ENEA GROUP CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS for the period from 1 January to 30 June 2021 in compliance with EU IFRS

Rysunek 1

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 4
CONSOLIDATED STATEMENT OF FINANCIAL POSITION 5
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 7
CONSOLIDATED STATEMENT OF CASH FLOWS 8
ADDITIONAL INFORMATION AND EXPLANATIONS 9
General information 9
1. General information on the Parent9
2. Group composition 9 3. Changes in composition of the Parent's Management Board and Supervisory Board11
4. Basis for preparing financial statements 11
5. Accounting rules (policy) and significant estimates and assumptions 12
6. Functional currency and presentation currency 12
Operating segments 13
Explanatory notes to the consolidated statement of comprehensive income 20
7. Revenue from sales 20
8. Tax21
Explanatory notes to the consolidated statement of financial position 22
9. Property, plant and equipment 22
10. Intangible assets 22
11. Investments in associates and jointly controlled entities23 12. Inventories27
13. Energy origin certificates28
14. Assets and liabilities arising from contracts with customers 28
15. Restricted cash28
16. Coverage of loss 28
17. Debt-related liabilities 29 18. Provisions32
19. Accounting for subsidies and road lighting modernisation services 33
Financial instruments 34
20. Financial instruments and fair value34
21. Debt financial assets at amortised cost36
22. Impairment of trade and other receivables36
23. Analysis of the age structure of assets arising from contracts with customers and trade and other receivables 37
Other explanatory notes 38
24. Related-party transactions 38
25. Conditional liabilities, court proceedings and cases on-going before public administration
organs 38
25.1. Sureties and guarantees 38
25.2. On-going proceedings in courts of general competence 39 25.3. Other court proceedings39
25.4. Risk associated with legal status of properties used by the Group 40
25.5. Cases concerning 2012 non-balancing41
25.6. Dispute concerning prices for origin certificates for energy from renewable sources
and terminated agreements for the purchase of property rights arising under origin certificates for energy from renewable sources 41
26. Participation in nuclear power plant build program 43
27. Impact of COVID-19 pandemic 43
28. Events after the reporting period44

These condensed consolidated interim financial statements are prepared in accordance with the requirements of IAS 34 Interim Financial Reporting, as endorsed by the European Union, and are approved by the Management Board of ENEA S.A.

Members of the Management Board

President of the Management Board	Paweł Szczeszek

Member of the Management Board	Rafał Mucha
Member of the Management Board	Tomasz Siwak
Member of the Management Board	Tomasz Szczegielniak
Member of the Management Board	Marcin Pawlicki

Prepared by: Robert Kiereta

Head of Consolidated Reporting

Poznań, 16 September 2021

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

		For the 6- month period ended	For the 3- month period ended	For the 6- month period ended	For the 3- month period ended
	Note	30 June 2021 (unaudited)	30 June 2021 (unaudited)	30 June 2020 (unaudited)	30 June 2020 (unaudited)
Revenue from sales	7	9 853 166	4 792 476	8 974 914	4 369 832
Excise duty		(36 697)	(17 276)	(33 057)	(15 016)
Net revenue from sales		9 816 469	4 775 200	8 941 857	4 354 816
Revenue from operating leases and subleases		6 869	2 364	7 598	2 557
Revenue from sales and other income		9 823 338	4 777 564	8 949 455	4 357 373
Other operating revenue		79 859	38 368	135 491	57 113
Change in provision for onerous contracts Depreciation/amortisation		(3 736) (749 581)	(2 656) (378 410)	39 305 (770 968)	14 958 (389 884)
Employee benefit costs		(1 042 313)	(511 258)	(980 939)	(500 051)
Use of materials and raw materials and value of goods		(2 097 962)	(1 093 511)	(1 663 061)	(871 630)
sold Purchase of electricity and gas for sales purposes		(4 116 962)	(2 019 829)	(3 682 909)	(1 810 113)
Transmission services		(217 185)	(110 021)	(236 895)	(115 430)
Other third-party services		(439 616)	(215 214)	(400 716)	(195 705)
Taxes and fees		(235 842)	(116 007)	(221 227)	(89 510)
Loss on change, sale and liquidation of property, plant and equipment and right-of-use assets		(23 591)	(11 388)	(17 195)	(2 418)
Impairment losses on non-financial non-current assets Other operating costs		(3 364) (73 855)	(6) (6 417)	(521 772) (99 611)	(521 772) (38 471)
Operating profit		899 190	351 215	528 958	(105 540)
Finance costs		(116 911)	(58 115)	(173 708)	(81 643)
Finance income		35 700	13 218	23 336	10 996
Dividend income		119	119	152	152
Impairment of financial assets at amortised cost Share of results of associates and jointly controlled		(9 988)	(3 788)	(138 737)	(137 695)
entities	11	121 204	121 485	(250 338)	(251 706)
Profit before tax		929 314	424 134	(10 337)	(565 436)
Income tax	8	(193 284)	(94 516)	(71 306)	24 746
Net profit for the reporting period		736 030	329 618	(81 643)	(540 690)
Other comprehensive income
Subject to reclassification to profit or loss:
- measurement of hedging instruments		80 770	28 043	(141 805)	(42 991)

- income tax	8	(15 347)	(5 347)	26 965	8 132
Not subject to reclassification to profit or loss:
- restatement of defined benefit plan		25 035	25 035	(46 504)	(46 504)
- other		(1 263)	(533)	−	−
- income tax	8	(4 757)	(4 757)	8 836	8 836
Net other comprehensive income		84 438	42 441	(152 508)	(72 527)
Comprehensive income for the reporting period		820 468	372 059	(234 151)	(613 217)
Including net profit:
attributable to shareholders of the Parent		699 380	313 816	(99 218)	(543 815)
attributable to non-controlling interests		36 650	15 802	17 575	3 125
Including comprehensive income:
attributable to shareholders of the Parent		784 061	356 500	(250 995)	(615 611)
attributable to non-controlling interests		36 407	15 559	16 844	2 394

Net profit attributable to shareholders of the Parent		699 380	313 816	(99 218)	(543 815)
Weighted average number of ordinary shares		441 442 578	441 442 578	441 442 578	441 442 578
Net profit attributable to the Parent's shareholders, per share (in PLN per share)		1.58	0.71	(0.22)	(1.23)
Diluted profit per share (in PLN per share)		1.58	0.71	(0.22)	(1.23)

The consolidated statement of comprehensive income should by analysed in conjunction with the additional information and explanations, which constitute an integral part of these condensed consolidated interim financial statements.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

	As at
	Note	30 June 2021	31 December 2020
		(unaudited)
ASSETS
Non-current assets
Property, plant and equipment	9	18 872 613	18 903 722
Right-of-use assets		748 123	730 078
Intangible assets	10	349 380	359 365
Investment properties		20 753	21 239
Investments in associates and jointly controlled entities	11	140 751	133 647
Deferred income tax assets	8	1 134 501	1 296 061
Financial assets measured at fair value	20	55 732	97 957
Trade and other receivables		391 157	72 381
Costs related to the conclusion of agreements		12 432	11 256
Finance lease and sublease receivables		772	513
Funds in the Mine Decommissioning Fund		141 226	141 591
Total non-current assets		21 867 440	21 767 810
Current assets
CO2 emission allowances		794 054	2 529 059
Inventories	12	1 291 217	1 129 975
Trade and other receivables		2 294 947	2 132 191
Costs related to the conclusion of agreements		11 970	13 428
Assets arising from contracts with customers	14	415 756	322 446
Finance lease and sublease receivables		868	975
Current income tax receivables		125 663	10 470
Financial assets measured at fair value	20	29 429	41 894
Debt financial assets at amortised cost	21	61	61
Cash and cash equivalents	15	4 195 268	1 941 554
Total current assets		9 159 233	8 122 053
Total assets		31 026 673	29 889 863

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

		As at
	Note	30 June 2021 (unaudited)	31 December 2020
EQUITY AND LIABILITIES
Equity
Equity attributable to shareholders of the parent
Share capital		588 018	588 018
Share premium		2 692 784	3 632 464
Revaluation reserve - measurement of financial instruments		-	(16 295)
Revaluation reserve - measurement of hedging instruments		(40 111)	(105 534)
Retained earnings		9 580 185	7 938 162
Total equity attributable to shareholders of the parent		12 820 876	12 036 815
Non-controlling interests		1 093 859	1 057 538
Total equity		13 914 735	13 094 353

LIABILITIES
Non-current liabilities
Credit facilities, loans and debt securities	17	4 641 594	6 607 756
Trade and other payables		903 640	132 793
Liabilities arising from contracts with customers	14	16 035	10 833
Lease liabilities		536 816	529 140
Accounting for subsidies and road lighting modernisation services	19	286 857	261 162
Deferred income tax provision Employee benefit liabilities	8	449 947 1 081 642	445 094 1 097 643
Financial liabilities measured at fair value		22 513	75 131
Provisions for other liabilities and other charges	18	848 530	849 990
Total non-current liabilities		8 787 574	10 009 542

Current liabilities
Credit facilities, loans and debt securities	17	2 318 704	1 224 061
Trade and other payables		3 144 017	2 037 926
Liabilities arising from contracts with customers	14	375 400	246 629
Lease liabilities		24 881	25 172
Accounting for subsidies and road lighting modernisation services	19	15 437	13 308
Current income tax liabilities		1 643	73 500
Employee benefit liabilities		490 143	497 483
Liabilities concerning the equivalent for rights to free purchase of shares Financial liabilities measured at fair value		281 75 997	281 70 987
Provisions for other liabilities and other charges	18	1 877 861	2 596 621
Total current liabilities		8 324 364	6 785 968

Total liabilities		17 111 938	16 795 510

TOTAL EQUITY AND LIABILITIES		31 026 673	29 889 863

The consolidated statement of financial position should by analysed in conjunction with the additional information and explanations, which constitute an integral part of the condensed consolidated interim financial statements.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(a) H1 2021 (unaudited)

	Equity attributable to shareholders of the parent
	Share capital (nominal amount)	Reserve for revaluation and merger accounting	Total share capital	Share premium	Revaluation reserve - measurement of financial instruments	Revaluation reserve - measurement of hedging instruments	Retained earnings	Non-controlling interests	Total equity

As at 1 January 2021	441 443	146 575	588 018	3 632 464	(16 295)	(105 534)	7 938 162	1 057 538	13 094 353
Net profit for the reporting period	-	-	-	-	-	-	699 380	36 650	736 030
Net other comprehensive income	-	-	-	-	17 036	65 423	2 222	(243)	84 438
Net comprehensive income recognised in the period	-	-	-	-	17 036	65 423	701 602	36 407	820 468
Dividends	-	-	-	-	-	-	-	(86)	(86)
Coverage of net loss - transfer	-	-	-	(939 680)	-	-	939 680	-	-
Other	-	-	-	-	(741)	-	741	-	-
As at 30 June 2021	441 443	146 575	588 018	2 692 784	-	(40 111)	9 580 185	1 093 859	13 914 735

(b) H1 2020 (unaudited)

	Equity attributable to shareholders of the parent
	Share capital (nominal amount)	Reserve for revaluation and merger accounting	Total share capital	Share premium	Revaluation reserve - measurement of financial instruments	Revaluation reserve - measurement of hedging instruments	Retained earnings	Non-controlling interests	Total equity

As at 1 January 2020	441 443	146 575	588 018	3 632 464	(16 295)	(17 356)	10 268 882	1 024 058	15 479 771
Net profit for the reporting period	-	-	-	-	-	-	(99 218)	17 575	(81 643)
Net other comprehensive income	-	-	-	-	-	(114 840)	(36 937)	(731)	(152 508)
Net comprehensive income recognised in the period	-	-	-	-	-	(114 840)	(136 155)	16 844	(234 151)
Other	-	-	-	-	28	-	-	-	28
As at 30 June 2020	441 443	146 575	588 018	3 632 464	(16 267)	(132 196)	10 132 727	1 040 902	15 245 648

CONSOLIDATED STATEMENT OF CASH FLOWS

	Note	For the six-month period ended 30 June 2021 (unaudited)	30 June 2020 (unaudited)

Cash flows from operating activities Net profit/(net loss) for the reporting period		736 030	(81 643)
Adjustments:
Income tax in profit or loss Depreciation/amortisation	8	193 284 749 581	71 306 770 968
Loss on change, sale and liquidation of property, plant and equipment and right of-use assets		23 591	17 195
Impairment losses on non-financial non-current assets (Gain)/loss on sale of financial assets Interest income Dividend income Interest costs		3 364 (15 235) (9 915) (119) 86 747	521 772 13 108 (5 914) (152) 121 545
Loss/(gain) on measurement of financial instruments Impairment of financial assets at amortised cost Share of profit of associates and jointly controlled entities		47 312 9 988 (121 204)	(47 429) 138 737 250 338
Other adjustments Total adjustments Paid income tax Changes in working capital:		(13 391) 954 003 (245 051)	(15 398) 1 836 076 (130 465)
CO2 emission allowances Inventories		1 735 005 (149 710)	1 225 909 399
Trade and other receivables Trade and other payables Employee benefit liabilities		(438 303) 2 133 001 1 695	115 439 (212 691) 30 399
Accounting for subsidies and road lighting modernisation services Provisions for other liabilities and charges Total changes in working capital		27 613 (607 082) 2 702 219	9 484 (334 522) 834 417
Net cash flows from operating activities		4 147 201	2 458 385

Cash flows from investing activities Purchase of non-current tangible and intangible assets and right-of-use assets Proceeds from sale of non-current tangible and intangible assets and right-of-use		(945 469)	(1 212 782)
assets		807	8 238
Purchase of financial assets Proceeds from sale of financial assets		− 53 136	(4 000) −
Purchase of associates and jointly controlled entities Inflows/(outflows) concerning funds at Mine Decommissioning Fund bank account		− 365	(696) (984)
Received interest Other (outflows)/inflows from investing activities		16 (377)	2 498 50
Net cash flows from investing activities		(891 522)	(1 207 676)
Cash flows from financing activities
Credit and loans received Repayment of credit and loans Bond buy-back		− (108 476) (769 055)	1 507 (88 315) (1 106 255)
Dividends paid Repayment of lease liabilities		(86) (30 583)	− (29 185)
Interest paid		(91 249)	(142 833)
Other outflows under financing activities Net cash flows from financing activities		(2 516) (1 001 965)	(2 288) (1 367 369)

Total net cash flows		2 253 714	(116 660)
Cash at the beginning of reporting period		1 941 554	3 761 947
Cash at the end of reporting period		4 195 268	3 645 287
including restricted cash		374 784	329 922

The consolidated statement of cash flows should by analysed in conjunction with the additional information and explanations, which constitute an integral part of the condensed consolidated interim financial statements

ADDITIONAL INFORMATION AND EXPLANATIONS

General information

1. General information on the Parent

Name:	ENEA Spółka Akcyjna
Legal form:	spółka akcyjna (joint-stock company)
Country of registration:	Poland
Registered office:	Poznań, Poland
Address:	ul. Górecka 1, 60-201 Poznań
Location of business:	Poland
KRS:	0000012483
Telephone number:	(+48 61) 884 55 44
Fax number:	(+48 61) 884 59 59
E-mail:	[email protected]
Website:	www.enea.pl
REGON number:	630139960
NIP number:	777-00-20-640

ENEA S.A. ("Company," "Parent") is the parent entity for ENEA Group ("Group").

