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ORLEN Group 2016 Integrated Report

II nagroda specjalna w kategorii Raport Zintegrowany | Najlepszy raport on-line

ORLEN Group structure and joint arrangements

9.1. SGROUP STRUCTURE

SELECTED ACCOUNTING PRINCIPLES


Principles of consolidation
The consolidated financial statements of the Group include assets, liabilities, equity, income, expenses and cash flows of the Parent Company and its subsidiaries that are presented as those of a single economic entity and are prepared as at the same reporting period as separate financial statements of the Parent Company and using uniform accounting principles in relation to similar transactions and other events in similar circumstances.
The subsidiaries are consolidated using full consolidation method and joint operations by recognition of respective share in assets, liabilities, revenues and cost. The joint ventures as well as investments in associates are accounted for under equity method.
The Group's share in profit or loss of the investee is recognized in the Group's profit or loss as other operating activity.
For investments in subsidiaries - non-controlling interests shall be presented in the consolidated statement of financial position as non-controlling interest, separately from the equity of the owners of the Parent Company.
For investments in associates - the Group has a significant influence if it holds, directly or indirectly (i.e. through subsidiaries), from 20% to 49% of the voting rights of an entity, unless it can be clearly stated otherwise.


PROFESSIONAL JUDGEMENTS


Investments in subsidiaries and jointly controlled entities
The Group, regardless of the nature of its involvement in the entity (the entity in which it invested) defines its status by assessment, whether it controls the entity in which the investment was made, and whether it has a joint control in a joint venture, after consideration of all the facts and circumstances.


PKN ORLEN as the Parent Company is a multi-segment entity, appropriately allocated to all operating segments and corporate functions.

Name of entity Parent company Share in total voting rights Consolidation method/ Valuation method
    31/12/2016 31/12/2015  
Downstream Segment        
ORLEN Lietuva Group        
AB ORLEN Lietuva PKN ORLEN S.A. 100% 100% full

UAB Mazeikiu Naftos prekybos namai

AB ORLEN Lietuva 100% 100% full

OU ORLEN Eesti

UAB Mezeikiu naftos prekybos namai 100% 100% full

SIA ORLEN Latvija

UAB Mezeikiu naftos prekybos namai 100% 100% full

UAB Emas

AB ORLEN Lietuva 100% 100% full
UNIPETROL Group        

PARAMO, a.s.

UNIPETROL, a.s. 100% 100% full

MOGUL SLOVAKIA, s.r.o.

UNIPETROL RPA, s.r.o. - 100% full

Paramo Oil, s.r.o.

PARAMO, a.s. 100% 100% full

UNIPETROL Austria HmbH

UNIPETROL, a.s. - 100% full

UNIPETROL RPA, s.r.o.

UNIPETROL, a.s. 100% 100% full

UNIPETROL Slovensko, s.r.o.

UNIPETROL RPA, s.r.o. 100% 100% full

UNIPETROL Deutschland GmbH

UNIPETROL RPA, s.r.o. 100% 100% full

UNIPETROL RPA Hungary Kft.

UNIPETROL RPA, s.r.o. 100% 100% full

CHEMOPETROL, a.s.

UNIPETROL, a.s. - 100% full

Spolana a.s.

UNIPETROL RPA, s.r.o. 100% - full

UNIPETROL DOPRAVA, s.r.o.

UNIPETROL RPA, s.r.o. 100% 100% full

PETROTRANS, s.r.o.

BENZINA, s.r.o. 100% 100% full
UNIPETROL RAFINÉRIE, s.r.o. UNIPETROL, a.s. - 100% full
ČESKÁ RAFINÉRSKÁ, a.s. UNIPETROL, a.s. 100% 100% full
Butadien Kralupy a.s. UNIPETROL, a.s. 51% 51% share in assets and liabilities
ANWIL Group        
Anwil S.A. PKN ORLEN S.A. 100% 100% full

Spolana a.s.

