ORLEN GROUP STRUCTURE
As at December 31st 2020, the ORLEN Group consisted of 102 companies, including 88 subsidiaries.
Polski Koncern Naftowy Orlen S.A. (“PKN ORLEN”, the “Parent”, the “Company”), together with companies forming the Polski Koncern Naftowy ORLEN Group (the “ORLEN Group”, the “Group”), is one of the largest and most modern multi-energy groups in Central Europe operating on Polish, Lithuanian, Czech, Slovakian, German and Canadian market. The Group also has entities located on Malta, in Sweden, Netherlands, Hungary, Estonia, Latvia and USA.
PKN ORLEN was established on September 7th 1999 as a result of the merger of Petrochemia Płock S.A. (“Petrochemia Płock”), a producer of refining and petrochemical products in Poland, and Centrala Produktów Naftowych CPN S.A. (“CPN”), a distributor of motor fuels in Poland. Prior to the merger, Petrochemia Płock and CPN were owned by the Polish State Treasury, Nafta Polska S.A. (“Nafta Polska”) and employees of the merged companies. PKN ORLEN shares were listed on the Warsaw Stock Exchange on November 26th 1999. On April 12th 2000, the Company changed its name from Polski Koncern Naftowy S.A. to PKN ORLEN.
As at December 31st 2020, the Polish State Treasury held 27.52% of shares in the Parent, PKN ORLEN, and was able to exercise significant influence over the Company. For the shareholding structure of PKN ORLEN, see ‘Shares and shareholding structure’ section.
For management purposes, the ORLEN Group's business is divided into five operating segments:
Energy, Refining, Petrochemicals, Retail and Upstream, which are supported by Corporate Functions.
Allocation of the Parent and the ORLEN Group companies to operating segments and corporate functions as at December 31st 2020
Detailed information on organizational and capital links of the Parent Entity (PKN ORLEN S.A.) with ORLEN Group entities and the methods of consolidation are presented in point 7.1. Consolidated Financial Statements for 2020.
In line with the new long-term strategy adopted in November 2020, the ORLEN Group's key objectives are to be a regional leader in energy transition, develop new renewable power generation capacities, and pursue decarbonisation, while preserving operational efficiency and financial strength in its traditional business segments. Given the prevailing market trends, the ORLEN Group is consistently diversifying its business towardsbuilding a multi-energy conglomerate. The effective acquisition of the Energa Group in 2020 and continued work on other acquisition targets are part of this process. Recognising the importance of the retail segment, the ORLEN Group proceeded with expanding its service station chain in Poland and abroad, and commenced development of the non-fuel retail segment with the acquisition of the RUCH Group in 2020. The ORLEN Group also seeks to continue its strategic growth in petrochemicals and gas-fired power generation, as well as in new business areas such as new mobility, hydrogen technologies, recycling, R&D and digital transformation.
Effective growth of the ORLEN Group would not be possible without full operational and cost efficiency. The ORLEN Group continually takes steps to improve its management processes, optimise its business model and consolidate its assets. As a result of this strategy, it has consistently strengthened its position on home markets and has been steadily expanding its product range and geographical reach.
To ensure effective management, holding management policies, i.e. solutions designed to achieve Parent-defined shared goals across the ORLEN Group, have been introduced. The holding management concept has been implemented based on the ORLEN Group Constitution, which ensures uniformity of the organisational standards and information exchange rules, as well as effective monitoring of key business decisions. It also identifies the legal basis for creating a consistent strategy within the ORLEN Group. PKN ORLEN S.A.’s effective corporate supervision over the ORLEN Group companies relies on ongoing oversight of the Group's operations based on uniform standards, as well as financial, and formal and legal supervision.
Changes in the Parent’s and the ORLEN Group’s principles of organisation and management
The key changes in PKN ORLEN’s organisational structure and management policies in 2020 included the following:
- a Member of the Management Board for Communication and Marketing was appointed and, as a result, the area of Executive Director for Corporate Communication and the Sports Marketing, Sponsorship and Events Office were removed from the division of President of the Management Board, and the area of Executive Director for Marketing was removed from the division of Member or the Management Board for Retail Sales and its name was changed to Marketing Office,
- the External Relations Office was moved from the division of President of the Management Board to the division of Member or the Management Board for Retail Sales,
- the scope of responsibilities of Executive Director for Finance Management, Planning and Reporting, and Executive Director for Business Controlling was changed by moving responsibilities related to the annual budget, the medium-term budget and management reporting from the area of Finance Management, Planning and Reporting to the area of Business Controlling. At the same time, the name of the area of Executive Director for Finance Management, Planning and Reporting was changed to Executive Director for Finance and Financial Risk Management,
- the following areas were separated from the area of Executive Director for Finance and Financial Risk Management: the area of Executive Director for Finance Management, and the Credit Risk and Insurance Management Office. Executive Director for Finance Management shall remain responsible for finance management, financial risk management, and accounting and reporting supervision, and the Credit Risk and Insurance Management Office will continue to be responsible for credit risk management, insurance management, and debt collection,
- the Equity Investments Office was separated from the area of Executive Director for Strategy and Investor Relations and now reports directly to the President of the Management Board and Chief Executive Officer; its form was changed to area of Executive Director for Equity Investments,
- the Production Optimisation and Efficiency Office was terminated, and its responsibilities were assigned to: Executive Director for Development and Technology, Executive Director for Technology, Executive Director for Supply Chain Management, and Executive Director for Energy,
- the Innovation Office was included in the area of Executive Director for Strategy and Investor Relations, and the name of the area of Strategy and Investor Relations was changed to area of Strategy, Innovation and Investor Relations,
- responsibilities related to research and development and new technologies were moved from the area of Executive Director for Development and Technology to the area of Executive Director for Strategy, Innovation and Investor Relations,
- responsibilities related to investments in new service stations and motorway service areas were moved form the area of Executive Director for Investment to the area of Executive Director for Retail Sales.
For a description of changes in the composition of the Management Board and Supervisory Board in 2020 and by the issue date of this Report, see section ‘Management and supervisory bodies’ of this Report.
There were no material changes in the organisation and management policies of the other ORLEN Group companies in 2020. For information on the existing organisational structure of the ORLEN Group companies and their governing bodies, go to https://www.orlen.pl/EN/Pages/default.aspx.
Changes in cross-equity links
For a description of changes in cross-equity links in 2020, see Section 7.2 of the Consolidated Financial Statements for 2020.
