14.3. INVESTMENTS IN JOINTLY CONTROLLED ENTITIES AND ASSOCIATES
PROFESSIONALJUDGEMENT
Based on its own judgment, taking into account its rights, obligations, considering the structure, legal form and the terms of the agreement agreed by the parties, the Group assessed that BOP, PPPT, Pieridae Production, Polska Grupa Górnicza i Elektrownia Ostrołęka constitute a joint contractual arrangement whereby ORLEN Group exercises joint control over them.
The agreements give all shareholders a joint control over the companies, decisions related to significant operations require the unanimous approval of all shareholders, and the legal form of separate entities does not give shareholders the right to their assets and obligations to repay liabilities. In relation to above, the Group classified above investments as joint ventures that are accounted for under equity method in the consolidated financial statements.
Based on professional judgment, the Group assessed that the investment in Butadien Kralupy is a joint operation. The contractual arrangements for this investment indicate that the parties to the contract are entitled to substantially all economic benefits generated by the company's assets and are its only source of income. The obligation of the parties to purchase the entire production Butadiene Kralupy reflects the company's sole dependence on the parties to generate cash flows, meaning that the parties effectively have an obligation to finance the settlement of the company's liabilities. These facts and circumstances indicate that the investment in Butadien Kralupy is a joint operation and therefore the Group recognizes its share (51%) in assets, liabilities, revenues and costs of the company.
|
|
Place of business |
Principal activity |
Participation in share capital |
Valuation method |
|
joint ventures |
||||
|
Basell ORLEN Polyolefins Sp. z o.o. (BOP) (PKN ORLEN) |
Płock/Poland |
production, distribution and sales of poliolefins |
50.00% |
equity method |
|
Płocki Park Przemysłowo-Technologiczny (PPPT) (PKN ORLEN) |
Płock/Poland |
construction and renting real estate |
50.00% |
equity method |
|
Pieridae Production GP Ltd (ORLEN Upstream Group) |
Calgary/Canada |
exploration and extraction of minerals, storage, transport and logistics |
50.00% |
equity method |
|
Polska Grupa Górnicza (ENERGA Group) |
Katowice/Poland |
coal mining |
15.32% |
equity method |
|
Elektrownia Ostrołęka (ENERGA Group) |
Ostrołęka/Poland |
production of electricity and heat |
50.00% |
equity method |
|
Associates |
||||
|
Polimex Mostostal S.A. (ENERGA Group) |
Warsaw/Poland |
an engineering and construction company, general contractor in the field of industrial construction, producer and exporter of steel structures |
16.48% |
equity method |
|
ElectroMobility Poland (ENERGA Group) |
Warsaw/Poland |
electromobility and electric cars |
25.00% |
equity method |
|
UAB Naftelf (Grupa Orlen Lietuva) |
Vilnius / Lithuania |
aviation fuel trading and construction warehouses |
34.00% |
equity method |
|
joint operations |
||||
|
Butadien Kralupy a.s. (Unipetrol Group) |
Kralupy nad Vltavou/Czech Republic |
manufacturing of butadien |
51.00% |
share in assets |
* The Group, through ENERGA SA, holds 39 million shares of Polimex Mostostal with a nominal value of PLN 2, which represents approximately 16.48% of the shareholding structure of this company. Polimex Mostostal shares are listed on the Warsaw Stock Echange (WSE). The fair value of the company as at 31 December 2020 amounted to PLN 145 million.
As at 31 December 2020 ORLEN Upstream Group has participated in the following joint operations:
- consortium (Blue Gas – Polish Shale Gas program) founded by ORLEN Upstream (OU), Polskie Górnictwo Naftowe i Gazownictwo (PGNIG), LOTOS Petrobaltic and University of Science and Technology (Akademia Górniczo-Hutnicza), Institute of Oil and Gas (Instytut Nafty i Gazu), Gdansk University of Technology, Warsaw University of Technology. Works under the Blue Gas program - Polish Shale Gas were completed, projects settled in both material and financial terms.The program aimed to manufacture and commercialize the technology and gain knowledge for the extraction of shale gas in Poland. The cooperation was summarized in all 6 of 10 notified projects. The total contribution of ORLEN Upstream in the implementation of the above projects amounted to over PLN 24 million. Applications were collected that provides grounds for applying for patent rights for developed solutions, which have been submitted to the relevant authorities for an opinion. To the end of December 2020, the Patent Office of the Republic of Poland granted 3 patent decisions in favor to the Consortium Members;
- exploration – extraction projects carried out together with PGNiG (the search areas „Sieraków” – 49% share of ORLEN Upstream and the search areas “Płotki” – 49% share of ORLEN Upstream). The agreements provide the conduct of joint operations and activities in the field of exploration, prospection and extraction of crude oil and natural gas.
