Retained earnings comprise capital reserves created and used in accordance with the rules stipulated by the applicable laws and provisions of the Articles of Association, as well as current period’s profit.
Furthermore, retained earnings include actuarial gains/losses relating to defined post-employment benefits, recognised inclusive of tax effect, which are posted under Other comprehensive income/(loss), net in the statement of comprehensive income.
As at December 31st 2015 and December 31st 2014, Grupa LOTOS S.A. was restricted in its ability to distribute dividends, as described in detail in Note 12.
24.1 Restricted ability of subsidiaries to transfer funds to the Parent in the form of dividends
In 2015 and 2014, the ability of subsidiaries of the LOTOS Group to transfer funds to Grupa LOTOS S.A. in the form of dividends was restricted due to the following arrangements:
- Under credit facility agreements, the amount of distributable financial surplus generated by LOTOS Paliwa Sp. z o.o. in a financial year was contingent on compliance with specified performance targets.
- At AB LOTOS Geonafta, there are restrictions on dividend payment under credit facility agreements, which make such payment conditional upon the bank’s prior consent.
- At LOTOS Exploration and Production Norge AS, there are restrictions on dividend payment under credit facility agreements, which make such payment conditional upon the bank’s prior consent.
The dividend restrictions were binding as at December 31st 2015 and December 31st 2014.
In addition, as at December 31st 2015 dividend payment by LOTOS Asfalt Sp. z o.o. was restricted under the credit facility agreement for the financing of the EFRA Project, which permits distribution of dividends only after payment of the first instalment of the facility, due on December 21st 2018. Payment of dividends from operating cash flows is conditional upon fulfilment of the requirements defined in the agreement, including generation of a sufficient cash surplus and achievement of financial ratios at prescribed levels.
The Notes to the consolidated financial statements are an integral part of the statements.
(This is a translation of a document originally issued in Polish)