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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 Mar 2020 to Mar 2025
TIDM74JJ
RNS Number : 7630A
Petrol AD
09 June 2016
SEPARATE FINANCIAL STATEMENTS
FOR THE YEARING
ON DECEMBER 31, 2015
(Translation from the original Bulgarian version, in case of divergence the Bulgarian original shall prevail)
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
for the year ended December 31
Hot Features
Premium
Note 2015 2014
BGN'000 BGN'000
Revenue from sales 5 639,933 758,088
Other income 6 1,594 1,480
Cost of goods sold 7 (573,219) (693,824)
Materials and consumables 8 (3,726) (4,001)
Hired services 9 (35,623) (32,958)
Personnel expenses 10 (17,836) (17,807)
Depreciation and amortisation
expenses 15,16 (2,091) (2,817)
Impairment losses 11 (108,229) (271,254)
Other expenses 12 (2,646) (2,820)
Finance income 13 52,657 7,047
Finance costs 13 (5,886) (26,116)
--------- ---------
Profit (loss) before tax (55,072) (284,982)
--------- ---------
Income tax expense 14 (16,049) 26,915
--------- ---------
Profit (loss) for the year (71,121) (258,067)
--------- ---------
Other comprehensive income
Items that will never be
reclassified to profit or
loss:
Remeasurements of defined
benefit liability 27 (18) (12)
--------- ---------
Other comprehensive income
for the year, net of tax (18) (12)
--------- ---------
Total comprehensive income
for the year (71,139) (258,079)
========= =========
Basic net earnings (loss)
per share (BGN) 25 (0.65) (2.36)
These financial statements were approved on behalf of Petrol AD by:
_____________________ _____________________ ________________________
Georgi Tatarski Milko Dimitrov Rostislava Markova
Executive Director Executive Director Chief Accountant
May 14, 2016
STATEMENT OF FINANCIAL POSITION
Note 31 December 31 December
2015 2014
BGN'000 BGN'000
Non-current assets
Property, plant and equipment 15 16,636 25,181
Intangible assets 16 89 310
Investments in subsidiaries 17 17,500 139,526
Financial assets held for
sale 18 5 -
Loans granted 20 - 22,609
Deferred tax assets 14 11,630 27,679
----------- -----------
Total non-current assets 45,860 215,305
----------- -----------
Current assets
Inventories 19 19,582 20,712
Loans granted 20 672 11,437
Trade and other receivables 21 34,961 53,377
Refundable income taxes 22 499 499
Cash and cash equivalents 23 8,684 6,543
Total current assets 64,398 92,568
----------- -----------
Total assets 110,258 307,873
=========== ===========
STATEMENT OF FINANCIAL POSITION (continued)
Note 31 December 31 December
2015 2014
BGN'000 BGN'000
Equity
Share capital 24 109,250 109,250
General reserves 18,696 18,696
Retained earnings (81,909) (10,770)
----------- -----------
Total equity 46,037 117,176
----------- -----------
Non-current liabilities
Loans and borrowings 26 38,943 117,222
Obligation for defined benefit
retirement compensations 27 397 383
Total non-current liabilities 39,340 117,605
----------- -----------
Current liabilities
Trade and other payables 28 21,425 70,254
Loans and borrowings 26 3,456 2,838
Total current liabilities 24,881 73,092
----------- -----------
Total liabilities 64,221 190,697
----------- -----------
Total equity and liabilities 110,258 307,873
=========== ===========
These financial statements were approved on behalf of Petrol AD by:
______________________ ________________________ ________________________ Georgi Tatarski Milko Dimitrov Rostislava Markova Executive Director Executive Director Chief Accountant
May 14, 2016
STATEMENT OF CHANGES IN EQUITY
Registered General Retained Total
capital reserves earnings
BGN' BGN' BGN' BGN'
000 000 000 000
Balance at January 1,
2014 109,250 18,696 247,309 375,255
Comprehensive income for
the year
Loss for the year - - (258,067) (258,067)
Other comprehensive income (12) (12)
----------- ---------- ---------- ----------
Total comprehensive income
for the year - - (258,079) (258,079)
----------- ---------- ---------- ----------
Balance at December 31,
2014 109,250 18,696 (10,770) 117,176
=========== ========== ========== ==========
Comprehensive income for
the year
Loss for the year - - (71,121) (71,121)
Other comprehensive income (18) (18)
Total comprehensive income
for the year - - (71,139) (71,139)
----------- ---------- ---------- ----------
Balance at December 31,
2015 109,250 18,696 (81,909) 46,037
=========== ========== ========== ==========
These financial statements were approved on behalf of Petrol AD by:
______________________ ________________________ ________________________ Georgi Tatarski Milko Dimitrov Rostislava Markova Executive Director Executive Director Chief Accountant
May 14, 2016
STATEMENT OF CASH FLOWS
for the year ended December 31
2015 2014
BGN'000 BGN'000
Cash flows from operating activities
Receipts from customers 819,015 953,682
