3. Changes in the composition of TAURON Group

On 21 October 2022, a conditional agreement for the sales of shares in the subsidiary, TAURON Wydobycie S.A. was concluded between the Company and the State Treasury.  The subject matter of the agreement was the sale of all the shares held by the Company in TAURON Wydobycie S.A., representing 100% of the company share capital, for the total price of PLN 1, under the condition of joint fulfilment of the following conditions precedent:

• non-exercise of the pre-emptive right by Krajowy Ośrodek Wsparcia Rolnictwa (National Centre for Agricultural Support) (“KOWR”) to purchase shares of TAURON Wydobycie S.A. conferred under the provisions of the Act of 11 April 2003 on the development of the agricultural system. On 14 December 2022, the Company received a declaration from the KOWR that it had not exercised its pre-emptive right to purchase TAURON Wydobycie S.A. shares, as a result of which the condition precedent was fulfilled,
• increase in the share capital of TAURON Wydobycie S.A. performed in order to repay the debt of TAURON Wydobycie S.A towards the Company. On 21 October 2022, the Extraordinary General Meeting of TAURON Wydobycie S.A. adopted the resolution on increasing the share capital by issuing new 3 977 601 registered shares with a par value of PLN 10 per share, which were offered to the Company under the closed subscription at an issue price of PLN 1 000 per share, i.e. for the total amount of PLN 3 978 million. On 25 October 2022, a set-off agreement was concluded between the Company and TAURON Wydobycie S.A., pursuant to which the parties set off the receivables of TAURON Wydobycie S.A. on account of capital increase against the receivables of the Company arising from the debt in the amount of PLN 3 978 million. On 4 November 2022, the capital increase was registered with the National Court Register, consequently, the condition precedent was fulfilled.

On 31 December 2022, an entry was made in the register of shareholders of TAURON Wydobycie S.A. indicating the State Treasury as the purchaser of TAURON Wydobycie S.A. shares. Pursuant to the agreement, following the aforementioned entry, the ownership of TAURON Wydobycie S.A. shares was transferred from the Company to the State Treasury as of 31 December 2022.

The disposal of 100% of shares in TAURON Wydobycie S.A. is in line with the Group’s current strategy for the years 2022-2030 with an outlook till 2050. In the context of the tightening policies of financial institutions and financial market investors over the past few years regarding the financing of entities using coal assets in their business operations, holding coal assets in the Group’s structures limits the Group’s ability to raise financing. As a consequence – in the Company’s opinion – the divestment of TAURON Wydobycie S.A. will increase the possibilities of expanding the investor base in order to raise funds for the implementation of investments in TAURON Group, and thus facilitate the implementation of the strategic objectives included in the TAURON Group’s strategy.

In the Group’s opinion, discontinued operations constitute operations of the divested company,  in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations. Discontinued operations and loss of control of a subsidiary, together with a description of the impact on the consolidated financial statements, are further described in note 22 of consolidated financial statements.

As part of the implementation of the NABE Programme aimed at spinning off coal assets from state-owned power companies, the following restructuring changes were made in the Group, as further described in note 63 of consolidated financial statements:

• establishment of TAURON Inwestycje Sp. z o.o. by way of the division of TAURON Wytwarzanie S.A. registered on 1 July 2022,
• transfer to TAURON Wytwarzanie S.A. Of the ownership of 100% of shares in the share capital of Bioeko Grupa TAURON Sp. z o.o. and 95.61% of shares in the share capital of TAURON Serwis Sp. z o.o. to TAURON Wytwarzanie S.A. under a datio in solutum agreement,
• sale of 100% of the shares in Nowe Jaworzno Grupa TAURON Sp. z o.o. held by the Company to TAURON Wytwarzanie S.A.,
• merger of TAURON Wytwarzanie S.A. and Nowe Jaworzno Grupa TAURON Sp. z o.o. registered on 3 October 2022.

The above transactions did not have any impact on the consolidated financial statements of the Group.

