
9. Income and expenses
9.1 Expenses by nature
Note | 2016 | 2015 | |
---|---|---|---|
Depreciation and amortisation | 8 | 1,067,894 | 714,568 |
Raw materials and consumables used (1) | 14,469,826 | 16,860,134 | |
Services | 1,503,922 | 1,434,003 | |
Taxes and charges | 456,771 | 408,976 | |
Employee benefits expense | 9.2 | 688,968 | 685,254 |
Other expenses by nature | 247,721 | 222,462 | |
Merchandise and materials sold | 859,861 | 1,336,113 | |
Total expenses by nature | 19,294,963 | 21,661,510 | |
Change in products and adjustments to cost of sales | (362,297) | 331,484 | |
Total | 18,932,666 | 21,992,994 | |
including: | |||
Cost of sales | 17,215,704 | 20,249,028 | |
Distribution costs | 1,291,069 | 1,284,846 | |
Administrative expenses | 425,893 | 459,120 |
(1) Including PLN 2,720 thousand of foreign exchange gains related to operating activities, recognised as cost of sales (2015: foreign exchange gains of PLN 11,107 thousand), see Note 27.3.
9.2 Employee benefits expense
Note | 2016 | 2015 | |
---|---|---|---|
Current salaries and wages | 526,067 | 531,551 | |
Social security and other employee benefits | 157,372 | 148,628 | |
Length-of-service awards, retirement and other post-employment benefits | 25.2 | 5,529 | 5,075 |
Total employee benefits expense | 9.1 | 688,968 | 685,254 |
Change in products and adjustments to cost of sales | (2,394) | (152) | |
Total | 686,574 | 685,102 | |
including: | |||
Cost of sales | 414,834 | 396,122 | |
Distribution costs | 32,227 | 34,384 | |
Administrative expenses | 239,513 | 254,596 |
9.3 Other income
Note | 2016 | 2015 | |
---|---|---|---|
Gain on disposal of non-financial non-current assets and certificates of origin for electricity from cogeneration (1) | 13,216 | 5,215 | |
Grants | 26.2 | 5,724 | 7,353 |
Provisions: | 59,587 | - | |
- remeasurement of provision for costs of decommissioning of the offshore oil and gas extraction facilities in the Heimdal field |
40,895 | - | |
- remeasurement of provision for costs of decommissioning of the offshore oil and gas extraction facilities in the B-3 field |
8,333 | - | |
- remeasurement of provision for contingent payments − Sleipner assets acquisition agreement |
27,697 | - | |
- revaluation of estimated provision for future cost of removal of MOPU from the YME field |
(8,905) | - | |
- provision for deficit in CO2 emission allowances | 28.2 | (8,731) | - |
- other provisions | 298 | - | |
Reversal of impairment losses on receivables | 16.1 | - | 1,927 |
- reversal of impairment losses | - | 10,021 | |
- impairment losses | - | (8,094) | |
Compensation (2) | 17,709 | 16,870 | |
Gain on sale of organised part of business | - | 2,834 | |
Reimbursed excise duty | 3,738 | 6,846 | |
Other | 7,091 | 7,246 | |
Total | 107,065 | 48,291 |
(1) Including PLN 13,785 thousand on sale of certificates of origin for electricity from cogeneration (2015: PLN 7,578 thousand). Cash proceeds from these transactions are presented in the statement of cash flows under Sale of property, plant and equipment and other intangible assets.
(2) In 2016 the amount included chiefly PLN 12,347 thousand (2015: PLN 12,764 thousand) attributable to penalties for failure to collect guaranteed delivery amounts under contracts.
The Group offsets similar transaction items in accordance with IAS 1 Presentation of Financial Statements, Sections 34 and 35. The Group discloses material items of income and expense charged to profit or loss separately, as presented in the table above.
9.4 Other expenses
Note | 2016 | 2015 | |
---|---|---|---|
Impairment loss on property, plant and equipment and intangible assets: | 156,459 | 85,817 | |
Impairment losses: | 170,505 | 88,296 | |
· exploration and evaluation assets: | 13.2.1 | 138,118 | 12,098 |
- Poland: the Gaz Południe licence area, including the B-21 field | 64,754 | - | |
- Poland: Słupsk area | - | 2,071 | |
- Norway: PL 797 licence | 5,749 | - | |
- Norway: Utgard field assets | 67,615 | - | |
- Lithuania: costs of seismic surveys | - | 10,027 | |
· development assets: Norway: YME field | 13.2.2 | - | 1,485 |
· production assets: Lithuania: the Auksoras, Vėžaičiai, Kretinga, and Ablinga fields | 13.2.2 | 12,437 | 58,733 |
· refinery and other non-current assets: | 19,950 | 15,980 | |
- service stations | 13.1.1 | 13,122 | 10,228 |
- ships | 5,333 | 4,499 | |
- other assets | 1,495 | 1,253 | |
Reversal of impairment losses: | (14,046) | (2,479) | |
· production assets: | 13.2.2 | (11,849) | - |
- Norway: Heimdal production assets | (4,357) | - | |
- Lithuania: Girkalai field | (7,492) | - | |
· refinery and other non-current assets: | (2,197) | (2,479) | |
- service stations | (2,041) | (2,416) | |
- other assets | (156) | (63) | |
Loss on discontinued projects | 12,714 | 27,395 | |
- Norway: PL643 and PL655 licences | 13.2.1 | 12,327 | - |
- Norway: Heimdal area (Fulla licences: PL035B and PL362), PL503 licence | 13.2.2 | - | 14,846 |
- Poland: Sambia area | 13.2.1 | - | 12,378 |
- Poland: Słupsk area | 13.2.1 | 73 | - |
