LOTOS Group ■ The LOTOS Group is a vertically integrated oil company, whose business encompasses exploration for and production of crude oil, processing of crude oil, as well as wholesale and retail sale of high-quality petroleum products. It operates in the E&P segment on the Baltic Sea and on the Norwegian Continental Shelf. ■ Grupa LOTOS’ shares have been listed on the Warsaw Stock Exchange (WSE) since June 2005. Since 2009 Grupa LOTOS’ shares have been included in the RESPECT index - the first index of socially responsible companies in Central and Eastern Europe. ■ Grupa LOTOS refinery is one of the most modern and efficient in Central and Eastern Europe (according to SOLOMON’S Study). ■ Grupa LOTOS is a member of Responsible Business Forum (Forum Odpowiedzialnego Biznesu), UN Global Compact and signatory of the Declaration on for the energy sector. ■ The LOTOS Group has over 5,000 employees. CSR as the strategic approach

Organisations that accept the perspective of sustainable development and responsible business include, forecast and maximise the economical, environmental and social value in favour of all stockholders in relation to business objectives .

Strategy:

Complex activities in all business dimensions: • comprise all needs and expectations of the key stakeholders groups, related to market situation and company’s possibilities • long-term activities focused on sustainable development • minimise the negative and maximise the positive company’s influence • with measurable consequences LOTOS Group CSR Strategy principles

LOTOS Group CSR Strategy is strictly related to long-term business strategic objectives and to LOTOS brand communication objectives

CSR Strategy starting points are: STRATEGIC MISSION VISION OBJECTIVES Mission of the LOTOS Group

The mission of the LOTOS Group is to pursue innovative and sustainable development in the areas of hydrocarbon exploration, production and processing, and in the trading of products that meet the most stringent quality standards, in a MISSION manner which guarantees continuous growth in shareholder value, full customer satisfaction, on- going development of employees and capitalisation on their capabilities, and which is responsible towards society, environmentally friendly and compliant with the energy security policy LOTOS Group CSR Strategy 2008-2012

CSR Strategy objectives :  strengthening the competitive position  meeting stakeholders’ expectations, global and sector challenges  integration of business objectives with social issues inside and outside the organisation

Strategy internal dimensions: Strategy external dimensions: • human resources investments • integration with local community • improving health and safety aspects • market partnership • communication of changes and access to • respect of human rights information in the organisation • involvement in global environmental problems • natural resources management in the prevention production process • giving information about social involvement of • applying good practices of corporate LOTOS Group and promoting organisation’s good governance practices; commitment to periodic reporting of achievements Reporting of CSR Strategy implementation progress

Applied reporting standard:

 Global Reporting Initiative (GRI), version G3, application level A

2008 – First Grupa LOTOS’ Report in respect to GRI Reporting Framework

Grupa LOTOS:

 implemented GRI Reporting Framework as the second company in Poland

 implemented integrated reporting as the first company in Poland

 the only company in Poland, which uses application level A (highest ) Reporting of CSR Strategy implementation progress

Reporting system development:  CSR Reports :  2007 – Environmental Report of Grupa LOTOS 2006  2008 – Corporate Report of LOTOS Group 2006-2007 Best CSR Report in Poland – first prize in the second edition of the „CSR Reports 2008” award organized by Responsible Business Forum, PwC and CSR Consulting  2009 – Corporate Social Responsibility Report of LOTOS Group 2008 Report commended in the third edition of the "CSR Reports 2009" award for sustaining high quality of reporting and implementation of innovative solutions  Integrated reports :  2010 – Annual Report of LOTOS Group 2009 Report commended in the "CSR Reports 2010" award for successful incorporation of social and environmental issues into the integrated report  2011 – Annual Report of LOTOS Group 2010 History of implementation of management systems in Grupa LOTOS

Environmental Integrated Management Quality Management System Certification (IMS): Management System •Quality - ISO 9001 IMS System Certification •Environment -ISO 14001 recertification Certification (and quality •Health & Safety - PN-N-18001 recertification) •Internal System Control

1996 1999 2003 2006 2010

CUSTOMER EMPLOYEE ENVIRONMENT, Grupa LOTOS certified the IMS COMMUNITY as the first company in petrochemical sector and second in Poland Integral Management System basic principles

Quality Management Environmental Management Health and Safety System System Management System ISO 9001 ISO 14001 PN-N-18001

•Customer requirements • Environmental aspects • Occupational risk identification and identification assessment compliance • Legal requirements • Emergency/accidents •Defining processes in the identification – evaluation preparedness and of compliance organisation and response managing them • Emergency preparedness • Employees participation and response

Corrective and Setting objectives and preventive actions management programmes

Processes measurement, Implementation, activities, HSE monitoring, production and services Management systems in LOTOS Group Grupa LOTOS as the parent company: - sets standard procedures for LOTOS Group in different areas of activities - assists in implementation of stated rules and management systems in subsidiaries - monitors their realization in LOTOS Group

