Grupa LOTOS S.A. - Integrated Annual Report 2012
2. Composition of the Group and its changes
As at December 31st 2012, the LOTOS Group comprised Grupa LOTOS S.A. (the parent) and 34 production and service companies, including:
- 14 subsidiaries of Grupa LOTOS S.A.,
- 20 indirect subsidiaries of Grupa LOTOS S.A.
The Group also holds shares in a jointly-controlled entity.
Information on the registered offices and business profiles of the entities which are included in consolidation, the Group’s ownership interests, and the applied method of consolidation is presented below.
Company name | Registered office | Business profile |
Method of consolidation |
Ownership interest (%) | |
---|---|---|---|---|---|
Dec 31 2012 | Dec 31 2011 | ||||
Parent | |||||
Grupa LOTOS S.A. | Gdańsk | Production and processing of refined petroleum products (mainly fuels) and their wholesale | Not applicable | Not applicable | Not applicable |
Direct subsidiaries | |||||
LOTOS Paliwa Sp. z o.o. | Gdańsk | Wholesale and retail sale of fuels and light fuel oil, management of the LOTOS service station network | full | 100.00% | 100.00% |
LOTOS Gaz S.A. (in liquidation) | Kraków | The company does not conduct operations | full | 100.00% | 100.00% |
LOTOS Oil S.A. | Gdańsk | Production and sale of lubricating oils and lubricants, and sale of base oils | full | 100.00% | 100.00% |
LOTOS Asfalt Sp. z o.o. | Gdańsk | Production and sale of bitumens | full | 100.00% | 100.00% |
LOTOS Kolej Sp. z o.o. | Gdańsk | Rail transport | full | 100.00% | 100.00% |
LOTOS Serwis Sp. z o.o. | Gdańsk | Maintenance of mechanical and electrical systems and controlling devices, overhaul and repair services | full | 100.00% | 100.00% |
LOTOS Lab Sp. z o.o. | Gdańsk | Laboratory analyses | full | 100.00% | 100.00% |
LOTOS Straż Sp. z o.o. | Gdańsk | Fire safety | full | 100.00% | 100.00% |
LOTOS Ochrona Sp. z o.o. | Gdańsk | Personal and property protection | full | 100.00% | 100.00% |
LOTOS Parafiny Sp. z o.o. | Jasło | Production and sale of paraffin | full | - (1) | 100.00% |
LOTOS Tank Sp. z o.o. | Gdańsk | Until October 16th 2011 – trading in aviation fuel and, as of January 1st 2013 – logistics services | full | 100.00% | 100.00% |
LOTOS Czechowice S.A. (parent of another group: LOTOS Czechowice Group) |
Czechowice-Dziedzice | Storage and distribution of fuels | full | 100.00% | 100.00% |
LOTOS Jasło S.A. | Jasło | Storage and distribution of fuels Renting and operating of own or leased real estate | full | 100.00% | 100.00% |
LOTOS Petrobaltic S.A. (parent of another group: LOTOS Petrobaltic Group) |
Gdańsk | Acquisition of crude oil and natural gas deposits and their exploitation | full | 99.96% (2) | 99.95% |
LOTOS Park Technologiczny Sp. z o.o. |
Jasło | The company does not conduct operations | full | 100.00% | 100.00% |
Indirect subsidiaries | |||||
RCEkoenergia Sp. z o.o. | Czechowice-Dziedzice | Production and distribution of electricity, heat and gas | full | 100.00% | 100.00% |
LOTOS Biopaliwa Sp. z o.o. | Czechowice-Dziedzice | Production of fatty acid methyl esters (FAME) | full | 100.00% | 100.00% |
Miliana Shipholding Company Ltd. (parent of another group: Miliana Shipholding Company Group) |
Nicosia, Cyprus | Storage and transport of crude oil, other sea transport related services, and managing own financial assets | full | 99.96 % (3) | 99.95 % |
Technical Ship Management Sp. z o.o. (4) |
Gdańsk | On October 1st 2012, the company launched sea transport support activities involving advisory on the operation of ships. | full | 99.96 % (3, 4) | 100.00% |
