Consolidated non-financial statement

Economic aspects

In its decision-making processes, the LOTOS Group takes into account their indirect impact on the organisations's environment. By cooperating with local suppliers and business partners, the Concern can improve the quality of life and stimulate the spirit of entrepreurship in local communities. The financial data related to social responsibility illustrate the flow of capital between all groups involved in the Company along with the economic impact of the entire organisation on the society as a whole.


Economic performance

EC 1 Direct economic value generated and distributed, including revenues, operating costs, employee compensation, donations and other community investments, retained earnings, and payments to capital providers and governments
Grupa LOTOS 2006 2007 2008 2009 2010
  k PLN
Revenues, net 11,630,382 11,867,884 14,900,794 12,711,611 18,132,827
Operating costs 10,712,102 10,851,429 14,867,282 12,116,519 17,104,229
Employee compensation and other employee benefits 82,771 94,724 115,587 131,585 136,840
Payments to capital providers 3,093 65,680 61,497 127,114 126,842
Payments to governments 5,249,087 6,730,682 7,108,738 8.557,314 9,425,916
Community investments 1,876 1,121 651 793 1,240

On June 28th 2010, the General Shareholders Meeting of Grupa LOTOS passed a resolution on the distribution of net profit for 2009. Pursuant to the resolution, PLN 1,000 thousand was transferred to a special-purpose fund used by Grupa LOTOS to finance CSR projects.

LOTOS Group 2006 2007 2008 2009 2010
  k PLN
Revenues, net 12,834,708 13,143,463 16,309,960 14,344,851 19,695,002
Operating costs 10,978,033 11,368,625 15,314,995 12,775,790 17,562,048
Employee compensation and other employee benefits 359,998 388,418 422,506 462,948 497,043
Payments to capital providers 32,845 96,768 99,729 176,338 174,154
Payments to governments 5,968,567 7,194,536 7,519,904 8,951,791 9,804,980
Community investments 2,352 1,362 898 839 1,485


EC 3 Coverage of the organisation’s defined benefit plan obligations

As Grupa LOTOS has obligations under the Collective Bargaining Agreement, it recognises provisions for severance pays and length-of-service awards.

Grupa LOTOS 2006 2007 2008 2009 2010
Provisions for severance pays and length-of-service awards:  
- long-term 15,150 19,072 27,612 28,820 31,420
- short-term 2,189 2,753 3,666 4,348 4,973
Total provisions 17,339 21,825 31,278 33,168 36,393
Contributions under insurance contract with investment fund covering Grupa LOTOS employees (Pillar 3 of the Polish pension system) 1,453 2,496 3,105 3,439 3,800
LOTOS Group          
Provisions for severance pays and length-of-service awards:  
- long-term 54,232 60,295 82,587 87,961 95,370
- short-term 7,472 8,888 9,505 10,733 12,459
Total provisions 61,704 69,183 92,092 98,694 107,829
Contributions under insurance contract with investment fund covering LOTOS Group employees (Pillar 3 of the Polish pension system) 4,524 7,068 8,720 10,195 10,174


EC 4 Significant financial assistance received from government
Grupa LOTOS 2006 2007 2008  2009 2010
Subsidies received 3,416 2,808 - 5,908 -
Subsidies settled - - - - -
Subsidies at end of year 16,560 19,368 19,368 25,276 25,276
LOTOS Group          
Subsidies received 3,486 4,322 19 5,908 791
Subsidies settled 634 601 663 744 1,122
Subsidies at end of year 20,819 24,540 23,896 40,343 40,012

LOTOS Asfalt conducts its operations within the Tarnobrzeg Special Economic Zone, EURO-PARK WISŁOSAN, under Permit No. 158/ARP S.A./2008 issued on January 23rd 2008. The permit is valid through November 15th 2017. In light of the applicable regulations, LOTOS Asfalt is exempt from corporate income tax over the period covered by the permit. The company assesses the taxable income in accordance with the Act on Corporate Income Tax of February 15th 1992. For the purposes of calculating the taxable income and tax exempt income, LOTOS Asfalt makes a distinction between costs and income associated with in-zone operations and out-of-zone operations. The tax exemption is applied under the Act on Special Economic Zones of October 20th 1994 and Permit No. 158/ARP S.A./2008 of January 23rd 2008. Also, owing to the fact that its investments are conducted within the Tarnobrzeg Special Economic Zone, LOTOS Asfalt is entitled to a tax exampetion which allows it to reduce the income tax due by an amount not exceeding 50% of total investment expenditures incurred within the Tarnobrzeg Special Economic Zone.

