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ORLEN Group 2016 Integrated Report

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

Our capitals

Ensuring a stable financial position is one of the three pillars of the ORLEN Group's 2017-2021 Strategy. The record-breaking LIFO-based EBITDA of PLN 9.4bn in 2016 (before the positive effect of the reversal of net impairment losses on property, plant and equipment), was due mainly to our consistent efforts to strengthen our competitive advantages, as the macroeconomic factors were not as supportive as in the previous year. High operating income translated into operating cash flows of PLN 9.3bn in 2016, enabling us to allocate PLN 4.4 billion to investment projects, pay dividend of PLN 2 per share to the shareholders, and further reduce net debt, by PLN 3.4bn. As a consequence, net debt at the end of 2016 stood at PLN 3.4bn and the financial leverage was down to 11.5%.

Net debt and financial leverage PLNbn (%)

More: Management's discussion and analysis of 2016 financial results


Stable financial position

  •  ORLEN Group's record-high LIFO-based EBITDA of PLN 9.4bn in 2016, before impairment losses on property, plant and equipment,
  • Operating cash flows: PLN 9.3bn,
  • Financial leverage at year-end 2016: 11.5%,
  • Net debt at year-end 2016: PLN 3.4bn.


 Operational efficiency

  • Crude processing volume of 30.1 million tonnes, and sales volumes of 30.7 million tonnes,
  • Lower white product yield across the ORLEN Group − down by 1pp yoy, to 78%,
  • 2.5% higher sales volumes in the retail segment.

 Investment projects

  • Construction of CCGTs with related auxiliary infrastructure in Włocławek and Płock,
  • Construction of a new polyethylene unit (PE3) in Litvínov,
  • Construction of a metathesis unit in Płock.

 

  • Launch of 70 service stations (including CODO stations: 35 in Poland, 10 in Germany, and 25 in the Czech Republic),
  • Upgrade and rebranding of 67 service stations (including CODO stations: 50 in Poland, 11 in the Czech Republic, and 6 in Germany),
  • Opening of 133 new Stop Cafes, Stop Cafes Bistros and Stop Cafes 2.0 in Poland and the Czech Republic.

 

  • Canada – PLN 344m / Poland – PLN 181m.

 


 

Maintaining stable financial performance/Payment of dividend

  • Dividend paid for 2013: PLN 0.6bn / PLN 1.44 per share
  • Dividend paid for 2014: PLN 0.7bn / PLN 1.65 per share
  • Dividend paid for 2015: PLN 0.9bn / PLN 2.0 per share
  • Dividend paid for 2016: PLN 1.3bn / PLN 3.0 per share

Downstream


ORLEN Group’s refining and power generating assets


Source: Own study based on Wood Mackenzie


Logistics infrastructure used by the ORLEN Group in Europe


Retail


Upstream

Canada

Poland


Investments

Major growth projects in 2017:

Downstream:

  • Construction of a new polyethylene unit (PE3) in Litvínov
  • Construction of a CCGT and related auxiliary infrastructure in Płock
  • Construction of a metathesis unit in Płock

 Retail:

  • Construction of new service stations
  • Incorporation of 40 OMV stations into the network in the Czech Republic
  • Upgrade of the stations and development of non-fuel offering

Upstream:

  • Continuation of exploration and production projects in Poland and Canada
  • Capital expenditure: 50% Canada / 50% Poland

CAPEX 2017 1)


Scheduled maintenance shutdowns at the ORLEN Group in 2017:

  • PKN ORLEN: DRW III, Hydrocracking, HOG, Reforming, PX/PTA
  • ORLEN Lietuva Group: Fluid Catalytic Cracking, Hydrogen Production Plant, Visbreaking
  • Unipetrol Group: Visbreaking (Litvínov), Hydrocracking (Litvínov), HON (Kralupy)
  • Anwil: PVC
  • BOP: Polyethylene/Polypropylene

People are the pillar of the ORLEN Group

Our priority is to ensure a safe work environment and promote proactive attitudes among our staff and contractors alike

TRR* ORLEN Group employees in 2011-2016:


 

* TRR = (number of recordable injuries of the ORLEN Group employees in a given year x 1,000,000)/number of hours worked by the ORLEN Group employees in the year

Intellectual capital is the ORLEN Group's strategic asset and a source of sustained competitive advantage.

