2. Basis of preparation of the financial statements

Consolidated financial statements of the Group have been prepared for the year ended 31 December 2016 and include comparative data for the year ended 31 December 2015. Financial data have been presented in Polish zloty (PLN) in millions, with one decimal place, unless indicated otherwise.

2.1. Compliance with accounting standards

These consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted by the European Union (EU) as at 31 December 2016, and in the areas not regulated by these standards, in accordance with the requirements of the Accounting Act of 29 September 1994 and the respective secondary legislation issued on its basis, as well as the requirements relating to issuers of securities registered or applying for registration on an official quotations market.

2.2. Going concern

Consolidated financial statements of the Group have been prepared on the basis that the Group will continue as a going concern for at least the period of 12 months from the publication date, i.e. from 6 March 2017. As at the date of signing these financial statements, the Bank’s Management Board is not aware of any facts or circumstances that would indicate a threat to continuing activity of the Bank for 12 months following the publication date as a result of any intended or compulsory withdrawal or significant limitation in the activities of the Group.

In 2016 and 2015, the Group had no discontinued operations.

2.3. Basis of preparation of the financial statements

These consolidated financial statements have been prepared on a fair value basis in respect of financial assets and liabilities measured at fair value through profit and loss, including derivatives and financial assets available for sale, except of those for which the fair value cannot be reliably estimated. Other financial assets (including loans and advances) are measured at amortized cost less impairment or at purchase price less impairment. The other financial liabilities are recognised at amortized cost. Non-current assets are measured at acquisition cost less accumulated depreciation and impairment allowances. Non-current assets (or groups of the above-mentioned assets) classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell.

The Group recognises all significant expenses and income in accordance with the following policies: accrual basis, matching principle, policies for recognition and valuation of assets and liabilities, policies for recognition of impairment losses. The accounting policies relating to the individual items are presented in the individual notes to the income statement.

While preparing financial statements, the Group makes certain estimates and assumptions, which have a direct influence on both the financial statements and enclosed supplementary information. The estimates and assumptions that are used by the Group in determining the value of assets and liabilities as well as revenues and costs, are made based on historical data and other factors which are available and are considered to be proper in the given circumstances. Assumptions regarding the future and the available data are used for assessing carrying amounts of assets and liabilities which cannot be determined unequivocally using other sources. In making estimates the Group takes into consideration the reasons and sources of the uncertainties that are anticipated at the end of the reporting period. Actual results may differ from estimates.

Estimates and assumptions made by the Group are subject to periodic reviews. Changes to estimates are recognised in the period to which they relate.

2.4. Approval of the financial statements

These financial statements, subject to review of the Audit Committee and adoption by the Supervisory Board of the Bank on 2 March 2017, were approved for publication by the Management Board on 21 February 2017.