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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 : 0966L
Petrol AD
03 September 2019
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
OF PETROL GROUP
AND CONDENSED EXPLANATORY NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIODED JUNE 30, 2019
(This document is a translation of the original Bulgarian document,
in case of divergence the Bulgarian original text shall prevail)
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
For the period ended June 30
Hot Features
Premium
Note 2019 2018
BGN'000 BGN'000
Revenue 2 253,613 238,185
Other income 3 874 4,149
Cost of goods sold (224,776) (211,569)
Materials and consumables 4 (1,809) (1,836)
Hired services 5 (18,511) (17,271)
Employee benefits 6 (10,412) (9,162)
Depreciation and amortisation 10,11,12 (1,924) (471)
Impairment losses 67 5
Other expenses 7 (412) (649)
Finance income 8 1,437 55,410
Finance costs 8 (5,186) (1,662)
Profit (loss) before income tax (7,039) 55,129
--------- ---------
Tax income 9 32 70
--------- ---------
Profit (loss) for the period: (7,007) 55,199
--------- ---------
Total comprehensive income for the
period (7,007) 55,199
========= =========
Profit (loss) attributable to:
Owners of the Parent company (7,007) 55,199
Non-controlling interest - -
Profit (loss) for the period (7,007) 55,199
========= =========
Total comprehensive income attributable
to:
Owners of the Parent company (7,007) 55,199
Non-controlling interest - -
--------- ---------
Total comprehensive income for the
period (7,007) 55,199
========= =========
Profit (loss) per share (BGN) 19 (0.26) 0.51
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Note June 30 Dec. 31
2019 2018
BGN'000 BGN'000
Non-current assets
Property, plant and equipment and
intangible assets 10 12,941 13,498
Right-of-use asset 11 11,092 -
Investment properties 12 1,770 1,793
Goodwill 13 19,817 19,827
Deferred tax assets 9 4,173 4,186
Trade and other receivables 17 - 95
Total non-current assets 49,793 39,399
--------- ---------
Current assets
Inventories 14 23,185 23,977
Loans granted 16 19,084 22,124
Trade and other receivables 17 39,640 36,948
Non-current assets held-for-sale 15 3,459 3,459
Cash and cash equivalents 18 5,668 4,265
Total current assets 91,036 90,773
--------- ---------
Total assets 140,829 130,172
========= =========
Equity
Registered capital 19 109,250 109,250
General reserves 18,864 18,864
Accumulated loss (115,564) (108,557)
--------- ---------
Total equity attributable to the
owners of the Parent company 12,550 19,557
--------- ---------
Non-controlling interests - 9
--------- ---------
Total equity 12,550 19,566
--------- ---------
Non-current liabilities
Loans and borrowings 20 44,812 45,471
Lease liabilities 9,529 -
Employee defined benefit obligations 21 533 533
--------- ---------
Total non-current liabilities 54,874 46,004
--------- ---------
Current liabilities
Trade and other payables 22 70,091 61,844
Loans and borrowings 20 1,588 2,758
Lease liabilities 1,726 -
--------- ---------
Total current liabilities 73,405 64,602
--------- ---------
Total liabilities 128,279 110,606
--------- ---------
Total equity and liabilities 140,829 130,172
========= =========
COMPREHENSIVE 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, 2018 109,250 18,864 (164,473) (36,359) 10 (36,349)
Comprehensive income
for the period
Profit for the period - - 55,199 55,199 - 55,199
----------- ---------- ------------ --------- ---------------- ---------
Total comprehensive
income - - 55,199 55,199 - 55,199
----------- ---------- ------------ --------- ---------------- ---------
Balance at June 30,
2018 109,250 18,864 (109,274) 18,840 10 18,850
=========== ========== ============ ========= ================ =========
Comprehensive income
for the period
Profit for the period - - 731 731 (1) 730
Other comprehensive
income - - (14) (14) - (14)
Total comprehensive
income - - 717 717 (1) 716
----------- ---------- ------------ --------- ---------------- ---------
Balance at December
31, 2018 109,250 18,864 (108,557) 19,557 9 19,566
=========== ========== ============ ========= ================ =========
Comprehensive income
for the period
Loss for the period - - (7,007) (7,007) - (7,007)
----------- ---------- ------------ --------- ---------------- ---------
Total comprehensive
income - - (7,007) (7,007) - (7,007)
----------- ---------- ------------ --------- ---------------- ---------
Transactions with
shareholders,
recognized directly
in equity
Sale of a subsidiary
with a non-controlling
interest - - - - (9) (9)
Total transactions
with shareholders - - - - (9) (9)
Balance at June 30,
2019 109,250 18,864 (115,564) 12,550 - 12,550
=========== ========== ============ ========= ================ =========
CONSOLIDATED STATEMENT OF CASH FLOWS
For the period ended June 30
2019 2018
BGN'000 BGN'000
Cash flows from operating activities
Net profit (loss) before taxes (7,039) 55,129
Adjustments for:
Depreciation/amortization of property, plant
and equipment and intangible assets 1,924 471
Interest expense and bank commissions, net 4,319 905
Shortages and normal loss, net of excess
assets (583) (91)
Provisions for unused paid leave and retirement
benefits 432 315
Reversed impairment loss (67) (5)
Payables written-off - (120)
Gain on sale of subsidiaries (562) (54,621)
Profit on sale of assets (123) (3,831)
(1,699) (1,848)
Change in trade payables 14,546 24,397
Change in inventories 1,326 (3,367)
Change in trade and other receivables (6,361) (18,616)
Cash flows generated from operating activities 7,812 566
Interest, bank fees and commissions paid (2,746) (2,289)
Income tax paid - (56)
-------- --------
Net cash from operating activities 5,066 (1,779)
Cash flows from investing activities
Payments for purchase of property, plant
and equipment (359) (950)
Proceeds from sale of property, plant and
equipment 235 3,545
Payments for loans granted, net (4,558) (4,360)
Proceeds from loans granted, net 7,823 147
Interest received on loans granted 87 10
Payments for acquisition of subsidiary and
other investments, net of cash acquired - 16
Disposals cash from the sale of subsidiaries,
net of proceeds from sale 173 (47)
Proceed (payments) for acquisitions of other
investments (5,156) 530
-------- --------
Net cash flows used in investing activities (1,755) (1,109)
Cash flows from financing activities
Proceeds from loans and borrowings 19 166
Payments of loans and borrowings (923) (262)
Lease payments (1,585) -
Proceed for acquisitions of other investments 589 -
-------- --------
Net cash flows from financing activities (1,900) (96)
Net decrease in cash flows during the period 1,411 (2,984)
Cash and cash equivalents at the beginning
of the period 4,265 7,085
Effect of movements in exchange rates (8) (32)
-------- --------
Cash and cash equivalents at the end of the
period 5,668 4,069
======== ========
Notes
to the interim consolidated financial report
for the period ended June 30, 2019
1. Segments reporting
The Group has identified the following operating segments, based on the reports presented to the Group's Management, which are used in the process of strategic decision-making:
-- Wholesale of fuels - wholesale of petroleum products in Bulgaria;
-- Retail of fuels - retail of petroleum and other products through a network of petrol stations.