Payments to suppliers (809,046) (903,482)
VAT paid to the budget (8,160) (8,606)
Payments related to personnel (16,912) (17,317)
Cash flows from operating activities (15,103) 24,277
Withholding tax on debenture loan - (64)
---------- ----------
Net cash flows from operating
activities (15,103) 24,213
Cash flows from investing activities
Payments for acquisition of property,
plant and equipment (511) (3,538)
Proceeds from sale of property,
plant and equipment 855 10
Payments for acquisition of subsidiaries (920) -
Proceeds from sale of shares in
subsidiaries 2,440 -
Dividends received 617 -
Interest-bearing loans granted (383) (3,266)
Proceeds from loans repaid 16,972 -
Interest proceeds 5,440 479
Proceeds from cessions 452 -
Net cash flows investing activities 24,962 (6,315)
Cash flows from financing activities
Loans and borrowings repaid (5,525) (11,634)
Interests and commissions paid (4,085) (10,934)
Net cash flows from financing
activities (9,610) (22,568)
Net increase (decrease) in cash
for the year 249 (4,670)
Cash at the beginning of the year 6,093 10,755
Effect of foreign exchange rate
changes 16 8
---------- ----------
Cash at the end of the year (see
note 23) 6,358 6,093
========== ==========
These financial statements were approved on behalf of Petrol AD by:
_______________________ ________________________ ________________________ Georgi Tatarski Milko Dimitrov Rostislava Markova Executive Director Executive Director Chief Accountant
May 14, 2016
Notes
to the Separate Financial Statements
as at December 31, 2015
1. Legal status and main activity
Petrol AD (the Company) was registered in Bulgaria in 1990. The Company is registered with the Commercial Register at the Bulgarian Registry Agency with ID code 831496285. The address of registration of the Company is 12 Targovska Street, Lovech Hotel, Lovech. As at the end of the reporting period the shareholders of the Company are legal entities, the State - through the Ministry of Economics and Energy, and individual shareholders (see also note 24).
The main activity of the Company is retail trade with petroleum products and non-petroleum goods and services.
2. Basis of preparation of the financial statements and accounting principles 2.1. General
These financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS), as adopted by the European Union.
The financial statements have been prepared on a historical cost basis, except for the defined benefit obligation recognised at present value of the expected future payments. These are separate financial statements, the preparation of which is required by the accounting and tax legislation of the Republic of Bulgaria.
Petrol AD is going to prepare consolidated financial statements, in which it will consolidate the financial position of its subsidiaries as at December 31, 2015, their financial results and cash flows for the year ended that date (see note 17).
2.2. Application of new and revised IFRS 2.2.1. Standards and interpretations effective and applied during the current reporting period
Some new standards, amendments and interpretations have been effective for reporting periods beginning on or after January 1, 2015, and have been applied in the preparation of these financial statements.
-- Amendment to IAS 16 and IAS 38 (Annual Improvements to IFRSs 2010-2012 Cycle, issued in December 2013) - The amendment, applicable to annual periods beginning on or after 1 July 2014, clarifies how the gross carrying amount and the accumulated depreciation / amortisation are treated where an entity uses the revaluation model. As the Company does not use the revaluation model, there was no effect on its separate financial statements
-- Amendments to IAS 19 titled Defined Benefit Plans: Employee Contributions (issued in November 2013) - The amendments, applicable to annual periods beginning on or after 1 July 2014, clarify the requirements that relate to how contributions from employees or third parties that are linked to service should be attributed to periods of service. In particular, contributions that are independent of the number of years of service can be recognised as a reduction in the service cost in the period in which the related service is rendered (instead of attributing them to the periods of service). As the Company has no post-employment benefit plans requiring employees or third parties to meet some of the cost of the plan, the amendments had no effect on the Company's separate financial statements.
-- Amendment to IAS 24 (Annual Improvements to IFRSs 2010-2012 Cycle, issued in December 2013) - The amendment, applicable to annual periods beginning on or after 1 July 2014, clarifies how payments to entities providing key management personnel services are to be disclosed. This amendment had no effect on the Company's financial statements.
