Financial situation

Financial highlights of the PGNiG Group in 2018–2020

PGNiG Group	2020	2019	2018	2020/2019 change (%)	2020/2019 change
Revenue	39,197	42,023	41,234	(7%)	(2,826)
Total operating expenses	(29,612)	(39,575)	(36,839)	(25%)	9,963
Operating profit before interest, taxes, depreciation and amortisation (EBITDA)	13,009	5,504	7,115	136%	7,505
Depreciation and amortisation expense	(3,424)	(3,056)	(2,720)	12%	(368)
Operating profit	9,585	2,448	4,395	292%	7,137
Profit before tax	9,025	2,159	4,502	318%	6,866
Net profit	7,340	1,371	3,209	435%	5,969
Net cash from operating activities	14,118	4,938	5,814	186%	9,180
Net cash from investing activities	(6,254)	(6,152)	(4,704)	2%	(102)
Net cash from financing activities	(3,653)	327	237	(1,217%)	(3,980)
Net increase/(decrease) in cash and cash equivalents	4,211	(887)	1,347	(575%)	5,098
	December 31st 2020	December 31st 2019	December 31st 2018	2020/2019 change (%)	2020/2019 change
Total assets	62,871	59,185	53,271	6%	3,686
Non-current assets	46,243	43,939	38,898	5%	2,304
Current assets, including	16,628	15,246	14,373	9%	1,383
Inventories	2,684	4,042	3,364	(34%)	(1,358)
Total equity and liabilities	62,871	59,185	53,271	6%	3,686
Total equity	44,125	38,107	36,632	16%	6,018
Total non-current liabilities	11,666	10,378	7,255	12%	1,288
Total current liabilities	7,080	10,700	9,384	(34%)	(3,620)
Total liabilities	18,746	21,078	16,639	(11%)	(2,332)

Consolidated statement of profit or loss

Revenue

Revenue in 2019–2020 by business segment

E&P : revenue from sales of type E and type Ls/Lw gas down PLN -596m (-19%) y/y and revenue from sales of crude oil and condensate down PLN -662m (-29%) y/y.

T&S: revenue from sales of gas down -10% y/y (PLN -2,890m).

Distribution: revenue from distribution services higher by 4% (PLN 181m), with a 3.5% increase in the distribution tariff.

Generation: 10% y/year increase in revenue from sales of heat (PLN 139m), with the average air temperature lower by 0.4^oC y/y and 1% (323GJ) decrease in volumes of heat sales; revenue from sales of electricity from own generation down -4% y/y (PLN -35m), with sales volumes down -8% (by -311 GWh).

Operating expenses

Operating expenses in 2019–2020

Significant decrease in gas costs by 44% y/y (by PLN 11.8bn), mainly due to change of price under the annex to the Yamal contract with PAO Gazprom/OOO Gazprom Export – gas costs for 2014-2019 adjusted downward by PLN 4,915m.

Increase in consumption of other raw materials and consumables by PLN -247m y/y (-8%), including electricity for commercial purposes by PLN -327m y/y (-22%).

Employee benefits expense up by -7% yoy (PLN -213m), driven mainly by higher employee benefits in the Distribution segment.

Cost of 8 dry wells and seismic surveys totalled PLN -198m in 2020 vs PLN -258m (10 dry wells) in 2019.

Recognition of impairment loss on non-current assets in 2020: PLN -1,588m, vs 2019: PLN -400m.

Effect of reversal of a gas inventory write-down at PLN +358m. In 2019, recognition of gas inventory write-downs at PLN -258m.

Depreciation of PLN -3,424m in 2020, PLN -573m in Norway.

EBITDA

Net finance costs and net profit or loss

In 2020, net finance costs were PLN 35m and included mainly interest on lease liabilities (PLN -75m), exchange differences (PLN 47m) and other net finance costs (PLN 50m).