-- Other activities - financial and accounting services, consultancy, rental income and other activities.
The segment information, presented to the Group's Management for the years ended as of June 30, 2019 and 2018 is as follows:
June 30 Wholesale Retail All other Total for
of fuels of fuels segments the Group
2019
BGN'000 BGN'000 BGN'000 BGN'000
Total segment revenue 11,749 242,247 1,221 255,217
Intra-group revenue 5 9 716 730
Revenue from external
customers 11,744 242,238 505 254,487
Adjusted EBITDA 2,747 (4,662) 482 (1,433)
Depreciation/amortization 563 1,273 88 1,924
Impairment - (67) - (67)
June 30 Wholesale Retail All other Total for
of fuels of fuels segments the Group
2018
BGN'000 BGN'000 BGN'000 BGN'000
Total segment revenue 6,095 235,868 1,125 243,088
Intra-group revenue - 11 743 754
Revenue from external
customers 6,095 235,857 382 242,334
Adjusted EBITDA 224 1,322 301 1,847
Depreciation/amortization 2 396 73 471
Impairment (5) - (5)
The policies for recognition of revenue from intra-group sales and sales to external clients for the purposes of the reporting by segments do not differ from these applied by the Group for revenue recognition in the consolidated statement of profit and loss and other comprehensive income.
The Management of the Group evaluates the results of the performance of the segments based on the adjusted EBITDA. In the calculation of the adjusted EBITDA the effect of the impairment of assets is not taken into account. The reconciliation of the adjusted EBITDA and the profit (loss) before tax is presented in the table below:
June 30 June 30
2019 2018
BGN'000 BGN'000
Adjusted EBITDA - reporting segments (1,915) 1,546
Adjusted EBITDA - all other segments 482 301
Depreciation/amortization (1,924) (471)
Impairment of assets 67 5
Finance income (costs), net (3,749) 53,748
Profit (loss) before tax (7,039) 55,129
========= =========
2. Revenue from sales
June 30 June 30
2019 2018
BGN'000 BGN'000
Sales of goods 248,567 234,954
Sales of services 5,046 3,231
--------- ---------
253,613 238,185
========= =========
3. Other income
June 30 June 30
2019 2018
BGN'000 BGN'000
Surpluses of assets 618 141
Gain on sale of property, plant, equipment
and materials including: 123 3,831
Income from sales 213 4,729
Carrying amount (90) (898)
Penalties and indemnities 19 25
Insurance claims 6 32
Payables written off - 120
Other 108 -
--------- ---------
874 4,149
========= =========
4. Materials and consumables
June 30 June 30
2019 2018
BGN'000 BGN'000
Electricity and heating 1,049 1,035
Fuels and lubricants 233 209
Office consumables 210 170
Spare parts 147 170
Water supply 46 52
Working clothes 38 101
Advertising materials 23 42
Other 63 57
--------- ---------
1,809 1,836
========= =========
5. Hired services
June 30 June 30
2019 2018
BGN'000 BGN'000
Rents 7,907 6,856
Dealer and other commissions 5,792 5,526
Maintenance and repairs 1,775 1,565
Consulting, training and audit 805 911
Communications 420 409
Cash collection expense 363 371
Security 331 410
State, municipal fees and other costs 278 261
Insurances 215 214
Advertising 130 264
Software licenses 128 127
Transport 58 70
Other 309 287
--------- ---------
18,511 17,271
========= =========
6. Employee benefits
June 30 June 30
2019 2018
BGN'000 BGN'000
Wages and salaries 8,856 7,804
Social security contributions and benefits 1,556 1,358
--------- ---------
10,412 9,162
========= =========
7. Other expenses
June 30 June 30
2019 2018
BGN'000 BGN'000
Local taxes and taxes on expenses 153 177
Entertainment expenses and sponsorship 133 139
Penalties and indemnities 61 199
Scrap, shortages and written-off assets 35 50
Business trips 19 17
Other 11 67
--------- ---------
412 649
========= =========
8. Finance income and costs
June 30 June 30
2019 2018
BGN'000 BGN'000
Finance income
Interest income, including 867 757
Interest income on loans granted 789 706
Interest income on trade receivables 78 51
Gain on sale of subsidiaries, incl.: 562 54,621
Revenue from sales 950 25
Carrying amount of the Group's interest
in the net assets of the subsidiaries (388) 54,596
Net foreign exchange gain 8 32
1,437 55,410
--------- ---------
Finance costs
Interest costs, including: (1,904) (1,374)
Interest expenses on debenture loans (1,268) (1,251)
Interest expenses on the lease (331) -
Interest expenses on bank loans (272) (55)
Interest expenses to the state budget (21) (45)
Interest expenses on trade and other payables (9) (8)
Interest expenses on trade loans (3) (15)
Loss from cession contracts (3,056) -
Bank fees, commissions and other financial
expenses (226) (288)
--------- ---------
(5,186) (1,662)
--------- ---------
Finance income (costs), net (3,749) 53,748
========= =========
9. Taxation
9.1. Tax expenses
Tax expense recognised in profit or loss includes the amount of current and deferred income tax expenses in accordance with IAS 12 Income taxes.
June 30 June 30
2019 2018
BGN'000 BGN'000
Current tax expense - -
Change in deferred tax, including: (32) (70)
Temporary differences recognised during
the period 121 71
Temporary differences arising during the
period (108) (141)
Adjustments (45) -
Tax income (32) (70)
========= =========
9.2. Effective tax rate
The reconciliation between the accounting profit (loss) and tax expense, as well as calculation of the effective tax rate as of June 30, 2019 and June 30, 2018 is presented in the table below:
June 30 June 30
2019 2018
BGN'000 BGN'000
Profit (loss) before tax for the period (7,039) 55,129
Applicable tax rate 10% 10%
Tax expense at the applicable tax rate (704) 5,513
Tax effect of permanent differences 55 40
Tax effect of a tax asset recognized in
the current year that arose but was not
recognized in previous reporting periods (201) (4,588)
Tax effect of a tax asset not recognised
in the current year that arose in the current
period 719 11,182
Tax effect from consolidation adjustments 99 (12,217)
--------- ---------
Tax income (32) (70)
========= =========
Effective tax rate - -
========= =========
The respective tax periods of the Group may be subject to inspection by the tax authorities until the expiration of 5 years from the end of the year in which a declaration was submitted, or should have been submitted. Consequently additional taxes or penalties may be imposed in accordance with the interpretation of the tax legislation. The Group's management is not aware of any circumstances, which may give rise to a contingent additional liability in this respect.
