We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Register for Free to get streaming real-time quotes, interactive charts, live options flow, and more.
| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Pan European Terminals | LSE:PAN | London | Ordinary Share | GB00B12V3082 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 22.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From May 2019 to May 2024
TIDMPAN
RNS Number : 9591K
Pan European Terminals PLC
30 June 2014
30 June 2014
Pan European Terminals
("the Company", "the Group" or "PAN")
FINAL RESULTS
For the Year Ended 31 December 2013
Chairman and CEO Statement
On 15 October 2013, the Company posted a circular to shareholders, recommending the approval by shareholders of a special resolution to allow conversion of the entire loan note (the "Loan Note") held by Hepworth Technologies SA ("Hepworth") into shares at 22p per share. Shareholders were reminded that Hepworth were not shareholders but that conversion would result in them holding just over 26% of the new in issue share capital. Shareholders were also reminded that failure to pass the special resolution would result in the Company being obliged to pay Hepworth a one off contractual interest penalty of GBP550,000 and the monthly interest payments of approximately GBP70,000 per month would continue until November 2015 when the Loan Note matures.
On 21 October 2013, Belphar Limited ("Belphar"), a BVI company owned by Mr Khofiz Shakhidi, announced a possible offer for the Company at 22p. It was also announced that Belphar had purchased the Loan Note from Hepworth and had purchased approximately a 10% stake in the Company from Hurley Investments. At the time of this announcement Belphar already owned approximately 14% of the Company's share capital having purchased the entire shareholding of Alpcot Capital. On 21 October 2013, as a result of the above transactions, Belphar owned 29.9% of the Company shares, in addition to the conversion rights attached to the Loan Note.
On 18 November 2013, shareholders voted against the special resolution to convert the Loan Note held by Belphar into shares and immediately the Company paid Belphar the contractual one off interest penalty of GBP550,000. Subsequently Belphar withdrew its possible offer.
The Company issued a trading update on 27 February 2014, in which it outlined its good trading prospects and also indicated that it was exploring a possible solution for Rosbunker by which the Company would acquire the 50% interest owned by its partners and then enter a new agreement with a Russian Government entity to re activate the Rosbunker operations.
However, around the same time as the Trading Update, the Ukraine/Russia crisis accelerated, the Ukrainian president fled and Crimea was annexed in early March 2014 by Russia. The result of the subsequent EEC and US sanctions against Russia meant that it has become increasingly difficult for UK based companies to carry out business in Russia in general, and in Kaliningrad in particular. Sanctions were instigated by the Russian authorities against the management of the Company and it became clear that the proposal for Rosbunker might not be viable. In light of these problems, the Board obtained a legal opinion from its Russian legal advisors as to the viability of the proposed transaction and to ensure that the problems already encountered in Kaliningrad at the hands of its previous partners and the Russian legal system did not occur again. Our legal advisors were unfortunately unable to give any such assurances.
Due to this worsening position in Russia and the impact on the share price, the Board decided to approach Belphar and discuss with them the possibility of re-initiating discussions about an offer.
On 21 May 2014, Belphar and the Board of the Company announced a Recommended Offer from Belphar at a price of 22p which implied a c.37% premium to the three month share price of the Company and a c.46% premium over the market price on 20 May 2014. An Offer Document was posted to all shareholders on 27 May 2014. Paragraphs 3 and 7 of the Offer Document gave details on the background to the offer, why the Board felt the price of 22p was recommendable and also a Trading Update.
On 17 June 2014, Belphar declared their offer unconditional with over 90% of Pan European Terminal's shares in their hands and control has passed to Belphar at this date.
On a personal note, I would like to thank my fellow directors and all the staff in four countries that have supported my efforts over the past nine years. I would also thank our shareholders for their patience and goodwill during the very difficult times we have come through.
My role is not yet defined in the new organisation but I am certain that the change in ownership will mean exciting developments for all and I have pledged my full support in this endeavour and going forward to the new owners.
Simon Escott
Interim Chairman and Chief Executive
30 June 2014
Strategic Report
The Directors present their Strategic report for the year ended 31 December 2013. This report needs to be read in conjunction with the Chairman's statement and are incorporated into this report by reference.
Business Review
The Group made a loss after tax for the year of GBP18.8million (2012: profit GBP0.7million) which arose from the Group's principal activities during the year which were the operation of hydrocarbon transhipment terminals in the Europort, Rotterdam, Aabenraa Denmark, Kaliningrad and Baltysk on Russia's Baltic Sea coast. The loss for the year has arisen mainly from the devaluation of the Rosbunker asset which is explained in the Chairman's statement. In summary, the accounting treatment regarding Rosbunker changed in 2012 and in the current year the Board made a fair value assessment of Rosbunker according to IFRS 13 using the market approach which led to a fair value loss of GBP16.8m and resulted in a year end valuation of GBP5.7m.
Non-recurring costs of GBP2.4 million relate to bad debt provisions against trade receivables in PBI, TDKN and BHL which are considered necessary by the Directors due to the uncertainty of future recovery of these balances.
However it should be stressed that these provisions mainly relate to 2012 trading for PBI and TDKN and that the assets traded in 2013 on a revised and more secure platform with the requirement to make no such provisions.
On 27 March 2013 the Company issued 4,500,000 new ordinary shares to a strategic investor at an issue price of 19.65p per share raising proceeds of GBP0.9m. The proceeds of the share issue were used to strengthen the Group's balance sheet and to provide additional working capital.
Finally, as also outlined in the Chairman's statement, on 17 June 2014 control of the Company passed to Belphar and it is their stated intention to return the Group to private ownership.
Principal Risks and Uncertainties
There are a number of potential risks and uncertainties which could have a material impact on the Group's long term performance and which could cause actual results to differ from those expected. Those considered by the Directors to be the principal risks facing the Group are set out in Note 4 to the financial statements. Further details of factors relating to financial risk are also set out in note 23 to the financial statements.
Key Performance Indicators
The Group monitors KPI's on a regular basis and where they differ significantly from expectations an investigation is undertaken. The following KPI's are monitored on a regular basis and the principal key performance indicators are summarised below and are as defined in the Consolidated Income statement.
Revenue GBP15.3 million (2012: GBP20.6 million)
Gross Profit Margin 24% (2012: 22%)
Operating Loss (GBP748,000) (2012: (GBP1.7 million))
Loss per share (18p) (2012:0.69p)
At an operational level the Group constantly monitors storage contracts. The Group has approximately 385,000 cubic metres of tank storage at PBI, Dan Balt and Baltic Top in addition to its facilities at Rosbunker. The Holland facility was fully let in 2012 as was the Danish terminal but on contracts that had been inherited from the vendor in 2011. These contracts all expired on or before 31 December 2012 and the Group has since commenced more profitable oil transhipment arrangements including a major new customer. The position on contracts and storage availability is continually monitored to ensure tanks remain let to customers at market rates. Baltic Top continued to trade as advised in the interims and, as a result of our new business approach to this asset, reported lower turnover but maintained profit through better margins and lower staff costs. After the original leases expired as planned in April 2014, PBI is now re-aligning its leases in Rotterdam and Amsterdam by means of a joint venture with a major player and the continuation of our service model. We are in discussions with several players in ARA not just Europoort and we expect these to be completed by August 2014.
Group cash flows are monitored daily and surplus cash in subsidiaries is regularly controlled by central management to ensure cash in different currencies is aggregated to pay creditors on time and earn interest. At the year end the Group had cash balances of GBP0.7m (2012 GBP1.1m), after payment to Belphar of GBP0.55m to settle the interest penalty.
Financial Overview
Turnover decreased by 25% from GBP20m in 2012 to GBP15m in 2013. This is primarily due to change of strategic orientation in Baltic Top for optimizing profits as also mentioned in the interim results to June 2013. This strategic reorientation did not result in lower profits.
The gross profit in Dan Balt has increased from GBP454,000 to GBP522,000; operating profit increased from GBP65,000 to GBP160,000 for 2013. This is mainly due to the old inherited contracts running out and new contracts such as Monjassa starting up. However as stated in our interim statement, Dan Balt will begin to show the progress we expect in 2014, once we have upgraded the operating and management systems so that they satisfy the requirements of the major players we wish to attract to the terminal.
Our Terminal in the Netherlands, Petro Broker International, was 100% let for the whole of 2013 but with lower turnover that was concentrated on having only majors as clients. Sales were GBP5.7m (2012: GBP6.9m) and gross profit was GBP1.8m (2012: GBP2.8m), and there were no receivables in relation to sales made in 2013 against which provision was required. Operational constraints caused by equipment failures belonging to the owner/operator of the tanks also impacted to a significant degree on turnover and profit in 2013, although this has now been fully rectified, subject to settlement and ongoing discussions with the lessor of the tanks. Moving on from 2012 we reduced the overheads in Holland further to GBP273,000 in 2013 compared to GBP346,000 in 2012.
The accounting treatment regarding Rosbunker changed in 2012 and this asset was reflected in investments at fair value. In our results to 31 December 2013 we have incurred a fair value loss on Rosbunker for which we used the "Market Approach" basis of valuation, which led to a fair value loss of GBP16.8m to give a year end valuation of GBP5.7m. The Board considers this accurately reflects the more challenging trading conditions outlined in the Chairman's statement and the political situation in Russia.
On behalf of the Board of Directors of Pan European Terminals plc.
Simon Escott
CEO
30 June 2014
Simon Escott (aged 69) - Executive Chairman
Simon has over 35 years of management experience in the oil and gas and petrochemical industries. He is a qualified Petroleum and Mechanical Engineer and has worked in a senior capacity for ESSO GmbH, BP Brazil, Phillips Petroleum Incorporated, Elf Aquitaine S.A., Pennzoil/Cities Services (Brazil), Norsk Hydro A/S, Saga Petroleum A/S, Zhetybay Quest Petroleum GmbH, Reliance Industries Limited and the Mannai Corporation WLL. He has run major construction projects for Brown & Root Incorporated in the North Sea and for ABB Lummus Crest Incorporated in India. In 1992, Simon was a Project Director for the Russian World Bank Oil Rehabilitation Loans 1 and 2, based in Moscow and Siberia. He co-founded Pan European in 2004.
Reg Eccles (aged 68) - Senior Independent non-Executive Director
Reg has sat on the boards of a number of public and private companies over the past 13 years, including Toledo Mining Corporation plc and Belitung Zinc Corporation plc, where he acted as Chairman. He began his career at Anglo American Corporation of South Africa as a business analyst, deputy Chief Economist and finally Corporate and Financial Planning Director in Johannesburg. In 1979, he co-founded and acted as Chairman of Claspbourne Ltd, a consultancy and publishing company, sold in 1988. He has also held senior positions at a number of investment banks, including, James Capel, where he was a Director of Research and SBC Warburg, Ord Minnett and ABN Amro, where he was Global Head of Mining Equities.
