PGE Polska Grupa Energetyczna S.A. Quarterly financial report for the 3-month period

ended March 31, 2021 in accordance with IFRS EU (in PLN million)

I.	PGE GROUP CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE 3-MONTH PERIOD ENDED MARCH 31, 2021, IN ACCORDANCE WITH IFRS EU4
	CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME4
	CONSOLIDATED STATEMENT OF FINANCIAL POSITION5
	CONSOLIDATED STATEMENT OF CHANGES IN EQUITY6
	CONSOLIDATED STATEMENT OF CASH FLOWS7
	GENERAL INFORMATION, BASIS FOR PREPARATION OF FINANCIAL STATEMENTS AND OTHER EXPLANATORY INFORMATION8
1.	General information8
1.1	Information on the parent8
1.2	Information on PGE Group8
1.3	PGE Group's composition9
2.	Basis for preparation of financial statements12
2.1 2.2	Statement of compliance12 Presentation and functional currency 12
2.3	New standards and interpretations published, not yet effective12
2.4	Professional judgement of management and estimates13
3.	Changes in accounting principles and data presentation13
4.	Fair value hierarchy13
	EXPLANATORY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS15
	EXPLANATORY NOTES TO OPERATING SEGMENTS 15
5.	Information on operating segments15
5.1	Information on business segments16
	EXPLANATORY NOTES TO THE CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 18
6.	Revenue and costs18
6.1	Revenue from sales18
6.2 6.3	Costs by nature and function19 Other operating income and expenses20
6.4	Finance income and finance costs20
6.5	Share of profit of equity-accounted entities21
7.	Impairment of assets21
8.	Income tax21
	EXPLANATORY NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION 22
9.	Material transactions to purchase and sell property, plant and equipment, intangible assets and right-of-use assets22
10.	Future investment commitments22
11.	Shares accounted for using the equity method22
12.	Deferred tax in statement of financial position23
12.1	Deferred income tax assets23
12.2	Deferred tax liabilities24
13.	Inventories24
14.	CO2 emission allowances for captive use24
15.	Other current and non-current assets25
15.1 15.2	Other non-current assets25 Other current assets25
16.	Selected financial assets25
16.1	Trade and other financial receivables25
16.2	Cash and cash equivalents26
17.	Derivatives and other assets measured at fair value through profit or loss26
18.	Equity 28
18.1	Share capital28
18.2 18.3	Hedging reserve28 Dividends paid and recommended for payment28
19.	Provisions29
19.1	Provision for employee benefits29
19.2	Rehabilitation provision 30
19.3	Provision for CO2 emissions cost30
19.4 19.5	Provision for energy origin rights held for redemption30 Provision for claims concerning non-contractual use of property30
19.6	Settlements with prosumers30

20.	Financial liabilities30
20.1	Loans, borrowings, bonds and leases31
20.2	Trade and other financial liabilities32
21.	Other non-financial liabilities32
21.1	Other non-current non-financial liabilities32
21.2	Other current non-financial liabilities32
	OTHER EXPLANATORY NOTES33
22.	Contingent liabilities and receivables, legal claims33
22.1	Contingent liabilities33
22.2	Other significant issues related to contingent liabilities33
22.3	Contingent receivables33
22.4	Other court cases and disputes34
23.	Tax settlements35
24.	Information on related parties37
24.1	Associates and jointly controlled entities37
24.2	State Treasury-controlled companies37
24.3	Management Board and Supervisory Board remuneration 37
25.	Significant events during and after the reporting period38
25.1	Impact of COVID-19 on PGE Group's business38
25.2	Preliminary proposal to purchase stake in Fortum's assets38
25.3	Investment agreement with Ørsted for offshore wind farm projects39
25.4	Czechia's complaint against Poland regarding prolongation of mining concession for KWB Turów 39
25.5	Planned transfer of coal assets to National Energy Security Agency40
II.	PGE Polska Grupa Energetyczna S.A. Quarterly financial information for the 3-month period ended March 31, 2021, in
	accordance with IFRS EU (in PLNm)41

	SEPARATE STATEMENT OF COMPREHENSIVE INCOME41
	SEPARATE STATEMENT OF FINANCIAL POSITION42
	SEPARATE STATEMENT OF CHANGES IN EQUITY43
	SEPARATE STATEMENT OF CASH FLOWS44
1.	Changes in accounting principles and data presentation44
III.	APPROVAL OF QUARTERLY FINANCIAL REPORT45
	Glossary of terms and abbreviations46

I. PGEGROUPCONDENSEDCONSOLIDATEDINTERIMFINANCIALSTATEMENTSFORTHE 3-MONTHPERIODENDEDMARCH31, 2021, INACCORDANCEWITHIFRS EU CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

		Period ended	Period ended
	Note	March 31, 2021	March 31, 2020
		(unaudited)	(unaudited)
STATEMENTOF PROFITOR LOSS

REVENUE FROM SALES	6.1	11,900	12,591
Cost of goodssold	6.2	(10,158)	(11,282)
GROSS PROFITONSALES		1,742	1,309
Distribution and selling expenses	6.2	(417)	(348)
General and administrative expenses	6.2	(260)	(272)
Net other operating income / expenses	6.3	99	84
OPERATING PROFIT		1,164	773
Netfinance costs, including:	6.4	(134)	(157)
Interestincome calculated using		8	11
effective interestrate method
Share of profit/(loss) of entities accounted for using the equitymethod	6.5	(6)	(7)
GROSS PROFIT/(LOSS)		1,024	609
Income tax	8	(189)	(124)
NET PROFIT/(LOSS) FOR THE REPORTING PERIOD		835	485

OTHER COMPREHENSIVE INCOME
Itemsthat may be reclassified to profit orlossin the future:
Valuation of debtfinancial instruments		7	(11)
Valuation of hedging instruments		83	185
Foreign exchange differencesfrom translation of foreign entities		1	5
Deferred tax	8	(18)	(33)
Itemsthat may not be reclassified to profit orlossin the future:
Actuarial gains and lossesfrom valuation of provisionsfor employee benefits		-	(30)
Deferred tax	8	-	6
OTHER COMPREHENSIVE INCOME FOR THE REPORTINGPERIOD,NET		73	122
		908	607
TOTAL COMPREHENSIVE INCOME
NET PROFIT/(LOSS)ATTRIBUTABLE TO:
– equity holders of the parent company		808	432
– non-controlling interests		27	53

COMPREHENSIVE INCOME ATTRIBUTABLE TO:
– equity holders of the parent company		880	554
– non-controlling interests		28	53

EARNINGS AND DILUTEDEARNINGS PER SHARE ATTRIBUTABLE TOEQUITY HOLDERSOF THE PARENT COMPANY (INPLN)		0.43	0.23

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

		As at	As at
	Note	March 31, 2021 (unaudited)	December 31, 2020
NON-CURRENTASSETS			audited
Property, plant and equipment		61,170	61,741
Investment property		40	41
Intangible assets		639	646
Right-of-use assets		1,271	1,309
Financialreceivables	16.1	206	191
Derivatives and other assets measured atfair value through profit orloss	17	170	132
Shares and other equity instruments		64	57
Shares accounted for using the equitymethod	11	154	152
Other non-current assets		812	839
CO2 emission allowancesfor captive use	14	41	39
Deferred income tax assets	12.2	1,204 65,771	1,351 66,498
CURRENTASSETS
Inventories	13	2,583	3,123
CO2 emission allowancesfor captive use	14	6,150	1,735
Income tax receivables		4	8
Derivatives and other assets measured atfair value through profit orloss	17	371	423
Trade and otherfinancialreceivables	16.1	4,874	4,812
Other current assets		1,562	799
Cash and cash equivalents	16.2	2,902	4,189
		18,446	15,089
ASSETS CLASSIFIEDAS HELDFOR SALE		6	7
TOTAL ASSETS		84,223	81,594
EQUITY
Share capital	18.1	19,165	19,165
Reserve capital		18,410	18,410
Hedging reserve	18.2	58	(13)
Foreign exchange differencesfrom translation		6	5
Retained earnings		5,758	4,951
EQUITYATTRIBUTABLE TOEQUITY HOLDERS OF THE PARENT		43,397	42,518
Equity attributable to non-controlling interests		856	983
TOTAL EQUITY		44,253	43,501

NON-CURRENT LIABILITIES
Non-current provisions	19	11,270	11,207
Loans, borrowings, bonds and leases Derivatives	20.1 17	9,348 229	10,025 385
Deferred income tax liabilities	12.2	363	345
Deferred income and government grants		592	600
Otherfinancial liabilities	20.2	442	448
Other non-financial liabilities	21.1	63	65
		22,307	23,075
CURRENT LIABILITIES
Current provisions	19	9,079	7,311
Loans, borrowings, bonds and leases	20.1	2,127	1,384
Derivatives	17	32	63
Trade and otherfinancial liabilities	20.2	3,082	3,504
Income tax liabilities Deferred income and government grants		300 77	476 77
Other non-financial liabilities	21.2	2,966	2,203
		17,663	15,018
TOTAL LIABILITIES		39,970	38,093
TOTAL EQUITYAND LIABILITIES		84,223	81,594

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

	Share capital	Reserve capital	Hedging reserve	Foreign exchange differences from translation	Retained earnings	Total	Non-controlling interests	Total equity
Note	18.1		18.2
JANUARY 1, 2021	19,165	18,410	(13)	5	4,951	42,518	983	43,501
Net profit for the reporting period	-	-	-	-	808	808	27	835
Other comprehensive income	-	-	71	1	-	72	1	73
COMPREHENSIVE INCOME	-	-	71	1	808	880	28	908
Entity's exit from PGE Group (PGE EJ1)	-	-	-	-	-	-	(155)	(155)
Other changes	-	-	-	-	(1)	(1)	-	(1)
MARCH 31, 2021	19,165	18,410	58	6	5,758	43,397	856	44,253

	Share capital	Reserve capital	Hedging reserve	Foreign exchange differences from translation	Retained earnings	Total	Non-controlling interests	Total equity
Note	18.1		18.2
JANUARY 1, 2020	19,165	19,669	(323)	(1)	3,779	42,289	848	43,137
Net profit for the reporting period	-	-	-	-	432	432	53	485
Other comprehensive income	-	-	141	5	(24)	122	-	122
COMPREHENSIVE INCOME	-	-	141	5	408	554	53	607
Other changes	-	-	-	-	(1)	(1)	-	(1)
MARCH 31, 2020	19,165	19,669	(182)	4	4,186	42,842	901	43,743

CONSOLIDATED STATEMENT OF CASH FLOWS

	Note	Period ended March 31, 2021 (unaudited)	Period ended March 31, 2020 (unaudited)
CASHFLOWS FROM OPERATINGACTIVITIES
Gross profit		1,024	609
Income tax paid		(213)	(128)
Adjustmentsfor:
Share of (profit)/loss of equity-accounted entities		6	7
Depreciation, amortisation, disposal and impairmentlosses		1,042	996
Interest and dividend, net		71	76
(Profit)/loss on investing activities		(58)	260
Change in receivables		(108)	(2,489)
Change in inventories		531	1.702
Change in CO2 emission allowancesfor captive use		(4,417)	(1,888)
Change in liabilities, excluding loans and borrowings		733	(425)
Change in other non-financial assets, prepayments		(778)	(81)
Change in provisions		1,768	1,509
Other		1	70
NET CASH FROM OPERATINGACTIVITIES		(398)	218
CASHFLOWS FROM INVESTINGACTIVITIES
Purchase of property, plant and equipment and intangible assets		(1,164)	(2,249)
Sale of property, plant and equipment and intangible assets		10	-
Recognition of deposits with maturity over 3 months		(8)	(20)
Termination of deposits with maturity over 3 months		-	10
Purchase of financial assets		(41)	(2)
Sale of otherfinancial assets after offsetting cash		361	-
Other		(3)	(2)
NET CASH FROM INVESTINGACTIVITIES		(845)	(2,263)
CASHFLOWS FROM FINANCINGACTIVITIES
Proceedsfrom loans, borrowings		98	3,161
Repayment of loans, borrowings, leases		(50)	(343)
Interest paid		(89)	(77)
Other		5	7
NET CASH FROM FINANCINGACTIVITIES		(36)	2,748
NET CHANGE INCASHAND CASHEQUIVALENTS		(1,279)	703
Net exchange differences		(6)	16
CASHAND CASHEQUIVALENTS AT THE BEGINNING OF PERIOD	16.2	4,173	1,311
CASHAND CASHEQUIVALENTS AT THE ENDOF PERIOD	16.2	2,894	2,014

GENERAL INFORMATION, BASIS FOR PREPARATIONOF FINANCIAL STATEMENTS AND OTHER EXPLANATORY INFORMATION

1. Generalinformation

1.1 Informationontheparent

PGE Polska Grupa Energetyczna S.A. wasfounded on the basis of the Notary Deed of August 2, 1990 and registered in the District Court in Warsaw, XVI Commercial Department on September 28, 1990. The Company was registered in the National Court Register of the District Court forthe capital city of Warsaw, XII Commercial Department, under no. KRS 0000059307. The Company'sregistered office is in Warsaw, ul. Mysia 2.

As at January 1, 2021 and March 31, 2021 the composition of the Company's Management Board was asfollows:

Wojciech Dąbrowski President of the Management Board,
Wanda Buk Vice-President of the Management Board,
Paweł Cioch Vice-President of the Management Board,
Paweł Strączyński Vice-President of the Management Board,
Paweł Śliwa Vice-President of the Management Board,
Ryszard Wasiłek Vice-President of the Management Board.

On March 31, 2021 Mr. Paweł Strączyńskiresident as Vice-President of the Management Board, effective March 31, 2021.

On the date on which these financialstatements were published, the Company's Management Board was asfollows:

Wojciech Dąbrowski President of the Management Board,
Wanda Buk Vice-President of the Management Board,
Paweł Cioch Vice-President of the Management Board,
Paweł Śliwa Vice-President of the Management Board,
Ryszard Wasiłek Vice-President of the Management Board.

Ownership structure

The parent's ownership structure was asfollows:

	State Treasury	Othershareholders	Total
As at December 31, 2020	57.39%	42.61%	100.00%
As atMarch 31, 2021	57.39%	42.61%	100.00%

The ownership structure as at each reporting date was prepared on the basis of information available to the Company.

According to information known to the Company as of the date on which these financial statements were prepared, the State Treasury wasthe only shareholder with at least 5% of votes at the general meeting of PGE S.A.

1.2 InformationonPGEGroup

PGE Group includes the parent, PGE Polska Grupa Energetyczna S.A., along with 72 consolidated subsidiaries, 4 associates and 1 jointly controlled entity. For additional information aboutsubordinated entitiesincluded in the consolidated financialstatements please referto note 1.3.

These consolidated financialstatements of PGEGroup coverthe period from January 1, 2021 to March 31, 2021 and include comparative data forthe period fromJanuary 1,2020 toMarch 31, 2020 and as atDecember 31, 2020. These condensed consolidated interimfinancial statements do not include all of the information and disclosures required in annual financial statements and they should be read in conjunction with the Group's consolidated financial statements for the year ended December 31, 2020, approved for publication on March 22, 2021.

The financialstatementsof allsubordinated entitieswerepreparedforthe same reportingperiodasthe financialstatementsoftheparent company, using consistent accounting principles. Companies acquired in the course of the financial year were the exception, preparing financial data forthe period from the moment when PGE Group obtained control.

PGE Group companies' core activities are asfollows:

production of electricity,
distribution of electricity,
wholesale and retail trade in electricity, energy origin rights, CO² emission allowances and natural gas,
production and distribution of heat,
provision of other services related to these activities

Business activities are conducted under appropriate concessions granted to specific Group companies.

Going concern

These financialstatementswereprepared underthe assumptionthatthe keyGroupcompanieswill continueoperating as a going concern for at least 12 months from the reporting date. Subsidiary PGE Obrót S.A. reported negative equity as at March 31, 2021, largely due to negativechangesontheretail electricity tradingmarket.PGEObrót S.A.-likeotherPGEGroupcompanies-hasaccesstofinancingthrough PGE S.A., in connection with which this company's going concern assumption isjustified.