In January 2017, the Parent company received a tax audit assessment on corporate tax revision for 2013 and VAT until October 2014 amounting to BGN 222 thousand principal and BGN 68 thousand interest. In order to cease the enforcement of the appealed tax assessment in January 2017, a bank guarantee of BGN 350 thousand was issued. In order to secure the additionally calculated interest liabilities on this tax assessment, in February 2019 was issued an additional bank guarantee for BGN 60 thousand. In April 2019 the Administrative Court - Sofia city enacted a decision, which entirely repealed the obligation for VAT amounting to BGN 112 thousand principal and BGN 37 thousand interest and considerably reduced the corporate tax liability from BGN 110 principal and BGN 31 thousand interest to BGN 24 thousand principal and BGN 2 thousand interest.
In March 2017, the Parent company received a tax assessment due to an tax audit of corporate income tax for 2014 and VAT until June 2015 for BGN 663 thousand principal and BGN 138 thousand interest. The tax assessment is in process of being appealed. In order to suspend the enforcement of the appealed tax assessment, ordered by the Parent company, a bank guarantee in favor of National Revenue Agency for BGN 940 thousand was issued. The bank guarantee is partly secured by BGN 300 thousand cash. In August 2017 the Director of "Appealing and tax-security practice" department issued a decision, which changed the appealed tax assessment of the Parent company on corporate income tax for 2014 and VAT until June 2015 and reduced the additional tax liabilities from BGN 663 thousand to BGN 65 thousand principal and from BGN 138 thousand to BGN 15 thousand interest. The issued bank guarantee, to suspend the enforcement of the appealed tax audit assessment in favor of the National Revenue Agency of BGN 940 thousand, partly secured by BGN 300 thousand blocked cash, was replaced with new bank guarantee of BGN 94 thousand and the blocked cash was released. The rest of the decreased tax liabilities was appealed in court in higher judicial body. As a result in February 2019, following the final decision of Supreme
Administrative Court (SAC) the court proceeding was partly won and the liabilities according to tax assessment reduced to BGN 13 thousand principal, related to an additionally accrued VAT and BGN 5 thousand accrued interest. As at the date of preparation of these consolidated financial statements the liability is fully paid and the bank guarantee released and given back by National Revenue Agency (NRA). The liabilities are accounted as correcting events as at December 31, 2018 and are recognised in the result for 2018.
In November 2017 the issued tax assessment from March 2016 on the security contributions tax audit for BGN 543 thousand principal and BGN 248 thousand interest, appealed entirely by the Parent company as unjustified and secured by a bank guarantee of BGN 800 thousand, was entirely repealed due to decision of Administrative Court - Sofia city. The tax administration appealed the decision and SAC repealed the decision of AC - Sofia city and returned the court proceeding to the initial judicial body for new examination. In order to secure the additionally calculated interest liabilities on this tax assessment, an additional bank guarantee for BGN 255 thousand was issued in February 2019.
9.3. Recognised deferred tax assets and liabilities
Asset Recognised Recognised Asset Recognised Asset
(liability) in equity in profit (liability) in profit (liability)
as at and loss as at and loss as at
January December June
1, 2018 31, 2018 30, 2019
BGN'000 BGN'000 BGN'000 BGN'000 BGN'000 BGN'000
Property, plant and
equipment (284) - 86 (198) - (198)
Impairment of assets 3,819 242 131 4,192 (7) 4,185
Tax loss carry-forwards 24 - 15 39 (34) 5
Provisions for unused
paid leave and other
provisions 89 - 16 105 15 120
Excess of interest
payments in accordance
with CITA 1 - 2 3 (3) -
Other temporary differences,
including unpaid benefits
to individuals 43 - 2 45 16 61
------------- ----------- ----------- ------------- ----------- -------------
3,692 242 252 4,186 (13) 4,173
============= =========== =========== ============= =========== =============
The Company has the right to carry forward deferred tax assets on tax losses until 2024
9.4. Unrecognized deferred tax assets
As of June 30, 2019 the Group's Management reviews the recoverability of deductible temporary differences and tax loss carry forward, forming tax assets. Because of this review, the Group's Management estimates that there might be no sufficient taxable profits in the near future against which the assets will be utilized. Consequently, the Group does not recognize tax assets on the following deductible temporary differences and tax loss carry forward and impairment of assets, incurred during the current and previous reporting periods.
10. Property, plant, equipment and intangible assets
Land Buildings Plant Vehicles Other Assets Intangible Total
and under assets
equipment constr.
BGN'000 BGN'000 BGN'000 BGN'000 BGN'000 BGN'000 BGN'000
BGN'000
Cost
Balance at
January
1, 2018 7,636 6,664 11,157 572 1,754 93 3,483 31,359
Additions - - 68 - 6 208 93 375
Transfers - 29 54 - 24 (107) - -
Disposals - - (25) - (20) - - (45)
Balance at
June
30, 2018 7,636 6,693 11,254 572 1,764 194 3,576 31,689
-------- ---------- ---------- --------- -------- --------- ----------- ---------
Additions 26 - 295 - 65 219 70 675
Transfers - 3 67 - 158 (228) - -
Disposals (704) (665) (868) - (182) - (86) (2,505)
Balance at
December
31, 2018 6,958 6,031 10,748 572 1,805 185 3,560 29,859
-------- ---------- ---------- --------- -------- --------- ----------- ---------
Additions 2 79 53 - 44 279 3 460
Transfers - 61 9 - 169 (239) - -
Disposals (40) (46) (81) - (65) - (6) (238)
Disposals on
sale
of
subsidiaries (99) (218) (1,018) - (40) - (3,011) (4,386)
Balance at
June
30, 2019 6,821 5,907 9,711 572 1,913 225 546 25,695
-------- ---------- ---------- --------- -------- --------- ----------- ---------
Accumulated
depreciation
Balance at
January
1, 2018 - 4,076 7,946 560 970 - 3,409 16,961
Accumulated - 105 249 - 69 - 25 448
Disposals for
the
period - - (20) - (15) - - (35)
-------- ---------- ---------- --------- -------- --------- ----------- ---------
Balance at
June
30, 2018 - 4,181 8,175 560 1,024 - 3,434 17,374
-------- ---------- ---------- --------- -------- --------- ----------- ---------
Accumulated - 96 242 - 72 - 30 440
Disposals for
the
period - (506) (761) - (154) - (32) (1,453)
Balance at
December
31, 2018 - 3,771 7,656 560 942 - 3,432 16,361
-------- ---------- ---------- --------- -------- --------- ----------- ---------
Additions - 88 232 - 87 - 15 422
Transfers - 1 (1) - - - - -
Disposals - (16) (66) - (30) - (6) (118)
Disposals on
sale
of
subsidiaries - (36) (937) - (38) - (2,900) (3,911)
-------- ---------- ---------- --------- -------- --------- ----------- ---------
Balance at
June
30, 2019 - 3,808 6,884 560 961 - 541 12,754
-------- ---------- ---------- --------- -------- --------- ----------- ---------
Carrying
amount
at
January 1,
2018 7,636 2,588 3,211 12 784 93 74 14,398
======== ========== ========== ========= ======== ========= =========== =========
Carrying
amount
at
June 30,
2018 7,636 2,512 3,079 12 740 194 142 14,315
======== ========== ========== ========= ======== ========= =========== =========
Carrying
amount
at
December 31,
2018 6,958 2,260 3,092 12 863 185 128 13,498
======== ========== ========== ========= ======== ========= =========== =========
Carrying
amount
at
June 30,
2019 6,821 2,099 2,827 12 952 225 5 12,941
======== ========== ========== ========= ======== ========= =========== =========
As at June 30, 2019 property, plant and equipment with carrying amount of BGN 7,332 thousand are mortgaged or pledged as collaterals under bank loans, granted to the Group and to unrelated parties, under credit limit agreements for issuance of bank guarantees.
