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.
The segmental management model we have implemented enhances management efficiency, delivering cost and revenue synergies across the organization.
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.
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.
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.
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.
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.
Key data 2014
With revenue of ca. PLN 28.5bn in 2014, we rank fourth in the group of 500 largest businesses in Poland.
Integrated Annual Report 2014
Awards and distinctions
In 2014, LOTOS Group companies were honoured with awards and accolades in the key areas of business management, corporate social responsibility, and quality of products and services.
- Paweł Olechnowicz, President of the Grupa LOTOS Board, received the Crystal Laurel of Skills and Competence from the Regional Chamber of Commerce in Katowice in recognition of excellence in combining business with social responsibility goals and contribution to Poland’s economic growth.
- For another consecutive year, LOTOS Terminale and LOTOS Lab were awarded Forbes’ Diamonds in the category of companies with revenue of PLN 50m or less. For the eighth time, the Forbes monthly together with Bisnode Polska, a business intelligence agency, compiled a list of companies with the fastest value growth.
- Grupa LOTOS took the top position in the Pillars of Polish Economy ranking, in the Province of Gdańsk. The ranking was compiled by the Puls Biznesu daily’s editorial team, under the auspices of the Ministry of State Treasury, Polish Investments Programme, and Polish Agency for Enterprise Development. The winner was selected by local governments.
- The judging panel of the 20th edition of the ‘Business Person of the Year in the Pomerania Region’ competition awarded the ‘Business Person of the Last 25 Years (1989–2014) in the Pomerania Region’ titles to six business people whose achievements gained the highest rating - including Paweł Olechnowicz, President of the Grupa LOTOS Board.
- The Polish Success Academy, run by the Polish Business Club Association, awarded a Gold Medal and granted membership to Paweł Olechnowicz, President of the Grupa LOTOS Board, in recognition of his innovative business projects.
- The winner of 2014 Polish Individual Quality Award in the Practice category was Halina Stasiewicz, Process Management Office Director, Grupa LOTOS. The awards are organized by the National Chamber of Commerce. The award, named after Professor Edward Kindlarski, is presented to individuals who have made an outstanding contribution to the development of the Total Quality Management concept, succeeded in implementing quality systems in their organizations or made a meaningful contribution to TQM training.
- Grupa LOTOS received the Super Leader award at the 10th Congress of the National Association for the Protection of Classified and Business Information and Personal Data.
- Grupa LOTOS received a Top Quality Human Resources Certificate from the Polish Human Resources Management Association, for implementing the organization’s business strategy through the creation of an engaging workplace.
- Another Best Annual Report award was granted to Grupa LOTOS. Having stated that the 2013 Integrated Annual Report of Grupa LOTOS exemplifies a publication based on which investment decisions can be made at a relatively minimal risk, the Chapter of the ninth edition of the contest ranked our Company in the third place in the ‘Main Prizes for Large Companies’ category.
- At the grand gala event of the 10th edition of the Nafta/Chemia Conference, the ‘Man of the Decade – who Changed the Polish Oil and Chemical Industry’ titles were awarded, with Paweł Olechnowicz, President of the Grupa LOTOS Board, as one of this year’s honorees.
- Paweł Olechnowicz was among Poland’s top 20 CEOs with the most successful track records according to Bloomberg Businessweek Polska. The top 20 managers ranking is based on a survey, with the final rank depending on the overall number of votes cast by respondents (other managers) in favour of a candidate.
Corporate Social Responsibility
- Grupa LOTOS received the Patron of Gdańsk Culture title for its support, as a strategic partner, of projects run by the Baltic Opera House in Gdańsk.
- Four Grupa LOTOS initiatives were highlighted in the publication by the Responsible Business Forum (FOB) on best CSR practices. The Supplier portal was among the 20 examples included in the Fair Operating Practices subject. The Development Initiation Forum, co-founded by LOTOS, and the ‘White and Green Future with LOTOS’ (‘Biało-zielona przyszłość z Lotosem’) programme, are our initiatives recognised as part of the Community Involvement and Development subject. The ‘Let’s Talk About LOTOS’ ('Porozmawiajmy o LOTOSIE') practice was presented as part of the long-term Labour Practices subject.
- Grupa LOTOS topped the 8th Responsible Companies Ranking in the Fuels, Energy and Mineral Production category, and ranked fifth overall. The Responsible Companies Ranking draws on a comprehensive list of the largest companies in Poland, assessing them for the quality of their Corporate Social Responsibility management. The authors of the ranking are representatives of the Business Ethics Centre of the Akademia Leona Koźminskiego (Kozminski University) and the Dziennik Gazety Prawnej daily newspaper, while PwC is responsible for checking and verification. Patronage of the ranking is held by the Responsible Business Forum.
- For the second consecutive time, Grupa LOTOS received the CSR Golden Leaf in a ranking of companies whose CSR policies adhere to the ISO 26000 standard, compiled under the auspices of the POLITYKA weekly and PwC.
- For the 15th time, the Pomeranian business community recognised the best companies in the region. In recognition of our consistent and regular sponsorship and patronage of locally-based cultural projects, Grupa LOTOS receives the special Pomeranian Griffin award.
- At the Chemical Industry Forum, the ‘Diamonds of the Polish Chemical Industry’ awards were presented, with two equal ranking ‘CSR Leader’ titles granted to Grupa LOTOS and BASF Polska.
- Grupa LOTOS won the title of Sports Patron of Independent Poland. The award was collected on behalf of the Company by Paweł Olechnowicz, President of the Grupa LOTOS Board, during the ‘Sporting Success at the 25th Anniversary of Poland’s Independence’ gala event.
