted prepared by The Management Board of the Company, using external experts, valuation models, respectively, the fair value of receivables from loans granted measured at fair value and write-offs due to expected credit losses for loans receivable measured at
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measured at amortized cost in the amount of PLN 15 million. For loans measured at fair value, gains from changes in fair value were recognized in the amount of PLN 657 million, and losses from changes in fair value were recognized in the amount of PLN 94 million.
Disclosures regarding the valuation of receivables from loans granted are presented in note 6.2 and 7.5.2.5 of the separate financial statements .
Determining the amount of the write-off due to expected credit losses, as well as measuring the fair value of receivables from granted loans involves the necessity to make a number of significant assumptions and make judgments, in particular regarding the Company's strategy, macroeconomic and market assumptions as well as predictions regarding legal conditions, financial plans and cash flow projections .
Considering the inherent risk of uncertainty associated with significant estimates made by the Management Board, as well as the significance of items in the separate financial statements, we have determined that this is a key issue for our audit .
amortized cost ,
● critical assessment of the assumptions made by the Management Board of the Company and the estimates made to determine the expected value of loans and the expected credit losses ,
● assessment of the sensitivity analysis carried out by the Management Board of the adopted assumptions for the valuation result ,
● assessment of the correctness and completeness of disclosures in the separate financial statements in the scope of valuation of financial assets from granted loans and assessment of their recoverability .
Fair value measurement of derivatives and hedge accounting
The Company is a party to derivative transactions related to volatility of prices, interest rates and exchange rates. Disclosures related to derivative instruments are presented in note 7.2 of the separate financial statements .
The value of derivative financial assets as at 31 December 2023 amounted to 993 million, including PLN 519 million under hedge accounting .
The Company applies hedge accounting for cash flows.
In accordance with the accounting policy of the Company, derivatives are measured at fair value at the end of each reporting period or at transaction settlement date. In relation to instruments hedging future cash flows, gains and losses resulting from changes in the fair
Our testing procedures included in particular :
● assessment of compliance of the accounting policy adopted by the Company with respect to the initial recognition and subsequent measurement of derivative instruments with the relevant financial reporting standards ,
● understanding of the hedging policy adopted by the Company against the risk of changes in metals prices, interest rate risk and currency risk ,
● understanding and evaluation of the process of valuation of derivative instruments, including the adopted methodology and sources of obtaining market data and unobservable valuation parameters ,
● verification, on a sample, of key parameters of selected derivatives to external
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value of these instrument, in the portion which is effective, are deferred in other comprehensive income and accumulated in the capital for the valuation of financial instruments, until the transactions that are the subject of the hedge have an impact on fi nancial result. As at 31 December 2023 , the accumulated amount of other comprehensive income from the valuation of hedging derivatives recognized in equity amounted to PLN 510 million (including deferred tax).
Estimating the fair value of derivatives and the effectiveness of the established hedging relationships is an area that requires a significant estimates by the Management Board as to future metal prices, interest rates and exchange rates, and involves the use of an appropriate instrument valuation model .
Considering the inherent risk of uncertainty related to significant estimates made by the Management Board, as well as the materiality of the impact of these transactions on the separate financial statements, we considered this to be a key audit matter .
independent data sources ,
● performing and independent valuations of all open derivatives at fair value at the balance sheet date, with the use of PwC's internal valuation experts, and comparing them with results of Company's valuations. Assessing the differences in the fair value measurement of derivative instruments between independent PwC valuations and the valuations prepared by the Group. In cases where the obtained results differed from those calculated by the management of the Company, we assessed whether these differences are within acceptable ranges, taking into account the estimates of future metal prices, interest rates and exchange rates in the valuation ,
● verification, performed by internal PwC valuation expert, of the correctness of the application of hedge accounting, determining the part of an effective hedging relationship, conducting qualitative effectiveness tests and verification of the division of relationships into effective and ineffective portion ,
● verification of disclosures in the separate financial statements in terms of meeting the requirements of the standards .