As at 30 June 2021, the Parent's shareholding structure was as follows:

	Poland's State Treasury	Other shareholders	Total
As at 30 June 2021	51.50%	48.50%	100.00%

As at 30 June 2021, the Parent's highest-level controlling entity was the State Treasury.

As at 30 June 2021, ENEA S.A.'s statutory share capital amounted to PLN 441 443 thousand (PLN 588 018 thousand after restatement to EU IFRS, taking into account hyperinflation and other adjustments) and was divided into 441 442 578 shares.

The Parent's duration is indefinite.

Its activities are conducted on the basis of relevant concessions issued for the Parent and for specific Group companies.

The Group's condensed consolidated interim financial statements cover the six-month period ended 30 June 2021 and contain comparative data for the six-month period ended 30 June 2020 and the year ended 31 December 2020.

2. Group composition

As at 30 June 2021, ENEA Group consisted of the parent - ENEA S.A., 14 subsidiaries, 9 indirect subsidiaries, 2 associates and 2 jointly controlled entities.

ENEA Group's principal business activities are as follows:

production of electric and thermal energy (ENEA Wytwarzanie Sp. z o.o., ENEA Elektrownia Połaniec S.A., Przedsiębiorstwo Energetyki Cieplnej Sp. z o.o. w Obornikach, Miejska Energetyka Cieplna Piła Sp. z o.o., ENEA Ciepło Sp. z o.o., ENEA Nowa Energia Sp. z o.o.);
trade of electricity (ENEA S.A., ENEA Trading Sp. z o.o.);
distribution of electricity (ENEA Operator Sp. z o.o.);
distribution of heat (Przedsiębiorstwo Energetyki Cieplnej Sp. z o.o. w Obornikach, Miejska Energetyka Cieplna Piła Sp. z o.o., ENEA Ciepło Sp. z o.o.);

mining and enriching of hard coal (LW Bogdanka S.A.)

	Company name	Activity	Registered office	ENEA S.A.'s stake in total number of voting rights as at 30 June 2021	ENEA S.A.'s stake in total number of voting rights as at 31 December 2020
	SUBSIDIARIES
1.	ENEA Operator Sp. z o.o.	distribution	Poznań	100%	100%
2.	ENEA Wytwarzanie Sp. z o.o.	generation	Świerże Górne	100%	100%
3.	ENEA Elektrownia Połaniec S.A.	generation	Połaniec	100%	100%
4.	ENEA Oświetlenie Sp. z o.o.	other activity	Szczecin	100%	100%
5.	ENEA Trading Sp. z o.o.	trade	Świerże Górne	100%	100%
6.	ENEA Serwis Sp. z o.o.	distribution	Lipno	100%	100%
7.	ENEA Centrum Sp. z o.o.	other activity	Poznań	100%	100%
8.	ENEA Pomiary Sp. z o.o.	distribution	Poznań	100%	100%
9.	ENERGO-TOUR Sp. z o.o. w likwidacji	other activity	Poznań	100%6	100%6
10.	ENEA Innowacje Sp. z o.o.	other activity	Warsaw	100%7,8	100%
11.	Lubelski Węgiel BOGDANKA S.A.	mining	Bogdanka	65.99%	65.99%
12.	ENEA Ciepło Sp. z o.o.	generation	Białystok	99.94%	99,94%
13.	ENEA Ciepło Serwis Sp. z o.o.	generation	Białystok	100%	100%
14.	ENEA Nowa Energia Sp. z o.o.	generation	Radom	100%	100%
	INDIRECT SUBSIDIARIES
15.	ENEA Logistyka Sp. z o.o.	distribution	Poznań	100%5	100%5
16.	ENEA Bioenergia Sp. z o.o.	generation	Połaniec	100%1	100%1
17.	ENEA Połaniec Serwis Sp. z o.o.	generation	Połaniec	100%1	100%1
18.	Przedsiębiorstwo Energetyki Cieplnej Sp. z o.o.	generation	Oborniki	99.93%2	99.93%2
19.	Miejska Energetyka Cieplna Piła Sp. z o.o.	generation	Piła	71.11%2	71.11%2
20.	EkoTRANS Bogdanka Sp. z o.o.	mining	Bogdanka	65.99%3	65.99%3
21.	RG Bogdanka Sp. z o.o.	mining	Bogdanka	65.99%3	65.99%3
22.	MR Bogdanka Sp. z o.o.	mining	Bogdanka	65.99%3	65.99%3
23.	Łęczyńska Energetyka Sp. z o.o.	mining	Bogdanka	58.53%3	58.53%3
24.	ENEA Badania i Rozwój Sp. z o.o.	other activity	Warsaw	4,8 -	100%4
	JOINTLY CONTROLLED ENTITIES
25.	Polska Grupa Górnicza S.A.	-	Katowice	7.66%	7.66%
26.	Elektrownia Ostrołęka Sp. z o.o.	-	Ostrołęka	50%	50%
	ASSOCIATES
27.	Polimex – Mostostal S.A.	-	Warsaw	16.48%	16.48%
28.	ElectroMobility Poland S.A.	-	Warsaw	25%	25%

¹ – indirect subsidiary through stake in ENEA Elektrownia Połaniec S.A.

² – indirect subsidiary through stake in ENEA Wytwarzanie Sp. z o.o.

³ – indirect subsidiary through stake in Lubelski Węgiel BOGDANKA S.A.

⁴ – indirect subsidiary through stake in ENEA Innowacje Sp. z o.o.

⁵ – indirect subsidiary through stake in ENEA Operator Sp. z o.o.

⁶ – on 30 March 2015 the company's extraordinary general meeting adopted a resolution on the dissolution of the company following a liquidation proceeding; the resolution entered into force on 1 April 2015. An application for the company to be removed from the National Court Register was filed on 5 November 2015. At the date on which these condensed consolidated interim financial statements were prepared, procedural activities connected with removing the entity from the National Court Register were in progress.

⁷ – on 7 May 2021 an Extraordinary General Meeting of ENEA Innowacje Sp. z o.o. adopted a resolution regarding an increase of the company's share capital by PLN 4 500 thousand, i.e. from PLN 26 360 thousand to PLN 30 860 thousand, by issuing 45 000 new shares with a nominal value of PLN 100.00 each. All of the new-issue shares were acquired by ENEA S.A. and were paid for with a cash contribution. The share capital increase was registered at the National Court Register on 1 July 2021.

⁸ – on 12 April 2021 an Extraordinary General Meeting of ENEA Badania i Rozwój Sp. z o.o. adopted a resolution on a merger with ENEA Innowacje Sp. z o.o. through the acquisition of ENEA Badania i Rozwój Sp. z o.o. by ENEA Innowacje Sp. z o.o.

The merger of ENEA Innowacje Sp. z o.o. and ENEA Badania i Rozwój Sp. z o.o. was entered in the National Court Register on 1 June 2021.

3. Changes in composition of the Parent's Management Board and Supervisory Board

Management Board

	As at	As at
	30 June 2021	31 December 2020

President of the Management Board	Paweł Szczeszek	Paweł Szczeszek
Member of the Management Board, responsible for finance	Rafał Mucha	Rafał Mucha
Member of the Management Board, responsible for sales	Tomasz Siwak	Tomasz Siwak
Member of the Management Board, responsible for corporate affairs	Tomasz Szczegielniak	Tomasz Szczegielniak
Member of the Management Board, responsible for operations	Marcin Pawlicki	Marcin Pawlicki

Supervisory Board

	As at		As at
	30 June 2021	Appointment	31 December 2020	Resignation

Chairperson of the Supervisory Board	Rafał Włodarski	7 January 2021	Izabela Felczak Poturnicka	5 January 2021
Deputy Chairperson of the Supervisory Board	Roman Stryjski		Roman Stryjski
Secretary of the Supervisory Board	Michał Jaciubek		Michał Jaciubek
Member of the Supervisory Board	Dorota Szymanek	7 January 2021	Rafał Włodarski
Member of the Supervisory Board	Maciej Mazur		Maciej Mazur
Member of the Supervisory Board	Piotr Mirkowski		Piotr Mirkowski
Member of the Supervisory Board	Paweł Koroblowski		Paweł Koroblowski
Member of the Supervisory Board	Ireneusz Kulka		Ireneusz Kulka
Member of the Supervisory Board	Mariusz Pliszka		Mariusz Pliszka
Member of the Supervisory Board	Mariusz Fistek		Mariusz Fistek

On 4 January 2021, the Company received a letter of resignation from Mrs. Izabela Felczak-Poturnicka as Chairperson of the Supervisory Board and as Supervisory Board member, effective from 5 January 2021.

On 7 January 2021, an Extraordinary General Meeting of ENEA S.A. appointed Mr. Rafał Włodarski as Chairperson of ENEA S.A.'s Supervisory Board.

On 7 January 2021, the Company's Extraordinary General Meeting adopted a resolution appointing Mrs. Dorota Szymanek as member of ENEA S.A.'s Supervisory Board, effective from the same date.

On 15 September 2021, the Company received a statement from Mr. Ireneusz Kulka on his resignation as member of the Supervisory Board of ENEA S.A. and Chairperson of the Audit Committee, effective 16 September 2021.

4. Basis for preparing financial statements

The Parent's Management Board used its best knowledge as to the application of standards and interpretations as well as methods and rules for the measurement of items in ENEA Group's condensed consolidated interim financial statements in accordance with EU IFRS as at 30 June 2021. The presented tables and explanations are prepared with due diligence. These condensed consolidated interim financial statements have been reviewed by a statutory auditor. The accounting rules below are applied consistently across all of the presented periods unless stated otherwise.

These condensed consolidated interim financial statements are prepared on a going concern basis for the foreseeable future. There are no circumstances such as would indicate a threat to the Group's going concern.

These condensed consolidated interim financial statements should be read in conjunction with ENEA Group's consolidated

financial statements for the financial year ended 31 December 2020.

5. Accounting rules (policy) and significant estimates and assumptions

These condensed consolidated interim financial statements are prepared in accordance with accounting rules that are consistent with those applied in preparing the most recent annual consolidated financial statements, for the financial year ended 31 December 2020.

Drafting condensed consolidated interim financial statements in accordance with IAS 34 requires the Management Board to adopt certain assumptions and make estimates that have an impact on the application of accounting rules and on amounts being presented in the condensed consolidated interim financial statements and explanatory notes to these statements. Such assumptions and estimates are based on the Management Board's best knowledge regarding current and future events and activities. However, actual results may differ from forecasts. The estimates used in preparing these condensed consolidated interim financial statements are consistent with the estimates used in preparing the consolidated financial statements for the most recent financial year. The estimated values presented in previous financial years do not have a material impact on the present interim period.

6. Functional currency and presentation currency

Items in the financial statements of individual Group entities are measured in the main currency of the economic setting in which the entity operates (in the functional currency).

The condensed consolidated interim financial statements are presented in PLN, which is the functional and presentation currency for all of the Group's entities. Items in financial statements are rounded to full thousands of zlotys (PLN 000s), unless otherwise stated.

Operating segments

The Group presents segment information in accordance with IFRS 8 Operating Segments. Operating segments correspond to the reporting segments and are not aggregated. The Group's activities are managed in operating segments that are distinct in terms of products and services. ENEA Group reports four operating segments and other activity, as shown below.

Segment revenue is revenue generated from sales to external customers and transactions with other segments that can be directly attributed to the given segment. Segment costs include the cost of sales to external customers and costs of transactions with other segments within the Group that result from the operating activities of a given segment and can be directly attributed to the given segment. Market prices are applied to inter-segment transactions, which makes it possible for units to generate margins sufficient to independently operate on the market.

In analysing segment results, the Group especially focuses on EBITDA. EBITDA is defined as operating profit (calculated as result before tax adjusted by the share of results of associates and jointly controlled entities, impairment of financial assets at amortised cost, impairment of investments in associates and jointly controlled entities, finance income, dividend income and finance costs) plus amortisation and impairment of non-financial non-current assets.

Rules for determining segment results and segment assets and liabilities are in compliance with the accounting rules used in preparing consolidated financial statements.

In the third quarter of 2020, ENEA Logistyka Sp. z o.o. became a subsidiary of ENEA Operator Sp. z o.o. According to the Parent's Management Board, shifting this company into the distribution segment more closely reflects the nature of its activities.

This is why the revenue, costs, assets and liabilities of ENEA Logistyka Sp. z o.o. are presented in these condensed consolidated interim financial statements in the distribution segment rather than in the other activities segment. The comparative period in notes concerning segments was also appropriately restated.

