After four quarters of 2010, LOTOS reported operating profit of PLN 769m, up by 83% year on year, and net profit of PLN 653m. Sales revenue stood at PLN 19.7bn, having grown by 36% relative to the previous year.

Today, Grupa LOTOS S.A. published its report on Q4 2010 and Q1-Q4 2010 financial results.

- 2010 was a breakthrough year for Grupa LOTOS. First of all, we completed the large-scale projects under the 10+ Programme on schedule. The figures presented today already reflect the operation of the new units which were put into service last year - says Paweł Olechnowicz, President of Grupa LOTOS S.A. - What is equally important, apart from expanding the production capacities, we are also making headway towards increasing our market share: in 2010, our share in the domestic fuel market grew to 30%. We have successfully completed a certain stage in Grupa LOTOS’ development. It is time to take up new challenges, especially in the area of exploration and production of hydrocarbons. We have already taken the first step in this direction by finalising the acquisition of Geonafta, a Lithuanian production company. Increasing own crude oil output is one of the most important goals for the future development of the Group, as provided in the document entitled “Strategy for the LOTOS Group until 2015”, adopted at the end of last year - adds Mr. Olechnowicz.

In Q4 2010 alone, the LOTOS Group reported operating profit of PLN 229.8m, up by 254.6% year on year. In the same period, net profit reached PLN 223.1m and consolidated sales revenue stood at approx. PLN 5.74bn, which means an increase of 42.6% year on year and 8.6% quarter on quarter.

Record-breaking 8 million tonnes of processed crude oil

In Q4 2010, the Gdańsk refinery operated by Grupa LOTOS S.A. processed 2,223.9 thousand tonnes of crude oil, that is 42.7% more than in the corresponding period of 2009 and 1.3% more than in Q3 2010. Thus, in the whole of 2010, the Gdańsk refinery reached its planned target of over 8 million tonnes, which is the highest annual throughput ever recorded by Grupa LOTOS. The increase was mostly due to the coming on stream of the integrated crude distillation unit/vacuum distillation unit (CDU/VDU), built under the 10+ Programme. At the same time, in connection with the process of diversifying crude oil supply directions and sources and optimising oil processing, in Q4 2010 there was an increase in the share of crude types other than Ural and Rozewie, delivered to the Gdańsk refinery by tankers, in the total processing volume.

The 10+ Programme at the finish line

At the end of last year LOTOS completed the largest refinery expansion programme in Central and Eastern Europe, on schedule and on budget. All the work under the 10+ Programme connected with the engineering design, procurement and construction was completed for all the basic and auxiliary installations. In 2010, the mild hydrocracker (MHC) unit and the residue oil supercritical extraction (ROSE) reached the Ready For Start Up status. The MHC unit is already operational and the ROSE unit is expected to deliver its first batch of products at the end of February or at the beginning of March 2011. It should be noted that 2010 saw the operational launch of most of the 10+ Programme units and facilities, including the integrated crude distillation unit/vacuum distillation unit (CDU/VDU), amine sulphur recovery unit (ASR), hydrogen generation unit (HGU), hydrogen recovery unit (HRU), refinery-harbour product pipeline, product tanks and pumping stations. Back in 2009 LOTOS put into service the hydrodesulphurisation unit (HDS).

30% market share in 2010

After the first 11 months of 2011, Grupa LOTOS’ total share in the Polish fuel market reached 29.8%, up by 1.6% percentage point. Preliminary estimates put the market share for the whole of 2010 at 30.1%. To compare, LOTOS ended 2009 with a 28.3% share in the fuel market.

Retail segment continues to grow

In 2010, retail sales revenue of the Group grew by 21% year on year and by 22% quarter on quarter, to PLN 4.26bn. Retail sales volume went up by 5.3% year on year. In 2011, LOTOS Paliwa will focus on the continued development of its network of premium service stations (own and franchised) and the development of a low-cost sales channel. The LOTOS Group ended 2010 with a 7% share in the retail fuel market. The strategy until 2015 assumes that the Group’s share in the retail fuel market will increase to 10%. LOTOS intends to gain additional 1% by further improving the operational efficiency of its service stations and implementing uniform standards across the network. The remaining 2% is to be achieved through organic growth, i.e. consistent expansion of its network of own and franchised service stations. By 2015, additional 100-150 stations are to be launched in both the premium and economy segments. A strong focus will be put on the development of motorway service stations at the Motorway Service Areas. Currently, LOTOS Paliwa operates seven Motorway Service Areas located along the A2, A4 and A6 motorways. Another four Motorway Service Areas will be located by the A1 motorway and the S3 expressway. The target for 2015 is a network of 22 Motorway Service Areas. LOTOS Paliwa is currently taking part in four tenders for the lease of seven Motorway Service Areas.

LOTOS wins the bid for Geonafta

The documents on the closure of the transaction for the acquisition of control over Lithuania’s Geonafta were signed in Vilnius on February 3rd 2011. Following the acquisition, the annual production volume of the LOTOS Group will increase by approx. 100 thousand tonnes. The transaction also brings added value in the form of expertise and experience of the Lithuanian company in the field of onshore exploration and production of hydrocarbons. To compare, in 2010 LOTOS Petrobaltic extracted 186 thousand tonnes of crude oil from the Baltic Sea. An important element of the LOTOS Group’s strategy for the years to come is its active presence in the area of oil exploration in the Norwegian Continental Shelf. LOTOS E&P Norge was granted the PL 503B licence under the APA 2010 licensing round. The 21st licensing round awards will be announced by the end of June 2011. In Q4 2010, LOTOS E&P Norge also signed an agreement with Bergen Oilfield Services AS to perform 3D seismic surveys for the PL503 licence over a sea area of 1.5 thousand sq km (planned for summer 2011).

Marcin Zachowicz, spokesperson for Grupa LOTOS S.A., ul. Elbląska 135, 80-718 Gdańsk, Poland, tel. +48 58 308 75 70, +48 505 050 454, e-mail: marcin.zachowicz@grupalotos.pl