2.1. Basis of preparation

These Consolidated Financial Statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the European Union. IFRSs comprise standards and interpretations approved by the International Accounting Standards Board (“IASB”) and the International Financial Reporting Interpretations Committee (“IFRIC”).

These Consolidated Financial Statements have been prepared in millions of Polish złoty (“PLN”). Comparative amounts for the year ended 31 December 2019 have been compiled using the same basis of preparation, except for impact of a change in the accounting policy described below.

The Consolidated Financial Statements have been prepared under the historical cost convention, except for the fair value applied to derivative financial instruments and selected trade receivables arising from sales of mobile handsets in instalments.

The Consolidated Financial Statements have been prepared on the going concern basis. As at 31 December 2020, the Group’s current liabilities exceeded current assets and unused credit facilities (excluding short term) by PLN 2,434 million (see Note 25.6). It was mainly due to current liabilities from the related party loans of PLN 3,576 million (presented in Note 20) with repayment date in May and June 2021. In order to ensure an adequate level of financial liquidity and cover the excess of current liabilities over current assets and unused credit facilities, Orange Polska and Orange Group concluded new loan agreement for PLN 2,700 million in January 2021 (see Note 32). Considering the new loan agreement, the amount of current liabilities would decrease by PLN 2,700 million to PLN 4,937 million and would be fully covered by current assets of PLN 3,363 million and unused credit facilities (excluding short term) of PLN 1,840 million. Furthermore, the Management analysed the timing, nature and scale of potential financing needs of the Group and believes that available cash as well as expected operating cash inflows will be sufficient to fund the Group’s anticipated cash requirements for working capital purposes.

The financial data of all entities constituting the Group included in these Consolidated Financial Statements were prepared using uniform group accounting policies.

These Consolidated Financial Statements were authorised for issuance by the Management Board on 17 February 2021 and are subject to approval at the General Meeting of Orange Polska S.A.

The principles applied to prepare financial data relating to the year ended 31 December 2020 are described in Note 33 and are based on:

• all standards and interpretations endorsed by the European Union and applicable to the reporting period beginning 1 January 2020;
• IFRSs and related interpretations adopted for use by the European Union whose application will be compulsory for periods beginning after 1 January 2020, but for which the Group has opted for earlier application,
• accounting positions adopted by the Group in accordance with paragraphs 10 to 12 of International Accounting Standard (“IAS”) 8 (Use of judgements).

Adoption of standards and interpretations in 2020

There were no new standards or interpretations issued from the date when the IFRS Consolidated Financial Statements for the year ended 31 December 2019 were published. Changes to standards and interpretations in 2020, other than described in Note 2.2 below, did not result in any changes to accounting policies applied by the Group.