Lotos

Integrated Annual Report 2014

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18. Trade receivables and other assets

18. Trade receivables and other assets

PLN ’000 Note Dec 31 2014
 		 Dec 31 2013
(restated)		 Jan 1 2013
(restated)
Financial assets        
Non-current financial assets        
Other financial assets: 31.1 71,102 194,002 86,435
     Security deposits receivable   20,631 23,089 28,555
     Finance lease receivables 18.2 9,111 8,061 6,180
     Shares   9,752 9,746 9,756
     Oil and Gas Extraction Facility Decommissioning Fund (1) 32.4.1 30,911 29,866 27,481
     Security deposits (margins) 32.4.1 - 11,029 11,163
     Cash blocked in bank accounts 32.3.1; 32.4.1 - 110,379 -
     Other receivables   697 1,832 3,300
Total   71,102 194,002 86,435
Current financial assets        
Trade receivables 31.1 1,406,501 1,591,649 1,625,715
     - including from related entities 36.1 23,318 16,670 5,014
Other financial assets: 31.1 1,260,931 197,631 172,787
Security deposits receivable   10,085 23,089 10,483
Deposits 32.4.1 31,432 29,593 122,501
Cash blocked in bank accounts 32.3.1; 32.4.1 179,377 103,559 18,320
Adjustment to the pro and contra settlement of acquisition of Heimdal assets 6.1 - 12,323 -
Settlements under joint operations (Norwegian fields) (2)   26,100 - -
Investment receivables   86 13,144 2,457
Security deposits (margins) related to the use of gas fuel distribution and transmission system   7,342 - -
Restricted cash - issue of shares   996,939 - -
Other receivables   9,570 15,923 19,026
Total   2,667,432 1,789,280 1,798,502
Total financial assets   2,738,534 1,983,282 1,884,937
Non-financial assets        
Non-current non-financial assets        
Prepayments for lease of railway locomotives   - 6,663 8,990
Fees and commissions related to B8 project financing   23,839 - -
Other   12,347 10,316 11,807
Total   36,186 16,979 20,797
Current non-financial assets        
Value-added tax receivable   71,262 51,895 165,152
Other receivables from the state budget other than income tax   178 632 2,114
Property and other insurance   16,729 4,522 5,704
Prepayments for lease of railway locomotives   2,336 2,336 2,336
Settlements under joint operations (Norwegian fields) (2)   357 27,158 41,756
Excise duty on inter-warehouse transfers   36,661 27,237 29,678
Prepaid deliveries   9,457 9,503 7,523
Other   21,123 16,157 7,350
Total   158,103 139,440 261,613
Total non-financial assets   194,289 156,419 282,410
         
Total   2,932,823 2,139,701 2,167,347
including:        
non-current   107,288 210,981 107,232
current:   2,825,535 1,928,720 2,060,115
     - trade payables   1,406,501 1,591,649 1,625,715
     - other   1,419,034 337,071 434,400

(1) Cash deposited in the bank account of the Oil and Gas Extraction Facility Decommissioning Fund (created pursuant to the Geological and Mining Law of February 4th 1994 and the Minister of Economy’s Regulation of June 24th 2002) to cover future costs of decommissioning of oil extraction facilities (see Decommissioning Fund for the Oil and Gas Extraction Facility in the Baltic Sea in Note 30.1).

(2) Receivables of LOTOS Exploration and Production Norge AS (LOTOS Petrobaltic Group, the upstream segment) under mutual settlements between the operator and consortium members concerning specific Norwegian fields. Information on the Group's interests and status in joint operations in Norway is presented in Note 13 to the consolidated financial statements for 2013 (see ‘Acquisition of interests in Norwegian production and exploration licences − Heimdal’).

As at December 31st 2014 and December 31st 2013, the item Deposits included the Parent’s deposits securing payments of interest under credit facilities contracted for the financing of projects executed under the 10+ Programme, as well as for financing and refinancing of inventories, referred to in Note 27.1. 

As at December 31st 2014, Restricted cash - issue of shares comprised cash proceeds from the issue of Series D shares in Grupa LOTOS S.A., deposited in a separate bank account of the Polish National Depository for Securities (see Note 21) until the day of registration of the share capital increase (see Note 37). The objectives of the issue of Series D shares, outlined in the Prospectus published on November 13th 2014, included the construction of a delayed coking unit (EFRA Project) and development of the B-4 and B-6 gas fields.

As at December 31st 2014, Cash blocked in bank accounts comprised cash held in an escrow account associated with the agreement concluded between the parties involved in the YME Project in Norway (for more details on the agreement, see Note 35.1, see also Note 30.1 and Note 13). As at December 31st 2014, the blocked cash totalled PLN 179,377 thousand (December 31st 2013: PLN 213,938 thousand).