Aside fromPGEObrót S.A., atthedateofthe approvalofthese financialstatements,there isno evidence indicating thatthe going concern ofsignificant Group companiesis endangered.

Changesin accounting policies

The same accounting principles(policy) and calculation methods were applied in these financialstatements asin the most recent annual financial statements. These financial statements should be read in conjunction with PGE Group's consolidated financial statements for the year ended December 31, 2020, published on March 22, 2021.

1.3 PGEGroup's composition

During the reporting period, PGE Group consisted of the following subsidiaries, consolidated directly and indirectly:

	Entity	Entity holding stake	Stake held by Group entities as at March 31, 2021	Stake held by Group entities as at December 31, 2020
	SEGMENT: SUPPLY
1.	PGE Polska Grupa Energetyczna S.A. Warsaw	Parent
2.	PGE Dom Maklerski S.A. Warsaw	PGE S.A.	100.00%	100.00%
3.	PGE Trading GmbH (in liquidation) Berlin	PGE S.A.	100.00%	100.00%
4.	PGE Obrót S.A. Rzeszów	PGE S.A.	100.00%	100.00%
5.	ENESTA sp.z o.o. Stalowa Wola	PGE Obrót S.A.	87.33%	87.33%
6.	PGE Centrum sp.z o.o. Warsaw	PGE S.A.	100.00%	100.00%
7.	PGE Paliwa sp.z o.o. Kraków	PGE EC S.A.	100.00%	100.00%
	SEGMENT: CONVENTIONALGENERATION
8.	PGE GiEK S.A. Bełchatów	PGE S.A.	100.00%	100.00%
9.	ELBIS sp.z o.o. Rogowiec	PGE S.A.	100.00%	100.00%
10.	MegaSerwissp.z o.o. Bogatynia	PGE S.A.	100.00%	100.00%
11.	"ELMEN" sp.z o.o. Rogowiec	PGE S.A.	100.00%	100.00%
12.	ELTUR-SERWIS sp.z o.o. Bogatynia	PGE S.A.	100.00%	100.00%
13.	"BETRANS" sp.z o.o. Bełchatów	PGE S.A.	100.00%	100.00%
14.	BESTGUM POLSKA sp.z o.o. Rogowiec	PGE S.A.	100.00%	100.00%
15.	RAMB sp.z o.o. Piaski	PGE S.A.	100.00%	100.00%
16.	"Energoserwis – Kleszczów" sp.z o.o. Rogowiec	PGE GiEK S.A.	51.00%	51.00%
	SEGMENT:DISTRICT HEATING
17.	PGE Energia Ciepła S.A. Warsaw	PGE S.A.	100.00%	100.00%
18.	PGE Toruń S.A. Toruń	PGE EC S.A.	95.22%	95.22%
19.	PGE Gaz Toruń sp.z o.o. Warsaw	PGE EC S.A.	100.00%	100.00%
20.	Zespół Elektrociepłowni Wrocławskich KOGENERACJA S.A. Wroclaw	PGE EC S.A.	58.07%	58.07%
21.	Elektrociepłownia Zielona Góra S.A. Zielona Góra	KOGENERACJA S.A.	98.40%	98.40%
22.	MEGAZEC sp.z o.o. Bydgoszcz	PGE S.A.	100.00%	100.00%

	Entity	Entity holding stake	Stake held by Group entities as at	Stake held by Group entities as at
23.	Przedsiębiorstwo Energetyki Cieplnejsp.z o.o.	PGE EC S.A.	March 31, 2021 100.00%	December 31, 2020 100.00%
	Zgierz SEGMENT: CIRCULAR ECONOMY
24.	PGE Ekoserwis S.A. Wrocław	PGE S.A.	95.08%	95.08%
25.	EPORE S.A. Bogatynia	PGE GiEK S.A.	100.00%	100,00%
26.	ZOWER sp.z o.o. Rybnik	PGE EC S.A.	100.00%	100.00%
	SEGMENT:RENEWABLES
27.	PGE EnergiaOdnawialna S.A. Warsaw	PGE S.A.	100.00%	100.00%
28.	Elektrownia Wiatrowa Baltica-1 sp.z o.o. Warsaw	PGE S.A.	100.00%	100.00%
29.	Elektrownia Wiatrowa Baltica-2 sp.z o.o. Warsaw	PGE Baltica 6 sp.z o.o.	100.00%	100.00%
30.	Elektrownia Wiatrowa Baltica-3 sp.z o.o. Warsaw	PGE Baltica 5 sp.z o.o.	100.00%	100.00%
31.	Elektrownia Wiatrowa Baltica-4 sp.z o.o. Warsaw	PGE S.A.	100.00%	100.00%
32.	Elektrownia Wiatrowa Baltica-5 sp.z o.o. Warsaw	PGE S.A.	100.00%	100.00%
33.	Elektrownia Wiatrowa Baltica-6 sp.z o.o. Warsaw	PGE S.A.	100.00%	100.00%
34.	PGE Baltica 1 sp.z o.o. Warsaw	PGE S.A.	100.00%	100.00%
35.	PGE Baltica 2 sp.z o.o. Warsaw	PGE S.A.	100.00%	100.00%
36.	PGE Baltica 3 sp.z o.o. Warsaw	PGE S.A.	100.00%	100.00%
37.	PGE Baltica 4 sp.z o.o. Warsaw	PGE S.A.	100.00%	100.00%
38.	PGE Baltica 5 sp.z o.o. Warsaw	PGE S.A.	100.00%	100.00%
39.	PGE Baltica 6 sp.z o.o. Warsaw	PGE S.A.	100.00%	100.00%
40.	PGE Baltica sp.z o.o. Warsaw	PGE S.A.	100.00%	100.00%
41.	PGE Klastersp.z o.o. Warsaw	PGE EOS.A.	100.00%	100.00%
42.	PGE Soleo 1 sp.z o.o. Warsaw	PGE EOS.A.	100.00%	100.00%
43.	PGE Soleo 2 sp.z o.o. Warsaw	PGE EOS.A.	100.00%	100.00%
44.	PGE Soleo 3 sp.z o.o. Warsaw	PGE EOS.A.	100.00%	100.00%
45.	PGE Soleo 4 sp.z o.o. Warsaw	PGE EOS.A.	100.00%	100.00%
46.	PGE Soleo 5 sp.z o.o. Warsaw	PGE EOS.A.	100.00%	100.00%
47.	PGE Soleo 6 sp.z o.o. Warsaw	PGE EOS.A.	100.00%	100.00%
48.	PGE Soleo 7 sp.z o.o. Warsaw	PGE EOS.A.	100.00%	100.00%
49.	ECO-POWER sp.z o.o. Warsaw	PGE EOS.A.	100.00%	100.00%
	SEGMENT:DISTRIBUTION
50.	PGE Dystrybucja S.A. Lublin	PGE S.A.	100.00%	100.00%
	SEGMENT:OTHER ACTIVITY
	PGE EJ 1 sp.z o.o. Warsaw	PGE S.A.	-	70.00%
51.	PGE Systemy S.A. Warsaw	PGE S.A.	100.00%	100.00%

	Entity	Entity holding stake	Stake held by Group entities as at March 31, 2021	Stake held by Group entities as at December 31, 2020
52.	PGE Sweden AB (publ) Stockholm	PGE S.A.	100.00%	100.00%
53.	PGE Synergia sp.z o.o. Warsaw	PGE S.A.	100.00%	100.00%
54.	"Elbest" sp.z o.o. Bełchatów	PGE S.A.	100.00%	100.00%
55.	Elbest Security sp.z o.o. Bełchatów	PGE S.A.	100.00%	100.00%
56.	PGE Inwest 2 sp.z o.o. Warsaw	PGE S.A.	100.00%	100.00%
57.	PGE Venturessp.z o.o. Warsaw	PGE S.A.	100.00%	100.00%
58.	PGE Inwest 8 sp.z o.o. Warsaw	PGE S.A.	100.00%	100.00%
59.	PGE Inwest 9 sp.z o.o. Warsaw	PGE S.A.	100.00%	100.00%
60.	PGE Inwest 10 sp.z o.o. Warsaw	PGE S.A.	100.00%	100.00%
61.	PGE Inwest 11 sp.z o.o. Warsaw	PGE S.A.	100.00%	100.00%
62.	PGE Inwest 12 sp.z o.o. Warsaw	PGE S.A.	100.00%	100.00%
63.	PGE Inwest 13 S.A. Warsaw	PGE S.A.	100.00%	100.00%
64.	PGE Inwest 14 sp.z o.o. Warsaw	PGE S.A.	100.00%	100.00%
65.	PGE Nowa Energia sp.z o.o. Warsaw	PGE S.A.	100.00%	100.00%
66.	Towarzystwo Funduszy Inwestycyjnych Energia S.A. Warsaw	PGE S.A.	100.00%	100.00%
67.	Rybnik 2050 sp.z o.o. w organizacji Warsaw	PGE S.A.	100.00%	-
68.	BIO-ENERGIA sp.z o.o. Warsaw	PGE EOS.A.	100.00%	100.00%
69.	Przedsiębiorstwo Transportowo-Usługowe "ETRA" sp.z o.o. Białystok	PGE Dystrybucja S.A.	100.00%	100.00%
70.	Energetyczne Systemy Pomiarowe sp.z o.o. Białystok	PGE Dystrybucja S.A.	100.00%	100.00%
71.	PrzedsiębiorstwoUsługowo-Handlowe TOREC sp.z o.o. Toruń	PGE Toruń S.A.	51.05%	51.05%
72.	4Mobility S.A. Warsaw	PGE Nowa Energia sp.z o.o.	51.47%	51.47%
73.	PIMERGE S.A. Wrocław	PGE Venturessp.z o.o.	89.87%	89.87%

The table above includes the following changes in the structure of PGE Group companies subject to full consolidation which took place during the period ended March 31, 2021:

Rybnik 2050 sp.z o.o. w organizacji wasformed on February 1, 2021. The company was not yet registered at the National Court Register as of the date on which this report was prepared.
On March 1, 2021, an Extraordinary General Meeting of PGE Trading adopted a resolution to dissolve PGE Trading and appoint a liquidator to liquidate PGE Trading.
An agreement to sell all shares in PGE EJ1 sp. z o.o. to the State Treasury was signed on March 26, 2021. The ownership of the shares wastransferred on March 31, 2021. In connection with thissale, PGE Group recorded a grossloss of PLN 19 million in its consolidated financial statements. The selling price may be adjusted due to the company's valuation as at the date of sale, but it shouldn't have significant impact on the result on sale.
On March 31, 2021 an Extraordinary General Meeting of PGE EO S.A. (acquiring company) and Extraordinary General Meeting of ECO - POWER sp.z o.o. (acquired company) adopted resolutionsto merge the companies by transferring the entire assets of the acquired company to the acquiring company without issuing new shares by the acquiring company in exchange for shares in the acquired company. The merger wasregistered at the National Court Register on April 30, 2021.

Events after the reporting period

Asstated in note 25.3 of these financialstatements, a 50% stake in Elektrownia Wiatrowa Baltica - 2 sp.z o.o. and Elektrownia Wiatrowa Baltica - 3 sp.z o.o.wassoldtoØrstedonMay 6, 2021. PGEGroupislosing controloverthese two companies as a result ofthe transaction. Starting fromthe sale date, Elektrownia WiatrowaBaltica - 2 sp.z o.o. and Elektrownia Wiatrowa Baltica - 3 sp.z o.o. will constitute a joint operation in the meaning of IFRS 11 Joint Arrangements.

2. Basisforpreparationoffinancialstatements

2.1 Statementof compliance

These consolidated financialstatements have been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting and in the scope required under the Regulation of the Minister of Finance of March 29, 2018 on current and periodic information provided by issuers of securities and conditions of recognition as equivalent information required by the law of a non-Member State (Polish Journal of Laws 2018, items 512 and 685).

IFRS comprise standards and interpretations approved by the International Accounting Standards Board (IASB) and the IFRS Interpretations Committee.

2.2 Presentationandfunctional currency

The parent's functional currency and the presentation currency of these consolidated financial statements is the Polish zloty (PLN). All amounts are in PLN millions(PLNm), unlessindicated otherwise.

For the purpose of translation of items denominated in currency other than PLN as at the reporting date the following exchange rates were applied:

	March 31, 2021	December 31, 2020	March 31, 2020
USD	3.9676	3.7584	4.1466
EUR	4.6603	4.6148	4.5523

2.3 Newstandardsandinterpretationspublished,notyeteffective

The following standards, amendmentsto existing standards and interpretations are not yet endorsed by the European Union or are not effective as at January 1, 2021:

Standard	Description of changes	Effective date
IFRS 14 Regulatory Deferral Accounts	Accounting and disclosure principlesfor regulatory deferral accounts.	Standard in the current version will not be effective in the EU
Amendmentsto IFRS 10 and IAS 28	Contains guidelines on the sale or contribution of assets between an investor and itsjoint venture or associate.	Deferred indefinitely
IFRS 17 Insurance contracts	Defines a new approach to recognising revenue and profit/lossin the period in which insurance services are provided	January 1, 2023
Amendmentsto IAS 1	The amendments concern the presentation of financialstatements.	January 1, 2023
Amendmentsresulting from IFRS annual improvement cycle 2018-2020	Amendmentsto IFRS 1, IFRS 9, IFRS 16 and IAS 41 mainly concern the resolution of inconsistencies and clarification of terminology.	January 1, 2022
Amendmentsto IFRS 3	Amendmentsto Referencesto the Conceptual Framework	January 1, 2022
Amendmentsto IAS 16	Proceedsfrom property, plant and equipment before intended use	January 1, 2022
Amendmentsto IAS 37	Onerous Contracts — Cost of Fulfilling a Contract	January 1, 2022
Amendmentsto IFRS 16	Covid-19-Related Rent Concessions	April 1, 2021
Amendmentsto IAS 12	Deferred Tax related to Assets and Liabilities arising from a Single Transaction	January 1, 2023

PGE Group intends to adopt the above new standards, amendments to standards and interpretations published by the International Accounting Standards Board but not yet effective at the reporting date, when they enter into force. These regulations will not have a material impact on PGE Group'sfuture financialstatements.

2.4 Professionaljudgementofmanagementandestimates

In the process of applying accounting rulesin the mattersreferred to below, ofthe mostimportance, aside from accounting estimates, is the professional judgement of management, which has an impact on the amounts presented in the consolidated financial statements, including in additional explanatory notes. The estimates are based on the best knowledge of the Management Board relating to current and future operations and events in specific areas. Detailed information on the assumptions made is presented below or in respective explanatory notes.

In the previous reporting periods PGE Group recognised impairment losses on assets, in particular property, plant and equipment. In the present period, the Group did not identify any need to conduct impairment tests or reverse impairment losses recognised in previous reporting periods. Estimates of recoverable amount of property, plant and equipment are based on a number ofsignificant assumptionsto the factors, realisation of which is uncertain and mostly beyond PGE Group's control. According to the Group, the most accurate volumes and values were applied but actual figures may differ from the Group's assumptions.
Provisions are liabilities of uncertain amount ortiming. During the reporting period,the Group changed estimatesregarding the validity or amounts of some provisions.
Uncertainties concerning tax settlements are described in note 23 to these consolidated financialstatements.
No significant extensions in the payment of receivables or problems with liquidity resulting from the COVID-19 pandemic were observed as of the reporting date. Following the pandemic's outbreak, in 2020 the Group updated its models for estimating expected credit losses. For the purposes of estimating expected credit losses, counterparties were split into two groups: strategic counterparties, which have been internally assigned ratings based on a scoring model, and other counterparties, for which expected credit losses are estimated based on a provision matrix. For the first group of counterparties, the basis for calculating expected credit losses was changed. Losses are currently calculated on the basis of Credit Default Swap (CDS) prices, while for the other group of counterparties percentage coefficients in each time interval of the provision matrix were updated to a level corresponding to the current recovery rate forreceivables. As a result of these two changes, the amount of provisions for expected credit losses at March 31, 2021 was PLN 16 million higher than it would have been had the previous rules been applied. A more extensive description of the impact ofthe pandemic on PGE Group's businessis presented in note 25.1 to these financialstatements.