ANWIL S.A. - 100% full

Przedsiebiorstwo Produkcyjno-Handlowo-Usługowe Pro-Lab Sp. z o.o.

ANWIL S.A. - 99,99% full

Przedsiębiorstwo Usług technicznych Wircom Sp. z o.o.

PKN ORLEN S.A. - 97,38% full
Basell Orlen Polyolefins Group        
Basell ORLEN Polyolefins Sp. z o.o. PKN ORLEN S.A. 50% 50% equity method

Basell ORLEN Polyolefins Sprzedaż Sp. z o.o.

Basell ORLEN Polyolefins Sp. z.o.o. 100% 100% equity method
ORLEN Południe Group        
ORLEN Południe S.A. PKN ORLEN S.A. 100% 100%  

EkoNaft Sp. z o.o.

ORLEN POŁUDNIE S.A. - 100% full

Energomedia Sp. z o.o.

ORLEN POŁUDNIE S.A. 100% 100% full

Euronaft Trzebinia Sp. z o.o.

ORLEN POŁUDNIE S.A. 100% 100% full

Konsorcjum Olejów Przepracowanych - Organizacja Odzysku S.A.

ORLEN Południe S.A. 89% 89% full
ORLEN Oil Group        
ORLEN Oil Sp. z o.o. PKN ORLEN S.A. 100% 100% full
ORLEN Asfalt Group        
ORLEN Asfalt Sp. z o.o. PKN ORLEN S.A. 100% 100% full

ORLEN Asfalt Ceska Republika s.r.o.

ORLEN ASFALT Sp. z o.o. 100% 100% full
Inowrocławskie Kopalnie Soli "Solino" S.A. PKN ORLEN S.A. 100% 100% full
Kopalnia Soli Lubień Sp. z o.o. PKN ORLEN S.A. 100% 100% full
ORLEN Paliwa Sp. z o.o. PKN ORLEN S.A. 100% 100% full

 

Name of entity Parent company Share in total voting rights Consolidation method/ Valuation method
    31/12/2016 31/12/2015  
Petrolot Sp. z o.o. PKN ORLEN S.A. 100% 100% full
ORLEN Eko Sp. z o.o. PKN ORLEN S.A. 100% 100% full
Baltic Power Sp. z o.o. PKN ORLEN S.A. 100% 100% full
ORLEN KolTrans Sp. z o.o. PKN ORLEN S.A. 99,85% 99,85% full
Ship-Service S.A. PKN ORLEN S.A. 60,86% 60,86% full
ORLEN Transport S.A. PKN ORLEN S.A. - 100% full
ORLEN Wir Sp. z o.o. PKN ORLEN S.A. - 76,59% full
Retail Segment        
AB Ventus-Nafta PKN ORLEN S.A. 100% 100% full
ORLEN Deutschland GmbH PKN ORLEN S.A. 100% 100% full
ORLEN Budonaft Sp .z o.o. PKN ORLEN S.A. 100% 100% full
ORLEN Centrum Serwisowe Sp. z o.o. PKN ORLEN S.A. 99,33% 99,33% full
UNIPETROL RPA, s.r.o. UNIPETROL, a.s. 100% - full
BENZINA, s.r.o. UNIPETROL, a.s. - 100% full
Upstream Segment        
ORLEN Upstream Group        
ORLEN Upstream Sp. z o.o. PKN ORLEN S.A. 100% 100% full
ORLEN Upstream International BV PKN ORLEN S.A. - 100% full

ORLEN Upstream Kanada Ltd.

PKN ORLEN S.A. 100% 100% full

1426628 Alberta Ltd.

ORLEN Upstream Kanada Ltd. 100% 100% full

OneEx Operations Partnership

ORLEN Upstream Kanada Ltd. 100% 100% full

Kicking Horse Energy Inc.

ORLEN Upstream Sp. z o.o. - 100% full

KCK Operating Company Ltd.

ORLEN Upstream Sp. z o.o. - 100% full

Columbia Natural Resources Canada Ltd.