ORLEN Upstream Group has the right to proportionate share of the income and bears a proportionate share in the costs of joint operations.
Investments accounted for under equity method
|
|
31/12/2020 |
31/12/2019 |
|
Joint ventures, incl.: |
680 |
672 |
|
Basell ORLEN Polyolefins Sp. z o.o. (PKN ORLEN) |
648 |
640 |
|
Associates |
78 |
6 |
|
Polimex Mostostal S.A. (ENERGA Group) |
72 |
- |
|
UAB Naftelf (Orlen Lietuva Group) |
6 |
6 |
|
|
758 |
678 |
Share in profit from investments accounted for under equity method
|
|
2020 |
2019 |
|
Joint ventures |
143 |
136 |
|
Basell ORLEN Polyolefins Sp. z o.o. (PKN ORLEN) |
143 |
136 |
|
Associates |
6 |
- |
|
Polimex Mostostal S.A. (ENERGA Group) |
6 |
- |
|
|
149 |
136 |
Condensed financial information of Basell ORLEN Polyolefines Group
|
|
31/12/2020 |
31/12/2019 |
|
Non-current assets |
733 |
789 |
|
Current assets |
1,178 |
1,259 |
|
cash |
235 |
366 |
|
other current assets |
943 |
893 |
|
Total assets |
1,911 |
2,048 |
|
Total equity |
1,329 |
1,324 |
|
Non-current liabilities |
61 |
61 |
|
Current liabilities |
521 |
663 |
|
trade and other liabilities |
498 |
646 |
|
Total liabilities |
582 |
724 |
|
Total equity and liabilities |
1,911 |
2,048 |
|
(235) |
(366) |
|
|
Net assets |
1,329 |
1,324 |
|
Group’s share in joint ventures (50%) |
665 |
662 |
|
Elimination of unrealised profit and loss |
(17) |
(22) |
|
Joint ventures investments accounted for under equity method |
648 |
640 |
|
|
2020 |
2019 |
|
Sales revenues |
3,298 |
3,741 |
|
Cost of sales, incl.: |
(2,847) |
(3,271) |
|
Depreciation and amortisation |
(88) |
(90) |
|
Gross profit on sales |
451 |
470 |
|
Distribution expenses |
(106) |
(104) |
|
Administrative expenses |
(21) |
(23) |
|
Other operating income and expenses, net |
1 |
(5) |
|
Profit from operations |
325 |
338 |
|
Net finance income and costs |
17 |
(4) |
|
Profit before tax |
342 |
334 |
|
Tax expense |
(65) |
(64) |
|
Net profit |
277 |
270 |
|
Total net comprehensive income |
277 |
270 |
|
Dividends received from joint ventures |
137 |
107 |
|
Net profit |
277 |
270 |
|
Group’s share in joint ventures (50%) |
139 |
135 |
|
Elimination of unrealised profit and loss |
4 |
1 |
|
Group’s share in result of joint ventures accounted for under equity method |
143 |
136 |
Condensed financial information of the associate of POLIMEX-Mostostal (ENERGA Group)
|
|
31/12/2020 |
|
Non-current assets |
311 |
|
Current assets |
1,187 |
|
cash |
368 |
|
other current assets |
819 |
|
Total assets |
1,498 |
|
Non-current liabilities |
220 |
|
Current liabilities |
936 |
|
Total liabilities |
1,156 |
|
Total equity and liabilities |
1,498 |
|
Net assets |
342 |
|
Group’s share in associates (16,48%) |
56 |
|
Elimination of unrealised profit and loss |
16 |
|
Investments in associates |
72 |
|
|
8 MONTHS |
|
Sales revenues |
1,248 |
|
Depreciation and amortisation |
(28) |
|
Net finance income and costs |
(14) |
|
Profit before tax |
49 |
|
Tax expense |
(12) |
|
Net profit |
37 |
|
Total net comprehensive income |
35 |
|
Net profit |
37 |
|
Group’s share in associates (16,48%) |
6 |
|
Group’s share in profit of associates |
6 |
In 2020 and 2019, 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.