3. Changesinaccountingprinciplesanddatapresentation

New standards and interpretationsthat went into force on January 1, 2021

The accounting principles (policy) applied in preparing these financial statements are consistent with those applied in preparing the financial statements for 2020. The following amendments to IFRSs are applied in these financial statements in line with their effective dates. The following amendments did not have a material impact on the presented and disclosed financial information or were not applicable to the Group'stransactions:

Amendmentsto IFRS 4 Extension of the Temporary Exemption from Applying IFRS 9;
Amendmentsto IFRS 9, IAS 39 and IFRS 7 Interest Rate Benchmark Reform Phase II.

The Group decided not to apply early any standard, interpretation or amendment that was published but is not yet effective in the light of EU regulations.

4. Fair valuehierarchy

Derivatives

The Groupmeasures derivatives at fair value using valuationmodelsforfinancial instruments based on publicly available exchange rates, interestrates, discount curvesin particular currencies(applicable also for commodities which prices are denominated in these currencies) derived from active markets. The fair value of derivatives is determined based on discounted future cash flows from transactions, calculated based on the difference between the forward rate and transaction price. Forward exchange rates are not modelled as a separate risk factor, but are derived from the spotrate and appropriate forward interestrate forforeign currenciesin relation to PLN.

In the category of financial assets and financial liabilities at fair value through profit or loss, the Group presents financial instruments related to greenhouse gas emissionstrading – currency and commodity forwards, contractsto buy and sell coal, commodity swaps(Level 2).

In addition, the Group presents a CIRRUS derivative instrument that hedges foreign exchange rate and interest rate and IFRS hedging transactions exchanging a variable interest in PLN for a fixed interestrate in PLN (Level 2).

	Assets at	Liabilities at
	March 31, 2021		March 31, 2021
FAIR VALUE HIERARCHY	Level 1	Level 2	Level 1	Level 2
CO2 emission allowancesin trading activities	1	-	-	-
Hard coal in trading activities	124	-	-	-
INVENTORIES	125	-	-	-
Currency forwards		9	-	4
Commodity forwards		73	-	-
Commodity SWAP		11	-	15
Contractsfor purchase/sale of coal		1	-	1
Options		25	-	-
DERIVATIVES AT FAIR VALUE THROUGH PROFITOR LOSS	-	119		20
CCIRS hedges	-	92	-	-
IRS hedges	-	-	-	229
Currency forward - USD	-	3	-	-
Currency forward - EUR	-	275	-	12
HEDGING DERIVATIVES	-	370	-	241
Investmentfund participation units	-	52	-	-
OTHER ASSETS / LIABILITIES MEASURED AT FAIR VALUE THROUGHPROFITOR LOSS	-	52	-	-

	Assets at		Liabilities at
	December 31, 2020		December 31, 2020
FAIR VALUE HIERARCHY	Level 1	Level 2	Level 1	Level 2
CO2 emission allowancesin trading activities	1	-	-	-
Hard coal in trading activities	144	-	-	-
INVENTORIES	145	-	-	-
Currency forwards		3	-	4
Commodity forwards		11	-	4
Commodity swaps		11	-	13
Contractsfor purchase/sale of coal		17	-	18
Options		16	-	-
DERIVATIVES AT FAIR VALUE THROUGH PROFITOR LOSS	-	58		39
CCIRS hedges	-	64	-	-
IRS hedges	-	-	-	385
Currency forward - USD	-	-	-	1
Currency forward - EUR	-	381	-	23
HEDGING DERIVATIVES	-	445	-	409
Investmentfund participation units	-	52	-	-

Derivative instruments are presented in note 17 to these financial statements. During the current and comparative reporting periods, there were no transfers of financial instruments between the first and second level of the fair value hierarchy.

EXPLANATORY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS EXPLANATORY NOTES TO OPERATING SEGMENTS

5. Informationonoperating segments

PGEGroup companies conducttheir business activities based on relevant concessions, including primarily concessionsforthe generation, trade and distribution of electricity, generation, transmission and distribution of heat, granted by the President of the Energy Regulatory Office, along with concessions for lignite mining, granted by the Minister of the Environment. Generally, concessions are issued for a period between 10 and 50 years.

Relevant assets are assigned to concessionsforlignite mining and the generation and distribution of electricity and heat, as presented in detailed information on operating segments. For its concessions concerning electricity and heat, the Group pays annual fees dependent on the level of turnover, while lignite mining operations under concessions are subject to extraction fees depending on the current rate and volume of output as well as mining use fees.

PGE Group presents information on operating segments in the current and comparative reporting period in accordance with IFRS 8 Operating Segments. PGE Group'ssegment reporting is based on the following businesssegments:

Conventional Generation, comprising the exploration and production of lignite, conventional generation of electricity and ancillary services.
District Heating, comprising the generation of electricity from cogeneration sources and the transmission and distribution of heating.
Renewables, comprising the generation of electricity in pumped-storage power plants and from renewable sources.
Supply, comprising selling and buying electricity and natural gas on wholesale markets, emissionstrading, buying and supplying fuels as well as selling electricity and providing services to end users.
Distribution, comprising management of local distribution networks and transmission of electricity.
Circular Economy, comprising management of the by-products of combustion.
Other Activity, comprising services provided by subsidiaries for the Group, e.g. capital raising, IT services, accounting and HR, and transportservices and investments in startups.

PGEGroup is organised andmanaged in segmentsthat are distinctin terms of products and services. Each segmentrepresents a strategic business unit that offers distinct goods and serves different markets. Entities assigned to operating segments are described in note 1.3 of these consolidated financialstatements. PGE Group accountsfor inter-segment transactions asif they concerned unrelated entities- on market terms. When analysing the results of businesssegmentsthe management of PGE Group focuses mainly on EBITDA.

Starting in 2021, PGE Group reports a new operating segment - Circular Economy - the assets and results of which had previously been recognised and analysed within the following segments: Conventional Generation, District Heating and Other Activity. The data for the comparative period was notrestated.

Seasonality of businesssegments

Key factorsaffectingthedemandforelectricity andheatingare:weather conditions–airtemperature,windforce,rainfall;socio-economic factors – number of energy consumers, prices of energy sources, GDP growth; and technological factors – technological progress, manufacturing technologies. Each of these factors has an impact on technical and economic conditions of production, distribution and transmission of energy carriers, thusinfluence the results obtained by PGE Group.

The level of electricity sales variesthroughout the year, depending especially on weather conditions- airtemperature, length of the day. Growth in electricity demand is particularly evident in winter periods, while lower demand is observed during the summer months. Moreover,seasonal changes are evident among selectedgroupsof end users. Seasonality effects aremore significantfor householdsthan forthe industrialsector.

In the Renewables segment, electricity is generated from natural resources such as water, wind and sun. Weather conditions are an important factor affecting electricity generation in thissegment.

Sales of heat depend in particular on airtemperature and are higherin winter and lowerin summer.

5.1 Informationonbusinesssegments

Information on businesssegmentsfor the period ended March 31, 2021

	Conventional Generation	DistrictHeating	Renewables	Supply	Distribution	Circular Economy	OtherActivity	Adjustmen ts	Total
STATEMENT OF PROFITOR LOSS
Salesto external customers	4,271	1,309	197	4,428	1,657	21	15	2	11,900
Inter-segmentsales	1,577	575	126	6,070	20	37	87	(8,492)	-
TOTAL SEGMENT REVENUE	5,848	1,884	323	10,498	1,677	58	102	(8,490)	11,900
Cost of goodssold	(5,607)	(1,436)	(201)	(9,743)	(1,273)	(42)	(92)	8,236	(10,158)
EBIT	41	357	104	343	348	7	(4)	(32)	1,164
Depreciation, amortisation, liquidation and impairment recognised in profit orloss	470	153	89	9	310	2	16	(7)	1,042
EBITDA	511	510	193	352	658	9	12	(39)	2,206
GROSS PROFIT	-	-	-	-	-	-	-	-	1,024
Income tax	-	-	-	-	-	-	-	-	(189)
NET PROFIT FOR THE REPORTING PERIOD	-	-	-	-	-	-	-	-	835
ASSETSAND LIABILITIES
Segment assets excluding trade receivables	40,931	8,399	4,265	1,807	19,446	68	355	(1,003)	74,268
Trade receivables	1,850	597	185	11,429	1,025	38	71	(11,242)	3,953
Equity-accounted interests	-	-	-	-	-	-	-	-	154
Unallocated assets	-	-	-	-	-	-	-	-	5,848
TOTAL ASSETS	-	-	-	-	-	-	-	-	84,223
Segmentliabilities excluding trade liabilities	17,972	2,218	514	4,524	2,039	48	102	(1,073)	26,344
Trade liabilities	6,915	1,049	32	4,509	382	11	24	(11,695)	1,227
Unallocated liabilities	-	-	-	-	-	-	-	-	12,399
TOTAL LIABILITIES	-	-	-	-	-	-	-	-	39,970
OTHER INFORMATIONON BUSINESS SEGMENT
Capital expenditures	416	116	18	2	285	4	17	(30)	828
Increasesin right-of-use assets	1	4	2	1	2	-	1	-	11
TOTAL INVESTMENT EXPENDITURES	417	120	20	3	287	4	18	(30)	839
Impairmentlosses on financial and non-financial assets	43	(4)	-	1	4	-	-	-	44
Other non-monetary expenses *)	1,795	375	10	319	42	(1)	7	-	2,547

*) Non-monetary expensesinclude mainly changesin provisionssuch as:rehabilitation provision, provision for CO² emission rights, provision forseniority bonuses, employee tariff and non-financial liabilities concerning employee benefitsthat are recognised in profit orloss and other comprehensive income.

Information on businesssegmentsfor the period ended March 31, 2020

	Conventional Generation	DistrictHeating	Renewables	Supply	Distribution	Other activity	Adjustmen ts	Total
STATEMENT OF PROFITOR LOSS
Salesto external customers	4,699	945	210	6,650	1,618	24	(1,555)	12,591
Inter-segmentsales	2,105	793	100	3,517	23	101	(6,639)	-
TOTAL SEGMENT REVENUE	6,804	1,738	310	10,167	1,641	125	(8,194)	12,591
Cost of goods sold	(6,503)	(1,443)	(175)	(9,637)	(1,310)	(117)	7,903	(11,282)
EBIT	59	195	119	210	261	(14)	(57)	773
Depreciation, amortisation, liquidation and impairment recognised in profit or loss	438	147	74	8	312	21	(3)	997
EBITDA	497	342	193	218	573	7	(60)	1,770
GROSS PROFIT	-	-	-	-	-	-	-	609
Income tax	-	-	-	-	-	-	-	(124)
NET PROFIT FOR THE REPORTINGPERIOD	-	-	-	-	-	-	-	485
ASSETSAND LIABILITIES
Segment assets excluding trade receivables	35,659	7,938	4,116	2,423	19,106	833	(703)	69,372
Trade receivables	3,471	932	163	8,484	871	82	(8,839)	5,164
Shares accounted for using the equitymethod	-	-	-	-	-	-	-	705
Unallocated assets	-	-	-	-	-	-	-	5,729
TOTAL ASSETS	-	-	-	-	-	-	-	80,970
Segmentliabilities, exceptfortrade liabilities	15,029	2,313	481	2,420	1,962	139	(2,726)	19,618
Trade liabilities	3,720	689	35	5,222	254	53	(8,683)	1,290
Unallocated liabilities	-	-	-	-	-	-	-	16,319
TOTAL LIABILITIES	-	-	-	-	-	-	-	37,227
OTHER INFORMATIONONBUSINESS SEGMENT
Capital expenditures	368	40	91	4	426	41	(22)	948
Increasesin right-of-use assets	2	3	1	1	1	1	-	9
TOTAL INVESTMENT EXPENDITURES	370	43	92	5	427	42	(22)	957
Impairmentlosses on financial and non-financial assets	21	(6)	-	9	2	-	(3)	23
Other non-monetary expenses *)	1,546	303	8	168	59	14	96	2,194

EXPLANATORY NOTES TO THE CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

6. Revenueandcosts

6.1 Revenuefromsales

Revenue from salesforthe period ended March 31, 2021, by category

The following tablepresents a reconciliationbetweenrevenue disclosed by category andinformationonrevenue thattheGroupdiscloses for each reporting period.

	Conventional Generation	DistrictHeating	Renewables	Supply	Distribution	Circular Economy	OtherActivity	Adjustmen ts	Total
Revenue fromcontracts with customers	5,845	1,874	322	10,497	1,661	58	101	(8,483)	11,875
RevenuesfromLTC compensations	-	1	-	-	-	-	-	-	1
Revenue fromsupportfor high efficiency cogeneration	-	2	-	-	-	-	-	-	2
Revenue from leases	3	7	1	1	16	-	1	(7)	22
TOTAL REVENUE FROM SALES	5,848	1,884	323	10,498	1,677	58	102	(8,490)	11,900

The following table presents revenue from contracts with customers by category to reflect the manner in which economic factors influence the type, amount, payment deadline and uncertainty of revenue and cash flows.

Type of goods orservices	Conventional Generation	DistrictHeating	Renewables	Supply	Distribution	Circular Economy	Other Activity	Adjustments	Total
Revenue fromsale of goods and products, without excluding taxes and fees	5,848	1,859	322	10,311	1,939	20	10	(8,137)	12,172
Taxes and fees collected on behalf of third parties	(3)	(1)	-	(38)	(290)	-	-	-	(332)
Revenue from sale of goods and products, including:	5,845	1,858	322	10,273	1,649	20	10	(8,137)	11,840
Sale of electricity	4,104	824	199	3,369	1	-	-	(1,316)	7,181
Capacity market	513	77	71	10	-	-	-	-	671
Sale of distribution services	5	3	-	13	1,599	-	-	(20)	1,600
Sale of heat	78	922	-	5	-	-	-	-	1,005
Sale of energy origin rights	20	4	44	-	-	-	-	-	68
Regulatory systemservices	90	-	8	-	-	-	-	-	98
Sale of natural gas	-	-	-	105	-	-	-	(56)	49
Sale of fuel	-	-	-	132	-	-	-	(72)	60
Sale of CO2 emission allowances	1,018	28	-	6,639	-	-	-	(6,664)	1,021
Othersale of goods and materials	17	-	-	-	49	20	10	(9)	87
Revenue from sale ofservices	-	16	-	224	12	38	91	(346)	35
REVENUE FROM CONTRACTSWITH CUSTOMERS	5,845	1,874	322	10,497	1,661	58	101	(8,483)	11,875

Revenue from salesforthe period ended March 31, 2020, by category

The following tablepresents a reconciliationbetweenrevenue disclosed by category andinformationonrevenue thattheGroupdiscloses for each reporting period.

	Conventional Generation	DistrictHeating	Renewables	Supply	Distribution	Other activity	Adjustments	Total
Revenue fromcontracts with customers	6,800	1,730	259	10,166	1,627	125	(8,190)	12,517
RevenuesfromLTC compensations	-	3	-	-	-	-	-	3
Revenue from leases	4	5	51	1	14	-	(4)	71
TOTAL REVENUE FROM SALES	6,804	1,738	310	10,167	1,641	125	(8,194)	12,591

The following table presentsrevenue from contracts with customers by category to reflect the mannerin which economic factors influence the type, amount, payment deadline and uncertainty of revenue and cash flows.