After accounting for profit or loss on equity-accounted investments of PLN -595m (of which PLN -612m is the effect on the consolidated net profit or loss of the PGNiG Group of accounting for PGG shares using the equity method) and tax expense of PLN -1,685m, the Group’s net profit for 2020 was PLN 7,340m, having increased by PLN 5,969m year on year.

For detailed notes on finance income and costs (Note 3.4) equity-accounted investees (Note 2.4) and income tax (Note 4.1), see the consolidated financial statements of the PGNiG Group for 2020.

Overview of segment results

Segment performance

Fluctuations in financial performance

The sale, distribution and storage of gas fuels, as well as cogeneration of heat and electricity, which, in addition to hydrocarbon exploration and production, constitute the principal business of the PGNiG Group, are subject to significant seasonal fluctuations.

Revenue from sales of natural gas and heat in the winter season (Q1 and Q4) is substantially higher than in summer (Q2 and Q3). This is due to the seasonal changes in weather conditions in Poland, and the extent of the fluctuations is determined by temperatures – low in winter and higher in summer. Revenue from gas and heat sales is subject to much greater seasonal changes in the case of households, where gas and heat are used for heating, than in the case of industrial customers.

To ensure uninterrupted gas supplies in periods of peak demand and for reasons of security of the supplies, the underground gas storage facilities must be restocked in summer, and higher transmission and distribution capacities must be reserved for the winter season.

The performance of individual segments is also subject to significant fluctuations driven by changes in product prices. Moreover, the performance of the Exploration and Production segment reflects changes in hydrocarbon production profiles.

Quarterly EBITDA and adjusted EBITDA by operating segments in 2020

2020
PLNm	PGNiG Group	Exploration and Production	Trade and Storage	Distribution	Generation
Q1 EBITDA	2,078	71	909	771	416
Adjusted Q1 EBITDA	2,835	829	909	769	416
Q2 EBITDA	7,274	173	6,646	405	117
Adjusted Q2 EBITDA	7,371	267	6,647	408	117
Q3 EBITDA	1,333	478	632	362	35
Adjusted Q3 EBITDA	1,288	433	632	362	35
Q4 EBITDA	2,324	207	1,392	618	362
Adjusted Q4 EBITDA	3,104	883	1397	623	369

Quarterly EBITDA and adjusted EBITDA by operating segment in 2019

2019
PLNm	PGNiG Group	Exploration and Production	Trade and Storage	Distribution	Generation
Q1 EBITDA	2,218	1,298	(71)	633	400
Adjusted Q1 EBITDA	2,200	1,280	(71)	632	400
Q2 EBITDA	962	692	(162)	491	62
Adjusted Q2 EBITDA	1,202	898	(160)	487	62
Q3 EBITDA	803	676	(221)	415	(19)
Adjusted Q3 EBITDA	755	630	(221)	414	(19)
Q4 EBITDA	1,521	694	(16)	456	413
Adjusted Q4 EBITDA	1,747	906	(14)	457	413

Consolidated statement of financial position

As at December 31st 2020, total assets recognised in the consolidated statement of financial position were PLN 62,871m, having increased by PLN 3,686m (approximately 6%) on the end of 2019.

Assets

Property, plant and equipment represent the largest item of the PGNiG Group’s assets. As at December 31st 2020, property, plant and equipment amounted to PLN 42,565m, having increased by PLN 2,563m (6%) relative to December 31st 2019. Equity-accounted investees fell by PLN -598m (or -38%) year on year, mainly as a result of remeasurement of the investment in Polska Grupa Górnicza S.A.

As at the end of 2020, the PGNiG Group’s current assets were PLN 16,628m, having increased by PLN 1,382m (9% y/y), with a 134% year-on-year increase in cash and cash equivalents (PLN 4,061m). At year-end 2020, inventories fell by PLN 1,358m (-34%) year on year, to PLN 2,684m.

Equity and liabilities

The main source of financing for the PGNiG Group’s assets is equity, whose value at the end of 2020 was PLN 44,125m, which represents an increase of PLN 6,018m (16% y/y) relative to 2019. The change in equity was mainly attributable to net profit earned in the reporting period – retained earnings increased by PLN 6,842m y/y, and hedging reserve grew by PLN 755m yoy.