Professor Francesco Gardin (aged 59) - Non-Executive Director
Professor Gardin, 59, graduated in Theoretical Physics at Padova University in 1979, before undertaking a UK Government research project at Exeter University from 1980 to 1982. In 1983 he was employed by the Italian National Research Council and from 1984 to 1985 he worked at the European Union Research Centre in Ispra, Italy as Co-ordinator of the Artificial Intelligence Laboratory.
In 1983, Professor Gardin founded AISoftw@re SpA to develop and distribute Artificial Intelligence systems within Italy, which he took public on NASDAQ Europe in 1999 and the Milan Stock Exchange in 2000. He sold the company in 2005 through a merger, remaining as non-Executive Chairman until March 2008, at which time it employed more than 1,400 people with revenues in excess of GBP70m.
Between 2002 and 2011 Professor Gardin was Chairman and major shareholder of Brainspark plc, an AIM quoted investment company. Since 2006 he has worked extensively in China, and in March 2007 became CEO of China IPO Group plc, wholly owned by Brainspark plc, focusing on investments in China. In March 2008 he became a Board Member of IPO Beijing Investment Consulting Company Ltd., the China IPO Group plc Chinese subsidiary, with offices in Beijing and Xi'an. The company was subsequently demerged from Brainspark in December 2009.
Between December 2008 and July 2013 he was an executive Director of London Asia Capital plc, a UK company investing in Asia, with a mandate to review and maximise the returns of the investment portfolio.
During the last twenty years, he has been Director of almost fifty companies in Italy, UK, USA, Israel, Hong Kong, China, Singapore, Mauritius and Jersey.
Since 1984 to date, he has been Research Associate Professor at Udine, Milano and Siena University lecturing in Artificial Intelligence, Theory and Application of Computation, and Virtual Reality. His academic papers include more than 50 individual and joint publications and three books on the subject of Artificial Intelligence as editor.
Directors' report
The Directors present their report and audited financial statements for the year ended 31 December 2013.
Going concern
The Directors believe that the Group is well placed to manage its business risk successfully. The Directors have reviewed future forecasts and commitments on projects, which when compared to the current cash available, lead the Directors to have a reasonable expectation that the Group has adequate financial resources to continue in operational existence for the next twelve months. The Directors have made this assessment by reviewing future and existing contracts. For this reason, they continue to adopt the going concern basis in preparing the financial statements. Further information is given in notes 5 and 30.
Subsequent to the year end, the company was subject to a successful takeover set out in Note 27 to the Financial Statements. The ability of the current Directors to forecast and influence future strategy is clearly affected by this change in ownership; however, the board is confident that the new owners will continue to operate the business as a going concern and provide adequate finance for the company to achieve its objectives.
Directors
The Directors who served during the year and to the date of signing these accounts were as follows:
Simon Escott (Executive Chairman and Chief Executive Officer) Reg Eccles (Senior Independent non-Executive Director, appointed 30/09/2013) Francesco Gardin (Non-Executive Director, appointed 03/09/2013) Adrian Simpson Finance Director (resigned 30/09/13) Richard Healey Non-executive Chairman (resigned 30/09/13) Louis Castro Non-executive Director (resigned 30/09/13)
Auditors
Grant Thornton UK LLP offer themselves for reappointment as auditors in accordance with section 489 of the Companies Act 2006. A resolution to reappoint them will be proposed at the forthcoming Annual General Meeting.
Directors' statement as to disclosure of information to auditors
The Directors who were members of the Board at the time of approving the Directors' report are listed on page 5. Having made enquiries of fellow Directors and of the Group's auditors, each of these Directors confirms that:
-- to the best of each Director's knowledge and belief, there is no information relevant to the preparation of their report of which the Group's auditors are unaware; and
-- each Director has taken all the steps a Director might reasonably be expected to have taken to be aware of relevant audit information and to establish that the Group's auditors are aware of that information.
On behalf of the Board
Simon Escott
Director
30 June 2014
Statement of Directors' responsibilities
The directors are responsible for preparing the Directors' Report, the Strategic Report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have to prepare the financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs and profit or loss of the company and group for that period. In preparing these financial statements, the directors are required to:
- select suitable accounting policies and then apply them consistently; - make judgments and accounting estimates that are reasonable and prudent; and
- state whether applicable IFRSs have been followed, subject to any material departures disclosed and explained in the financial statements.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006 They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The directors confirm that:
- so far as each director is aware, there is no relevant audit information of which the company's auditor is unaware; and
- the directors have taken all the steps that they ought to have taken as directors in order to make themselves aware of any relevant audit information and to establish that the auditors are aware of that information.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Directors' remuneration review
The Company discloses certain information relating to Directors' remuneration in this report, which is not audited.
Remuneration committee
The Company established a Remuneration Committee in April 2006.
The committee meets as required. The Executive Director invited to attend does not vote on his own remuneration or incentives.
The committee advises the Board on Group remuneration policy and may obtain advice from independent remuneration consultants appointed by the Company. The Remuneration committee met in November 2013 and the members are Reg Eccles (chairman) and Francesco Gardin.
Remuneration policy
The Company's policy is to maintain levels of remuneration for the Directors that are comparable and competitive with peer companies, so as to attract and retain individuals of the highest calibre, by rewarding them as appropriate to their contribution to the Group's performance.
Terms of appointment
The terms of each Director's appointment are set out in their service agreement which are effective for an indefinite period but may be terminated in accordance with specified notice periods.
Each service agreement sets out details of basic salary, fees, benefits in kind and share option grants.
Basic salaries
The basic salary of the Executive Director is established by reference to their responsibilities and individual performance.
Fees
The fees paid to Non-executive Directors are determined by the Board and reviewed periodically to reflect current rates and practice commensurate with the size of the Company and their roles.
Share options
The Company operates a policy of granting share options to all employees and Directors as a long-term incentive and retention plan. The share options are exercisable over varying periods and at varying strike prices dependent upon satisfying appropriate performance conditions. The right to exercise is subject to terms related to continuing employment.
There were no new share options issued in the current year and all previous share options granted have expired.
On behalf of the Board of Directors of Pan European Terminals plc.
Simon Escott
CEO
30 June 2014
REPORT OF THE INDEPENDENT AUDITOR TO THE MEMBERS OF PAN EUROPEAN TERMINALS PLC
We have audited the group financial statements of Pan European Terminals plc for the year ended 31 December 2013 which comprise the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of financial position, the consolidated statement of cash flows, the consolidated statement of changes in equity and the related notes. The financial framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditor
As explained more fully in the Directors' Responsibilities statement, the directors are responsible for the preparation of the group financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the group financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's (APB's) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the APB's website at www.frc.org.uk/apb/scope/private.cfm.
Basis for qualified opinion on financial statements
Included in the consolidated income statement for the year ended 31 December 2012 is an amount of GBP2.8m related to the de-recognition of the group's investment in ZAO Rosbunker ("Rosbunker"), previously accounted for as an associate using the equity accounting method for the year ended 31 December 2011. Further detail is given in Notes 5 and 25. We were unable to obtain sufficient, appropriate audit evidence about the carrying amount of the group's investment in Rosbunker as at 31 December 2011, because we were unable to access the financial information and supporting documentation. Our audit opinion on the financial statements for the years ended 31 December 2011 and 31 December 2012 were modified accordingly. Since opening balances affect the determination of the gain reported in the 2012 comparative within the consolidated income statement, we were unable to determine whether adjustments to the results of operations might be necessary for the year ended 31 December 2012.
Qualified opinion on financial statements
In our opinion, except for the effects of the matter described in the Basis for Qualified Opinion paragraph, the Group financial statements:
-- give a true and fair view of the state of the Group's affairs as at 31 December 2013 and of its loss for the year then ended;
-- have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
-- have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Strategic Report and the Directors' Report for the financial year for which the Group financial statements are prepared is consistent with the Group financial statements.
Matters on which we are required to report by exception
In respect solely of the limitation on our work referred to above:
-- we have not obtained all the information and explanations that we considered necessary for the purpose of our audit
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
-- certain disclosures of directors' remuneration specified by law are not made.
Other matter
We have reported separately on the parent company financial statements of Pan European Terminals plc for the year ended 31 December 2013.
Philip Westerman
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
London
30 June 2014
Consolidated income statement
For the year ended 31 December 2013
Hot Features
Premium
2013 2012
Notes GBP'000 GBP'000
----------------------------------------- ----------------------- ----------------------- -----------------------
Revenue 6 15.253 20.590
Cost of sales (11.579) (16.026)
----------------------------------------- ----------------------- ----------------------- -----------------------
Gross profit 3.674 4.564
Administrative expenses -
recurring (2.020) (2.549)
Administrative expenses -
non-recurring 7 (2.402) (3.722)
Total administrative expenses (4.422) (6.271)
----------------------------------------- ----------------------- ----------------------- -----------------------
Operating (loss)/profit before taxation
and finance items 7 (748) (1.707)
Investment fair value gain
on initial recognition 25 2.801
Investment fair value (loss)/
gain during the year 25 (16.781) 1.362
Finance income 10 1 -
Finance costs 10 (1.369) (1.309)
----------------------------------------- ----------------------- ----------------------- -----------------------
(Loss)/Profit before taxation (18.897) 1.147
Taxation 11 84 (470)
(Loss)/Profit for the year (18.813) 677
----------------------------------------- ----------------------- ----------------------- -----------------------
Attributable to:
Equity shareholders of the
Company (18.813) 677
(18.813) 677
----------------------------------------- ----------------------- ----------------------- -----------------------
(Loss)/Earnings per share attributable to
equity shareholders of the Company:
Basic and diluted 12 (18p) 0,69p
----------------------------------------- ----------------------- ----------------------- -----------------------
Consolidated statement of comprehensive income/expense
For the year ended 31 December 2013
2013 2012
GBP'000 GBP'000
-------------------------------------------- --------- ---------------------
Profit after tax (18.813) 677
-------------------------------------------- --------- ---------------------
Other comprehensive expense
Exchange differences on translating
foreign operations (1.870) (150)
-------------------------------------------- --------- ---------------------
Other comprehensive expense for the
year, net of tax (1.870) (150)
Total comprehensive expense/income for the
year attributable to equity shareholders (20.683) 527
Total comprehensive expense/income
for the year (20.683) 527
-------------------------------------------- --------- ---------------------
Consolidated statement of financial position
As at 31 December 2013
Consolidated Balance Sheet
2013 2012
Notes GBP'000 GBP'000
------------------------------- ---------------------- ----------------------- -----------------------
Non current assets
Intangible assets 13 - -
Property, plant and equipment 14 6.448 6.360
Investments in associates 24 1.189 1.189
Fair value of Investments 25 5.700 22.481
Goodwill 13 11.598 11.598
24.935 41.628
------------------------------- ---------------------- ----------------------- -----------------------
Current assets
Inventories 15 780 864
Trade and other receivables 16 430 2.957
Prepayments and other current
assets 17 67 1.040
Cash and cash equivalents 18 671 1.143
------------------------------- ----------------------
1.948 6.004
------------------------------- ---------------------- ----------------------- -----------------------
TOTAL ASSETS 26.883 47.632
------------------------------- ---------------------- ----------------------- -----------------------
Share capital 19 1.063 1.018
Share premium 19 51.275 50.437
Other reserves - Equity -
foreign exchange reserves (3.238) (1.368)
Retained losses (33.179) (14.366)
------------------------------- ---------------------- -----------------------
Total equity 15.921 35.721
------------------------------- ---------------------- ----------------------- -----------------------
Non current liabilities
Borrowings 20 8.850 8.500
Deferred tax liability 11 441 486
------------------------------- ---------------------- ----------------------- -----------------------
9.291 8.986
Current liabilities
Trade and other payables 21 1.671 2.880
Borrowings 22 - 45
-----------------------
1.671 2.925
------------------------------- ---------------------- ----------------------- -----------------------
Total liabilities 10.962 11.911
------------------------------- ---------------------- ----------------------- -----------------------
TOTAL EQUITY AND LIABILITIES 26.883 47.632
------------------------------- ---------------------- ----------------------- -----------------------
These financial statements were approved by the Board of Directors on 30 June 2014.
