PGNiG : Condensed Consolidated Half Yearly Report for the 2017

(in PLN million, unless stated otherwise)

Definitions

Whenever any of the following acronyms and terms appear in this Directors' Report and nothing to the contrary is stated herein, these acronyms and terms should be interpreted as follows: PGNiG or the Issuer - PGNiG S.A. as the parent of the group; PGNiG Group, Group - the PGNiG Group, which includes PGNiG S.A. as the parent, and subsidiaries; PGNiG UN - PGNiG Upstream Norway AS; POGC Libya - Polish Oil and Gas Company - Libya B.V.; PSG - Polska Spółka Gazownictwa Sp. z o.o.; PST - PGNiG Supply & Trading GmbH; PGNiG OD - PGNiG Obrót Detaliczny Sp. z o.o.; GSP - Gas Storage Poland Sp. z o.o.; PGNiG TERMIKA - PGNiG TERMIKA S.A.; PGNiG Technologie - PGNiG Technologie Sp. z o.o.; GEOFIZYKA Kraków - GEOFIZYKA Kraków Sp. z o.o. w likwidacji; GEOFIZYKA Toruń - GEOFIZYKA Toruń Sp. z o.o.; GEOVITA - GEOVITA S.A.; Gazoprojekt - Biuro Studiów i Projektów Gazownictwa Gazoprojekt S.A.; EXALO - EXALO Drilling S.A.; PEC - Przedsiębiorstwo Energetyki Cieplnej S.A. w Jastrzębiu Zdroju; PGNiG TERMIKA EP - PGNiG TERMIKA Energetyka Przemysłowa S.A.; CLPB - Oddział Centralne Laboratorium Pomiarowo-Badawcze PGNiG S.A.; PGG - Polska Grupa Górnicza Sp. z o.o.; ECSW - Elektrociepłownia Stalowa Wola S.A.; URE - Energy Regulatory Office; TTF - Title Transfer Facility; PPX - Towarowa Giełda Energii S.A. (Polish Power Exchange) UGSF - Underground gas storage facilities; CGSF - Cavern gas storage facility; CHPP - combined heat and power plant; HP - heat plant; SF − storage facilities; SFG - Storage Facilities Group; EGM − Extraordinary General Meeting; GM − General Meeting; AGM - Annual General Meeting; National Court Register - National Court Register; With respect to currency and other units: amounts expressed in the złoty are designated with the acronym PLN; amounts expressed in the euro are designated with the acronym EUR; amounts expressed in the US dollars are designated with the acronym USD; amounts expressed in the Norwegian crown are designated with the acronym NOK; amounts expressed in the Swedish crown are designated with the acronym SEK; and the acronym boe is used to designate barrel of oil equivalent.

Converters

TABLE OF CONTENTS

Definitions 2

Converters 2

1. PGNiG Group in the first half of 2017 4

2. Key financial and operating metrics 4

3. Calendar of corporate events 5

4. Events subsequent to the reporting date 5

5. Companies of the PGNiG Group 6

6. Strategy of the PGNiG Group 7

7. Mission, vision, overriding objective 7

8. Challenges 7

9. Strategy of the PGNiG Group 8

10. Risks 8

11. Research and development 8

12. Regulatory and market environment 10

13. Regulatory environment 10

14. Fuel prices and currency exchange rates 12

15. Financial results for the first half of 2017 17

16. Separate financial data of the Parent 17

17. Consolidated financial data of the PGNiG Group 18

18. Change in presentation of the PGNiG Group's segments 20

19. Expected financial standing of the Group 21

20. Results of the PGNiG Group by segments 22

21. Exploration and Production 22

22. Trade and Storage 26

23. Distribution 33

24. Generation 36

25. Other Segments 38

26. Additional information on the PGNiG Group 39

27. Structure of the PGNiG Group 39

28. Other ownership interests and organisational links 40

29. Governing bodies 41

30. Court proceedings 42

31. Shareholding structure. PGNiG at WSE 44

32. Shareholding structure 44

33. Dividend 44

35. PGNiG Group in the first half of 2017

36. Key financial and operating metrics

37. PLN 18.8bn Revenue	PLN 4.2bn EBITDA	PLN 2.8bn EBIT	PLN 2.1bn Net profit	PLN 45.1bn Total assets
    4th Largest company listed on the WSE	PLN 36.5bn Market capitalisation	24.9 thousand Number of employees	6.4% ROE	4.7% ROA
    8.4% EV/EBITDA	17.4 P/E	1.1 P/BV	PLN 24.1m Average daily value of trading
    0.6 m tonnes Production of crude oil, condensate, and NGL	2.2bn m3 Production of natural gas	14.5bn m3 Volume of gas sold	3.0bn m3 Gas storage capacities
    4.8bn m3 Volume of gas sold on PPX		6.6bn m3 Volume of imported gas
    6.4bn m3 Volume of distributed gas	132 thousand km Length of gas distribution network, excluding service line	24.4 PJ Heat output	2.2 Twh Electricity output