Segment results for the period from 1 January to 30 June 2021 are as follows:

	TRADE	DISTRIBUTION	GENERATION	MINING	OTHER ACTIVITY	EXCLUSIONS	TOTAL
Net revenue from sales	3 856 183	1 610 543	4 119 450	174 736	55 557	−	9 816 469
Inter-segment sales	790 139	18 045	344 095	867 680	192 831	(2 212 790)	−
Total net revenue from sales	4 646 322	1 628 588	4 463 545	1 042 416	248 388	(2 212 790)	9 816 469
Revenue from operating leases and subleases	−	−	450	4 179	2 276	(36)	6 869
Revenue from sales and other income	4 646 322	1 628 588	4 463 995	1 046 595	250 664	(2 212 826)	9 823 338
Total costs	(4 639 011)	(1 273 197)	(4 009 808)	(915 191)	(230 411)	2 179 957	(8 887 661)
Segment result	7 311	355 391	454 187	131 404	20 253	(32 869)	935 677
Depreciation/amortisation	(1 599)	(332 066)	(201 138)	(186 923)	(36 643)
Impairment losses on non-financial non-current assets	−	−	−	(6)	(3 358)
Segment result - EBITDA	8 910	687 457	655 325	318 333	60 254
% of revenue from sales and other income	0.2%	42.2%	14.7%	30.4%	24.0%
Unallocated costs at Group level (administration expenses)							(36 487)
Operating profit							899 190
Finance costs							(116 911)
Finance income							35 700
Dividend income							119
Impairment of financial assets at amortised cost							(9 988)
Share of results of associates and jointly controlled entities							121 204
Income tax							(193 284)
Net profit							736 030
Share of profit attributable to non-controlling interests							36 650

Segment results for the period from 1 April to 30 June 2021 are as follows:

	TRADE	DISTRIBUTION	GENERATION	MINING	OTHER ACTIVITY	EXCLUSIONS	TOTAL
Net revenue from sales Inter-segment sales	1 855 133 431 602	780 474 8 607	2 044 717 175 737	68 240 432 641	26 636 96 430	- (1 145 017)	4 775 200 -
Total net revenue from sales	2 286 735	789 081	2 220 454	500 881	123 066	(1 145 017)	4 775 200
Revenue from operating leases and subleases	-	-	267	2 037	71	(11)	2 364
Revenue from sales and other income	2 286 735	789 081	2 220 721	502 918	123 137	(1 145 028)	4 777 564
Total costs	(2 325 545)	(637 955)	(2 033 982)	(443 571)	(107 478)	1 139 472	(4 409 059)
Segment result	(38 810)	151 126	186 739	59 347	15 659	(5 556)	368 505
Depreciation/amortisation Impairment losses on non-financial non-current assets	(735) -	(167 572) -	(101 387) -	(95 413) (6)	(17 472) -
Segment result - EBITDA	(38 075)	318 698	288 126	154 766	33 131
% of revenue from sales and other income Unallocated costs at Group level (administration expenses)	(1.7%)	40.4%	13.0%	30.8%	26.9%		(17 290)
Operating profit							351 215
Finance costs Finance income Dividend income Impairment of financial assets at amortised cost Share of results of associates and jointly controlled entities Income tax							(58 115) 13 218 119 (3 788) 121 485 (94 516)
Net profit							329 618
Share of profit attributable to non-controlling interests							15 802

The additional information and explanations presented on pages 9 -44 constitute an integral part of these condensed consolidated interim financial statements.

Segment results for the period from 1 January to 30 June 2020 are as follows:

	TRADE	DISTRIBUTION	GENERATION	MINING	OTHER ACTIVITY	EXCLUSIONS	TOTAL
Net revenue from sales Inter-segment sales	3 338 653 660 509	1 607 425 14 893	3 810 600 294 933	132 316 711 880	52 863 184 051	− (1 866 266)	8 941 857 −
Total net revenue from sales	3 999 162	1 622 318	4 105 533	844 196	236 914	(1 866 266)	8 941 857
Revenue from operating leases and subleases	−	−	273	4 816	2 534	(25)	7 598
Revenue from sales and other income	3 999 162	1 622 318	4 105 806	849 012	239 448	(1 866 291)	8 949 455
Total costs	(3 959 515)	(1 252 775)	(4 040 873)	(782 990)	(222 253)	1 875 095	(8 383 311)
Segment result	39 647	369 543	64 933	66 022	17 195	8 804	566 144
Depreciation/amortisation (Impairment loss)/reversal of impairment loss on non-financial non-current assets	(663) −	(308 956) −	(284 324) (522 822)	(149 342) 1 050	(35 234) −
Segment result - EBITDA	40 310	678 499	872 079	214 314	52 429
% of revenue from sales and other income Unallocated costs at Group level (administration expenses)	1.0%	41.8%	21.2%	25.2%	21.9%		(37 186)
Operating profit							528 958
Finance costs Finance income Dividend income Impairment of financial assets at amortised cost Share of results of associates and jointly controlled entities Income tax							(173 708) 23 336 152 (138 737) (250 338) (71 306)
Net profit							(81 643)
Share of profit attributable to non-controlling interests							17 575

Segment results for the period from 1 April to 30 June 2020 are as follows:

	TRADE	DISTRIBUTION	GENERATION	MINING	OTHER ACTIVITY	EXCLUSIONS	TOTAL
Net revenue from sales Inter-segment sales	1 576 306 374 576	808 342 8 044	1 881 783 128 049	63 150 319 452	25 235 94 918	- (925 039)	4 354 816 -
Total net revenue from sales	1 950 882	816 386	2 009 832	382 602	120 153	(925 039)	4 354 816
Revenue from operating leases and subleases	-	-	137	2 327	106	(13)	2 557
Revenue from sales and other income	1 950 882	816 386	2 009 969	384 929	120 259	(925 052)	4 357 373
Total costs	(2 021 228)	(603 150)	(2 276 324)	(372 127)	(109 753)	938 675	(4 443 907)
Segment result	(70 346)	213 236	(266 355)	12 802	10 506	13 623	(86 534)
Depreciation/amortisation (Impairment loss)/reversal of impairment loss on non-financial non-current assets	(344) -	(159 027) -	(143 354) (522 822)	(73 177) 1 050	(17 479) -
Segment result - EBITDA	(70 002)	372 263	399 821	84 929	27 985
% of revenue from sales and other income Unallocated costs at Group level (administration expenses)	(3.6%)	45.6%	19.9%	22.1%	23.3%		(19 006)
Operating profit							(105 540)
Finance costs Finance income Dividend income Impairment of financial assets at amortised cost Share of results of associates and jointly controlled entities							(81 643) 10 996 152 (137 695) (251 706)
Income tax Net profit							24 746 (540 690)
Share of profit attributable to non-controlling interests							3 125

Other information concerning segments as at 30 June 2021 and for the six-month period ended on that date is as follows:

	Trade	Distribution	Generation	Mining	Other activity	Exclusions	Total

Property, plant and equipment	15 063	9 949 886	6 003 119	3 061 451	351 709	(518 091)	18 863 137
Trade and other receivables	1 969 174	359 489	1 035 531	230 855	424 987	(1 336 370)	2 683 666
Costs related to the conclusion of agreements	24 402	-	-	-	-	-	24 402
Assets arising from contracts with customers	186 831	240 249	47	-	-	(11 371)	415 756
Total	2 195 470	10 549 624	7 038 697	3 292 306	776 696	(1 865 832)	21 986 961
ASSETS excluded from segments - including property, plant and equipment - including trade and other receivables							9 039 712 9 476 2 438

TOTAL ASSETS							31 026 673
Trade and other payables	211 869	690 071	660 052	229 824	199 196	(672 163)	1 318 849
Liabilities arising from contracts with customers	716 357	349 627	-	889	140	(675 578)	391 435
Total	928 226	1 039 698	660 052	230 713	199 336	(1 347 741)	1 710 284
Equity and liabilities excluded from segments - including trade and other payables							29 316 389 2 728 808
TOTAL EQUITY AND LIABILITIES							31 026 673
for the 6-month period ending 30 June 2021 Investment expenditures on property, plant and equipment and intangible assets Investment expenditures on property, plant and equipment	769	341 505	190 913	137 132	7 770	(12 388)	665 701 −
and intangible assets excluded from segments Depreciation/amortisation	1 599	332 066	201 138	186 923	36 643	(10 355)	748 014
Amortisation excluded from segments							1 567
Recognition/(reversal/use) of impairment losses on receivables	4 687	1 777	(14 806)	2 248	(46)	-	(6 140)
Recognition of impairment losses on non-financial non-current assets	-	-	-	6	3 358	-	3 364

Other information concerning segments as at 31 December 2020 and for the six-month period ended on 30 June 2020 is as follows:

	Trade	Distribution	Generation	Mining	Other activity	Exclusions	Total
Property, plant and equipment	14 392	9 889 504	5 978 596	3 158 735	368 500	(515 537)	18 894 190
Trade and other receivables	1 421 069	313 950	735 455	268 999	93 293	(630 881)	2 201 885
Costs related to the conclusion of agreements	24 684	-	-	-	-	-	24 684
Assets arising from contracts with customers	127 988	206 426	18	-	311	(12 297)	322 446
Total	1 588 133	10 409 880	6 714 069	3 427 734	462 104	(1 158 715)	21 443 205
ASSETS excluded from segments - including property, plant and equipment - including trade and other receivables							8 446 658 9 532 2 687
TOTAL ASSETS							29 889 863
Trade and other payables	338 466	526 855	625 379	244 462	204 054	(351 012)	1 588 204
Liabilities arising from contracts with customers	324 455	222 155	-	1 329	1 689	(292 166)	257 462
Total	662 921	749 010	625 379	245 791	205 743	(643 178)	1 845 666
Equity and liabilities excluded from segments - including trade and other payables							28 044 197 582 515
TOTAL EQUITY AND LIABILITIES							29 889 863
for the 6-month period ending 30 June 2020 Investment expenditures on property, plant and equipment and intangible assets Investment expenditures on property, plant and equipment and intangible assets excluded from segments	609	485 025	236 303	399 506	17 710	(21 302)	1 117 851 −
Depreciation/amortisation Amortisation excluded from segments	663	308 956	284 324	149 342	35 234	(8 685)	769 834 1 134
Recognition/(reversal/use) of impairment losses on receivables	2 456	(9 189)	(9 649)	(1 791)	(77)	-	(18 250)
Recognition/(reversal) of impairment losses on non-financial non-current assets	-	-	522 822	(1 050)	-	-	521 772

Explanatory notes to the consolidated statement of comprehensive income

7. Revenue from sales

Net revenue from sales

	For the six-month period ended
	30 June 2021	30 June 2020

Revenue from the sale of electricity	7 068 169	6 782 916
Revenue from the sale of distribution services	1 567 263	1 565 581
Revenue from the sale of goods and materials	59 705	42 744
Revenue from the sale of other products and services	81 553	84 199
Revenue from origin certificates	1 653	7 894
Revenue from the sale of industrial heat	234 752	186 715
Revenue from the sale of coal	155 344	116 155
Revenue from the sale of gas	221 879	155 653
Revenue from Capacity Market	426 151	-
Total net revenue from sales	9 816 469	8 941 857

The Group mainly classifies revenue by type of product/service. The key revenue groups are revenue from the sale of electricity (ENEA S.A., ENEA Wytwarzanie, ENEA Trading and ENEA Elektrownia Połaniec) and revenue from the sale of distribution services (ENEA Operator).

Sale of electricity: The Group recognises revenue when an obligation to provide a consideration by providing a promised good or service to the customer is performed (or is being performed). Revenue is recognised on the basis of prices specified in sale agreements, less estimated rebates and other deductions. The key groups of contracts include electricity sale contracts (including framework contracts) for retail, business, key and strategic customers. Under these contracts, service is provided in a continuous manner and the level of revenue depends on usage. Sales to the clearing-house Izba Rozliczeniowa Giełd Towarowych S.A. and the TGE power exchange also take place.

The standard payment deadline for invoices for the sale of electricity at ENEA S.A. is 14 days from VAT invoice date. In the case of business, key and strategic customers, payment deadlines may be negotiated.

Payment deadlines for invoices concerning electricity sales to IRGiT are 1-3 days from delivery and invoice issue. For sales to TGE, payment deadlines are governed by TGE's regulations.

Sale of distribution services: In the case of distribution services sales, ENEA Operator charges a fee that contains separate components: grid fee (variable component), quality fee, grid fee (fixed component), instalment fee, transition fee and renewables fee.

In the case of the quality fee, transition fee and renewables fee, ENEA Operator serves, as a rule, as entity collecting fees and providing this consideration to other market participants, e.g. to Polskie Sieci Elektroenergetyczne S.A. (PSE). These fees (quality fee, transition fee, renewables fee) constitute quasi-taxes collected on behalf of other entities. ENEA Operator acts as agent collecting fees for other energy market participants, including PSE. In consequence, revenue from the sale of distribution services is decreased by the amount of renewables fee, quality fee and transition fee collected. Costs related to the procurement of transmission services and costs related to invoices for renewables support and support for producers are subject to adjustment.

Revenue from the Capacity Market constitutes revenue from the performance of capacity contracts (obligations) executed as a result of the 2021 Auction. The Capacity Market is a market mechanism intended to ensure a stable supply of electricity to households and industry over the long term. After the end of each month, the Group's companies are entitled to receive fees from PSE S.A. for performing the capacity obligation. In connection with this obligation, the Group's companies that supply capacity to PSE S.A. recognise revenue every month from transactions related to the Capacity Market.

Presented below is revenue from sales, divided into categories that reflect how economic factors influence the amount, payment deadline and the uncertainty of revenue and cash flows.

	For the six-month period ended
	30 June 2021	30 June 2020
Revenue from continuous services	9 283 462	8 504 150
Revenue from services provided at specified time	533 007	437 707
Total	9 816 469	8 941 857

8. Tax

Deferred income tax

Changes in deferred income tax assets and provision (after offsetting assets and provision) are as follows:

	As at
	30 June 2021	31 December 2020

Net deferred income tax assets at the beginning of period, including:	850 967	155 977
- deferred income tax assets at the beginning of period	1 296 061	569 369
- deferred income tax provision at the beginning of period	445 094	413 392
(Charge)/addition to profit or loss	(146 309)	659 551
(Charge)/addition to other comprehensive income	(20 104)	35 439
Net deferred income tax assets at the end of period, including:	684 554	850 967
- deferred income tax assets at the end of period	1 134 501	1 296 061
- deferred income tax provision at the end of period	449 947	445 094

In the 6-month period ended 30 June 2021, the Group's profit before tax was charged as a result of a decrease in net deferred income tax assets by PLN 146 309 thousand (in the 6-month period ended 30 June 2020 the charge to the Group's profit before tax as a result of a decrease in net deferred income tax assets amounted to PLN 31 641 thousand).

Explanatory notes to the consolidated statement of financial position

9. Property, plant and equipment

In the 6-month period ended 30 June 2021 the Group purchased property, plant and equipment items for a total of PLN 656 158 thousand (in the 6-month period ended 30 June 2020: PLN 1 098 889 thousand). These amounts mainly concern the generation segment (PLN 190 531 thousand), mining (PLN 136 994 thousand) and distribution (PLN 312 253 thousand).

In the 6-month period ended 30 June 2021 the Group sold and liquidated property, plant and equipment items with a total net book value of PLN 25 476 thousand (in the 6 months ended 30 June 2020: PLN 18 643 thousand).

In the 6-month period ended 30 June 2021, impairment losses recognised on property, plant and equipment decreased by PLN 4 899 thousand on a net basis (in the 6-month period ended 30 June 2020 impairment of property, plant and equipment increased by PLN 518 687 thousand on a net basis).

As at 30 June 2021, total impairment of property, plant and equipment amounted to PLN 4 841 868 thousand (as at 31 December 2020: PLN 4 846 767 thousand).

