Integrated
Annual Report 2011

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Grupa LOTOS S.A. - Integrated Annual Report 2011
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18. Intangible assets

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PLN '000 Dec 31 2011 Dec 31 2010
Development expense 184 184
Software 2,312 3,914
Patents, trademarks and licences, including 464,839 81,136
- licences of the AB LOTOS Geonafta Group(1) 361,975 -
Other 8,245 9,591
Total 475,580 94,825

(1)  In 2011, LOTOS Petrobaltic S.A. executed a transaction to acquire control over Lithuanian assets. The interest of LOTOS Petrobaltic S.A. in AB LOTOS Geonafta increased from 40.59% to 100% (see Note 2).

  

Changes in intangible assets

PLN '000 Development expense Software Patents, trademarks and licences Other Prepayments for intangible assets Total - including: exploration and appraisal assets (1)
(restated)
Gross carrying amount
as at Jan 1 2010
528 14,901 134,054 11,415 - 160,898 41,146
Increase - 1,589 33,090 5,544 - 40,223 26,160
- purchase - 965 21,873 3,040 - 25,878 21,872
- transfer from investments - 551 10,009 2,504 - 13,064 3,080
- exchange differences on translating foreign operations - 40 1,208 - - 1,248 1,208
- other - 33 - - - 33 -
Decrease - (126) (95) (28) - (249) -
- sale - (45) - - - (45) -
- liquidation - (81) (47) (28) - (156) -
- other - - (48) - - (48) -
Gross carrying amount
as at Dec 31 2010
528 16,364 167,049 16,931 - 200,872 67,306
Gross carrying amount
as at Jan 1 2011
528 16,364 167,049 16,931 - 200,872 67,306
Increase - 2,547 471,646 910 - 475,103 21,176
- purchase - 131 12,836 92 79 13,138 12,836
- transfer from investments - 247 47,210 352 - 47,809 456
- acquisition of control over the AB LOTOS Geonafta Group - 1,669 378,436 438 47 380,590 -
- transfer - (32) - - - (32) -
- exchange differences on translating foreign operations - 378 33,164 28 - 33,570 7,884
- settled prepayments - 126 - - (126) - -
- other - 28 - - - 28 -
Decrease - (816) (700) (838) - (2,354) (602)
- sale - (11) - (3) - (14) -
- liquidation - (399) (616) (558) - (1,573) (602)
- reclassification into non-current assets held for sale - (406) (15) (277) - (698) -
- other - - (69) - - (69) -
Gross carrying amount
as at Dec 31 2011
528 18,095 637,995 17,003 - 673,621 87,880
Accumulated amortisation
as at Jan 1 2010
371 10,079 49,207 6,076 - 65,733 4,280
Increase - 2,364 8,533 1,288 - 12,185 981
- amortisation - 2,345 8,517 1,288 - 12,150 981
- exchange differences on translating foreign operations - 19 - - - 19 -
- other - - 16 - - 16 -
Decrease - (123) (47) (24) - (194) -
- sale - (45) - - - (45) -
- liquidation - (78) (47) (24) - (149) -
Accumulated amortisation
as at Dec 31 2010
371 12,320 57,693 7,340 - 77,724 5,261
Accumulated amortisation
as at Jan 1 2011
371 12,320 57,693 7,340 - 77,724 5,261
Increase - 4,115 51,780 2,007 - 57,902 1,497
- amortisation - 2,219 49,166 1,541 - 52,926 1,497
- acquisition of control over the AB LOTOS Geonafta Group - 1,610 - 438 - 2,048 -
- transfer - (32) - - - (32) -
- exchange differences on translating foreign operations - 289 2,614 28 - 2,931 -
- other - 29 - - - 29 -
Decrease - (705) (631) (589) - (1,925) (602)
- sale - (12) - - - (12) -
- liquidation - (324) (616) (558) - (1,498) (602)
- reclassification into non-current assets held for sale - (369) (15) (31) - (415) -
Accumulated amortisation
as at Dec 31 2011
371 15,730 108,842 8,758 - 133,701 6,156
Impairment losses
as at Jan 1 2010
(27) 136 5,816 - - 5,925 5,813
Increase - - 21,950 - - 21,950 21,950
Foreign exchange differences on translating foreign operations - - 454 - - 454 454
Decrease - (6) - - - (6) -
Impairment losses
as at Dec 31 2010
(27) 130 28,220 - - 28,323 28,217
Impairment losses
as at Jan 1 2011
(27) 130 28,220 - - 28,323 28,217
Increase - - 30,646 - - 30,646 30,646
Foreign exchange differences on translating foreign operations - - 5,448 - - 5,448 5,448
Decrease - (77) - - - (77) -
Impairment losses
as at Dec 31 2011 
(27) 53 64,314 - - 64,340 64,311
Net carrying amount
Jan 1 2010
184 4,686 79,031 5,339 - 89,240 31,053
Net carrying amount
Dec 31 2010
184 3,914 81,136 9,591 - 94,825 33,828
Net carrying amount
Dec 31 2011
184 2,312 464,839 8,245 - 475,580 17,413

