2. Composition of the Group and its changes
As at December 31st 2013, the LOTOS Group comprised Grupa LOTOS S.A. (the Parent) and 34 production, service and trading companies, including:
- 13 direct subsidiaries of Grupa LOTOS S.A.,
- 21 indirect subsidiaries of Grupa LOTOS S.A.
In addition, the Group holds shares in equity-accounted entities and a proportionately-consolidated entity.
Detailed information on the registered addresses and business profiles of these entities, the Group’s ownership interests and the applied method of consolidation is presented below.
| Name | Registered office | Business profile | Grupa LOTOS's shareholding | |||
|---|---|---|---|---|---|---|
| Dec 31st 2013 | Dec 31st 2012 | |||||
| Parent | ||||||
| Grupa LOTOS S.A. | Gdańsk | Production and processing of refined petroleum products (mainly fuels) and their wholesale | Not applicable | Not applicable | ||
| Direct fully-consolidated subsidiaries | ||||||
|
LOTOS Petrobaltic S.A. (parent of another group: LOTOS Petrobaltic Group) |
Gdańsk | Acquisition of crude oil and natural gas deposits and hydrocarbon production | 99.98% (1) | 99.96% | ||
|
LOTOS Paliwa Sp. z o.o. |
Gdańsk | Wholesale and retail sale of fuels and light fuel oil, management of the LOTOS service station chain | 100.00% | 100.00% | ||
|
LOTOS Oil S.A. |
Gdańsk | Production and sale of lubricating oils and lubricants, and sale of base oils | 100.00% | 100.00% | ||
|
LOTOS Asfalt Sp. z o.o. |
Gdańsk | Production and sale of bitumens | 100.00% | 100.00% | ||
|
LOTOS Kolej Sp. z o.o. |
Gdańsk | Railway transport | 100.00% | 100.00% | ||
|
LOTOS Serwis Sp. z o.o. |
Gdańsk | Maintenance of mechanical and electric operations and controlling devices, overhaul and repair services | 100.00% | 100.00% | ||
|
LOTOS Lab Sp. z o.o. |
Gdańsk | Laboratory analyses | 100.00% | 100.00% | ||
|
LOTOS Straż Sp. z o.o. |
Gdańsk | Fire services | 100.00% | 100.00% | ||
|
LOTOS Ochrona Sp. z o.o. |
Gdańsk | Security services | 100.00% | 100.00% | ||
|
LOTOS Terminale S.A. (2) (parent of another group: LOTOS Terminale Group) |
Czechowice-Dziedzice | Storage and distribution of fuels | 100.00% | 100.00% | ||
|
LOTOS Infrastruktura S.A. (3) |
Jasło | Storage and distribution of fuels Renting and operating of own or leased real estate | 100.00% | 100.00% | ||
|
LOTOS Gaz S.A. (in liquidation) |
Kraków | Dormant | 100.00% | 100.00% | ||
|
LOTOS Park Technologiczny Sp. z o.o. |
Jasło | Dormant | 100.00% | 100.00% | ||
| Indirect fully-consolidated subsidiaries | ||||||
| LOTOS Terminale Group | ||||||
|
Czechowice-Dziedzice | Production and distribution of electricity, heat and gas | 100.00% | 100.00% | ||
|
Czechowice-Dziedzice | Production of fatty acid methyl esters (FAME) | 100.00% | 100.00% | ||
| LOTOS Petrobaltic Group | ||||||
|
Stavanger, Norway | Oil exploration and production on the Norwegian Continental Shelf, provision of services related to oil exploration and production | 99.98% (4) | 99.96% | ||
|
Curaçao, Netherlands Antilles | Sea transport services (dormant) | 99.98% (4) | 99.96% | ||
|
Władysławowo | Production of electricity, heat, LPG and natural gas condensate | 99.98% (4) | 99.96% | ||
|
Gdańsk | Support activities for extraction and quarrying operations (dormant) | 99.98% (4, 5) | - | ||
|
Gdańsk | Exploration and production of crude oil and natural gas (dormant) | 99.98% (4, 6) | - | ||
|
Nicosia, Cyprus | Storage and transport of crude oil, other sea transport services | 99.98% (4) | 99.96% | ||
|
Gdańsk | Sea transport support activities, ship operation advisory services | 99.98% (4) | 99.96% | ||
|