The assets under construction include mainly incurred expenses for reconstruction of trade sites.
Management's impairment tests on property, plant and equipment, confirm that there is no evidence or circumstances indicating a sustained decline in the carrying amounts of assets, which recoverable amount significantly differs from their carrying amount.
11. Right-of-use assets and lease liabilities
The following items and amounts related to leasing agreements are presented in the statement of financial position as of June 30, 2019
June 30
2019
BGN'000
Right-of-use assets
Property, plant and equipment 11,092
Liabilities (11,255)
Lease liabilities:
Current liabilities (1,726)
Non-current liabilities (9,529)
----------
Net effect on equity (163)
==========
Costs recognized in the statement of comprehensive income:
June 30
2019
BGN'000
Depreciation and amortisation of right-of-use
assets
Property, plant and equipment 1,479
Interest expense
Interest expense on lease agreements for right-of-use
assets 331
---------
Total 1,810
=========
12. Investment property
June 30 Dec. 31
2019 2018
BGN'000 BGN'000
Cost
Balance at the beginning of the period 1,883 1,859
Additions - 24
Balance at the end of the period 1,883 1,883
--------- ---------
Accumulated depreciation
Balance at the beginning of the period 90 47
Depreciation for the period 23 43
Balance at the end of the period 113 90
--------- ---------
Carrying amount at the beginning of the
period 1,793 1,812
========= =========
Carrying amount at the end of the period 1,770 1,793
========= =========
Investment property representing land and building were acquired through business combination in December 2016. The carrying amount of the investment property as at June 30, 2019 and December 31, 2018 is a maximum approximation of their fair value. The Group determines the fair value of the investment property for reporting purposes, using a valuation report of independent appraiser, which is calculated by method of net assets value and discounted free cash flows.
13. Goodwill
The carrying amount of the goodwill as at June 30, 2019 and December 31, 2018 is BGN 19,817 thousand and BGN 19,827 thousand, respectively.
In April 2019, the Group sold its investments in Petrol Technologies OOD and Store Oil EAD and wrote off the goodwill arising from their acquisition of BGN 3 thousand and BGN 7 thousand, respectively.
A goodwill was recognised in previous periods for the acquisition of Varna Storage EOOD - BGN 19,787 thousand, Storage Invest EOOD- BGN 1 thousand and Lozen Asset AD - BGN 29 thousand.
14. Inventory
June 30 Dec. 31
2019 2018
BGN'000 BGN'000
Goods, including: 22,514 23,374
Fuels 14,680 15,324
Lubricants and other goods 7,834 8,050
Materials 671 603
---------
23,185 23,977
========= =========
In 2018 the Group pledged goods in turnover, representing oil products with carrying amount of BGN 1,768 thousand as at June 30, 2019.
15. Non-current assets held for sale
June 30 Dec. 31
2019 2018
BGN'000 BGN'000
Non-current assets held for sale incl.: 3,459 3,459
Land 2,379 2,379
Buildings 695 695
Plants and equipment 381 381
Other 4 4
3,459 3,459
========= =========
As at June 30, 2019 non-current assets held for sale with a carrying amount of BGN 3,417 thousand are mortgaged or pledged as collaterals under bank loans, granted to the Group and to unrelated parties, under credit limit agreements for issuance of bank guarantees.
16. Loans granted
June 30 Dec. 31
2019 2018
BGN'000 BGN'000
Loans granted to unrelated parties, including 19,084 22,124
Initial value 31,154 66,500
Allowance for impairment (12,070) (44,376)
19,084 22,124
========= =========
In January 2019 the Group granted a cash loan to an unrelated party with a credit limit up to BGN 5,500 thousand, in tranches for the period until December 31, 2019 at 6.7% interest rate. As at June 30, 2019 the Group has receivables at the amount of BGN 2,920 thousand principal and BGN 119 thousand interest.
In April 2019 the Group granted a cash loan to an unrelated party with a credit limit up to BGN 1,300 thousand, in tranches for the period until December 31, 2019 at 6.7% interest rate. As at June 30, 2019 the Group has receivables at the amount of BGN 1,291 thousand principal and BGN 18 thousand interest.
In May 2019 the Group granted a cash loan to an unrelated party with a credit limit up to BGN 10 thousand, in tranches for the period until December 31, 2019 at 6.7% interest rate. As at June 30, 2019 the Group has receivables at the amount of BGN 3 thousand.
In March 2018 the Group entered into an agreement for granting a loan to unrelated party at the amount of BGN 1,961 thousand at 5.5% annual interest and repayment period until December 31, 2018. At the end of 2018, according to a signed trade agreement between the parties, the loan was partially offset with outstanding opposite trade liabilities under an agreement for goods supplies. With an additional agreement from December 2018 the term of loan agreement was prolonged until December 31, 2019. In 2019 the Group continues to offset the receivables with due trade liabilities under the agreement for goods supplies. The loan is fully repaid in June 2019.