Future contract liabilities related to the purchase of property, plant and equipment incurred as at the reporting date but not yet recognised in the statement of financial position reached PLN 1 235 189 thousand as at 30 June 2021 (as at 31 December 2020: PLN 1 067 174 thousand).

10. Intangible assets

In the 6-month period ended 30 June 2021 the Group purchased intangible assets worth PLN 9 543 thousand (in the 6-month period ended 30 June 2020 the Group purchased intangible assets worth PLN 18 962 thousand).

In the 6-month period ended 30 June 2021 the Group did not conduct significant sales or liquidations of intangible assets (in the 6-month period ended 30 June 2020 the Group also did not conduct significant sales or liquidations of intangible assets).

Future contract liabilities related to the purchase of intangible assets incurred as at the reporting date but not yet recognised in the statement of financial position reached PLN 61 355 thousand as at 30 June 2021 (as at 31 December 2020: PLN 29 173 thousand).

11. Investments in associates and jointly controlled entities

As at 30 June 2021	Elektrownia Ostrołęka Sp. z o.o.	Polimex - Mostostal S.A.	Polska Grupa Górnicza S.A.	ElectroMobility Poland S.A.	Total

Stake	50.00%	16.48%	7.66%	25%
Current assets	100 450	1 527 983	1 863 206	10 709	3 502 348
Non-current assets	65 011	692 518	8 158 540	42 557	8 958 626
Total assets	165 461	2 220 501	10 021 746	53 266	12 460 974

Current liabilities	679 367	1 274 013	6 437 334	937	8 391 651
Non-current liabilities	-	224 846	3 480 661	28	3 705 535
Total liabilities	679 367	1 498 859	9 917 995	965	12 097 186

Net assets	(513 906)	721 642	103 751	52 301	363 788
Share in net assets	-	118 927	7 947	13 075	139 949

Goodwill	7 080	15 954	52 697	-	75 731
Impairment of goodwill	(7 080)	-	(52 697)	-	(59 777)
Elimination of unrealised gains/losses	-	(7 205)	3 805	-	(3 400)
Impairment of investments	-	-	(11 752)*	-	(11 752)
Book value of equity-accounted investments at 30 June 2021	-	127 676	-	13 075	140 751

The following table shows key financial data concerning associates and jointly controlled entities consolidated using the equity approach:

The Group made a consolidation adjustment concerning margins on sales in transactions between the Group and Polimex - Mostostal S.A. and Polska Grupa Górnicza S.A.

	Polska Grupa Górnicza S.A.

Book value of equity-accounted investments at 31 December 2020	-
Recognised share of loss	(117 456)
Revaluation of investment	117 456
Book value of equity-accounted investments at 30 June 2021	-

As at 31 December 2020	Elektrownia Ostrołęka Sp. z o.o.	Polimex - Mostostal S.A.	Polska Grupa Górnicza S.A.	ElectroMobility Poland S.A.	Total
Stake	50.00%	16.48%	7.66%	25%
Current assets	38 172	1 390 029	1 799 476	17 537	3 245 214
Non-current assets	95 229	673 930	9 080 500	39 274	9 888 933
Total assets	133 401	2 063 959	10 879 976	56 811	13 134 147
Current liabilities	912 443	1 175 007	6 568 576	2 901	8 658 927
Non-current liabilities	−	213 913	2 733 135	17	2 947 065
Total liabilities	912 443	1 388 920	9 301 711	2 918	11 605 992
Net assets	(779 042)	675 039	1 578 265	53 893	1 528 155
Share in net assets	−	111 246	120 895	13 473	245 614
Goodwill	7 080	15 954	52 697	−	75 731
Impairment of goodwill	(7 080)	−	(52 697)	−	(59 777)
Impairment of investments	−	−	(129 208)	−	(129 208)
Elimination of unrealised gains/losses	−	(7 026)	8 313	−	1 287
Book value of equity-accounted investments at 31 December 2020	−	120 174	−	13 473	133 647

Change in investments in subsidiaries, associates and jointly controlled entities

	As at
	30 June 2021	31 December 2020

As at the beginning of period	133 647	373 016
Change in the change in net assets	7 104	(110 161)
Impairment of investments in jointly controlled entities	-	(129 208)
As at the reporting date	140 751	133 647

Implementation of project to build Elektrownia Ostrołęka C

At 30 June 2021, ENEA S.A. held 9 124 821 shares of Elektrownia Ostrołęka Sp. z o.o., with a nominal value of PLN 50 each and total nominal value of PLN 456 241 thousand.

On 13 February 2020, ENEA S.A. executed an agreement with ENERGA S.A. suspending financing by ENERGA S.A. and ENEA S.A. for the project to build Elektrownia Ostrołęka C. In the agreement, ENEA S.A. and ENERGA S.A. undertook to carry out analyses, especially concerning the project's technical, technological, economic and organisational parameters and further financing.

ENERGA S.A. and ENEA S.A. assumed that suspending financing for the project would result in the company having to suspend its contract executed on 12 July 2018 to build Elektrownia Ostrołęka C with capacity of approx. 1000 MW, along with a contract to convert rail infrastructure for Elektrownia Ostrołęka C of 4 October 2019.

On 14 February 2020, Elektrownia Ostrołęka Sp. z o.o. issued to the General Contractor for the contract to build Elektrownia Ostrołęka C with capacity of approx. 1000 MW of 12 July 2018 a notice to suspend all works related to that contract, effective 14 February 2020.

As part of the analytical work performed under the agreement, ENEA S.A. and ENERGA S.A. worked on updating business and technical assumptions as well as assumptions concerning the financing structure within the financial model. On ENERGA S.A.'s part, the results of this work were provided to Elektrownia Ostrołęka Sp. z o.o. on 14 May 2020, when the company received calculations concerning the Project's profitability in the coal fuel variant. These results were used by the company to perform a CGU test. The CGU test carried out at Elektrownia Ostrołęka Sp. z o.o. shows that completing the Project would generate a negative value, meaning that continuing the Project would be unjustified.

On 19 May 2020, ENEA S.A. received an electronic copy of Resolution no. 39/2020 of the Management Board of Elektrownia Ostrołęka Sp. z o.o. of 19 May 2020 regarding recognition of impairment losses on the book value of the Company's assets. As a result of an impairment test on non-current assets performed at Elektrownia Ostrołęka Sp. z o.o., which followed an update of business assumptions by Elektrownia Ostrołęka Sp. z o.o. regarding the construction of power plant Ostrołęka C based on coal technology, the Group's consolidated financial statements for 2019 include ENEA S.A.'s share of the net loss generated by Elektrownia Ostrołęka Sp. z o.o. Given the fact that it was higher than the value of the stake in this company, it was reduced to zero. At 30 June 2021, ENEA S.A.'s stake in Elektrownia Ostrołęka Sp. z o.o. was worth PLN 0.

On 2 June 2020 the Management Board of ENEA S.A. accepted a final report on analyses conducted in collaboration with ENERGA S.A. regarding the project's technical, technological, economic, organisational and legal aspects and further financing.

Conclusions from these analyses do not justify continuing the project in its existing form, i.e. the construction of a power plant generating electricity in a process of hard coal combustion. This evaluation was driven by the following:

1) regulatory changes at the EU level and the credit policy of certain financial institutions, which show that there is far greater access to financing for energy projects based on gas than coal; and
2) the acquisition of control over Energa by PKN Orlen S.A., the strategy of which does not include investments in electricity generation based on coal combustion.

At the same time, technical analysis confirmed the viability of a variant in which the power plant would use gas ("Gas Project") at the current location of the coal-unit being built. As a result of the above, ENEA S.A.'s Management Board decided to continue building a generating asset in Ostrołęka and change the fuel source from coal to gas.

On 2 June 2020, a three-party agreement was executed between ENEA S.A., ENERGA S.A. and PKN Orlen S.A., spelling out the following key cooperation rules for the Gas Project:

subject to the reservations expressed below, continue cooperation between ENEA S.A. and ENERGA S.A. via the existing special-purpose vehicle, i.e. Elektrownia Ostrołęka Sp. z o.o., and settle costs related to the Project between ENEA S.A. and ENERGA S.A., along with settlements with Project contractors, in accordance with the existing rules,
take into account PKN Orlen S.A.'s potential role in the Gas Project as a new shareholder,
ENEA S.A.'s participation in the Gas Project as a minority shareholder with an investment cap, as a result of which the Company will not be an entity co-controlling Elektrownia Ostrołęka Sp. z o.o.,
subject to the essential corporate approvals, execute a new shareholders agreement regarding the Gas Project that incorporates the aforementioned cooperation rules,

undertake activities intended to secure financing for the Gas Project by ENERGA S.A. together with PKN Orlen S.A.

From 2 June 2020, the parties to this agreement had been holding talks regarding a new investment agreement specifying rules for the further implementation of the Gas Project, including investment by each of the parties. At the same time, ENEA S.A. on its own evaluated the prospect of participating in the project.

On 22 December 2020 at the request of ENEA S.A.'s Management Board, ENEA S.A.'s Supervisory Board approved the following:

ENEA S.A.'s withdrawal from investing in the construction of a gas-based unit as part of project Ostrołęka C, and
arrangements with ENERGA regarding the settlement of costs pertaining to the project to build a coal-based unit as part of project Ostrołęka C.

In connection with the above, ENEA S.A. and the other parties involved in Project Ostrołęka C agreed that an organised part of enterprise related to the gas project will be spun off from Project Ostrołęka C (in accounting and organisational terms). From the spin-off date, investment costs related to settling the gas project will not be incurred by ENEA S.A.

Further, the following documents were signed on 22 December 2020:

agreement between ENEA S.A., ENERGA S.A. and Elektrownia Ostrołęka Sp. z o.o. regarding cooperation on the division of Elektrownia Ostrołęka Sp. z o.o. (Division Agreement),
agreement between the Company and ENERGA S.A. regarding cooperation on settling the coal-based project as part of Project Ostrołęka C (Settlement Agreement, Coal Project).

These agreements were signed in connection with a decision to change the source of power for the Elektrownia Ostrołęka C power plant being constructed with capacity of approx. 1000 MW from coal to gas, and ENEA S.A.'s decision to not participate in the Gas Project.

Both of the agreements include a statement by ENEA S.A. on withdrawal from further participation in the Gas Project. The reasons for withdrawing from further investment in the construction of the gas unit are especially related to ENEA Group's intention to intensify investing activity in the area of renewable energy sources as well as to invest in the conversion of coal-based sources to gas-based across ENEA S.A.'s existing generating assets that are fully owned by ENEA S.A.

Reaching these agreements also serves to confirm that in light of ENEA S.A.'s withdrawal from the Gas Project the remaining parties will not be seeking any claims from ENEA S.A. based on this decision.

In accordance with the Division Agreement, Elektrownia Ostrołęka Sp. z o.o. would be divided through a spin-off (in the meaning of the Polish Commercial Companies Code) of the assets and liabilities (rights and obligations) and other elements that comprise the Gas Project.

The Settlement Agreement is essential to the performance of the Division Agreement, which requires cooperation by the shareholders of Elektrownia Ostrołęka Sp. z o.o., including the settlement of costs related to the Coal Project. In accordance with the Settlement Agreement, costs related to the Coal Project will be settled based on the existing arrangements between the company and ENERGA S.A. and ENEA S.A.

On 31 December 2020, in accordance with the Settlement Agreement (which amended the loan agreement of 23 December 2019 in this regard), ENEA S.A. bought from ENERGA S.A. half of ENERGA S.A.'s receivables due from Elektrownia Ostrołęka Sp. z o.o. for a price equal to the nominal value of the receivables being sold, i.e. PLN 170 000 thousand, plus interest accrued from 31 December 2020, amounting to PLN 11 617 thousand.

Impairment of loans issued to Elektrownia Ostrołęka Sp. z o.o. as at 30 June 2021 amounted to PLN 219 772 thousand, together with interest (the value of these loans was written off to zero).

On 26 February 2021 ENEA S.A. and ENERGA S.A. executed with Elektrownia Ostrołęka Sp. z o.o. Annex 1 to the PLN 340 million loan agreement of 23 December 2019 and Annex 6 to the PLN 58 million loan agreement of 17 July 2019. Pursuant to the provisions of the aforementioned annexes, Elektrownia Ostrołęka Sp. z o.o. undertook to make a one-off loan repayment to ENEA S.A. of PLN 170 million and PLN 29 million, respectively, together with interest, by 30 June 2021. Next, on 30 June 2021, ENEA S.A. and ENERGA S.A. executed with Elektrownia Ostrołęka Sp. z o.o. Annex 2 to the PLN 340 million loan agreement of 23 December 2019 and Annex 7 to the PLN 58 million loan agreement of 17 July 2019. Pursuant to the provisions of the aforementioned annexes, Elektrownia Ostrołęka Sp. z o.o. undertook to make a one-off loan repayment to ENEA S.A. of PLN 170 million and PLN 29 million, respectively, together with interest, by 30 September 2021.

On 25 June 2021, Elektrownia Ostrołęka Sp. z o.o. as vendor and CCGT Ostrołęka Sp. z o.o. (a wholly-owned subsidiary of Energa S.A.) as buyer signed a sale agreement and associated agreements regarding an SPV (excluding certain assets) intended (and used as such) to implement economic tasks covering the construction of a gas-fired power generating unit in Ostrołęka and the subsequent operation of this unit (Gas Plant). The business being sold includes generally all of the SPV's asset and non-asset components in use as of the transaction date in connection with preparations to begin an investment process consisting of the construction of the Gas Plant. The transaction is intended to facilitate the implementation of a gas project by CCGT Ostrołęka Sp. z o.o. as a company that will replace Elektrownia Ostrołęka Sp. z o.o. in implementing the investment in Ostrołęka. The sale price for the business being sold (transaction value) is

currently estimated at approx. PLN 166 million. The price is set on a preliminary basis as additional considerations will apply in determining the final price.

