Selected consolidated financial data of PGE Polska Grupa Energetyczna S.A. Capital Group

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2 2 Selected consolidated financial data of PGE Polska Grupa Energetyczna S.A. Capital Group 6-month period 6-month period June 30, June 30, (reviewed) (reviewed) (reviewed) (reviewed) data restated data restated PLN thousand EUR thousand Sales revenues 15,100,832 14,914,091 3,583,491 3,530,297 Net profit from operating activities 3,167,341 3,365, , ,594 Gross profit (before taxation) 3,116,276 3,491, , ,503 Net profit for the reporting period 2,525,019 2,736, , ,767 Net profit attributable to equity holders of the parent company 2,511,214 2,703, , ,973 Total income 2,526,641 2,736, , ,667 Net cash from operating activities 3,264,513 4,396, ,683 1,040,733 Net cash from investing activities -2,772, , ,814-23,712 Net cash from financial activities 747, , ,346-74,170 Net change in cash and cash equivalents 1,239,819 3,983, , ,852 Net earnings per share (in PLN/EUR per share) Diluted earnings per share (in PLN/EUR per share) Weighted average number of shares (issued ordinary shares used for calculation of EPS) 1,869,760,829 1,869,760,829 1,869,760,829 1,869,760,829

3 3 As at June 30, 2013 As at December 31, 2012 As at June 30, 2013 As at December 31, 2012 (reviewed) (audited) (reviewed) (audited) data restated data restated PLN thousand EUR thousand Non-current assets 46,297,332 45,406,411 10,694,200 11,106,700 Current assets 14,005,641 13,396,629 3,235,157 3,276,902 Total assets 60,302,973 58,803,040 13,929,357 14,383,602 Equity 42,043,009 41,116,586 9,711,496 10,057,381 Equity attributable to equity holders of the parent 41,725,187 40,820,721 9,638,083 9,985,011 Share capital 18,697,608 18,697,608 4,318,952 4,573,555 Long-term liabilities 9,751,318 8,499,581 2,252,453 2,079,052 Short-term liabilities 8,508,646 9,186,873 1,965,408 2,247,168 Number of shares as at the end of the reporting period Book value per share (in PLN/EUR per share) Diluted book value per share (in PLN/EUR per share) 1,869,760,829 1,869,760,829 1,869,760,829 1,869,760,

4 4 Selected standalone financial data of PGE Polska Grupa Energetyczna S.A. 6-month period 6-month period June 30, June 30, (reviewed) (reviewed) (reviewed) (reviewed) data restated data restated PLN thousand EUR thousand Sales revenues 6,125,459 5,062,102 1,453,597 1,198,244 Net profit from operating activities 479, , ,704 36,195 Gross profit (before taxation) 1,934, , ,107 96,984 Net profit for the reporting period 1,812, , ,078 68,749 Total income 1,812, , ,078 68,932 Net cash from operating activities 226, ,916 53,709-61,761 Net cash from investing activities -222,390 3,848,547-52, ,985 Net cash from financial activities 853,289-2, , Net change in cash and cash equivalents 857,230 3,584, , ,581 Net earnings per share (in PLN/EUR per share) Diluted earnings per share (in PLN/EUR per share) Weighted average number of shares (issued ordinary shares used for calculation of EPS 1,869,760,829 1,869,760,829 1,869,760,829 1,869,760,829

5 5 As at June 30, 2013 As at December 31, 2012 As at June 30, 2013 As at December 31, 2012 (reviewed) (audited) (reviewed) (audited) PLN thousand data restated EUR thousand data restated Non-current assets 28,103,032 27,003,855 6,491,507 6,605,317 Current assets 4,701,540 3,386,703 1,086, ,409 Total assets 32,804,572 30,390,558 7,577,514 7,433,726 Equity 29,501,183 29,296,534 6,814,465 7,166,121 Share capital 18,697,608 18,697,608 4,318,952 4,573,555 Long-term liabilities 1,094,988 88, ,931 21,634 Short-term liabilities 2,208,401 1,005, , ,972 Above financial data for the 6-month period ended June 30, 2013 and June 30, 2012 were converted into EUR according to the following rules: particular items of the assets and liabilities according to average exchange rate published by the National Bank of Poland as of June 30, 2013 EUR/PLN and as of December 31, 2012 EUR/PLN , particular items of statement of comprehensive income and statement of cash flows according to the exchange rate constituting an arithmetic average of average exchange rates set out by the National Bank of Poland at the end of every month of the reporting period from January 1, 2013 till June 30, 2013 EUR/PLN , d and for the period from January 1, 2012 till June 30, 2012 EUR/PLN