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Responsibility of the Management and Supervisory Board for the separate financial statements
The Management Board of the Company is responsible for the preparation of the annual separate financial statements that give a true and fair view of the Company’s financial position and results of operations, in accordance with International Financial Reporting Standards as adopted by the European Union, the adopted accounting policies, the applicable laws and the Company’s Articles of Association, and for such internal control as the Management Board determines is necessary to enable the preparation of separate financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the separate financial statements, the Company’s Management Board is responsible for assessing the Company’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
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Board either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
The Company’s Management Board and members of the Supervisory Board are obliged to ensure that the separate financial statements comply with the requirements specified in the Accounting Act. Members of the Supervisory Board are responsible for overseeing the financial reporting process .
Auditor’s responsibility for the audit of the separate financial statements
Our objectives are to obtain reasonable assurance about whether the separate 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 the NSA will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence economic decisions of users taken on the basis of these separate financial statements .
The scope of the audit does not include an assurance on the Company’s future profitability nor the efficiency and effectiveness of the Company’s Management Board conducting its affairs, now or in future .
As part of an audit in accordance with NSA, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
• identify and assess the risks of material misstatement of the separate 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 Company’s internal control ;
• evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Company’s Management Board ;
• conclude on the appropriateness of the Company’s Management Board’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 Company’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 separate 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 Company to cease to continue as a going concern ;
• evaluate the overall presentation, structure and content of the separate financial statements, including the disclosures, and whether the separate financial statements represent the underlying transactions and events in a manner that achieves fair presentation ;
We communicate with the Audit Committee 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 Audit Committee with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other
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matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied .
From the matters communicated to the Audit Committee, we determine those matters that were of most significance in the audit of the separate 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 a 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 activities
Other information
Other information comprises a :
• joint report on the activities of the Company’s and the KGHM Polska Miedź S.A. Group’s. (“the Group”) in which KGHM Polska Miedź S.A. is the parent company, for the financial year ended December 31, 2023 ("
the joint Report on activities"),
together with a statement on the application of corporate governance and a statement of the Company and the Group on non-financial information referred to in art. 49b sec. 1 and art. 55 sec. 2b of the Accounting Law, which are separate parts of this joint Report on activities,
• consolidated report on payments to public administration
,
• other documents comprising the Annual Report for the financial year ended 31 December 2023
(together "Other information").
Other information does not include the separate financial statements and our auditor’s report thereon.
We obtained the Annual Report before the date of this audit report, except for the Report of the Supervisory Board on the results of the assessment of the separate financial statements, and the Statement of the Supervisory Board regarding the Audit Committee, which will be available after this date.
Responsibility of the Management and Supervisory Board
The Management Board of the Company is responsible for the preparation of the Other Information in accordance with the law .
The Company’s Management Board and the members of the Supervisory Board are obliged to ensure that the Joint Report on the Company’s and Group’s activities, along with its separate parts, the separate Report on non-financial information of the Company and the Group and Consolidated report on payments to public administration complies with the requirements of the Accounting Law .
Registered auditor’s responsibility
Our opinion on the separate financial statements does not cover the Other Information .
In connection with our audit of the separate financial statements, our responsibility is to read the Other Information and, in doing so, consider whether the Other Information is materially inconsistent with the information in the separate financial statements, our knowledge obtained in our audit, or otherwise appears to be materially misstated. If, based on the work performed, we identified a material misstatement in the Other Information, we are obliged to inform about it in our audit report. In accordance with the requirements of the Law on the Registered Auditors, we are also obliged to issue an opinion on whether the Joint Report on the activities has been prepared in accordance with the law and is consistent with information included in annual stand-alone and consolidated separate financial statements.
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Moreover, we are obliged to issue an opinion on whether the Company and the Group provided the required information in its corporate governance statement and to inform whether the Company prepared a separate report on non-financial information .