As at December 31st 2013, Investment receivables included mainly receivables of LOTOS Exploration and Production Norge AS under the sale of a drilling rig and receivables of LOTOS Asfalt Sp. z o.o. under the sale of assets related to the Waterproofing Materials Production Plant in Jasło. The receivables of Lotos Asfalt Sp. z o.o. were collected in 2014. Cash proceeds of the transaction were disclosed in the statement of cash flows from investing activities under Sale of organised part of business.

The collection period for trade receivables in the ordinary course of business is 7−35 days.

As at December 31st 2014, the Group’s receivables of PLN 31,676 thousand (December 31st 2013: PLN 3,156 thousand) were assigned by way of security for the Group’s liabilities.

For a description of the financial instruments, see Note 7.23. For a description of objectives and policies of financial risk management, see Note 32.

For currency risk sensitivity analysis of financial assets, see Note 32.3.1.

For interest rate risk sensitivity analysis of financial assets, see Note 32.4.1.

The maximum credit risk exposure of financial assets is presented in Note 32.6.

18.1 Change in impairment losses on receivables

PLN ’000 Year ended
Dec 31 2014		 Year ended
Dec 31 2013
At beginning the period 175,293 177,152
Recognised 18,077 11,955
Exchange differences on translating foreign operations 12 34
Used (11,222) (10,974)
Deconsolidation (LOTOS Tank Sp. z o.o.) (1) - (735)
Reversed (4,604) (2,141)
Other 138 (2) 2
At end of the period 177,694 175,293

(1) In November 2013, the Group sold 50% of shares in LOTOS-Air BP Polska Sp. z o.o. (formerly LOTOS Tank
Sp. z o.o.) to a third party.

(2) Additional amounts awarded in court proceedings.

The amounts resulting from recognition or reversal of impairment losses on receivables are presented under other income or expenses (the principal portion) and under finance income or costs (the default interest portion). In the statement of comprehensive income, recognised and reversed impairment losses on receivables are presented on a net basis under: Other income/expenses (in accordance with the adopted accounting policy the Group offsets corresponding items of Other income and Other expenses in line with Section 34 and 35 of IAS 1 Presentation of Financial Statements).

Recognised impairment losses included PLN 15,928 thousand under the principal (2013: PLN 9,584 thousand) and PLN 2,149 thousand under interest (2013: PLN 2,371 thousand).

Reversed impairment losses include PLN 2,850 thousand on the principal portion (2013: PLN 1,279 thousand) and PLN 1,754 thousand on the interest portion (2013: PLN 862 thousand).

In 2014, the Group disclosed the recognised and reversed impairment losses on the principal under Other expenses in the amount of PLN 13,078 thousand, including: PLN 15,928 thousand under recognised impairment losses, and PLN 2,850 thousand under impairment loss reversal (see Note 9.4).

In 2013, the Group disclosed the recognised and reversed impairment losses on the principal under Other expenses in the amount of PLN 6,012 thousand, including: PLN 7,291 thousand under recognised impairment losses, and PLN 1,279 thousand under impairment loss reversal (see Note 9.4).

Moreover, in 2013 the Group offset the impairment losses for the principal of PLN 2,293 thousand against corresponding Other income items.

The table below presents aging of past due receivables for which no impairment losses were recognised:

PLN ’000 Dec 31 2014 Dec 31 2013
Up to 1 month 41,973 47,503
From 1 to 3 months 5,752 8,051
From 3 to 6 months 956 5,694
From 6 months to 1 year 385 4,948
Over 1 year 24 6,341
Total 49,090 72,537

No impairment losses were recognised on past due receivables because they are secured against credit risk with a mortgage, pledge, insurance policy, bank guarantee or surety. 

As at December 31st 2014 and December 31st 2013, the share of trade receivables from the Group’s five largest customers as at the end of the reporting period was approximately 25% and 27%, respectively, of total trade receivables (individually: 2%–12%). In the Group’s opinion, with the exception of receivables from the above-mentioned customers, there is no material concentration of credit risk. The Group’s maximum exposure to credit risk as at the end of the reporting period is best represented by the carrying amounts of those instruments.

18.2 Finance lease receivables

The Group has developed and operates the “LOTOS Family” Franchise Programme, which defines the procedures for managing service stations. The Group has entered into franchise agreements with entities operating service stations at their own risk and for their own account (Partners). Receivables under franchise agreements represent mainly expenditure on the design of DOFO service stations operated by dealers under agreements executed for periods from 5 to 10 years.

PLN ’000 Minimum lease payments Present value of minimum
lease payments
Dec 31 2014 Dec 31 2013 Dec 31 2014 Dec 31 2013
Up to 1 year (1) 4,429 3,437 4,394 3,406
From 1 to 5 years 8,951 7,604 8,881 7,534
Over 5 years 232 532 230 527
Total 13,612 11,573 13,505 11,467
Less unrealised finance income (107) (106) - -
Present value of minimum lease payments 13,505 11,467 13,505 11,467
including:        
non-current     9,111 8,061
current     4,394 3,406

(1) Present value of minimum lease payments is disclosed under Trade receivables.

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)

Financial information