Signed on behalf of the Board of Directors
Simon Escott
Chief Executive Officer
Pan European Terminals plc
Company registration number: 05752493
Consolidated cash flow statement
For the year ended 31 December 2013
Notes 2013 2012
GBP'000 GBP'000
--------------------------------------------- ------ --------- ---------
Cash flows from operating activities
(Loss)/Profit before taxation (18,897) 1,147
Adjustments to reconcile (loss)/profit
before taxation to net cash flows from
operating activities
Investments fair value (loss)/ gain 16,781 (4,163)
Finance costs 1,368 1,309
Foreign exchange gain (1,768) (24)
Depreciation of property, plant and
equipment 14 323 431
Loss on disposal of property, plant
and equipment - 8
Decrease in inventories 84 (666)
Decrease in trade and other receivables 3,500 137
Decrease in trade and other payables (610) 313
--------------------------------------------- ------ --------- ---------
Cash flow from op berations 781 (1,508)
Income tax paid (605) (115)
Interest paid (1,369) (1,026)
--------------------------------------------- ------ --------- ---------
Net cash outflow from operating activities (1.193) (2,649)
--------------------------------------------- ------ --------- ---------
Cash flows from investing activities
Finance income 1 -
Purchase of property, plant and equipment 14 (513) (30)
Net cash outflows from investing activities (512) (30)
--------------------------------------------- ------ --------- ---------
Cash flows from financing activities
Proceeds from shares issued net of issue
costs 19 883 910
Proceeds from borrowings 20 350 8,500
Repayment of borrowings 20/22 - (7,202)
Net cash inflows from financing activities 1.233 2.208
--------------------------------------------- ------ --------- ---------
Decrease in cash and cash equivalents (472) (471)
Cash and cash equivalents at beginning
of year 1,143 1,614
Decrease in cash and cash equivalents (472) (471)
--------------------------------------------- ------ --------- ---------
Cash and cash equivalents at end of
year 671 1,143
--------------------------------------------- ------ --------- ---------
Consolidated statement of changes
in equity
For the year
ended 31
December 2013
Attributable to equity
shareholders of the parent
---------------------- ---------------------------------------------------------------------- -------------------
Foreign
currency
Share translation Retained Total
Share capital premium adjustment losses equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- ---------------------- ---------------------- ---------------------- ---------------------- -------------------
At 1 January
2012 945 49.600 (1.218) (15.043) 34.284
Exchange
differences
on
translating
foreign
operations - - (150) - (150)
Profit for the
year - - - 667 667
--------------- ---------------------- ---------------------- ---------------------- ---------------------- -------------------
Total
comprehensive
income
for the year - - (150) 667 527
--------------- ---------------------- ---------------------- ---------------------- ---------------------- -------------------
Shares issued
during
the year 73 837 - - 910
At 31 December
2012
and 1 January
2013 1.018 50.437 (1.368) (14.366) 35.721
--------------- ---------------------- ---------------------- ---------------------- ---------------------- -------------------
Exchange
differences
on
translating
foreign
operations - - (1.870) - (1.870)
Profit for the
year - - - (18.813) (18.813)
--------------- ---------------------- ---------------------- ---------------------- ---------------------- -------------------
Total
comprehensive
income
for the year - - (1.870) (18.813) (20.683)
--------------- ---------------------- ---------------------- ---------------------- ---------------------- -------------------
Transactions
with owners
- shares
issued during
the year 45 838 - - 883
At 31 December
2013 1.063 51.275 (3.238) (33.179) 15.921
--------------- ---------------------- ---------------------- ---------------------- ---------------------- -------------------
Notes to the consolidated financial statements
1. General information
Pan European Terminals plc is a public limited company listed on the Alternative Investment Market of the London Stock Exchange and is registered in England. The registered office is 1 - 6 Yarmouth Place, London, W1J 7BU. The principal activity of the Group is the development and operation of hydrocarbon transhipment terminals in the Netherlands, Denmark and the Russian Federation, and trading in refined products.
The Group's financial statements for the year ended 31 December 2013 were authorised for issue by the Board of Directors on 30 June 2014 and the statement of financial position was signed on the Board's behalf by Simon Escott.
2. Accounting policies
The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
2.1 Basis of preparation
The Group's financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union.
The consolidated financial statements have been prepared on a historical cost basis, except for investments that have been measured at fair value.
No material changes to accounting policies arose as a result of new standards adopted in the period.
The consolidated financial statements are presented in pounds sterling ("GBP") and all monetary amounts are rounded to the nearest thousand (GBP'000) except when otherwise indicated.
The preparation of financial statements requires management to make estimates and assumptions that affect the amounts reported for assets and liabilities as at the balance sheet date and the amounts reported for revenues and expenses during the year. The nature of estimation means that actual outcomes could differ from those estimates.
2.2 Basis of consolidation
The consolidated financial statements reflect the Group's financial position as at 31 December 2013 and the Group's financial performance for the period from 1 January 2013 to 31 December 2013.
(a) Subsidiaries
Subsidiaries are those enterprises controlled by the Group. Control exists when the Group has the power, directly or indirectly, to govern the financial and operating policies of an enterprise so as to obtain benefits from its activities. Subsidiaries are consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group. On acquisition of a subsidiary, the purchase consideration is allocated to the assets, liabilities and contingent liabilities on the basis of their fair value at the date of acquisition. The excess of the cost of the acquisition over the fair value of the Group's share of identifiable net assets of the subsidiary acquired is recognised as positive goodwill. Following initial acquisition positive goodwill is measured at cost less any impairment losses. Acquisition costs are expensed as incurred.
The financial statements of subsidiaries are prepared for the same reporting year as the Company, using consistent accounting policies. All intercompany balances and transactions, including unrealised profits arising from intercompany transactions, have been eliminated in full. Unrealised losses are eliminated in the same way as unrealised gains except that they are only eliminated to the extent that there is no evidence of impairment.
(b) Associates
An associate is an entity over which the Group is in a position to exercise significant influence through participation in the financial and operating policy decisions of the investee, but which is not a subsidiary or a jointly controlled entity. The results, assets and liabilities of an associate are incorporated in these financial statements using the equity method of accounting.
(c) Investments
All equity investments are measured at fair value in the statement of Financial Position with value changes recognised in profit or loss except for those investments which the Group has elected to report value changes in "other comprehensive income".
2.3 Segment reporting
Operating segments are those components of the business where results are regularly reviewed by the Board to assess their performance and to make resource allocation decisions. The operating segments are identified by either trading or terminals activity and the similarity of their economic characteristics and not by their geographical area of operation
2.4 Foreign currency translation
The functional currency for each entity in the Group is determined as the currency of the primary economic environment in which it operates. Transactions in foreign currencies are initially recorded in the functional currency by applying the spot exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are re-translated at the functional currency rate of exchange ruling at the year end. All differences are taken to the income statement. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions.
The assets and liabilities of foreign operations are translated into sterling at the rate of exchange ruling at the year end. Income and expenses are translated at average exchange rates for the year. The resulting exchange differences are taken directly to other comprehensive income. On disposal of a foreign entity, the deferred cumulative amount in equity relating to that particular foreign operation is recognised in the income statement.
At the year end differences arise on the translation of foreign currency transactions which represent retranslation of fair value adjustments previously recorded in US dollars which historically was the functional currency of the group. These differences are taken directly to reserves.
2.5 Oil and gas assets
The Group's entire capitalised oil and gas assets relate to properties that are in the exploration and evaluation stage. The Group accounts for oil and gas properties under IFRS 6 'Exploration for and Evaluation of Mineral Resources'. Property, plant and equipment acquired as part of a business combination is recorded at fair value at the acquisition date. All subsequent additions are recorded at historical cost of acquisition or construction. The Group does not currently have proven oil and gas reserves.
(a) Pre-licence award costs
Costs incurred prior to the award of oil and gas licences, concessions and other exploration rights are expensed in the income statement.
(b) Licence acquisition costs
Oil and gas licence acquisition costs are capitalised within intangible exploration assets and amortised on a straight-line basis over the period of the licence.
(c) Exploration and evaluation
Geological and geophysical exploration costs are charged against income as incurred. The direct costs associated with an exploration well, exploratory drilling and directly related overheads, are capitalised as an intangible asset pending determination of proven reserves. These costs are excluded from depletion until commerciality is determined or impairment occurs. Intangible assets also include fair value of exploration assets obtained through acquisitions. The costs of unsuccessful exploratory wells are expensed upon determination that the well does not justify commercial development.
Exploration and evaluation assets shall be assessed for impairment when facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount. When facts and circumstances suggest that the carrying amount exceeds the recoverable amount, an entity shall measure, present and disclose any resulting impairment loss in accordance with IAS 36 'Impairment of assets'.
