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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.
Risk and opportunities
In this Chapter:
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Enterprise risk management policy
To ensure secure and effective pursuit of our strategic and operational objectives, we have put in place an Enterprise Risk Management system at the LOTOS Group.
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Management segment
In the management segment, we identify political, legal, reputation and social risks as well as the risk of misconduct.
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Exploration and production segment
In the Exploration and Production segment, we identify exploration risks, technical and production risks, risks related to exploration and production projects and financial risk.
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Operational (refining) segment
In the operational (refining) sector, we identify operational risks related to the refinery and environmental risks, including risks related to carbon emission caps.
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Financial segment
In the financial segment, we identify the risk related to prices of raw materials and petroleum products, the risk related to prices of carbon allowances, liquidity risk, currency risk, interest rate risk, credit risk in financial and trade transactions, the risk of limited access to external financing or changes in lending terms and the risk related to debt servicing as well as the risk of adverse changes in tax regulations, interpretations or court rulings.
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Marketing segment
In the marketing segment, we identify the risk of crude supply interruptions or reduced crude supply, the risk of changes in margins on product sale and the risk of decline in domestic demand.