Market presence

EC 5 Range of ratios of standard entry level wage compared to local minimum wage at significant locations of operations
No. Location Minimum base pay in 2010
Ratio of minimum base pay to national minimum wage in 2010 of PLN 1,317
1. Gdańsk 2,550 194
2. Czechowice 2,755 209
3. Jasło 2,600 197
4. Kraków 4,284 325
5. Piotrków Trybunalski 4,419 336
6. Poznań 2,900 220
7. Rypin 3,162 240
8. Warszawa 3,490 265
LOTOS Asfalt
1. Gdańsk 2,500 190
2. Czechowice 2,464 187
3. Jasło 1,500 114
1. Gdańsk 2,600 197
2. Czechowice 2,421 184
3. Jasło 2,475 188
4. Zduńska Wola 2,700 205
1. all locations 2,199 167
LOTOS Paliwa
1. all locations 2,550 194
1. all locations 1,600 121

In 2010, the minimum national wage in Poland was PLN 1,317. 

EC 6 Policy, practices, and proportion of spending on locally-based suppliers at significant locations of operations

As one of the largest business enterprises in the Gdańsk region, Grupa LOTOS feels responsible for the local communities and their dynamic growth. In the course of doing business, the Company is guided by the principles of sustainable development and corporate social responsibility. This means that ethics, transparency and openness play an important role in its day-to-day activities.

According to in-house estimates, local suppliers account for 84% of all business partners in the Company’s key locations (Gdańsk, Warsaw and Kraków), and 50% of all contracts are signed with suppliers from the region of Pomerania. The chart below presents the percentage shares of liabilities to business partners having registered offices in the Company’s key locations.

Percentage shares of liabilities to business partners having registered offices in Grupa LOTOS’ key business locations (2010)
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No. of contracts with business partners having registered offices in Grupa LOTOS’ key business locations (2010)

Registered office No. of contracts
Gdańsk and the region of Pomerania 385
Warsaw 197
Kraków 59
Other 125
Total 766

LOTOS Paliwa: The company purchases nearly 100% of its fuel stocks for resale from Grupa LOTOS. A major portion of the fuel is produced domestically at the Gdańsk refinery.

LOTOS Asfalt: In the process of choosing service and product suppliers, the company must follow a selection procedure which defines the rules to be applied and the course of action to be taken when purchasing products or services of any kind, with the key criteria being the quality and environmental impact of the product or service, compliance with health and safety regulations by the supplier, and the proposed terms of payment and warranty. The strategic supplier of feedstock to LOTOS Asfalt (Gdańsk, Jasło, Czechowice) is Grupa LOTOS. The share of local suppliers in the company’s supply structure is 5%, with Polish importers and international producers of raw materials and semi-finished products accounting for the balance.

LOTOS Kolej: The company’s procurement team seeks to optimise the purchasing process, including by selecting the best possible supplier, with one of the criteria being its location in the region. The largest item under costs of materials is the cost of spare parts for the rolling stock. A vast majority of spare part suppliers operate in the south of Poland, therefore only a portion of the supplies may be procured from local partners operating in the region of Pomerania.

LOTOS Parafiny: The company operates productions plants in the towns of Czechowice and Jasło, where local means from the south of Poland. Approximately 60% of transport services to or from Jasło and Czechowice are provided by local firms. As regards procurement of investment- or overhaul-related services, no special rules or restrictions apply as to the supplier’s location. In 2010, the local versus non-local supplier breakdown for the Jasło and Czechowice plants was 68%/32% and 85%/15%, respectively.

LOTOS Oil: The company tends to follow a supplier selection policy which enables it to secure at least two sources of supplies in each product category. If a monopoly is identified, the company monitors the market for any changes in the status quo on a regular basis. In line with the currently applied procurement policy, the company searches local markets for potential suppliers, and, if a reliable prospective partner is found, it is invited to participate in a tender procedure. In 2010, the procurement structure by value (net of services), accounting for all production units, the Distribution Centre, and business arrangements with Grupa LOTOS, was as follows: local suppliers represented 82% of total purchases, with the other 18% attributable to non-local suppliers. As regards the structure of service purchases by value, local providers accounted for 90% and non-local providers – for 10% of total purchases.

EC 7 Procedures for local hiring and proportion of senior management hired from the local community at locations of significant operation

Grupa LOTOS hires members of senior management staff according to the job profile and skills required for the position. Only those candidates are selected who best satisfy the employment criteria. Managerial positions are often filled by persons selected in an internal recruitment process. At the Company’s key locations, 76.4% of senior management staff are persons from local communities.

LOTOS Asfalt: When creating a new job, or filling a managerial vacancy, priority is given to persons from the local labour market, provided that their skills and qualifications meet the relevant criteria. In 2010, local-community members represented, respectively, 82%, 100%, and 75% of the management staff employed in Gdańsk, Czechowice and Jasło.

LOTOS Kolej: When selecting senior managers, the company is guided by a pragmatic evaluation of the candidates, including their expertise and skills required for a given position. During a recruitment process, internal candidates, i.e. the Company’s or the LOTOS Group’s current employees, are considered first. All senior executives employed at the company come from the region of Pomerania.