Gdańsk | Provision of sea transport and related services | 99.98% (4, 7) | - | ||
|
Nicosia, Cyprus | Provision of sea transport and related services | 99.98% (4) | 99.96% | ||
|
Nicosia, Cyprus | Management of own assets | 99.98% (4) | 99.96% | ||
|
Nicosia, Cyprus | Ship chartering | 99.98% (4) | 99.96% | ||
|
Nicosia, Cyprus | Ship chartering | 99.98% (4) | 99.96% | ||
|
Nicosia, Cyprus | Ship chartering | 99.98% (4) | 99.96% | ||
|
Nicosia, Cyprus | Ship chartering | 99.98% (4) | 99.96% | ||
|
Nicosia, Cyprus | Ship chartering | 99.98% (4) | 99.96% | ||
|
Nicosia, Cyprus | Ship chartering | 99.98% (4) | 99.96% | ||
|
Gargždai, Lithuania | Crude oil exploration and production, drilling services, and purchase and sale of crude oil | 99.98% (4) | 99.96% | ||
|
Gargždai, Lithuania | Crude oil exploration and production | 99.98% (4) | 99.96% | ||
|
Gargždai, Lithuania | Crude oil exploration and production | 99.98% (4) | 99.96% | ||
| Equity-accounted entities | ||||||
|
Gdańsk | Sale of aviation fuel and logistics services | 50.00% (8) | 100.00% | ||
| LOTOS Petrobaltic Group | ||||||
|
Gdańsk | Oil and gas production (support activities for oil and gas production) | 49.99% (4, 9) | 99.96% | ||
|
Gdańsk | Crude oil and gas production | 81.68% (4, 10) | 99.96% | ||
| Jednostki konsolidowane metodą proporcjonalną | ||||||
| GK AB LOTOS Geonafta | ||||||
|
Gargždai, Lithuania | Crude oil exploration and production | 49.99% (4) | 49.98% | ||
(1) In 2013, Grupa LOTOS continued the squeeze-out of shares in LOTOS Petrobaltic S.A. Following the acquisition of shares in LOTOS Petrobaltic S.A. as part of a squeeze-out, as at December 31st 2013 Grupa LOTOS held a 99.98% interest in the share capital of LOTOS Petrobaltic S.A.
(2) On July 30th 2013, the change of the company’s name from LOTOS Czechowice S.A. to LOTOS Terminale S.A. was registered.
(3) On April 18th 2013, the change of the company’s name from LOTOS Jasło S.A. to LOTOS Infrastruktura S.A. was registered.
(4) The shareholding changes described in item (1) above had an effect on the indirect equity interests held by Grupa LOTOS in the LOTOS Petrobaltic Group entities.
(5) On December 30th 2013, LOTOS Petrobaltic S.A. acquired 100% of the shares in B8 Sp. z o.o. One of the objectives of the acquisition was to create a vehicle for financing development of the B8 field.
(6) On December 30th 2013, LOTOS Petrobaltic S.A. acquired a 99.5% interest in B8 Spółka z ograniczoną odpowiedzialnością BALTIC spółka komandytowo-akcyjna, and became a limited partner in the company. B8 Sp. z o.o., holding 0.5% of the company shares, is a minority shareholder and the general partner in the company. One of the objectives of the acquisition was to create a vehicle for the financing of development of the B8 field.
(7) On December 20th 2013, Technical Ship Management Sp. z o.o. acquired a 100% interest in SPV Baltic Sp. z o.o.
(8) On November 25th 2013, Grupa LOTOS sold to BP Europe SE 1,000 shares in LOTOS Tank Sp. z o.o., representing 50% of LOTOS Tank Sp. z o.o.'s share capital. The sale was connected with a joint venture agreement executed between Grupa LOTOS and BP Europa SE German Branch on June 25th 2013, providing for the establishment of a new entity on the basis of LOTOS Tank Sp. z o.o. (a Grupa LOTOS subsidiary), through which the two partners could pursue joint operations in the aviation fuel market. On December 17th 2013, the change of the company’s name from LOTOS Tank Sp. z o.o. to LOTOS-Air BP Polska Sp. z o.o. was registered.
(9) The sale by LOTOS Petrobaltic S.A. of a 50% interest in Baltic Gas Sp. z o.o. to CalEnergy Resources Poland Sp. z o.o. was registered on May 17th 2013.
