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2.1. Key information on the Group and its reporting segments

These consolidated financial statements include financial information of the Parent and of:

  • 15 direct subsidiaries of PGNiG, and
  • 8 indirect subsidiaries of PGNiG.

The Parent holds 100% equity interests in all its consolidated subsidiaries except for BSiPG Gazoprojekt S.A., in which PGNiG S.A. holds an aggregate interest of 75% (including a direct holding of 22.5% and 52.5% held indirectly through PGNiG Technologie S.A.).

The assets and liabilities of companies in which the Group holds non-controlling interests are not material.

The Group identifies five reporting segments.

Below is presented a classification of the Group’s fully-consolidated entities by reporting segment. For more information on the Group structure, see Section 6.1. of the Directors’ Report on the operations of PGNiG S.A. and the PGNiG Group in 2016.

Figure 1 Group structure by operating segment

The reporting segments have been identified based on the type of business conducted by the Group companies. The individual operating segments have been aggregated into reporting segments according to the aggregation criteria given in the table below. The Management Board of the Parent is the chief operating decision maker (CODM).

Segment Description of the segment Operating segments and aggregation criteria
Exploration and Production The segment’s business focuses on extracting hydrocarbons from deposits and preparing products for sale. The segment covers the process of exploring for and extracting natural gas and crude oil from deposits, including geological surveys, geophysical research, drilling, and development of and production from gas and oil fields. The segment’s operations include sale of gas directly from the fields, sale of crude oil and other products in Poland and abroad. The operating segments included in this reporting segment are the operations of PGNiG S.A. related to the hydrocarbon exploration and production business, as well as the Group companies listed under Exploration and Production in Figure 1.

None of the operating segments is significant, therefore the segments were aggregated as they have similar economic characteristics and meet most of the aggregation criteria. The key criteria for aggregation of the operating segments into the reporting segment included similarity of products and services, similar characteristics of the production process and of the target customer base, as well as economic similarities (exposure to the same market risks, as reflected in the correlation of performance (margins) generated by the individual operating segments included in the reporting segment).

Trade and Storage The segment’s activities consist in sale of natural gas (imported, produced or purchased on natural gas exchanges), operation of underground gas storage facilities for trading purposes (including the UGSFs located in Mogilno, Wierzchowice, Husów, Brzeźnica, Strachocina and Swarzów), and electricity trading. The operating segments included in this reporting segment are the operations of PGNiG S.A. related to the gas fuel and electricity trading business, as well as the Group companies listed under Trade and Storage in Figure 1.

The key criteria for aggregation of the operating segments into the reporting segment included similarity of products and services, similarity of target customer groups purchasing the segment’s products/services, and similar economic characteristics.

Distribution The segment’s principal business activity consists in distribution of natural gas via distribution networks to retail, industrial and wholesale customers, as well as operation, maintenance (repairs) and expansion of gas distribution networks. In this case, the operating segment is also a reporting segment, comprising only Polska Spółka Gazownictwa Sp. z o.o.
Generation The segment’s activities consist in generation and sale of electricity and heat. The operating segments making up this reporting segment include PGNiG TERMIKA S.A. and its subsidiaries shown in Figure 1.

The key criteria for aggregation of the operating segments into the reporting segment included similarity of products and services, similarity of target customer groups purchasing the segment’s products/services, and similar economic characteristics.

Other Segments This segment comprises operations which cannot be classified into any of the segments listed above, i.e. engineering design and construction of structures, machinery and equipment for the extraction and energy sectors, as well as catering and hospitality services. In this reporting segment, the operating segments are represented by the individual Group companies which do not qualify for inclusion in any of the other reporting segments, as listed under Other Segments in Figure 1.