2.6 Non -oil and gas assets (a) Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation and impairment losses. Such cost includes costs directly attributable to making the asset capable of operating as intended.
Depreciation is provided on all property, plant and equipment, other than freehold land, at rates calculated to write off the cost, less estimated residual value based on prices prevailing at the year end, of each asset evenly over its expected useful life as follows:
Buildings - 50 years Plant and equipment - 5 to 25 years Office equipment - 3 years Computer equipment - 3 years
Depreciation of an item of property, plant and equipment begins when it is available for use and when it is in the location and condition necessary for it to be capable of operating in the manner intended by management.
(b) Construction in progress
Assets in the course of construction are capitalised as a separate component of property, plant and equipment. On completion, the cost of construction is transferred to the appropriate category. The Group has storage tanks located in Russia with a book value of GBP2.05m that are awaiting deployment in one of the Group's terminals.
The cost of a property, plant and equipment comprises its purchase price and any costs directly attributable to bringing it into working condition for its intended use.
Construction in progress is not depreciated.
Borrowing costs directly attributable to the construction of assets that necessarily take a substantial period of time to get ready for their intended use are added to the cost of those assets, until such time as the assets are substantially ready for their intended use.
2.7 Impairment
The carrying amounts of property, plant and equipment are reviewed for impairment if events or changes in circumstances indicate the carrying value may not be recoverable. If there are indicators of impairment, an exercise is undertaken to determine whether the carrying values are in excess of their recoverable amount. Such review is undertaken on an asset by asset basis, except where such assets do not generate cash flows independent of other assets, in which case the review is undertaken at the cash generating unit level.
If the carrying amount of an asset or its cash generating unit exceeds the recoverable amount, a provision is recorded to reflect the asset at the lower amount. Impairment losses are recognised in the income statement.
(a) Calculation of recoverable amount
The recoverable amount of assets is the greater of their value in use and fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the cash generating unit to which the asset belongs. The Group's cash generating units are the smallest identifiable groups of assets that generate cash inflows that are largely independent of the cash inflows from other assets or groups of assets.
(b) Reversals of impairment
An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
2.8 Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group's share of the net identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose identified according to operating segment.
2.9 Financial assets
Financial assets are initially recognised at fair value plus transaction costs. Financial assets classified as held for trading and other assets designated as such on inception are included in this category. Financial assets are classified as held for trading if they are acquired for sale in the short term. Derivatives are also classified as held for trading unless they are designated as effective hedging instruments or as financial guarantee contracts. Assets are carried in the balance sheet at fair value with gains or losses recognised in the income statement.
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market, do not qualify as trading assets and have not been designated as either fair value through profit and loss or available-for-sale. Such assets are carried at amortised cost using the effective interest method if the time value of money is significant. Gains and losses are recognised in the income statement when the loans and receivables are derecognised or impaired, as well as through the amortisation process.
2.10 Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss includes financial assets designated upon initial recognition at fair value through profit or loss. Financial assets at fair value through profit and loss are carried in the statement of financial position at fair value with net changes in fair value recognised in finance costs in the income statement.
Financial assets designated upon initial recognition at fair value through profit and loss are designated at their initial recognition date and only if the criteria under IAS 39 are satisfied. The Group has designated financial assets at fair value through profit or loss.
At present the performance of Rosbunker is measured by management on the basis of the fair value of the underlying business due to restraints on the Group's control of the business.
2.11 Impairment of financial assets
The Group assesses at the yearend whether a financial asset or group of financial assets is impaired.
If there is objective evidence that an impairment loss on assets carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at the financial asset's original effective interest rate (i.e. the effective interest rate computed at initial recognition). The carrying amount of the asset is reduced, through the use of an allowance account. The amount of the loss shall be recognised in administration costs.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed. Any subsequent reversal of an impairment loss is recognised in the income statement, to the extent that the carrying value of the asset does not exceed its amortised cost at the reversal date. In relation to trade receivables, a provision for impairment is made when there is objective evidence (such as the probability of insolvency or significant financial difficulties of the debtor) that the Group will not be able to collect all of the amounts due under the original terms of the invoice. The carrying amount of the receivable is reduced through use of an allowance account. Impaired debts are derecognised when they are assessed as irrecoverable.
2.12 Inventories
Inventories are stated at the lower of cost and net realisable value. Cost includes all costs incurred in bringing each product to its present location and condition, as follows:
-- Raw materials, consumables and goods for resale - purchase cost on a first-in, first-out basis.
-- Finished goods - cost of direct materials and labour plus attributable overheads based on a normal level of activity, excluding borrowing costs.
2.13 Cash and cash equivalents
Cash and short-term deposits comprise cash at banks and in hand and short-term deposits with an original maturity of three months or less.
For the purpose of the consolidated cash flow statement, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts.
2.14 Financial liabilities
Except for derivatives, financial liabilities are recognised initially at fair value net of transaction costs and carried subsequently at amortised cost under the effective interest method.
Obligations for trade payables, loans and borrowings are recognised when the Group becomes party to the related contracts and are measured initially at the fair value of consideration received less directly attributable transaction costs.
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method.
Gains and losses arising on the repurchase, settlement or otherwise cancellation of liabilities are recognised respectively in finance revenue and finance cost.
2.15 Derecognition of financial assets and liabilities
A financial asset or liability is generally derecognised when the contract that gives rise to it is settled, sold, cancelled or expires.
Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, such that the difference in the respective carrying amounts together with any costs or fees incurred are recognised in profit or loss.
2.16 Income tax
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, based on tax rates and laws that are enacted or substantively enacted by the year end.
Deferred income tax is recognised on all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements, with the following exceptions:
-- where the temporary difference arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss;
-- in respect of taxable temporary differences associated with investments in subsidiaries, associates and joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future;
-- and deferred income tax assets are recognised only to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, carried forward tax credits or tax losses can be utilised.
Deferred income tax assets and liabilities are measured on an undiscounted basis at the tax rates that are expected to apply when the related asset is realised or liability is settled, based on tax rates and laws enacted or substantively enacted at the year end.
Income tax is charged or credited directly to equity if it relates to items that are credited or charged to equity. Otherwise income tax is recognised in the income statement.
2.17 Revenue
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured at the fair value of consideration received or receivable. Revenue excludes any applicable sales taxes.
Transhipment service revenue is recognised at the point of loading hydrocarbon product onto the customers export vessel.
Trading revenue is recognised when the risks and rewards of hydrocarbon product ownership pass to the customer. The associated costs of acquiring the hydrocarbon product are recognised in cost of sales.
When the risks and rewards of hydrocarbon product ownership do not pass to the Group the Group is acting as an agent between the supplier and customer and recognises the margin between the cost of the hydrocarbon product and the selling price as revenue.
The Group provides heated storage facilities for customer product which is billed monthly in advance plus additional services such as Ship to Ship transfers.
The Group has a fuel distribution business in Russia which recognises revenue on despatch of product to the customer.
2.18 Financial income and expenses
Financial income and expenses comprise interest expense on borrowings, amortisation of issue costs and interest income on funds invested.
Interest income is recognised as it accrues, calculated in accordance with the effective interest rate method.
2.19 Going concern
The financial statements have been prepared on the going concern basis, which assumes that the Company and its subsidiaries will continue in operational existence for the foreseeable future. The Board has performed a review of the next 12 months cash flows from the date of signing of the accounts and is confident with current operations, cash balance is sufficient to meet liabilities as they fall due.
Subsequent to the year end, the company was subject to a successful takeover set on in Note 27 to the Financial Statements. The ability of the current Directors to forecast and influence future strategy is clearly affected by this change in ownership; however, the board is confident that the new owners will continue to operate the business as a going concern and provide adequate finance for the company to achieve its objectives.
Further explanation in respect of the Going concern basis is set out in Note 30 to the Financial Statements.
3. Capital management
Management controls the capital of the Group in order to provide the shareholders with adequate returns and ensure that the Group can fund its operations and continue as a going concern.
The Group's debt and capital includes ordinary share capital and financial liabilities, supported by financial assets.
There are no externally imposed capital requirements.
Management effectively manages the Group's capital by assessing the Group's financial risks and adjusting its capital structure in response to changes in these risks and in the market. These responses include the management of debt levels, distributions to shareholders and share issues.
There have been no changes in the strategy adopted by management to control the capital of the Group since the prior year.
4. Risk management
The Group's activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk and price risk), credit risk, liquidity risk and other risks and uncertainties. The Group operates a risk management programme where risks are identified and discussed at Board level and appropriate mitigation measures are implemented.
(a) Market risk (i) Currency risk
The Group operates internationally and is exposed to foreign currency risk arising from various currency exposures, primarily with respect to the US Dollar, Euro and Russian Rouble.
The Group's cash flows generated from the terminals and trading divisions are in US Dollars. Only a proportion of the cash earned from transhipment is converted into Roubles to pay local overheads. There is a currency risk associated with the movement in exchange rate between the Rouble and the Dollar as the Group converts a proportion of US Dollars into Roubles at regular intervals to meet the Rouble expenditure as it falls due. Where there is a significant exposure to currency risk the Group enters into forward contracts to tie into the current exchange rate to mitigate the risk.
The presentation currency of the Pan European Terminals plc Group is GBP. The functional currencies of the underlying entities are mainly US Dollar, Euro and Russian Roubles. The assets and liabilities of the underlying entities are re-translated at the closing rate into the presentation currency therefore any currency movements affect the carrying value of the assets and liabilities in the Consolidated Statement of Financial Position of Pan European Terminals plc.
(ii) Interest rate risk
The Group is not currently exposed to risks associated with interest rate movements on borrowings as these are at a fixed interest rate.
The Group is currently exposed to interest rate movements on its cash deposits as cash is mainly held in readily available bank accounts. Where there is sufficient cash held in these bank accounts it is placed on the short term money markets where the interest earned is fixed.
(iii) Price risk
The Group's revenue is not generally correlated to oil or commodity prices. In the terminals division revenue is derived from fixed prices earned from handling the customer's product. In the trading division the Group earns a margin between the purchase price of product and the selling price. This margin is determined through purchasing product at a given number of basis points below Platz (the oil product price index) and selling it at a given number of points above. Although the Platz index is correlated to the underlying commodity price the margin between the purchase and selling price will generally be fixed. As the purchase and sale of the product is done under letters of credit, the prices and margins are fixed in advance therefore the Group is not exposed to any price movements between the time of purchase and sale.