(10) The presented ownership interest was determined based on the value of contributions made by individual partners relative to the sum of all contributions as at December 31st 2013:
- Baltic Gas Sp. z o.o. (general partner) (0.002%),
- LOTOS Petrobaltic S.A. (limited partner) (81.693%),
- CalEnergy Resources Poland Sp. z o.o. (“CalEnergy”) (limited partner) (18.305%).
The Group’s indirect ownership interest in Baltic Gas spółka z ograniczoną odpowiedzialnością i wspólnicy sp. k. (a jointly-controlled entity) is 81.68%.
Baltic Gas spółka z ograniczoną odpowiedzialnością i wspólnicy spółka komandytowa (“Baltic Gas Sp. z o.o. i wspólnicy sp.k” ) is a partnership. The partnership agreement defines the profit and loss sharing ratio, whereby Baltic Gas Sp. z o.o. holds 0.001% share in profits and 100% share in losses, LOTOS Petrobaltic S.A. holds 50.9995% share in profits, and CalEnergy holds 48.9995% share in profits. The respective percentage shares in the total vote are not given, as any matters subject to the partners’ decision, as set forth in the partnership agreement, require unanimous approval, or the partners are required to unanimously pass a resolution determining the procedure for deciding on other matters not specified in the partnership agreement. For IFRS purposes, Baltic Gas Sp. z o.o. i wspólnicy sp.k is an entity jointly-controlled by the Group.
Acquisition of Series A shares in LOTOS Petrobaltic S.A.
In 2013, Grupa LOTOS S.A. continued the squeeze-out of non-controlling interests in LOTOS Petrobaltic S.A. (excluding shares held by the State Treasury). From January 1st to December 31st 2013, the Company acquired 2,212 shares with a total value of PLN 278 thousand, representing 0.0223% of the share capital entered in the share register.
In line with IAS 27 Consolidated and Separate Financial Statements, the above transactions were accounted for as equity transactions; as a result, an amount of PLN 143 thousand was recognised as retained earnings attributable to the Parent, and the value of non-controlling interests decreased by PLN 421 thousand.
Following the acquisition of shares in LOTOS Petrobaltic S.A. as part of the squeeze-out, as at December 31st 2013 Grupa LOTOS S.A. held a 99.98% interest in the share capital of LOTOS Petrobaltic S.A. (9,938,484 shares).
CalEnergy Resources Poland Sp. z o.o. becomes a limited partner in Baltic Gas spółka z ograniczoną odpowiedzialnością i wspólnicy sp. k.
On April 9th 2013, CalEnergy Resources Poland Sp. z o.o. (“CalEnergy”) became a limited partner in Baltic Gas spółka z ograniczoną odpowiedzialnością i wspólnicy spółka komandytowa (“Baltic Gas Sp. z o.o. i wspólnicy sp.k”), a partnership established by LOTOS Petrobaltic S.A. for the purpose of implementing an investment agreement with CalEnergy of October 2012, which provides a framework for cooperation between the parties through a special purpose vehicle (the agreement was concluded subject to certain conditions precedent). CalEnergy made a cash contribution of PLN 5 thousand to Baltic Gas Sp. z o.o. i wspólnicy sp.k. Concurrently, LOTOS Petrobaltic S.A., as the other limited partner, increased its contribution to equity from PLN 5 thousand to PLN 52,000 thousand, making a cash payment of PLN 295 thousand and an in-kind contribution worth PLN 51,700 thousand. The cooperation agreement provides development of the B-4 and B-6 fields. Under the preparatory work schedule, seismic acquisition and selection of a preliminary field development concept are scheduled for 2013–2014. Upon completion of that stage, the partners will be able to make a final decision whether to pursue development of the B-4 and B-6 fields.
Acquisition of an equity interest in Baltic Gas Sp. z o.o. i wspólnicy sp.k by CalEnergy marked the end of preparation for joint operations on the two fields and the beginning of CalEnergy’s financial commitment to the project. During the preparatory work, a number of conditions precedent for project launch were met, including the transfer of licences to Baltic Gas Sp. z o.o. i wspólnicy sp.k upon LOTOS Petrobaltic S.A.’s consent. By virtue of the Minister of Environment’s decision dated March 13th 2013, the following licences were transferred to Baltic Gas Sp. z o.o. i wspólnicy sp.k:
- licence for exploration and appraisal of oil and gas deposits in the Gaz Północ area,
- licence for extraction of wet natural gas from the B-4 field located in the Polish exclusive economic zone of the Baltic Sea,
- licence for extraction of natural gas condensate from the B-6 field located in the Polish exclusive economic zone of the Baltic Sea.
