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 Series | B Series | C Series | D Series | Total | |
| 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
| NOTE | 31/12/2014 | 31/12/2013 | |
|---|---|---|---|
| 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
| 2014 | 2013 | |
|---|---|---|
| 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