6 6 CONTENTS 1. ORGANISATION OF THE CAPITAL GROUP DESCRIPTION OF ORGANISATION OF THE CAPITAL GROUP CHANGES IN ORGANISATION OF THE CAPITAL GROUP Changes in organisation of the Capital Group in the first half-year of Changes in the organisation of the Capital Group after the balance sheet date ACTIVITY OF PGE CAPITAL GROUP FACTORS AND EVENTS AFFECTING RESULTS Macroeconomic situation Tariffs Electricity prices National Allocation Plan for the years ( NAP II ) and for the years ( NAP III ) Prices of CO2 emission rights Balance of energy of PGE Capital Group Sales of heat Termination of long-term contracts (LTC Fuel purchase costs FINANCIAL RESULTS OF PGE CAPITAL GROUP BUSINESS SEGMENTS Conventional Generation Renewable energy Wholesale trading Distribution Retail Sales Other Operations PUBLICATION OF FINANCIAL FORECASTS OTHER SIGNIFICANT EVENTS OF THE REPORTING PERIOD AND SUBSEQUENT EVENTS Legal aspects Project WEKTOR Activities related to nuclear energy Investment project Opole II Agreement on the exploration for and extraction of shale gas Letter of Intent on joint participation in preparation, construction and exploitation of the first Polish nuclear power plant Decisions of the President of the Energy Regulatory Office related to realisation of LTC Act Changes in the composition of the Management Board of PGE S.A Conclusion of material agreement on hard coal supply for period Conclusion of material agreement for coal supply for the needs of Investment Project Opole II RISKS AND THREATS OF THE PGE CAPITAL GROUP RISK FACTORS CONNECTED WITH MARKET ENVIRONMENT AND GENERAL MACROECONOMIC SITUATION IN POLAND AND IN THE WORLD Risk connected with macroeconomic situation Risk relating to an increasing competition Risk of a decrease in demand for electricity and heat... 62

7 RISK FACTORS CONNECTED WITH REGULATORY AND LEGAL ENVIRONMENT Political risk Risk of instability of legal environment Risk associated with amendments to the support schemes for renewable and cogeneration sources Risk connected with the requirement for licenses Risk resulting from the potential violation of antitrust regulations Risk connected with the programme of CO2 emissions reduction Risk of restrictions with respect to emissions to the environment of substances other than CO2 and of more stringent BAT standards RISK FACTORS CONNECTED WITH THE OPERATING ACTIVITY OF THE PGE CAPITAL GROUP Risk of disruption of fuel supplies and insufficient stocks of fuel Risk connected with mining site rehabilitation expenses Risk connected with weather conditions Risk relating to maintenance, repairs, modernisations and investments Risk of unsettled legal status of the real estates Risk relating to obtaining and cost of external financing (downgrade or withdrawal of the rating of PGE) Risk associated with the decisions of the President of the Energy Regulatory Office regarding the implementation of LTC Act Risk of transfer prices Risk of insufficient insurance protection Risk relating to court, arbitration and administrative proceedings and employees claims Risk of asset impairment RISK FACTORS RELATED TO RISK OF PRICE CHANGE AND CREDIT RISK Commodity price risk Interest rate risk Foreign exchange risk Liquidity risk Credit Risk FACTORS, WHICH IN COMPANY S OPINION, WILL AFFECT THE RESULTS WITHIN AT LEAST THE NEXT QUARTER SHAREHOLDERS HOLDING DIRECTLY OR INDIRECTLY BY SUBSIDIARIES AT LEAST 5% OF THE TOTAL VOTES AT COMPANY S GENERAL MEETING AS AT THE DATE OF THE HALF-YEAR REPORT NUMBER OF SHARES OR RIGHTS TO SHARES OF THE COMPANY HELD BY COMPANY S MANAGERS AND SUPERVISORS, AS OF THE DATE OF SUBMISSION OF THE HALF-YEAR REPORT INFORMATION ON ISSUE, REDEMPTION AND REPAYMENT OF DEBT SECURITIES AND OTHER SECURITIES INFORMATION ON GRANTING BY THE COMPANY OR ITS SUBSIDIARY OF LOAN SECURITIES OR GUARANTEES JOINTLY TO A SINGLE ENTITY OR ITS SUBSIDIARY, IF THE TOTAL VALUE OF THE EXISTING SECURITIES OR GUARANTEES IS EQUIVALENT TO AT LEAST 10% OF COMPANY S EQUITY INFORMATION CONCERNING PROCEEDINGS IN FRONT OF COURT, BODY APPROPRIATE FOR ARBITRATION PROCEEDINGS OR IN FRONT OF PUBLIC ADMINISTRATION AUTHORITIES STATEMENTS OF THE MANAGEMENT BOARD STATEMENT ON THE RELIABLE PREPARATION OF THE FINANCIAL STATEMENTS STATEMENT ON THE ENTITY AUTHORISED TO AUDIT THE FINANCIAL STATEMENTS... 80