On 10 October 2022, as a result of an amendment to the articles of association of Energetyka Cieszyńska Sp. z o.o., liquidating  the voting preference hitherto enjoyed by part of the shares belonging to the City of Cieszyn, the TAURON Ciepło Sp. z o.o. company acquired the control over Energetyka Cieszyńska Sp. z o.o. According to the Group’s assessment, the transaction constituted the acquisition of an undertaking within the meaning of IFRS 3 Business Combinations performed in stages without the transfer of payment and was settled using the acquisition method. As at the acquisition date, the Group remeasured to fair value its previously held equity interests in Energetyka Cieszyńska Sp. z o.o. and recognized the identifiable assets acquired and liabilities assumed of Energetyka Cieszyńska Sp. z o.o. and measured them at fair values. The fair value of the net assets acquired was negative and amounted to PLN (32) million. Given the lack of consideration transferred for the acquisition, the Group assessed that the amounts of any non-controlling interest in the acquired entity and the fair value as at the acquisition date of the previously held interest in the acquired entity exceeded the net of the acquisition-date fair values of the identifiable assets acquired and liabilities assumed, and therefore the Group recognised goodwill of PLN 18 million at the time of taking over the control.

On 7 December 2022, the redemption of all shares belonging to the City of Cieszyn and a simultaneous increase in the share capital of Energetyka Cieszyńska Sp. z o.o. was registered. Shares in the increased capital of the company were taken up by TAURON Ciepło Sp. z o.o. As a result of the above transaction, TAURON Ciepło Sp. z o.o. holds 100% of shares in the share capital of Energetyka Cieszyńska Sp. z o.o.

On 10 October 2022, TAURON Dystrybucja S.A. acquired 100% of shares in the share capital of Marselwind Sp z o.o. from TAURON Polska Energia S.A. On 1 November 2022, the demerger of Wsparcie Grupa TAURON Sp. z o.o. company and the transfer of the real estate management and fleet administration business to Marselwind Sp. z o.o. was registered. On 23 December 2022, the change of the company name from Marselwind Sp. z o.o. to Usługi Grupa TAURON Sp. z o.o. was registered.

The above transaction did not have any impact on the consolidated financial statements of the Group.

On 30 December 2022, the subsidiary, TAURON Dystrybucja S.A. joined Polski Holding Obronny Sp. z o.o., taking up for this purpose newly created shares in the increased capital of Polski Holding Obronny Sp. z o.o., constituting 4.2% in the increased capital of the company and covered them with an non-cash contribution (in-kind contribution) in the form of 100% of the shares in the Wsparcie Grupa TAURON Sp. z o.o. company. As a result of the transaction, TAURON Dystrybucja S.A. lost control over the Wsparcie Grupa TAURON Sp. z o.o. company. The impact of the transaction on the consolidated financial statements of TAURON Group is described in note 18 of consolidated financial statements.

In the year ended 31 December 2022, the subsidiary, TAURON Zielona Energia Sp. z o.o. acquired 100% shares in the following project  companies within which conducting of investment projects in the area of Renewable Energy Sources is planned:

• “MEGAWATT S.C.” Sp. z o.o.,
• Windpower Gamów Sp. z o.o.,
• Wind T30MW Sp. z o.o.,
• FF Park PV 1 Sp. z o.o.,
• Wind T4 Sp. z o.o.

In the opinion of the Company, taking into account in particular the preliminary stage of preparation for project implementation and the lack of business operations related to energy generation upon the acquisition, transactions do not constitute a business acquisition within the meaning of IFRS 3 Business Combinations and therefore the transaction has been settled as the acquisition of assets that do not constitute a business. The total value of assets recognized as a result of the transaction amounted to PLN 226 million.

As at 31 December 2022, the share of TAURON Polska Energia S.A. in the capital and in the governing body of the remaining key subsidiaries and jointly-controlled companies has not changed since 31 December 2021.