2. Composition of the Group and changes thereof

These consolidated financial statements have been prepared on the basis of the financial statements of the Parent and financial statements of its subsidiaries and jointly-controlled entities, prepared as at December 31st 2021.

All significant balances and transactions between the consolidated entities, including material unrealised profits on transactions, have been eliminated in their entirety. Unrealised losses are eliminated unless they are indicative of impairment.

Subsidiaries are fully consolidated starting from the date when the Group assumes control over them and cease to be consolidated when the control is lost. According to IFRS 10 Consolidated Financial Statements, the Group controls an investee when it is exposed or has rights to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.

The Group and all other investors collectively control an investee when they must act together to direct the relevant activities. In such cases, because no investor can direct the activities without the cooperation of other investors, no investor individually controls the investee. Interests in joint ventures held by the Group (see Note 14) are accounted for with the equity method.

The LOTOS Group comprises: Grupa LOTOS S.A. (the Parent), a number of production, service and trading companies which are direct or indirect subsidiaries of Grupa LOTOS S.A., and a foundation.

On November 2nd 2021, as part of the implementation of intra-organisational measures aimed at optimising the Group’s structure and preparing the Group for the implementation of the remedies, the General Meeting of LOTOS Asfalt Sp. z o.o. adopted a resolution to increase the share capital of LOTOS Asfalt Sp. z o.o. As the sole shareholder of LOTOS Asfalt Sp. z o.o., the Parent acquired all new shares in the company and covered them with a non-cash contribution in the form of an organised part of business of Grupa LOTOS S.A., comprising tangible and intangible assets related to the refining operations carried out by the Parent in Gdańsk. The transfer of the organised part of business to LOTOS Asfalt Sp. z o.o. marked the commencement of the process of integrating refining assets, the objective of which is to change the operating model of LOTOS Asfalt Sp. z o.o. into one of a processing refinery, managed by Grupa LOTOS S.A. Under the model, LOTOS Group S.A., as the processor, will be responsible for the purchase of crude oil and other raw materials, the sale of fuels and other final products resulting from the processing of crude oil in the refinery, as well as logistics, administrative and corporate matters, and R&D activities. LOTOS Asfalt Sp. z o.o. will not purchase crude oil or other commodities nor will it sell products on its own behalf, and its core business will be processing crude oil and providing fuel production services to Grupa LOTOS S.A. on a cost-plus basis.

Information on the registered addresses and business activities of the aforementioned entities, as well as on the Group’s ownership interests in those entities, is presented below.

For information on the Group’s interests in equity-accounted joint ventures, see Note 10.2.