24. Retained earnings
Retained earnings comprise capital reserves created and used in accordance with the rules stipulated by the applicable laws and provisions of the Articles of Association, as well as current period’s profit.
As at December 31st 2013 and December 31st 2012, Grupa LOTOS S.A. was restricted in its ability to distribute funds in the form of dividends, as described in detail in Note 12.
Furthermore, retained earnings include actuarial gains/losses relating to defined post-employment benefits, recognised inclusive of tax effect, which are posted under Other comprehensive income in the statement of comprehensive income.
24.1 Restricted ability of subsidiaries of the LOTOS Group to transfer funds to the Parent in the form of dividends
In 2012 and 2013, the ability of subsidiaries of the LOTOS Group to transfer funds to Grupa LOTOS S.A. in the form of dividends was restricted due to the following arrangements:
- The agreement concluded on December 16th 2004 by LOTOS Paliwa Sp. z o.o. with Bank Pekao S.A. and PKO BP S.A. imposes restrictions on the amount of surplus cash generated by LOTOS Paliwa Sp. z o.o. in a financial year that may be allocated to dividend payment, setting specific ratios which must be met.
- At AB LOTOS Geonafta, there are restrictions on dividend payment under the credit facility agreements of April 5th and September 27th 2012, which make such payment conditional upon the bank’s prior consent.
- At LOTOS Exploration and Production Norge AS, there are restrictions on dividend payment under the credit facility agreements of December 17th 2010 and December 11th 2013, and the framework agreement concerning provision of bank guarantees dated December 11th 2013. Pursuant to the agreements, no dividends may be paid without a prior consent of the bank.
As at December 31st 2013, the following companies were restricted in their ability to pay dividends: LOTOS Paliwa Sp. z o.o., AB LOTOS Geonafta and LOTOS Exploration and Production Norge AS.