-- Amendment to IAS 40 (Annual Improvements to IFRSs 2011-2013 Cycle, issued in December 2013) - The amendment, applicable to annual periods beginning on or after 1 July 2014, clarifies the application of IFRS 3 and IAS 40 in respect of acquisitions of investment property. IAS 40 assists preparers to distinguish between investment property and owner-occupied property, then IFRS 3 helps them to determine whether the acquisition of an investment property is a business combination. The amendment had no effect on the Companys's financial statements
-- Amendment to IFRS 3 (Annual Improvements to IFRSs 2011-2013 Cycle, issued in December 2013) - The amendment, applicable prospectively to annual periods beginning on or after 1 July 2014, clarifies that IFRS 3 excludes from its scope the accounting for the formation of any joint arrangement in the financial statements of the joint arrangement itself. This had no effect on the Company's financial statements.
-- Amendment to IFRS 8 (Annual Improvements to IFRSs 2010-2012 Cycle, issued in December 2013) - The amendment, applicable to annual periods beginning on or after 1 July 2014, requires disclosure of the judgements made by management in applying the aggregation criteria to operating segments, and clarifies that reconciliations of the total of the reportable segments' assets to the entity's assets are required only if the segment assets are reported regularly. These clarifications had no effect on the Company's financial statements.
-- Amendment to IFRS 13 (Annual Improvements to IFRSs 2011-2013 Cycle, issued in December 2013) - The amendment, applicable to annual periods beginning on or after 1 July 2014, clarifies that the portfolio exception in IFRS 13 - allowing an entity to measure the fair value of a group of financial assets and financial liabilities on a net basis - applies to all contracts (including non-financial) within the scope of IAS 39 / IFRS 9. This had no effect on the Company's financial statements.
2.2.2. New standards and interpretation, not yet adopted
The Company has not applied the following new or amended standards that have been issued by the IASB but are not yet effective for the financial year beginning 1 January 2015 (the list does not include information about new or amended requirements that affect interim financial reporting or first-time adopters of IFRS - since they are not relevant to Petrol AD's present financial statements).
The Directors anticipate that the new standards and amendments will be adopted in the Company's financial statements when they become effective. The Company has assessed, where practicable, the potential effect of all these new standards and amendments that will be effective in future periods.
-- Amendments to IAS 1 titled Disclosure Initiative (issued in December 2014) - The amendments, applicable to annual periods beginning on or after 1 January 2016, clarify guidance on materiality and aggregation, the presentation of subtotals, the structure of financial statements and the disclosure of accounting policies. The amendments are not expected to have a material effect on the Company's financial statements.
-- Amendments to IAS 16 and IAS 38 titled Clarification of Acceptable Methods of Depreciation and Amortisation (issued in May 2014) - The amendments add guidance and clarify that (i) the use of revenue-based methods to calculate the depreciation of an asset is not appropriate because revenue generated by an activity that includes the use of an asset generally reflects factors other than the consumption of the economic benefits embodied in the asset, and (ii) revenue is generally presumed to be an inappropriate basis for measuring the consumption of the economic benefits embodied in an intangible asset; however, this presumption can be rebutted in certain limited circumstances. They are prospectively effective for annual periods beginning on or after 1 January 2016. The Directors do not anticipate any effect on the Company's financial financial statements.
-- Amendments to IAS 16 and IAS 41 titled Agriculture: Bearer Plants (issued in June 2014) - The amendments, applicable to annual periods beginning on or after 1 January 2016, define bearer plants - ie living plants which are used solely to grow produce over several periods and usually scrapped at the end of their productive lives (eg grape vines, rubber trees, oil palms) - and include them within IAS 16's scope while the produce growing on bearer plants remains within the scope of IAS 41. As the Group does not have agricultural activity, the Directors do not anticipate any effect on its financial statements.
-- Amendment to IAS 19 (Annual Improvements to IFRSs 2012-2014 Cycle, issued in September 2014) - The amendment, applicable to annual periods beginning on or after 1 January 2016, clarifies that the high quality corporate bonds used in estimating the discount rate for post-employment benefits should be denominated in the same currency as the benefits to be paid. This is not expected to have an effect on the Company's financial statements.
-- Amendments to IAS 27 titled Equity Method in Separate Financial Statements (issued in August 2014) - The amendments, applicable to annual periods beginning on or after 1 January 2016, reinstate the equity method option allowing entities to use the equity method to account for investments in subsidiaries, joint ventures and associates in their separate financial statements.
-- Amendment to IFRS 5 (Annual Improvements to IFRSs 2012-2014 Cycle, issued in September 2014) - The amendment, applicable prospectively to annual periods beginning on or after 1 January 2016, adds specific guidance when an entity reclassifies an asset (or a disposal group) from held for sale to held for distribution to owners, or vice versa, and for cases where held-for-distribution accounting is discontinued. This is not expected to have an effect on the Company's financial statements.
