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Financial information
The past year ushered in a series of challenges for the companies in the fuel sector. The decisions made by us have demonstrated that we are able to take rapid steps to adapt to a demanding environment and ensure the desired profitability for our projects.
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Segment performance
The segmental management model we have implemented enhances management efficiency, delivering cost and revenue synergies across the organization.
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Letter from the Vice-President of the Board
2014 ushered in a series of challenges for the companies in the fuel sector. The decisions made by the LOTOS Group have demonstrated that we are able to take rapid steps to adapt to a demanding environment and ensure the desired profitability for our projects.
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Business environment
The key factor that had a strong impact on both the global and Polish petroleum markets in 2014, with significant consequences for the LOTOS Group’s performance, was the price of crude oil, which also determined the price of petroleum products.
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Strategic objectives
The LOTOS Group’s Strategy is designed to strengthen our position as a strong, innovative and efficient business which plays a major role in ensuring national energy security.
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Business model
Our operations consist in crude oil production and processing, as well as wholesale and retail sale of petroleum products, among which are: fuels (unleaded gasoline, diesel oil and light fuel oil), heavy fuel oil, bitumens, aviation fuel, naphtha, propane-butane LPG and base oils.
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Risk and opportunities
At the LOTOS Group, we identify a range of diverse risks, which may affect all areas of our business. The key risks in terms of their impact on our operations are the financial risks as well as risks affecting the exploration and production area. In the analysis of the risks, we also factor in issues related to sustainable development.
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Key data 2014
With revenue of ca. PLN 28.5bn in 2014, we rank fourth in the group of 500 largest businesses in Poland.
Consolidated statement of cash flows
Consolidated statement of cash flows for 2014
prepared using the indirect method
| PLN ’000 | Note | Year ended Dec 31 2014 |
Year ended Dec 31 2013 |
|---|---|---|---|
| (restated) | |||
| Cash flows from operating activities | |||
| Net profit | (1,466,372) | 39,428 | |
| Adjustments: | 2,904,163 | 1,388,160 | |
| Income tax | 10.1 | (657,343) | (98,104) |
| Share in net loss of equity-accounted associates | 16 | 24,465 | 18,131 |
| Depreciation and amortisation | 9.1 | 808,941 | 642,480 |
| Foreign exchange (gains)/losses | 366,720 | 119,591 | |
| Interest and dividends | 168,177 | 170,636 | |
| (Gain)/loss from investing activities | 16,356 | (6,401) | |
| Impairment losses on property, plant and equipment and other intangible assets |
9.3; 9.4 | 806,141 | (550) |
| Settlement and valuation of financial instruments | 9.5; 9.6 | 197,849 | (112,861) |
| Decrease in trade receivables | 185,148 | 18,998 | |
| (Increase)/decrease in other assets | (6,376) | 4,453 | |
| Decrease in inventories | 1,811,755 | 232,487 | |
| (Decrease)/increase in trade payables | (702,398) | 242,659 | |
| (Decrease)/increase in other provisions and liabilities | (120,389) | 140,907 | |
| Increase in employee benefit obligations | 5,117 | 15,734 | |
| Income tax paid | (57,303) | (11,311) | |
| Net cash from operating activities | 1,380,488 | 1,416,277 | |
| Cash flows from investing activities | |||
| Dividends received - equity-accounted joint ventures | 16.1 | 7,280 | 6,098 |
| Dividends received from other entities | 894 | 680 | |
| Interest received | 6,033 | 6,988 | |
| Sale of property, plant and equipment and other intangible assets | 14,015 | 9,428 | |
| Sale of organised part of business | 4,880 | 3,722 | |
| Sale of shares - equity-accounted joint ventures | 16.1 | - | 3 |
| Loss of control of LOTOS - Air BP Polska Sp. z o.o., net of cash disposed | - | 14,907 | |
| Effect of final accounting for the acquisition of Heimdal assets | 6 | 12,443 | - |
| Purchase of property, plant and equipment and other intangible assets | (1,002,131) | (975,709) | |
| Accounting for acquisition of shares in Energobaltic Sp. z o.o. | - | (13,112) | |
| Cash contributions - equity-accounted joint ventures | 16.1 | (339) | (448) |
| Acquisition of shares in related entities | (23) | - | |
| Security deposit (margin) | 10,035 | 134 | |
| Funds contributed to the oil and gas extraction facilities decommissioning fund | (407) | (1,654) | |
| Settlement of derivative financial instruments | (11,018) | 17,912 | |
| Net cash from investing activities | (958,338) | (931,051) | |
| Cash flows from financing activities | |||
| Proceeds from bank borrowings | 27.1 | 562,963 | 963,045 |
| Proceeds from non-bank borrowings | 27.2 | 106,900 | - |
| Issue of notes | 27.3 | - | 203,050 |
| Cash flows attributable to changes in interest in subsidiaries not resulting in loss of control | (1,681) | (278) | |
| Grants received | 1,239 | - | |
| Return of a deposit provided as security for repayment of credit facility at Energobaltic Sp. z o.o. | 2,111 | - | |
| Repayment of borrowings | 27.1 | (1,030,408) | (1,256,798) |
| Repayment of non-bank borrowings | 27.2 | (12,983) | (6,750) |
| Redemption of notes | 27.3 | (17,397) | - |
| Interest paid | (181,297) | (169,123) | |
| Decrease in finance lease liabilities | (18,830) | (16,811) | |
| Settlement of derivative financial instruments | 4,439 | 39,801 | |
| Share issue costs | (12,327) | - | |
| Net cash from financing activities | (597,271) | (243,864) | |
| Total net cash flow | (175,121) | 241,362 | |
| Effect of exchange rate fluctuations on cash held | 11,509 | (1,553) | |
| Change in net cash | (163,612) | 239,809 | |
| Cash at beginning of the period | (3,075) | (242,884) | |
| Cash at end of period | 20 | (166,687) | (3,075) |
The Notes to the consolidated financial statements are an integral part of the statements.
(This is a translation of a document originally issued in Polish)