(b) Credit risk
The Group's trade receivables arise in both the terminals and trading division. The Group considers the risk of not realising trade receivable balances as low, but where debts are overdue provisions are considered and made as necessary as set out in note 16. In the terminals division the transhipment and product handling fees are paid prior to the release of the product onto the vessel. As the fees are a relatively small proportion of the value of the customer's product the terminal is handling, the Group rarely encounters default on the payment of debts. If on the rare occasion the customer defaults then the Group holds the customers product as security against the outstanding debt. In the Trading division product is purchased and sold using letters of credit therefore the transactions carried out are guaranteed by the banks issuing the letters of credit. The Group uses letters of credit from reputable European banks only.
The Group incurs capital expenditure in the development and maintenance of its terminals division. Material and labour requirements are generally paid for in advance in Russia so there is a risk of non-performance of contractors. To mitigate this risk the Group has a policy of dealing with only reputable contractors and building merchants.
(c) Liquidity risk
Liquidity risk is the risk that obligations associated with financial liabilities will not be met. The Group has performed a cash flow forecast through to 30 June 2015 which has provided the directors with assurance that the Group has sufficient cash to meet its financial liabilities as they fall due.
(d) Potential taxation issues
As the Group operates in a number of jurisdictions, monitoring of cross border tax issues and repatriation of funds will be required. The Group has developed adequate presence in its key jurisdictions of the UK, Cyprus, the Netherlands, Denmark and Russia to manage the risks that changing tax legislation may present. The Group charges a management fee to its subsidiaries in the Netherlands and Denmark. The Directors have obtained independent professional advice from transfer pricing specialists and are confident that management fees are charged on an arm's length basis.
(e) Title and control over Assets
The Group has undertaken all the customary due diligence and legal due diligence in the verification of title to and control of its assets and share of assets.
(f) Political risk is the risk that assets will be lost through expropriation, unrest or war. The Group minimises political risk by operating in countries with relatively stable political systems, established fiscal codes and a respect for the rule of law. In the case of operating in countries that do not enjoy the stability above, The Group takes special measures to ensure that such risks are minimised to the full extent possible.
(g) A change or breach of regulatory and local legal requirements.
Regulatory compliance is managed with the assistance of external advisors. Changes in legal requirements are monitored by the management team and with the use of external advisors where required.
5. Significant accounting judgements, estimates and assumptions
The Group makes estimates and assumptions concerning the future. The resulting estimates will by definition, seldom equal the actual results. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Many of the amounts included in the financial statements involve the use of judgement and/or estimation. These judgements and estimates are based on managements' best knowledge of the relevant facts and circumstances, having regard to prior experience, but actual results may differ from the amounts included in the financial statements. The Board has considered the critical accounting estimates and assumptions used in the historical financial information and concluded that the areas of judgement that have the most significant effect on the amounts recognised in the financial statements concern.
Receivables
The Directors have carefully reviewed all of the outstanding receivables to the Group at the year end. In making their assessments, the Directors have considered several factors including the age and size of the debt, the trading pattern of the customer and their relative financial strength. Where necessary, confirmations of the debts have been sought from customers. The Directors are satisfied that the balances included in the Statement of Financial Position as at 31 December 2013 are recoverable at the amounts stated therein. In addition as set out in Note 7 the Directors have made a number of provisions against old trade receivables to reflect the current level of uncertainty regarding their recoverability..
Financial instruments measured at fair value through profit or loss
Financial assets at FVTPL include financial assets that are either classified as held for trading or that meet certain conditions and are designated at FVTPL upon initial recognition. All investments where the company hold more than 10% of the share capital fall into this category. Assets in this category are measured at fair value with gains or losses recognised in profit or loss. The fair values of financial assets in this category are determined by reference to active market transactions or using a valuation technique where no active market exists.
Note 25 shows the valuation of the Rosbunker asset At present the performance of Rosbunker is measured by management on the basis of fair value of the underlying business due to restraints on the Group's access to the business.
Going Concern
The financial statements have been prepared on the going concern basis, which assumes that the Company and its subsidiaries will continue in operational existence for the foreseeable future. The Board has performed a review of the next 12 months cash flows from the date of signing of the accounts and is confident with current operations, cash balances are sufficient to meet liabilities as they fall due.
Subsequent to the year end, the company was subject to a successful takeover set on in Note 27 to the Financial Statements. The ability of the current Directors to forecast and influence future strategy is clearly affected by this change in ownership; however, the board is confident that the new owners will continue to operate the business as a going concern and provide adequate finance for the company to achieve its objectives.
Further explanation in respect of the Going concern basis is set out in Note 30 to the Financial Statements.
Goodwill Impairment
Impairment tests for Goodwill are set in Note 13 and are consistent with previous years. However in respect of the cash generating unit held by Petro Broker there is a specific assumption that the lease which expired in April 2014 will be renewed. The Directors currently expect this lease arrangement to be renewed in August 2014 and for Petro Broker to continue trading successfully from this point forwards, but recognise the element of judgement applied in making this assessment. .
6. Segment information
The Group considers that its activities be split into two key areas, terminal and trading activities. An operating segment is a component of the Group engaged in terminal or trading activities that is regularly reviewed by the Chief Operating Decision Maker for the purposes of making economic decisions. In addition, Head Office costs are disclosed separately and added to the sector result in arriving at an operating profit.
The terminals operating segment provides terminal handling and storage services on behalf of clients wishing to export oil products and has bases in the Netherlands, Denmark and Russia. The trading operating segment matches buyers and sellers of hydrocarbon product and takes a margin on the product sold.
The following table analyses the sector revenue and result and reconciles the sector result to the profit after tax.
(a) Operating segments - year ended 31 December 2013
Terminals Trading Unallocated Total
GBP'000 GBP'000 GBP'000 GBP'000
------------------------ ---------------------- ---------------------- ---------------------- --------------------
Revenue 15.253 - - 15.253
Segment operating
profit/(loss) (748) - - (748)
Investment fair
value loss (16.781) - - (16.781)
Finance costs
- net (note 10) - - (1.368) (1.368)
Tax charge 84 - - 84
Segment profit/(loss)
for the year (17.445) - (1.368) (18.813)
------------------------ ---------------------- ---------------------- ---------------------- --------------------
Assets and liabilities
Segment assets 26.883 - - 26.883
Segment liabilities (10.962) - - (10.962)
------------------------ ---------------------- ---------------------- ---------------------- --------------------
Segment net assets 15.921 - - 15.921
Total assets includes
Property, plant
and equipment 6.448 - - 6.448
Goodwill 11.598 - - 11.598
Investments 5.700 - - 5.700
------------------------ ---------------------- ---------------------- ---------------------- --------------------
(b) Operating segments - year ended 31 December 2012
Terminals Trading Unallocated Total
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- ---------- --------- ------------ ---------
Revenue 20,590 - - 20,590
Segment operating profit /
(loss) 2,810 (2,450) (2,067) (1,707)
Investment fair value gain 4,163 - - 4,163
Finance costs - net (note
10) - - (1,309) (1,309)
Tax charge (470) - - (470)
------------------------------- ---------- --------- ------------ ---------
Segment profit / (loss) for
the year 6,503 (2,450) (3,376) 677
------------------------------- ---------- --------- ------------ ---------
Assets and liabilities
Segment assets 45,961 285 1,386 47,632
Segment liabilities (11,421) - (490) (11,911)
------------------------------- ---------- --------- ------------ ---------
Segment net assets 34,540 285 896 35,721
Total assets includes
Property, plant and equipment 6,360 - - 6,360
Goodwill 11,598 - - 11,598
Investments 22,481 - - 22,481
------------------------------- ---------- --------- ------------ ---------
(c) Geographical disclosure - year ended 31 December 2013
Note 6 - Geographical
segments 2013
Rest Russian
UK of Europe Federation Total
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ ---------------------- ---------------------- ------------------ ------------------
Revenue - 7.197 8.056 15.253
------------------------------ ---------------------- ---------------------- ------------------ ------------------
Results
Operating (loss)/profit
for the year (1.034) (807) 1.093 (748)
------------------------------ ---------------------- ---------------------- ------------------ ------------------
Other segment information
Segment assets 3.543 11.875 11.465 26.883
------------------------------ ---------------------- ---------------------- ------------------ ------------------
Total assets
Property, plant and equipment 1.079 3.314 2.055 6.448
Goodwill - 9.710 1.888 11.598
Investments - - 5.700 5.700
------------------------------ ---------------------- ---------------------- ------------------ ------------------
(d) Geographical disclosure - year ended 31 December 2012
Rest of Russian
UK Europe Federation Total
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- ---------- --------- ------------ ----------
Revenue - 7,907 12,683 20,590
------------------------------- ---------- --------- ------------ ----------
Results
Operating (loss) / profit
for the year (2,848) 839 302 (1,707)
------------------------------- ---------- --------- ------------ ----------
Other segment information
Segment assets 3,913 15,364 28,355 47,632
------------------------------- ---------- --------- ------------ ----------
Total assets
Property, plant and equipment 1,095 3,220 2,045 6,360
Goodwill - 9,710 1,888 11,598
Investments - - 22,481 22,481
------------------------------- ---------- --------- ------------ ----------
7. Operating (loss)/profit
The operating (loss)/profit is stated after charging/(crediting):
2013 2012
GBP'000 GBP'000
------------------------------- --------- ---------
Depreciation and amortisation 323 431
Foreign currency (gain)/loss 76 (164)
------------------------------- --------- ---------
Non-recurring administrative expenses consists of the following:
2013 2012
GBP'000 GBP'000
------------------------------------ ----------------------- ---------------------
Loan note refinancing costs - 181
Russian legal costs - 333
Dan Balt acquisition costs - 372
Bad debt provisions 2.402 2.448
Payments to settle old trading
dispute - 250
Other items - 138
Total non-recurring administration
expenses 2.402 3.722
------------------------------------ ----------------------- ---------------------
Bad debt provisions in 2013 relate to a review of all group debtors for all irrecoverable amounts.
The Russian legal costs relate to the protection of the Rosbunker assets and are not expected to recur when the Group's control is reinstated.
The Dan Balt Tank-lager acquisition costs have arisen from a one off finders fee from the Danish terminal acquired at the end of 2011.
