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.
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.
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.
With revenue of ca. PLN 28.5bn in 2014, we rank fourth in the group of 500 largest businesses in Poland.
Letter from the Chairman of the Supervisory Board
Ladies and Gentlemen,
It is with immense satisfaction that we present the 2014 Integrated Annual Report of Grupa LOTOS. It confirms the right choices we have made for the Company’s development, but first and foremost, it proves the managerial skills and high competence of its Board members.
In 2014, the most important project of key significance to the Company’s further development was its Secondary Public Offering (SPO). Immaculately prepared and carried out, it turned out to be a spectacular success putting Grupa LOTOS ahead of other companies which have launched an SPO on the capital market in recent years. The State Treasury, Grupa LOTOS’ majority shareholder, subscribed for all new shares it was entitled to, as did other shareholders. As a result, the reduction rate for additional orders was 98.33%. Having raised considerable funds in the challenging market environment and having won the trust of shareholders for new investment projects, the Board demonstrated its responsibility for the Company not only in the short term, but also in the long-term perspective. The issue proceeds will be applied towards financing of the EFRA Project (i.e. construction of a delayed coking unit with auxiliary infrastructure) and towards development of the B4/B6 gas fields in the Baltic Sea. These projects will be the drivers of shareholder value creation, strengthening the Company’s competitive edge in the coming years.
The Company’s transparency, accountability and effectiveness in all areas of operation are of utmost importance to its shareholders. Therefore, in 2014 LOTOS continued to work on projects under its Corporate Social Responsibility (CSR) strategy, but also effectively supported initiatives aimed to improve the living conditions of local communities and protect the natural environment. Once again, the Company won the recognition of its stakeholders, and its outreach initiatives were held up as a model of corporate citizenship of the 21st century.
Looking back from the vantage point of 2015, it is clear that 2014 was a year spent wisely and diligently on building solid foundations for further growth of the entire LOTOS Group. The organization’s strategy for the next five years will be communicated to the shareholders and capital market in the second half of 2015. Therefore, congratulations are owed to everyone who contributed to the success of LOTOS in the previous year, when foundations were laid for a new and exciting stage of the Company’s development. Words of appreciation go to the Grupa LOTOS Board for taking the Company through a challenging period, and to all employees, whose commitment was one of the forces strengthening the position of LOTOS among the leaders of Poland’s economy.
Chairman of the Supervisory Board