Type of goods orservices	Conventional Generation	DistrictHeating	Renewables	Supply	Distribution	Other activity	Adjustments	Total
Revenue fromsale of goods and products, without excluding taxes and fees Taxes and fees collected on behalf ofthird	6,800	1,704	259	9,957	1,632	24	(7,840)	12,536
parties third parties	(1)	(1)	-	(32)	(19)	-	-	(53)
Revenue from sale of goods and products, including:	6,799	1,703	259	9,925	1,613	24	(7,840)	12,483
Sale of electricity	5,298	777	159	3,983	1	-	(2,139)	8,079
Sale of distribution services	4	3	-	13	1,561	-	(22)	1,559
Sale of heat	58	707	-	5	-	-	-	770
Sale of energy origin rights	14	4	84	-	-	-	3	105
Regulatory systemservices	114	-	15	-	-	-	-	129
Sale of natural gas	-	-	-	108	-	-	(59)	49
Sale of fuel	-	-	-	247	-	-	(147)	100
Sale of CO2 emission allowances	1,276	200	-	5,569	-	-	(5,474)	1,571
Othersale of goods and materials	35	12	1	-	51	24	(2)	121
Revenue from sale ofservices	1	27	-	241	14	101	(350)	34
REVENUE FROM CONTRACTSWITH CUSTOMERS	6,800	1,730	259	10,166	1,627	125	(8,190)	12,517

6.2 Costsbynatureandfunction

	Period ended	Period ended
	March 31, 2021	March 31, 2020
COSTS BY NATURE
Depreciation, amortisation and impairmentlosses	1,044	989
Materials and energy	1,543	1,520
Externalservices	556	606
Taxes and fees	2,648	2,169
Employee benefits expenses	1,351	1,425
Other costs by nature	80	68
TOTAL COST BYNATURE	7,222	6,777
Change in productinventories	(10)	(12)
Cost of products and servicesforinternal purposes	(133)	(221)
Distribution and selling expenses	(417)	(348)
General and administrative expenses	(260)	(272)
Cost of goods andmaterialssold	3,756	5,358
COSTOFGOODS SOLD	10,158	11,282

6.2.1 Depreciation,amortisation,liquidationandimpairment

The following presents depreciation, amortisation, liquidation and impairment of property, plant and equipment, intangible assets,rightof-use assets and investment propertiesin the statement of comprehensive income.

Period ended			Depreciation, amortisation, disposal	Impairment
March 31, 2021	Property, plant and equipme nt	Intangible assets	Right-of use assets	Investme nt property	TOTAL	Property, plant and equipment	Intangible assets	TOTAL
Cost of goodssold	952	13	12	1	978	45	(1)	44
Distribution and selling expenses	3	1	-	-	4	-	-	-
General and administrative expenses	9	4	3	-	16	-	-	-
RECOGNISED INPROFITOR LOSS	964	18	15	1	998	45	(1)	44
Change in productinventories	-	-	-	-	-	-	-	-
Cost of products and servicesfor internal purposes	2	-	-	-	2	-	-	-
TOTAL	966	18	15	1	1,000	45	(1)	44

Period ended				Depreciation, amortisation, disposal	Impairment
March 31, 2020	Property, plant and equipment	Intangible assets	Right-of use assets	Investment property	TOTAL	Property, plant and equipment	TOTAL
Cost of goodssold	915	18	14	1	948	30	30
Distribution and selling expenses	3	1	-	-	4	-	-
General and administrative expenses	8	4	2	-	14	1	1
RECOGNISED INPROFITOR LOSS	926	23	16	1	966	31	31
Change in productinventories	(14)	-	-	-	(14)	-	-
Cost of products and servicesfor internal purposes	5	1	-	-	6	-	-
TOTAL	917	24	16	1	958	31	31

Impairment losses recognised in the reporting period concern investment expenditures at units for which impairment had been recognised in previous periods.

In the item 'Depreciation/amortisation and liquidation' the Group recognised in the current and comparative period PLN 8 million net as liquidation of property, plant and equipment and intangible assets.

6.3 Otheroperatingincomeandexpenses

	Period ended March 31, 2021	Period ended March 31, 2020
NETOTHEROPERATING INCOME/(EXPENSES)
Measurement and exercise of derivatives, including:	74	76
- CO2	73	69
- Coal	1	7
Penalties, fines and compensationsreceived	14	21
(Recognition)/reversal of other provisions	10	(4)
Grantsreceived	8	9
(Recognition)/reversal of impairmentlosses on receivables	4	(7)
Gain on sale of property, plant and equipment/intangible assets	3	2
Other	(14)	(13)
TOTALNETOTHEROPERATINGINCOME/(EXPENSES)	99	84

6.4 Financeincomeandfinancecosts

	Period ended	Period ended
	March 31, 2021	March 31, 2020
NET FINANCE INCOME/(COSTS) FROM FINANCIAL INSTRUMENTS
Dividends	-	-
Interest, including	(65)	(63)
Interestincome calculated using the effective interestmethod	8	11
Impairment	10	(8)
Reversal/(recognition) of impairment	(2)	2
Exchange differences	(10)	(15)
Loss on sale of investment	(19)	-
TOTALNET FINANCE INCOME/(COSTS) FROM FINANCIAL INSTRUMENTS	(86)	(84)
NETOTHER FINANCE INCOME/(COSTS)
Interest cost on non-financial items	(46)	(59)
Interest on statutory receivables	-	-
Recognition of provisions	(1)	(9)
Other	(1)	(5)
TOTALNETOTHER FINANCE INCOME/(COSTS)	(48)	(73)
TOTALNET FINANCE INCOME/(COSTS)	(134)	(157)

Interest costs mainly relate to outstanding bonds, credit facilities, loans and leases. The interest cost on liabilitiesreached PLN 10 million in the currentreport (PLN 11 million in the comparative period).

The interest cost on non-financial items concernsland rehabilitation provisions and employee benefit provisions.

The loss on disposal of an investment, amounting to PLN 19 million, concernsthe sale ofsharesin PGE EJ 1 sp.z o.o.

6.5 Shareofprofitofequity-accountedentities

Period ended March 31, 2021	PolskaGrupa Górnicza	Polimex Mostostal	ElectroMobility Poland	PEC Bogatynia	Energopomiar
SHARE INVOTES	15.32%	16.48%	25.00%	34.93%	49.79%
Revenue	1,956	421	-	7	17
Result on continuing operations	(148)	-	(1)	1	3
Share of profit of equity-accounted entities before consolidation adjustments	(23)	-	-	-	2
Elimination of unrealised gains and losses	(7)	-	-	-	-
Impairment	23	-	-	-
SHAREOF PROFITOF EQUITY-ACCOUNTED ENTITIES	(7)	-	-	-	1

Period ended March 31, 2020	PolskaGrupa Górnicza	Polimex Mostostal	ElectroMobility Poland	PEC Bogatynia	Energopomiar
SHARE INVOTES	15.32%	16.48%	25.00%	34.93%	49.79%
Revenue	1,832	337	-	5	18
Result on continuing operations	(136)	57	(1)	1	4
Share of profit of equity-accounted entities before consolidation adjustments	(21)	9	-	-	2
Elimination of unrealised gains and losses	3	-	-	-	-
SHAREOF PROFITOF EQUITY-ACCOUNTED ENTITIES	(18)	9	-	-	2

The Group performs a consolidation adjustment related to margin on coalsales between Polska Grupa Górnicza and PGE Group.

7. Impairmentofassets

	Period ended	Period ended
	March 31, 2021	March 31, 2020 restateddata
IMPAIRMENT OF PROPERTY, PLANT AND EQUIPMENT
Recognition of impairment	47	34
Reversal of impairment loss	2	3
IMPAIRMENT OF INTANGIBLE ASSETS
Recognition of impairment loss	-	-
Reversal of impairment loss	1	-
IMPAIRMENT OF INVENTORIES
Recognition of impairment loss	2	7
Reversal of impairment loss	3	15

8. Incometax

Tax in the statement of comprehensive income

The main elements of the tax burden forthe period ended March 31, 2021 and March 31, 2020 were asfollows:

	Period ended March 31, 2021	Period ended March 31, 2020
INCOME TAX RECOGNISED INSTATEMENTOF PROFITOR LOSS
Currentincome tax	42	375
Adjustments concerning currentincome tax from prior years	-	-
Deferred income tax	144	(249)
Adjustments of deferred income tax	3	(2)
INCOME TAX EXPENSE RECOGNISEDINSTATEMENTOF PROFITOR LOSS	189	124
INCOME TAX EXPENSE RECOGNISEDINOTHER COMPREHENSIVE INCOME
From actuarial gains and lossesfrom valuation of provisionsfor employee benefits	-	(6)
Frommeasurement of hedging instruments	18	33
(Tax benefit) / tax burden recognised in other comprehensive income (equity)	18	27

EXPLANATORY NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION

9. Materialtransactionstopurchaseandsellproperty,plant andequipment,intangible assetsandright-of-useassets

In the present period, PGE Group purchased property, plant and equipment and intangible assets worth PLN 828 million, along with the right-of-use for underlying assets worth PLN 12 million. The largest expenditures were incurred in the Conventional Generation segment (PLN 417 million) and the Distribution segment (PLN 287 million). The key expenditure items were as follows: construction of new unit (no. 7) at Elektrownia Turów (PLN 70 million), construction of two new gas-and-steam units at Elektrownia Dolna Odra (PLN 172 million) and connection of new customersto DSO grid (PLN 129million). These valuesinclude borrowing costs.

In the current period, the Group sold its stake in PGE EJ1 sp. z o.o. As a result of this transaction, the net value of property, plant and equipment, intangible assets and right-of-use assets decreased by PLN 415 million.

10. Futureinvestment commitments

As at March 31, 2021, PGEGroup committed to incur capital expenditures on property, plant and equipment of approximately PLN7,233 million. These amountsrelatemainly to construction of new power units,modernisation ofGroup's assets and the purchase ofmachinery and equipment.

	As at	As at
	March 31, 2021	December 31, 2020
ConventionalGeneration	5,594	5,790
Distribution	1,269	1,346
Renewables	188	185
District Heating	171	190
Circular Economy	5	-
Supply	3	3
Other Activity	3	175
TOTAL FUTURE INVESTMENT COMMITMENTS	7,233	7,689

The mostsignificant future investment commitments concern:

Conventional Generation:
- Branch Elektrownia Bełchatów modernisation of flue gas desulphurisation system approx. PLN 130 million,
- Branch Elektrownia Turów construction of new power unit no. 7 approx. PLN 548 million,
- Branch Zespół Elektrowni Dolna Odra construction of two gas-and-steam units and contract for service for two gas turbines- approx. PLN 4,090 million,
Distribution investment commitments mainly related to network distribution assets with the total value of approximately PLN 1,269 million,

The decrease in future investment commitmentsin the Other Activity segmentisrelated to the sale of PGE EJ1 sp.z o.o., which had been responsible forthese commitments.

11. Sharesaccountedforusingtheequitymethod

	As at March 31, 2021	As at December 31, 2020
Polska Grupa Górnicza S.A., Katowice	-	-
Polimex - Mostostal S.A., Warsaw	127	127
ElectroMobility Poland S.A., Warsaw	14	14
PEC Bogatynia Sp.z o.o., Bogatynia	-	-
Energopomiar Sp.z o.o., Gliwice	13	11
EQUITY-ACCOUNTED INTERESTS	154	152

	PolskaGrupa Górnicza	Polimex Mostostal	ElectroMobility Poland	PEC Bogatynia	Energopomiar
SHARE INVOTES	15.32%	16.48%	25.00%	34.93%	49.79%
AT MARCH 31, 2021
Current assets	1,645	1,131	13	5	30
Non-current assets	8,283	650	41	20	18
Currentliabilities	6,638	907	1	2	9
Non-currentliabilities	2,828	201	-	-	14
NET ASSETS	462	673	53	23	25
Share in net assets	71	111	14	7	13
Goodwill	1	16	-	-	-
Impairment of investment	(72)	-	-	(7)	-
EQUITY-ACCOUNTED INTERESTS	-	127	14	-	13

	PolskaGrupa Górnicza	Polimex Mostostal	ElectroMobility Poland	PEC Bogatynia	Energopomiar
SHARE INVOTES	15.32%	16.48%	25.00%	34.93%	49.79%
AT DECEMBER 31, 2020
Current assets	1,770	1,390	18	4	33
Non-current assets	9,423	674	39	21	18
Currentliabilities	6,626	1,175	3	2	18
Non-currentliabilities	2,704	214	-	-	10
NET ASSETS	1,863	675	54	23	23
Share in net assets	285	111	14	7	11
Goodwill	1	16	-	-	-
Impairment of investment	(286)	-	-	(7)	-
EQUITY-ACCOUNTED INTERESTS	-	127	14	-	11

An impairmentloss wasrecognised on the investmentin PGGin the previous period, which amounted to PLN286million as at December 31, 2020. Following the recognition ofthisimpairmentloss, PGG's book value in PGE Group's consolidated financialstatements waszero.

In the current period,the impairmentloss was partially used due to lossesincurred by PGG. The amount ofimpairmentloss was adjusted to the value of net assets attributable to PGE Group.

12. Deferredtax instatementoffinancialposition

12.1 Deferredincometaxassets

	As at	As at
	March 31, 2021	December 31, 2020
Difference between tax value and carrying amount of property, plant and equipment	2,651	2,776
Rehabilitation provision	1,253	1,242
Provision for cost of CO2 emissions	1,553	1,206
Provisionsfor employee benefits	715	723
Difference between tax value and carrying amount of liabilities	330	316
Difference between tax value and carrying amount of financial assets	422	395
Difference between carrying amount and tax value ofright-of-use assets	165	171
Tax losses	620	111
Other provisions	140	157
LTC compensations	79	79
Energy infrastructure acquired free of charge and connection paymentsreceived	28	28
Difference between tax value and carrying amount of inventories	13	11
Other	15	4
TOTAL DEFERRED INCOME TAXASSETS	7,984	7,219

12.2 Deferredtaxliabilities

	As at March 31, 2021	As at December 31, 2020
Difference between tax value and carrying amount of property, plant and equipment	4,970	5,000
Difference between tax value and present carrying amount of financial assets	812	713
Difference between carrying amount and tax value of lease liabilities	178	181
CO2 emission allowances	1,058	199
Difference between tax value and carrying amount of energy origin units	19	31
Receivablesfrom recognised compensation - Act on electricity prices	17	16
Difference between tax value and present carrying amount of financial liabilities	10	8
Other	79	65
TOTAL DEFERRED TAX LIABILITIES	7,143	6,213
Group'stax after offsetting assets and liabilities at companies and within tax group

Deferred income tax assets	1,204	1,351
Deferred income tax liabilities	(363)	(345)

13. Inventories

	As at	As at
	March 31, 2021	December 31, 2020
Hard coal	644	963
Repair and maintenancematerials	707	676
Mazut	34	29
Othermaterials	63	70
TOTALMATERIALS	1,448	1,738
Green energy origin rights	903	1,140
Other energy origin rights	7	3
TOTAL ENERGYORIGINRIGHTS	910	1,143
CO2 emission allowances held forsale	1	1
Hard coal held forsale	124	144
Other goods	20	25
TOTALGOODS	145	170
OTHER INVENTORIES	80	72
TOTAL INVENTORIES	2,583	3,123

14. CO² emissionallowancesfor captiveuse

Pursuantto the provisions ofthe Regulation ofthe Council of Ministers datedApril 8, 2014 on the list of electricity generation installations in the greenhouse gas emissions trading scheme, PGE Group's installations are not eligible to receive free emission allowances, starting from 2020.

In the case of EUAsfor CO² emissions related to district heating, the allocation schedule for 2021 has not yet been approved, and EUAs which were allocated in February covered CO² emissionsfor 2020 (1million EUAs).

	At March 31, 2021		At December 31, 2020
EUA	Non-current	Current	Non-current	Current
Quantity (Mg million)	1	57	1	20
Value (PLNmillion)	41	6,150	39	1,735
EUA	Quantity (Mg million)		Value (PLN million)
AT JANUARY 1, 2020		21		1,205
Purchase		78		6,629
Granted free of charge		13		-
Redemption		(61)		(3,414)
Sale		(30)		(2,646)
AT DECEMBER 31, 2020		21		1,774
Purchase		49		5,620
Redemption		(2)		(168)
Sale		(10)		(1,035)
AT MARCH 31, 2021		58		6,191

15. Other currentandnon-currentassets

15.1 Othernon-currentassets

	As at	As at
	March 31, 2021	December 31, 2020
Advancesfor property, plant and equipment	686	711
Costto acquire customers	105	105
Other non-current assets	21	23
TOTALOTHER ASSETS	812	839

Advancesfor construction in progressrelatemainly to investment projects conducted by the ConventionalGeneration segment. The cost to acquire customers concern co-financing by PGE Energia Ciepła S.A. ofinvestmentsin the development of district heating networks and agent commissions at PGE Obrót S.A.