8. Staff costs and Directors' emoluments
(a) Staff costs
2013 2012
GBP'000 GBP'000
----------------------- --------- ---------
Wages and salaries 707 763
Social security costs 74 72
Other pension costs - -
----------------------- --------- ---------
781 835
----------------------- --------- ---------
The average monthly number of employees during the year was as follows:
2013 2012
Number Number
----------------- -------- --------
Operational 23 21
Administrative 12 21
----------------- -------- --------
Total employees 35 42
----------------- -------- --------
(b) Directors' emoluments
2013 2012
GBP'000 GBP'000
-------------------------------------- ----------------------- -----------------------
Directors' emoluments 308 269
Pension costs - defined contribution
plan - -
-------------------------------------- ----------------------- -----------------------
308 269
-------------------------------------- ----------------------- -----------------------
The directors constitute the only key personnel of the Group.
There were no gains made by Directors on the exercise of share options during the year (2012: nil).
Total Total
Emoluments Emoluments
2013 2012
GBP'000 GBP'000
--------------------------- ---------------------- ----------------------
Simon Escott 138 120
Adrian Simpson (resigned) 76 61
Richard Healey (resigned) 23 52
Louis Castro (resigned) 27 36
Francesco Gardin 17 -
Reg Eccles 27 -
308 269
--------------------------- ---------------------- ----------------------
The total emoluments paid to directors consists of basic salary only.
Simon Escott's remuneration for services as a Director are invoiced by and paid to an independent third party consultancy business. Emoluments for Richard Healey and Adrian Simpson were invoiced by and paid to their own service companies. Louis Castro was engaged directly as a consultant by the Group. Emoluments for Francesco Gardin and Reg Eccles are invoiced by and paid to their own service companies.
9. Auditors' remuneration
2013 2012
GBP'000 GBP'000
------------------------------- ---------------------- ----------------------
Fees payable to the Company's
auditor consist of:
Audit of the group financial
statements 68 75
Taxation services - 15
68 90
------------------------------- ---------------------- ----------------------
10. Finance income and costs
2013 2012
GBP'000 GBP'000
-------------------------- --------- ---------
Finance income:
Bank interest receivable 1 -
-------------------------- --------- ---------
1 -
-------------------------- --------- ---------
Finance costs:
Loan note interest 819 986
Loan costs and penalties 550 -
Loan note issue costs - 323
-------------------------- --------- ---------
1,369 1,309
-------------------------- --------- ---------
As of not meeting conditions of the loan note of GBP8.5m, there was an additional penalty of GBP0.55m which caused the increase in finance costs in 2013 compared to 2012.
11. Taxation (a) Tax on (loss)/profit on ordinary activities
Current income tax (credited)/charged in the income statement
2013 2012
GBP'000 GBP'000
---------------------------------------- --------- ---------
Corporation tax:
Current tax on profits for the year (84) 494
Deferred tax:
Origination and reversal of temporary
timing differences - (24)
---------------------------------------- --------- ---------
Tax (credit)/charge reported in the
income statement (84) 470
---------------------------------------- --------- ---------
(b) Reconciliation of the total tax charge
2013 2012
GBP'000 GBP'000
--------------------------------------- ------------------------ ---------------------
Loss/Profit before tax (18.897) 1.147
--------------------------------------- ------------------------ ---------------------
Accounting losses/ profits
multiplied by the UK standard
rate of corporation tax of
24.5% (2012: 28%) (4.630) 321
- UK tax losses not utilised - 1.265
- Russian tax losses utilised (56) (56)
- Income not deductible for
tax purposes 4,583 (1.113)
- Expenses not deductible
for tax purposes 114 150
- Effect of different corporate tax
rates in different tax jurisdictions (48) (11)
- Timing differences (39) (39)
- Other (8) (47)
---------------------
Total tax (credit)/charge
for the year (84) 470
--------------------------------------- ------------------------ ---------------------
(c) Deferred tax
The deferred tax included in the Statement of Financial Position is as follows:
2013 2012
GBP'000 GBP'000
----------------------------- --------- ---------
Balance bought forward 486 526
Foreign exchange adjustment (45) (16)
Income statement credit - (24)
----------------------------- --------- ---------
Deferred tax liability 441 486
----------------------------- --------- ---------
The deferred tax liability consists of temporary differences on the timing of depreciation in the income statement and the claiming of capital allowances in the corporate tax returns.
The Group has tax losses which arose in the UK of GBP12,356,000 (2012: GBP11,554,000) and in Russia of GBPNil (2012: GBP1,730,000) that are available indefinitely for offset against future taxable profits of those companies in which the losses arose. Deferred tax assets have not been recognised in respect of these losses due to uncertainty as to whether such amounts will be realised.
No deferred tax has been recognised on the fair value movements of the investments as it is held through a Cypriot intermediary holding company and in accordance with Cypriot tax legislation no capital gains tax would become liable on a disposal of the Group's interest in the investment.
12. (Loss)/Earnings per share (EPS)
Basic EPS is calculated by dividing the net profit for the year attributable to ordinary equity shareholders of the Company by the weighted average number of ordinary shares of 1 pence each outstanding during the year.
The following reflects the income and adjusted share data used in the EPS computation.
2013 2012
GBP'000 GBP'000
-------------------------------------------- --------------- ---------------------
Loss/Profit attributable to equity
shareholders of the company (18.813) 677
-------------------------------------------- --------------- ---------------------
2013 2012
Number Number
-------------------------------------------- --------------- ---------------------
Number of shares
Weighted average number of ordinary shares
of 1 pence each for EPS calculation 102.072.846 97.957.142
-------------------------------------------- --------------- ---------------------
Loss/Earnings per share -
basic and diluted (18,43p) 0,69p
-------------------------------------------- --------------- ---------------------
13. Intangible assets
Exploration
assets Licenses Goodwill Total
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- ------------ --------- --------- --------
Cost
At 1 January 2012 5,196 617 12,011 17,824
Foreign exchange adjustment (130) (20) (150)
Additions - - -
Additions through acquisition - - -
------------------------------- ------------ --------- --------- --------
At 31 December 2012 5,066 597 12,011 17,674
Foreign exchange adjustment (242) (54) - (296)
------------------------------- ------------ --------- --------- --------
At 31 December 2013 4,824 543 12,011 17,378
------------------------------- ------------ --------- --------- --------
Amortisation and impairment
At 1 January 2012 5,196 617 413 6,226
Foreign exchange adjustment (130) (20) - (150)
Amortisation charge - - -
------------------------------- ------------ --------- --------- --------
At 31 December 2012 5,066 597 413 6,076
Foreign exchange adjustment (242) (54) - (296)
------------------------------- ------------ --------- --------- --------
At 31 December 2012 4,824 543 413 5,780
------------------------------- ------------ --------- --------- --------
Net book value
At 31 December 2013 - - 11,598 11,598
------------------------------- ------------ --------- --------- --------
At 31 December 2012 - - 11,598 11,598
------------------------------- ------------ --------- --------- --------
Impairment tests for goodwill
Goodwill is allocated to the Group's four cash-generating units (CGUs) Dan Balt, Petro Broker, Baltic Top and TDKN. An amount of GBP3,617,000 is allocated to the Dan Balt CGGU, GBP6,092,000 to Petro Broker, GBP814,000 to Baltic Top and GBP1,075,000 to TDKN (2011: GBP3,617,000, GBP6,092,000, GBP814,000 and GBP1,075,000 respectively). The country of operation of Dan Balt is Denmark, Petro Broker is the Netherlands and Baltic Top and TDKN are in Russia.
The recoverable amount of a CGU is determined based on value in use calculations. The value in use is calculated from the net present value of future cash flows from each CGU over a period of 10 years. The future cash flows are based on a 3 year financial projection from 2014 to 2016 and then a 3% growth rate on 2016 cash flows is assumed from 2017 onwards. The 3% growth rate is assumed to arise from increases in unit price and volume related synergies. The future cash flows were discounted at a rate of 10% which represents the Group's weighted average cost of capital. The recoverable amount of each CGU was in excess of the goodwill carrying value and therefore no impairment provisions were required.
The Directors have performed a sensitivity analysis on the 3 year financial projections and the key assumptions used in the net present value calculations and are confident that there is low risk that the carrying value of the CGUs exceeds the recoverable amount.
With regard to Petro Broker, the highest CGU, the Directors have made the assumption that the current leases which expired in April 2014 will be renewed. There are currently ongoing negotiations in respect of these leases and should these not be renewed the amount in respect of Petro Broker, GBP6,092,000, would need be written off. The directors are confident that we will either renew the leases or enter new leases.
14. Property, plant and equipment
L&B P&M C&O CIP
Land Plant Computer Construction Total
and buildings and machinery and office in progress
equipment
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- ----------------- ------------------- -------------------- ------------------ ------------------
Cost
At 1 January
2012 947 4.618 256 3.857 9.678
Foreign
exchange
adjustment (19) (81) - (116) (216)
Additions 17 11 2 - 30
Disposals - (21) - - (21)
---------------- ----------------- ------------------- -------------------- ------------------ ------------------
At 31 December
2012 and 1
January
2013 945 4.527 258 3.741 9.471
Foreign
exchange
adjustment - - - (102) (102)
Additions - 508 5 - 513
Disposals - - - - -
---------------- ----------------- ------------------- -------------------- ------------------ ------------------
At 31 December
2013 945 5.035 263 3.639 9.882
---------------- ----------------- ------------------- -------------------- ------------------ ------------------
Depreciation
At 1 January
2012 49 697 252 1.769 2.767
Foreign
exchange
adjustment - 2 - (76) (74)
Depreciation
charge 143 283 5 - 431
Disposals - (13) - - (13)
---------------- ----------------- ------------------- -------------------- ------------------ ------------------
At 31 December
2012 and 1
January
2013 192 969 257 1.693 3.111
Foreign - - - - -
exchange
adjustment
Depreciation
charge 143 179 1 - 323
Disposals - - - - -
---------------- ----------------- ------------------- -------------------- ------------------ ------------------
At 31 December
2013 335 1.148 258 1.693 3.434
---------------- ----------------- ------------------- -------------------- ------------------ ------------------
Net Book Value
At 31 December
2013 610 3.887 5 1.946 6.448
---------------- ----------------- ------------------- -------------------- ------------------ ------------------
At 31 December
2012 753 3.558 1 2.048 6.360
---------------- ----------------- ------------------- -------------------- ------------------ ------------------
15. Inventory
2013 2012
GBP'000 GBP'000
------------- --------------------- ---------------------
Consumables 780 864
------------- --------------------- ---------------------
16. Trade and other receivables (current)
2013 2012
GBP'000 GBP'000
------------------- --------------------- --------------------
Trade receivables 430 2.957
------------------- --------------------- --------------------
There is no difference between the carrying value and fair value of financial assets.
During the year the Directors undertook to make significant provisions for historic debtors as set out in Notes 5 and Note 7. The directors are continuing their efforts to recover these balances however in the light of current circumstances the Directors consider these provisions appropriate at this time.
