Financial analysis

In 2015, the Trade and Storage segment’s operating profit was down PLN 202m year on year, to PLN 381m.

The segment’s revenue in 2015 was up by PLN 2,917m (or 10%) year on year, driven principally by higher revenue from gas sold on the Polish Power Exchange (TGE), whose volume was 9 billion cubic metres in 2015, relative to 4.3 billion cubic metres the year before. The segment’s operating expenses in 2015 were up by PLN 3,119m (or 11%) year on year, mainly on higher costs of gas fuel purchases on the Polish Power Exchange (made by PGNiG Obrót Detaliczny Sp. z o.o.). Sale and purchase transactions carried out on the Polish Power Exchange by, respectively, PGNiG and PGNiG Obrót Detaliczny (which commenced operations on August 1st 2014) are not eliminated in the consolidated financial statements.

The decline in the segment’s operating result is due to the ongoing deregulation of the Polish gas market, which allows the segment’s largest customers to diversify their gas fuel supplies. In 2015, PGNiG and PGNiG Obrót Detaliczny changed their tariffs for fuel gas sales several times. As a result, the average tariff price of gas fuel in Q4 2015 was lower by ca. 10% compared with 2014. Additionally, in response to changing market conditions, the segment companies selling gas fuel in Poland launched discount schemes, making their offering more attractive to customers.

The decline in the segment’s operating result was also attributable to a higher write-down of gas fuel inventories, up by PLN 190m in 2015.

As at December 31st 2015, the Group held ca. 1.7 billion cubic metres of gas in underground storage – approximately 19% less than at the end of 2014.

* Measured as high-methane gas equivalent, including direct sales from fields (Exploration and Production segment), after consolidation eliminations; volumes
of PGNiG sales through the Polish Power Exchange (TGE) and of PGNiG Obrót Detaliczny sales were not eliminated due to the anonymity of trade on TGE.