8 8 1. Organisation of the Capital Group 1.1. Description of organisation of the Capital Group Capital Group of PGE Polska Grupa Energetyczna S.A. ( PGE Capital Group, the Group, PGE Group ) currently organizes its activities in five main business segments: Wholesale Trading Mining and Conventional Generation ( Conventional Generation ) Includes trading of electricity, related products and fuels. Includes extraction of lignite and generation of electricity and heat from conventional sources and distribution of heat. Distribution of electricity Renewable Energy Includes electricity generation from renewable sources and in pumped storage power plants. Retail sales of electricity

9 9 9 Additionally, the Group also comprises of company, whose main activities are preparation and execution of project of construction of nuclear power plants within First Polish Nuclear Power Plant Program, companies providing IT and telecommunication services and supporting services to companies from the energy and mining sectors like: building, renovation and modernization works and investments in electricity equipment, comprehensive diagnostic tests and measurements of electro energy machines and equipment, management of by-products of coal combustion, development and implementation of above technologies usage as well as rehabilitation of degraded areas. Detailed description of the organization of the PGE Capital Group and the full list of entities subject to consolidation are presented in Note 1 and 3 to the consolidated financial statements.

10 10 Companies comprising the main business segments of PGE Group as at June 30, 2013: Segment Company Conventional Generation 1. PGE Górnictwo i Energetyka Konwencjonalna S.A. ( PGE GiEK S.A. ) 2. Przedsiębiorstwo Energetyki Cieplnej sp. z o.o. Renewable Energy 3. PGE Energia Odnawialna S.A. 4. Bio-Energia S.A. 5. Pelplin sp. z o.o. 6. Żuromin sp. z o.o. 7. Elektrownia Wiatrowa Baltica-1 sp. z o.o. 8. Elektrownia Wiatrowa Baltica-2 sp. z o.o. 9. Elektrownia Wiatrowa Baltica-3 sp. z o.o. 10. Eolica Wojciechowo sp. z o.o. 11. Dong Energy Polska S.A. (currently PGE Energia Natury S.A.*) 12. Dong Energy Renewables Polska sp. z o.o. (currently PGE Energia Natury sp. z o.o.*) 13. Dong Energy Karnice III sp. z o.o. (currently PGE Energia Natury Karnice sp. z o.o.*) 14. Dong Energy Bukowo sp. z o.o. (currently PGE Energia Natury Bukowo sp. z o.o.*) 15. Dong Energy Olecko sp. z o.o. (currently EPW Energia Olecko sp. z o.o.*) 16. Omikron sp. z o.o. (currently PGE Energia Natury Omikron sp. z o.o.*) 17. Kappa sp. z o.o. (currently PGE Energia Natury Kappa sp. z o.o.*) 18. Polska Energia Wiatrowa sp. z o.o. (currently PGE Energia Natury PEW sp. z o.o.*) Wholesale Trading 19. PGE Polska Grupa Energetyczna S.A. ( PGE S.A. ) 20. PGE Trading GmbH Distribution 21. PGE Dystrybucja S.A. Retail Sales 22. PGE Obrót S.A. *The change of firm of the company has not been registered as at the date of this report