The receivables on loans granted and interest due on them from a controlled company until November 2013 at the amount of BGN 32,063 thousand were completely impaired in previous periods due to an open bankruptcy procedure and their difficult collection. In April 2019, the claims were transferred to an unrelated party through a cession agreement.
In April 2019, the balance of the loan granted, amounting to BGN 393 thousand principal, net of impairment, granted in previous periods to a subsidiary until March 2018, was transferred to an unrelated party through a cession agreement.
In March 2018 the Group entered into an agreement for granting a cash loan to an unrelated party with a credit limit up to BGN 300 thousand at 6.7% annual interest and repayment period until December 31, 2018. With an annex from the end of 2018 the term of the loan was prolonged until December 31, 2019. In 2019 the loan limit was increased, and as at June 30, 2019 the granted funds under this contract were BGN 408 thousand principal and BGN 18 thousand interest.
In August 2017, the Group signed two cash loan agreements, according to which the Group has a liability to grant to unrelated parties interest bearing loans up to BGN 4,000 thousand and up to BGN 500 thousand at 6.7% annual interest. Subsequently the terms of contracts are annexed. The initially contracted repayment period was extended to December 31, 2019. As of June 30, 2019, the loans are fully repaid.
17. Trade and other receivables
June 30 Dec. 31
2019 2018
BGN'000 BGN'000
Non-current receivables
Guarantees granted - 95
--------- ---------
- 95
--------- ---------
Current receivables
Receivables from clients, including 30,888 25,527
Initial value 31,822 26,664
Allowance for impairment (934) (1,137)
Receivables under cession agreements, assumption
of debt and regress 3,578 6,725
Initial value 4,688 8,129
Allowance for impairment (1,110) (1,404)
Financial assets, measured at fair value
through profit or loss 2,285 2,285
Deferred expenses 1,099 411
Guarantees for participation in tender procedures 964 921
Advances granted, including 208 92
Initial value 278 168
Allowance for impairment (70) (76)
Litigations and writs - -
Initial value 10 10
Allowance for impairment (10) (10)
Tax refundable, incl.: - 93
VAT - 93
Other taxes - -
Other 618 894
Initial value 675 951
Allowance for impairment (57) (57)
--------- ---------
39,640 36,948
--------- ---------
39,640 37,043
========= =========
The Management has performed an analysis of the trade receivables in order to determine their fair values and their level in the fair value hierarchy. The Management considers that the carrying values of the trade and other receivables in the consolidated statement of financial position are reasonable approximations of their fair value as at June 30, 2019 and December 31, 2018 within Level 3 category.
The Group considers that unimpaired overdue receivables are collectible based on historical information about payments, guarantees received and a detailed analysis of the credit risk and collaterals of its customers.
18. Cash and cash equivalents
June 30 Dec. 31
2019 2018
BGN'000 BGN'000
Cash in transit 4,695 2,713
Cash at banks 907 1,476
Cash on hand 66 76
5,668 4,265
========= =========
Cash in transit comprises cash collected from fuel stations as at the end of the reporting period, but actually received in the bank accounts of the Group in the beginning of the next reporting period.
19. 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 June 30, 2019 and December 31, 2018 the fully paid registered capital at the amount of BGN 109,250 thousand is distributed in 27 312 403 personal shares with a nominal value of BGN 4 each.
As at June 30, 2019 and December 31, 2018 the shareholders in the Parent company are as follows:
Shareholder June 30 Dec. 31
2019 2018
BGN'000 BGN'000
Alfa Capital AD 28.85% 28.85%
Yulinor EOOD 23.11% 23.11%
Perfeto consulting EOOD 16.43% 16.43%
Correct Pharm EOOD 10.98% 10.98%
Trans Express Oil EOOD 9.86% 9.86%
Corporate Commercial Bank AD 5.51% 5.51%
VIP Properties EOOD 2.26% 2.26%
The Ministry of Economy of the Republic
of Bulgaria 0.65% 0.65%
Other minority shareholders 2.35% 2.35%
--------- ---------
100.00% 100.00%
========= =========
The Management of the Parent company has undertaken series of measures in order to optimize the capital adequacy of the company. As a result of the several General Meetings of Shareholders held during the period 2016 - 2017 was voted a decision for reverse split procedure for merging 4 old shares with nominal of BGN 1 into 1 new share with nominal of BGN 4 and subsequent decrease of capital of the Parent company in order 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 cancelled the refusal of the Commercial Register (CR) to register the decision taken on EGMS for merging of 4 old shares with BGN 1 nominal in 1 new share with BGN 4 nominal. The submitted change was registered in Commercial Register and the registered capital of the Parent company of BGN 109,249,612 was distributed in 27,312,403 shares with nominal of BGN 4 each. The change in capital structure was registered also in the register of Central Depository AD. The Commercial Register enacted a refusal on the submitted in April 2018 application for registration of the decision of EGMS for the second stage of the procedure reducing the nominal value of the shares from BGN 4 to BGN 1 in order to cover losses.
On EGMS of Petrol AD held on November 8, 2018 the decision to decrease 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. A refusal of the application for registration of the decision in CR was enacted, which was appealed by the Parent company within the legal term. The minority shareholders disputed the decision of the EGMS and additionally to the refusal the application proceeding was postponed until the pronouncing of the Lovech Regional Court on the court proceedings, initiated on minority shareholders' request. In March 2019 the RC - Lovech enacted a decision, which rules the CR to register the decrease of capital after the resumption of the registration proceedings after the adjudication on the proceedings, created on minority shareholders' request.
In February 2019 was held a new EGMS, where the decision for reduction of capital was voted again and a decision for substitution of the deceased member of Supervisory Board Ivan Voynovski with Rumen Konstantinov was taken. A refusal on the application for registration of these circumstances in the file of the Parent company was enacted, which was appealed by the Parent company within the statutory term. In addition to the refusal, the registration proceeding was ceased on request of minority shareholders until the RC - Lovech rules on.
Profit (loss) per share
The profit (loss) per share is calculated by dividing the net profit (loss) for the period by the weighted average number of ordinary shares held during the reporting period.
June 30 June 30
2019 2018
BGN'000 BGN'000
Weighted average number of shares 27,312 109,250
Profit (loss) (BGN'000) (7,007) 55,199
--------- ---------
Profit (loss) per share (BGN) (0.26) 0.51
========= =========
20. Loans and borrowings
June 30 Dec. 31
2019 2018
BGN'000 BGN'000
Non-current liabilities
Debenture loans 36,808 36,704
Loans from financial institutions 8,004 8,767
44,812 45,471
========= =========
Current liabilities
Debenture loans 1,013 2,040
Loans from financial institutions 575 524
Trade loans from unrelated parties - 194
1,588 2,758
========= =========
46,400 48,229
========= =========
20.1. Debenture loans
In October 2006, the Parent company issued 2,000 registered transferable bonds with fixed annual interest rate of 8.375% and issue value 99.507% of the face value, which is determined at EUR 50,000 per bond. The principal is due in one payment at the maturity date. The bond term is 5 years and the maturity date is in October 2011. 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 of extension of the bond issue to 2022 and reduction of the interest rate in the range from 5.5% to 8% was successfully completed.
