One-off events which impact significantly ORLEN Group results for 2024

ORLEN S.A. („Company”, „ORLEN Group”) informs that as part of its work on the consolidated financial statement for 2024 it has identified grounds and conducted tests for impairment of assets according to international accounting standards (“IAS 36”).

IAS 36 imposes an obligation to cyclical review of the present value of the future cash flows expected to be derived from the assets based on current and predicted macro and market environment conditions.

As a result of the tests carried out, the Company predicts:

• reversing of some of the impairments of assets recognized in prior periods,

• recognition of new impairments of assets.

Impairments of assets are non-cash and are not directly linked to the ORLEN Group current operating results, so they are not linked to operating cash flow that is the base for the new dividend policy of the Group and for the Management Board recommendation as 27 February 2025 to pay dividends for 2024 in the amount of PLN 6,00 per share. The ORLEN Group dividend policy is based on operating cash flow, up to 25% of operating cash flow, less financing costs. It takes into account annual increase in the guaranteed dividend of PLN 0.15 per share starting with PLN 4,50 per share in 2024. The dividend policy and conditions of its payout remain unchanged.

The Company predicts that in the consolidated financial statement for 2024 it will recognize:

• Reversal of impairment of assets in the total amount of PLN 4,0 bn, including:

• PLN 2,2 bn in ORLEN S.A. and PLN 0,4 bn in ORLEN Unipetrol (Refining segment),
• PLN 1,3 bn in ORLEN S.A. (Upstream segment).

In the Refining segment reversal of impairment of assets results from the update of projected cash flow based on the anticipated improvement in macro conditions for this sector and the maintenance CAPEX verified in the process of optimization measures at a level preserving production capacity.

In the Upstream segment main reason for reversal of impairments is lack of negative impact of Price Difference Payment Fund (windfall tax), which impacted the value in use in the previous tests.

• Impairments of assets in the total amount of ca. PLN 11,5 bn, including mainly:

• PLN 6,2 bn in ORLEN S.A., PLN 1,8 bn in ORLEN Unipetrol a.s. and PLN 0,9 bn in Anwil S.A. (Petrochemical segment), 
• PLN 1,2 bn in ORLEN Południe S.A. and PLN 0,6 bn in AB ORLEN Lietuva (Refining segment).

In the Petrochemical segment, the impairments result from assumptions of the difficult macroeconomic and market conditions, prepared on the base of the internal analysis with forecasts of widely-recognized data providers and product quotations. The Group is currently restructuring its Petrochemical segment. Despite the wide-ranging optimization actions, in particular focusing on improvement of New Chemistry investment project profitability, the Company is obliged to update the value of assets under construction of the New Chemistry project in the amount of PLN 5,2 bn.

CAPEX spent in 2024 on the newly re-established New Chemistry (prior Olefins III) amounted to PLN 4,8 bn (in total, from the Olefins III project kick-off in 2021 by the end of 2024 CAPEX amounted to PLN 14,1 bn).

Impairments on that assets were consequently recognized in each of the reporting period in 2024 and amounted to:

- 1q: PLN 506 m,

- 2q: PLN 374 m,

- 3q: PLN 770 m,

- 4q: PLN 5 241 m, and results from the continues hard macroenvironment on the world markets.

In the Refining segment, the reason for impairments is:

- an increase in estimates of the value of capital expenditures and an increase in future operating costs for the newly-constructed Bioethanol 2G Unit in ORLEN Południe S.A., 

- the change in the anticipated economic and regulatory conditions as well as delays in the implementation of the works schedule and rising investment costs of Bottom of the Barell Unit in ORLEN Lietuva.

CAPEX spent in 2024 on the Bottom of the Barell Unit in AB ORLEN Lietuva amounted to PLN 0,9 bn (in total, from project kick-off in 2021 by the end of 2024 CAPEX amounted to PLN 2,8 bn).

Impairments on that assets were already recognized in 3q2024 in the amount of PLN 2 420 m, and in 4q2024 in the amount of PLN 622 m.

Taking into account the impact of the above impairment tests, as well as the impact of impairment tests conducted in the period of 12 months 2024 and presented in the 4q2024 financial report, the ORLEN Group's estimates its results for 2024 as follows:

• Revenues: PLN  294,9 bn

• EBITDA LIFO excluding the impairment of assets: PLN 35,8 bn

• Net profit excluding the impairment of assets: PLN 13,2 bn

• Net profit: PLN 1,5 bn.

The abovementioned one-offs and the estimations of results are currently being audited by the auditor and may be subject to change in the final version of the ORLEN Group consolidated financial statements for 2024, which the Company will publish on 15 April 2025.