11 Changes in organisation of the Capital Group Changes in organisation of the Capital Group in the first half-year of 2013 The changes, which occurred in the Group s structure during the 6-month period ended June 30, 2013, are presented in Note 3 to consolidated financial statements and described below. Shares in subsidiaries and associates In the first half of 2013 PGE Polska Grupa Energetyczna S.A. changed its equity interest in the following entities: on January 17, 2013, the Extraordinary General Meeting of PGE Energia Odnawialna S.A. adopted a resolution to increase the share capital of the company from PLN 217,126, to PLN 308,500,000.00, i.e. by PLN 91,373, by issuing 9,137,350 inscribed shares at a nominal and issue price of PLN 10 per share. All the shares of the company in the increased share capital were acquired by PGE S.A. in exchange for a cash contribution. On February 26, 2013, the share capital increase was registered in the National Court Register. on January 23, 2013 PGE S.A. purchased from a minority shareholder 3,885 shares of EXATEL S.A., constituting % in the share capital of the company. After the above transactions PGE S.A. currently holds 99.98% in the share capital of EXATEL S.A. on March 27, 2013 PGE S.A. and PGE Górnictwo i Energetyka Konwencjonalna S.A. ( PGE GiEK S.A. ) signed an agreement for sale of 100% shares of PGE Gubin sp. z o.o. with its seat in w Gubin. On the ground of the agreement, the property right of 100% shares of PGE Gubin sp. z o.o. was transferred to PGE GiEK S.A. as of March 27, On April 8, 2013 PGE Obrót S.A. signed an agreement with a minority shareholder on squeeze-out of 5,127 bearer shares (the Agreement ), held by the minority shareholder. The purchase of shares was made pursuant to art of the Polish Commercial Companies Code. As a result of the Agreement, on April 15, 2013 the company paid to the minority shareholder the full buyout price for 5,127 shares. Following the execution of the Agreement, all the shares of the Company have been bought out, and PGE Polska Grupa Energetyczna S.A. became the sole shareholder of the company.

12 12 In connection with the above squeeze-out, the company holds 22,222 treasury shares (constituting 0.45% in the share capital of the company), including 21,979 treasury shares, which were purchased by the company through squeeze-out pursuant to art of the Polish Commercial Companies Code and 243 shares not allotted to the shareholders during the consolidation process of companies from PGE Capital Group in In connection with the transactions, PGE S.A. currently holds 99.55% in the share capital of PGE Obrót S.A., being the sole shareholder of the company. In the first half of 2013 PGE S.A. purchased from minority shareholders a total of 2,489 shares of PGE Górnictwo i Energetyka Konwencjonalna S.A. (constituting % in the share capital of PGE GiEK S.A.). On June 28, 2013 the Ordinary General Meeting of PGE Obrót S.A. adopted a resolution on distribution of net profit for 2012 and allocation of part of reserve capital for dividend payment. Part of the dividend was paid in form of dividend in kind through transfer of 16,865,600 shares of PGE Górnictwo i Energetyka Konwencjonalna S.A. by PGE Obrót S.A. to PGE S.A. On July 1, 2013 the ownership right of shares of PGE GiEK S.A. was transferred to PGE S.A. As at July 1, 2013 PGE S.A. held 93.62% in the share capital of PGE GiEK S.A. On June 28, 2013 PGE S.A. and Energa Hydro sp. z o.o. (subsidiary of Energa S.A.) concluded with Dong Energy Wind Power A/S ( DONG Energy ) on June 28, 2013 acquisition agreement of shares in companies operating wind farms and developing portfolios of wind farms in Poland. Concluding of the abovementioned agreement results from conditional agreement concluded on February 19, 2013 and a further approval for concentration issued by the President of the Office of Competition and Consumer Protection dated June 4, 2013 (see Note 3.1. and 3.2. to the consolidated financial statements). On the ground of the acquisition agreement, as of June 28, 2013 the ownership rights of the following companies were transferred to PGE S.A.: Dong Energy Polska S.A. (100%); Dong Energy Renewables Polska sp. z o.o. (100%); Dong Energy Karnice III sp. z o.o. (100%);