Under the investment agreement, CalEnergy will finance the costs of seismic surveys, selection of the development concept and preparation of the front end engineering design.
The partners’ participation in profits and losses and the percentage ownership interest in Baltic Gas Sp. z o.o. i wspólnicy sp.k, calculated on the basis of the value of contributions made by individual partners, is presented above.
Agreement on joint financing of the development of the B-8 oil field in the Baltic Sea. Acquisition of shares in special purpose vehicles
On October 7th 2013, LOTOS Petrobaltic S.A. and Polskie Inwestycje Rozwojowe S.A. (“PIR”) executed an agreement to jointly finance the development of the B-8 oil field in the Baltic Sea. The purpose of the agreement is to work out the terms and structure of the project financing; a special purpose vehicle (SPV) has been established, to which LOTOS Petrobaltic S.A. will transfer the mining usufruct rights and the assets related to the development of the B-8 field. The tasks to be carried out by the SPV include completion of the drilling work within the field, installation of subsea production facilities, and conversion of the Petrobaltic drilling platform into a production unit. Subsequently, the SPV will produce and sell oil and gas extracted from the B-8 field. PIR will have its claims subordinated to those of banks as senior lenders. The financing can take the form of a private placement of corporate bonds with restricted transferability, and the financing period should not exceed 10 years. PIR has expressed its willingness to participate in the project financing on market terms. The total cost of the B-8 project, including the value of assets contributed by LOTOS Petrobaltic S.A. to the SPV, stands at approximately PLN 1,600m, of which the market value of the assets contributed by LOTOS Petrobaltic S.A. is approximately PLN 700m, and the total external financing to be provided by banks and PIR amounts to approximately PLN 900m. Under the agreement, PIR’s share in the project financing will not exceed PLN 563m. The parties want the first tranche of the PIR financing to be advanced in the first half of 2014. The final project financing structure will be subject to further analyses and negotiations, and will be prepared in consultation with banks interested in providing funds for the project. Details of the final financing structure will be published in a report.
To facilitate the financing of the B-8 field development, on December 30th 2013 LOTOS Petrobaltic S.A. acquired 100% of shares in B8 Sp. z o.o. and 99.5% of shares in B8 Spółka z ograniczoną odpowiedzialnością BALTIC spółka komandytowo-akcyjna, and became a limited partner in the company. With a 0.5% equity interest, B8 Sp. z o.o. is a minority shareholder and general partner in B8 Spółka z ograniczoną odpowiedzialnością BALTIC spółka komandytowo-akcyjna.
Sale of shares in LOTOS Tank Sp. z o.o. (currently LOTOS Air-BP Polska Sp. z o.o.) to a third party
On November 25th 2013, Grupa LOTOS S.A. sold 1,000 shares in LOTOS Tank Sp. z o.o. (currently LOTOS Air-BP Polska Sp. z o.o.), representing 50% of the company’s share capital, to BP Europe SE. The transaction was concluded under the joint venture agreement of June 25th 2013 between Grupa LOTOS S.A. and BP Europa SE, concerning establishment of a new entity based on assets of LOTOS Tank Sp. z o.o., through which the two partners will pursue joint operations in the aviation fuel market.
The effect of the loss of control over the subsidiary was presented in the consolidated statement of comprehensive income for 2013 under Loss of control over subsidiary, in the amount of PLN 13,472 thousand. In the consolidated statement of cash flows for 2013, net cash proceeds of PLN 14,907 thousand from the above transaction were presented under Sale of shares. Until the date of the loss of control, the subsidiary had been fully consolidated and a part of the downstream segment. As at December 31st 2013, shares in LOTOS-Air BP Polska Sp. z o.o. were accounted for with the equity method.
As a result of the transaction and in line with IAS 27.34.d, the Group disclosed the fair value of 50% of the shares resulting from recognition of the investment held in the former subsidiary, in the amount of PLN 14,907 thousand. The shares are disclosed in the consolidated statement of financial position under Equity-accounted entities.
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