2013 2012
GBP'000 GBP'000
------------------------ ----------------------- -----------------------
Current 245 959
3 to 6 months past due - -
Over 6 months past due 185 1.998
-----------------------
430 2.957
------------------------ ----------------------- -----------------------
17. Prepayments and other current assets
2013 2012
GBP'000 GBP'000
----------------------------- ----------------------- ----------------------
Advances paid for goods and
services - 976
VAT reclaimable 67 64
----------------------
67 1.040
----------------------------- ----------------------- ----------------------
18. Cash and cash equivalents
2013 2012
GBP'000 GBP'000
-------------------------- --------------------- --------------------
Cash at bank and in hand 671 1.143
-------------------------- --------------------- --------------------
Cash at bank earns interest at floating rates based on daily bank deposit rates. Short-term deposits are made for varying periods of between one day and one month depending on the immediate cash requirements of the Group, and earn interest at the respective short-term deposit rates.
19. Share capital and reserves
(a) Allotted and called up share capital
2013 2012
------------------------ --------------------------
Number GBP Number GBP
----------------------------------- ------------ ---------- -------------- ----------
Allotted and called up share
capital
Ordinary shares of 1 pence
each 106,325,110 1,063,251 101,825,110 1,018,251
----------------------------------- ------------ ---------- -------------- ----------
Share
Number of capital Share premium Total
shares GBP'000 GBP'000 GBP'000
----------------------------------- ------------ ---------- -------------- ----------
Ordinary shares of 1 pence
each issued and fully paid
At 1 January 2012 94,517,416 945 49,600 50,454
Shares issued 7,307,694 73 837 910
----------------------------------- ------------ ---------- -------------- ----------
At 31 December 2012 and 1 January
2013 101,825,110 1,018 50,437 51,455
Shares issued 4,500,000 45 838 883
----------------------------------- ------------ ---------- -------------- ----------
At 31 December 2013 106,325,110 1,063 51,275 52,338
----------------------------------- ------------ ---------- -------------- ----------
On 27 March 2013 the Company issued 4,500,000 new ordinary shares to a strategic investor at an issue price of 19.65p per share raising proceeds of GBP0.9m. The proceeds of the share issue were used to strengthen the Group's balance sheet and to provide additional working capital.
(b) Ordinary shares - rights at general meetings
At general meetings of the Company each member present or by proxy has one vote on a show of hands, and on a poll every member who is present in person or by proxy has one vote per every ordinary share.
20. Borrowings (non current liabilities)
2013 2012
GBP'000 GBP'000
----------------------------------- --------- ---------
Loan notes 8,500 8,500
Loan note issue costs capitalised - -
----------------------------------- --------- ---------
8,500 8,500
----------------------------------- --------- ---------
On 19 November 2012, the Directors successfully completed a re-financing of its $11m secured fixed rate loan notes. The loan notes were repaid from the proceeds of an GBP8.5m secured convertible fixed rate Loan Note which matures on 19 November 2015 and carries interest at 10% per annum. The Group has given security over its assets except those in Cyprus and Russia in respect of the Loan Note. The Loan Note carried the possibility of a conversion to equity at 22 pence per share contingent on a special resolution being passed by the shareholders on or before 30 November 2013.
In April 2013 the Group obtained a further GBP350,000 in loan notes as further working capital.
As the option to convert the Loan Note into ordinary share capital lies with the Group, the Directors deem it appropriate to treat the Loan Note as debt in the Group accounts.
21. Trade and other payables (current)
2013 2012
GBP'000 GBP'000
------------------------------- --------- ---------
Trade payables 1,448 1,553
Salaries and related payables 28 -
Corporation tax payable (245) 399
Other payables and accrued
expenses 440 928
------------------------------- --------- ---------
1,671 2,880
------------------------------- --------- ---------
There is no material difference between the fair value and carrying value of financial liabilities.
These financial liabilities are all due within 6 months.
22. Borrowings (current liabilities)
2013 2012
GBP'000 GBP'000
------------- ---------- ---------
Other loans - 45
------------- ---------- ---------
- 45
------------------------ ---------
There is no difference between the carrying value and fair value of financial liabilities.
23. Financial instruments
Capital Management Policies and Procedures
The Group's capital management objectives are:
- To ensure the Group's ability to continue as a going concern, and - To provide an adequate return to shareholders.
These objectives will be achieved by effectively managing the Group's existing assets and by strategically investing in new projects.
The Group monitors capital on the basis of the carrying amount of equity, less cash and cash equivalents as presented on the face of the consolidated statement of financial position.
The Group sets the amount of capital in proportion to its overall financing structure, i.e. equity and financial liabilities. The Group manages the capital structure and makes adjustments to it in the light of changes in the economic conditions and the risk characteristics of the underlying assets. Capital for the reporting periods under review is summarised as follows:
2013 2012
GBP'000 GBP'000
--------------------------------- --------------------- ---------------------
Total equity 15.921 35.721
Less: cash and cash equivalents (671) (1.143)
Capital 15.250 34.578
--------------------------------- --------------------- ---------------------
Total equity 15.921 35.721
Borrowings (8.850) (8.545)
Overall financing 7.071 27.176
--------------------------------- --------------------- ---------------------
Capital to overall financing
ratio 2,16 1,27
--------------------------------- --------------------- ---------------------
The disclosures detailed below are as required by IFRS 7 Financial Instruments: Disclosures. The Company's principal treasury objective is to provide sufficient liquidity to meet operational cash flow requirements and to allow the Group to take advantage of new growth opportunities whilst maximising shareholder value. The Company operates controlled treasury policies which are monitored by the Board to ensure that the needs of the Company are met as they evolve. The impact of the risks required to be discussed in accordance with IFRS 7 are detailed below.
Liquidity and funding risk
The objective of the Group in managing funding risk is to ensure that it can meet its financial obligations as and when they fall due as shown below:
Current Non-current
Within 6 months 1 to 2 years 2 to 3 years
2013 2012 2013 2012 2012 2012
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------ --------------------- -------------------- ---------------------- ---------------------- ---------------------- ----------------------
Trade &
other
payables 1.671 2.880 - - - -
Borrowings - 45 - - 8.850 8.500
Totals 1.671 2.925 - - 8.850 8.500
------------ --------------------- -------------------- ---------------------- ---------------------- ---------------------- ----------------------
Credit risk
The Group's principal financial assets are bank balances and cash, trade and other receivables and investments in other Group companies, which represent the Group's maximum exposure to credit risk in relation to financial assets.
The Group's credit risk is primarily attributable to its trade and other receivables. It is the policy of the Group to present the amounts in the balance sheet net of allowances for doubtful receivables, estimated by the Group's Directors based on prior experience and the current economic environment.
The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings assigned by international credit rating agencies.
The Group's credit risk is confined to a small number of counterparties and customers and these are individually managed by the Directors accordingly.
Foreign exchange risk
The Group's transactional foreign exchange exposure arises from income, expenditure and purchase and sale of assets denominated in foreign currencies. As each material commitment is made, the risk in relation to currency fluctuations is assessed by the Directors and regularly reviewed. The Group does not have a hedging programme in place at this time.
Foreign currency denominated financial assets and liabilities, translated into GBP at the closing rate, are as follows:
2013 2012
Financial Financial Financial Financial
assets liabilities Exposure assets liabilities Exposure
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----- --------------------- ---------------------- ---------------------- ---------------------- ---------------------- ----------------------
USD 5 - 5 86 - 86
RUR - - - - - -
EUR 7 - 7 7 - 7
DKK - - - - - -
GBP - - - - - -
----- --------------------- ---------------------- ---------------------- ---------------------- ---------------------- ----------------------
The following table illustrates the sensitivity of the net result for the year and equity in regards to the Group's financial assets and financial liabilities that are held in a currency other than the functional currency of the underlying Group entity. There is limited exposure to the income statement in this area as the underlying Group entities generally trade with third parties in the same currency as their functional currency.
It assumes a +/-5% change of the GBP-USD, GBP-RUR, GBP-EUR and GBP-DKK for the year ended 31 December 2012 (2011: 5%). The sensitivity analysis is applied to the Group's foreign currency financial instruments held at the balance sheet date. If the GBP had weakened by 5% against USD, RUR, EUR and DKK (the other main functional currencies of the Group entities), this would have had the following impact by currency:
2013 2012
Net result Net result
for year Equity for year Equity
GBP'000 GBP'000 GBP'000 GBP'000
----- ----------- -------- ----------- --------
USD 11 (700) 11 (700)
RUR - (630) - (630)
EUR - 149 - 149
DKK - 146 - 146
GBP - - - -
----- ----------- -------- ----------- --------
If GBP had strengthened against these respective currencies, there would be an equal and opposite effect on the net result for the year and equity.
Exposures to foreign exchange rates vary during the year depending on the volume of overseas transactions. Nonetheless, the analysis above is considered to be representative of the Group's exposure to currency risk.
Interest rate risk
The Group has minimal exposure to interest rate risk in respect of the cash balances held with banks and other highly rated counterparties as cash is generally held in readily available current accounts and earns a minimal rate of interest. If the interest rate the Group received had increased/decreased by 0.1 percent during the year, the net result for the year would have been increased/reduced by GBPnil (2011: GBP4,000). There would have been no impact on other equity. The trade and other payables, borrowings and the other financial liabilities are carried at amortised cost. All the financial assets are considered to be cash and receivables. The fair values of all financial assets and financial liabilities are not considered to be materially different from their carrying values.