13 13 Dong Energy Bukowo sp. z o.o. (100%); Dong Energy Olecko sp. z o.o. (81%). Dong Energy Polska S.A. (current firm of the company is PGE Energia Natury S.A.) is the sole partner in the following companies: Kappa sp. z o.o. (currently PGE Energia Natury Kappa sp. z o.o.), Omikron sp. z o.o. (currently PGE Energia Natury Omikron sp. z o.o.) and Polska Energia Wiatrowa sp. z o.o. (currently PGE Energia Natury PEW sp. z o.o.). On March 5, 2013 PGE Inwest spółka z ograniczoną odpowiedzialnością II S.K.A. in liquidation with its seat in Warsaw was deleted from the National Court Register as a result of liquidation proceeding. PGE S.A. held 100% in the share capital of the company. PGE Inwest Sp. z o.o. was a working partner of the company. On April 12, 2013 ELECTRA Bohemia s.r.o. in liquidation with its seat in Prague (Czech Republic), was deleted from the entrepreneurs register as a result of the liquidation proceeding. Decision on deletion of the company from the register became final on April 28, PGE S.A. held 100% shares in the share capital of the company. In the first half of 2013 PGE Group companies changed their capital exposure in the following entities: On January 7, 2013 the Extraordinary Meeting of Shareholders of Bio-Energia S.A. adopted a resolution on merger of Bio-Energia S.A. (acquiring company) with Biogazownia Łapy sp. z o.o. and Biogazownia Wożuczyn sp. z o.o. (acquired companies) and on changes to the Statutes of the acquiring company pursuant to art. 516 of the Polish Commercial Companies Code. The merger of the companies was registered in the National Court Register on January 31, On January 8, 2013, a conditional sale agreement was signed with regard to the acquisition of shares of Eolica Wojciechowo sp. z o.o. with its seat in Czymanów by the company Greentech Energy Systems A/S. Pursuant to an agreement for sale of shares concluded on January 24, 2013, Greentech Energy Systems A/S sold 9,550 shares to PGE Energia Odnawialna S.A., which constituted 50% of the Eolica Wojciechowo sp. z o.o. share capital. Under the transaction PGE Energia Odnawialna S.A. acquired 100% of shares in the share capital of the company concerned.

14 14 On February 19, 2013 PGE Energia Odnawialna S.A., as the sole partner of the company, on the ground of the resolution of the Extraordinary Assembly of Partners contributed to Eolica Wojciechowo sp. z o.o. a surcharge in the meaning of art. 177 of the Commercial Companies Code in the aggregate amount of PLN 59,999,976, i.e. PLN 3, to each share of the company. On January 10, 2013, a conditional agreement was signed by PGE Energia Odnawialna S.A. and BE-BETON sp. z o.o. for the sale of 100% of Budownictwo Hydro - Energetyka Dychów sp. z o.o. shares owned by PGE Energia Odnawialna S.A. On February 21, 2013, the title to 100% of Budownictwo Hydro Energetyka Dychów sp. z o.o. shares was transferred to the company BE-BETON sp. z o.o. under a conditional sale agreement. On December 21, 2012 PGE GiEK S.A. set up MegaSerwis sp. z o.o. with its seat in Zgorzelec. PGE GiEK S.A. took up 100% in the share capital of that company. The share capital of the company in amount of PLN 100,000 was paid on January 31, On March 21, 2013 the company was registered in the National Court Register. On March 26, 2013 the Extraordinary Assembly of Partners of MegaSerwis sp. z o.o. adopted a resolution on increase of the share capital of the company from PLN 100,000 to PLN 2,100,000, i.e. by PLN 2,000,000, through issue of 2,000 new shares with a nominal value of PLN 1,000 each. All newly issued shares were acquired by PGE GiEK S.A. The company started its operations as of April 1, On March 25, 2013 the Extraordinary Assembly of Partners of ELBEST sp. z o.o. adopted a resolution on change to the articles of partnership, consisting in deletion of some of the types of company s activities. The above changes were registered in the National Court Register on April 2, As of March 31, 2013 the company abandoned activities in the services area and handed over 891 employees to MegaSerwis sp. z o.o., on the ground of art of the Labour Law.

