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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.
← Statement Notes index
28. Derivative financial instruments
| PLN ’000 | Dec 31 2014 | Dec 31 2013 |
|---|---|---|
| Financial assets | ||
| Current financial assets | ||
| Commodity swaps (commodities and petroleum products) | - | 736 |
| Currency forward and spot contracts | 536 | 34,924 |
| Currency swap | 3,894 | 38,275 |
| Total financial assets | 4,430 | 73,935 |
| Financial liabilities | ||
| Non-current financial liabilities | ||
| Commodity swaps (commodities and petroleum products) | 9,483 | - |
| Interest rate swap (IRS) | 53,143 | 52,876 |
| Total | 62,626 | 52,876 |
| Current financial liabilities | ||
| Commodity swaps (commodities and petroleum products) | 19,854 | - |
| Currency forward and spot contracts | 56,365 | 1,017 |
| Interest rate swap (IRS) | 22,341 | 19,387 |
| Currency swap | 37,357 | 873 |
| Total | 135,917 | 21,277 |
| Total financial liabilities | 198,543 | 74,153 |
Derivative financial instruments used by the Group are contracted by the Parent. For a description of the derivative financial instruments, see Note 7.25. For a description of objectives and policies of financial risk management, see Note 32. For the classification of derivative financial instruments by fair value hierarchy, see Note 31.2.
For market risk sensitivity analysis of derivative financial instruments related to changes in prices of petroleum commodities and products, see Note 32.1.1.
For currency risk sensitivity analysis of derivative financial instruments, see Note 32.3.1.
For interest rate sensitivity analysis of derivative financial instruments, see Note 32.4.1.
For maturities of derivative financial instruments, see Note 32.5.
For information on the maximum credit risk exposure of derivative financial instruments (financial assets), see Note 32.6.
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)
