1.1. Company name, principal business activity and key registry data

Polskie Górnictwo Naftowe i Gazownictwo Spółka Akcyjna (“PGNiG S.A.”, “the Company”, “the Parent”), registered office at ul. Marcina Kasprzaka 25, 01-224 Warsaw, Poland, is the Parent of the PGNiG Group (“the PGNiG Group”, “the Group”).

On October 30th 1996, the Company was entered in the commercial register maintained by the District Court for the Capital City of Warsaw, 14th Commercial Division, under No. RHB 48382. Currently, the Company is entered in the Register of Entrepreneurs maintained by the District Court for the Capital City of Warsaw, 12th Commercial Division of the National Court Register, under No. KRS 0000059492. The Company’s Industry Identification Number REGON is 012216736 and its Tax Identification Number NIP is 525-000-80-28.

PGNiG S.A. shares are listed on the Warsaw Stock Exchange ("WSE"). The Company’s principal business activity includes exploration for and production of crude oil and natural gas, import, storage and sale of gas fuels, as well as trade in electricity.

The PGNiG Group is the only vertically integrated company in the Polish gas sector, holding the leading position in all segments of the country’s gas industry. It is also a significant domestic producer of heat and electricity. The scope of the PGNiG Group’s business comprises exploration for mineral deposits, oil and gas exploration and production, import, storage and distribution of and trade in gas fuels. The PGNiG Group is the main importer of gas fuel from Russia, Germany and Switzerland and the main producer of natural gas from Polish deposits. The Group’s upstream operations are one of the key contributors to PGNiG’s competitive position on the liberalised gas market in Poland.

The trade in and distribution of natural gas as well as the generation and sale of heat, which together with natural gas and crude oil production constitute the core business of the PGNiG Group, are regulated by the Polish Energy Law. For this reason, the Group’s operations require licence and a significant portion of its revenue depends on the tariff rates for gas fuels approved by the President of the Energy Regulatory Office. Exploration and production activities are licensed and are governed by the provisions of the Polish Geological and Mining Law.

1.2.  Duration of the PGNiG Group

The Parent and the Group subsidiaries were incorporated for an unspecified time.

1.3.  Reporting period of these consolidated financial statements

These consolidated financial statements present data as at December 31st 2014 and for the period January 1st–December 31st 2014, with comparative financial data for the relevant periods of 2013.

1.4.  Consolidated data

These financial statements contain consolidated data of the Parent, its 15 subsidiaries (of which three are parents of their own groups), one associated entity and one joint venture. In the tables below are listed equity-accounted entities as well as PGNiG Group companies.

1.5.  Changes in the Group’s structure, including changes resulting from mergers, acquisitions or disposals of Group entities

The most important changes in the structure of the PGNiG Group in 2014 included:

• On January 20th 2014, GEOFIZYKA Toruń S.A. reported that its subsidiary, PT Geofizyka Toruń Indonezja LLC w likwidacji (in liquidation), was deleted from the business register after the company liquidation process had been completed.
• On May 22nd 2014, a new company with a share capital of PLN 1,000,000 was incorporated under the name of Zakład Separacji Popiołów Siekierki Spółka z ograniczoną odpowiedzialnością; PGNiG TERMIKA S.A. acquired a 70% equity interest, valued at PLN 700,000, in the newly established entity. The company was registered with the National Court Register on June 17th 2014.
• On August 1st 2014, PGNiG Obrót Detaliczny Sp. z o.o.'s share capital was increased by PLN 1,090,000,000, from PLN 1,000,000 to PLN 1,091,000,000, through an issue of 10,900,000 new equal and indivisible shares with a par value of PLN 100 per share and a total par value of PLN 1,090,000,000. All new shares in the share capital of PGNiG Obrót Detaliczny Sp. z o.o. were subscribed for by the company's sole shareholder, PGNiG S.A., and paid for with non-cash contribution in the form of an organised part of business. The share capital increase was registered with the National Court Register on September 9th 2014.
• On August 18th 2014, the District Court for the Capital City of Warsaw, 12th Commercial Division of the National Court Register, deleted Biogazownia Ostrowiec Sp. z o.o. w likwidacji (in liquidation) from the National Court Register.
• On November 28th 2014, the winding up of Polskie Elektrownie Gazowe Sp. z o.o. was completed. A request was filed with the National Court Register (a registry court) to delete the company from the register. By the date of preparation of these financial statements, the registry court had not issue a decision to delete the company from the register.
• On December 15th 2014, PGNiG SPV 6 Sp. z o.o. and PGNiG SPV 5 Sp. z o.o. incorporated Gas Assets Management Sp. z o.o. w organizacji (in formation) with a share capital of PLN 20,000. PGNiG SPV 6 Sp. z o.o. and PGNiG SPV 5 Sp. z o.o. acquired capital interests of PLN 19,800 and PLN 200, respectively, in the newly incorporated company. The company's share capital was paid up with cash. On February 17th 2015, the company was registered with the National Court Register.