After the prolongation of the debenture loan, the annual effective interest rate is 6.79%. The purpose of the bond issue is to provide funds for working capital, investment projects financing and restructuring of the previous debt of the Group.
The debenture loan liabilities are presented in the statement of financial position at amortised cost.
As at the date of these financial statements the nominal value of the debenture loan is EUR 18,659 thousand.
20.2. Loans from financial institutions
In July 2016, the Parent company entered into an investment loan agreement, prepaying the liabilities on finance lease contract from November 2015. Collateral of the loan is 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%. As at June 30, 2019 the liabilities under the bank loan amounting to BGN 575 thousand current liabilities and BGN 1,004 thousand non-current liabilities.
In September 2018 the Group entered into a credit-overdraft agreement on current account in commercial bank, intended for working capital with maximum allowed amount of BGN 2,000 thousand and repayment period until January 31, 2019 and contracted interest rate as Savings-based interest rate (SIR) plus added amount of 6,1872 points, but cumulatively not less than 6.5% annually. The credit is secured with a special pledge of its goods in turnover, representing oil products and with pledge of receivables on bank accounts. In December 2018, as a result of a signed annex to an agreement from 2016 for revolving credit line with the same bank, the Group negotiated an increase of the amount of the credit line of BGN 9,500 thousand with an additional amount of BGN 11,500 thousand, by which the total amount of credit line rose to BGN 21,000 thousand. The line is separated in total limit of BGN 13,500 thousand for issuance of bank guarantees and BGN 7,500 thousand for refinancing of the received credit-overdraft of BGN 2,000 thousand and the rest for working capital. The increased amount of the credit limit on the revolving credit line is covered additionally with establishment of mortgages and pledges of properties, plants and equipment with a carrying amount of BGN 1,063 thousand as at June 30, 2019 and a special pledge on goods in turnover, representing oil products with a book value of BGN 1,768 thousand as at June 30, 2019. In June 2019 the limit for working capital, granted under this credit line was partially repaid and as at June 30, 2019 its amount decreased from BGN 7,500 thousand to BGN 7,000 thousand.
In December 2018 the Group entered into an agreement for sale of receivables with a commercial bank under a contract for sale of receivables (standard factoring) with a total limit of advance payment up to BGN 550 thousand and Saving-based Interest Rate (SIR) for BGN plus added amount of 3,7157 points, but not less than 4% annually on the received advance payment. As at December 31 2018 the Group received an advance payment of BGN 280 thousand on this factoring agreement. In January 2019 the factoring agreement was ceased and the Group has no utilized limits on it.
In February 2019 the Group entered into a factoring agreement with a commercial bank with no right of regress special terms for transferring approved in advance receivables with maximum repayment period of 120 days from the date of invoice issuance with advance payment of 90% of the amount of the transferred receivables with added VAT. The commission consideration for factoring services is 0.35% on the total amount of the transferred invoices plus additional annual fees. The interest price for the advance payments is Basis Deposit Index for Entities + 1,95%, daily accrued and monthly withdrawn at the end of each calendar month. As at June 30, 2019 the Group has transferred receivables upon this factoring contract at the amount of BGN 490 thousand.
21. Obligation for defined benefit retirement compensations
As at June 30, 2019 and December 31, 2018, the Group accrued obligation for defined benefit retirement compensations amounting to BGN 553 thousand. The amount of the liability is determined based on an actuarial valuation, based on assumptions for mortality, disability, employment turnover, salary increases, etc. The present value of the liability is calculated using a discount factor of 1.25% and increase of the expected salary by 4%.
The demographic assumptions are related to the likelihood individuals to leave the plan before retirement due to various reasons: withdrawal, staff reduction, illness, death, disability, etc. They are based on a statistical information about the population and are attached to the staff structure by gender and age at the time of the assessment.
22. Trade and other payables
June 30 Dec. 31
2019 2018
BGN'000 BGN'000
Payables to suppliers 58,740 44,680
Tax payables, including 6,842 6,858
Excise duty and other taxes 6,149 6,740
VAT 693 118
Payables to personnel and social security
funds 2,522 2,360
Advances received and deferred income 860 1,339
Payables to related parties 12 12
Obligations under cession agreements and
regress - 5,606
Other 1,115 989
--------- ---------
70,091 61,844
========= =========
The Group accrues unused paid leave provision of employees in compliance with IAS 19 Employee Benefits. The movement of these provisions for the period is as follows:
June 30 Dec. 31
2019 2018
BGN'000 BGN'000
Balance at the beginning of the year 500 429
Accrued during the year 432 415
Utilised during the year (278) (344)
Balance at the end of the year, including: 654 500
========= =========
Paid leaves 551 422
Social security on paid leaves 103 78
The balance at the end of the year is presented in the consolidated statement of financial position together with current payable to personnel.
The Management performed an analysis of trade payables in order to determine their fair values and their level in the fair value hierarchy. The Management of the Group considers that the carrying amounts of the current payables in the consolidated statement of financial position are reasonable approximations of their fair value as at June 30, 2019 and December 31, 2018 within Level 3 category.
23. Subsidiaries
The subsidiaries, included in the consolidation, over which the Group has control as of June 30, 2019 and December 31, 2018 are as follows:
Subsidiary Main activity Investment Investment
at June at Dec.
30 2019 31 2018
Petrol Properties Trading movable and immovable
EOOD property 100% 100%
Trade with oil and oil
Varna Storage EOOD products 100% 100%
Petrol Finance Financial and accounting
EOOD services 100% 100%
Elit Petrol - Lovech Trade with oil and oil
AD products 100% 100%
Acquisition, management
Lozen Asset AD and exploitation of property 100% 100%
Production and trading
with goods and services,
Storage Invest investments and intermediary
EOOD activities 100% 100%
Kremikovtsi Oil Processing, import, export
EOOD and trading with oil and
oil products 100% -
Shumen Storage Processing, import, export
EOOD and trading with oil and
oil products 100% -
Petrol Finances Financial and accounting
OOD services 99% 99%
Processing and trading
Storage Oil EAD with oil and oil products - 100%
Petrol Technologies
OOD IT services and consultancy - 98,80%
In June 2019 two new subsidiaries - Kremikovtsi Oil EOOD and Shumen Storage EOOD - were established and entered in the Commercial Register through an in-kind contribution of land, buildings, machinery and equipment. The capital of Kremikovtsi Oil EOOD is divided into 1,740,397 company shares, with nominal value of BGN 1 each, and the capital of Shumen Storage EOOD is divided into 1,650,000 company shares, with nominal value of BGN 1 each.
Disposal of interest in subsidiaries in 2019:
In April 2019 the Group sold to unrelated party its interest in Petrol Technologies OOD for a consideration amounting to BGN 900 thousand. As at the transaction date, the Group's share in the consolidated net assets of the sold company were at the amount of BGN 641 thousand, and the goodwill written off at the amount of BGN 3 thousand. Pursuant to the sale, the Group has reported BGN 256 thousand profit.
In April 2019 the Group sold 5,940,000 shares, representing 100% of the capital of Storage Oil EAD for a total price of BGN 50 thousand. As at the transaction date, the consolidated net assets of the sold company were negative at the amount of BGN 263 thousand. and the goodwill written off at the amount of BGN 7 thousand. Pursuant to the sale, the Group reported BGN 306 thousand profit.
Disposal of interest in subsidiaries during previous years
In December 2015 a contract with notarized signatures, whereby Petrol AD transferred to a company outside the Group 100% of Naftex Petrol EOOD's equity shares against BGN 1. Changing the sole owner of Naftex Petrol EOOD is filed timely for entry in the Commercial register at the Registry Agency, but has not been recorded because of incompleteness in the documents attached to the application. However, since the contract, as at December 2015, has been concluded properly according to the prescribed by the Commercial Code form, it raises legal action between the parties involved, due to which Petrol AD is no longer the sole shareholder of Naftex Petrol EOOD. Consequently, it is accepted that the Group has lost control and assets and liabilities of the subsidiary were written off and the gain was recognized resulting from the loss of control in the consolidated statement of profit or loss and other comprehensive income. As at the transaction date the consolidated net assets of the subsidiary amounted to BGN (314,452) thousand. The result of the sale of the Group was a profit amounted to BGN 314,452 thousand.
In March 2016, the change of the sole owner of Naftex Petrol EOOD has been repeatedly applied for registration with the Commercial Register when a completed set of documents as instructed by the officials has been submitted. The registration was suspended by the court because of a request by a shareholder of the Parent company, on the grounds that the sale contract was challenged in court because executives were not authorized to conclude the agreement by the general meeting of the company contrary to the provisions of Public Offering of Securities Act (POSA). Before the conclusion of the transaction, it was thoroughly checked for compliance with the law and that fall below the thresholds for convening the General Meeting pursuant to Art. 114 of the POSA as documents proving this circumstance are duly implemented in the Commercial Register with the application for registration of the change of the sole owner of the company. For these reasons, the Management of Petrol AD considers that the claim was unfounded and after a judgment in favor of Petrol AD, a sale of shares will be recorded in the register.
During the period until June 30, 2019 the Group has no purchases and sales with related parties.
The total amount of the accrued remunerations of the members of Management and Supervisory Board of the Parent company for the period ended June 30, 2019, included in the personnel expenses, amounted to BGN 728 thousand (June 30, 2018: 665 thousand) and unsettled liabilities of BGN 115 thousand (December 31, 2018: 116 thousand).
24. Capital management
In order to ensure the going concern functioning of the Group, the Management has undertaken series of purely procedural and business oriented measures, aimed to bring the capital of the Parent company in consistence with the requirements of Art. 252, par. 1, item 5 of the Commercial Act (CA) and overall improvement of the financial position of the Group.
Some of the measures include the reduction of the registered capital bellow the net assets of the Parent company. Holding of an Extraordinary General Meeting of Shareholders (EGMS) in November 2016, where a proposal for reverse split (merging) of 4 old shares with nominal value of BGN 1 to 1 share with nominal value of BGN 4 was voted, is the first step in this direction. As a result the number of the issued shares will decrease from 109,249,612 shares to 27,312,403 new shares maintaining the value of the registered capital to BGN 109,249,612. The registration of the decision of the EGMS in the Commercial Register of the Parent company's account was suspended by the court upon request of a shareholder.
In February 2017, continuing the measures for capital adequacy of the Group, the Management Board of the Parent company convened new Extraordinary General Meeting of Shareholders (EGMS) with a decision agenda for reverse split of shares. EGMS was held with 77,951,767 presenting shares, representing 71,36% of the registered capital, where 71,937,309 shares representing 65,85% (over 2/3 of the presenting shares) were voted "For" the reverse split procedure.
In May 2017 was hold next EGMS when decision for reduction of capital from BGN 109,249,612 to BGN 27,312,403 by decrease of nominal value of the issued shares from BGN 4 to BGN 1 was voted. The decision is conditional upon the decision of the EGMS concerning the procedure of reverse split, which should be confirmed by final entered into force court decision.
In October 2017 was hold a new EGMS where a decision repealing the decisions taken on meetings hold in February and May 2017 was voted. On the same meeting, a new decision for reverse split procedure by merging 4 old shares with nominal of BGN 1 in 1 new share with nominal of BGN 4 and consequently decreasing of the Parent company's capital in order to cover losses by decreasing the nominal value of the shares from BGN 4 to BGN 1. In December 2017, an application for registration in Commercial Register of the change in nominal value and number of shares was applied, which was refused by the CR. The Parent company appealed the refusal. In March 2018, following the decision of Lovech Regional Court, which cancelled the refusal of the Commercial Register for registration of the decision taken 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. As a result of that the registered capital of the Parent company amounting to BGN 109,249,612, distributed in 27,312,403 shares with nominal of BGN 4 each. The change in the structure of capital was registered in the register of Central Depository AD. The Commercial Register enacted a refusal on the applied in April 2018 application for registration of the decision of EGMS for the second stage of the procedure, which to decrease the capital of the Parent company by reducing the nominal value from BGN 4 to BGN 1 in order to cover losses.
On EGMS of Petrol AD held on November 8, 2018 the decision to decrease 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. A refusal was given on the application for registration of the decision in CR, which was appealed by the Parent company within the legal term. The minority shareholders disputed the decision. In March 2019 the RC - Lovech enacted a decision, which rules the CR to register the decrease of capital after the resumption of the registtration proceedings after the adjudicatation on the proceedings, created on minority shareholders request.
