Public Company ORLEN Lietuva 2 0 CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2015 1 PREPARED IN ACCORDANCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS AS ADOPTED BY EUROPEAN UNION 5 Public Company ORLEN Lietuva Consolidated financial statements for the year 2015 (all tabular amounts are in USD’000 and EUR’000 unless otherwise stated) Table of contents: Independent auditor’s report to the shareholder of AB ORLEN Lietuva ........................................ 4 Consolidated statement of financial position ........................................................................................ 6 Consolidated statement of profit or loss and other comprehensive income ................................ 7 Consolidated statement of cash flows .................................................................................................... 8 Statement of changes in consolidated equity ....................................................................................... 9 Accounting principles and other explanatory information .............................................................. 11 1. Reporting entity ................................................................................................................................................... 11 2. Accounting principles ......................................................................................................................................... 11 2.1. Principles of preparation of financial statements ......................................................................................... 11 2.2. Basis of measurement ..................................................................................................................................... 12 2.3. Impact of IFRS amendments and interpretations on consolidated financial statements of the Group 12 2.4. Applied accounting policies ............................................................................................................................ 15 3. The Management estimates and assumptions .............................................................................................. 38 4. Operating segments ........................................................................................................................................... 39 4.1. Revenue and financial results by operating segments ............................................................................... 40 4.2. Other segment data ......................................................................................................................................... 42 4.3. Revenues from sales of core products and services .................................................................................. 43 4.4. Information about major customers ............................................................................................................... 44 5. Discontinued operation ...................................................................................................................................... 44 5.1. Results of discontinued operation .................................................................................................................. 44 5.2. Cash flows generated in discontinued operation ......................................................................................... 44 5.3. Effect on disposal on the financial position of the Group ........................................................................... 45 6. Property, plant and equipment ......................................................................................................................... 45 7. Intangible assets ................................................................................................................................................. 49 8. Investments in equity-accounted investees .................................................................................................... 53 9. Other non-current assets ................................................................................................................................... 54 10. Impairment of non-current assets .................................................................................................................. 54 11. Inventories ......................................................................................................................................................... 55 12. Trade and other receivables ........................................................................................................................... 56 13. Other financial assets ...................................................................................................................................... 57 14. Cash and cash equivalents ............................................................................................................................. 57 15. Non-current assets classified as held for sale ............................................................................................. 58 16. Share capital ..................................................................................................................................................... 58 17. Loans and borrowings ..................................................................................................................................... 58 18. Provisions .......................................................................................................................................................... 59 18.1. Environmental provision ............................................................................................................................... 61 18.2. Provision for jubilee bonuses and post-employment benefits ................................................................ 61 18.3. Business risk provision ................................................................................................................................. 65 18.4. Restructuring provision ................................................................................................................................. 66 18.5. Provision for CO2 emission .......................................................................................................................... 66 19. Trade and other liabilities ................................................................................................................................ 66 2 Public Company ORLEN Lietuva Consolidated financial statements for the year 2015 (all tabular amounts are in USD’000 and EUR’000 unless otherwise stated) 20. Other financial liabilities ................................................................................................................................... 66 21. Sales revenues ................................................................................................................................................. 67 22. Operating costs................................................................................................................................................. 67 23. Other operating income and expenses ......................................................................................................... 69 23.1. Other operating income ................................................................................................................................ 69 23.2. Other operating expenses ............................................................................................................................ 69 24. Financial income and expenses ..................................................................................................................... 70 24.1. Financial income ............................................................................................................................................ 70 24.2. Financial expenses........................................................................................................................................ 70 25. Tax expenses .................................................................................................................................................... 70 25.1. The differences between income tax expense recognized in profit or loss and the amount calculated based on profit before tax ..................................................................................................................... 71 25.2. Deferred tax .................................................................................................................................................... 71 25.3. Change in deferred tax asset and liability, net .......................................................................................... 72 26. Financial instruments ....................................................................................................................................... 73 26.1. Financial instruments by category and class ............................................................................................ 73 26.2. Income and expense, profit and loss in the consolidated statement of profit or loss and other comprehensive income ............................................................................................................................................ 76 26.3. Hedge accounting ........................................................................................................................................