ORLEN Upstream Sp. z o.o. - 100% full

Kicking Horse Internat. Exploration Ltd.

ORLEN Upstream Sp. z o.o. - 100% full

Pieridae Production GP Ltd

ORLEN Upstream Kanada Ltd. 50% 50% equity method

671519 NB Ltd

Pieridae Production GP Ltd 50% 50% equity method

KCK Atlantic Holdings Ltd.

Kicking Horse Energy Inc. 100% 100% full

Pieridae Production LP

KCK Atlantic Holdings Ltd. 80% 80% equity method
FX Energy, Inc. ORLEN Upstream Sp. z o.o. 100% 100% full

FX Drilling Company, Inc.

FX Energy, Inc. - 100% full

FX Producing Company, Inc.

FX Energy, Inc. - 100% full

Frontier Exploration, Inc.

FX Energy, Inc. 100% 100% full

FX Energy Netherlands Partnership C.V.

FX Energy, Inc. 100% 100% full

FX Energy Netherlands B.V.

FX Energy Netherlands Partnership C.V. 100% 100% full

FX Energy Poland Sp. z o.o.

FX Energy Netherlands Partnership C.V. 100% 100% full
Corporate Functions        
AB ORLEN Lietuva PKN ORLEN S.A. 100% 100% full
UNIPETROL Group        

UNIPETROL, a.s.

PKN ORLEN S.A. 62,99% 62,99% full

UNIPETROL RPA, s.r.o.

UNIPETROL, a.s. 100% 100% full

UNIPETROL SERVICES, s.r.o.

UNIPETROL, a.s. - 100% full
Unipetrol výzkumně vzdělávací centrum, a.s. UNIPETROL, a.s. 100% 100% full
HC Verva Litvinov, a.s. UNIPETROL RPA, s.r.o. 70,95% 70,95% full
ORLEN Administracja Sp. z o.o. PKN ORLEN S.A. 100% 100% full
ORLEN Capital AB PKN ORLEN S.A. 100% 100% full
ORLEN Centrum Usług Korporacyjnych Sp. z o.o. PKN ORLEN S.A. 100% 100% full
ORLEN Finance AB PKN ORLEN S.A. 100% 100% full
Grupa ORLEN Holding Malta        
ORLEN Holding Malta Ltd. PKN ORLEN S.A. 100% 100% full

Orlen Insurance Ltd.

ORLEN HOLDING MALTA Ltd. 100% 100% full
ORLEN Ochrona Group        
ORLEN Ochrona Sp. z o.o. PKN ORLEN S.A. 100% 100% full
UAB Apsauga ORLEN OCHRONA Sp. z o.o. 100% 100% full
ORLEN Serwis S.A. PKN ORLEN S.A. 100% 100% full
ORLEN Projekt S.A. PKN ORLEN S.A. 99,77% 99,77% full
ORLEN Laboratorium S.A. PKN ORLEN S.A. 99,38% 99,38% full
Płocki Park Przemysłowo-Technologiczny Group        
Płocki Park Przemysłowo-Technologiczny S.A. (PPPT S.A.) PKN ORLEN S.A. 50% 50% equity method

Centrum Edukacji Sp. z o.o.

PPPT S.A. 69,43% 69,43% equity method

Activity of core companies belonging to ORLEN Group

Name of entity Headquarters Principal activity
AB ORLEN Lietuva (including its own Capital Group) Lithuania - Juodeikiai crude oil processing, production of refining products and wholesale
UNIPETROL a.s. (including its own Capital Group) Czech Republic - Prague crude oil processing as well as manufacture and distribution of refinery, petrochemical and chemical products
Anwil S.A. Poland - Włocławek production of nitrogen fertilizers, plastic and chemicals
ORLEN Południe S.A. Poland - Trzebinia crude oil processing, production and sale of biofuels, oils
ORLEN Oil Sp. z o.o. Poland - Cracow production, distribution and sale of grease oils, maintenance liquids
ORLEN Asfalt Sp. z o.o. Poland - Płock manufacture and sale of road bitumens and specific bitumen products
ORLEN Paliwa Sp. z o.o. Poland - Płock   liquid fuels trade
Inowrocławskie Kopalnie Soli "SOLINO" S.A. Poland - Inowrocław storage of crude oil, fuels and gases, extraction and supply of brine
ORLEN Upstream Sp. z o.o. (including its own Capital Group) Poland - Warsaw exploration and recognition of hydrocarbon deposits, extraction of crude oil and natural gas

