Grupa LOTOS S.A. - Annual Report 2010

Following a review announced on January 25th 2011, the LOTOS stock was included in the index again. In 2010, the index value was published twice daily. Starting from 2011, it is quoted in the continuous system, from the beginning to the end of a trading session.

The RESPECT project is intended to promote responsible management of WSE-listed companies. Similar indices have been launched on several dozen stock markets around the world, the most prominent of them being the Dow Jones Sustainability Index and FTSE4Good. The basic criteria for inclusion in the RESPECT Index are the results of the rating designed to assess the sustainability-driven companies. The analysis covered the companies listed on the regulated market of the Warsaw Stock Exchange which received the highest ratings in terms of their social responsibility efforts and are leaders in communication with the financial markets, sustainable development and corporate disclosure discipline.

To assess the WSE-listed companies (excluding the NewConnect market, foreign companies and companies whose shares are traded outside of the Warsaw Stock Exchange) and establish the RESPECT rating, corporate social responsibility was defined as a management strategy and conceptual approach to doing business. In 2009, Grupa LOTOS joined the project independently as one of the 120 companies that agreed to subject themselves to the assessment. Starting from 2011, the first two stages of the qualification process are run without the participation of the candidate companies. At present, the Warsaw Stock Exchange together with the Polish Association of Listed Companies – based on publicly available information – undertake the assessment of the listed companies as to their meeting the criterium of liquidity and then to the practices adopted by them in the areas of corporate and information governance as well as investor relations. It is only at the third stage of the process that the consent to be included in the project along with the detailed verification by the consulting firm Deloitte from the companies interested is required.

Companies which ranked highest in course of this qualification process were included in the RESPECT sustainability index, which is an income index, taking into account income from dividends and pre-emptive rights to evaluate the economic condition of companies considered to operate to the highest corporate standards.

Areas covered by assessment for inclusion in the RESPECT Index

CSR policies

• CSR strategy and CSR activities
• Person dedicated to the CSR area
• CSR reports
• Non-obligatory declarations, rules or codes observed by the Company and relating directly to social, economic or environmental issues

Management system

• Internal control and risk management system
• Code of ethics
• CSR requirements vis-à-vis suppliers and contractors (ethical conduct clauses, audits)
• Stakeholder dialogue

Environmental management

• Environmental policies
• Efforts made to monitor and reduce consumption of raw materials, materials, fuels, energy and water
• Non-obligatory waste recycling and segregation

HR policies

• HR policies
• Accident statistics
• Non-financial incentives
• Employee satisfaction surveys

Market and customers

• Management of complaints and requests
• Advertising ethics
• Management of personal data and privacy protection
• Fines incurred for anti-competitive and monopolistic practices

Starting from 2011, the assessment will be repeated every six months and may only cover companies whose shares are included in the WIG-20, mWIG-40 or sWIG-80 indices. The project is supervised by a steering committee composed of representatives of the organiser and the scientific council – a group of independent, reputed scientists and economists.

An important success confirming the high ratings achieved by Grupa LOTOS in the RESPECT assessment was the first award in the Investor Relations category of the Listed Company of the Year 2010 ranking, prepared by the Pentor Research Institute for the Puls Biznesu daily. The winner was selected by capital market experts - stock analysts, investment advisers and brokers representing brokerage houses and offices, insurance companies, investment funds, capital departments of banks and consulting firms located all over Poland – in acknowledgement of the quality of Grupa LOTOS’ dialogue with retail and institutional investors, as well as the promptness of its response to investor queries.