- Grupa LOTOS secured a top place in the ranking of listed companies with the best ESG (environmental, social and governance) disclosure standards, compiled as part of the The ESG Analysis of Companies in Poland project, aimed to provide comprehensive information on the quality of sustainability reporting by WSE-listed companies and to educate businesses and investors on the importance of non-financial performance.
- Grupa LOTOS was declared ‘A Well-Perceived Company’ in the fifth edition of a contest organized by the Business Centre Club. The purpose of the competition is to honour companies which conduct their business in a socially responsible way and to promote knowledge of CSR and effective methods of its communication. The competition was organized under the honorary patronage of the Ministry of Labour and Social Policy.
- The Maritime Education Programme, with Grupa LOTOS as one of the partners, received the EKO Inspiracja 2014 award in the ‘Partnership’ category.
- Grupa LOTOS was awarded the title of Gdańsk Sports Sponsor at the 12th Gdańsk Sports Gala as the sponsor of the Lechia Gdańsk football team and the LOTOS Trefl volleyball team, and organizer of the ‘White and Green Future with LOTOS’ (‘Biało-zielona przyszłość z Lotosem’) initiative sponsoring a number of training centres for young football players.
- LOTOS Terminale received its fourteenth Fair Play Company certificate in what is Poland’s longest running business ethics and CSR certification programme.
- Once again, Grupa LOTOS was included in the RESPECT Index of the most socially responsible WSE-listed companies, in its eighth edition. The Company has been part of the Index since its inception in 2009.
- LOTOS Infrastruktura received a Patron of Culture 2014 award, which was presented to the company by the mayor of Jasło Ryszard Pabian.
- LOTOS Petrobaltic received a Safe Division 2014 award for the Maritime Operations Team in the Logistics and Dispatchers Office. The competition is organized by the State Mining Authority together with the Professor W. Cybulski 'Safe Mining' Foundation. The award means that the Team is considered one of ten safest divisions in Poland’s mining sector.
Quality of products and services
- LOTOS was recognised as the Top Brand 2013 in the engine oils category of the Consumer Laurel 2013 competition. The title was awarded based on the popularity of brands present on the Polish market, as well as their growth dynamics in the last five years. The award confirms the awareness and popularity of the brand among Polish customers.
- LOTOS-Air BP received an award for the Most significant event on the ground handling services market at Chopin Airport in the ‘Development of competition in jet fuel supplies’ category. The awards are presented by Chopin Airport to its key business partners.
- The LOTOS brand was named Leader of the Decade in the nationwide Consumer Laurel award programme in the engine oils category. The title was awarded based on the popularity of brands present on the Polish market, as well as their growth dynamics.
- In the 2013/2014 edition, LOTOS received the Business Superbrands title in recognition of its strong brand image, as well as the special Created in Poland Business Superbrands award, given to Polish brands that have developed an outstanding image enabling them to successfully compete against foreign brands. The Superbrands title, awarded for 18 years in over 87 countries, is granted by Superbrands Ltd., an independent international organization. The purpose of the initiative is to promote and award brands that have achieved success on the market thanks to their unique qualities.
- The Ministry of Economy and the Office of Technical Inspection awarded enterprises leading in terms of business initiative, growth and technical safety. A recognition certificate and statuette In Recognition of High Technical Safety Standard were awarded to Grupa LOTOS.
- In the 11th Most Valuable Polish Brands Ranking, the LOTOS brand was valued at PLN 1,245.3m, and Grupa LOTOS entrenched its position among Poland’s top ten most valuable brands.
- LOTOS Oil was again presented with the European Medal award, which honours companies making products and providing services to the highest European standards. The award-winning TRANSMIL EXTRA XSP was the first mineral oil available on the global market to meet the stringent SIEMENS/FLENDEAR Rev.13 criteria. It took the company five years to bring the product to the market.
- LOTOS Oil won the 2014 Ambassador of the Polish Economy title in the Exporters category. LOTOS Oil sells its oil and lubricant products to customers in most European and Asian markets, consistently expanding its presence in South America and Middle East. The awards are organized by Business Centre Club and held under the auspices of the Minister of Foreign Affairs.
- The Modbit 25/55-60CR rubber-modified bitumen product received a distinction at the 20th International Road Construction Fair. LOTOS Asfalt was additionally recognised for the attractive and original design of its fair stand.
- The MODBIT 25/55-60CR bitumen received recognition at the 10th Autostrada-Poland Fair, the 2014 edition. The judging panel headed by prof. dr hab. inż. Wiesław Trąmpczyński of the Kielce University of Technology recognised the technology for producing the rubber-modified bitumen at the refinery for its innovative quality and excellent usability.
- LOTOS topped the ‘Best Economy Service Station Operated by a Fuel Company’ category in the third edition of the Service Station of the Year 2014 ranking. During the 14th PetroTrend Fuel Market Forum 2014, a distinction was awarded to the LOTOS Optima station in Marki.
- At a gala event held to celebrate the Railwaymen’s Day 2014, twelve LOTOS Kolej employees received medals for their outstanding service to the Polish transport industry and railway industry from the Minister of Infrastructure and Development.
- LOTOS Kolej received the MediaKreator 2014 statuette, in an awards programme run by KOW media&marketing, the publisher of the Kurier Kolejowy biweekly, for the rail industry’s best information and advertising policy. LOTOS Kolej won the first place in the 'Event' category for its Railway Equipment Days organized as part of the Children’s Day 2014 celebrations.
- LOTOS Asfalt received a distinction in the Construction Company of the Year 2014 competition, and its CEO Piotr Przyborowski won an award in the Industry Personality ranking organized by the Builder monthly. The company was recognised for bringing innovative products to the market, including WMAs, delivering investment projects (Energy Management System), running education initiatives on modern road building technologies, and implementing efficiency improvements in manufacturing, logistics and trade.