STRUCTURED ENTITIES

ORLEN Capital AB
The company’s business is raising funds through the issuance of bonds and other financial instruments for institutional and private investors. ORLEN Capital AB specializes in granting borrowings or loans to Group companies and conduct any other activities related to the financial instruments. 

On 30 June 2014 and on 7 June 2016 ORLEN Capital AB issued Eurobonds with 7-year redemption of approximately of PLN 5,530 million translated using exchange rate as at 31 December 2016 (representing EUR 1,250 million).The funds obtained by ORLEN Capital through the issue were transferred to PKN ORLEN under the borrowing agreement. PKN ORLEN is the guarantor of the both issued bonds by an irrevocable and unconditional guarantees issued to the bondholders of PLN 9,290 million translated using exchange rate as at 31 December 2016 (representing of EUR 2.1 billion). The guarantees were granted for the time of the Eurobonds issues, until 30 June 2021 and 7 June 2023, respectively.

ORLEN Finance AB
The company’s business is to conduct financial services within the ORLEN Group, including intercompany borrowings, as well as any other financial instruments, including mainly external financing.
As at 31 December 2016 the Group has issued the guarantee to ORLEN Finance of PLN 885 million.

ORLEN Insurance Ltd.
ORLEN Insurance is an internal insurance company (i.e. captive), which main purpose is insurance and reinsurance the Group's business, matching insurance to the individual needs of its property and the potential loss of margin.

9.2. SUBSIDIARIES

9.2.1. Changes in shareholder structure of the Group

TYPE OF TRANSACTION / ENTITIES TRANSACTION DATE NUMBER OF AQUIRED / (SOLD) SHARES
SALES OF SHARES*    
by PKN ORLEN:    

in ORLEN Transport S.A.

29 February 2016 (25 530 000)
by FX Energy Inc:    

w FX Drilling Company, Inc

30 December 2016 (1 000 000)

w FX Producing Company, Inc.

30 December 2016 (1 000 000)
INCREASE IN SHARE CAPITAL AND SUBSCRIPTION OF SHARES    
by PKN ORLEN:    

in ORLEN Upstream Sp. z o.o.

25 May 2016 3 478

TRANSFORMATION OF ENTITY

   

ORLEN Laboratorium Sp. z o.o. into ORLEN Laboratorium S.A.

10 August 2016 -
MERGERS AND ACQUISITIONS  WITHIN THE GROUP:    
MERGERS AND ACQUISITIONS  WITHIN THE GROUP:    

ORLEN Upstream Canada with Kicking Horse Energy Inc., KCK Operating Company Ltd., Columbia Natural Resources Canada, Ltd. and Kicking Horse International Exploration Ltd

1 January 2016 -

Unipetrol Slovensko s.r.o. with Mogul Slovakia s.r.o.

1 January 2016 -

Unipetrol RPA s.r.o. with Benzina s.r.o.

1 January 2016 -

ORLEN Serwis S.A. with ORLEN Wir Sp. z o.o. and Wircom Sp. z o.o 

29 February 2016 240 344

Unipetrol RPA, s.r.o. with Unipetrol Services, s.r.o, Unipetrol Rafinerie, s.r.o. and Chemopetrol, a.s.

1 August 2016 -

ORLEN Upstream sp. z o.o. with ORLEN Upstream International B.V.

