In Q2 2015, LOTOS generated EBITDA (operating profit before depreciation and amortisation) of PLN 755m (up 69.5% quarter on quarter), with operating profit (EBIT) at PLN 569m (up 112.5% quarter on quarter) and net profit of ca. PLN 479m (down PLN 101.4m on Q1 2015 and PLN 122.5m on Q2 2014). In the past quarter, the Company’s revenue was nearly PLN 6,642m, having grown by more than 29% quarter on quarter.

LOTOS has been consistently pursuing its Efficiency and Growth Programme to ensure cost optimisation and development of new projects, such as EFRA (Efficient Refining), for which financing has already been secured and the general contractor selected.

The capacity utilisation rate in Q2 2015 was 100.3% (up 9.5pp year on year). With its operations stable, the refinery maintained a throughput of 2,627.6 thousand tonnes (up 10.5% year on year). In the discussed period, the Company’s output was 2,798.5 thousand tonnes, up 9.5% quarter on quarter, and consisted mainly of diesel oil, motor gasolines, bitumen components and heavy fuel oil.

Thanks to efficient downstream operations, LOTOS was able to take advantage of a period of strong refining margins (USD 8.08/bbl in Q2 2015, up 62.6% year on year).

In Q2 2015, consumption of liquid fuels (i.e. diesel oil, gasolines and light fuel oil) in Poland grew by 4.1% year on year. Stronger consumption was recorded in all product categories: diesel oil (up 3.8%), gasolines (up 4.4%) and light fuel oil (up 9.1%), with LOTOS accounting for 31.1% of the Polish fuel market.

In H1 2015, LOTOS generated PLN 11,773m in revenue, with EBITDA of PLN 1,201m (down PLN 11m on H1 2014).

“We are not losing momentum. Our financial performance is proof that the past quarter and the first six months of 2015 were good for the company. The company’s EFRA Project is a natural extension of the refinery’s technological development plans following completion of the 10+ Programme,” says Paweł Olechnowicz, President of the Grupa LOTOS Management Board. “In three years’ time, LOTOS and the Polish economy will boast one of the most advanced refineries − not only in Europe, but also globally. Successful implementation of the Efficiency and Growth agenda will improve our management capabilities and reduce the cost of operations,” concludes Mr Olechnowicz.

In June 2015, LOTOS Asfalt, a subsidiary of Grupa LOTOS S.A., signed a credit facility agreement thereby securing the remaining part of funding for the EFRA Project. The agreement, with an estimated value of ca. PLN 1,926m, was concluded between LOTOS Asfalt and a syndicate of financial institutions comprising: Bank Gospodarstwa Krajowego (which is to advance financing under the ‘Polish Investments’ programme), Bank Millennium S.A., Bank Polska Kasa Opieki S.A. (coordinator of the EFRA Project’s financing), Bank Zachodni WBK S.A., Powszechna Kasa Oszczędności Bank Polski S.A., Powszechny Zakład Ubezpieczeń S.A., Powszechny Zakład Ubezpieczeń na Życie S.A. and Société Générale.

In July 2015, LOTOS Asfalt and Kinetics Technology S.p.A. signed a lump-sum turnkey contract for engineering, procurement and construction of the EFRA Project’s three main units, namely the Delayed Coking Unit (DCU), the Hydrogen Generation Unit (HGU) and the Coker Naphtha Hydrotreating Unit (CNHT). The contract with an estimated value of PLN 1.26bn is scheduled for completion in 2018.

Improved upstream performance

Total production in Norway, Poland and Lithuania in Q2 2015 amounted to 1.1 million boe (up 56.7% year on year and 6% quarter on quarter), which translates into daily production volumes of approximately 12.4 thousand boe (up 0.4% year on year).

In Q2 2015, revenue in the upstream segment reached ca. PLN 194m and was higher than in Q1 2015 by 4.1%, chiefly on account of higher crude oil prices.

The upstream segment’s EBITDA for Q2 2015 was PLN 102.6m (up 36.6% quarter on quarter), with operating profit of PLN 33.5m (up 172.4% quarter on quarter), mainly on the back of higher sales volumes.

Strong revenue, EBITDA and EBIT generated by retail

As at the end of July 2015, the LOTOS retail network comprised 451 service stations. In Q2 2015, the volume of fuels sold at LOTOS service stations was 313 thousand tonnes (up 15.6% year on year and 24.8% quarter on quarter).

In the period under review, revenue generated by the retail segment was over PLN 1,550m (up 2.7% year on year or 28.7% quarter on quarter). EBITDA for the period totalled PLN 27m (up 58.8% year on year and 30.4% quarter on quarter). At the same time, EBIT reached PLN 10.3m (up 281.5% year on year and 66.1% quarter on quarter).

Q2 2015 highlights:

• EBIT: PLN 569m (up 112.5% quarter on quarter)
• Net profit: PLN 479m (down PLN 101.4m on Q1 2015 and PLN 122.5m on Q2 2014)
• Oil and gas production volume: 12.4 thousand boe/d (up 0.4% year on year)
• Capacity utilisation: 100.3% (up 9.5pp year on year)

Q2 2015 macroeconomic highlights:

• Model refining margin: USD 8.08/bbl (up 62.6% year on year)
• Brent/Urals differential: USD 1.45/bbl (down 34.7% year on year and 18.5% quarter on quarter)
• USD/PLN exchange rate at end of Q2 2015: up 23% year on year; average quarterly USD/PLN exchange rate: up 22% year on year

Communications Office
Grupa LOTOS S.A.
ul. Elbląska 135,
80-718 Gdańsk,
tel. 58 308 87 31, 58 308 83 88, 58 308 83 55,
e-mail: media@grupalotos.pl