Tauron Polska Energia S.A.

Annual Report • Feb 18, 2019

Current report no. 2/2019

Subject: Impairment test results

Management Board of TAURON Polska Energia S.A. ("Issuer", "TAURON")announces that the main analyses conducted as part of the impairmenttests related to TAURON Capital Group's assets carrying amount as ofDecember 31, 2018 were completed on February 18.

The analyses demonstrated material changes to the recoverable value ofthe Generation and Mining segments' fixed assets that were primarily theconsequence of the following internal and external factors:

- completion of the capacity market's three main auctions with thedelivery in 2021-2023;

- draft regulation of the European Parliament and of the Council on theinternal market for electricity that envisages excluding generatingunits which do not meet the specified CO2 emission criteria fromeligibility for the capacity market support;

- increase of profitability of electricity generation from renewablesources as compared to the conventional generation (a consequence ofhigher electricity and green certificate prices);

- rising costs of purchasing CO2 emission allowances.

With respect to the 2018 consolidated financial statements of TAURONPolska Energia S.A. the completed analyses related to the Generationsegment demonstrated:

- in conventional electricity generation the need to book netwrite-downs related to the loss of tangible and intangible fixed assetsin the amount of PLN 788.4 million,

- in renewable energy sources the need to reverse the write-down relatedto the loss of tangible and intangible fixed assets in the amount of PLN321.9 million.

The excess of the booked write-downs versus the reversed write-downs inthe consolidated financial statements (net value of the impairmentcharges) is PLN 466.5 million, while the total estimated impact on thedecrease of the consolidated net financial result will reach PLN 377.9million.

With respect to the 2018 standalone financial statements of TAURONPolska Energia S.A. the completed analyses demonstrated:

- the need to book write-downs related to the loss of the value of theshares in TAURON Wydobycie S.A. in the amount of PLN 54.1 million,

- the need to book write-downs related to the loss of the value of theshares in TAURON Wytwarzanie S.A. in the amount of PLN 1,814.3 million,

- the need to reverse write-downs related to the loss of the value ofthe shares in TAURON Ekoenergia sp. z o. o. in the amount of PLN 402.4million.

The excess of the booked write-downs versus the reversed write-downs inthe standalone financial statements (net value of the impairmentcharges) is PLN 1,466 million, while the total estimated impact on thedecrease of the standalone net financial result will reach PLN 1,466million.

The above charges will not impact EBITDA in the standalone andconsolidated financial statements (EBITDA shall be understood by theIssuer as EBIT increased by deprecation and charges related tonon-financial assets).

The Issuer states that the values provided above are estimates and maybe subject to change. The final results of the impairment tests and theamounts of write-downs related to the loss of the assets carrying amountwill be presented in the 2018 financial statements of TAURON PolskaEnergia S.A. and TAURON Capital Group.

Legal basis: art. 17, clause 1 of MAR - inside information