PGNiG: Recommendation of the PGNiG Management Board concerning distribution of the 2011 net profit and allocation of retained earnings

The Management Board of Polskie Górnictwo Naftowe i Gazownictwo SA ("PGNiG", the "Company") hereby reports that on April 25th 2012 it resolved to recommend that the General Meeting of PGNiG allocate the 2011 net profit of PLN 1,615,690,672.36 to the Company's statutory reserve funds, with the allocation of that amount resting within the powers of the PGNiG General Meeting. The PGNiG Management Board also proposed to allocate retained earnings of PLN 72,471,800.88 to the Company's statutory reserve funds.The recommendation reflects the PGNiG Group's ambitious investment programme, involving exploration for crude oil and conventional and unconventional gas, construction and extension of gas production and storage facilities, extension of distribution network and energy projects, which requires the Company to incur a total capital expenditure of approx. PLN 8 billion in 2012 (including PLN 3 billion for finalised acquisition of the shares of Vattenfall Heat Poland SA). As the gas purchase cost incurred by the Company in the fourth quarter of 2011 and the first quarter of 2012 was not reflected in its gas fuel tariff, dividend payment to shareholders could hinder execution of the investment tasks planned by the Company under the investment programme.Upon receipt of the PGNiG Supervisory Board's opinion on this matter, the Management Board will request the General Meeting to adopt a relevant resolution concerning profit distribution.