total revenue in 2018
24.5% – increase in revenue relative to 2017
2 455 /t (toe)
average statistical net revenue per tonne in 2018
17.9% – increase in average statistical net revenue per tonne relative to 2017
increase in sales volumes of petroleum products, merchandise and materials relative to 2017
increase in unit gross margin in 2018 relative to 2017
LOTOS Group’s consolidated gross profit
13.5% – increase in consolidated gross profit compared with 2017
LOTOS Group’s cost of sales in 2018
26.7% – increase in LOTOS Group’s cost of sales compared with 2017
The 2018 increase in our operating profit was driven mainly by higher average annual prices of crude oil and natural gas, higher margins on key petroleum products, the uptrend in crude oil and petroleum product prices in the first three quarters of 2018, and higher sales volumes.
The higher revenue and operating profit reported by the E&P segment in 2018 were primarily driven by growing prices of Brent Dated crude (up 31.4%) and natural gas (up 38.8%) on global markets.
The higher revenue of the Refining and Marketing segment in 2018 was mainly due to a 17% increase in the average selling price following from higher prices of petroleum products on global markets, offset by a lower USD/PLN exchange rate, as well as a rise in the sales volumes of petroleum products. The segment’s 11.4% increase in operating profit for 2018 was partly related to the ‘Spring 2017’ maintenance shutdown.
KEY FINANCIAL RESULTS OF THE LOTOS GROUP
LOTOS Group’s operating profit for 2018
LOTOS Group’s net profit for 2018
Refining and Marketing segment’s operating profit
Exploration and Production segment’s operating profit
year-on-year increase in revenue
equity at the end of 2018
increase in LOTOS Group’s equity relative to 2017
share of equity in total equity and liabilities in 2018
increase in the share of equity in total equity and liabilities relative to 2017
KEY CHANGES IN LIABILITIES (DOWN BY PLN 269.6M):
increase in other liabilities and provisions (mainly provisions recognised in the Refining and Marketing segment and provisions remeasured in the Exploration and Production segment)
increase in current tax liabilities
In 2018, the LOTOS Group’s financial debt decreased relative to 2017. The ratio of financial debt adjusted for free cash to equity was 16.1%, down 7.3 pp.
LOTOS Group’s financial debt at the end of 2018
decrease in LOTOS Group’s financial debt relative to 2017
net financial debt as at the end of 2018
As at the end of 2018, our cash balance, including current account overdrafts, was PLN 1.94bn, up PLN 17.7m year on year.
Positive cash flows from operating activities were driven mainly by net profit before depreciation and amortisation, income tax and lower trade receivables, which were offset by higher inventories, impairment losses on property, plant and equipment and intangible assets, and lower trade payables.
Negative cash flows from operating activities primarily included expenditure on main growth projects, including the EFRA project, and on hydrocarbon production from the Norwegian and Baltic fields, as well as funds in the Sleipner decommissioning escrow account.
Negative cash flows from financing activities were due mainly to borrowings, repayments of borrowings and payment of interest, dividend paid, and negative balance of proceeds from issue and redemption of the Group’s bonds.
LOTOS Group’s cash balance, including current
positive cash flows from operating activities generated in 2018
negative cash flows from investing activities generated in 2018
negative cash flows from financing activities
We invest in the future
In 2018, the LOTOS Group’s capital expenditure exceeded PLN 1bn, most of which was spent on the construction of a delayed coking unit (EFRA Project) and on oil and gas production, mainly from the B8 field in the Baltic Sea and from the Sleipner and YME area fields on the Norwegian Continental Shelf.
We support economic growth
As Poland’s second largest fuel company, we have a direct and indirect effect on the country’s economy. The development of the regions where we operate is driven by taxes we pay and a diversified supplier network.
We support local entrepreneurs by improving conditions for further growth of small and medium-sized businesses. LOTOS Oil, one of our companies, plays an important role in stimulating local economy. It works with numerous local suppliers of goods and services, for whom establishing business relationships with LOTOS undoubtedly presents a growth opportunity. As a result, more jobs are created in the regions in which those businesses operate.
In 2018, 20.80% of our procurement budget was spent on goods and serviced purchased from local companies from Gdańsk and the surrounding area.
We are a major employer not only in the Gdańsk Province – our service stations are a workplace for people also in other regions of Poland. Total workforce at the LOTOS Group is 5,045. In 2018, we paid PLN 761.6m in salaries and wages.
The funds paid to our employees and suppliers indirectly contribute to improving the economic situation of the regions where we are present. The money they put in circulation supports other local businesses and improves the quality of life of local communities.
Our broad offering is also designed to bridge the gap in access to consumer goods for low-income customers. LOTOS Oil products are widely available and come in different prices so that they can be purchased by both more and less affluent individuals.
The LOTOS Group also pursues a number of innovation and efficiency improvement initiatives to reduce process and energy costs. In this way we seek to counteract the rising global prices of energy carriers and thus prevent energy poverty.