On 25 June 2021, Elektrownia Ostrołęka Sp. z o.o. and CCGT Ostrołęka Sp. z o.o. on the one hand and GE Power sp. z o.o., based in Warsaw, GE Steam Power Systems S.A.S. (former name: ALSTOM Power Systems S.A.S.), based in Boulogne-Billancourt, France (Coal Project Contractor), and General Electric Global Services, GmbH, based in Baden, Switzerland (together with GE Power sp. z o.o. - Gas Project Contractor) on the other hand signed a Contract Change Document concerning the contract of 21 July 2018 to build unit C at Elektrownia Ostrołęka, with a capacity of 1000 MW, and an Agreement on settlement of the Coal Project. The Contract Change Document is structured in a way that facilitates implementation of the Gas Project by CCGT Ostrołęka Sp. z o.o. as a company that will replace Elektrownia Ostrołęka Sp. z o.o. in implementing the investment in Ostrołęka, which is related, inter alia, to the fact that ENEA S.A. has confirmed its withdrawal from the Gas Project. The agreement concerning the Coal Project settlement regulates the rights and obligations of Elektrownia Ostrołęka Sp. z o.o. and the Coal Project Contractor mainly in connection with the settlement of construction work that had been completed by the Coal Project Contractor before the contract was suspended, maintenance and security activities during Contract suspension and tasks related to finishing the work dedicated to implementing the Coal Project. Under this agreement, the Coal Project will be settled by the end of 2021, and the entire amount that Elektrownia Ostrołęka Sp. z o.o. will be obligated to pay to the Coal Project Contractor, taking into account the expenditures incurred thus far, will not exceed PLN 1.35 billion (net).

In connection with this agreement being signed and based on the status of settlements between Elektrownia Ostrołęka Sp. z o.o. and the Coal Project Contractor, a provision for future investment liabilities toward Elektrownia Ostrołęka Sp. z o.o., amounting to PLN 222 200 thousand, was partially released in these condensed consolidated interim financial statements, with the amount released being PLN 114 100 thousand. This amount was recognised in the consolidated statement of comprehensive income in the item "Share of the results of associates and jointly-controlled entities". The amount of this provision as at 30 June 2021 is PLN 108 100 thousand and constitutes the best possible estimate due to uncertainty over the final settlement amounts.

ENEA S.A.'s commitment to provide funding for Elektrownia Ostrołęka Sp. z o.o. resulting from the existing agreements (especially the agreements dated 28 December 2018 and 30 April 2019 and the Settlement Agreement) that is still outstanding amounts to PLN 620 million. ENEA S.A. does not have sufficient information on any potential additional contributions or their potential deadlines, aside from those above.

12. Inventories

Inventories

	As at
	30 June 2021	31 December 2020

Materials	831 591	785 407
Semi-finished products and production in progress	2 478	1 237
Finished products	85 606	28 144
Energy origin certificates	393 583	350 664
Goods	17 933	10 230
Gross value of inventory	1 331 191	1 175 682
Impairment of inventory	(39 974)	(45 707)
Net value of inventory	1 291 217	1 129 975

In the 6-month period ended 30 June 2021, impairment losses on inventory decreased by PLN 5 733 thousand (in the 6-month period ended 30 June 2020 impairment of inventory decreased by PLN 17 149 thousand).

13. Energy origin certificates

Energy origin certificates

	As at
	30 June 2021	31 December 2020

Net value at the beginning of period	345 776	430 571
Internal manufacture	154 233	282 693
Purchase	14 488	130 752
Depreciation	(113 684)	(491 718)
Sale	(12 119)	(7 788)
Change in impairment	-	1 266
Net value at the reporting date	388 694	345 776

14. Assets and liabilities arising from contracts with customers

Assets and liabilities arising from contracts with customers

	Assets arising from contracts with customers	Liabilities arising from contracts with customers

As at 1 January 2020	330 447	115 701
Transfer from contract assets to receivables	(8 018)	-
Increase due to prepayments	-	150 064
Liabilities resulting from sales adjustments	-	(8 303)
Impairment	17	-
As at 31 December 2020	322 446	257 462
Change in non-invoices receivables	93 356	-
Increase due to prepayments	-	135 128
Liabilities resulting from sales adjustments	-	(1 155)
Impairment	(46)	-
As at 30 June 2021	415 756	391 435

The balance of assets arising from contracts with customers mainly covers uninvoiced electricity sales, while the balance of liabilities arising from contracts with customers mainly covers advances received from connection fees.

15. Restricted cash

As at 30 June 2021, the Group's restricted cash amounted to PLN 374 784 thousand (as at 31 December 2020: PLN 754 321 thousand). This mainly included cash for deposits for electricity and CO² emission allowance transactions (mainly cash for collateral in settlements with clearinghouse IRGiT), funds in a VAT account (split payment), collateral paid to suppliers and cash withholding as collateral for proper performance of work.

16. Coverage of loss

On 17 June 2021, an Ordinary General Meeting of ENEA S.A. adopted resolution no. 6, resolving to cover the net loss for the financial year covering the period from 1 January 2020 to 31 December 2020, amounting to PLN 3 356 750 thousand, using retained earnings (PLN 2 417 700 thousand) and supplementary capital (PLN 939 680 thousand).

On 30 July 2020 an Ordinary General Meeting of ENEA S.A. adopted resolution no. 6 concerning the allocation of net profit for the financial year covering the period from 1 January 2019 to 31 December 2019, pursuant to which 100% of the 2019 net profit was transferred to reserve capital, intended to finance investments.

17. Debt-related liabilities

Credit facilities, loans and debt securities

	As at
	30 June 2021	31 December 2020

Bank credit	1 584 640	1 686 985
Loans	41 074	46 717
Bonds	3 015 880	4 874 054
Long-term	4 641 594	6 607 756

Bank credit	208 189	208 339
Loans	11 644	11 723
Bonds	2 098 871	1 003 999
Short-term	2 318 704	1 224 061

Total	6 960 298	7 831 817

In the 6-month period ended 30 June 2021, the book value of credit facilities, loans and debt securities decreased by PLN 871 519 thousand on a net basis (6-month period ended 30 June 2020: down by PLN 1 196 832 thousand).

In accordance with ENEA S.A.'s financing model, in order to secure funding for ENEA Group companies' on-going operations and investment needs, ENEA executes agreements with external financial institutions concerning bond issue programs and/or credit agreements.

Credit facilities and loans

Presented below is a list of the Group's credit facilities and loans:

No.	Company	Lender	Contract date	Total contract amount	Debt at 30 June 2021	Debt at 31 December 2020	Interest	Contract period
1.	ENEA S.A.	EIB	18 October 2012 (A) and 19 June 2013 (B)	1 425 000	950 837	1 013 543	Fixed interest rate or WIBOR 6M + margin	17 June 2030
2.	ENEA S.A.	EIB	29 May 2015 (C)	946 000	839 500	878 500	Fixed interest rate or WIBOR 6M + margin	15 September 2032
3.	ENEA S.A.	PKO BP	28 January 2014, Annex 2 of 4 December 2019	300 000	-	-	WIBOR 1M + margin	31 December 2022
4.	ENEA S.A.	Pekao S.A.	28 January 2014, Annex 2 of 4 December 2019	150 000	-	-	WIBOR 1M + margin	31 December 2022
5.	ENEA S.A.	BGK	7 September 2020	250 000	-	-	WIBOR 1M +margin	7 September 2022
6.	ENEA Ciepło Sp. z o.o.	National Fund for Environment al Protection and Water Management (NFOŚiGW)	22 December 2015	60 075	37 958	41 327	Interest based on WIBOR 3M, no less than 2%	20 December 2026
7.	Other	-	-	-	17 123	20 385	-	-
	TOTAL			3 131 075	1 845 418	1 953 755
Transaction costs and effect of measurement using effective interest rate			129	9
	TOTAL			3 131 075	1 845 547	1 953 764

The additional information and explanations presented on pages 9-44 constitute an integral part of these condensed consolidated interim financial statements.

Presented below is a short description of ENEA Group's significant credit and loan agreements:

ENEA S.A.

ENEA S.A. currently has credit agreements with the European Investment Bank (EIB) for a total amount of PLN 2 371 000 thousand (Agreement A PLN 950 000 thousand, Agreement B PLN 475 000 thousand and Agreement C PLN 946 000 thousand). Funds from the EIB were used to finance a multi-year investment plan aimed at modernising and expanding ENEA Operator Sp. z o.o.'s power network. Funds from Agreements A, B and C were fully used. Interest on credit facilities may be fixed or variable. ENEA S.A. also has an overdraft agreement with Bank Gospodarstwa Krajowego (BGK). The credit limit amounted to PLN 250 000 thousand. The funds obtained from BGK will be used to finance the borrower's on-going operations. In the 6-month period ended on 30 June 2021, ENEA S.A. did not execute new credit agreements.

ENEA Ciepło Sp. z o.o.

Loan from NFOŚiGW - agreement executed on 22 December 2015 for the period from 1 April 2016 to 20 December 2026, with a PLN 60 075 thousand limit. The loan has annual interest based on WIBOR 3M of no less than 2%. The loan was transferred (together with an organised part of enterprise) from ENEA Wytwarzanie Sp. z o.o. to ENEA Ciepło Sp. z o.o. on 30 November 2018.

The total loan-related debt of ENEA Ciepło Sp. z o.o. as at 30 June 2021 amounted to PLN 37 958 thousand (at 31 December 2020: PLN 41 327 thousand).

Bond issue programs

Presented below is a list of bonds issued by ENEA S.A.

No.	Bond issue program name	Program start date	Program amount	Value of outstanding bonds as at 30 June 2021	Value of outstanding bonds as at 31 December 2020	Interest	Buy-back deadline
1.	Bond issue program agreement with PKO BP S.A., Bank PEKAO S.A., Santander BP S.A., Citi BH S.A.	21 June 2012	3 000 000	1 799 000	2 140 000	WIBOR 6M + margin	One-off buy-back for each series from June 2020 to June 2022
2.	Bond issue program agreement with BGK	15 May 2014	1 000 000	680 000	720 000	WIBOR 6M + margin	Buy-back in tranches, last tranche due in December 2026
3.	Bond issue program agreement with PKO BP S.A., Bank PEKAO S.A. and mBank S.A.	30 June 2014	5 000 000	2 150 000	2 500 000	WIBOR 6M + margin	One-time buy-back of each series; PLN 878 million bought back in February 2020, next series in September 2021 and June 2024
4.	Bond issue program agreement with BGK	3 December 2015	700 000	494 724	532 779	WIBOR 6M + margin	Buy-back in tranches, last tranche due in September 2027
	TOTAL		9 700 000	5 123 724	5 892 779
Transaction costs and effect of measurement using effective interest rate			(8 973)	(14 726)
	TOTAL		9 700 000	5 114 751	5 878 053

In the 6-month period ended on 30 June 2021, ENEA S.A. did not execute new bond issue program agreements.

On 11 May 2021 the Management Board of ENEA S.A. decided to partially buy back series ENEA0921 bonds before maturity in order to redeem them, with principal amounting to PLN 350 000 thousand, plus interest due and bonus for the bondholders. Series ENEA0921 bonds were issued in the amount of PLN 500 000 thousand on 16 September 2015 as part of the "Program Agreement regarding a bond issue program up to PLN 5 000 000 thousand of 30 June 2014" as amended. The outstanding part of series ENEA0921 bonds, with a nominal value of PLN 150 000 thousand, is held by the bondholders until maturity, i.e. 16 September 2021.

Interest rate hedges and currency hedges

In the 6-month period ended 30 June 2021 ENEA S.A. did not execute new interest rate swaps. The total bond and credit exposure hedged with IRSs as at 30 June 2021 amounted to PLN 3 451 564 thousand. Moreover, ENEA S.A. has fixedrate credit agreements totalling PLN 630 221 thousand. These transactions have material impact on the predictability of expense flows and finance costs. The Company presents the measurement of these instruments in the item: Financial liabilities measured at fair value. Derivative instruments are treated as cash flow hedges, which is why they are recognised and accounted for using hedge accounting rules. As at 30 June 2021, financial liabilities at fair value concerning IRSs amounted to PLN 53 582 thousand (31 December 2020: PLN 139 673 thousand).

In the 6-month period ended 30 June 2021 the Company executed FX forward transactions for a total volume of EUR 1 116 thousand. The last transaction's settlement date is in December 2021. As at 30 June 2021, financial liabilities at fair value concerning the measurement of forward instruments amounted to PLN 63 thousand (31 December 2020: PLN 0).

Financing terms - covenants

Financing agreements require ENEA S.A. and ENEA Group to maintain certain financial ratios. As at 30 June 2021 and the date on which these condensed consolidated interim financial statements were prepared and in the course of 2021 the Group did not breach any credit agreement provisions such as would require early re-payment of long-term debt.

18. Provisions

In the 6-month period ended 30 June 2021, provisions for other liabilities and charges decreased on a net basis by PLN 720 220 thousand (6-month period ended 30 June 2020: decrease by PLN 95 805 thousand).

Change in provisions for other liabilities and charges in the period ended 30 June 2021

	Provision for non-contractual use of land	Provision for other claims	Provision for landfill site reclamation	Provision for energy origin certificates	Provision for CO2 emission allowance purchases	Mine liquidation	Other	Total
As at January 2021	239 833	262 221	116 898	175 429	1 895 156	201 463	555 611	3 446 611
Reversal of discount and change of discount rate	3 520	-	(5 203)	-	-	1 511	-	(172)
Increase in existing provisions	231	22 409	1 430	285 878	1 174 320	-	36 203	1 520 471
Use of provisions	(11 740)	(384)	-	(155 325)	(1 912 933)	-	(20 642)	(2 101 024)
Reversal of unused provision	(327)	(971)	(193)	(47)	-	(14 339)	(123 618)	(139 495)
As at 30 June 2021	231 517	283 275	112 932	305 935	1 156 543	188 635	447 554	2 726 391
Long-term Short-term								848 530 1 877 861

Change in provisions for other liabilities and charges in the period ended 31 December 2020

	Provision for non contractual use of land	Provision for other claims	Provision for landfill site reclamation	Provision for energy origin certificates	Provision for CO2 emission allowance purchases	Mine liquidation	Other	Total
As at 1 January 2020	210 087	230 706	91 280	197 555	1 233 325	162 972	364 528	2 490 453
Reversal of discount and change of discount rate	(7 199)	-	186		- -	3 504	−	(3 509)
Increase in existing provisions	41 380	44 912	25 649	136 556	1 933 376	34 987	321 343	2 538 203
Use of provisions	(3 615)	(10 930)	-	(158 524)	(1 271 545)	-	(129 984)	(1 574 598)
Reversal of unused provision	(820)	(2 467)	(217)	(158)	-	-	(276)	(3 938)
As at 31 December 2020	239 833	262 221	116 898	175 429	1 895 156	201 463	555 611	3 446 611
Long-term Short-term								849 990 2 596 621

A description of material claims and conditional liabilities is presented in note 25.

Provision for other claims

In the 6-month period ended 30 June 2021 ENEA S.A. created a PLN 9 773 thousand provision for potential claims related to the termination by ENEA S.A. of agreements to purchase energy origin certificates for renewables, and the value of this provision as at 30 June 2021 was PLN 149 238 thousand (this provision is included in the table above in the column "Provision for other claims" and detailed information on this provision is presented in note 25.6).