15.2 Other currentassets

	As at	As at
	March 31, 2021	December 31, 2020
PREPAYMENTS
Costto acquire customers	52	50
Long-term contracts	46	43
Property and tortinsurance	18	14
Logistics costsrelated to coal purchases	13	17
IT services	12	16
Social Fund	2	10
Other prepayments	74	20
OTHER CURRENTASSETS
VAT receivables	1,251	519
Excise tax receivables	12	17
Advancesfor deliveries	5	11
Other current assets	77	82
TOTALOTHER ASSETS	1,562	799

The amount of VAT isrelated to an estimate of electricity sales unread on metering equipment as of the reporting date and transactions in CO² emissions trading. The increase in VAT in comparison with the preceding period mainly results from an increase in the scale of transactions along with growth in CO² allowance prices.

16. Selectedfinancialassets

The value of financialreceivables at amortised cost is a rational approximation of theirfair value.

16.1 Tradeandotherfinancialreceivables

	At March 31, 2021		At December 31, 2020
	Non-current	Current	Non-current	Current
Trade receivables	-	3,953	-	3,602
Deposits and loans	194	5	185	6
Bonds	-	-	-	40
Receivablesfrom recognised compensation - Act on electricity prices	-	85	-	85
Deposits,security and collateral	4	662	2	788
Damages and penalties	-	107	-	102
Otherfinancialreceivables	8	62	4	189
FINANCIAL RECEIVABLES	206	4,874	191	4,812

Deposits,security and collateral mainly concern transaction and hedging depositsfortransactions on the electricity and CO2markets.

PGE Obrót has recognised a receivable from the Settlements Manager concerning applications adjusting the amount of price difference and financial compensation received forthe period from January 1 to December 31, 2019, amounting to PLN 85 million.

16.2 Cashandcashequivalents

Short-term deposits have different maturities, typically from one day up to one month, depending on the Group's needsfor cash. The balance of cash and cash equivalents comprise the following positions:

	As at	As at
	March 31, 2021	December 31, 2020
Cash on hand and cash at bank	2,518	1,415
Overnight deposits	-	309
Short-term deposits	131	1,423
Cash in VAT accounts	253	1,042
TOTAL	2,902	4,189
Exchange differences on cash in foreign currencies	(8)	(16)
Cash and cash equivalents presented in the statement of cash flows	2,894	4,173

Unused creditfacilities atthe reporting date	6,455	6,556
including overdraftfacilities	1,810	1,811

A detailed description of credit agreementsis presented in note 20.1 ofthese financialstatements.

The value of cash includesrestricted cash amounting to PLN 139 million (PLN 93 million in the comparative period) in customer accounts at PGEDom Maklerski S.A., which constitute collateral forsettlements with clearinghouse IRGiT,fundsin VAT accounts amounting to PLN 253 million (PLN 1,042 million in the comparative period) and PLN 110 million in tender deposits (PLN 104 million in the comparative period).

17. Derivativesandother assetsmeasuredatfair valuethroughprofitorloss

	At March 31, 2021
	Assets	Liabilities
DERIVATIVES AT FAIR VALUE THROUGH PROFITOR LOSS
Currency forwards	9	4
Commodity forwards	73	-
Commodity SWAP	11	15
Contractsfor purchase/sale of coal	1	1
Options	25	-
HEDGING DERIVATIVES
CCIRS hedges	92	-
IRS hedges	-	229
Currency forward - USD	3	-
Currency forward - EUR	275	12
Other assets carried atfair value through profit orloss
Investmentfund participation units	52	-
TOTAL	541	261
current	371	32
non-current	170	229

	At December 31, 2020
	Assets	Liabilities
DERIVATIVES AT FAIR VALUE THROUGH PROFITOR LOSS
Currency forwards	3	4
Commodity forwards	11	4
Commodity swaps	11	13
Contractsfor purchase/sale of coal	17	18
Options	16	-
HEDGING DERIVATIVES
CCIRS hedges	64	-
IRS hedges	-	385
Currency forward - USD	-	1
Currency forward - EUR	381	23
Other assets carried atfair value through profit orloss
Investmentfund participation units	52	-
TOTAL	555	448
current	423	63
non-current	132	385

Commodity and currency forwards

Commodity and currency forward transactions mainly relate to trade in CO² emission allowances and coal sales. The Group uses hedge accounting to account for currency forwardsrelated to the purchase of CO2 allowances.

Options

On January 20, 2017 PGE S.A. bought a call option to purchase shares of Polimex-Mostostal S.A. from Towarzystwo Finansowe Silesia Sp. z o.o. The option was valued using the Black-Scholes method.

Coalswaps

In the current period, PGE Paliwa sp.z o.o. executed a number of transactionsto hedge thisrisk using commodity swapsfor coal in order to secure commodity risk related to the price of imported coal. The volume and value of these transactionsis correlated to the volume and value of imported coal. Changesin fair value are recognised in profit orloss.

Purchase and sale contracts with physical delivery of coal

PGE Paliwa Sp. z o.o. measures all of its sales and purchase contracts with physical delivery of coal at fair value using the trader-broker model.

IRS transactions

PGE S.A. executed IRS transactionsto hedge interestrates on creditfacilities with a total nominal value of PLN7,030million. To recognise these IRS transactions,theGroup uses hedge accounting. The impact of hedge accounting on the revaluation reserve is presented in note 18.3 to these consolidated financialstatements.

CCIRS hedges

In connection with loans received from PGE Sweden AB (publ), PGE S.A. concluded CCIRS transactions, hedging the exchange rate for principal and interest. In these transactions, banks-counterparties pay PGE S.A. interest based on a fixed rate in EUR and PGE S.A. pays interest based on a fixed rate in PLN. In the consolidated financial statements, a relevant part of the CCIRS transaction is treated as a hedge of bondsissued by PGE Sweden AB (publ).

Investment fund participation units

At the reporting date, the Company held participation unitsin three sub-funds managed by TFI Energia S.A.

18. Equity

The basic assumption of the Group's policy regarding equity management is to maintain an optimal equity structure over the long term in orderto ensure a good financialstanding and secure equity structure ratiosthat would support PGEGroup's operations. Itis also crucial to maintain a sound equity base that would be the basis to win confidence of future investors, creditors and the market and ensure the Group'sfurther development.

18.1 Sharecapital

	As at	As at
	March 31, 2021	December 31, 2020
1,470,576,500 Series A ordinary Shares with a nominal value of PLN10.25 each	15,073	15,073
259,513,500 Series B ordinary Shares with a nominal value of PLN10.25 each	2,660	2,660
73,228,888 Series C ordinary Shares with a nominal value of PLN10.25 each	751	751
66,441,941 Series D ordinary Shares with a nominal value of PLN10.25 each	681	681
Totalshare capital	19,165	19,165

All of the Company'sshares are paid up.

Afterthe reporting date and untilthe date of preparation ofthe foregoing financialstatementsthere were no changesin the value ofthe Company'sshare capital.

Shareholder rights- State Treasury rights concerning the Company's activities

The Company is a part of PGE Group, where the State Treasury holdsspecialrights aslong asitremains a shareholder.

The State Treasury'sspecialright applicable to PGE Group entities derive from the Act of March 18, 2010 on specialrights of the Minister of Energy and their exercise at certain companies and groups operating in the electricity, oil and gas sectors (Polish Journal of Laws of 2016, item 2012). The Actspecifiesthe specialrights available to the Minister of Energy related to companies and groups operating in the electricity, oil and gas sectors whose assets are disclosed in the register of buildings, installations, equipment and services considered as critical infrastructure.

Based on this acttheMinister of Energy hasthe rightto objectto any resolution adopted orlegal activity undertaken by the Management Board involving assets that would endanger the functioning, operational continuity and integrity of critical infrastructure. The objection can also be applied to any resolution pertaining to:

dissolution of the Company,
changesin use or retirement of an asset being a component of critical infrastructure,
change in the scope of the Company's activities,
sale or lease of enterprise or its organised part or establishment of legal restrictions,
approval of operational and financial plan, investment plan or long-term strategic plan,
transfer of the Company'sregistered office abroad,

if the performance of such a resolution would cause an actual threat to the functioning, operational continuity and integrity of critical infrastructure. The objection is expressed in the form of an administrative decision.

18.2 Hedgingreserve

	Period ended	Year ended
	March 31, 2021	December 31, 2020
AS AT JANUARY 1	(13)	(323)
Change in hedging reserve:	89	383
Measurement of hedging instruments, including:	82	387
Recognition ofthe effective part of change in fair value of hedging instrumentsin the part considered as effective hedge	91	420
Accrued interest on derivativestransferred from hedging reserve and recognised in interest expense	(2)	17
Currency revaluation of CCIRS transaction transferred from hedging reserve and recognised in the result on foreign exchange differences	(7)	(51)
Ineffective portion of changesin fair value of hedging derivativesrecognised in profit orloss	-	1
Measurement of otherfinancial assets	7	(4)
Deferred tax	(18)	(73)
HEDGINGRESERVE AFTER DEFERRED TAX	58	(13)

The hedging reserve mainly includesthe measurement of cash flow hedges.

18.3 Dividendspaidandrecommendedforpayment

OnApril 27, 2021 theManagementBoardof PGE S.A. decided to recommend that a dividend for 2020will not be distributed. The decision wasinlinewiththedividend policy,particularly after analysing theCompany'sdebtinthe contextofitsinvestment programinaccordance with PGE Group's Strategy 2030.

19. Provisions

The carrying amount of provisionsis asfollows:

	At March 31, 2021		At December 31, 2020
	Non-current	Current	Non-current	Current
Employee benefits	3,013	269	3,007	276
Rehabilitation provision	8,176	-	8,110	1
Provision for cost of CO2 emissions	-	8,143	-	6,318
Provision for energy origin units held forredemption	-	507	-	589
Provision for non-contractual use of property	48	5	58	5
Other provisions	33	155	32	122
TOTAL PROVISIONS	11,270	9,079	11,207	7,311

Changesin provisions

	Employee benefits	Rehabilitation provision	Provision for cost of CO2 emissions	Provisionsfor energy origin rights held for redemption	Provision for non contractual use of property	Other	Total
JANUARY 1, 2021	3,283	8,111	6,318	589	63	154	18,518
Actuarial gains and losses	-	-	-	-	-	-	-
Current employment costs	29	-	-	-	-	-	29
Past employment costs	1	-	-	-	-	-	1
Interest costs	11	35	-	-	-	-	46
Adjustment of discountrate and other assumptions	-	-	-	-	-	-	-
Benefits paid / Provisions used	(42)	-	(168)	(342)	-	(20)	(572)
Provisionsreversed	-	(3)	-	-	(11)	(5)	(19)
Provisionsrecognised - costs	-	20	1,993	260	1	48	2,322
Provisionsrecognised - expenditures	-	12	-	-	-	-	12
Sale ofsubsidiaries	(1)	-	-	-	-	-	(1)
Other changes	1	1	-	-	-	11	13
MARCH 31, 2021	3,282	8,176	8,143	507	53	188	20,349

	Employee benefits	Rehabilitation provision	Provision for cost of CO2 emissions	Provisionsfor energy origin rights held for redemption	Provision for non contractual use of property	Other	Total
JANUARY 1, 2020	3,066	6,649	3,532	572	72	127	14,018
Actuarial gains and losses	40	-	-	-	-	-	40
Current employment costs	121	-	-	-	-	-	121
Past employment costs	(10)	-	-	-	-	-	(10)
Interest costs	61	168	-	-	-	-	229
Adjustment of discountrate and other assumptions	231	1,173	-	-	-	-	1,404
Benefits paid / Provisions used	(228)	(1)	(3,411)	(947)	-	(32)	(4,619)
Provisionsreversed	-	-	(121)	(2)	(16)	(15)	(154)
Provisionsrecognised - costs	-	55	6,318	966	7	80	7,426
Provisionsrecognised - expenditures	-	43	-	-	-	-	43
Acquisition of companies within the Group	-	14	-	-	-	-	14
Other changes	2	10	-	-	-	(6)	6
DECEMBER 31, 2020	3,283	8,111	6,318	589	63	154	18,518

19.1 Provisionforemployeebenefits

Provisionsfor employee benefits mainly include:

post-employment benefits PLN 2,378 million (PLN 2,379 million as at December 31, 2020),
seniority bonuses PLN 904 million (PLN 904 million as at December 31, 2020),

19.2 Rehabilitationprovision

Provision for rehabilitation of post-mining properties

PGE Group creates provisions for the rehabilitation of post-mining properties. The amount of the provision recognised in the financial statementsincludesthe value of the Mine Liquidation Fund created in accordance with the Geological and Mining Law. The provision as at March 31, 2021 amounted to PLN 7,524 million and as at December 31, 2020 to PLN 7,463 million.

Provision for rehabilitation of ash landfills

PGE Group's generating assets create provisions for the rehabilitation of ash landfills. As at March 31, 2021, this provision amounted to PLN 328 million (PLN 318million atthe end of the comparative period).

Provisionsfor wind farm decommissioning and restoration

Wind farm owners create provisions for decommissioning and restoration. As at March 31, 2021, this provision amounted to PLN 34 million (PLN 71 million at the end ofthe comparative period).

Liquidation of property, plant and equipment

As at the reporting date, the provision amounted to PLN 290 million (PLN 259 million as at the end of the comparative period) and refers to certain assetsin the Conventional Generation and Renewablessegments.

19.3 ProvisionforCO² emissions cost

As described in note 14 to these financial statements, the Group no longer receives free emission allowances for electricity generation from 2020. The Group is only eligible to receive free allowances for heating generation. In connection with this, the estimate of this provision as at March 31, 2021, increased to PLN 8,143 (PLN 6,318 million at the end of the comparative period).

19.4 Provisionforenergyoriginrightsheldforredemption

PGE Group companies create a provision for energy origin rights concerning sales generated in the reporting period or previous periods, in the part yetto be redeemed as atthe reporting date. The provision as at March 31, 2021 amounted to PLN507million (PLN589million in the comparative period) and was created mainly by PGE Obrót S.A.

19.5 Provisionfor claims concerningnon-contractualuseofproperty

PGE Group companies recognise a provision for claims related to the non-contractual use of property. This issue mainly concerns the distribution company that owns distribution networks. As at the reporting date the provision amounted to approximately PLN 53 million (of which 27 million relate to litigations). In the comparative period, the provision amounted to PLN 63 million (of which PLN 32 million related to litigations).

19.6 Settlementswithprosumers

2020 saw a considerable increase in the number of prosumer installations, mainly due to the assistance available in the "My electricity" program. According to the Energy Market Agency, installed PV capacity in Poland grew by 159% to 3.96 GW in 2020 vs. 1.53 GW at the end of 2019. The Act on renewable energy sources of February 20, 2015 introduced a settlement system for prosumers and energy cooperatives that generateslosses for the obligated supplier (i.e. PGE Obrót S.A.); the higher the percentage of electricity introduced to the grid that is compensated by the prosumer's or energy cooperative's own use, the higherthese losses are.

Therefore,theprosumer doesnotincur any variable costsofdistribution servicesfor energy drawnfromthegrid. Companiesinthe Supply segment, which aremerely intermediariesin the sale of distribution services, have to pay the fullfee for electricity drawn by the prosumer to the Distribution System Operator. Companies in the Supply segment, despite the fact that they do not provide distribution services, have to bearthe costsrelated to these services because they are a party to a comprehensive contract with the customer.

PGE Obrót's growing losses due to fees for distribution services are giving rise to deliberations on recognising provisions for onerous contracts. However, due to the difficulty in estimating the number of prosumer installations being built, their capacity and consumption as well as their operational period and potential new regulations, the results of such calculations may be subject to significant errors. Moreover, taking into account the fact that losses on contracts with prosumersresult from systemic regulations, these contractsshould be analysed together with contractsthat PGE Obrót S.A. isrequired to perform as an obligated supplier, according to the Group.

