In the period, the Group reported revenue of just under PLN 16.4bn, down 2% from PLN 16.7bn in H1 2013. Revenue fell by slightly over PLN 1bn on slower gas sales caused by the warm winter, with the decline moderately offset by the rising revenues from crude oil and electricity sales.

The Group's EBITDA, affected by an impairment loss of approximately PLN 500m, grew by 4%, to approximately PLN 3.5bn (PLN 3.3bn in H1 2013). On an adjusted basis (net of impairment losses), EBITDA increased 21% in H1 2014, to almost PLN 4bn. With a 55% share, the Exploration and Production segment was the largest contributor to the Group's net profit, followed by Distribution with a 32% share, and the Trade & Storage and Generation segments, accounting for 5% and 8% of the total, respectively.

Exploration and Production segment - profit growth

Revenue from the Exploration and Production segment in the first half-year of 2014 came in at PLN 3.4bn, a year-on-year increase of 24%, which translated into EBITDA of PLN 1.9bn, up 5% on the same period last year.

The segment's robust performance was mainly led by an over 46% rise in revenue from crude oil sales, and an almost 60% increase in the volume of gas produced from the Norwegian fields and sold to PGNiG Sales & Trading.

Negative gas margin

The key factors which impacted the Trade and Storage segment's performance in H1 2014 were a 0.6 bcm year-on-year decline in the volume of gas sales, and concurrent growth in off-tariff sales of gas on the Polish Power Exchange. The segment's revenue fell 4%, to PLN 13.3bn.

In Q2 2014, high-methane gas was sold at a negative margin of -3%, compared with a -1% in the same period of 2013. However, the aggregate margin of 0.5% in H1 2014 was a marked improvement on -2% the year before.

In Q2 2014, the Group's gas sales volumes remained broadly flat year on year, at 3.3 bcm. By customer groups, larger gas volumes were only sold to the customers of PGNiG Sales & Trading. Sales of gas by PST, mainly on the German market, grew by 26%, to 0.91 bcm, in H1 2014.

PGNiG Sales & Trading's share in total gas revenue was stable, at PLN 0.9bn.

PGNiG Group’s performance in H1 2014 (PLNm)

PGNiG Group’s performance in Q1 2014 (PLNm)

Effect of higher air temperatures on the Distribution segment

In H1 2014, the Distribution segment's revenue of PLN 2.3bn stayed flat year on year. The volume of distributed gas declined by 12%, to 0.67 bcm in H1 2014, due to the average air temperatures being 2°C higher than in the same period last year.

Mild winter weather and electricity prices impacted sales in the Generation segment

In H1 2014, Generation posted PLN 1.03bn in revenue, down 8% year on year, which was attributable to lower heat and electricity sales on the back of higher air temperatures, coupled with lower electricity prices.

Sales of electricity from the Group's own generation sources fell 5%, to 2 TWh, in H1 2014, while sales of heat energy were at 20.7 PJ, down by 14%.

Utilisation of gas storage capacities

As at the end of June 2014, the Group held 2.05 bcm stocks of high-methane gas in its underground storage facilities, compared with 1.78 bcm in June 2013.

Dorota Gajewska

Press Officer