Weighted
average
effective Variable Fixed
interest interest interest Non-interest
2013 rate rate rate bearing Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- ---------- ---------------------- ---------------------- ---------------------- ----------------------
Assets
Cash 0,1% 671 - - 671
Trade and
other
receivables - - 430 430
Prepayments
and other
current
assets - - 67 67
--------------- ---------- ---------------------- ---------------------- ---------------------- ----------------------
Total
financial
assets 671 - 497 1.168
Liabilities
Trade and
other
payables - - (1.671) (1.671)
Borrowings -
current - - - -
Borrowings -
non
current - (8.850) - (8.850)
--------------- ---------- ---------------------- ---------------------- ---------------------- ----------------------
Total
financial
liabilities - (8.850) (1.671) (10.521)
Net financial
assets
/
(liabilities) 671 (8.850) (1.174) (9.353)
--------------- ---------- ---------------------- ---------------------- ---------------------- ----------------------
Weighted average Variable Fixed
effective interest interest interest Non-interest
2012 rate rate rate bearing Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------ -------------------- ---------- ---------- ------------- ---------
Assets
Cash 2.0% 1,143 - - 1,143
Trade and other
receivables - 2,957 2,957
Prepayments and
other current assets - - 1,040 1,040
------------------------------------ -------------------- ---------- ---------- ------------- ---------
Total financial
assets 1,143 - 3,997 5,140
Liabilities
Trade and other
payables - - (2,880) (2,880)
Borrowings - current (45) - - (45)
Borrowings - non-current - (8,500) - (8,500)
------------------------------------ -------------------- ---------- ---------- ------------- ---------
Total financial
liabilities (45) (8,500) (2,880) (11,425)
------------------------------------ -------------------- ---------- ---------- ------------- ---------
Net financial assets/(liabilities) 1,098 (8,500) 1,117 (6,285)
------------------------------------ -------------------- ---------- ---------- ------------- ---------
24. Investment in associates
2013 2012
GBP'000 GBP'000
---------------------------------------------- --------------------- -----------------------
Group share of Polex net
assets 100 100
Polex goodwill 1.089 1.089
-----------------------
1.189 1.189
---------------------------------------------- --------------------- -----------------------
GBP'000
---------------------------------------------- --------------------- -----------------------
At 31 December 2012 (at cost plus cumulative
share of profits, and including goodwill) -
De-recognition of associated undertaking
on 1 January 2013 -
---------------------------------------------- --------------------- -----------------------
At 31 December 2013 -
---------------------------------------------- --------------------- -----------------------
The Directors have reviewed the carrying value of the investment in Polex and consider that the fair value of underlying land assets supports the accounts carrying value.
The following table illustrates summarised financial information of the Group's investment in OOO Polex Service:
Share of Polex Service balance sheet (50%):
2013 2012
GBP'000 GBP'000
--------------------------------- --------- ---------
Non-current assets 87 87
Current assets 76 76
--------------------------------- --------- ---------
Share of gross assets 163 163
Current liabilities 63 63
Non-current liabilities - -
--------------------------------- --------- ---------
Share of gross liabilities 63 63
Share of net assets 100 100
--------------------------------- --------- ---------
Share of Polex income statement
(50%):
2013 2012
GBP'000 GBP'000
--------------------------------- --------- ---------
Revenue - -
Net profit/(loss) before tax - -
--------------------------------- --------- ---------
The Polex investments in associates at 31 December 2013 includes goodwill of GBP1,089,000 (2012: GBP1,089,000).
25. Investments
The Group's investments consist wholly of the Rosbunker asset as follows:
2013 2012
GBP'000 GBP'000
Fair value of investments 5.700 22.481
----------------------------- --------- --------
2013 2012
GBP'000 GBP'000
At 1 January 2013 22.481 18.318
Movement in fair value for
year (16.781) 4.163
Fair value 31 December 2013 5.700 22.481
----------------------------- --------- --------
Financial instruments measured at fair value
The following table presents financial assets and liabilities measured at fair value in the statement of financial position in accordance with the fair value hierarchy. The hierarchy groups financial assets and liabilities into three levels based on the significance of inputs used in measuring the fair value of the financial assets and liabilities. The fair value hierarchy has the following levels:
-- Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities;
-- Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices or indirectly (i.e. derived from prices); and
-- Level 3 - inputs for the asset or liability that are not based on observable market data (unobserved inputs).
The level within which the financial asset or liability is classified is determined based on the lowest level of significant input to the fair value measurement.
The financial assets and liabilities measured at fair value in the statement of financial position are grouped into the fair value hierarchy as follows:
Level 1 Level 2 Level 3 Total
31(st) December 2013 GBP000's GBP000's GBP000's GBP000's
Financial assets at fair value - - 5,700 5,700
through profit or loss
Total - - 5,700 5700
Level 1 Level 2 Level 3 Total
31(st) December 2012 GBP000's GBP000's GBP000's GBP000's
Financial assets at fair value - - 22,781 22,781
through profit or loss
Total - - 22,781 22,781
There have been no significant transfers between levels in the reporting period.
Measurement of fair value
The underlying Rosbunker asset has been valued as a financial asset at fair value through the profit and loss on the basis that the Directors currently monitor the performance of the asset primarily on the basis of its fair value. It is therefore valued under IFRS 13 which requires explanation of the basis of valuation and accompanying sensitivity analysis.
The Rosbunker asset has been valued using an offer from the joint venture partner to sell their 50% stake to Pan European Terminals for $16 million that they believe fairly reflects the sales prices they would be able to achieve in the market for the Groups own 50% stake in the asset. This offer is then subject to a control premium and risk premium and a further discount factor to ensure an appropriate basis for valuation. This represents in total a 65% discount being applied to the Rosbunker asset as shown in the financial statements.
The following table represents a 10% sensitivity analysis on this discount applied:
Decrease Actual Increase
GBP'000 GBP'000 GBP'000
Fair Value of Investment 6.270 5.700 5.130
-------------------------- -------------------- -------------------- --------------------
Discount Rate 59% 65% 72%
-------------------------- -------------------- -------------------- --------------------
26. Related party disclosures
During the year the Group engaged with an independent third party company to provide consultancy services to its overseas operations in Denmark, Holland and Russia. These services are considered to have been provided under normal commercial terms and on an arms-length basis.
The Group Chief Executive Officer's (Mr Escott) remuneration for services as a director of the Group are invoiced through this company as disclosed in note 8. In addition, Mr Escott was engaged as a consultant by this company to provide services to them which formed part of the amounts then invoiced to the Group. These services were all provided under normal commercial terms and on an arms-length basis with a value of GBP40,000 (2012: GBP70,000) in the year to 31 December 2013. There were no amounts owing under this arrangement at 31 December 2013.
27. Post balance sheet events
On 21(st) May 2014, a Recommended Offer from Belphar Limited, a Special Purpose Vehicle, solely owned by Mr Khofiz Shakhidi, was published on the Company Web Page and the Belphar Web Page, at an offer price of 22p. The offer price showed a 37% premium to the three month share price and a 46.67% premium over the market price on 20(th) May 2104.
On 17(th) June 2014 the offer was declared unconditional by Belphar with over 90% of Pan European Terminals shares in their hands and control passed to Belphar on that date.
Settlement to shareholders, who accepted the original offer, is due through Equiniti on 3(rd) July 2014.
On 18(th) June 2014 application was filed by the company to de-list the shares from the AIM market and the company will be de-listed on 16(th) July 2014.
The plans are to grow the business both organically and through possible M&A projects. The existing management will be strengthened and close attention will be paid by the new owners to the assets still within the Russian Federation.
28. Principal subsidiaries, associates and investments
Principal activity Country of Percentage Percentage
incorporation equity interest equity interest
held by the held by the
Group at Group at
31 December 31 December
2013 % 2012 %
--------------------------------- ---------------------- -------------------- ----------------- -----------------
Baltic Petroleum Intermediate holding
Limited company UK 100 100
Baltic Terminals Intermediate holding
Limited company UK 100 100
Baltic Petroleum Intermediate holding
(E&P) Limited company UK 100 100
Caspian Finance Limited Finance company UK 100 100
Baltic Hydrocarbons
Limited Oil Services UK 100 100
Zauralneftegaz Limited Oil E&P UK 50 50
Tetoil Limited Oil Services UK 100 100
Tetoil Baltic Limited Oil Services UK 100 100
OOO Zauralneftegaz Oil E&P Russian Federation 50 50
OJSC Tetoil Oil Services Russian Federation 100 100
OJSC Tetoil Baltic Oil Services Russian Federation 100 100
OOO Polex Service Oil Services Russian Federation 50 50
Intermediate holding
Pazega Limited company Cyprus 100 100
OOO Baltic Top Oil Services Russian Federation 100 100
OOO Otelbiznesstroy Oil Services Russian Federation 100 100
Intermediate holding
Yuri Trading Limited company Cyprus 100 100
OOO Torgovy Dom Kaliningradneft Oil Services Russian Federation 65 65
Baltica Hydrocarbons Intermediate holding
Limited company Cyprus 100 100
Arblade Holdings Intermediate holding
Limited company Cyprus 100 100
Intermediate holding
OOO Agroprom (1) company Russian Federation 50 50
ZAO Rosbunker (1) Oil Services Russian Federation 50 50
Edgeview Ventures British Virgin
Limited (1) Finance company Islands 50 50
North Oil Trading
Limited (1) Oil Services Panama 50 50
North Oil Bunker British Virgin
Limited (1) Oil Services Islands 50 50
Petro Broker International
B.V Oil Services Netherlands 100 100
Dan Balt Tank-Lager
A/S Oil Services Denmark 100 100
Dan Balt Terminals Intermediate holding
Limited company UK 100 100
--------------------------------- ---------------------- -------------------- ----------------- -----------------
(1) These companies are treated as an investment as at 31 December 2013 (note 25).
The Company has operational control over Zauralneftegaz Limited and OOO Zauralneftegaz by virtue of there being 50 A ordinary shares and 50 B ordinary shares of GBP1 each. The A and B ordinary shares of GBP1 rank pari passu other than the A ordinary shares have an additional vote at general meeting thereby giving the Company as shareholder of the A shares control of the company.
29. Capital commitments
At 31 December 2013, there were no amounts contracted for but not provided in the financial statements.
30. Going concern
The financial statements have been prepared under the Going Concern basis based on public statements made by the new owners. The Belphar Limited Directors have publicity stated that the successful completion of their offer which has now completed will provide a stable and well capitalised future for the Pan Group. As part of this transaction the new owners have also acquired the loan notes set out in Note 20 which further enhances the basis of going concern. Details of offer documents in respect of this transaction are available on the Pan European website and therefore the financial statements do not include adjustments that would be required if this public statement of continuing financial support was not provided by the new owners.
The Company's Annual Report for the year ended 31 December 2013 will be sent to shareholders shortly and will be available to view today at www.peterminals.com."
-ends-
Enquiries:
Pan European Terminals plc Tel: +44 (0) 20 3145
Simon Escott, Chief Executive Officer and Interim 1908
Executive Chairman Mob: +44 (0)7920
095 800
Westhouse Securities Ltd - Joint Financial Adviser, Tel: +44 (0) 20 7601
Nominated Adviser and Broker to Pan 6100
Richard Johnson
Antonio Bossi
finnCap Ltd - Joint Financial Adviser to Pan Tel: +44 (0) 20 7220
Stuart Andrews 0500
Christopher Raggett
Leander - Financial PR to Pan Tel: +44 (0)7795
Christian Taylor-Wilkinson 168 157
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SDMFISFLSESM
1 Year Pan Euro Chart |
1 Month Pan Euro Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions
