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| Name | Symbol | Market | Type |
|---|---|---|---|
| Petrol 4.24% | LSE:74JJ | London | Bond |
| Price Change | % Change | Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0 | - |
From Jun 2019 to Jun 2024
TIDM74JJ
RNS Number : 1425J
Petrol AD
02 December 2018
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
OF PETROL GROUP
AND CONDENSED EXPLANATORY NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIODED SEPTEMBER 30, 2018
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
For the period ended September 30
Hot Features
Premium
2018 2017
BGN'000 BGN'000
Revenue 394,321 357,508
Other income 7,471 645
Cost of goods sold (349,004) (315,700)
Materials and consumables (2,766) (2,837)
Hired services (26,651) (28,303)
Employee benefits (14,290) (13,987)
Depreciation and amortisation (707) (1,203)
Impairment losses 32 (6)
Other expenses (996) (1,321)
Finance income 55,845 751
Finance costs (2,411) (2,443)
Profit (loss) before tax 60,844 (6,896)
--------- ---------
Tax income (expense) 150 (24)
--------- ---------
Profit (loss) for the period 60,994 (6,920)
--------- ---------
Total comprehensive income for the
period 60,994 (6,920)
Profit (loss) attributable to:
Owners of the Parent company 60,994 (6,920)
Non-controlling interest - -
Profit (loss) for the period 60,994 (6,920)
========= =========
Total comprehensive income attributable
to:
Owners of the Parent company 60,994 (6,920)
Non-controlling interest - -
--------- ---------
Total comprehensive income for the
period 60,994 (6,920)
========= =========
Profit (loss) per share (BGN) 0.56 (0.06)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
September
30 Dec. 31
2018 2017
BGN'000 BGN'000
Non-current assets
Property, plant and equipment and
intangible assets 13,280 14,398
Investment properties 1,801 1,812
Goodwill 19,827 40
Deferred tax assets 3,842 3,692
Trade and other receivables 95 95
Total non-current assets 38,845 20,037
--------- --------
Current assets
Trade and other receivables 47,600 32,733
Inventories 23,096 20,990
Loans granted 24,654 18,894
Non-current assets held-for-sale 42 42
Cash and cash equivalents 6,559 7,271
Total current assets 101,951 79,930
--------- --------
Total assets 140,796 99,967
========= ========
Equity
Registered capital 109,250 109,250
General reserves 18,864 18,864
Accumulated loss (101,292) (162,286)
--------- ---------
Total equity attributable to the
owners of the Parent company 26,822 (34,172)
--------- ---------
Non-controlling interests 10 10
--------- ---------
Total equity 26,832 (34,162)
---------
Non-current liabilities
Loans and borrowings 38,021 38,144
Employee defined benefit obligations 441 441
Total non-current liabilities 38,462 38,585
--------- ---------
Current liabilities
Trade and other payables 71,054 92,010
Loans and borrowings 4,448 3,478
Current income tax liabilities - 56
Total current liabilities 75,502 95,544
--------- -------------------
Total liabilities 113,964 134,129
========= ===================
Total equity and liabilities 140,796 99,967
========= ===================
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Equity attributable to the Non-controlling Total
owners of the Parent company interests equity
Registered General Accumulated Total
capital reserves profit
(loss)
BGN'000 BGN'000 BGN'000 BGN'000 BGN'000 BGN'000
Balance at January
1, 2017 106,482 18,864 (161,702) (36,356) 10 (36,346)
Comprehensive income
for the period
Loss for the period - - (6,920) (6,920) - (6,920)
Total comprehensive
income - - (6,920) (6,920) - (6,920)
----------- ---------- ------------ --------- ---------------- ---------
Transactions with
shareholders,
recognized directly
in equity
Sale of ordinary shares 2,768 - (1,939) 829 - 829
Total transactions
with shareholders 2,768 - (1,939) 829 - 829
----------- ---------- ------------ --------- ---------------- ---------
Balance at September
30, 2017 109,250 18,864 (170,561) (42,447) 10 (42,437)
=========== ========== ============ ========= ================ =========
Comprehensive income
for the period
Profit for the period - - 8,297 8,297 - 8,297
Other comprehensive
income - - (22) (22) - (22)
----------- ---------- ------------ --------- ---------------- ---------
Total comprehensive
income - - 8,275 8,275 - 8,275
----------- ---------- ------------ --------- ---------------- ---------
Balance at December
31, 2017 109,250 18,864 (162,286) (34,172) 10 (34,162)
=========== ========== ============ ========= ================ =========
Comprehensive income
for the period
Profit for the period - - 60,994 60,994 - 60,994
----------- ---------- ------------ --------- ---------------- ---------
Total comprehensive
income - - 60,994 60,994 - 60,994
----------- ---------- ------------ --------- ---------------- ---------
Balance at September
30, 2018 109,250 18,864 (101,292) 26,822 10 26,832
=========== ========== ============ ========= ================ =========
CONSOLIDATED STATEMENT OF CASH FLOWS
For the period ended September 30
2018 2017
BGN'000 BGN'000
Cash flows from operating activities
Receipts from customers 579,995 527,061
Payments to suppliers (501,885) (446,464)
VAT and excise paid to the budget, net (60,570) (57,578)
Payments related to personnel (14,053) (13,432)
Income tax paid (56) (246)
Other cash flows from operating activities,
net (2,114) (1,235)
---------- ----------
Net cash flows from operating activities 1,317 8,106
Cash flows from investing activities
Payments for purchase of property, plant and
equipment (2,952) (1,628)
Proceeds from sale of property, plant and
equipment 7,279 9
Payments for loans granted, net (4,443) (3,720)
Repayment of loans granted 148 -
Interest received on loans and deposits 14 55
Payments for acquisition of subsidiary and
other investments, net of cash acquired 16 (349)
Disposal and loss of control of subsidiary,
net of cash disposed of (22) -
Proceeds (payments) from other investments (2,397) 70
Net cash flows used in investing activities (2,357) (5,563)
Cash flows from financing activities
Proceeds from loans and borrowings 2,065 -
Repayment of loans and borrowings (453) (349)
Interest and bank fees and commissions paid,net (2,325) (2,978)
Net cash flows from financing activities (713) (3,327)
Net decrease in cash flows during the period (1,753) (784)
Cash at the beginning of the period 7,271 5,334
Effect of movements in exchange rates 18 11
---------- ----------
Cash as per cash flow statement at the end
of the period 5,536 4,561
---------- ----------
Restricted cash 1,023 -
---------- ----------
Cash as per statement of financial position 6,559 4,561
========== ==========
I. General Information
Petrol AD (the Parent company) was registered in Bulgaria in 1990 and entered in the Commercial Register to the Registry Agency with UIC 831496285. The headquarter address of the Parent company is 12 Tyrgovska Str., Hotel Lovetch in Lovetch city. As at the end of the reporting period shareholders are legal entities, the country - through the Ministry of Energy and individuals.
The main activity of Petrol AD and its subsidiaries (the Group) is related with trading of petrol products and non-petrol goods and services.
These explanatory notes are prepared according to the requirements of Art. 100o1, par.5 of the Public Offering of Securities Act (POSA) in relation to Art. 33, par.1, item.2 of the Ordinance No 2 of September 17, 2003 on the prospectuses in public offering and admission of securities for trading on a regulated market and for disclosure of information by the public companies and other issuers of securities, and represent information about important events occurred during the first quarter of 2018. The explanatory notes reflect their influence on the results in the statements for the first quarter of 2018 and describe of the main risks and uncertainties, which stay ahead of the Petrol Group in the rest of the financial year and comprise information for transactions with related parties and/or interested parties, as well as information for emerging significant receivables and/or payables during the same period.
II. Information on important events, occurred in the third quarter of 2018 and accumulated from the beginning of the financial year to the end of the this quarter
Property, plant, equipment and intangible assets
As at September 30, 2018 the Group has property, plant, equipment and intangible assets with total carrying amount of BGN 13,280 thousand.
As at September 30, 2018 property, plant and equipment with carrying amount of BGN 6,742 thousand are mortgaged or pledged as collaterals under bank loans, granted to the Group and other companies.
During the reporting period the Group acquires trade sites - fuel stations exclusively with the intention to sell them. The Group considers that the assets meet the requirements of IFRS 5 Non-current Assets Held for Sale and Discontinued Operations. During the period ended September 30, 2018 non-current assets held for sale with a carrying amount of BGN 915 thousand were purchased and sold.
Investment property
The investment properties of the Group, consisted of a land and building, are part of aggregated assets for BGN 1,500 thousand, which serve as a collateral for the increase of the credit limit under contract for revolving credit line signed in 2016 from BGN 8,500 thousand to BGN 9,500 thousand.
Loans Granted
In February 2018 the Group granted a short-term cash loan to the unrelated party for BGN 2,000 thousand at an annual interest rate of 6.7%. The loan is due on December 31, 2018. As at September 30, 2018 the receivables under this loan are BGN 1,500 thousand principal and BGN 59 thousand interest.
In March 2018 the Group signed a contract for granting short-term loan with an unrelated party for BGN 1,961 thousand at an annual interest rate of 5.5%. The loan is due on December 31, 2018. As at September 30, 2018 the Group has receivables for BGN 1,961 thousand principal and BGN 56 thousand interest.
In March 2018 the Group signed a contract for granting a short-term cash loan to an unrelated party with a credit limit up to BGN 300 thousand at annual interest rate of 6.7%. The loan is due on December 31, 2018. As at September 30, 2018 the granted funds under this loan amounted to BGN 168 thousand principal and BGN 4 thousand interest.
Cash and cash equivalents
As at September 30, 2018 the Group reported cash amounted to BGN 6,559 thousand, including blocked cash of BGN 1,023 thousand under a financial collateral pledge arrangement, covering the Groups liabilities under revolving credit line agreement.
In the notes under Art. 33a2 of Ordinance 2 from the Public Offering of Securities Act (POSA), as cash equivalents of BGN 4,590 thousand, is presented the cash collected from the trade sites as at the end of the reporting period and actually registered in the Group's bank accounts at the beginning of the next reporting period.
Registered capital
The Group's registered capital is presented at its nominal value. The registered capital of the Group represents the registered capital of the Parent company Petrol AD.
As at the end of the reporting period shareholders in the Parent company are as follows:
Shareholder September
30,
2018
Alfa Capital AD 28.85%
Yulinor EOOD 23.11%
Perfeto consulting EOOD 16.43%
Correct Pharm EOOD 10.98%
Trans Express Oil EOOD 9.86%
Corporate Commercial Bank AD 5.51%
VIP Properties EOOD 2.26%
The Ministry of Economy of the Republic
of Bulgaria 0.65%
Other minority shareholders 2.35%
----------
100.00%
==========
The Management of the Parent company has undertaken series of measures related to optimization of its capital adequacy. At the several General Meetings of Shareholders hold in the period of 2016 - 2017 a decision for reverse-split procedure for merging 4 old shares with nominal value of BGN 1 to 1 share with a nominal value of BGN 4 and consequent decrease of the capital of the Parent company in order to cover losses by decreasing the nominal value of the shares from BGN 4 to BGN 1 was voted. In March 2018, following a decision of the Lovech Regional Court, which repealed the refusal of the Commercial Register (CR) to register the decision voted on EGMS for merging 4 old shares with nominal of BGN 1 into 1 new share with nominal of BGN 4, the applied change was registered in CR resulting in registered capital of the Parent company of BGN 109 249 612, distributed in 27 312 403 shares with nominal of BGN 4 each. The change in the capital structure of the Parent company was registered also in Central Depositary AD. The application applied in April 2018 for registration of the voted on EGMS decision for the second stage of the procedure of the Parent company's capital to be decreased by decreasing the nominal value of the shares from BGN 4 to BGN 1 in order to cover losses was refused by CR. At the convened on November 8, 2018 EGSM a decision for decreasing the capital of the Parent company in order to cover losses by decreasing the nominal value of the shares from BGN 4 to BGN 1 was voted again. The application for registration in CR was refused by CR and the refusal was appealed
by the Group within the legal term. The decision was challenged by minority shareholders, and in addition to the refusal, it was ordered a suspension of the registration until the ruling of the Lovech Regional Court on the cases, initiated at the request of the minority shareholders.
Current income tax liabilities and tax audits
As at September 30, 2018 the Group does not have current corporate tax liabilities.
In January 2017, the Parent company received a tax audit act on corporate tax revision for 2013 and VAT until October 2014 amounting to BGN 222 thousand principal and BGN 68 thousand interest. A bank guarantee of BGN 350 thousand was issued in order to cease the execution of the appealed audit act in January 2017.
In March 2017, the Parent company received a tax audit act due to the audit of corporate income tax for 2014 and VAT until June 2015 for BGN 663 thousand principal and BGN 138 thousand interest. The Parent company appealed the act. In order to suspend the enforcement of the appealed audit act, a bank guarantee in favor of National Revenue Agency for BGN 940 thousand, ordered by the Parent company, was issued. The bank guarantee is partly covered by BGN 300 thousand cash.
In August 2017 the Director of "Appealing and tax-security practice" department issued a decision which change the appealed revision act of the Parent company on corporate income tax for 2014 and VAT until June 2015 and reduce the additional tax liabilities from BGN 663 thousand to BGN 65 thousand principal and from BGN 138 thousand to BGN 15 thousand interest. The rest of the additionally determined tax liabilities in the revision act are in process of legal appealing. The issued bank guarantee to suspend the enforcement of the appealed audit act in favor of the National Revenue Agency of BGN 940 thousand, partly covered by BGN 300 thousand blocked cash, was replaced with a new bank guarantee of BGN 94 thousand and the blocked cash was released.
In November 2017 the issued in March 2016 tax revision act for BGN 543 principal and BGN 248 interest of the security payments revision, appealed by the Parent company as unfounded and covered by bank guarantee of BGN 800 thousand was entirely repealed with a decision of Administrative court - Sofia city. The tax administration appealed against the decision and the dispute and Supreme Administrative Court repealed the decision of Administrative court - Sofia city, and returned the cases for reconsideration by another chamber of Administrative court - Sofia city.
Loans and borrowings
As at September 2018 the Group has total liabilities under received bank, debenture and trade loans of BGN 42,469 thousand, including BGN 4,448 thousand current liabilities.
Bank loans
In July 2016, the Group entered into an investment loan agreement, prepaying the liabilities on finance lease contract from November 2015. The loan is secured by a mortgage of property, acquired through finance lease and pledge of receivables. The term of the contract is May 2022 and the contracted interest rate is 3mEuribor+5.25%.
In September 2018 the Parent company signed an agreement for current account overdraft, intended for working capital with a maximum allowable amount of BGN 2,000 thousand and repayment term of January 31, 2019. The contracted interest rate is an Interest Rate based on Deposits plus 6.1872 points, but not less than 6.5% annually. The credit is secured by a special pledge of petroleum products (fuels) in turnover at the amount of BGN 2,418 thousand, and by a pledge of receivables on bank accounts. As at September 30, 2018 the credit limit is fully utilized.
Debenture loans
In October 2006, the Parent company issued 2,000 registered transferable bonds with a fixed annual interest rate of 8.375% and an emission value of 99.507% of the nominal, which is determined at EUR 50,000 per bond. The bond term is 5 years and the maturity date is in October 2011. The principal is due in one payment at the maturity date. At the general meetings of the bondholders conducted in October and December 2011, it was decided to extend the term of the issue until January 26, 2017. On December 23, 2016, a procedure for extension of the bond issue to 2022 and reduction of the interest rate in the range from 5.5% to 8% was successfully completed.
The interest is paid once in a year. After the prolongation of the debenture loan, the annual effective interest rate is 6.78%. The purpose of the bond issue is to provide funds for working capital, financing of investment projects and restructuring of the previous debt of the Group.
The debenture loan liabilities are presented in the statement of financial position at amortized cost. As at September 30, 2018 the nominal value of the debenture loan is EUR 18,659 thousand.
Operating lease agreements
The Group is a lessee under operating lease agreements. The recognised expenses for rent of fuel stations, hired under operating lease for the period ended September 30, 2018 are at the amount of BGN 8,425 thousand. The rent prices for hiring the trade sites from the two parties - main lessors were renegotiated in 2018, resulting in average decrease of 28% in the current rent prices for 2018.
Subsidiaries
The Parent company (the Controlling company) is Petrol AD. The subsidiaries included in the consolidation, over which the Group has control as at September 30, 2018 are as follows:
Subsidiary Main activity Share (%)
of the Group
Petrol Properties Trading with movable assets
EOOD and real estates 100%
Varna Storage EOOD Trade with oil and oil products 100%
Petrol Finance EOOD Financial and accounting services 100%
Elit Petrol - Lovech
AD Trade with oil and oil products 100%
Acquisition, management and
Lozen Asset AD exploitation of property 100%
Production and trading with
goods and services, investments
Storage Invest EOOD and intermediary activities 100%
Processing and trading with
Storage Oil EAD oil and oil products 100%
Petrol Finances OOD Financial and accounting services 99%
Petrol Technologies
OOD IT services and consultancy 98,80%
In March 2018 the Group sold 100% of the capital of Elit Petrol AD for BGN 25 thousand. As at the transaction date Elit Petrol AD is sole owner of the capital of Varna Storage EOOD. The consolidated net assets of the two companies are negative amounting to BGN 54,596 thousand. The result of the sale is a profit of BGN 54,621 thousand.
In March 2018 the Group signed a contract for purchasing of 1,873,700 shares, representing 100% of the capital of Varna Storage EOOD. The price of BGN 6,500 thousand was determined by a market valuation, accepted by both parties and was offset with the opposite receivables of the Group from the seller. The recognised goodwill arising from the acquisition amounts to BGN 19,787 thousand.
Contingent liabilities, including information for new arising significant liabilities for the reporting period
As at September 30, 2018 the Group has contingent liabilities, including issued mortgages and pledges of property, plant and equipment, which serve as a collateral for the bank loans granted to the Group and unrelated parties and credit limits for issuance of bank guarantees with total carrying amount of BGN 6,742 thousand. The Group is a joint co-debtor under a loan agreement for BGN 35,000 thousand and stand-by credit for issuance of bank guarantees amounted to BGN 10,000 thousand in favor of unrelated supplier. The total amount of the utilized funds and issued valid bank guarantees of all borrower's exposures to the Bank shall not exceed BGN 45,000 thousand.
The Group has contingent liability, which secured the execution of the contract for storage of third-party fuels amounted to BGN 30,000 thousand.
As at September 30, 2018 the Group has a co-debtor liability of BGN 2,346 thousand, pursuant to entering-into-debt agreement from January 2017 under liability of a subsidiary till February 2018.
Under a bank agreement for revolving credit line concluded in 2016, bank guarantees were issued for a total amount as at September 30, 2018 of BGN 9,263 thousand, including BGN 5,900 thousand in favor of third parties - Group's suppliers, BGN 1,244 thousand in favor of National Revenue Agency, for issuance of appealed by the Parent company revision acts and BGN 2,119 thousand to secure own liabilities related to contracts under the Public Procurement Act. The bank agreement is secured by a mortgage and a pledge of property, a pledge of all receivables on bank accounts of the Parent company and a subsidiary, and blocked cash of BGN 1,023 thousand. In July 2017 the credit limit under the revolving credit line was increased from BGN 8,500 thousand to BGN 9,500 thousand. Assets amounted to BGN 1,500 thousand, owned by a subsidiary, additionally secured the credit limit.
As a collateral of an investment loan signed in July 2016, a mortgage of property, acquired through the investment loan and a pledge of receivables, arising from opened bank accounts of the Parent company to the amount of the outstanding balance of the loan, which as at the September 30, 2018 amounting to BGN 1,974 thousand.
In September 2018 the Group signed an agreement for current account overdraft, intended for working capital. The credit is secured by a special pledge of petroleum products (fuels) in turnover at the amount of BGN 2,418 thousand, and by a pledge of receivables on bank accounts with balances of BGN 37 thousand as at September 30, 2018.
There is a pending court dispute in relation to a singed in 2015 written guarantee of liabilities of a subsidiary until February 2018, arising from a cession agreement with an exposure of BGN 245 thousand as at September 30, 2018. The blocked cash of BGN 245 thousand, which served as a collateral pursuant to Art.180 and Art. 181 of the Obligations and Contracts Act (OCA), is reported as other receivables on guarantees. A claim to release the cash was deposited, but the court has dismissed it.
In the previous reporting periods companies from the Group have entered into the debt under two loan agreements of a subsidiary (until December 2015) for USD 15,000 thousand and USD 20,000 thousand, respectively. In 2015 the bank -creditor acquired court orders for immediate execution and receiving orders against the subsidiaries - joint debtors. In relation to the complaints filed by the subsidiaries, the competent court has revoked the immediate enforcement orders and has invalidated the receiving orders. In October and December 2015 the creditor has filed claims under Art. 422 of Civil Procedure Code (CPC) against the subsidiaries for the existence of the receivables under each loan agreement. The court proceedings of the creditor are still pending.
In December 2016 the first instance court decreed a decision (the Decision) which admit for established that the bank has a receivable amounted to USD 15,527 thousand from the subsidiaries - joint debtors, arising from a signed loan agreement for USD 15,000 thousand. With the same decision the court has ordered the subsidiaries jointly to pay BGN 411 thousand to the bank - creditor for legal fees and expenses and BGN 538 thousand state fee in favor of the judiciary state for the ordered proceedings and BGN 538 thousand state fee for claim proceedings. In January 2017 the subsidiaries have filed in time appeals against the court decision, because of that the decision did not come into force. As at the date of preparation of these consolidated financial statements the dispute is pending before the court of appeal and the Group's Management considers that there are reasonable grounds the decision to be fully canceled.
As at the date of the preparation of these consolidated financial statements, the filed proceedings against the subsidiaries - joint debtors for estimation of the bank receivables due to the loan agreement for USD 20,000 thousand is pending before the first-instance court. The Management expects favorable decision by the competent court. As at the date of the preparation of this financial report the Parent company sold its interest in one of co-debtor subsidiaries and the potential risk for the Group is reduced to the court proceedings against the second subsidiary.
A creditor of a subsidiary (until December 2015) unreasonably claimed in court the responsibility of the Parent company under a contract of guarantee for liabilities arising from a contract for a framework credit limit as a result of that the bank accounts of the Parent company amounting to USD 29,983 thousand were garnished. This claim was disputed in court by Petrol AD because the liability as guarantor has not occurred and / or extinguished pursuant to Art. 147, paragraph 2 of the Obligations and Contracts Act (OCA). At the time of conclusion of the guarantee deadline of the arrangements between the lender and subsidiary contractual framework for credit limit was July 1, 2014. The term of the framework credit limit was extended without the consent of the customer, therefore the responsibility of the latter has fallen by six months after initially agreed period, during which the creditor has brought an action against the principal debtor. The term of Art. 147, paragraph 1 of the Obligations and Contracts Act (OCA) is final and upon its expiration the company's guarantee has been terminated, so the objection of the Parent company was granted by the court and the imposed liens on bank accounts lifted.
After the writ of execution, pursuant to order proceedings, was canceled on which were imposed liens on bank accounts of the Parent company, the creditor has initiated legal claim proceedings under Art. 422 of the Civil Procedure Code (CPC) to establish the same claims against the subsidiary (until December 2015) and the guarantor Petrol AD. In these proceedings the objections are repeated, that liability as guarantor has not occurred and / or extinguished pursuant to Art. 147, par. 2 of the OCA, and therefore the Management expects that the claim of the creditor against the Parent company will be dismissed permanently by a court decision on those cases. At present, the claim proceedings are pending.
Other significant events occurred during the reporting quarter
As it is disclosed above, the Group's Management has taken a series of measures to optimize the capital adequacy of the Parent company. As a result of several general meetings of shareholders hold in 2016 and 2017, a decision for reverse split procedure was voted for merging 4 old shares with nominal of BGN 1 to 1 new share with nominal of BGN 4 and subsequent decrease of the Parent company's capital to cover losses by decreasing the nominal value of the shares from BGN 4 to BGN 1. In March 2018, following a decision of the Lovech Regional Court, which repealed the refusal of the Commercial Register to register the decision voted on EGMS for merging 4 old shares with nominal of BGN 1 into 1 new share with nominal of BGN 4. The applied change was registered in Commercial Register (CR) resulting in registered capital of the Parent company of BGN 109 249 612, distributed in 27 312 403 shares with nominal of BGN 4 each.
The change in the capital structure of the Parent company was registered also in Central Depositary AD. The application applied in the beginning of April 2018 for registration of the voted on EGMS decision for the second stage of the procedure of the Parent company's capital to be decreased by decreasing the nominal value of the shares from BGN 4 to BGN 1 in order to cover losses was refused by CR.
At the convened on November 8, 2018 EGSM a decision for decreasing the capital of the Parent company in order to cover losses by decreasing the nominal value of the shares from BGN 4 to BGN 1 was voted again. The application for registration in CR was refused by CR and the refusal was appealed by the Group within the legal term. The decision was challenged by minority shareholders, and in addition to the refusal, it was ordered a suspension of the registration until the ruling of the Lovech Regional Court on the cases, initiated at the request of the minority shareholders.
III. Disclosure of transactions with related parties
The total amount of the accrued remunerations of the members of Management and Supervisory Board of the Parent company, included in the personnel expenses, amounted to BGN 997 thousand, and the unsettled liabilities as at September 30, 2018 are at the amount of BGN 96 thousand.
In the third quarter of 2018 transactions with related parties have not been carried out.
IV. Risks and uncertainties ahead of the Group for the rest of the financial year
Macroeconomic environment
The Petrol Group's activity is influenced by the general economic condition of the country and in particular the degree of the successful adoption of the market-oriented economic reforms by the government, changes in the gross domestic product (GDP) and the purchasing power of the Bulgarian customers. In the long term the change in the fuels consumption in the country is commensurate with the GDP.
As a result of the global financial and economic crisis, the Bulgarian economy has been experiencing a continuing decline in its development which affects a wide range of industries. This leads to a noticeable deterioration in cash flows and reduction in income and eventually - to a significant deterioration of the economic environment in which the Group operates. In addition, there is a significant increase in price risk, market risk, credit risk, liquidity risk, interest rate risk, operating risk and other types of financial risks, which the Group is exposed to.
As a result, there has been an increase in uncertainty about the customers' ability to repay their obligations in accordance with the agreed terms. Therefore, the amount of impairment losses on loans granted, sales receivables and on the values of other accounting estimates, might differ substantially in future reporting periods from the reported ones in these consolidated financial statements. The Management of the Group applies the necessary procedures to manage these risks.
Legislature
The Parent company is supervised by a number of regulatory bodies in the country and a potential change in the regulatory framework, regulating the Parent-company's activity may have a negative impact on the Group's financial results.
Suppliers
Due to the specifics of the core business of the Group, namely retail and wholesale trading with fuels, the Group's fuels supplies are provided by a small number of suppliers, as a result of which the Group is at risk of discontinuation of relationships with key suppliers, which may lead to a short-term depletion of inventories and trading activity difficulties;
Competition
Retail trading with petroleum products is carried out in highly competitive market as the products offered in the sector are homogenous and entire substitutes of the offered products by other companies in the sector. In addition, the regulatory framework stipulates an exact specification of the minimum requirements of the fuels offered at the trade stations and all market participants should comply with the imposed legal requirements;
Price risk
The Group is at risk of frequent and sharp changes in prices of fuels and non-petroleum goods. Because of that, the future financial results may diverge significantly from the expectations of the Group's Management. Any future sharp fluctuations in the price of fuels and non-petroleum goods may lead to a deterioration of the financial position of the Group;
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return. Because of the nature of its activity, the Group is exposed to price and currency risk.
The Group is exposed to the risk of change in currency rate, movement in the interest rates and the prices of the capital instruments, which may impact the Group's financial instruments or the value of its investments.
Interest rate risk
Risks arising from the increase in the price of the Group's financing;
Credit risk
The risk of inability of the Group's trade partners to fulfill their contract obligations, which may lead to losses for the Group;
Exceptional costs
There is a risk of incurring unforeseeable costs, which to affect negatively the financial position of the Group;
Political risk
Risks to the Group arising from global and regional political and economic crises;
Liquidity risk
Liquidity risk is the risk that the Group may not be able to meet its financial obligations when they fall due. The policy is aimed at ensuring sufficient liquidity with which to serve liabilities when they fall due, including abnormal and emergency situations.
Georgi Tatarski Milko Dimitrov Prepared by Elena Pavlova Executive Director Executive Director - Teofanova
November 29, 2018
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
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December 03, 2018 02:00 ET (07:00 GMT)
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