As at the end of 2020, non-current liabilities were PLN 11,666m, having increased by PLN 1,288m (12% y/y) on December 31st 2019. The change in non-current liabilities is attributable, among other things, to an increase in the provision for decommissioning, restoration and rehabilitation costs – an increase of PLN 731m (29% y/y) in 2020.

As at December 31st 2020 the PGNiG Group had current liabilities of PLN 7,080m, that is less by PLN -3,620 (-34%) year on year. The decrease was mainly attributable to a PLN -2,920m decrease in debt (-90% y/y).

For the full version of the consolidated statement of financial position, see the consolidated financial statements of the PGNiG Group for 2020.

Consolidated statement of cash flows

PGNiG Group capital expenditure in 2020 by segment: Exploration and Production: PLN 2.6bn; Trade and Storage: PLN 0.1bn; Distribution: PLN 2.95bn and Generation: PLN 1.1bn.

Dividends paid of PLN 520m (PLN 0.09 per share)

For the full version of the consolidated statement of cash flows, see the consolidated financial statements of the PGNiG Group for 2020.

Profitability ratios

ROE: net profit to equity at end of period

The year-on-year rise of the ROE and ROA ratios in 2020 was due to the increase in net profit for the year as a result of signing the annex to the Yamal contract.

ROA: net profit to assets at end of period

The year-on-year rise of the ROE and ROA ratios in 2020 was due to the increase in net profit for the year as a result of signing the annex to the Yamal contract.

Net margin: net profit to revenue.

The year-on-year rise of the ROE and ROAratios in 2020 was due to the increase in net profit for the year as a result of signing the annex to the Yamal contract.

Anticipated financial condition and trends on key product markets

In the coming periods, the financial standing of the PGNiG Group will be materially affected by changes in the prices of hydrocarbons on global commodity markets and fluctuations in foreign exchange rates. These factors will be a material driver of the PGNiG Group’s performance in the Exploration and Production and Trade and Storage segments. Any changes in hydrocarbon prices affect revenues of the Group entities engaged in production, and determine the demand for seismic and exploration services offered by the Group companies. Rising gas and crude oil prices have a positive effect on the performance of the Exploration and Production segment. Long-term forecasts of hydrocarbon prices strongly influence projected cash flows from production assets, and as a consequence entail the necessity of revaluation of property, plant and equipment.

On the other hand, since the prices of gas purchased by PGNiG under the Yamal and Qatar contracts are linked to prices of crude oil, the effect of rising oil prices on the performance of the Trade and Storage segment is opposite to the effect that rising oil prices have on the performance of the Exploration and Production segment. Any increase in crude oil prices translates into higher cost of gas purchased by PGNiG. This relationship was significantly limited in the case of the Yamal contract thanks to the ruling of the Arbitration Court in Stockholm in favour of PGNiG concerning the pricing formula used in the Yamal contract. The PGNiG Group’s financial results will also be influenced by the situation on the domestic currency market. Any strengthening of the złoty against foreign currencies (primarily the US dollar) will have a positive effect on the performance of the Trade and Storage segment by driving down PGNiG’s gas procurement costs, although it must be noted that the effect of exchange rate fluctuations is mitigated by the PGNiG Group’s hedging policy.

Another factor with a bearing on the PGNiG Group’s financial condition is the President of URE’s decisions on gas fuel sale and distribution tariffs and heat sale tariffs. In addition, the progressing deregulation of the gas market in Poland will continue to put pressure on the performance of the PGNiG Group’s Trade and Storage companies selling gas. In view of the competition for customers, the Group offers discount schemes to customers and adjusts pricing terms to reflect market prices. These factors may have an adverse effect on the profitability of the Trade and Storage segment by eroding its margins.

However, the PGNiG Group companies have put in place a number of initiatives to improve efficiency. These initiatives focus, among other things, on optimisation of the cost base and are expected to have a positive effect on the PGNiG Group’s financial results.

