23. Shareholders’ equity

23.1. Share capital

In accordance with the Polish Commercial Register, the share capital of Polski Koncern Naftowy ORLEN S.A. as at 31 December 2014 and as at 31 December 2013 amounted to PLN 535 million and is divided into 427,709,061 ordinary shares with nominal value of PLN 1.25 each.
 
As at 31 December 2014 and 31 December 2013, the number of shares issued and the number of shares approved for issuance is equal.
The share capital as at 31 December 2014 and as at 31 December 2013 consisted of the following series of shares:

Number of shares issued
A SeriesB SeriesC SeriesD SeriesTotal
336 000 000 6 971 496 77 205 641 7 531 924 427 709 061

In Poland, each new issue of shares is labelled as a new series of shares. All of the above series have the exact same rights.

   31/12/2014 

 31/12/2013

(restated data)

Share capital  535  535
Share capital revaluation adjustment  523  523
  1 058 1 058

            

23.2. Share premium

Share premium is the surplus of the issuance value over the nominal value of shares belonging to series B, C and D.

   31/12/2014   31/12/2013 
Nominal share premium 1 058 1 058
Share premium revaluation adjustment 169 169
  1 227 1 227

 

23.3. Hedging reserve

Changes in hedging reserve

2014

2013

(restated data)

At the beginning of the period 148 (73)
gross value 182 (88)
deferred tax (34) 15
Settlement of hedge instruments 24 47
sales revenues (139) (58)
foreign exchange differences (48) (61)
interest 4 43
construction in progress 1 (1)
inventories 206 124
Valuation of hedge instruments (1 782) 213
Non-controlling interest share in valuation (43) 10
Deferred tax from settlement and valuation of hedge instruments 334 (49)
(1 319) 148
gross value (1 619) 182
deferred tax 300 (34)

Additional information is presented in note 3.4.24.3 and 32.4.1

23.4. Revaluation reserve

Revaluation reserve includes the valuation of the item in accordance with accepted principles of the Group, in particular:

  • changes in the fair value of financial assets available-for-sale and
  • the positive difference between the net book value and the fair value of investment property at the date of reclassification of the property, plant and equipment to an investment property and their subsequent reductions.

23.5. Foreign exchange differences on subsidiaries from consolidation

As at 31 December 2014, foreign exchange differences on subsidiaries from consolidation include the effect of the translation of the financial statements of the foreign Group companies into PLN under consolidation procedures. Additionally, this position as at 31 December 2013 consisted of the translation of bank loans denominated in USD accounted for as net investment hedge in a foreign operation (ORLEN Lietuva Group), which was ceased by the Group on 30 June 2014.
Additional information regarding net investment hedge in foreign operation is presented in note 32.4.2.

23.6. Retained earnings

31/12/2014

31/12/2013

(restated data)

Reserve capital 22 236 22 653
Other capital 884 884
Actuarial gains and losses (13) 3
Net profit/(loss) for the period attributable to equity owners of the parent (5 811) 176
17 296 23 716

 

23.7. Equity attrituable to non-controlling interest

   31/12/2014 

 31/12/2013

(restated data)

Unipetrol Group 1 598 1 547
Rafineria Trzebinia Group 2 41
Ship Service S.A. 15 15
  1 615 1 603

23.7.1. Change in non-controlling interest

NOTE31/12/201431/12/2013
At the beginning of the period 1 603 1 828
Share in profit/(loss), net 23.7.2 (17) (86)
Share in components of other comprehensive income 102 (136)
hedging reserve 43 (10)
foreign exchange differences on subsidiaries from consolidation 59 (126)
Adjustments concerning the buy-out of non-controlling interest 5.1.2 (72) (2)
Paid and declared dividends (1) (1)
1 615 1 603

23.7.2. Net profit/(loss) attrituable to non-controlling interest

23.7.2.1. Condensed finacial inforamtion of aubsidiaries with significant non-controlling interest 

UNIPETROL GROUP

Selected data from the statement of financial position

  31/12/2014  31/12/2013 
Non-current assets 3 387  3 845 
Current assets 4 050  3 673 
Cash  259   169 
Other current assets 3 791  3 504 
Total assets 7 437  7 518 
Total equity 4 336  4 198 
Non-controlling interest (10) (10)
Non-current liabilities  763   461 
Loans  615   303 
Provisions  70   65 
Other non-current liabilities  78   93 
Current liabilities 2 338  2 859 
Trade and other liabilities  2 087  2 623 
Loans  54   77 
Provisions  120   82 
Other current liabilities  77   77 
Total liabilities 3 101  3 320 
Total equity and liabilities 7 437  7 518 
Net debt  410   211 