In February 2019 was held a new EGMS, where the decision for reduction of capital was voted again and a decision for substitution of the deceased member of Supervisory Board Ivan Voynovski with Rumen Konstantinov was taken. A refusal on the application for registration of these circumstances in the file of the Parent company was enacted, which was appealed by the Parent company within the statutory term. In addition to the refusal, the registration proceeding was ceased on request of minority shareholders until the RC - Lovech rules on. In May 2019, the Lovech District Court ruled a decision, which repealed the enacted refusal and returned the case file to the Registry Agency to make the requested entry after resuming the suspended registry proceedings. At present, the legal proceedings on the claims for annulment of the decisions of the EGMS from February 2019 are pending.
To carry out its business activity the Group needs a free capital to provide the necessary working capital, to pay its obligations on timely manner and to follow its investment intentions. Major sources of liquidity are cash and its equivalents, long-term and short-term loans, the decrease of receivables collection period and extension of the liabilities paying period.
The Group's management expectations are that in the coming years, as a result of a growing competition mainly in retail market, part of the small independent players would be forced out gradually of fuel business. At the same time, the expectations in terms of the levels of trade margins, in particular on the retail market, are the margins to stabilize around the average European levels.
The plans for the future development of the Group are closely related with the stated expectations for changes in the market environment, in particular, sector of trading with fuels. The Management continues to follow the program outlined and started in the beginning of 2014 for restructuring the activities of Petrol Group, aiming to concentrate the efforts to optimize and develop the core business - wholesale and retail trading with fuels. In order to improve the financial position, the Management continues to analyze actively all expenses in demanding of hidden reserves for optimization.
In 2019 the Management will continue the active action for expansion of Group's market share that has been taken since mid-2016, by securing the long-term use of storage facilities - licensed fuel storage facilities strategically located in the country. The Management is in the process of analyzing and exploring the possibilities of increasing wholesale trading, including by import of petroleum products.
In the coming years the results of the Group will also depend on the possibilities to carry out the investments and the successful delivering of new projects. The investments of the Group will be focused predominantly on the development of new sites and increasing the sales and market share of Petrol AD, mainly through transformation of the trade sites managed by the Parent - company into modern places for complex customer service.
Following the strategy of expanding the market share in retail market, the Group plans to attract new sites under Petrol brand through the franchise program.
In 2019 year the Management of the Group will direct its effort towards conducting an active marketing campaign. In terms of the clients, the direction of development is the attraction of new groups of clients, which were not seriously covered by the current marketing plans and development of a group of loyal corporate clients, which to increase their share in the total volume of sales in trade sites. The Group's strategy for 2019 is focused on the final customer. It is provided marketing activities - games, promotions and other, supported by enough media appearances to increase the sales of fuels. The Management will continue to develop its card system and plans to create a loyalty clients system.
The Group's Management activities are directed to validation of the principles and traditions of good corporate governance, increasing the trust of the interested parties, namely shareholders, investors and counterparties, and to disclosure of timely and precise information in accordance with the legal requirements.
25. Contingent liabilities
As at June 30, 2019 the Group has contingent liabilities, including issued mortgages and pledges of property, plant and equipment, which serve as a collateral for bank loans granted to the Group and unrelated parties and credit limits for issuance of bank guarantees with total carrying amount of BGN 10,749 thousand. The Group is a joint co-debtor under loan agreement of unrelated supplier, including limit for overdraft for BGN 25,000 thousand and stand-by credit for issuance of bank guarantees in favour of Customs Agency amounted to BGN 20,000 thousand. The total amount of the utilized funds and issued bank guarantees of all borrower's exposures to the Bank shall not exceed BGN 45,000 thousand. In relation to this credit agreement, the Group has established a special pledge on its cash in the bank account opened in the bank-creditor with total amount of BGN 17 thousand as at June 30, 2019 and a special pledge on receivables from contractors for BGN 4,000 thousand average monthly turnover.
The Group bears a contingent liability, covering the execution of an agreement for storage of third-party fuels up to BGN 30,000 thousand.
The Group bears a joint obligation according to a contract for debt from January 2017 on an obligation of a subsidiary until February 2018 for BGN 2,346 thousand as at June 30, 2019
Under a bank agreement for revolving credit line signed in 2016, bank guarantees were issued for a total amount of BGN 9,902 thousand as at June 30, 2019, including BGN 6,450 thousand in favor of third parties - Group's suppliers, BGN 1,465 thousand in favor of National Revenue Agency, for issuance of appealed by the Parent company revision acts and BGN 1,987 thousand to secure own liabilities related to contracts under the Public Procurement Act. The bank agreement is secured by mortgages of property, pledge of plants and equipment, pledge of all receivables on bank accounts of the Parent company and a subsidiary. 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. With annex from December 2018 the limit is increased to BGN 21,000 thousand and is additionally secured with mortgages and pledge of property, plants and equipment, and special pledge of goods in turnover, namely oil products with book value of BGN 1,768 thousand as at June 30, 2019. In June 2019 the limit for working capital granted under this credit line was partially repaid and as of June 30, 2019 its amount decreased from BGN 7,500 thousand to BGN 7,000 thousand.
In December 2018 the Group entered into an agreement for sale of receivables with a commercial bank under a contract for sale of receivables (standard factoring) with a total limit of advance payment up to BGN 550 thousand and withdrawn amount as at December 31, 2018 of BGN 280 thousand, secured with a pledge of receivables on bank accounts. In January 2019, the factoring contract was terminated and the Group has no unused limits on it.
As a collateral of an investment bank 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 June 30, 2019 amounting to BGN 1,573 thousand.
There is a pending litigation in relation to a signed in 2015 guarantee contract of the liabilities of a subsidiary until February 2018, arising of a cession contract with outstanding book value as at June 30, 2019 of BGN 245 thousand. The cash granted as a collateral under Art. 180 and Art. 181 of Law on Obligations and Contracts (LOC) amounting to BGN 245 thousand is disclosed as other receivables on guarantees. A request to release the cash was deposited, but the court dismissed the appeal.
In the previous reporting periods companies from the Group have entered into the debt under two loan agreements of a subsidiary with a bank-creditor (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 complains 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 joint-debtors to pay BGN 411 thousand to the bank - creditor for legal advisory fees and court dispute 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 co-debtors have filed in time appeals against the court decision, because of that the decision did not come into force. As at the date of the preparation of these explanatory notes, the dispute is pending in the appeal court. The Group's Management considers that there are grounded chances the Decision to be entirely repealed.
As at the date of the preparation of these explanatory notes, 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. In the current reporting period 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, par. 2 of the LOC. 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, par. 1 of the LOC 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 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 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 LOC, 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.
26. Events after the reporting date
On July 19, 2019, a newly established subsidiary named Office Estate EOOD was registered in the Commercial Register. The capital of the company amounts to BGN 1,541 thousand and is distributed in 1 541 000 shares with nominal value of BGN 1 each.
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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