- other assets | 314 | 171 | |
Impairment loss on assets held for sale | - | 36,634 | |
Impairment losses on receivables: | 16.1 | 1,554 | - |
- impairment losses | 3,489 | - | |
- reversal of impairment losses | (1,935) | - | |
Provisions: | - | 16,072 | |
- provision for deficit in CO2 emission allowances | 28.2 | - | 1,059 |
- revaluation of estimated provision for future cost of removal of MOPU from the YME field |
- | 10,287 | |
- other provisions | - | 4,726 | |
Fines and compensation | 1,176 | 1,546 | |
Damage to property caused in ordinary course of business | 2,141 | 1,718 | |
Costs relating to the Polish National Foundation (1) | 29,019 | - | |
Charitable donations | 5,346 | 1,866 | |
VAT expense | 30.1 | 39,365 | 160,909 |
Other | 3,058 | 9,384 | |
Total | 250,832 | 341,341 |
(1) As one of the founders of the Polish National Foundation created in 2016 (“PFN”; number in the National Court Register: KRS 0000655791), Grupa LOTOS S.A. is required to make annual contributions for the next 10 years to finance the activities provided for in the foundation’s constitutional documents. The total amount of the Company’s commitment to finance PFN’s activities was established at the amount of discounted future payments, equal to PLN 29,019 thousand. On December 30th 2016, the Company contributed PLN 5,000 thousand to PFN’s founding capital, and the amount of the Company’s outstanding commitment under PFN’s constitutional documents as at December 31st 2016 was PLN 24,019 thousand (including PLN 5,000 thousand presented under current financial liabilities and PLN 19,019 thousand presented under non-current financial liabilities, see Note 26).
The Group offsets similar transaction items in accordance with IAS 1 Presentation of Financial Statements, Sections 34 and 35. The Group discloses material items of income and expense charged to profit or loss separately, as presented in the table above.
9.5 Finance income
Note | 2016 | 2015 | |
---|---|---|---|
Dividends | 2,435 | 1,120 | |
Interest: | 15,359 | 20,697 | |
- on deposits | 27.3 | 11,919 | 16,181 |
- on trade receivables | 27.3 | 2,290 | 2,847 |
- other | 1,150 | 1,669 | |
Exchange differences: | 7,840 | - | |
- on bank borrowings | 27.3 | (73,532) | - |
- on intercompany loans (1) | 27.3 | 64,700 | - |
- on realised foreign-currency transactions in bank accounts | 27.3 | 12,165 | - |
- on intercompany notes (1) | 27.3 | 15,216 | - |
- on deposits and other cash | 27.3 | (11,271) | - |
- other | 562 | - | |
Revaluation of financial assets: | - | 78,809 | |
- valuation of derivative financial instruments | 27.3 | - | 290,447 |
- settlement of derivative financial instruments | 27.3 | - | (211,638) |
Other | 1,043 | 11 | |
Total | 26,677 | 100,637 |
(1) In accordance with IAS 21 Effects of Changes in Foreign Exchange Rates, foreign exchange gains and losses on intercompany foreign currency transactions are recognised in the Group’s net profit or loss.
The Group offsets similar transaction items in accordance with IAS 1 Presentation of Financial Statements, Sections 34 and 35. The Group discloses material items of income and expense charged to profit or loss separately, as presented in the table above.
9.6 Finance costs
Note | 2016 | 2015 | |
---|---|---|---|
Interest: | 241,152 | 284,148 | |
- on bank borrowings | 27.3 | 150,421 | 150,364 |
- on non-bank borrowings | 27.3 | 4,035 | 7,870 |
- on notes | 27.3 | 4,145 | 3,819 |
- on finance lease liabilities | 27.3 | 20,808 | 10,152 |
- discount related to provisions for oil production facilities and for land reclamation, and other provisions |
26.1 | 49,127 | 22,202 |
- cost of discount on employee benefit obligations | 25.1; 25.2 | 5,109 | 5,058 |
- on liabilities to the state budget | 30.1 | 6,297 | 77,932 |
- other | 1,210 | 6,751 | |
Exchange differences: | - | 344,940 | |
- on bank borrowings | 27.3 | - | 175,425 |
- on translation of intercompany loans (1) | 27.3 | - | 47,750 |
- on realised foreign-currency transactions in bank accounts | 27.3 | - | 108,419 |
- on notes, including intercompany notes (1) | 27.3 | - | 41,975 |
- on deposits and other cash | 27.3 | - | (29,309) |
- other | - | 680 | |
Revaluation of financial assets, including: | 33,511 | - | |
- valuation of derivative financial instruments | 27.3 | 206,567 | - |
- settlement of derivative financial instruments | 27.3 | (173,056) | - |
Bank fees | 19,145 | 20,978 | |
Bank guarantees | 5,720 | 5,317 | |
Write-off of bank fees related to the financing of the B8 project | - | 29,212 | |
Other | 5,288 | 3,648 | |
Total | 304,816 | 688,243 |
(1) According to IAS 21 The Effects of Changes in Foreign Exchange Rates, foreign exchange gains and losses on intercompany foreign currency transactions are recognised in the Group’s net profit or loss.
The Group offsets similar transaction items in accordance with IAS 1 Presentation of Financial Statements, Sections 34 and 35. The Group discloses material items of income and expenses charged to profit or loss separately, as presented in the table above.