Other provisions mainly concern:

potential liabilities related to grid assets resulting from differences in the interpretation of regulations PLN 182 303 thousand (as at 31 December 2020: PLN 178 172 thousand); it is difficult to determine when this provision will be performed, however in these financial statements it is assumed that it will not happen within 12 months,
costs to use forest land managed by State Forests PLN 61 589 thousand (as at 31 December 2020: PLN 64 421 thousand); it is difficult to determine when this provision will be performed, however in these financial statements it is assumed that it will not happen within 12 months,
future investment liabilities toward Elektrownia Ostrołęka Sp. z o.o. PLN 108 100 thousand (PLN 222 200 thousand as at 31 December 2020), detailed information on this provision is available in note 11,
onerous contracts PLN 54 557 thousand (as at 31 December 2020: PLN 50 821 thousand); this provision will be performed in 2021.

19. Accounting for subsidies and road lighting modernisation services

Accounting for income from subsidies and road lighting modernisation services

	As at
	30 June 2021	31 December 2020

Long-term
Accounting for deferred revenue - subsidies	190 978	168 473
Accounting for deferred revenue - road lighting modernisation services	95 879	92 689
Total non-current deferred revenue	286 857	261 162

Short-term
Accounting for deferred revenue - subsidies	11 123	9 326
Accounting for deferred revenue - road lighting modernisation services	4 314	3 982
Total current deferred revenue	15 437	13 308

Schedule for accounting for deferred revenue

	As at
	30 June 2021	31 December 2020

Up to one year	15 437	13 308
From one to five years	59 266	52 448
Over five years	227 591	208 714
Total deferred revenue	302 294	274 470

In the 6-month period ended 30 June 2021, the book value of grant accounting and road lighting modernisation services increased by PLN 27 824 thousand on a net basis (in the 6-month period ended 30 June 2020, the book value of grant accounting and road lighting modernisation services increased by a net amount of PLN 10 205 thousand).

The item 'deferred revenue concerning subsidies' includes mainly EU subsidies and subsidies from the NFOŚiGW for the development of electricity and heating infrastructure.

Road lighting modernisation services, i.e. improving the quality and efficiency of road lighting, are services provided on an on-going basis. Revenue from improving the quality and efficiency of road lighting is recognised proportionally over the economic period of use for the tangible assets created.

Financial instruments

20. Financial instruments and fair value

The following table contains a comparison of fair values and book values:

	As at 30 June 2021			As at 31 December 2020
	Book value	Fair value	Book value	Fair value
FINANCIAL ASSETS
Long-term	579 741	55 732	308 797	97 957
Financial assets measured at fair value	55 732	55 732	97 957	97 957
Trade and other receivables	382 011	(*)	68 736	(*)
Finance lease and sublease receivables	772	(*)	513	(*)
Funds in the Mine Decommissioning Fund	141 226	(*)	141 591	(*)
Short-term	6 581 135	29 429	3 886 756	41 894
Financial assets measured at fair value	29 429	29 429	41 894	41 894
Debt financial assets at amortised cost	61	(*)	61	(*)
Assets arising from contracts with customers	415 756	(*)	322 446	(*)
Trade and other receivables	1 939 753	(*)	1 579 826	(*)
Finance lease and sublease receivables	868	(*)	975	(*)
Cash and cash equivalents	4 195 268	(*)	1 941 554	(*)
TOTAL FINANCIAL ASSETS	7 160 876	85 161	4 195 553	139 851

FINANCIAL LIABILITIES

Long-term	6 104 563	4 707 399	7 344 820	6 749 538
Credit facilities, loans and debt securities	4 641 594	4 684 886	6 607 756	6 674 407
Lease liabilities	536 816	(*)	529 140	(*)
Trade and other payables	903 640	(*)	132 793	(*)
Financial liabilities measured at fair value	22 513	22 513	75 131	75 131
Short-term	5 309 032	2 394 701	2 900 566	1 295 048
Credit facilities, loans and debt securities	2 318 704	2 318 704	1 224 061	1 224 061
Lease liabilities	24 881	(*)	25 172	(*)
Trade and other payables	2 848 671	(*)	1 548 057	(*)
Liabilities arising from contracts with customers	40 779	(*)	32 289	(*)
Financial liabilities measured at fair value	75 997	75 997	70 987	70 987
TOTAL FINANCIAL LIABILITIES	11 413 595	7 102 100	10 245 386	8 044 586

(*) book value is close to fair value measured in accordance with level 2 in the following hierarchy.

Financial instruments are fair-value measured according to a hierarchy.

	As at 30 June 2021
	Level 1	Level 2	Level 3	Total

Financial assets measured at fair value	19 250	64 836	1 075	85 161
Derivative instruments used in hedge accounting	-	-	-	-
Call options (at fair value through profit or loss)	-	19 924	-	19 924
Other derivative instruments at fair value through profit or	-	44 912	-	44 912
loss
Interests at fair value through profit or loss	19 250	-	1 075	20 325
Total	19 250	64 836	1 075	85 161

Financial liabilities measured at fair value	-	(98 510)	-	(98 510)
Derivative instruments at fair value through profit or loss	-	(44 802)	-	(44 802)
Derivative instruments used
in hedge accounting (e.g. interest rate swaps)	-	(53 708)	-	(53 708)
Credit facilities, loans and debt securities	-	(7 003 590)	-	(7 003 590)
Total	-	(7 102 100)	-	(7 102 100)

	As at 31 December 2020
	Level 1	Level 2	Level 3	Total

Financial assets measured at fair value	15 000	69 910	54 941	139 851
Equity instruments at fair value through other comprehensive income	−	−	53 866	53 866
Call options (at fair value through profit or loss)	−	15 982	−	15 982
Other derivative instruments at fair value through profit or loss	−	53 928	−	53 928
Interests at fair value through profit or loss	15 000	−	1 075	16 075
Total	15 000	69 910	54 941	139 851
Financial liabilities measured at fair value	−	(146 118)	−	(146 118)
Derivative instruments at fair value through profit or loss	−	(6 445)	−	(6 445)
Derivative instruments used	−	(139 673)	−	(139 673)
in hedge accounting (e.g. interest rate swaps)
Credit facilities, loans and debt securities	−	(7 898 468)	−	(7 898 468)
Total	−	(8 044 586)	−	(8 044 586)

Financial assets and financial liabilities at fair value include:

shares and interests in unrelated entities where the stake is below 20%; If interests in unrelated entities are listed on the Warsaw Stock Exchange, then their fair value is based on quoted prices;
Polimex-Mostostal S.A. call options;
derivative instruments, which include the measurement of interest rate swaps; the fair value of derivative instruments is established by calculating the net present value based on two yield curves, i.e. a curve to determine discount factors and a curve used to estimate future variable reference rates;
forward contracts for the purchase of electricity and gas and property rights.

Non-current debt financial assets at amortised cost cover loans maturing in over one year. Current debt financial assets at amortised cost cover loans maturing in under one year.

The fair value of bank credit, loans and debt securities is calculated for financial instruments that are based on a fixed rate of interest, based on current WIBOR.

The table above contains an analysis of financial instruments at fair value, grouped into a three-level hierarchy, where:

Level 1 - fair value is based on (unadjusted) market prices quoted for identical assets or liabilities on active markets

Level 2 - fair value is determined on the basis of values observed on the market, which are not a direct market quote (e.g. they are established by direct or indirect reference to similar instruments on a market),

Level 3 - fair value is determined using various measurement techniques that are not, however, based on observable market data.

No transfers between the levels were made in the 6-month period ended 30 June 2021.

As at 30 June 2021, financial assets at fair value included call options for Polimex-Mostostal S.A. shares, among other things. Pursuant to a call option agreement for Polimex-Mostostal S.A. shares of 18 January 2017, as amended, ENEA S.A. holds 22 call options from Towarzystwo Finansowe Silesia Sp. z o.o. to purchase 6 937 500 shares, with a nominal value of PLN 2 each. The contractual share allocation date is at the end of each calendar quarter from September 2021 to December 2026. Fair value measurement of the call options was conducted using the Black-Scholes model. The book value of these options as at 30 June 2021 was PLN 19 924 thousand (at 31 December 2020: PLN 15 982 thousand).

Moreover, the Group's financial assets at fair value include the measurement of derivative contracts for the purchase of electricity and gas and concerning property rights not used for the Group's own purposes worth PLN 44 912 thousand (as at 31 December 2020: PLN 53 928 thousand). The nominal value of contracts for the purchase and sale of electricity, gas and property rights maturing in 2021-2023, presented as financial assets and liabilities at fair value, amounts to PLN 1 193 500 thousand (PLN 607 714 thousand concerns procurement contracts and PLN 585 786 thousand concerns sales contracts).

21. Debt financial assets at amortised cost

Debt financial assets at amortised cost

	As at
	30 June 2021	31 December 2020
Current debt financial assets at amortised cost
Loans granted	61	61
Total current debt financial assets at amortised cost	61	61

Non-current debt financial assets at amortised cost
Loans granted	-	-
Total non-current debt financial assets at amortised cost	-	-

TOTAL	61	61

Impairment of financial assets at amortised cost (concerns loans granted) as at 30 June 2021 amounted to PLN 220 072 thousand. The total impairment loss on loans issued and recognised in the 6-month period ended 30 June 2021 was PLN 9 988 thousand, and this amount was recognised in the consolidated statement of comprehensive income under "Impairment of financial assets at amortised cost."

22. Impairment of trade and other receivables

Impairment of trade and other receivables

	As at
	30 June 2021	31 December 2020

Impairment at the beginning of period	139 595	157 844
Created	12 972	18 633
Reversed	(4 907)	(26 424)
Used	(14 205)	(10 458)
Impairment at the reporting date	133 455	139 595

In the 6-month period ended 30 June 2021, impairment of trade and other receivables decreased by PLN 6 140 thousand (in the 6-month period ended 30 June 2020 impairment declined by PLN 18 250 thousand).

Impairment losses are mainly recognised on trade receivables. Impairment of other receivables is negligible.

As at 30 June 2021, the Company carried out an additional analysis of the COVID-19 pandemic's potential impact on receivables impairment. An individual approach was applied to a list of ENEA S.A.'s largest debtors, using assumptions for a model described in the Company's existing Methodology for determining expected credit losses for non-current debt assets and similar items. As regards the model's quantitative module - available reporting data from the debtors was used, while the qualitative module incorporated the existing (and predicted) situation in the national economy as well as the counterparty's market and financial position. Based on this overall evaluation, a rating was assigned and subsequently transposed onto the Probability of Default parameter (in accordance with the aforementioned Methodology). As regards the Loss Given Default parameter, a value equal to 10% was conservatively adopted (in reality far exceeding the actual levels of receivables losses recorded by the Company/Group). The above analysis generated an additional expected credit loss at a negligible level from the viewpoint of reporting.

For current trade receivables, expected credit losses are calculated based on historic data in a way that is described in Rules for creating and recording impairment losses on trade receivables and other financial items at ENEA Group companies. The impairment of receivables for 2021 is calculated on the basis of data from 2020. Therefore, the level of receivables impairment estimated as at 30 June 2021 reflects objective indications of impairment resulting from the situation and regulations arising from the COVID-19 pandemic.

23. Analysis of the age structure of assets arising from contracts with customers and trade and other receivables

Age structure of assets arising from contracts with customers and trade and other receivables constituting financial instruments:

	As at 30 June 2021
	Nominal value	Impairment	Book value
Trade and other receivables
Current	2 162 056	(8 753)	2 153 303
Overdue	293 163	(124 702)	168 461
0-30 days	101 902	(241)	101 661
31-90 days	22 296	(3 342)	18 954
91-180 days	12 167	(4 576)	7 591
over 180 days	156 798	(116 543)	40 255
Total	2 455 219	(133 455)	2 321 764
Assets arising from contracts with customers	416 013	(257)	415 756

	As at 31 December 2020
	Nominal value	Impairment	Book value
Trade and other receivables
Current	1 498 136	(8 817)	1 489 319
Overdue	290 021	(130 778)	159 243
0-30 days	100 033	(262)	99 771
31-90 days	15 417	(1 359)	14 058
91-180 days	9 215	(2 676)	6 539
over 180 days	165 356	(126 481)	38 875
Total	1 788 157	(139 595)	1 648 562
Assets arising from contracts with customers	322 657	(211)	322 446

Other explanatory notes

24. Related-party transactions

Group companies execute transactions with the following related parties:

Group companies these transactions are eliminated at the consolidation stage;
Transactions between the Group and members of the Group's corporate authorities, which are divided into two categories:
- resulting from being appointed as Supervisory Board members,
- resulting from other civil-law contracts.
transactions with State Treasury related parties.

Transactions with members of the Group's corporate authorities:

	For the six-month period ended
Item	Company's Management Board		Company's Supervisory Board
	30 June 2021	30 June 2020	30 June 2021	30 June 2020

Remuneration under management contracts	1 848*	2 674**	-	-
Remuneration under appointment to management or supervisory bodies	-	-	401	386
TOTAL	1 848	2 674	401	386

* This remuneration includes a non-compete clause for former Management Board members, amounting to PLN 138 thousand

** This remuneration covers bonuses for 2018 of PLN 1 294 thousand.

In the 6-month period ended 30 June 2021, no loans were made to Supervisory Board members from the Company Social Benefit Fund (PLN 0 thousand for the 6-month period ended 30 June 2020).

Other transactions resulting from civil-law contracts executed between the Parent and members of the Parent's corporate authorities mainly concern the use of company cars by members of ENEA S.A.'s Management Board for private purposes.

Transactions with State Treasury related parties

The Group also executes commercial transactions with state and local administration units and entities owned by Poland's State Treasury.

The subject of these transactions mainly is as follows:

purchases of coal, electricity, property rights resulting from energy origin certificates as regards renewable energy and energy produced in cogeneration with heat, transmission and distribution services that the Group provides to the State Treasury's subsidiaries,
sale of electricity, distribution services, connection to the grid and other associated fees, as well as coal, that the Group provides for both state and local administration authorities (sale to end customers) and to the State Treasury's subsidiaries (wholesale and retail sale - to end customers).

These transactions are executed on market terms, and these terms do not differ from the terms applied in transactions with other entities. The Group does not keep records that would make it possible to aggregate the amounts of all transactions executed with all state institutions and the State Treasury's subsidiaries.

In addition, the Group identified financial transactions with State Treasury's related parties, i.e. with banks serving as guarantors for bond issue programmes. These entities include: PKO BP S.A., Pekao S.A. and Bank Gospodarstwa Krajowego. Detailed information on bond issue programs is presented in note 17.