In connection with the above, the conditionsto create provisionsfor onerous contractsin the meaning of IAS 37 were not met as of the reporting date.

20. Financialliabilities

The value of financial liabilities measured at amortised cost is a rational approximation of theirfair value, except for bondsissued by PGE Sweden AB (publ).

Bondsissued by PGE Sweden AB (publ) are based on a fixed interestrate. Their amortised cost presented in these financialstatements as at March 31, 2021 amounted to PLN 656 million and theirfair value amounted to PLN 725 million.

20.1 Loans,borrowings,bondsandleases

	At March 31, 2021		At December 31, 2020
	Non-current	Current	Non-current	Current
Loans and borrowings	6,458	2,060	7,105	1,318
Bondsissued	2,041	21	2,035	10
Leases	849	46	885	56
TOTAL LOANS, BORROWINGS, BONDS AND LEASES	9,348	2,127	10,025	1,384

Loans and borrowings

Among loans and borrowings presented above as at March 31, 2021, and December 31, 2020, PGE Group presents mainly the following facilities:

Lender	Hedging instrument	Maturity	Limit in curren cy	Currency	Interest rate	Liability at 31- 03-2021	Liability at 31- 03-2020
Bank consortium	IRS	2023-09-30	3,630	PLN	Variable	3,629	3,636
European Investment Bank	-	2034-08-25	1,500	PLN	Fixed	1,516	1,505
Bank Gospodarstwa Krajowego	IRS	2027-12-31	1,000	PLN	Variable	878	876
European Bank for Reconstruction and Development	IRS	2028-06-07	500	PLN	Variable	502	501
Bank Gospodarstwa Krajowego	IRS	2028-12-31	500	PLN	Variable	502	500
European Investment Bank	-	2034-08-25	490	PLN	Fixed	496	493
Nordic Investment Bank	-	2024-06-20	150	EUR	Variable	222	219
Bank Pekao S.A.	-	2021-09-21	40	USD	Variable	148	149
Millennium S.A.	-	2021-06-16	7	PLN	Fixed	1	1
Bank Gospodarstwa Krajowego	-	2021-05-31	1,000	PLN	Variable	-	-
PKO BP S.A.	-	2022-04-29	300	PLN	Variable	-	-
Revolving credit facility (bank consortium)	-	2022-12-16	4,100	PLN	Variable	-	-
Bank Pekao S.A.	-	2024-12-22	500	PLN	Variable	-	-
European Investment Bank	-	2038-10-16	273	PLN	Fixed	-	-
NFOŚiGW	-	March 2023 - December 2028	215	PLN	Fixed	147	157
NFOŚiGW	-	September 2021 - June 2035	697	PLN	Variable	355	279
WFOŚiGW	-	September 2021 - September 2026	70	PLN	Fixed	6	6
WFOŚiGW	-	September 2021 - September 2028	207	PLN	Variable	116	101
TOTAL LOANS AND BORROWINGS						8,518	8,423

As at March 31, 2021, the value of the available overdrafts at significant PGE Group companies was PLN 1,810 million. The repayment datesforthe available overdraft facilities of PGE Group's key companies are in 2021-2024.

In the period ended March 31, 2021 and after the reporting period no failures to make payment or other breaches of credit agreement terms were recorded.

Outstanding bonds

Issuer	Security instrument	Program maturity date	Program limit in currency		Currency Interest rate	Tranche issue date	Tranche buy-back date	Liability at 31- 03-2021	Liability at 31- 03-2020
PGE S.A.	IRS	indefinite	5,000	PLN	Variable	2019-05-21	2029-05-21	1,004	1,001
						2019-05-21	2026-05-21	402	400
PGE Sweden AB (publ)	CCIRS	indefinite	2,000	EUR	Fixed	2014-08-01	2029-08-01	656	644
	TOTAL OUTSTANDING BONDS							2,062	2,045

20.2 Tradeandotherfinancialliabilities

	At March 31, 2021		At December 31, 2020
	Non-current	Current	Non-current	Current
Trade liabilities	-	1,227	-	1,357
Settlementsrelated to transactions on exchange	-	941	-	856
Purchase of property, plant and equipment and intangible assets	3	649	6	1,050
Security depositsreceived	30	90	30	96
Liabilitiesrelated to LTC	395	22	395	22
Insurance	-	-	-	8
Other	14	153	17	115
TRADE ANDOTHER FINANCIAL LIABILITIES	442	3,082	448	3,504

The item 'Other' includes PGE Dom Maklerski S.A.'sliabilitiestowards clients on account of funds deposited.

21. Othernon-financialliabilities

The main components of non-financial liabilities as at the respective reporting dates are asfollows:

21.1 Othernon-currentnon-financialliabilities

	As at	As at
	March 31, 2021	December 31, 2020
OTHER NON-CURRENT LIABILITIES
Liabilitiesrelated to a contract	62	64
Estimated liabilities due to Voluntary Leave Programs	1	1
TOTALOTHER NON-CURRENT LIABILITIES	63	65

21.2 Other currentnon-financialliabilities

	As at	As at
	March 31, 2021	December 31, 2020
OTHER CURRENT LIABILITIES
VAT liabilities	1,567	540
Excise tax liabilities	23	33
Environmental fees	97	202
Payroll liabilities	179	284
Bonusesfor employees	150	272
Unused annual holiday leave	156	113
Estimated liability related to branch holidays: "Barbórka" and "Dzień Energetyka"	27	1
Liabilities due to Voluntary Leave Programs	1	1
Bonusesforthe Management Board	21	20
Estimated liabilities concerning other employee benefits	14	5
Personal income tax	56	95
Liabilitiesfrom social insurances	227	269
Liabilitiesrelated to a contract	332	296
Liabilitiesrelated to dividends	7	7
Other	109	65
TOTALOTHER CURRENT LIABILITIES	2,966	2,203

Liabilitiesrelated to VATmainly concern transactionsin CO² emissionsrights. The increase inVAT by PLN1,027million in comparisonwith the previous period mainly resultsfrom an increase in the scale of transactions along with growth in CO² allowance prices.

The item 'Other' largely includes liabilities related to settlements within the Company Social Benefits Fund, settlement of inventory surpluses, contributionsto the Employee Pensions Program and amounts withheld from employees'salaries.

Liabilitiesrelated to a contract

Contract liabilities mainly include advances for deliveries and prepayments by customers for connections to the distribution grid and electricity consumption forecastsforfuture periods.

OTHER EXPLANATORY NOTES

22. Contingentliabilitiesandreceivables,legal claims

22.1 Contingentliabilities

	As at	As at
	March 31, 2021	December 31, 2020
Contingentreturn of grantsfrom environmental funds	457	461
Legal claims	117	186
Liabilitiesrelated to bank guarantees and suretiessecuring exchange transactions	60	75
Contractual fines and penalties	70	70
Usufruct of land	67	67
Other contingentliabilities	9	37
Total contingentliabilities	780	896

Contingentreturn of grantsfrom environmental funds

The liabilities represent the value of possible future returns of funds received by PGE Group companies from environmental funds for selected investments. The funds will be returned if the investments for which they were granted do not achieve the expected environmental outcomes.

Legal claims

In connection with the sale of shares in PGE EJ1 sp. z o.o. to the State Treasury and in accordance with an agreement determining the responsibility of the former shareholders as regards the costs of a dispute with Worley Parsons, if the dispute is lost, PGE S.A. may be required to coverthe cost ofthe dispute of up to PLN98million. The probability oflosing the dispute was estimated in orderto determine the fair value of the payment received. In effect, PLN 59 million was recognised under contingent liabilities and PLN 39 million in noncurrent provisions. The amount of the provision adjusted the result on the sale ofshares as presented in these financialstatements.

Bank guarantee liabilities

These liabilities represent bank guarantees provided as security for exchange transactions resulting from membership in the clearinghouse IRGiT.

Contractual penalties- contract liabilitiesrelated to the purchase of fuels

In accordance with fuel purchase agreements (mainly coal and gas), PGE Group is required to collect a minimum volume of fuel and to not exceed the maximum gas uptake levels in specific periods. Failure to uptake the contractual minimum volume of fuel may result in the necessity to pay fees (in case of gas fuel, volumes that have been paid for but not collected can be collected in the next three contractual years).

According to PGE Group, the terms of fuel delivery to its generating assets as described above do not diverge from the terms of delivery to other powerstationsin Poland.

Usufruct of land

Contingent liabilities pertaining to the usufruct of land are related to an update of annual fees for the usufruct of land. PGE GiEK S.A.'s branches have appealed the decisions in Local Appeals Courts. The contingent liability is measured as the difference between the discounted sum of the updated feesfor usufruct of land throughout the entire period of the usufruct and the perpetual usufruct of land liability recognised in accounts based on previousfees.

22.2 Othersignificantissuesrelatedtocontingentliabilities

Non-contractual use of property

As describedinnote 19.5 ofthese financialstatements, PGEGrouprecognises a provisionfordisputesunder court proceedings concerning non-contractual use of propertiesfor distribution activities. In addition, PGEGroup is a party to disputes at an earlierstage of proceedings, and it cannot be ruled out that the volume and value ofsimilar disputes will increase in the future.

22.3 Contingentreceivables

As at the reporting date, PGE Group held PLN 72 million in contingentreceivablesrelated to a potentialrefund of excess excise duty. The Group is waiting for a ruling by the Supreme Administrative Court on what excise duty rate should be applied in settling the excise duty relief related to the redemption of property rights created in renewable energy sources priorto January 1, 2019.

According toPGEGroup,thisreliefshould be settledusing the rate applicable atthe time the electricity generatedfromrenewable sources issoldto the endcustomer,i.e. 20PLN/MWh. Thiswas confirmedina rulingby theVoivodshipAdministrativeCourtinRzeszówofOctober 8, 2019.

The tax authority issued a cassation appeal against thisruling by the Voivodship Administrative Court on November 20, 2019.

22.4 Other court casesanddisputes

Compensation for conversion ofshares

Former shareholders of PGE GiEK S.A. petitioned the courts to summon PGE S.A. to conciliatory hearings concerning payment of compensation forincorrect(in theiropinion) determination ofthe exchange ratio ofshares of PGEGórnictwo i Energetyka S.A. into shares of PGE S.A. during a consolidation processthattook place in 2010. The total value of claimsresulting from these summonsto conciliatory hearingslodged by formershareholders of PGE Górnictwo i Energetyka S.A. exceeds PLN 10 million.

Regardless ofthe above, onNovember 12, 2014 SocratesInvestment S.A. (an entity which purchased claimsfrom former PGE Górnictwo i Energetyka S.A.shareholders) filed a lawsuitseeking more than PLN 493 million in compensation (plusinterest) for damagesincurred in respect of incorrect(in their opinion) determination ofthe exchange ratio ofsharesin themerger of PGE Górnictwo i Energetyka S.A. and PGE S.A. The Company filed a response to the lawsuit, and first-instance proceedings are in progress. A hearing to appoint a court expert was held on November 20, 2018. A first-instance court proceeding is currently under-way. In a ruling dated April 19, 2019 the court appointed experts to draft an opinion on this matter. The experts' opinion was not yet drafted as of the date on which these financial statements were prepared. The date of the next hearing will be set ex officio.

Furthermore, a similar claim was raised by Pozwy sp. z o.o., an entity that purchased claims from former PGE Elektrownia Opole S.A. shareholders. Pozwy sp.z o.o. filed a claim atthe District Courtin Warsaw against PGE Górnictwo i Energetyka Konwencjonalna S.A., PGE S.A. and PwC Polska sp.z o.o.("Defendants"), demanded fromtheDefendants, in solidum, orjointly damagesfor Pozwy sp.z o.o.totalling over PLN 260 million with interest for allegedly incorrect (in its opinion) determination of the exchange ratio for PGE Elektrownia Opole S.A. shares for PGE Górnictwo i Energetyka Konwencjonalna S.A. shares in a merger of these companies. This lawsuit was delivered to PGE S.A. on March 9, 2017, and the deadline for responding to it wasset by the court as July 9, 2017. PGE S.A. and PGE GiEK S.A. filed a response to the claim on July 8, 2017. On September 28, 2018, the District Court in Warsaw ruled in the first instance - the lawsuit by Pozwy sp. z o.o. against PGE S.A., PGE GiEK S.A. and PWC Polska sp. z o.o. was rejected. On April 8, 2019 PGE S.A. received a copy of an appeal lodged by the claimant on December 7, 2018. A response to the appeal was drafted on April 23, 2019. A hearing was held on December 21, 2020. The Appeals Court ruled to repeal the District Court'sruling in its entirety and referred the case to the District Court for re-examination. On January 22, 2021 PGE S.A. and PGE GiEK S.A. appealed the ruling to the Supreme Court, requesting that the appealed ruling be repealed entirely and the case referred to the Appeals Court forre-examination. At a closed-door hearing on April 27, 2021 the Supreme Courtreversed the judgement. The case will therefore be re-examined by the Court of Appeal. PGE S.A. and PGE GiEK S.A. are currently awaiting the justification for the Supreme Court's decision in the final judgment on which the reasons for the decision will be based.

PGE Group companies do not accept the claims being raised by Socrates Investment S.A., Pozwy sp. z o.o. and the rest of shareholders requesting conciliatory settlements. According to PGE S.A., these claims are groundless and the entire consolidation process was conducted fairly and correctly. The value ofsharessubject to the process of consolidation was established by an independent firm, PwC Polska sp. z o.o. Additionally, the merger plans of these companies, including the exchange ratios, were examined for accuracy and reliability by an expert appointed by the registration court; no irregularities were found. Then, the court registered the mergers of the aforementioned companies.

PGE Group did not create a provision forthis claim.

Termination by Enea S.A. of long-term energy origin rightssale contracts

In 2016, PGE GiEK S.A., PGE EO S.A. and PGE Energia Natury PEW sp.z o.o. (acquired by PGE EO S.A.) received statementsfrom Enea S.A. regarding the terminationoflong-termcontractsforthe saleofrenewable energy originrights,the so-called"greencertificates." Justifying the termination, Enea S.A. claimed that the companiessignificantly breached the provisions of these contracts, i.e. failed to re-negotiate contractual provisionsinaccordancewith the adaptive clause, asrequested by Enea S.A. in July 2015 inconnectionwith anallegedchange in legalregulations having impact on performance of these contracts.

According to PGEGroup,the noticesterminating the contractssent by Enea S.A. were submitted in breach of contractual obligations. The companies took appropriate steps to enforce their rights. With Enea S.A. refusing to perform these long-term contracts to purchase property rights resulting from certificates of origin received by PGE Group companies in connection with the production of renewable energy, PGE GiEK S.A. and PGE Energia Natury PEW sp.z o.o. demanded from Enea S.A. the payment of contractual penalties, while PGE EO S.A. demanded payment of compensation for damages. In October 2020, at the request of the parties, the court proceedings were suspended in connection with the intention to hold mediation sessions as an alternative dispute resolution. In 2021, the parties to the disputessubmitted them for conciliation by the General Prosecutor's Office of the Republic of Poland.

Due to the factthat according to PGE Group the declarationsterminating the contracts presented by Enea S.A. were submitted in breach of contractualterms, as atthe reporting date theGrouprecognisedcontractualpenalty receivablesof PLN164million(recognisedentirely asrevenue in previousreporting periods). According to PGE Group companies, based on available legal analysis, a favourable resolution in the above disputesis more probable than a negative resolution.

In addition, PGE GiEK S.A., PGE Energia Natury, PEW sp.z o.o. (acquired by PGE EO S.A.) and PGE EO S.A. filed lawsuits against Enea S.A. for the payment of receivables totalling PLN 47 million concerning invoices issued to Enea S.A. for the sale of property rights based on these contracts. Enea S.A. refused to pay these receivables, claiming that they were offset by receivables from the Group's companies relatedto compensationfor allegeddamages arising as a resultofthe companies'failure to re-negotiate the contracts.According toGroup companies,such offsets are groundless because Enea S.A.'sreceivables concerning the payment of compensation never arose and there are no groundsfor acknowledging Enea S.A.'s claim that the companies breached contractual provisions. InOctober 2020, at the request oftheparties,the court proceedingswere suspendedinconnectionwiththe intentionto holdmediationsessions as analternative dispute resolution. In 2021, the parties to the disputes submitted them for conciliation by the General Prosecutor's Office of the Republic of Poland.