In the Generation segment, financial results will be considerably influenced by the support programmes for electricity produced from high-efficiency cogeneration sources and renewable sources. Changes in the market prices of CO₂ emission allowances will have an increasing effect on the PGNiG Group’s financial condition in the segment. Another key driver of the segment’s performance is prices of the fuels used to produce heat and electricity.

In early 2021, the United States Energy Information Administration (EIA) published its 2021 Brent crude price forecast, which puts the average month-ahead contract price for Brent at USD 52.75/bbl. Based on EIA’s projections, WTI will trade at USD 49.75/bbl. EIA explains that the absence of major price changes is due to the balancing effects of high inventories and the expansion of COVID-19 vaccination programmes, which are expected to bring demand back to the level seen in 2019. Despite the continued shortage of crude on the markets, the low price is attributed to the increasing supply from OPEC+ countries.

In the longer term, oil prices may be driven by the global economic situation and the United States’ domestic energy policy. Higher hydrocarbon prices in 2021 could lead to recovery of much of the production that was halted due to sharp declines in the second quarter of 2020. However, the weak global economy may still make these prices insufficiently attractive and access to finance for new projects may prove difficult.

The price of Brent crude in 2021 will be vulnerable to decisions by OPEC+ countries, which are currently keeping supply cuts high, but resurgent demand could prompt the group to increase production to maintain or increase market share. A slow increase in supply could push the price above USD 60 per barrel of Brent crude, but this would give a strong supply boost to non-OPEC+ countries in 2022. In the long term, the likely scenario is a consistent but not very dynamic increase in prices as a result of rising global demand, which will lead to pressures for oil to be obtained from sources that are increasingly expensive to maintain.

According to analysts, the price of natural gas in Europe will remain at a similar average level to that seen in 2020, but with a smaller price amplitude throughout the year. Increased shale gas production in North America and Australia and the launch of new natural gas liquefaction plants will bring LNG production back to rapid growth. In 2021, liquefaction capacities of approximately 133 TWh are planned to be put into service, of which 69 TWh will be located in the United States. In a positive scenario of the world recovering from the pandemic, this expansion will not result in price falls due to the relatively low filling of European storage facilities and rising demand in Asia. LNG regasification terminals with a total capacity of 982.8 TWh are also expected to be commissioned or extended in 2021. On the European market, the coming into operation of the Nord Stream 2 gas pipeline may provide a negative price impulse. Higher and diversified import capacities may lead to smaller price differences between the summer and winter seasons.

The price of CO₂ emission allowances (EUAs) will mainly depend on the cost of gas-fired generation and the efficiency of renewable energy sources. The current situation, with high winter gas prices (which encourage coal burning) and low RES generation, has pushed EUA prices above EUR 30/t CO₂. The European Union employs a mechanism to limit the supply of certificates each year. The smaller amount of EUAs available to EU Member States is intended to discourage them from producing electricity from conventional sources. Member States’ efforts to dynamically increase the share of RES in the national energy mix may halt the increase in certificate prices over the next few years, but analysts expect a stable, strong increase after 2025.

Based on analysts’ forecasts, in 2021 electricity prices in Poland will not be higher than the average prices in 2020. Commissioning of new RES generation capacities and stable EUA certificate prices may depress electricity prices in the short term. However, the slower pace of change in the Polish energy mix may lead to higher energy prices, especially after the EU’s 2025 targets are met. The rising cost of CO₂ emission certificates could have a very strong impact on the price, especially if the reduction in coal generation is not significant.

Financial and operating forecasts

The Company does not publish performance forecasts. In the strategy released in 2017, the Company announced its plans to generate cumulative Group EBITDA of approximately PLN 33.7bn in 2017–2022 thanks to an investment programme. As at the end of 2020, cumulative EBITDA reached PLN 32.2bn, representing 96% of the target to be achieved by 2022.

On January 27th 2021, PGNiG published its oil and gas production forecasts for 2021–2023.

