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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
33. Capital management
The objective of the LOTOS Group financial policy is to maintain long-term liquidity, while using an appropriate level of financial leverage to support the achievement of the principal objective of maximising the return on equity for shareholders.
This is achieved through constant effort to develop the desired capital structure at the Group level.
The LOTOS Group uses the debt to equity ratio, calculated as net debt to equity, to monitor its financing structure.
Net debt comprises borrowings, notes and liabilities under finance leases less cash and cash equivalents. Equity includes equity attributable to owners of the Parent plus non-controlling interests.
| PLN '000 | Note | Dec 31 2014 |
Dec 31 2013 (restated) |
|---|---|---|---|
| Non-current liabilities | |||
| Bank borrowings | 27.1 | 4,098,225 | 4,180,374 |
| Loans | 27.2 | 92,146 | 3,250 |
| Notes | 27.3 | 195,892 | 183,171 |
| Finance lease liabilities | 27.4 | 109,299 | 129,395 |
| Total | 4,495,562 | 4,496,190 | |
| Current liabilities | |||
| Bank borrowings | 27.1 | 2,117,387 | 1,671,435 |
| Loans | 27.2 | 10,637 | 7,056 |
| Notes | 27.3 | 17,587 | 15,069 |
| Finance lease liabilities | 27.4 | 22,495 | 21,636 |
| Total | 2,168,106 | 1,715,196 | |
| Restricted cash - issue of shares (1) | 18 | (996,939) | - |
| Cash and cash equivalents | 20 | (348,215) | (495,839) |
| Net debt | 5,318,514 | 5,715,547 | |
| Equity attributable to owners of the Parent | 8,258,288 | 9,189,307 | |
| Non-controlling interests | 26 | 175 | 289 |
| Total equity | 8,258,463 | 9,189,596 | |
| Net debt to equity | 0.64 | 0.62 |
(1) 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 Company monitors its financing structure in order to achieve the goal set in the Strategy for the LOTOS Group for the years 2011–2015, that is to reduce debt in order to achieve a debt to equity ratio of no more than 0.4 at the end of the Strategy term.
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)