Miliana Shipmanagement Ltd. | Nicosia, Cyprus | Provision of sea transport and related services | full | 99.96% (3) | 99.95 % |
Miliana Shipping Group Ltd. (parent of another group: Miliana Shipping Group Group) |
Nicosia, Cyprus | Management of own assets | full | 99.96% (3) | 99.95 % |
Bazalt Navigation Co. Ltd. | Nicosia, Cyprus | Ship chartering | full | 99.96% (3) | 99.95 % |
Granit Navigation Company Ltd. | Nicosia, Cyprus | Ship chartering | full | 99.96% (3) | 99.95 % |
Kambr Navigation Company Ltd. | Nicosia, Cyprus | Ship chartering | full | 99.96% (3) | 99.95 % |
St. Barbara Navigation Company Ltd. | Nicosia, Cyprus | Ship chartering | full | 99.96% (3) | 99.95 % |
Petro Icarus Company Ltd. | Nicosia, Cyprus | Ship chartering | full | 99.96% (3) | 99.95 % |
Petro Aphrodite Company Ltd. | Nicosia, Cyprus | Ship chartering | full | 99.96% (3) | 99.95 % |
LOTOS Exploration and Production Norge AS | Stavanger, Norway | Oil exploration and production on the Norwegian Continental Shelf, provision of services related to oil exploration and production | full | 99.96% (3) | 99.95 % |
Aphrodite Offshore Services N.V. | Curaçao, Netherlands Antilles | Dormant since October 17th 2011 | full | 99.96% (3) | 99.95 % |
Energobaltic Sp. z o.o. | Władysławowo | Production of electricity, heat, LPG and natural gas condensate | full | 99.96% (3) | 99.95% |
AB LOTOS Geonafta (parent of another group: AB LOTOS Geonafta) |
Gargždai, Lithuania | Crude oil exploration and production, drilling services, and purchase and sale of crude oil | full | 99.96% (3) | 99.95% |
UAB Genciu Nafta | Gargždai, Lithuania | Crude oil exploration and production | full | 99.96% (3) | 99.95% |
UAB Manifoldas | Gargždai, Lithuania | Crude oil exploration and production | full | 99.96% (3, 5) | 49.98% |
Baltic Gas Sp. z o.o. | Gdańsk | The company has not commenced operations | non-consolidated (6) | 99.96% (3, 6) | - |
Baltic Gas spółka z ograniczoną odpowiedzialnością i wspólnicy sp.k. | Gdańsk | The company has not commenced operations | non-consolidated (7) | 99.96% (3, 7) | - |
Jointly-controlled entities | |||||
UAB Minijos Nafta | Gargždai, Lithuania | Crude oil exploration and production | proportional | 49.98% (3) | 49.98% |
(1) On January 10th 2012, 100% of shares in LOTOS Parafiny Sp. z o.o. were sold to a third party, Krokus Chem Sp. z o.o.
(2) In exercise of its pre-emptive rights, on December 15th 2011 Grupa LOTOS S.A. subscribed for newly issued Series C shares of LOTOS Petrobaltic S.A. Grupa LOTOS S.A. subscribed for 279,996 shares in the increased share capital of LOTOS Petrobaltic S.A., with a total value of PLN 53,980 thousand. On February 2nd 2012, the increase in the share capital of LOTOS Petrobaltic S.A. was registered.
Grupa LOTOS S.A. also continued purchasing shares from non-controlling shareholders as part of the voluntary share purchase process, which was completed at the end of March 2012. In the period from January 1st to the completion of the voluntary share purchase process, Grupa LOTOS S.A. acquired 26 shares in LOTOS Petrobaltic S.A. with an aggregate value of PLN 3 thousand, representing 0.0003% of the company's share capital.
With respect to the remaining shares held by non-controlling shareholders, excluding the shares held by the State Treasury, on May 8th 2012 the Extraordinary General Meeting of LOTOS Petrobaltic S.A. adopted a resolution regarding minority squeeze-out by the majority shareholder, that is Grupa LOTOS S.A.