Selected data from the statement of profit or loss and other comprehensive income

20142013
Sales revenues 18 873 16 062
Cost of sales (17 965) (15 689)
Gross profit on sales 908 373
Distribution expenses (307) (307)
Administrative expenses (194) (192)
Net other operating income and expenses (542) (10)
(Loss) from operations (135) (136)
Finance income 197 178
interests 7 7
Finance costs (252) (229)
interests (18) (18)
(Loss) before tax (190) (187)
Tax expense 118 ( 14)
Net (loss) (72) ( 201)
Items of other comprehensive income
which will not be reclassified into profit or loss (2) (10)
Fair value measurement of investment property as at the date of reclassification - (10)
Actuarial gains and losses (2) -
which will be reclassified into profit or loss under certain conditions 173 (356)
Hedging instruments 136 (34)
Foreign exchange differences on subsidiaries from consolidation 63 (328)
Deferred tax (26) 6
171 (366)
Total net comprehensive income 99 (567)

23.7.2.2. Impact of changes of ownership interests in a subsidiary that do or do not result in a loss of control

In 2014, there were no changes in ownership interests in subsidiaries that would result in a loss of control. The impact of changes in the structure of non-controlling interest, presented in the statement of changes in consolidated equity, is a result of the purchase of non-controlling shares in Rafineria Trzebinia, ORLEN OIL and ORLEN Asfalt. Additional information is presented in note 5.1.

23.7.2.3. Significant restrictions

In 2014 and 2013, there were no significant restrictions in entities with significant non-controlling interest resulting from credit agreements, regulatory requirements and other contractual arrangements that restrict access to assets and settlement of liabilities of the Group.

23.8. Suggested distribution of the Parent Company’s loss for 2014 and the recommendation regarding dividened payment in 2015

Improved financial situation of the ORLEN Group achieved in the recent years enabled to implement, within the ORLEN Group’s Strategy for years 2014-2017, the dividend policy which assumes a gradual increase in the level of dividend per share by taking into account the implementation of strategic financial indicators and forecasts of the macroeconomic situation. This method does not relate the dividend to net profit, which in the ORLEN Group’s area of operations is the subject to high fluctuations and can include non-cash items, such as the revaluation of assets, inventories or loans, and as a result does not fully reflect the Group’s current financial position.
Taking the above into account, the Management Board of PKN ORLEN proposes to cover the net loss for 2014 in the amount of PLN 4,671,826,145.06 from the reserve capital of the Parent Company.
Simultaneously, The Management Board of PKN ORLEN, after considering the liquidity situation of the Group, recommends to distribute the amount of PLN 705,719,950.65 (PLN 1.65 per share). The dividend will be paid from the reserve capital, which includes net profits from previous years.
The Management Board recommend the date of 16 June 2015 as a date of setting the right to dividend and 8 July 2015 as a payday. This recommendation will be presented to the General Shareholders` Meeting of PKN ORLEN, which makes a conclusive decision in this matter.

23.9. Distribution of the Parent Company’s profit for 2013

Pursuant to article 395 § 2 point 2 of the Commercial Code and § 7 sec. 7 point 3 of the Parent Company’s Articles of Association, the Ordinary General Shareholders’ Meeting of PKN ORLEN S.A. on 15 May 2014, having analyzed the motion of the Management Board, decided to distribute the total net profit for 2013 of PLN 617,684,481.47 as follows: PLN 615,901,047.84 as dividend payment (PLN 1.44 per 1 share) and the remaining amount of PLN 1,783,433.63 as reserve capital of the Parent Company.

23.10.  Equity management policy

Equity management is performed on the Group level in order to protect the Group’s ability to continue its operations as a going concern while maximizing returns for shareholders.
The Management Board monitors the following ratios:

  • net financial leverage of the Group. As at 31 December 2014 and as at 31 December 2013 net financial leverage amounted to 33.0% and 16.9%, respectively;
  • dividend per ordinary shares – depends on current financial position of the Group. In 2014 and in 2013 the dividend of PLN 615,901,047.84 was paid, i.e. PLN 1.44 per share and PLN 641,563,591.50 was paid i.e. PLN 1.50 per share, respectively.

Net financial leverage: net debt/equity (calculated as at the end of the period) x 100%
Net debt:  non-current loans, borrowings and bonds + current loans and borrowings – cash and cash equivalents