15 15 On April 25, 2013 District Court in Rzeszów decided to repeal the settlement approved on October 11, 2011 by the Meeting of Creditors of MEGA sp. z o.o. with its seat in Miłocin and approved by the decision of October 19, 2011 and to open bankruptcy proceeding involving liquidation of assets of the MEGA sp. z o.o. On June 3, 2013 District Court in Wrocław registered the merger of ELTUR-WAPORE sp. z o.o. with its seat in Bogatynia (acquiring company) with EPO sp. z o.o. with its seat in Opole pursuant to art p. 1 of the Polish Commercial Companies Code, i.e. by transfer of all assets of EPO sp. z o.o. to "ELTUR-WAPORE" sp. z o.o. As a result of the merger the share capital of the acquiring company amounting to PLN 22,631, was raised by PLN 9,350, i.e. to PLN 31,981,500.00, through issue of 18,700 new shares with a nominal value of PLN each. After the merger, the firm of the acquiring company was changed from Przedsiębiorstwo Produkcji Sorbentów i Rekultywacji ELTUR-WAPORE sp. z o.o. to EPORE sp. z o.o. PGE GiEK S.A. holds 54,613 shares in EPORE sp. z o.o. with a nominal value of PLN 27,306, constituting 85.38% of the share capital. On January 7, 2013 the Extraordinary Assembly of Partners of BESTGUM POLSKA sp. z o.o. adopted a resolution on change to the Deed of Foundation of the company, consisting in expansion of activities by rehabilitation and other service activities connected with the waste management. Above change was registered in the National Court Register on January 23, In the 6-month period ended June 30, 2013, PGE Capital Group did not discontinue any of its significant activities.

16 Changes in the organisation of the Capital Group after the balance sheet date On July 5, 2013 PGE S.A. acquired from a minority shareholder 2,000 shares of PGE GiEK S.A. (constituting % in the share capital of PGE GiEK S.A.) (see p of this report). On June 27, 2013 Ordinary General Meeting of PGE S.A. adopted a resolution on merger of PGE S.A. (acquiring company) with PGE Energia Jądrowa S.A. (acquired company), expression of consent to the merger plan and the amendment of the Statute of the acquiring company. The merger was carried out by course of art p. 1, art and art of Code of Commercial Companies i.e. through transfer of all assets of the acquired company to the acquiring company without raising the share capital of the acquiring company and without the issue of new shares of the acquiring company in exchange of acquired company s shares for acquiring company s shares, on the terms agreed in the merger plan. The merger of the companies was registered in the National Court Register on July 31, On July 31, 2013 PGE S.A. jointly with Energa Hydro sp. z o.o. (subsidiary of Energa S.A.) concluded with Iberdrola Renovables Energía, S.A.U. and European Bank for Reconstruction and Development ( EBRD ) two agreements for acquisition of 100% shares in Iberdrola Renewables Polska Sp. z o.o. As a result of these agreements, PGE S.A. acquired 32.7% shares in Iberdrola Renewables Polska Sp. z o.o., comprising of portfolio of operating wind farms with a total capacity of 70.5 MW with contracted off-take of electricity and certificates and pipeline of projects in the advanced stage of development with planned capacity of 36 MW (see Notes 3.1. and 3.2. to the consolidated financial statements).

17 17 2. Activity of PGE Capital Group 2.1. Factors and events affecting results Macroeconomic situation The PGE Group runs its activities mainly in Poland. Therefore it has been and will be dependent on macroeconomic trends existing in Poland. At the same time, in connection with the growing integration, the domestic economy is more and more sensitive to the changes of the economic situation in European Union as well as in the international markets. Condition of the European economy, impact of future regulatory decisions and unstable legal environment makes assessments of development prospects in the European energy sector subject to significant unpredictability. As a rule, there is a positive correlation between the growth of electricity demand and economic growth. Thus, the macroeconomic situation of Poland has an impact on financial results achieved by the PGE Group. Falling electricity prices in Poland and in Europe as a consequence of weaker demand for electricity and considerably higher share of subsidized renewable energy sources in the total energy output reduced the profitability levels of conventional sources of electricity generation, and in certain cases even led to their total elimination. This is particularly relevant to gas-fired power plants and the least efficient coal-fired plants. Weakening economic conditions in the 6-month period ended June 30, 2013 resulted in decreased demand for electricity in the National Power System, that was by approximately 1.0% lower in comparison to the 6-month period ended June 30, Table: Key economic ratios connected with the Polish economy. Key data H H Real GDP growth (% of growth) 1 0.7* 2.9 Annual CPI rate (% of growth) Domestic electricity consumption (% of growth) Domestic electricity consumption (TWh) * estimates by Bank Handlowy w Warszawie S.A. 1 Source: Polish Central Statistical Office, real growth of GDP in constant previous year s price, with corresponding period of preceding year = 100; 2 Polish Central Statistical Office, inflation rate, with corresponding period of preceding year = 100; 3 PSE S.A.