LOTOS Oil: The company has adopted a global recruitment policy: the same procedures apply at each of its branches. The policy provides for no special treatment of candidates from the local labour market. However, all senior management staff members (directors, deputy directors, plant managers, heads of office) employed at the company’s key business locations (the Gdańsk Branch, the Czechowice Branch, the Jasło Branch and the Distribution Office in Piotrków Trybunalski) are locals. Similarly, 100% of staff employed at the offices established across the country as part of the management function diversification process are members of local communities.

LOTOS Parafiny: The company selects well-qualified candidates for senior executive positions in line with relevant procedures. During a recruitment process, applications from the existing employees of the LOTOS Group are considered first. Ninety-one percent of senior management staff employed at the company’s key locations represent local communities.

LOTOS Paliwa: The company does not follow the global policy of favouring local community members in the recruitment of managerial personnel. Due to the nature of the Company’s operations, management staff members across Poland are hired on an as needed basis.

Indirect economic impacts

EC 8 Development and impact of infrastructure investments and services provided primarily for public benefit through commercial, in-kind, or pro bono engagement

Detailed information on Grupa LOTOS activities in this area are available on the Company’s website [ link ].

EC 9 Understanding and describing significant indirect economic impacts, including the extent of impacts – cooperation with suppliers at significant location of operation

Grupa LOTOS seeks to align its decision-making process with the corporate social responsibility strategy by giving due consideration to the potential impact of its decisions on local communities and the development of the Gdańsk region as a whole. Half of the contracts for the supply of goods or services are signed with local suppliers. Around 35% of all contracts are recurring or long-term arrangements entered into with small and medium-sized enterprises operating on local markets. This fact alone demonstrates our commitment to the local market and its economic prosperity.

By contracting locally, the Company indirectly contributes to improved financial standing of local populations. For many small and medium-sized businesses in the region, Grupa LOTOS is a source of additional capital, which fuels their operations and helps increase employment rates in the SME sector. This, in turn, supports improvement in the living standards, stimulates consumer spending, including on luxury goods and services, and encourages investment in education and intellectual resources, which the Company considers pillars of the economy. Intellectual assets offer measurable benefits: hired by Grupa LOTOS, the competent and well-educated members of the Gdańsk region community build the Company’s potential and innovation at the local, national and international levels.

LOTOS Asfalt: The company is a wholesaler of bitumens, heavy fuel oil, bunker fuel and waterproofing materials. These are produced and sold under business-to-business (B2B) arrangements. Accordingly, by establishing business links with its partners, the company has an indirect impact on their growth prospects and economic standing. Moreover, the company contributes to maintaining or increasing employment rates and stimulates economic activity on its local markets. Since 2009, LOTOS Asfalt’s indirect economic impact on the Jasło region, suffering from an economic slowdown, took the form of investments in a new manufacturing business, the Waterproofing Materials Production Plant. The large-scale project located in the Tarnów Special Economic Zone in the south-east of Poland helped improve the local labour market, affected by unemployment concerns. Launched in 2009, the plant, after becoming fully operational, created 104 new jobs (data as at the end of 2010). As at the end of 2009 the headcount was 69 persons. Thanks to relevant training, employees of the newly launched modern production facility were offered an opportunity to gain hands-on experience and skills in operating technologically advanced manufacturing equipment and to learn how to function in organisational, logistics and distribution systems based on contemporary IT tools.

LOTOS Kolej: Although no monitoring takes place in this area, certain aspects of the company’s activities may be classified as having an indirect economic impact. One such aspect is the company’s consistent efforts to upgrade the operated rolling stock. Purchases of new road locomotives strengthen the company’s competitive edge and position it among leading carriers that invest in new technologies. In late 2009, the company signed a contract for the sale of ST 43 Diesel locomotives (the last engine of this type left the company’s premises in 2010). In September 2009, LOTOS Kolej signed a contract for the delivery of the highly advanced TRAXX F140 DE diesel locomotives with Bombardier Transportation GmbH and an operating lease of 14 TRAXX F140 MS electric locomotives with Railpool GmbH. As a result, the company owns the most modern railroad plant and equipment in Poland, adding to the technological advancement of the local market.

LOTOS Oil: In distributing its products, the company supports employment at its business partners operating locally and nationally. Entering into cooperation agreements at home and abroad, LOTOS Oil obtains access to new technologies. The company undertakes efforts to upgrade its processes, enhance the quality of its products and services, and provide employees with opportunities to improve their professional qualifications through training. These efforts make the company the most sought after employer in the country, which offers prospects for improvement and development and attracts specialists with extensive experience.

LOTOS Parafiny: The company’s indirect economic impact on local communities is reflected in its efforts to create new jobs across the supply chain and improve professional qualifications and skills on the local labour markets, which is linked with recruiting more suppliers.


Two subsidiaries of the LOTOS Group are domiciled abroad: in Lithuania - LOTOS Baltija and in Norway - LOTOS E&P Norge AS.


In 2010, the LOTOS shares were included in the RESPECT index, the first index of socially responsible companies in Central and Eastern...


The management of the LOTOS Group strives to build responsible relations with its employees through its recruitment policies,  work...

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