Natural gas production forecast for 2021–2023*

bcm	2021	2022	2023
Poland	3.8	3.8	4.0
Other countries, including:	1.2	1.4	1.3
– Norway	0.9	1.1	1.0
– Pakistan	0.3	0.3	0.3
Total	5.0	5.2	5.3

* Converted to gas with a calorific value of 39.5 MJ/m3.

Natural gas production in Poland should remain stable over the years to come. The expected decrease in gas production volumes in 2021 is due to the lengthened project timelines caused by the pandemic, and in 2022 – due to an extended shutdown of the Lubiatów facility. Production is expected to increase in 2023 following completion of capex projects involving development of new fields and connection of new wells.

Lower gas production forecasts in Pakistan are due to delays in construction of technical facilities and the local lockdown caused by the pandemic situation. Growth in gas production in Norway in 2021–2023 will be driven by the acquisition of the Kvitebjørn and Valemon fields, and by the planned launch of production from the Snadd Outer, Duva and other wells drilled on the Ærfugl structure.

Crude oil production forecast, including condensate and NGL, for 2021–2023

thousand tonnes	2021	2022	2023
Poland	667	612	616
Other countries, including:	633	918	771
– Norway	633	918	771
Total	1,300	1,530	1,387

The 2021 oil production forecasts reflect a number of factors, including the postponement of a project to develop the Kamień Mały field from 2020 to 2022 and lower oil output at the Lubiatów facility. Production volumes are expected to fall in 2022–2023 as a result of a planned extended shutdown of the Lubiatów facility related to its expansion and connection of the Międzychód-8h well in 2022. The planned extended shutdown of the Dębno facility related to its expansion will affect oil production volumes in 2023.

Over the forecast period 2021–2022, the natural decline in oil production will decelerate, as a consequence of the acquisition of the Kvitebjørn and Valemon fields, and of the planned launch of production from the Snadd Outer, Duva, Gråsel and other wells drilled on the Ærfugl structure. In addition, work is being planned to boost production from the Morvin field. The decline in production volumes in Norway expected in 2023 is due to natural depletion. However, the Company is taking steps to acquire new oil and gas reserves in Norway.

Management of financial resources and liquidity of the PGNiG Group

Borrowings and debt securities

On October 28th 2020, PGNiG executed Annex 1 to the PLN 5bn Notes Programme Agreement of December 21st 2017 with the following issue arrangers: ING Bank Śląski S.A., Bank Polska Kasa Opieki S.A., Bank Handlowy w Warszawie S.A. and Bank BNP Paribas Bank Polska SA. Annex 1 aligns the Programme with the current legal framework and extends the Programme until October 28th 2025. Under the Programme, PGNiG may issue fixed- or floating-rate notes with maturities of up to 10 years or zero-coupon notes as part of a public or private offering. The notes may be introduced to trading on the Catalyst multilateral trading facility. Proceeds from the notes will be used to satisfy the PGNiG Group’s day-to-day financial needs related to the implementation of its strategy. No securities were issued under the Programme in the reporting period.

PGNiG Group’s key credit facility agreements as at December 31st 2020

Bank	Maximum debt amount under the agreement (million)	Currency	Interest rate type	Facility type	Maturity date
Syndicate of eight banks	500	USD	variable	working capital/
investment facility	June 30th 2026
Bank Gospodarstwa Krajowego	271	PLN	variable	long-term facility	August 27th 2027
Pekao S.A.	75	PLN	variable	overdraft facility	July 16th 2021
Bank Gospodarstwa Krajowego	45	PLN	variable	investment facility	December 31st 2023
Pekao S.A.	20	PLN	variable	overdraft facility	June 27th 2025
Deutsche Bank	35	EUR	variable	short-term working capital overdraft facility	on demand
PKO Bank Polski	20	EUR	variable	short-term working capital overdraft facility	March 31st 2021

For detailed information on loans advanced by PGNiG to its subsidiaries and other related entities, see Note 7.4 to the separate financial statements of PGNiG for 2020.