As part of the squeeze-out process, by December 31st 2012 Grupa LOTOS S.A. acquired 1.421 shares in LOTOS Petrobaltic S.A. with the aggregate value of PLN 179 thousand, representing 0.0146% of the company's share capital, of which 218 shares with the aggregate value of PLN 28 thousand, representing 0.0022% of the company's share capital, were entered in the share register.In line with IAS 27 Consolidated and Separate Financial Statements, the above acquisition of shares in LOTOS Petrobaltic S.A. from non-controlling shareholders as part of the voluntary share purchase process and the minority squeeze-out were accounted for as equity transactions, as a result of which PLN 79 thousand was recognised under retained earnings attributable to the Parent and the value of non-controlling interests decreased by PLN 261 thousand.
Following acquisition of shares in LOTOS Petrobaltic S.A. from non-controlling shareholders as part of the voluntary share purchase process and the minority squeeze-out, and the increase in the share capital of LOTOS Petrobaltic S.A., as at December 31st 2012 Grupa LOTOS S.A. held a 99.96% interest in the share capital of LOTOS Petrobaltic S.A., including 9,935,069 shares entered in the share register and representing 99.95% of the share capital of LOTOS Petrobaltic S.A.(3) The shareholding changes described in item (2) above resulted in changes in the Group’s indirect interests in the share capitals of the subsidiaries and the jointly controlled company of LOTOS Petrobaltic S.A.(4) W dniu 31 lipca 2012 roku Grupa LOTOS S.A. sprzedała 100% udziałów spółki LOTOS Ekoenergia Sp. z o.o. na rzecz Miliana Shipholding Company Ltd. Z dniem 17 października 2012 roku została zarejestrowana zmiana nazwy spółki z: LOTOS Ekoenergia Sp. z o.o. na: Technical Ship Management Sp. z o.o.
(4) On July 31st 2012, Grupa LOTOS S.A. sold 100% of shares in LOTOS Ekoenergia Sp. z o.o. to Miliana Shipholding Company Ltd. On October 17th 2012, a change of the company name from LOTOS Ekoenergia Sp. z o.o. to Technical Ship Management Sp. z o.o. was registered.
(5) On November 28th 2012, AB LOTOS Geonafta acquired a 50% interest in UAB Manifoldas. Following the transaction, AB LOTOS Geonafta holds a 100% interest in UAB Manifoldas.
(6) On November 12th 2012, LOTOS Petrobaltic S.A. and Kancelaria Prawna Domański i Wspólnicy sp.k. executed a share purchase agreement whereby LOTOS Petrobaltic S.A. acquired a 100% interest in Baltic Gas Sp. z o.o. Baltic Gas Sp. z o.o. was excluded from consolidation due to the fact that the data disclosed in its financial statements as at December 31st 2012 is immaterial to the performance of the obligation specified in IAS 27 Consolidated and Separate Financial Statements.
(7) On November 12th 2012, LOTOS Petrobaltic S.A. purchased from Kancelaria Prawna Domański i Wspólnicy sp.k. all the rights and obligations in Baltic Gas Spółka z ograniczoną odpowiedzialnością i wspólnicy sp.k., and thus became the sole limited partner in the company. The general partner in Baltic Gas spółka z ograniczoną odpowiedzialnością i wspólnicy sp.k. is Baltic Gas Sp. z o.o. The company was excluded from consolidation due to the fact that the data disclosed in its financial statements as at December 31st 2012 is immaterial to the performance of the obligation specified in IAS 27 Consolidated and Separate Financial Statements.
Sale of shares in LOTOS Parafiny Sp. z o.o. to a third party
On January 10th 2012, 100% of shares in LOTOS Parafiny Sp. z o.o. were sold to a third party, Krokus Chem Sp. z o.o. As an additional element of the transaction, on November 29th 2011, the parties executed a seven-year agreement for the supply of slack waxes by Grupa LOTOS S.A. to LOTOS Parafiny Sp. z o.o. The agreement was concluded for the period from January 1st 2012 to December 31st 2018 and its estimated value is PLN 780m, VAT exclusive.