23. Tax settlements

Tax obligations and rights are specified in Poland's constitution, tax regulations and ratified international agreements. According to the tax code, tax is defined as public, unpaid, obligatory and non-returnable cash liability toward the State Treasury, provincial or other regional authoritiesresulting from the tax regulation. Taking into accountthe subject criterion,the current taxesin Poland can be divided into five groups: income tax, turnovertax, asset tax, activity tax and otherfees not classified elsewhere.

From the point of view of business entities, the most important is the taxation of incomes (corporate income tax), taxation of turnover (value added tax, excise tax) followed by taxation of assets (real estate tax and vehicle tax). Other payments classified as quasi – taxes must also be mentioned Among these there are socialsecurity charges.

Basic tax rates were asfollowsin 2021: corporate income tax rate – 19%, forsmaller enterprises a 9% rate is possible; basic value added tax rate – 23%, reduced: 8%, 5%, 0%, furthermore some goods and products are subject to a VAT tax exemption.

The tax system in Poland is characterised by significant volatility and complexity of tax regulations, steep potential penalties for tax offences or crimes. Tax settlements and other activity areas subject to regulations (customs or currency controls) may be the subject of inspections by relevant authorities authorised to issue fines and penalties with interest. These inspections may cover tax settlementsfor a five-year period afterthe end of calendar yearin which the tax was due.

Tax group

An agreementfor a tax group named PGK PGE 2015,represented by PGE S.A., wassigned on September 18, 2014 for a period of 25 years.

Companies included in the tax group must meet a number of requirements covering: appropriate level of equity, parent's stake in taxgroup companies of atleast 75%, lack of capitalties between subsidiaries, no tax arrears, an earnings-to-salesratio of atleast 2% (counted at tax group level), and execution of transactions with related parties from outside the tax group only on market terms. Violating these requirements would mean the dissolution of the tax group and loss of its taxpayer status. When the tax group is dissolved, each of its member companies becomes an individual payer of corporate incometax.Due to the introduction oflawsintended to combatthe effects of COVID-19, the requirement to have an earnings-to-salesratio of at least 2% was waived for 2020.

VAT split payment mechanism,requirement to make paymentsto accountsregistered with tax offices

The Group intends to effectively use the funds received from counterparties in VAT accounts to pay its liabilities that contain VAT. The level of funds in these VAT accounts on any given day depends mainly on how many of PGE Group's counterparties decide to use this mechanismand the relation betweenthe payment deadlinesforreceivables andliabilities. As ofMarch31, 2021 the cash balance inthese VAT accountstotalled PLN 253million.

Reporting of tax arrangements(MDR)

In 2019, new regulationsintroduced mandatory reporting of tax arrangements(Mandatory Disclosure Rules- MDR). A tax arrangement should be understood as any activity of which the main or one of the main benefits is the obtaining of a tax advantage. Moreover, tax arrangements include eventsthat have general hallmarks or various specific hallmarks, as defined in regulations. Three types of entities are subject to the reporting obligation: promoter, supporter and beneficiary. MDR regulations are complex and imprecise in numerous areas, which givesrise to interpretation doubts asto their practical application.

Excise tax

In connection with an incorrect implementation of EU regulationsin the Polish legal system, PGE GiEK S.A. in 2009 initiated proceedings regarding reimbursement of improperly paid excise tax for the period January 2006 - February 2009. The irregularity consisted of taxing electricity at the firststage ofsale, i.e. by producers, whereassalesto end usersshould have been taxed.

Examining the company's complaints with regard to the restitution claims against decisionsissued by tax authoritiesrefusing to confirm overpayment of excise tax, administrative courtsruled that the company did not bearthe economic burden of the improperly calculated excise tax (which in the context ofthe resolution by the Supreme Administrative Court of June 22, 2011, file no. I GPS 1/11, precludesthe return of overpaid amounts). According to the Supreme Administrative Court, the claims that the company sought, especially using economic analyses, are of an offsetting nature and therefore may be sought only in civil courts. Given the above, PGE GiEK S.A. decided to withdraw from the proceedings asregardsrestitution claims. Activities concerning the excess excise tax are currently being conducted in civil courts. On January 10, 2020 the District Court in Warsaw issued a ruling in a case brought by PGE GiEK against the State Treasury - Minister of Finance. The court dismissed the case.On February 3, 2020 the company filed an appeal with the Court of Appealsin Warsaw against the first-instance ruling. The session was held on December 2, 2020, after which the Court of Appeals in Warsaw rejected PGE GiEK's appeal in a ruling dated December 17, 2020. PGE GiEK lodged a cassation appeal with the Supreme Court on April 23, 2021.

Given the significant uncertainty over the final ruling on this issue, the Group does not recognise in its financial statements any effects related to potential compensation in civil courtsin connection with the improperly paid excise tax.

Real estate tax

Real estate tax constitutes a considerable burden for certain PGE Group companies. Regulations on the real estate tax are unclear in certain areas and give rise to a range of interpretation doubts. Tax authorities such as municipality head, city mayor or president often issue inconsistent tax interpretations in substantively similar cases. This means that PGE Group companies were and can be parties in proceedings relating to real estate tax. If the Group concludes that an adjustment of settlements is probable as a result of such a proceeding, it creates an appropriate provision.

Uncertainty concerning tax settlements

Regulations concerning tax on goods and services, corporate income tax and burdensrelated to social insurance are subject to changes. These frequent changes result in a lack of reference points, inconsistent interpretations and few precedents that can be applied. The existing regulations also contain uncertainties that result in differing opinions as to legal interpretation of tax regulations both between state organs and between state organs and companies.

Tax settlements and other activity areas are conditioned by regulations (customs or currency controls) and can be subject to controls of respective authoritiesthat are authorised to issue fines and penalties, and all additional tax liabilities resulting from such audits must be paid with high interest. This meansthat tax risk in Poland is higherthan in countries with more stable tax systems.

As a consequence,the amounts presented and disclosed in financialstatementsmay change in the future as a result of a final decision by a tax control organ.

The Tax Ordinance Act contains provisions from the General Anti-Abuse Clause (GAAR). GAAR is intended to prevent the formation and use of artificial legal structures created in order to avoid paying tax in Poland. GAAR defines tax avoidance as an activity performed primarily to obtain a tax benefit contrary under the circumstances to the subject and aim of the tax law. According to GAAR, such an activity does notresultin a tax benefitif itis artificial. All proceedingsregarding unjustified division of operations, involving intermediaries despite a lack of economic justification, mutually offsetting elements or other similar activities may be treated as a condition for the existence of artificial activitiessubject to GAAR. These new regulations willrequire a much greaterjudgement in assessing the tax effects of transactions.

TheGAAR clause isto be applied in relation to transactions executed afterits entry into force and to transactionsthat were executed prior to its entry into force but in the case of which tax benefits were or continue to be obtained after GAAR went into force. The implementation of these regulations will make it possible for Polish tax inspection authorities to question legal arrangements and agreements made by taxpayerssuch as group restructuring and reorganisation.

The Group recognises and measures current and deferred income tax assets and liabilities using IAS 12 Income Tax, based on profit (tax loss), tax base, unsettled tax losses, unused tax exemptions and tax rates, taking into account assessment of uncertainties related to tax settlements. If there is uncertainty over where or not and in whatscope the tax authority will accept tax accounting fortransactions, the Group recognisesthese settlementstaking into account an uncertainty assessment.

24. Informationonrelatedparties

PGE Group's transactions with related entities are concluded based on market prices for provided goods, products and services or are based on the cost of manufacturing.

24.1 Associatesandjointlycontrolledentities

The total value of transactions with such entitiesis presented in the table below.

	Period ended	Period ended
	March 31, 2021	March 31, 2020*
Salesto associates and jointly controlled entities	60	80
Purchasesfrom associates and jointly controlled entities	534	466

	As at	As at
	March 31, 2021	December 31, 2020
Trade receivablesfrom associates and jointly controlled entities	194	93
Trade liabilitiesto associates and jointly controlled entities	207	243

*restated data

Thisturnover and balancesresult from transactions with Polska Grupa Górnicza S.A. and Polimex-Mostostal S.A.

24.2 StateTreasury-controlledcompanies

The State Treasury isthe dominantshareholder of PGE Polska Grupa Energetyczna S.A. and as a result in accordance with IAS 24 Related Party Disclosures, State Treasury companies are treated as related entities. PGE Group entities identify in detail transactions with approximately 40 of the biggest State Treasury subsidiaries.

The total value of transactions with such entitiesis presented in the table below:

	Period ended	Period ended
	March 31, 2021	March 31, 2020
Salesto related parties	898	515
Purchasesfrom related parties	1,562	1,328


	As at	As at
	March 31, 2021	December 31, 2020
Trade receivablesfrom related parties	406	254

The largest transactions with companies where the State Treasury holds a stake concern Polskie Sieci Elektroenergetyczne S.A., Polskie Górnictwo Naftowe i Gazownictwo S.A., Jastrzębska Spółka Węglowa S.A., ENERGA-OPERATOR S.A., PKN Orlen S.A., Grupa LOTOS S.A., Zakłady Azotowe PUŁAWY S.A., PKP Cargo S.A., TAURON Dystrybucja S.A., PKO Bank Polski S.A.

Moreover, PGE Group executesmaterialtransactions on the energy market via power exchange TowarowaGiełda Energii S.A. Due to the fact that this entity only manages exchange trading, purchases and sales transacted through this entity are not treated as transactions with related parties.

24.3 ManagementBoardandSupervisoryBoardremuneration

The key management includesthe Management Boards and Supervisory Boards of the parent company and significant Group entities.

	Period ended	Period ended
PLN 000s	March 31, 2021	March 31, 2020
Short-term employee benefits(salaries and salary related costs)	9,981	9,815
Post-employment benefits	-	1,045
TOTAL REMUNERATIONOF KEY MANAGEMENT PERSONNEL	9,981	10,860
Remuneration of keymanagement personnel of entities of non-core operations	6,084	6,506
TOTAL REMUNERATIONOF KEY MANAGEMENT PERSONNEL	16,065	17,366

	Period ended	Period ended
PLN 000s	March 31, 2021	March 31, 2020
Management Board ofthe parent company	2,164	2,060
including post-employment benefits	-	180
Supervisory Board ofthe parent company	210	217
Management Boards – subsidiaries	6,597	7,462
Supervisory Boards – subsidiaries	1,010	1,121
TOTAL	9,981	10,860
Remuneration of keymanagement personnel of entities of non-core operations	6,084	6,506
TOTAL REMUNERATIONOF KEY MANAGEMENT PERSONNEL	16,065	17,366

PGE Group companies(direct and indirectsubsidiaries) apply a rule whereby management boardmembers are employed on the basis of managementservices contracts. The cost of thisremuneration is presented, by nature and function, in note 5.2 other costs by nature.

25. Significanteventsduringandafterthereportingperiod

25.1 ImpactofCOVID-19onPGEGroup'sbusiness

PGE is identifying risk factors related to the COVID-19 pandemic that affect the Group's results on an on-going basis. The pandemic's impact on financial resultsremained limited in the first quarter of 2021. Further potential events and their scale are difficult to estimate. The duration, intensity and reach ofthe pandemic will be ofsignificance, aswell asthe pandemic'simpact on economic growth in Poland. At the same time, preparing precise estimates is difficult due to a variety of other factors having an impact on the electricity market, including demand for electricity.

The onset of the pandemic caused an economic slowdown in 2020 globally and in Poland. As the pandemic restrictions are being lifted, the economic situation is now gradually improving. This is seen in corrections of market forecasts for GDP, industrial production and investments.

Nonetheless, the re-introduction of restrictions could result in reduced economic activity, which would give rise to a temporarily lower domestic consumption of electricity, which in turn would reduce revenue and margins on the generation, distribution and sale of energy intheConventional Energy,Distribution, Supply andDistrictHeating segments.Most oftheproductionin2021was contractedinprevious years, which is why the potential negative impact of lower volumesin the Conventional Energy segment would largely be limited.

If the pandemic intensifies, the Supply segment is at a risk of falling demand for electricity, which could translate into lowersalesto end customers and a higher cost of electricity balancing. In the Distribution segment, a lower volume ofsuppliesto end customers could also directly lead to lowerrevenue.

As at March 31, 2021, the impact of a predicted increase in payment backlogs, especially in receivablesfrom SMEs, was not material. As described innote 2.4 to these consolidated financialstatements,theGrouphasrecognisedadditional impairmentlossesof PLN16million. Depending on the further development of the pandemic and economic situation, PGE Group isstillsubject to liquidity risk and the risk of higher impairment of overdue receivables, both of which are monitored on an on-going basis. The Group currently does not expect this risk to become material and has not identified liquidity risk.

PGE Group owns facilities of strategic importance from the viewpoint of uninterrupted generation and supply of electricity and heat in Poland. TheCOVID-19 pandemic has changed thewaywork isorganised, especiallywith regard to PGEGroup's generating assets. Inmany instances,this givesrise to additional costs, including for example the purchase of protective equipmentfor employees. Since the start of the pandemic, the Group has work rules in place that are aimed at reducing the risk of infection for employees. As one of the largest employers in Poland, with more than 40 000 employees, PGE Group is undertaking a range of corporate and work organisation efforts intended to ensure operational continuity, protection of employee health and life, including remote and rotational work, raising awareness ofthe basic rulesfor protecting against COVID-19, prevention and quarantine. PGE has appointed a crisisteam, which collects information from all Group companies, monitorsthe situation at the companies and undertakes appropriate activities.

Production units also have operational plans, drafted and approved on an on-going basis, in the event of elevated absences- asthey are ofstrategic importance fromthe viewpoint ofmaintaining the continuity of productionandsupply of electricity andheat,they also remain in continuous contact with localservicesresponsible for monitoring the situation in the country across all PGE Group sites.

In the retail customer area, PGE Group has been primarily focusing on expanding itsremote service channels.

Having implemented appropriate remedial measures at an early stage of the pandemic, PGE Group has been producing and supplying electricity and heat with no interruptions.

PGE Group ismonitoring the furtherimpact of COVID-19 on itsfinancial position and is preparing for variousscenarios. The pandemic has accelerated the roll-out of measures intended to prepare the entire organisation for changes in order to take on the challenges that energy companies are facing in connection with decarbonisation. This will require financial expenditures. All potential savings scenarios, in both investment expenditures and operational costs, have been analysed in orderto focus on flagship development projectsrelated to PGE Group's core business.

25.2 PreliminaryproposaltopurchasestakeinFortum'sassets

OnOctober 27, 2020, an investor consortium thatincluded PGE submitted a preliminary, non-binding proposalto purchase from Fortum Holding B.V. its district heating and cooling businessin Estonia, Lithuania, Latvia and Poland. Consortium membersincluded: PGE, Polskie Górnictwo Naftowe i Gazownictwo S.A., PFR Inwestycje FIZ, whose investment portfolio is managed in part by Polski Fundusz Rozwoju S.A., and IFM Investors Pty Ltd.

OnNovember 16, 2020 PGE and PolskieGórnictwoNaftowe iGazownictwo S.A.(Partners)submitted amodified preliminary, non-binding proposal to purchase assetsfrom Fortum Holding B.V.

The modified proposal entails the acquisition of Fortum Holding B.V.'s district heating business in Poland only. At the same time, the Partners withdrew from the proposed acquisition of Fortum's assets in Estonia, Lithuania, Latvia and from participating in the investor consortium with PFR Inwestycje FIZ and IFM Investors Pty Ltd.

Joint work is currently in progress on a binding proposal.

Fortum Holding B.V.'s Polish subsidiary isinvolved in the generation, distribution and sale of heat and the generation of electricity.

The purchase of Fortum's assetsisin line with PGE Group's Strategy 2030, announced on October 19, 2020.