Statement on the Other information
We declare, based on the knowledge of the Company and the Group]and its environment obtained during our audit, that we have not identified any material misstatements in the joint Report on the operations of the Company and the Group and the remaining Other information which we obtained before the date of this audit report.
If we identify a material misstatement in [list the elements of the Annual Report which were not obtained by the date of this report, we are obliged to inform the Parent Company’s Supervisory Board of this fact.
Opinion on the Joint Report on the activities
Based on the work we carried out during our audit, in our opinion, the Joint Report on the Company’s and Group’s activities :
• has been prepared in accordance with the requirements of Article 49 of the Accounting Act para. 70 and 71 of the Regulation of the Minister of Finance dated 29 March 2018 on current and periodical information submitted by issuers of securities and conditions for considering as equivalent the information required under the legislation of a non-Member State (“Regulation on current information”) ;
• is consistent with the information in the separate and the consolidated separate financial statements .
Opinion on the corporate governance statement
In our opinion, in its corporate governance statement, the Company and the Group included information set out in para. 70.6 (5) of the Regulation on current information. In addition, in our opinion, information specified in paragraph 70.6 (5)(c)–(f), (h) and (i) of the said Regulation included in the corporate governance statement are consistent with the applicable provisions of the law and with information included in the stand-alone and the consolidated separate financial statements .
Information on non-financial information
In accordance with the requirements of the Act on the Registered Auditors, we confirm that the Company has prepared a statement on non-financial information referred to in Article 49b(1) and Article 55(2b) of the Accounting Act as a separate section of the Report on the operations.
We have not performed any assurance work relating to the separate report on non-financial information and we do not provide any assurance with regard to it .
Report on other legal and regulatory requirements
Opinion on the requirements of Article 44 of the Energy Law
The Company's Management Board is responsible for preparing regulatory financial information in accordance with the requirements of Art. 44 of the Energy Law of 10 April 1997 ("Energy Law").
In accordance with the requirements of art. 44 of the Energy Law, it is our responsibility to examine the regulatory financial information and issue the opinion required by the Energy Law.
Regulatory financial information is presented in note 12.10 of the additional information. Our audit did not include an assessment of whether the information required for disclosure by this law is sufficient to ensure equal treatment of recipients and to eliminate cross-subsidization between activities.
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In our opinion, the relevant items of the statement of financial position as at 31 December 2023 and the result statements for the year ended on that date, included in the regulatory financial information (explanatory note No. 12.11), prepared separately for each business activity meet, in all material respects, requirements referred to in art. 44 section 2 of the Energy Law, as regards ensuring equal treatment of recipients and eliminating cross-subsidization between these activities .
Statement on the provision of non-audit services
To the best of our knowledge and belief, we declare that the non-audit services we have provided to the Company and its subsidiaries are in accordance with the applicable laws and regulations in Poland and that we have not provided any non-audit services prohibited under Article 5(1) of the EU regulation and Article 136 of the Law on Registered Auditors .
Non-audit services that we provided to the Company and its subsidiaries in the audited period are listed in note 3.3 in the
joint Report on activities.
Appointment
We have been nominated to audit the annual separate and consolidated financial statements of the Parent Company and the Group by virtue of the resolution of the Parent Company's Supervisory Board, dated 22 October 2021, for a period of 3 years, i.e. 2022-2024. We have been auditing separate and consolidated financial statements of the Parent Company and the Group continuously since the financial year ending 31 December 2019, i.e. for 5 consecutive years.
The Key Registered Auditor responsible for the audit on behalf of PricewaterhouseCoopers Polska spółka z ograniczoną odpowiedzialnością Audyt sp.k., a company entered on the list of Registered Audit Companies with the number 144., is Rafał Matusiak.
Rafał Matusiak
Key Statutory Auditor
No. in the registry. 13858
Wrocław, 23 April 2024