25. Conditional liabilities, court proceedings and cases on-going before public administration organs

This section of explanatory notes includes conditional liabilities and on-going proceedings in courts, arbitration bodies or public administration bodies.

25.1. Sureties and guarantees

The following table presents significant bank guarantees valid as of 30 June 2021 under an agreement between ENEA S.A. and PKO BP S.A. up to a limit specified in the agreement.

List of guarantees issued as at 30 June 2021

Guarantee issue date	Guarantee validity	Entity for which the guarantee was issued	Bank - issuer	Guarantee amount in PLN 000s

12 August 2018	15 February 2022	Górecka Projekt Sp. z o.o.	PKO BP S.A.	2 109
1 July 2020	30 June 2022	H. Święcicki Clinical Hospital in Poznań	PKO BP S.A.	1 281
Total bank guarantees				3 390

The value of other guarantees issued by the Group as at 30 June 2021 was PLN 6 626 thousand.

25.2. On-going proceedings in courts of general competence

Proceedings initiated by the Group

Proceedings in courts of general competence initiated by ENEA S.A. and ENEA Operator Sp. z o.o. concern receivables related to electricity supplies (electricity cases) and receivables related to other matters - illegal uptake of electricity, grid connections and other specialised services (non-electricity cases).

Proceedings in courts of general competences initiated by ENEA Wytwarzanie Sp. z o.o. mainly concern compensation for damages and contractual penalties from the company's counterparties.

At 30 June 2021, a total of 17 162 cases initiated by the Group were in progress before courts of general competence, worth in aggregate PLN 167 179 thousand (31 December 2020: 13 046 cases worth PLN 173 165 thousand).

The outcome of individual cases is not significant from the viewpoint of the Group's financial result.

Proceedings against the Group

Proceedings against the Group are initiated by both natural persons and legal entities. They concern issues such as: compensation for electricity supply disruptions, illegal uptake of electricity and compensation for the Group's use of properties on which power equipment is located. The Group considers cases related to non-contractual use of properties that are not owned by the Group as especially significant.

There are also claims concerning terminated agreements for the purchase of property rights (note 25.6).

Court proceedings against ENEA Wytwarzanie Sp. z o.o. concern compensation for damages and contractual penalties.

At 30 June 2021, a total of 3 143 cases against the Group were in progress before courts of general competence, worth in aggregate PLN 1 173 814 thousand (31 December 2020: 2 499 cases worth PLN 936 828 thousand). The outcome of individual cases is not significant from the viewpoint of the Group's financial result.

Provisions related to these court cases are presented in note 18.

25.3. Other court proceedings

Proceedings on-going before public administration courts involving Lubelski Węgiel Bogdanka S.A. mainly concern disputes with local government units regarding property tax. This stems from the fact that in preparing property tax declarations LWB (like other mining companies in Poland) did not take into account the value of underground mining excavations or the value of equipment located therein. These cases concern refunds of overpayments and the way in which property tax base is calculated.

In order to protect the Group from any potential consequences in the form of late interest on property tax - provided that the municipalities' decisions that include equipment and support structures located inside mining excavations are eventually upheld - LWB in mid-2019 decided to include the value of underground excavations and equipment in calculations regarding this tax (given the majority of case law involving tax on elements of mining excavations).

The Management Board of ENEA S.A. filed in December 2018 a response to a lawsuit brought by the Company's shareholder, Fundacja "CLIENTEARTH Prawnicy dla ziemi," based in Warsaw, to cancel, determine the non-existence or repeal resolution no. 3 of the Extraordinary General Meeting of ENEA S.A. of 24 September 2018 regarding directional approval to join the Construction Stage of the Ostrołęka C project, and demanded that the lawsuit be rejected in its entirety as unjustified, along with reimbursement of court representation costs. The first hearing in the case was held on 10 April 2019, with no witnesses called to the hearing. The Court requested that the Company provide the Investment Agreement within 14 days, at least as regards points 1 to 8 (especially point 8.6), subject to the trial consequences indicated in art. 233 § 2 of the Civil Procedure Code. ENEA's attorney filed a reservation to the protocol pursuant to art. 162 of the Civil Procedure Code. On 24 April 2019, the Company provided the Investment Agreement. The Court decided to postpone the hearing to 17 July 2019. On 31 July 2019, the District Court in Poznań allowed the main claim and declared the Resolution invalid.

On 17 September 2018, an attorney for ENEA S.A. submitted an appeal against the ruling of 31 July 2019. The complainant submitted a response to the appeal, to which ENEA S.A.'s attorney replied. On 8 July 2020 the Appeals Court dismissed the Company's appeal against the District Court's ruling. As indicated in verbal major reasons for the ruling, the Appeals Court decided that the District Court's ruling complies with the law because the Resolution is invalid due to the fact that adopting the Resolution breached the division of competences between the organs of a commerciallaw company. In consequence, the ruling by the District Court in Poznań invalidating the Resolution became final. The Group has assessed the impact of this event as neutral for the reported data.

The Management Board of ENEA S.A. filed in December 2018 a response to a lawsuit brought by Międzyzakładowy Związek Zawodowy Synergia Pracowników Grupy Kapitałowej ENEA, based in Poznań, to cancel, determine the nonexistence or repeal resolution no. 3 of the Extraordinary General Meeting of ENEA S.A. of 24 September 2018 regarding directional approval to join the Construction Stage of the Ostrołęka C project, and demanded that the lawsuit be rejected in its entirety as unjustified, along with reimbursement of court representation costs. The hearing was scheduled for 8 May 2019. That hearing, and others scheduled for 30 July 2019 and 1 October 2019, did not take place. The hearing has been suspended until a final ruling is issued in a case instigated by a shareholder of the Company - Fundacja "CLIENTEARTH Prawnicy dla ziemi". Through a decision of 26 May 2021, the District Court in Poznań dismissed the case.

On 23 June 2021, the management board of ENEA Elektrownia Połaniec S.A. ("EEP") received notice from the Minister of Climate and Environment on an administrative proceeding being instigated ex officio regarding public aid received by EEP in the form of CO2 emission allowances for 2016 for the modernisation of power generating units in 2013-2016 (tasks included in the National Investment Plan). EEP's management board notes that the proceeding concerns a period in which EEP was owned by ENGIE Group (ENGIE International Holdings B.V.).

The estimated value of the public aid received back then, understood as the sum total of allowance prices as of the date on which each of the tranches was awarded in the aforementioned years, is approx. PLN 170 million, plus potential penalty interest. To the best knowledge of EEP's management board, the ecological objective of these investments was achieved, and the ecological effect for these investments was also confirmed by an external, independent auditor in 2016 and 2017.

On 21 July 2021, EEP's management board submitted explanations to the Ministry of Climate and Environment, confirming the ecological effect for these investments, along with an expanded opinion by an independent auditor. In its response to the notice, the management board also requested that the Minister of Climate and Environment dismiss this administrative proceeding.

On 9 August 2021, EEP's management board was notified by the Minister of Climate and Environment that the entire proceeding had been dismissed.

25.4. Risk associated with legal status of properties used by the Group

Risk associated with the legal status of properties used by the Group results from the fact that the Group does not have a legal title to use land for all of its facilities where its transmission grids and the associated equipment are located. In the future, the Group might be obligated to incur the costs of non-contractual use of property.

Rulings in these cases are significant because they have a considerable impact on the Group's approach to people raising pre-trial claims concerning equipment located on their properties in the past as well as the way in which the legal status of such equipment is addressed in the case of new investments.

The loss of assets in this case is highly unlikely. Having an unclear legal status for properties where power equipment is located does not constitute a risk for the Group of losing such assets, rather it gives rise to the threat of additional costs related to demands for compensation for the non-contractual use of land, rent, costs related to transmission easements and, exceptionally, in individual cases, demands related to a change in the object's location (return of land to original condition). The Group recognises adequate provisions.

The provision also applies to compensation for the non-contractual use by the Group of properties on which the Group's grid assets (power lines) are located, in connection with transmission corridors or transmission easements being established for the Group.

As at 30 June 2021, the Group recognised a provision for claims concerning non-contractual use of land amounting to PLN 231 517 thousand.

25.5. Cases concerning 2012 non-balancing

On 30 and 31 December 2014, ENEA S.A. submitted demands for settlement to:

	Demanded amount in PLN 000s

PGE Polska Grupa Energetyczna S.A.	7 410
PKP Energetyka S.A.	1 272
TAURON Polska Energia S.A.	17 086
TAURON Sprzedaż GZE Sp. z o.o.	1 826
Total	27 594

The subject of these demands is claims for the payment for electricity that was incorrectly settled on the balancing market in 2012. The companies receiving these demands obtained unjustified proceeds by not allowing ENEA S.A. to issue invoices for 2012.

Given a lack of an amicable resolution in this case, ENEA S.A. brought lawsuits against:

TAURON Polska Energia S.A. lawsuit of 10 December 2015,
TAURON Sprzedaż GZE Sp. z o.o. lawsuit of 10 December 2015,
PKP Energetyka S.A. lawsuit of 28 December 2015,
PGE Polska Grupa Energetyczna S.A. lawsuit of 29 December 2015.

Three of the aforementioned disputes are not yet resolved in first-instance courts. In the case ENEA S.A. v. Tauron Polska Energia S.A. and others (file no. XIII GC 600/15/AM), on 23 March 2021 the District Court in Katowice ruled to reject the claim in its entirety and awarded the costs of proceedings in favour of the defendant and the co-defendants. The ruling along with justification in writing was delivered on 20 May 2021. On 10 June 2021, ENEA S.A. lodged an appeal to the Appeals Court in Katowice. In a case against PGE Polska Grupa Energetyczna S.A. (file no. XVI GC 525/20, previous file no. XX GC 1163/15) - through a ruling of 7 January 2021 the court suspended the proceeding at the mutual request of the parties.

No amounts concerning the above cases were recognised in the consolidated statement of financial position.

25.6. Dispute concerning prices for origin certificates for energy from renewable sources and terminated agreements for the purchase of property rights arising under origin certificates for energy from renewable sources

ENEA S.A. is a party to 8 court proceedings concerning agreements for the purchase of property rights arising under certificates of origin for energy from renewable sources, which includes:

5 proceedings for payment against ENEA S.A. concerning remuneration, contractual penalties or compensation;
2 proceedings for the voidance of ENEA S.A.'s termination or withdrawal from agreements to sell property rights, which took place on 28 October 2016, including 1 proceeding in which claims for payment are being sought at the same time;
1 proceeding for payment, in which ENEA S.A. seeks a claim concerning a contractual penalty.

ENEA S.A. offset a part of receivables due for these counterparties from ENEA S.A. for sold property rights with damagesrelated receivables due for ENEA S.A. from renewables producers. The damage caused to ENEA S.A. arose as a result of the counterparties' failure to fulfil a contractual obligation to participate, in good faith, in re-negotiating long-term agreements for the sale of property rights in accordance with an adaptation clause that is binding for the parties.

On 28 October 2016, ENEA S.A. submitted statements depending on the agreement: on termination or withdrawal from long-term agreements for the purchase by the Company of property rights resulting from certificates of origin for energy from renewable sources (green certificates) (Agreements).

The Agreements were executed in 2006-2014 with the following counterparties, which own renewable generation assets ("Counterparties"):

Farma Wiatrowa Krzęcin Sp. z o.o., based in Warsaw;
Megawind Polska Sp. z o.o., based in Szczecin;
PGE Górnictwo i Energetyka Konwencjonalna S.A., based in Bełchatów;
PGE Energia Odnawialna S.A., based in Warsaw;
PGE Energia Natury PEW Sp. z o.o., based in Warsaw (currently PGE Energia Odnawialna S.A., based in Warsaw);
"PSW" Sp. z o.o., based in Warsaw;
in.ventus Sp. z o.o. EW Śniatowo Sp. k., based in Poznań (currently TEC1 Sp. z o.o. EW Śniatowo Sp. k., based in Katowice);
Golice Wind Farm Sp. z o.o., based in Warsaw.

As a rule, the Agreements were terminated by the end of November 2016. The dates on which the respective Agreements were terminated depended on contractual provisions.

The reason for terminating/withdrawing from each of the Agreements by the Company was failure to engage in renegotiations concerning adaptive clauses in each of the Agreements that would justify the adjustment of these Agreements in order to restore contractual balance and the equivalence of the parties' benefits following changes in the law.

Legal changes that occurred after the aforementioned Agreements were executed include in particular:

ordinance of the Minister of Economy of 18 October 2012 on a detailed scope of obligations to obtain and present for redemption origin certificates, pay substitute fees, purchase electricity and industrial heat generated from renewable sources and the obligation to validate data concerning the quantity of electricity generated from renewable sources (Polish Journal of Laws of 2012, item 1229);
Act on renewable energy sources of 20 February 2015 (Polish Journal of Laws of 2015, item 478) and associated further legal changes and announced drafts of legal changes, including especially:
- the Act on amendment of the act on renewable energy sources and certain other acts dated 22 June 2016 (Polish Journal of Laws of 2016, item 925); and
- a draft of the Ordinance of the Minister of Energy concerning changes in the share of electricity resulting from redeemed origin certificates confirming production of electricity from renewable sources, which is to be issued based on an authorisation under art. 12 sec. 5 of the Act on amendment of the act on renewable energy sources and certain other acts dated 22 June 2016 and certain other acts,

caused an objective lack of possibilities to develop reliable models to forecast the prices of green certificates.

The Agreements were terminated with the intention for the Company to avoid losses constituting the difference between contractual and market prices of green certificates. Due to the changing legal conditions after termination of the Agreements in 2017, especially arising from the Act of 20 July 2017 on amendment of the act on renewable energy sources, the estimated value of future contract liabilities would have changed. In the current legal framework, this would be significantly lower in comparison to the amount estimated when the Agreements were being terminated, i.e. approx. PLN 1 187 million. This decline reflects a change in the way in which the substitute fee is calculated, which in accordance with the content of some of the Agreements constitutes the basis for calculating the contract price and indexing it to the market price. The Company created a PLN 149 238 thousand provision for potential claims resulting from the terminated Agreements in relation to submissions made by 30 June 2021 concerning transactions to sell property rights by the counterparties; the provision is presented in note 18.

In a case brought by Golice Wind Farm Sp. z o.o. against ENEA S.A., the court issued on 14 August a partial and preliminary ruling, in which it:

1) withdrew a claim seeking the voidance of ENEA S.A.'s termination of an agreement to sell property rights, which took place on 28 October 2016;
2) accepted a claim for the payment of consideration for property rights and ordered ENEA S.A. to pay PLN 6 042 thousand, together with interest;
3) considered the other parts of the claim for payment as justified in general.