  • 19,700 committed and highly-qualified employees in Poland and abroad
  • Experienced R&D team engaged in projects involving implementation of new products and technologies or projects conducted to ensure regulatory compliance
  • Internal organisational culture based on corporate values: Responsibility, Development, People, Energy, Reliability
  • Integrated Management System, which supports us in offering professional customer service and maintaining the highest environmental and health protection standards
  • Policies and procedures for individual areas of business, ensuring the highest management standards
  • Policy of motivating staff to develop innovative technical and technological solutions by implementing projects and intranet platforms to promote innovative processes and knowledge management
  • Implementing innovative solutions − R&D portfolio development and innovation are an integral part of the ORLEN Group's 2017-2021 Strategy and a key element of the Strategy's second pillar - People - Innovations that create value
  • ORLEN: the most valuable Polish brand − based on a ranking by the Rzeczpospolita daily, the ORLEN brand was worth PLN 3.9bn in 2016

The social capital of the ORLEN Group relies on social connections and trust, both within the organisation and in relations with third parties.

 


The ‘Core Values and Standards of Conduct’ - offer guidance on relations inside the Company and with external stakeholders, such as trading partners, local communities, and competitors.


Responsibility

  • Relations with local communities
    The ORLEN Group is an active and reliable partner of local communities. Most of our local CSR projects are pursued in communities where ORLEN carries on business, especially in Płock − the location of its registered office and largest production plant, but also in other regions where the ORLEN Group has operations or offices.
  • Collaboration with NGOs
    By joining forces with non-governmental organisations, we support closer and stronger dialogue between the public and private sectors, thus driving positive changes in the environment.
  • CSR and sustainability projects 
    These include Global Compact, Fair Trade, Respect Index, Vision of Sustainable Development of Polish Businesses until 2050, Declaration of Compliance with the Code of Corporate Responsibility, Declaration on Sustainable Development in the Polish Energy Sector.
  • We have partnered with a number of industry, expert and business organisations and associations to build long-lasting relations with our business environment. PKN ORLEN operates in accordance with the principles of sustainable development and corporate social responsibility, as well as legally prescribed environmental standards. All work is carried out by professionals, with due consideration to current and future environmental impacts.
  • Supplier Code of Conduct
    Striving to ensure sustainable development and responsible supply chain, PKN ORLEN incorporated the responsible business and sustainable growth criteria in its procurement management standard.

Charity

  • Charitable giving policy
    Its twin priorities are to improve the quality of life and health and promote education and youth development. The ORLEN Group provides help directly and indirectly, through its ORLEN GIFT FROM THE HEART Foundation and the ANWIL for Włocławek Foundation.
  • Employee Volunteering Programme
    Our employees initiate and support various CSR projects at the ORLEN Group with their knowledge, experience and work.
  • Fire Service Assistance Programme
    PKN ORLEN has always been especially concerned about the need to protect others from injury or death. Launched in 2000, the programme is aimed at improving general safety, promoting the right attitudes and conduct, and recognising the hard, life-saving work of firefighters.

Sponsorship

CSR Projects

  • PKN ORLEN sponsors cultural and national heritage protection projects.
  • A leader in the petrochemical industry, the ORLEN Group applies its extensive expertise to the promotion of education and knowledge of science, especially chemistry.
  • As a company operating in an area closely tied to the automotive industry, ORLEN has implemented a number of initiatives to improve road safety.

Sports projects

  • Being Poland’s largest company, ORLEN feels responsible for supporting Polish national disciplines and teams, which bring so much joy and excitement to so many Poles. We are well aware of how important it is to promote amateur sports and an active and healthy lifestyle.
  • The ORLEN Group sponsors track and field, volleyball, motor sports and other disciplines, as well as promoting athleticism among children and teenagers by supporting junior sporting events throughout Poland.

Integrated reporting

Since 2015, ORLEN has been releasing integrated reports that present interactions and interrelations between the financial and non-financial aspects of the ORLEN Group’s activities. Integrated reporting is a way of communicating and an organisation’s communication tool which demonstrates how the organisation’s strategy, corporate governance and performance, in the context of its environment, allow it to create value in various time horizons.


All our business activities are carried out in a responsible manner, with due consideration to the effects of current and future environmental impacts.

The ORLEN Group uses renewable and non-renewable natural resources in its business. All our business activities are carried out in a responsible manner, with due consideration to the effects of current and future environmental impacts.

  • Resources used in production processes: renewable − air, water, esters, bioethanol; non-renewable − crude oil, natural gas, auxiliary chemicals,
  • Committed to environmental sustainability, we take measures to reduce air emissions and ensure effective waste management and water/sewage management,
  • The production plants of the ORLEN Group in Poland, the Czech Republic and Lithuania are located on more than 1.7m ha,
  • The aggregate amount of capital expenditure on environment protection projects incurred by the entire ORLEN Group in 2016 was in excess of EUR 22m.