18 Tariffs PGE Group companies earn part of their income based on tariffs approved by the President of the Energy Regulatory Office: I. tariffs for the sale of electricity to households (G tariff group); II. III. tariffs of distribution system operators tariffs for heat. Sales of electricity In the 6-month period ended June 30, 2013 sales of electricity to recipients from the G tariff group, connected to the distribution network of PGE Dystrybucja S.A., took place on the basis of electricity Tariff approved by the decision of the President of the Energy Regulatory Office of December 16, 2011, whose validation was prolonged to June 30, 2013 by the decision of the President of the Energy Regulatory Office of December 20, Approved Tariff came into force on January 1, 2012 no changes to the prices were introduced. As of July 1, 2013 sales of electricity to G-tariff customers connected to the grid of PGE Dystrybucja S.A. is taking place on the ground of tariff set for PGE Obrót S.A. with its seat in Rzeszów approved by the decision of the President of the Energy Regulatory Office of June 11, In the 6-month period ended June 30, 2013 sales of energy to the corporate customers (key and business) and to individuals (other than G tariff customers connected to the distribution network of PGE Dystrybucja S.A.), took place on the basis of Tariff for customers from A, B, C and R tariff groups, approved by the resolution of the Management Board of PGE Obrót S.A. and effective from December 1, 2011, as well as on the basis of public promotional offers and individually negotiated sale conditions.

19 19 Distribution of electricity Methodology of and assumptions for tariffs determination were published in the document Tariffs for the DSO for the year 2013, which were prepared by the President of the Energy Regulatory Office and provided to distribution system operators. Tariff of PGE Dystrybucja S.A. for 2013 was approved by the President of the Energy Regulatory Office on December 19, Tariffs for 2013, according to resolution of the Management Board of PGE Dystrybucja S.A, dated December 21, 2012, came into force on January 3, 2013 except for the transition fee (according to the decision of the President of the Energy Regulatory Office, the transition fee has been in force since January 1, 2013). Distribution tariffs for 2012 approved by the President of the Energy Regulatory Office, contributed to changes in average payments for customers in particular tariff groups in comparison to year 2012: A tariff group decrease by 0.31%; B tariff group increase by 1.42%; C+R tariff group increase by 1.97%; G tariff group increase by 1.39%. An average price of energy distribution services in comparison to last tariffs binding in 2012 increased by approximately 1.10 %. During the reporting period the approved tariffs for distribution services were not subject to any changes.

20 20 Tariff for heat Pursuant to art. 47 sections 1 and 2 of the Energy Law, energy companies, which hold licences, set tariffs for heat and propose their duration. Submitted tariff is subject to the approval by the President of the Energy Regulatory Office, provided that it is consistent with rules and regulations referred to in art of the Energy Law. Detailed rules for tariffs determination are defined in the Regulation of the Polish Minister of Economy of September 17, 2010 on detailed rules for calculation of tariffs and on settlements with regard to heat supply. Conduction of proceedings concerning heat tariffs approval lies within the competence of regional Branches of Energy Regulatory Office. At present, costs recognized by the President of the Energy Regulatory Office as justified costs to calculate tariffs for PGE Group companies are lower than costs actually incurred by these companies Electricity prices The electricity market, in a regulated segment, is based on the operation of power exchanges and trading platforms. After Warsaw Stock Exchange stopped the trading of commodities as of March 31, 2013, exchange trading of electricity has been concentrated on Towarowa Giełda Energii ( TGE ). Total turnover on TGE in the first half of 2013 accounted for approx. 73% of the regulated market sales. Other trading operations were carried out on trading platforms: Tradition Financial Services ( TFS ) (approx. 22% of market share), and GFI Brokers ( GFI ) (approx. 5%). Trading conditions on the electricity wholesale market are subject to constant changes. The introduction of the so-called power exchange obligation, i.e. electricity generators obligation to sell energy on power exchange markets or regulated markets (art. 49a clause 1 and 2 of the Energy Law) brought about increasing turnovers on TGE, in particular in the futures and forward contracts segment. In the first half of 2012 futures and forward trading on TGE accounted for almost 39% of the organised futures and forward market, while in the first half of 2013 it reached 70%. The SPOT market on TGE is based on the Day Ahead Market and the Intra Day Market, where transactions for hourly contracts and block transactions in baseload, peakload and off-peak hours are concluded.