24 October 2016 -

Unipetrol RPA s.r.o with ČESKÁ RAFINÉRSKÁ a.s

1 January 2017 -
ACQUISITIONS OF SHARES    
by PKN ORLEN:    

in ORLEN Serwis S.A.

9 Novemeber 2016 79 028

in ORLEN Serwis S.A.

30 December 2016 2 276
by UNIPETROL RPA:    

in Spolana a.s. from Anwil S.A.

10 June 2016 7 482 788
DELETION FROM TRADE REGISTRY    

Pro-Lab sp. z o.o. in liquidation

18 April 2016 (18 282)

EkoNaft sp. z o.o. in liquidation

17 May 2016 (100)

Unipetrol Austria HmbH in liquidation

9 September 2016 (1)

* Impact of the transactions on the financial data of the Group were presented in the note 7.1.4 in the line profit on sale of subsidiaries in the amount PLN 63 million.

Changes in the Group structure are an element of the strategy, assuming a focus on core activities and allocating the resulting available capital for development of the Group in the most prospective areas.

9.3. INVESTMENTS IN JOINT ARRANGEMENTS

  Place of business Principal activity Valuation method
joint ventures      

Basell ORLEN Polyolefins Sp. z o.o. (BOP)

Płock production, distribution and sales of poliolefins equity method

Płocki Park Przemysłowo-Technologiczny (PPPT)

Płock renting real estate equity method

Pieridae Production GP Ltd (ORLEN Upstream Group)

Calgary exploration and extraction of minerals, storage, transport and logistics equity method
joint operations      

Butadien Kralupy a.s. (UNIPETROL Group)

Kralupy nad Vltavou manufacturing of butadien share in assets and liabilities

Additionally, ORLEN Upstream has participated in the following joint operations:

Investments accounted for under equity method

  31/12/2016 31/12/2015
joint ventures, incl.: 756 767

Basell ORLEN Polyolefins Sp. z o.o. (BOP)

677 693

Pieridae Production GP Ltd (ORLEN Upstream Group)

47 45
Associates 7 7
  763 774
 

Share in profit from investments accounted for under equity method

  2016 2015
joint ventures, incl.: 297 252

Basell ORLEN Polyolefins Sp. z o.o. (BOP)

298 252
Associates - 1
  297 253
 

 Condensed financial information of Bassel ORLEN Polyolefines Sp. z o.o.

  31/12/2016 31/12/2015
Non-current assets 856 874
Current assets 1 152 1 376

cash

440 394

other current assets

712 982
Total assets 2 008 2 250
Total equity 1 395 1 415
Non-current liabilities 50 36
Current liabilities, incl: 563 799

trade and other liabilities

548 783
Total liabilities 613 835
Total equity and liabilities 2 008 2 250
Net debt (440) (393)
Net assets 1 395 1 415
Group’s share in joint ventures (50%) 698 708
Consolidation adjustments (21) (15)
Joint ventures investments accounted for under equity method 677 693

 

  2016 2015
Sales revenues 3 218 3 895
Cost of sales, incl. (2 365) (3 136)

depreciation and amortisation

(97) (101)
Gross profit on sales 853 759
Distribution expenses (90) (112)
Administrative expenses (25) (23)
Other operating income and expenses, net (1) 1
Profit from operations 737 625
Net finance income and costs 7 4
Profit before tax 744 629
Tax expense (142) (120)
Net profit 602 509
Total net comprehensive income 602 509
Net cash provided by operating activities 745 611
Net cash (used) in investing activities (74) (17)
Net cash (used) in financing activities (625) (433)
Dividends received from joint ventures 311 190
Net profit 602 509
Group’s share in joint ventures (50%) 301 255
Consolidation adjustments (3) (3)
Group’s share in result of joint ventures accounted for under equity method 298 252

In 2016 and in 2015, there were no significant restrictions in associates and joint ventures resulting from loans agreements, regulatory requirements and other contractual agreements that would restrict access to assets and settlement of liabilities of the Group.