1.6.  Composition of the PGNiG Management Board

As at December 31st 2014, the PGNiG Management Board consisted of four members:

• Mr Mariusz Zawisza − President
• Mr Jarosław Bauc – Vice-President, Finance
• Mr Zbigniew Skrzypkiewicz – Vice-President, Exploration & Production
• Mr Waldemar Wójcik – Vice-President.

In the period from January 1st to December 31st 2014, the following changes occurred in the composition of the PGNiG Management Board:

• With effect from January 1st 2014, Mr Mariusz Zawisza was appointed President of the PGNiG Management Board, pursuant to a decision by the Supervisory Board of December 30th 2013.
• On April 3rd 2014, the Supervisory Board of PGNiG S.A. appointed Mr Waldemar Wójcik as member of the PGNiG Management Board elected by the employees, for the joint three-year term of office commencing December 30th 2013. Mr Wójcik assumed his position on April 3rd 2014.
• On June 18th 2014, the Supervisory Board of PGNiG S.A. resolved to suspend Mr Andrzej Parafianowicz from duties as Vice-President of the PGNiG Management Board for Corporate Affairs.
• On August 7th 2014, Mr Andrzej Parafianowicz tendered his resignation as Member of the PGNiG Management Board, with effect as of that date.
• Also on August 7th 2014, the Supervisory Board appointed Mr Waldemar Wójcik as Vice-President of the Management Board of PGNiG S.A.
• On December 29th 2014, the Supervisory Board of PGNiG S.A. removed Mr Jerzy Kurella from the PGNiG Management Board and the position of Vice-President for Trade. The resolution became effective as of its date.

Subsequent to December 31st 2014, until the date of preparation of these financial statements, there were no changes in the composition of the PGNiG Management Board.

1.7.  Commercial proxies

As at December 31st 2014, Ms Violetta Jasińska-Jaśkowiak served as commercial proxy for PGNiG S.A., appointed by the Management Board on December 20th 2013.

She was granted a joint power of proxy, which means that the actions taken by the commercial proxy will only be legally effective if she acts jointly with a Member of the PGNiG Management Board.

Subsequent to December 31st 2014, until the date of issue of these financial statements, there were no changes with respect to commercial proxies for PGNiG S.A.

1.8.  Composition of the PGNiG Supervisory Board

As at December 31st 2014, the Supervisory Board consisted of seven members:

• Wojciech Chmielewski – Chairman of the Supervisory Board
• Agnieszka Woś – Deputy Chairperson
• Magdalena Zegarska – Secretary
• Sławomir Borowiec – Member
• Ryszard Wąsowicz – Member
• Janusz Pilitowski – Member
• Andrzej Janiak – Member

In the period from January 1st 2014 to the date of preparation of these financial statements, the following changes occurred in the composition of the PGNiG Supervisory Board:

• On March 26th 2014, the Extraordinary General Meeting of PGNiG S.A. appointed Mr Andrzej Janiak as member of the Company's Supervisory Board. Mr Andrzej Janiak meets the independence criteria defined in the Company's Articles of Association.
• On May 15th 2014, the Annual General Meeting of PGNiG S.A. removed Ms Agnieszka Chmielarz, Mr Wojciech Chmielewski, Mr Józef Głowacki, Mr Andrzej Janiak, Mr Mieczysław Kawecki, Mr Marcin Moryń, Mr Janusz Pilitowski, Ms Ewa Sibrecht-Ośka and Ms Jolanta Siergiej from the PGNiG Supervisory Board, with effect from May 15th 2014.

On the same day, Mr Wojciech Chmielewski, Mr Sławomir Borowiec, Mr Andrzej Janiak, Mr Bogusław Nadolnik, Mr Janusz Pilitowski, Ms Agnieszka Trzaskalska, Mr Ryszard Wąsowicz, Ms Agnieszka Woś and Ms Magdalena Zegarska were appointed as members of the PGNiG Supervisory Board, with effect from May 15th 2014.

• On June 30th 2014, Ms Agnieszka Trzaskalska resigned as member of the PGNiG Supervisory Board with effect from that date.
• On November 5th 2014, PGNiG S.A. received a letter of resignation from Mr Bogusław Nadolnik, whereby Mr Nadolnik resigned as member of the PGNiG Supervisory Board with effect from November 6th 2014.

1.9.  Shareholding structure of PGNiG S.A.

As at the date of issue of these consolidated financial statements for 2014, the State Treasury was the only shareholder holding 5% or more of total voting rights at the General Meeting of PGNiG S.A.

PGNIG S.A.’s shareholding structure was as follows:

1.10.       Going-concern assumption

These consolidated financial statements have been prepared based on the assumption that the Group will continue as a going concern in the foreseeable future. As at the date of approval of these financial statements, no circumstances were identified which would indicate any threat to the Group’s continuing as a going concern.

1.11.       Business combinations

In the reporting period, there were no business combinations involving the Group and any other companies under commercial law.

1.12.       Approval of the financial statements

These financial statements will be submitted to the Parent's Management Board for approval and issue on March 5th 2015.