This ruling is not final. ENEA S.A. has appealed part of the ruling, i.e. as regards points 2 and 3. Moreover, on 13 January 2021 Golice Wind Farm Sp. z o.o. appealed a part of the ruling, i.e. as regards the ruling in point 1, dismissing the action for a declaration.

In cases brought by PGE Group companies, i.e.:

PGE Energia Odnawialna S.A., based in Warsaw (file no. IX GC 1064/17) on 15 June 2021, the court resumed the previously suspended proceeding;
PGE Górnictwo i Energetyka Konwencjonalna S.A., based in Bełchatów (file no. IX GC 555/16) through a ruling of 29 June 2021, the court suspended the proceeding at the parties' mutual request;
PGE Energia Odnawialna S.A., based in Warsaw (file no. IX GC 1011/17) through a ruling of 16 April 2021, the court resumed the previously suspended proceeding, and in a ruling dated 3 August 2021 the District Court in Poznań suspended the proceeding at the parties' mutual request.

In a case brought by PGE Energia Odnawialna S.A., based in Warsaw (file no. IX GC 1011/17), on 19 July 2021 the Company received a PLN 17 706 thousand claim expansion, as a result of which the total claims being sought in the proceeding amount to PLN 51 019 thousand.

In a case brought by ENEA S.A. against PGE Górnictwo i Energetyka Konwencjonalna S.A. (file no. X GC 608/20) – on 26 October 2020, the court ruled to suspend the proceeding at the parties' mutual request. The ruling is final.

In a case brought by Hamburg Commercial Bank AG against ENEA S.A., in which Hamburg Commercial Bank AG is seeking claims arising under property rights sales contract no. ENEA/WINDPARK ŚNIATOWO/PMOZE/2013 of 26 February 2014, executed between ENEA S.A. and Windpark Śniatowo Management GmbH EW Śniatowo Sp. k. (currently TEC1 Sp. z o.o. EW Śniatowo Sp. k., based in Katowice), claiming their purchase under a debt assignment contract, the District Court in Poznań issued on 25 February 2021 a partial ruling, ordering ENEA S.A. to pay PLN 494 thousand, with statutory late interest for the period from 16 December 2016 to the payment date. This ruling is not final. On 2 June 2021, ENEA S.A. lodged an appeal against the entire partial ruling by the District Court in Poznań of 25 February

Within the remaining scope, i.e. concerning the claim extension of 17 January 2019 and claim extension of 20 August 2019, the proceeding is legally suspended under the order of the District Court in Poznań of 24 October 2019 until a final ruling is issued by this court in case no. IX GC 552/17.

26. Participation in nuclear power plant build program

On 15 April 2015 KGHM Polska Miedź S.A., PGE S.A., TAURON S.A. and ENEA S.A. executed an agreement to purchase shares in PGE EJ 1. KGHM Polska Miedź S.A., TAURON S.A. and ENEA S.A. purchased 10% stakes in PGE EJ 1 each from PGE (30% in total). ENEA paid PLN 16 million for its stake. ENEA S.A.'s overall expenditures on purchasing shares and increasing the company's share capital amounted to PLN 70 902 thousand.

On 1 October 2020, ENEA S.A., PGE S.A., KGHM Polska Miedź S.A. and TAURON S.A. signed a letter of intent with the State Treasury regarding purchase by the State Treasury of a 100% stake in PGE EJ 1. The letter of intent did not commit the parties to the transaction. The decision on the transaction depended on the outcome of negotiations and compliance with other conditions specified in the provisions of law or corporate documents.

On 26 March 2021 ENEA S.A., PGE S.A., TAURON S.A. and KGHM Polska Miedź S.A. executed an agreement with the State Treasury to sell 100% of shares in PGE EJ 1 to the State Treasury (Share Sale Agreement). Pursuant to the Share Sale Agreement, ownership of the PGE EJ 1 shares was transferred on 31 March 2021. ENEA sold 532 523 shares in PGE EJ 1, constituting 10% of its share capital and representing 10% of votes at its general meeting, to the State Treasury. The sale price for the 100% stake was PLN 531 362 thousand, of which ENEA received PLN 53 136 thousand.

Furthermore, on 26 March 2021, the shareholders executed an Annex to an Agreement of 15 April 2015 with PGE EJ 1 regarding PGE EJ 1's dispute with the WorleyParsons consortium (Agreement). Pursuant to the Annex, the shareholders' liability toward PGE EJ 1 arising from the Agreement as a result of the dispute with the WorleyParsons consortium is now amount-limited, and if the dispute is resolved in PGE EJ 1's favour, the shareholders are eligible to receive appropriate consideration from PGE EJ 1. Information on the dispute between PGE EJ 1 and the WorleyParsons consortium were disclosed by PGE in relevant current reports.

In connection with the State Treasury's purchase of a 100% stake in PGE EJ 1, the shareholders terminated the Shareholder Agreement of 3 September 2014, effective from 26 March 2021.

In connection with the sale of all PGE EJ 1 shares owned by ENEA to the State Treasury, ENEA is no longer a shareholder of PGE EJ 1.

Pursuant to the Share Sale Agreement of 26 March 2021, the difference between the valuation of PGE EJ 1 as of 31 December 2020 (valuation for transaction purposes) and an updated valuation as of 31 March 2021 (valuation on share transfer date) should be returned by the selling companies to the State Treasury ("Price Adjustment"). Given the above, on 2 June 2021, ENEA S.A. settled the Price Adjustment concerning the sale of its stake in PGE EJ 1, i.e. paid PLN 533 thousand to the State Treasury.

27. Impact of COVID-19 pandemic

A state of epidemic caused by the SARS-Cov-2 coronavirus is in effect in Poland since 20 March 2020. The virus and its effects as well as the effects of actions taken by the state to combat the pandemic have influence over the condition of the domestic economy. The Group's activities have also been affected by the situation:

Higher demand for coal is seen in the Mining segment (approx. 30% in comparison with the same period of 2020).
The total electricity sales volume in the Trade segment went up in the first half of 2021 by 1 500 GWh, or 15.3%, in comparison with the same period of 2020. The volume of gas fuel sales also increased on a year-to-year basis (by 171 GWh, or 25.1%). Revenue from electricity and gas sales increased in the first half of 2021 by PLN 410 million, or approx. 13%. Revenue increased in in both the business and household customers segments.
Electricity output in the Generation segment in the first half of 2021 was approx. 16% higher than in the same period of 2020. This translates into higher revenue in this segment (by approx. 9% y/y).
In the Distribution segment, the Group recorded higher sales of distribution services to end customers in the first half of 2021 by 7% on a y/y basis, mainly driven by higher sales in tariff groups B and G.
From the onset of the pandemic, the Company has been regularly carrying out additional analyses of the COVID-19 pandemic's potential impact on receivables impairment. Expected losses are verified on the basis of these analyses. The level of this additional impairment loss - from the start of these analyses - is negligible from a reporting viewpoint, nonetheless the Group assesses that if restrictions related to the COVID-19 pandemic are maintained and thus economic activity is further reduced, the receivables turnover ratio might deteriorate given a reduced payment capacity on the part of electricity customers.
Due to work being re-organised and because of enhanced safety measures mandated by the state of epidemic and a temporary unavailability of contractors, the Group sees a risk of delays in completing scheduled repairs

and modernisations of generation assets, including adaptations to BAT conclusions. The effects of this risk materialising will be limited in terms of time and dependent on the current market conditions, among other factors.

At the date on which these consolidated financial statements were prepared, it was difficult to predict how the situation would develop and what the potential negative effects for the Parent's and the Group's operating and financing activities would be in the future. A further spread of the virus may lead to further restrictions and a decline in economic activity (currently numerous restrictions apply to: hotels, restaurants, coffee shops and shopping galleries). Moreover, a higher number of people with Covid at the Group could potentially elevate operational continuity risk at the Group's companies potential interruptions could have a negative impact on revenue from sales. The Group is taking preventive action to reduce this type of risk.

A crisis and coordination command, appointed by the Management Board, is operating at ENEA S.A., and all Group companies have appointed teams that coordinate tasks related to ensuring the continuity of ENEA Group companies' operations in the context of the coronavirus threat. The Management Board of ENEA S.A. is coordinating all activities in this area through the crisis coordination command. The command and teams engage in activities intended to protect the health of employees by providing personal protective equipment (face masks, anti-microbial gels, gloves), implementing safe work rules (including introducing, wherever possible, remote work, limited direct meetings in the workplace, disinfection of rooms, introducing a limit on the number of employees in a room, maintaining safe distances between employees). The precautions taken in order to prevent the spread of the coronavirus have an impact on operating costs, which together with changes in revenue will ultimately affect the consolidated net result.

The COVID-19 pandemic did not have as much impact on LWB's activities in the first half of 2021, unlike in 2020. Additionally, thanks to the crew's intensive efforts and the optimisation of longwall structuring and scheduling during a period of higher demand for coal, it was possible to achieve very good production results, which translated into improved financial results in H1 2021.

Nonetheless, having regard to COVID-19 risks, LWB continues to apply appropriate measures and precautions to safeguard against the negative impact of COVID-19 on its activities and financial results. These especially include personal protective equipment, maintaining distance, appropriate work scheduling and use of shift-based work and remote work wherever possible, as well as appropriate technical measures for prevention purposes.

At the date on which these consolidated financial statements were prepared, the Group sees no going-concern risk.

28. Events after the reporting period

On 23 July 2021, ENEA S.A., PGE Polska Grupa Energetyczna S.A., TAURON Polska Energia S.A., ENERGA S.A. (together the "Energy Companies") and the State Treasury (together the "Parties") signed an agreement concerning cooperation on the spin-off of coal assets and their integration within the National Energy Security Agency ("Agreement"). In a document entitled "Energy sector transformation in Poland. Spin-off of coal assets from companies with a State Treasury shareholding ("Transformation")," published by the Ministry of State Assets, a concept was developed to spin off assets related to the generation of electricity in conventional coal units ("Coal Assets") from the Energy Companies. The Transformation includes, inter alia, the integration of these Coal Assets within one entity, i.e. PGE Górnictwo i Energetyka Konwencjonalna S.A. - a subsidiary of PGE Polska Grupa Energetyczna S.A., which will eventually operate under the name National Energy Security Agency ("NABE").

Given the above, the Parties to the Agreement acknowledge the need to coordinate cooperation in the process of spinningoff the Coal Assets and integrating them within NABE. Under the Agreement, the Parties declare to mutually exchange essential information, including organisational structures, processes being implemented and the direction of the Transformation, provided that this exchange does not violate the law. The Agreement will facilitate a smooth and effective process intended to establish NABE.

On 19 August 2021, an Extraordinary General Meeting of ElectroMobility Poland S.A. adopted a resolution to decrease its share capital by PLN 17 700 thousand, by reducing the nominal value of all of its shares, from PLN 7 000.00 each to a new nominal value of PLN 5 230.05 each. The objective of the share capital decrease was to transfer share capital to supplementary capital. The general meeting also adopted a resolution to increase share capital by PLN 249 996 thousand to PLN 302 297 thousand, with the total issue price being PLN 250 000 thousand, which will be paid for entirely with a cash contribution. The new shares were issued by way of a private subscription. All of the new-issue shares are ordinary registered shares. The share premium will be transferred to supplementary capital. The new shares were offered to the State Treasury, with which ElectroMobility Poland S.A. signed a share purchase agreement. Once all activities related to the share capital increase are completed, ENEA S.A. will hold a 4.325% stake.

AI assistant

Enea S.A. — Interim / Quarterly Report 2021

5597_rns_2021-09-16_9f2ed9db-7c59-4f39-93bc-dc4bab905ba6.pdf

TABLE OF CONTENTS

Members of the Management Board

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(a) H1 2021 (unaudited)

(b) H1 2020 (unaudited)

CONSOLIDATED STATEMENT OF CASH FLOWS

ADDITIONAL INFORMATION AND EXPLANATIONS

General information

1. General information on the Parent

2. Group composition

3. Changes in composition of the Parent's Management Board and Supervisory Board

4. Basis for preparing financial statements

5. Accounting rules (policy) and significant estimates and assumptions

6. Functional currency and presentation currency

Operating segments

Other information concerning segments as at 30 June 2021 and for the six-month period ended on that date is as follows:

Explanatory notes to the consolidated statement of comprehensive income

7. Revenue from sales

Net revenue from sales

8. Tax

Deferred income tax

Explanatory notes to the consolidated statement of financial position

9. Property, plant and equipment

10. Intangible assets

11. Investments in associates and jointly controlled entities

Change in investments in subsidiaries, associates and jointly controlled entities

Implementation of project to build Elektrownia Ostrołęka C

12. Inventories

Inventories

13. Energy origin certificates

Energy origin certificates

14. Assets and liabilities arising from contracts with customers

Assets and liabilities arising from contracts with customers

15. Restricted cash

16. Coverage of loss

17. Debt-related liabilities

Credit facilities, loans and debt securities

Credit facilities and loans

ENEA S.A.

ENEA Ciepło Sp. z o.o.

Bond issue programs

Interest rate hedges and currency hedges

Financing terms - covenants

18. Provisions

Change in provisions for other liabilities and charges in the period ended 30 June 2021

Provision for other claims

Other provisions mainly concern:

19. Accounting for subsidies and road lighting modernisation services

Accounting for income from subsidies and road lighting modernisation services

Schedule for accounting for deferred revenue

Financial instruments

20. Financial instruments and fair value

FINANCIAL LIABILITIES

Financial instruments are fair-value measured according to a hierarchy.

21. Debt financial assets at amortised cost

Debt financial assets at amortised cost

22. Impairment of trade and other receivables

Impairment of trade and other receivables

23. Analysis of the age structure of assets arising from contracts with customers and trade and other receivables

Other explanatory notes

24. Related-party transactions

Transactions with State Treasury related parties

25.1. Sureties and guarantees

List of guarantees issued as at 30 June 2021

25.2. On-going proceedings in courts of general competence

Proceedings initiated by the Group

Proceedings against the Group

25.3. Other court proceedings

25.4. Risk associated with legal status of properties used by the Group

25.5. Cases concerning 2012 non-balancing

25.6. Dispute concerning prices for origin certificates for energy from renewable sources and terminated agreements for the purchase of property rights arising under origin certificates for energy from renewable sources

26. Participation in nuclear power plant build program

27. Impact of COVID-19 pandemic

28. Events after the reporting period

Enea S.A. Interim / Quarterly Report 2021