The effect of the loss of control over the subsidiary was presented in the consolidated statement of comprehensive income for 2012 under Loss of control over subsidiary, in the amount of PLN 20,966 thousand. In the consolidated statement of cash flows for 2012, net cash proceeds from the above transaction in the amount of PLN 78,000 thousand were presented under Loss of control over subsidiary, net of cash. As at December 31st 2011, the assets and liabilities of LOTOS Parafiny Sp. z o.o. were presented in the consolidated financial statements under assets of related entities held for sale and the associated liabilities. LOTOS Parafiny Sp. z o.o. was classified in the downstream segment.
Acquisition of shares in UAB Manifoldas by AB LOTOS Geonafta
On September 27th 2012, AB LOTOS Geonafta concluded an agreement for purchase of 50% of shares in UAB Manifoldas from a natural person. After clearance from the Lithuanian anti-trust authority was obtained and other contractual conditions were fulfilled, on November 28th 2012 AB LOTOS Geonafta acquired a controlling 50% interest in UAB Manifoldas.
The acquisition price of the 50% of shares in UAB Manifoldas comprised the base purchase price of PLN 101,773 thousand, increased by the amount of the difference between the UAB Manifoldas’ receivables and liabilities of PLN 7,899 thousand.
Following the transaction, as at December 31st 2012, AB LOTOS Geonafta, which is a part of the group of companies of LOTOS Petrobaltic (LOTOS Petrobaltic Group), held a 100% interest in UAB Manifoldas.
AB LOTOS Geonafta is the parent of another group of companies (AB LOTOS Geonafta Group). As at December 31st 2012, it included the following companies in consolidation:
- UAB Manifoldas (100% of shares held by AB LOTOS Geonafta, consolidated with the full method),
- UAB Genciu Nafta (100% of shares held by AB LOTOS Geonafta, consolidated with the full method),
- UAB Minijos Nafta (50% of shares held by AB LOTOS Geonafta, consolidated with the proportional method).
Given the fact that before November 28th 2012 AB LOTOS Geonafta held a 50 % interest in UAB Manifoldas, the business combination, as defined in IFRS 3 Business Combinations, is accounted for as a step acquisition. In the case of a business combination achieved in stages (step acquisition), the acquirer remeasures its previously held equity interest in the acquiree at fair value as at the business combination date and recognises the resulting gain or loss in the statement of comprehensive income.
As at December 31st 2012, the Group initially accounted for the business combination made on November 28th 2012 (“acquisition date” or “business combination date”) as follows:
PLN '000 | November 28th 2012 |
---|---|
Consideration paid at fair value as at the date of acquisition of a 50% equity interest in the acquiree (A) | 109,672 |
Fair value of the 50% equity interest in the acquiree previously held by the acquirer, determined as at the business combination date (B) | 109,672 |
Total (A+B) | 219,344 |
Equity interest in the acquiree | 100% |
Assets and liabilities of the acquiree: | |
Current assets, including: | 45,095 |
Cash and cash equivalents | 13,713 |
Trade receivables | 29,612 |
Non-current assets, including: | 213,184 |
Property, plant and equipment | 35,121 |
Identifiable intangible assets | 177,725 |
Acquired assets – total | 258,279 |
Non-current liabilities, including: | 30,414 |
Deferred tax liabilities | 26,659 |
Other liabilities and provisions | 3,755 |
Current liabilities | 8,521 |
Assumed liabilities – total | 38,935 |
Acquired net assets (C) | 219,344 |
Value of interest in acquired net assets | 219,344 |
Goodwill / Gain on bargain purchase (C-A-B) | - |
(A) Represents the fair value of the consideration for: 50% of shares in UAB Manifoldas acquired on November 28th 2012.
(B) Reprezentuje wartość godziwą uprzednio posiadanych przez AB LOTOS Geonafta (przed dniem 28 listopada 2012 roku) 50% udziałów konsolidowanych aktywów netto spółki UAB Manifoldas.
(C) Represents the fair value of the 50% interest in the consolidated net assets of UAB Manifoldas previously held by AB LOTOS Geonafta (before November 28th 2012).
