ORLEN Group’s structure

The ORLEN Group comprises PKN ORLEN, the Group’s Parent and entities operating in Poland, Germany, the Czech Republic, Lithuania, Malta, Sweden, the Netherlands, Slovakia, Hungary, Estonia, Latvia, the US and Canada.

The ORLEN Group companies are engaged in the following types of activity:

• For management purposes, the ORLEN Group’s business is divided into three operating segments of Downstream, Retail, Upstream, as well as Corporate Functions.
• For description of these segments, see section ‘ORLEN Group in 2019’, and for the segments’ financial results section ‘Financial Results’.
• For description of the organisational and cross-equity links between the Parent and the ORLEN Group companies, and the applied consolidation methods, see section 7.1 of the Consolidated Financial Statements for 2019.

Allocation of the Parent Company and the ORLEN Group companies to the operating segments and corporate functions as at 31 December 2019

The Parent’s policy with respect to the ORLEN Group focuses on reinforcing the position of the core-business companies, developing power generation and the Upstream segment, as well as improving management, consolidating assets, and divesting of non-core assets.

The purpose of the measures undertaken by the Group is to increase its market value, to strengthen its position on home markets, and to expand its product offering and geographical reach. The Group’s key development investments are aimed at further expanding the product portfolio, deeper conversion, construction of new electricity generating capacities, and continuation of the hydrocarbon exploration and production projects. To ensure effective management, holding management policies have been implemented and comprise solutions designed to achieve Parent-defined shared goals across the ORLEN Group.

The policies are based on the ORLEN Group Constitution which stipulates three key regulations: the Cooperation Agreement, the Group Rules, and provisions of respective articles of association of the ORLEN Group companies.

The Constitution provides for uniform information exchange standards and effective monitoring of key business decisions. It also defines the legal basis for establishing a coherent strategy for the ORLEN Group. PKN ORLEN’s effective corporate supervision relies on formal and legal supervision as well as on supervision of the companies’ operating and finance activities.

The key changes in PKN ORLEN’s organisational structure and management policies in 2019 included:

• inclusion of Planning and Reporting into the Finance Management area,
• inclusion of the Investor Relations Office into the Strategy area,
• allocation of responsibility for the supervised area’s compliance with applicable laws, internal regulations, adopted standards of conduct and ethical standards in place at the Group to the Head of the Financial Control, Risk and Compliance Management Office and to other unit heads reporting directly to the Management Board Members,
• allocation of responsibility for the execution of property investment projects (excluding API projects) with a view to increasing their value and the Company’s capital to the Executive Director for Investment,
• taking over by Mr Armen Artwich (Member of the Management Board, Corporate Affairs) of supervision over the Finance division, following removal of Mr Wiesław Protasewicz from the Management Board of PKN ORLEN S.A.,
• transfer of the Occupational Health and Safety Office from the Development division to the Operations division, transfer of the Infrastructure and Information.

Responsibility areas of Members of the PKN ORLEN Management Board as at 31 December 2019

*Direct supervision over financial control is exercised by the President of the Management Board, General Director on the basis of the Management Board’s resolution on establishing the internal division of powers and responsibilies among the Management Board members and substitution of Management Board Members,

For a description of changes in the composition of the Management and Supervisory Boards in 2019 and by the issue date of this Report, see section ‘Corporate Governance’. There were no material changes in the organisation and management policies of the other ORLEN Group companies in 2019. For information on the existing organisational structure of the ORLEN Group companies and their governing bodies, go to the website.

For a description of changes in cross-equity links in 2019, see section 7.2 of the Consolidated Financial Statements for 2019.