The ORLEN Group has crude oil and natural gas (2P) reserves in Poland and Canada − close to 114 MMBOE

  Unit Canada Poland
Reserves of oil and gas (2P) Mboe 102,5 11,3
Extraction Mboe/year 4,5 0,5
Average production thousand boe per day 12,2 1,4
Exploitation structure (liquid/gas) % 43/57 10/90
Net drilling number 13,1 5.0
Concessions number - 31

 ORLEN Group’s production assets in Canada:

Source: In-house analysis

ORLEN Group’s exploration assets in Poland:

Source: In-house analysis


Emissions

Selected air emissions generated by the Płock production plant in 2015−2016:

Substance Emissions [Mg] Increase/decrease
  2015 2016 [Mg] [%]
Sulfur dioxide 15 501,14 4 567,11 -10 934,03 -70,54
NOx (nitrogen dioxide equivalent) 5 770,94 4 452,06 -1 318,88 -22,85
Carbon monoxide 1 673,21 1 500,69 -172,52 -10,31
Total hydrocarbons 957,95 878,07 -79,88 -8,34
Total particle emissions1) 472,14 373,53 -98,61 -20,89
Other substances 102,82 549,07 446,26 434,04
Total emissions, excluding carbon dioxide 24,478.20 12 320,53 -12 157,67 -49,67
1) Total particle emissions, i.e. combustion dust, silica dust and metals in dust.

 

Selected air emissions generated by the PTA plant in Włocławek in 2015−2016:

Substance Emissions [Mg] Increase/decrease
  2015 2016 [Mg] [%]
Sulfur dioxide 2,33 2,46 0,13 5,58
NOx (nitrogen dioxide equivalent) 71,63 80,53 8.90 12,42
Carbon monoxide 749,74 874,29 124,56 16,61
Total particle emissions 2,78 2,31 -0,47 -16,88
Other substances 39,99 36,15 -3,84 (9.60)
Total emissions, excluding carbon dioxide 866,47 995,74 129,27 14,92

Air emissions from other ORLEN Group companies [Mg]:

Emissions [Mg]
Substance 2015 2016 Increase/decrease [%]
Sulfur dioxide 18 761 17 118 - 8,76
NOx 5 301 5 147 (2.90)
Carbon monoxide 1 798 1 133 (37.00)
Particle emissions 1 239 1 144 - 7,66
Other substances 11 219 12 721 13,39
Total 38 318 37 263 - 2,75

Water

Water abstracted by the Płock production plant in 2015−2016, by amount and type:

Parameter Year  
  2015 2016

Increase/decrease [%]

Water drawn from the Wisła river [m3] 24,363 987 23,437 909 (3.8)
Water abstracted from deep water wells [m3] 413,629 463,206 11.98
Amount of recycled water [m3] 2,418 949 3,147 039 30.1

Water drawn by the Włocławek PTA plant in 2015−2016:

Parameter Year  
  2015 2016

Increase/decrease [%]

Demineralised water [m3] 1,898 542 1,873 478 (1.3)
Industrial water [m3] 68,893 47,069 (31.68)
Decarbonised water [m3] 2,170 540 2,147 147 (1.1)
Sanitary and drinking water [m3] 5,349 5,436 1.6
TOTAL – Water delivered by ANWIL’s external supplier [m3] 4,143 324 4,073 130 (1.7)

Water abstraction at other companies of the ORLEN Group in 2015–2016 [m3]:

Water abstraction [m3]
Intake 2015 2016 Increase/decrease [%]
Surface water 59,408 533 55,779 646 (6.11)
Groundwater 1,929 628 2,026 601 5.03
Mains water 855,278 831.129 (2.82)
Total 61,338 161 58,637 376 (4.40)

Waste

Waste management at the Płock production plant in 2015−2016:

Waste Amount [Mg]  
  2015 2016

Increase/decrease [%]

Total generated waste: of which: 17 039 48215,615 183.0

hazardous waste

8 057 10 829,065 34,4

non-hazardous waste (excluding municipal waste)

8 982 37 386,550 316,2
Transferred for recycling 14 464 47 343 227,3
Transferred for disposal 1 729 4 480 159,1
Stored waste 6 184 2 577 -58,3

Waste management at the Włocławek PTA Plant in 2015−2016:

Waste Amount [Mg]  
  2015 2016 Increase/decrease [%]

Total generated waste: of which:

6 444 4477 -30,5

hazardous waste

6 425 4383 -31,8

non-hazardous waste (excluding municipal waste)

19 93 389,5
Transferred for recycling 86 139 61,6
Transferred for disposal 6 294 4335 -31,1
Stored waste 67 70 4,5

In total, other companies of the ORLEN Group generated over 120,000 Mg of waste in 2016. Its volumes are presented below, by type:

Quantity of generated waste [Mg] 2015 2016 Increase/decrease [%]
Hazardous waste 58 842 60 055 2,06
Non-hazardous waste 76 750 60 299 -21,43
Total 135 592 120 354 -11,24