(1) The value of exploration and appraisal assets comprises the value of expenses capitalised until technical feasibility and commercial viability of extracting a mineral resource are demonstrable.

In the year ended December 31st 2011, the cost of amortisation of intangible assets in respect of which technical feasibility and commercial viability of extracting a mineral resource have been demonstrated amounted to PLN 39,981 thousand (December 31st 2010: PLN 804 thousand).

The cost of amortisation of exploration and appraisal assets recognised under intangible items amounted to PLN 1,497 thousand in the year ended December 31st 2011 (December 31st 2010: PLN 981 thousand).

In the year ended December 31st 2011, cash flows used in investing activities related to exploration and appraisal assets amounted to PLN 12,114 thousand (2010: PLN 26,581 thousand).

In the year ended December 31st 2011, impairment losses on exploration and appraisal assets recognised under intangible assets amounted to PLN 30,646 thousand and are related to the PL 455 licence described below (December 31st 2010: PLN 21,950 thousand).

As at December 31st 2011, LOTOS Exploration and Production Norge AS held the following exploration licence interests: 45% interest in licence PL 455, 10% interest in licence PL 497/497B, 25% interest in licence PL 498, 25% interest in licence PL 503/503B, and 20% interest in licence PL 515.
Under “Intangible assets” LOTOS Exploration and Production Norge AS recognised expenditure incurred on the exploration licences. As at December 31st 2011, the expenditure was NOK 140,042 thousand (PLN 79,488   thousand, translated at the mid-exchange rate for NOK quoted by the National Bank of Poland for December 31st 2011) (2010: NOK 115,892 thousand as at December 31st 2010 (PLN 58,769 thousand, translated at the mid-exchange rate for NOK quoted by the National Bank of Poland for December 31st 2010)), and was incurred primarily on the PL 455 licence. As drillings under the PL 455 licence produced no positive outcome, on December 31st 2011 (the balance-sheet date) the company recognised impairment losses on capitalised costs of exploration work related to this licence of NOK 57,660 thousand  (PLN 32,728  thousand, translated at the mid-exchange rate for NOK quoted by the National Bank of Poland for December 31st 2011) (2010: NOK 55,646 thousand as at December 31st 2010 (PLN 28,218 thousand, translated at the mid-exchange rate for NOK quoted by the National Bank of Poland for December 31st 2010)). As at December 31st 2011, the net value of intangible assets related to exploration licences, net of impairment loss, amounted to NOK 26,737 thousand  (the equivalent of PLN 15,176 thousand, translated at the mid-exchange rate for NOK quoted by the National Bank of Poland for December 31st 2011), see Note 46 (2010: NOK 60,246 thousand as at December 31st 2010  (PLN 30,551 thousand, translated at the mid-exchange rate for NOK quoted by the National Bank of Poland for December 31st 2010)).

This is a translation of a document originally issued in Polish.