25.3 InvestmentagreementwithØrstedforoffshorewindfarmprojects

On February 10, 2021 PGE Group entities and Ørsted signed an agreement giving each of the parties a 50% stake in two offshore wind farm projects. PGE is currently implementing the two projects: Baltica 2 (with planned capacity of approx. 1.5 GW) and Baltica 3 (with planned capacity of approx. 1 GW).

PGE Baltica 6 sp. z o.o., PGE Baltica 5 sp. z o.o. (PGE's subsidiaries) ("Existing Shareholders"), Orsted Baltica 2 Holding sp. z o.o., Orsted Baltica 3 Holding sp.z o.o.,(subsidiaries ofØrsted Wind Power A/S ("OWPAS"), hereinafterjointly referred to as "Investors"), Elektrownia Wiatrowa Baltica – 2 sp. z o.o. ("EWB2") and Elektrownia Wiatrowa Baltica – 3 sp. z o.o. ("EWB3") signed an investment agreement for the Investorsto invest in Baltica 2 and Baltica 3.

The investment agreement establishes the legal framework for the formation of a joint operation between PGE and OWPAS for the development, construction and operation of offshore wind projects Baltica 2 and Baltica 3.

Underthe investment agreement, the Investors undertake to acquire newly-issued sharesin EWB2 and EWB3 constituting 50% ofshare capital and granting the Investors 50% of votes at each of the companies.

On March 10, 2021 the President ofthe Polish Office of Competition and Consumer Protection approved the concentration.

On May 6, 2021, after the fulfilment of the conditions precedent, relevant PGE Group entities and Ørsted completed the transaction in which Ørsted entities acquired sharesrepresenting a 50% stake in EWB2 and EWB3. Once the share capital increase isregistered, Ørsted and PGE (acting through subsidiaries) will become 50/50 partnersin thisjoint operation.

The total price for the 50% stake in EWB2 and EWB3 constitutesthe equivalent of approx. PLN 686 million. The increased price includes in particular contributions made by PGE to the companies after the investment agreement was signed. Once the relevant assumptions are met, Ørsted entities will be required to make additional contributionsto EWB2 and EWB3, which can amount to a total of PLN 1,024 million.

In closing the transactions, Ørsted and PGE entities signed a number of documents, separately for Baltica 2 and Baltica 3, including in particular:

shareholder agreements, regulating the companies' corporate governance, operational rules for integrated project teams, commitments by the parties regarding financing and the provision of other services to the companies, restrictions on the disposal of shares in the companies constituting the joint operation as well as the consequences of contractual breaches and change of control;
agreements concerning the provision of development services for the companies constituting the joint operation by relevant subsidiaries from both sides;
agreementsregarding accessto resources, based on which both of the parties will delegate personnel to the companies;
shareholder loan agreements, pursuant to which the shareholders will provide debt financing (aside from equity financing) to the companies; and
corporate guarantees issued by PGE and Ørsted Wind Power A/S, pursuant to which both of the parties guarantee due performance of liabilities at the development stage of the projects by their respective subsidiaries.

25.4 Czechia's complaintagainstPolandregardingprolongationofminingconcessionforKWBTurów

PGE GiEK S.A.'s concession for the mining of lignite and accompanying minerals at the "Turów" lignite deposit was prolonged through a decision of the Minister of Climate dated March 20, 2020. On September 30, 2020 the Czech Republic lodged a letter with the European Commission pursuantto Art. 259 ofthe Treaty on the Functioning ofthe EuropeanUnion initiating a proceeding against Poland regarding the continued functioning of the energy complex in Turów. The charges against Poland concerned the issue of administrative decisions permitting further extractive activities at the KWB Turów mine. The actions taken by Polish authorities allegedly constituted a breach of EU law, including the water framework directive, directive on the assessment of the effects of certain plans and programmes on the environment, directive on public accessto environmental information and directive on the assessment ofthe effects of certain public and private projects on the environment.

On December 17, 2020 the European Commission issued a reasoned opinion in which it agreed with some of the infringements alleged by Czechia, at the same time indicating that the prolongation of KWB Turów'sfunctioning did not infringe on the provisions of the water framework directive. The European Commission also emphasised that some of the other infringements alleged by Czechia were unfounded.

On February 22, 2021 the Czech government decided to lodge a complaint against Poland. The complaint was referred to the Court of Justice of the European Union on February 26, 2021. On April 19, 2021 a summary of the complaint and key arguments was published in the Official EU Journal. The partiesto this proceeding are memberstates, which precludesthe participation of natural and legal persons even if the case directly concernstheir activities.

On May 21, 2021 the Vice-President of the Court of Justice of the European Union issued an order on an interim measure as follows: "Poland must immediately cease lignite extraction activitiesin the Turów mine until a judgment of the Court brings case C-121/21 to an end." An interim measure does not rule on the merits of the case. As groundsfor adopting the interim measure, the Court asserted that the continued extraction of lignite at KWB Turów will lead to deterioration in the level of groundwater in Czech territory. At the same time, this circumstance is yet to be proven by Czechia.

The order on the interim measure cannot be appealed, although pursuant to Art. 163 of the Rules of Procedure of the Court of Justice of the European Union: "On application by a party, the order may at any time be varied or cancelled on account of a change in circumstances."

The memberstate against which the interim measure is applied determinesthe way in which the interim measure is performed.

Extractive operations at the KWB Turów mine are in compliance with domestic law and European environmentalstandards on the basis of on a lawfully acquired concession. According to PGE, there are currently no grounds for ceasing operations at the energy complex in Turów.

25.5 Plannedtransferof coalassetstoNationalEnergySecurityAgency

On May 21, 2021, the following project was published in the list of legislative and program works of the Council of Ministers: "Transformation of the electricity sector in Poland. Separation of generation coal assets from companies with State Treasury shareholding" .According to the draft project, the asset spin-off process will be pursued through acquisition by the State Treasury from PGE S.A., ENEA S.A., TAURON Polska Energia S.A. all assets related to the generation of electricity in hard coal-fired and lignite-fired power plants, including service companies providing services to them. Due to the inseparability of lignite-fired energy complexes, lignite mines will also be among the acquired assets. Assets related to hard coal mining will not be transferred to the entity dealing with generation of electricity in coal units. CHP plants will not be subject to separation, as they are planned to be modernized towards low and zero-emission sources. Then, the State Treasury will integrate the acquired assets within one entity. The integrator is to be PGE GiEK S.A. The integration will take place through the merger of the companies acquired by the State Treasury or their contribution for a capital increase to PGE GiEK S.A. PGE GiEK will be operating under the name of the National Energy Security Agency (Polish "NABE"). NABE will be a selfsufficient entity that, as part of its operations, will carry out maintenance and modernisation investments necessary to maintain the efficiency of the coal-fired units in operation. Transaction is to take place following appropriate business and economic analyses, including due diligence and valuations of selected assets. The method of settlement of the transaction, due to the indebtedness of the generation companies towards parent entities in their capital groups, will be subject to detailed arrangements between the State Treasury and the current owners.

According to the assumptions of the project, after the separation of coal generation assets, energy companies will focus on the implementation of low and zero-emission investments, and NABE, operating in the form of a company with 100% State Treasury shareholding, will be the owner of coal-based generation assets. The role of NABE will be to ensure the necessary power balance in the energy system, limiting itself to the necessary replacement investments and gradual decommissioning of coal-fired units along with the progressive capacity increase from low and zero-emission sources, ensuring the country's energy security. The planned date of adoption of the draft by the Council of Ministers is the second quarter of 2021.

Currently, the assumptions of the program have not been presented, in particular regarding the date of transfer of the coal assets, the valuation of the assets and the method of settlement of debt and other liabilities related to the assets. Therefore, it is currently not possible to determine the impact of the spin-off on the future financial statements of PGE and the PGE Capital Group.

II.PGE Polska Grupa Energetyczna S.A. Quarterly financial information for the 3-month period endedMarch 31, 2021, in accordancewith IFRS EU(in PLNm)

SEPARATE STATEMENT OF COMPREHENSIVE INCOME

	3 months ended	3 months ended
	March 31, 2021	March 31, 2020
	(unaudited)	(unaudited)
STATEMENTOF PROFITOR LOSS
REVENUE FROMSALES	9,920	9,698
Cost of goodssold	(9,673)	(9,416)
GROSS PROFITONSALES	247	282
Distribution and selling expenses	(5)	(5)
General and administrative expenses	(54)	(57)
Other operating income /(expenses)	-	(9)
OPERATINGPROFIT	188	211
Finance income /(costs), including	(4)	43
Interestincome calculated using the effective interestmethod	28	44
GROSS PROFIT	184	254
Income tax	12	(32)
NET PROFIT FOR THE REPORTINGPERIOD	196	222

OTHER COMPREHENSIVE INCOME
Itemsthat may be reclassified to profit orloss:
Measurement of hedging instruments	174	(301)
Deferred tax	(33)	57
Itemsthat may not be reclassified to profit orloss:
Actuarial gains and lossesfrom valuation of provisionsfor employee benefits	-	-
Deferred tax	-	-
OTHER COMPREHENSIVE INCOME FOR THE REPORTINGPERIOD,NET	141	(244)

TOTAL COMPREHENSIVE INCOME	337	(22)

NET PROFITAND DILUTEDNET PROFIT PER SHARE (INPLN)	0.10	0.12

SEPARATE STATEMENT OF FINANCIAL POSITION

	As at March 31, 2021	As at December 31, 2020
	(unaudited)	(audited)
NON-CURRENTASSETS
Property, plant and equipment	152	155
Right-of-use assets	20	20
Financialreceivables	9,140	9,139
Derivatives and other assets measured atfair value through profit orloss	169	132
Sharesin subsidiaries	29,492	29,401
Sharesin subsidiaries, jointly controlled entities and associates	101	101
Deferred income tax assets	94	119
	39,168	39,067
CURRENTASSETS Inventories	1	1
Trade and otherreceivables	15,447	9,762
Derivatives	1,226	1,244
Sharesin subsidiaries	-	369
Other current assets	257	54
Cash and cash equivalents	1,942	3,507
	18,873	14,937
TOTAL ASSETS	58,041	54,004

EQUITY
Share capital	19,165	19,165
Reserve capital	18,410	18,410
Hedging reserve	(147)	(288)
Retained earnings	1,938	1,742
	39,366	39,029
NON-CURRENT LIABILITIES Non-current provisions	20	19
Loans, borrowings, bonds and leases	7,881	8,602
Derivatives	229	385
Otherliabilities	14	17
	8,144	9,023
CURRENT LIABILITIES
Current provisions	52	21
Loans, borrowings, bonds, cash pooling, leases	4,020	2,150
Derivatives	1,222	1,243
Trade and otherliabilities	3,696	1,583
Income tax liabilities	252	456
Other non-financial liabilities	1,289	499
	10,531	5,952
TOTAL LIABILITIES	18,675	14,975
TOTAL EQUITY ANDLIABILITIES	58,041	54,004

SEPARATE STATEMENT OF CHANGES IN EQUITY

Share capital	Reserve capital	Hedging reserve	Retained earnings	Total equity

19,165	18,410	(288)	1,742	39,029
	-			196
	-			141
-	-	141	196	337
19,165	18,410	(147)	1,938	39,366
	- -		- 141	196 -

	Share capital	Reserve capital	Hedging reserve	Retained earnings	Total equity

AS AT JANUARY 1, 2020	19,165	19,669	(72)	(1,258)	37,504
Net profitforthe reporting period	-	-	-	222	222
Other comprehensive income	-	-	(244)	-	(244)
COMPREHENSIVE INCOME FOR THE PERIOD	-	-	(244)	222	(22)

Other changes	-	-	-	(1)	(1)
AS AT MARCH 31, 2020	19,165	19,669	(316)	(1,037)	37,481

SEPARATE STATEMENT OF CASH FLOWS

	Period ended	Period ended
	March 31, 2021	March 31, 2020
	(unaudited)	(unaudited)
CASHFLOWS FROM OPERATINGACTIVITIES
Gross profit	184	254
Income tax paid	3	122

Adjustmentsfor:
Depreciation, amortisation and impairmentlosses	3	3
Interest and dividend, net	(28)	(40)
(Gain)/loss on investing activities	23	102
Change in receivables	(7,119)	(5,499)
Change in inventories	1	(701)
Change in liabilities, excluding loans and borrowings	2,707	2,868
Change in other non-financial assets	(214)	(258)
Change in provisions	(8)	-
Exchange differences	9	(9)
NET CASH FROM OPERATINGACTIVITIES	(4,439)	(3,158)

CASHFLOWS FROM INVESTINGACTIVITIES
Purchase of property, plant and equipment and intangible assets	(1)	(2)
(Purchase)/ buy-back of bondsissued by PGE Group companies	-	610
Sale of otherfinancial assets	374	-
Expenditure on purchase ofsharesin subsidiaries	(91)	(18)
Origination /(repayment) of loans granted under cash pooling agreement	1,407	589
Loans granted	(2,040)	(1,039)
Interestreceived	53	66
Loansrepaid	3,252	861
NET CASH FROM INVESTINGACTIVITIES	2,954	1,067

CASHFLOWS FROM FINANCINGACTIVITIES
Proceedsfrom loans, borrowings	-	3,108
Repayment of loans, borrowings, leases	(1)	(301)
Interest paid	(69)	(77)

NET CASH FROM FINANCINGACTIVITIES	(70)	2,730

NET CHANGE INCASHAND CASHEQUIVALENTS	(1,555)	639
Net exchange differences	(9)	9
CASHAND CASHEQUIVALENTS AT THE BEGINNING OF PERIOD	3,493	219
CASHAND CASHEQUIVALENTS AT THE ENDOF PERIOD	1,938	858

1. Changesinaccountingprinciplesanddatapresentation

New standards and interpretations that went into force on January 1, 2021 and had no impact on the Company's separate financial statements are described in note 2.3 to the consolidated financialstatements.

III. APPROVALOFQUARTERLY FINANCIALREPORT

This quarterly report, containing PGE Group's condensed consolidated financialstatements and PGE S.A.'s quarterly financial information forthe 3-month period ended March 31, 2021, was approved for publication by the Management Board on May 25, 2021.

Warsaw, May 25, 2021

Signatures of members of the Management Board of PGE Polska Grupa Energetyczna S.A.

President of the Management Board	Wojciech Dąbrowski
Vice-President of the Management Board	Wanda Buk
Vice-President of the Management Board	Paweł Cioch
Vice-President of the Management Board	Paweł Śliwa
Vice-President of the Management Board	Ryszard Wasiłek

Signature of person responsible for drawing	Michał Skiba
up these financial statements	Director, Reporting and Tax Department

Glossaryoftermsandabbreviations

Presented below is a set of the most frequently used terms and abbreviationsin these consolidated financialstatements.

Abbreviation	Full term
CCIRS	Cross Currency Interest Rate Swap
EBIT	Earnings Before Interest and Taxes
EBITDA	Earnings Before Interest, Taxes, Depreciation and Amortization
EUA	European Union Allowances
PGE Group, Group	PGE Polska Grupa Energetyczna S.A. Group
IRGiT	Izba Rozliczeniowa Giełd Towarowych S.A.
IRS	Interest Rate Swap
LTC	Long-term capacity and electricity sale contracts
KOGENERACJA S.A.	Zespół Elektrociepłowni Wrocławskich KOGENERACJA S.A.
IFRS	International Financial Reporting Standards
IFRS EU	International Financial Reporting Standards approved by the European Union
NFOŚiGW	National Fund for Environmental Protection and Water Management
Investment property	Investment property
Right-of-use assets	Right-of-use assets
PGE S.A., Company, Parent	PGE Polska Grupa Energetyczna S.A.
PGE EC S.A.	PGE Energia Ciepła S.A.
PGE EO S.A.	PGE Energia Odnawialna S.A.
PGE GiEK S.A.	PGE GiEK S.A.
PGE PGK	PGE's tax group
Property, plant and equipment	Property, plant and equipment
Financial statements, consolidated financial statements	PGE Group's consolidated financial statements
Act on electricity prices	Act on amendment of the excise tax act and certain other acts
WFOŚiGW	Voivodship Fund for Environmental Protection and Water Management
Intangible assets	Intangible assets

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PGE Polska Grupa Energetyczna S.A.

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