Issues of securities and use of proceeds

In 2020, the PGNiG Group could issue notes under one programme. For detailed information on the effective terms and utilisation of the programme, as well as debt under securities in issue, see Note 5.2 to the consolidated financial statements of the PGNiG Group for 2020.

As at December 31st 2020, PGNIG had no outstanding debt under notes issued to other PGNiG Group members.

Financial instruments

Summary of main financial assets by category

		2020				2019
Item	Item referenced in Note	Financial assets at amortised cost	Financial assets at fair value through profit or loss	Financial instruments designated for hedge accounting	Total	Loans and receivables at amortised cost	Financial assets at fair value through profit or loss	Financial instruments designated for hedge accounting	Total
Receivables	Trade receivables	4,449	–	–	4,449	4,511	–	–	4,511
Derivative financial instruments		–	1,004	449	1,453	–	1,539	1,088	2,627
Cash and cash equivalents		7,098	–	–	7,098	3,037	–	–	3,037
Total		11,547	1,004	449	13,000	7,548	1,539	1,088	10,175

Summary of main financial liabilities by category

		2020				2019
Item	Item referenced in Note	Financial liabilities at amortised cost	Financial liabilities at fair value through profit or loss	Financial instruments designated for hedge accounting	Total	Financial liabilities at amortised cost	Financial liabilities at fair value through profit or loss	Financial instruments designated for hedge accounting	Total
Financing liabilities	Bank borrowings	1,995	–	–	1,995	4,893	–	–	4,893
Financing liabilities	Debt securities	–	–	–	–	–	–	–	–
Trade and tax payables	Trade payables	1,199	–	–	1,199	1,608	–	–	1,608
Derivative financial instruments		–	780	618	1,398	–	991	305	1,296
Total		3,194	780	618	4,592	6,501	991	305	7,797

For detailed information on financial instruments, see Note 7.1 to the consolidated financial statements of the PGNiG Group for 2020.

Debt ratios

Net debt is defined as the total amount of existing bank borrowings (both short-term and long-term), debt securities, lease liabilities and liabilities under non-bank borrowings, less cash and cash equivalents and cash classified as non-current assets.

For the purposes of the PGNiG Group’s debt analysis the Management Board uses the net debt/EBITDA ratio. In accordance with the Strategy, this ratio should not exceed 2.0.

In 2020, the ratios decreased due to the lower amount of liabilities and the higher EBITDA.

Total debt ratio: total liabilities to total equity and liabilities

Debt to equity ratio: total liabilities to equity

In 2020, the ratios decreased due to the lower amount of liabilities.

Liquidity ratios

Current ratio: current assets to current liabilities (net of employee benefit obligations, provisions and deferred income)

Quick ratio: current assets less inventories to current liabilities (net of employee benefit obligations, provisions and deferred income)

In 2020, the ratios increased due to the lower amount of current liabilities.

The PGNiG Group actively manages its financial resources by optimising both its debt structure and financing costs. PGNiG Group companies adapt the form of financing to its purpose (operating or investing activity) and to its term. The forms of financing available to PGNiG Group companies include credit facilities, finance leases and intra-Group loans advanced by PGNiG.

An important tool improving the efficiency of financial resources management is the liquidity management system in which the balances of specified bank accounts of PGNiG and its subsidiaries can be aggregated (cash pooling). Thanks to the cash pooling system within the Group, cash of entities with excess liquidity is used to finance the operations of entities recording cash deficits. The result is improved efficiency of cash management within the PGNiG Group, but also a material reduction in interest expenses incurred by companies financing their cash deficits through the system.

While assessing the efficiency of financial resources management, a noteworthy fact is the optimum diversification of the portfolio of financial institutions. It should also be noted that, thanks to the diversity of available financing sources and liquidity management tools at the PGNiG Group, the Group companies are able to timely fulfil their financial obligations.