Certified Integrated Certified Quality Management Management System (IMS): System, Implemented but not certified quality, health, safety and IMS standards implemented HSE standards environment (HSE) •Grupa LOTOS • LOTOS Paliwa •LOTOS Czechowice •LOTOS Asfalt • LOTOS Oil •LOTOS Jasło •LOTOS Kolej •LOTOS Tank •LOTOS Lab •LOTOS Ochrona •LOTOS Petrobaltic •LOTOS Parafiny •LOTOS Serwis •LOTOS Straż as the management system improvement element in LOTOS Group

AUDIT = analysis of compliance, effectiveness and efficiency of activities

 One of the most important IMS improvement tool:  internal audits  corporate audits  supplier audits

 LOTOS Group School of auditors Benefits of IMS implementation in LOTOS Group

 provides tools for efficient organisation management  improves the efficiency and effectiveness in achieving the organisation’s objectives  rules and procedures in LOTOS Group are unified  improves processes in the organisation  activities and resources used are optimised  various stakeholders are taken into consideration (customers, contractors, community, employees, shareholders, environment, NGOs, etc.)  creates activities which improve the work organisation, employees mental and behavioural changes  improves communication by setting rules, creating channels and defining data that should be communicated  tasks, competencies and responsibilities are specified for each employee  enhances employees engagement in the organisation’s improvement process IMS development challenges – Enterprise (ERM)

ERM assures LOTOS Group secure business operations in controlled environment by minimising risk and preparing for its materialisation

Risk analysis CRITERIA in LOTOS Group :

1. Financial consequences a) influence on health and safety

2. Reputational consequences b) influence on environment

c) reflection in media, supervisory board IMS development challenges – Energy Management System (EnMS)

BENEFITS  energy efficiency and intensity improvement and the energy cost reduction  best practices improvement in the area of energy efficiency management (last SOLOMON Report for year 2008: second place for Grupa LOTOS in Energy Intensity Index in Central and Eastern Europe)  support in EU ecological commitments („3 x 20%”)  support in activities that comply to the national goal of economical energy management (9% reduction to 2016) IMS development challenges – Energy Management System (EnMS)

AWARNESS INCREASE NATURAL RESOURCES PROTECTION

EMISSION REDUCTION FINANCIAL BENEFITS Operational Excellence Programme in Grupa LOTOS THE OBJECTIVE: to achieve the highest production standards by reorganisation of production area and by close cooperation with other company’s areas  to improve production processes and maximise the refining margin keeping the refinery production safe  to become a learning organisation – dynamically reacts to changes in the company and in the surrounding 4 PROGRAMME PILLARS: ADVANCED PROCESS OPERATIONAL PLANNING PROCESS BACK-UP TRAINING CONTROL (APC) Optimisation of Higher processes Looking for production planning efficiency by improving optimisation of Achieving the process; methods of their plant operation by highest closing the business control; processes competencies of cycle: plan, detailed APC – computer monitoring, plant operators schedule, realization, programmes that simulations and e.g. trainings with plan-realization optimise plant technological process simulators comparison, monitoring operations and analyses and analysis supports the operators SOLOMON Associates’ Study – benchmarking refinery performance

111 refineries 85% of capacity 75 refineries 128 refineries 74% of capacity 87% of capacity

BENCHMARKING PERSPECTIVES

“Competitiveness” How does my profitability compare Market Perspective with others in the marketplace?

“Efficiency” How well am I operating the facilities Operations Perspective that I have?

18 SOLOMON’S Study – why does Grupa LOTOS participate?

2004r. – Grupa LOTOS joined the SOLOMON’S benchmarking (analysis carried out every 2 years)  one of the best refining benchmarking in the world  takes into consideration elements, that mostly influence the business success  we can find our place among refineries, define our strengths and weaknesses comparing to others

Knowing the surrounding and our position we can efficiently build a good development strategy

Knowledge about the results gives the employees satisfaction and makes them proud, moreover it gives the motivation for being more competitive and aspiration for perfection

Knowing where the best refineries are, we can chase them and even beat them Social responsibilities core subjects (ISO 26000) and Grupa LOTOS activities

• organisational • IMS documentation regulations and structure • Enterprise Risk Mgmt

Organisational •10+ • local governance programme activities Community • compliance with legal involvement Human rights regulations •sponsorship support and •donations development Creating value for shareholders • ISO 9001 Consummer Labour • PN-N-18001 • high quality products issues practices • social dialogue supervision • social work inspector • LOTOS Academy Fair operating The practices environment • managers’ code • ISO 14001 • employees’ • Energy Management System Thank you for your attention

Halina Stasiewicz Director of Business Process Management Office

Contact Details : Grupa LOTOS S.A. . Elbląska 135 80-718 Gdańsk www.lotos.pl e-mail: [email protected] tel. Contact Center: 801 345 678 l