When initially accounting for the transaction involving acquisition of control over UAB Manifoldas, the Group used provisional fair values of the identifiable acquired assets and assumed liabilities, which may differ from the fair values that will be used for final accounting for the transaction. In accordance with IFRS 3 Business Combinations, a business combination must be finally accounted for within a year from the acquisition date.
The Group recognised identifiable intangible assets comprising licences held by Manifoldas and conferring the right to conduct production of oil from deposits in the territory of Lithuania. The value of the licences, that is PLN 177,725 thousand (LTL 149,311 thousand, translated at the LTL/PLN mid-exchange rate quoted by the National Bank of Poland for the business combination date) includes the tax effect of PLN 26,659 thousand (LTL 22,397 thousand, translated at the LTL/PLN mid-exchange rate quoted by the National Bank of Poland for November 28th 2010), calculated at the 15% rate in effect in Lithuania.
The increase in the value of the 50% equity interest in UAB Manifoldas held by AB LOTOS Geonafta before November 28th 2012, of PLN 57,747 thousand (LTL 48,515 thousand, translated at the LTL/PLN mid-exchange rate quoted by the National Bank of Poland for the acquisition date, that is November 28th 2010), resulting from its fair value measurement as at the business combination date, was disclosed in the consolidated statement of comprehensive income for 2012 under ”Effect of accounting for step acquisition of control (AB LOTOS Geonafta Group).
UAB Manifoldas' revenue and net loss figures for the period from the business combination date to December 31st 2012, were PLN 4,074 thousand and PLN (1,632) thousand, respectively (LTL 3,370 thousand and LTL 1,350 thousand, respectively, translated at the rate representing the arithmetic mean of the LTL/PLN mid-exchange rates quoted by the National Bank of Poland for the last day of each calendar month in the period from the acquisition date to December 31st 2012), and were accounted for in the consolidated statement of comprehensive income for 2012.
If UAB Manifoldas, acquired on November 28th 2012, was fully consolidated beginning from January 1st 2012, the Group's 2012 consolidated statement of comprehensive income would include the company's (as a subsidiary) total revenue of PLN 73,375 thousand and net profit of PLN 33,091 thousand (LTL 60,706 thousand and LTL 27,377 thousand, respectively, translated at the rate representing the arithmetic mean of the LTL/PLN mid-exchange rates quoted by the National Bank of Poland for the last day of each calendar month in the period from January 1st to December 31st 2012).
On November 28th 2012, AB LOTOS Geonafta paid all its liabilities related to the acquisition of 50% of shares in UAB Manifoldas, totalling PLN 109,672 thousand (LTL 92,138 thousand, translated at the LTL/PLN mid-exchange rate quoted by the National Bank of Poland for November 28th 2012).
Net of the acquiree’s cash acquired in the business combination, totalling PLN 6,820 thousand (LTL 5,760 thousand, translated at the LTL/PLN mid-exchange rate quoted by the National Bank of Poland for December 31st 2012), the acquisition value of UAB Manifoldas as disclosed in the consolidated statement of cash flows for the reporting period ended December 31st 2012 was PLN 104,405 thousand (LTL 86,378 thousand, translated at the rate representing the arithmetic mean of the LTL/PLN mid-exchange rates quoted by the National Bank of Poland for the last day of each calendar month in the period from January 1st to December 31st 2012).
The transaction follows from the Group’s development strategy for the upstream segment. The Group assumed control over AB LOTOS Geonafta on February 3rd 2011 by acquiring an interest in UAB Meditus. For more details, see Note 2 to the consolidated financial statements for 2011. On February 3rd 2012, the Group settled all its liabilities under the acquisition of UAB Meditus outstanding as at December 31st 2011, which resulted in the recognition in the consolidated statement of cash flows for the reporting period ended December 31st 2012 of an outflow of PLN 24,727 thousand (LTL 20,457 thousand, translated at the average LTL/PLN mid-exchange rate quoted by the National Bank of Poland for the reporting period ended December 31st 2012).