The Group has a stable financial position, with cash flows and available sources of financing enabling it to carry out its planned investment projects. The PGNiG Group manages its capital expenditure structure depending on the market situation, and focuses on the most efficient investment projects. For information on key investment projects planned for the coming years, see Capital expenditure in 2021.

Sureties, guarantees and other contingent assets and liabilities

As at December 31st 2020, guarantees and sureties were the most significant item of the PGNiG Group’s contingent liabilities, with the total value disclosed in the consolidated statements at PLN 4.8bn (PLN 3.8bn as at December 31st 2019).

The largest guarantee was issued by PGNiG to the Norwegian government for PGNiG UN’s work on the Norwegian Continental Shelf, for the total amount of PLN 2.9bn at year-end 2020 (PLN 2.7bn at year-end 2019).

Guarantee and surety agreements concluded in the reporting period, for a total amount of PLN 1.42bn, were primarily intended as security for gas supplies.

PGNiG’s financial data for 2018–2020

PGNiG	2020	2019	2018	2020/2019 change	2020/2019 change (%)
Revenue	21,237	22,615	22,344	(1,378)	(6%)
Total operating expenses, including	(13,342)	(22,229)	(20,505)	8,887	(40%)
Operating profit before interest, taxes, depreciation and amortisation (EBITDA)	8,714	1,241	2,637	7,472	602%
Depreciation and amortisation expense	(819)	(856)	(798)	37	(4%)
Operating profit	7,895	386	1,839	7,509	1,945%
Profit before tax	8,490	1,989	3,677	6,501	327%
Net profit	6,909	1,748	3,289	5,161	295%
Net cash from operating activities	9,394	1,989	2,658	7,405	372%
Net cash from investing activities	(2,794)	(2,256)	644	(538)	24%
Net cash from financing activities	(3,591)	(52)	(138)	(3,539)	6,806%
Net increase/(decrease) in cash and cash equivalents	3,009	(319)	3,164	3,328	(1,043%)
	December 31st 2020	December 31st 2019	December 31st 2018	2020/2019 change	2020/2019 change (%)
Total assets	43,746	41,044	36,993	2,702	7%
Non-current assets	30,737	28,885	25,742	1,852	6%
Current assets, including	13,009	12,159	11,251	850	7%
Inventories	2,070	3,230	2,691	(1,160)	(36%)
Total equity and liabilities	43,746	41,044	36,993	2,702	7%
Total equity	36,230	30,618	28,833	5,612	18%
Total non-current liabilities	3,871	3,315	2,551	556	17%
Total current liabilities	3,645	7,111	5,609	(3,466)	(49%)
Total liabilities	7,516	10,426	8,160	(2,910)	(28%)

In 2020, PGNiG reported EBITDA of PLN 8,714m, PLN 7,473m more year on year. Changes in EBITDA by segment are presented in the chart below.

The EBITDA increase (PLN +9,693m) in the Trade and Storage segment was mainly attributable to PGNiG winning the arbitration proceedings before the Arbitration Court of Stockholm in the dispute concerning the price terms of the Yamal contract. The award issued in the proceedings obliged Gazprom to pay back to PGNiG the overpaid amounts for the purchase of high-methane gas in 2014−2020. The segment’s EBITDA also benefited from a change in inventory write-downs.

The decrease in EBITDA (PLN -1,894m) in the Exploration and Production segment is primarily attributable to a lower result on sales of gas and crude oil due to lower unit selling prices caused by the decline in commodity prices on global exchanges. The segment’s EBITDA was also adversely affected by a change in gas inventory write-downs. The decrease in EBITDA (PLN -326m) in the other segments was mainly attributable to foreign exchange gains and losses.

Financial ratio analysis

Profitability

ROE: net profit to equity at end of period

ROA: net profit to assets at end of period

The year-on-year rise of the ROE and ROA ratios in 2020 was due to the increase in net profit for the year as a result of PGNiG winning the dispute with Gazprom.

Net margin: net profit to revenue

The year-on-year rise of net margin in 2020 was due to the increase in net profit for the year as a result of PGNiG winning the dispute with Gazprom.

Debt ratios