-- Amendment to IFRS 7 (Annual Improvements to IFRSs 2012-2014 Cycle, issued in September 2014) - The amendment, applicable to annual periods beginning on or after 1 January 2016, adds guidance to clarify whether a servicing contract is continuing involvement in a transferred asset. This is not expected to have an effect on the Company's financial statements.
-- IFRS 9 Financial Instruments (issued in July 2014) - This standard will replace IAS 39 (and all the previous versions of IFRS 9) effective for annual periods beginning on or after 1 January 2018. It contains requirements for the classification and measurement of financial assets and financial liabilities, impairment, hedge accounting and derecognition.
o IFRS 9 requires all recognised financial assets to be subsequently measured at amortised cost or fair value (through profit or loss or through other comprehensive income), depending on their classification by reference to the business model within which they are held and their contractual cash flow characteristics.
o For financial liabilities, the most significant effect of IFRS 9 relates to cases where the fair value option is taken: the amount of change in fair value of a financial liability designated as at fair value through profit or loss that is attributable to changes in the credit risk of that liability is recognised in other comprehensive income (rather than in profit or loss), unless this creates an accounting mismatch.
o For the impairment of financial assets, IFRS 9 introduces an "expected credit loss" model based on the concept of providing for expected losses at inception of a contract; it will no longer be necessary for there to be objective evidence of impairment before a credit loss is recognised.
o For hedge accounting, IFRS 9 introduces a substantial overhaul allowing financial statements to better reflect how risk management activities are undertaken when hedging financial and non-financial risk exposures.
o The derecognition provisions are carried over almost unchanged from IAS 39.
The Directors anticipate that IFRS 9 will be adopted in the Company's financial statements when it becomes mandatory and that the application of the new standard might have a significant effect on amounts reported in respect of the Companys' financial assets and financial liabilities. However, it is not practicable to provide a reasonable estimate of that effect until a detailed review has been completed.
-- Amendments to IFRS 10 and IAS 28 titled Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (issued in September 2014) - The amendments, applicable prospectively to annual periods beginning on or after 1 January 2016, address a current conflict between the two standards and clarify that gain or loss should be recognised fully when the transaction involves a business, and partially if it involves assets that do not constitute a business. This is not expected to have an effect on the Company's financial statements.
-- Amendments to IFRS 10, IFRS 12 and IAS 28 titled Investment Entities: Applying the Consolidation Exception (issued in December 2014) - The amendments, applicable to annual periods beginning on or after 1 January 2016, clarify the application of the consolidation exception for investment entities and their subsidiaries. This is not expected to have any effect on the Group's consolidated financial statements.
-- Amendments to IFRS 11 titled Accounting for Acquisitions of Interests in Joint Operations (issued in May 2014) - The amendments, applicable prospectively to annual periods beginning on or after 1 January 2016, require an acquirer of an interest in a joint operation in which the activity constitutes a business (as defined in IFRS 3) to apply all of the business combinations accounting principles and disclosure in IFRS 3 and other IFRSs, except for those principles that conflict with the guidance in IFRS 11. The amendments apply both to the initial acquisition of an interest in a joint operation, and the acquisition of an additional interest in a joint operation (in the latter case, previously held interests are not remeasured). This is not expected to have an effect on the Company's financial statements.
-- IFRS 15 Revenue from Contracts with Customers (issued in May 2014) - The new standard, effective for annual periods beginning on or after 1 January 2018, replaces IAS 11, IAS 18 and their interpretations (SIC-31 and IFRIC 13, 15 and 18). It establishes a single and comprehensive framework for revenue recognition to apply consistently across transactions, industries and capital markets, with a core principle (based on a five-step model to be applied to all contracts with customers), enhanced disclosures, and new or improved guidance (e.g. the point at which revenue is recognised, accounting for variable consideration, costs of fulfilling and obtaining a contract, etc.). The Directors anticipate that IFRS 15 will be adopted in the Company's financial statements when it becomes mandatory and that the application of the new standard might have a significant effect on amounts reported in respect of the Company's revenue. However, it is not practicable to provide a reasonable estimate of that effect until a detailed review has been completed.
2.3. Functional and presentation currency of the separate financial statements
Functional currency is the currency of the primary economic environment, in which the Company operates and primarily generates and disburses cash. It reflects the main transactions, events and conditions considered significant for the Company.
These separate financial statements are presented in BGN, which is the Company's functional currency. All amounts represented have been rounded to the nearest thousands, except when otherwise indicated.
2.4. Foreign currency
Transactions in foreign currency are initially recorded at amounts denominated in BGN at the official exchange rate of the Bulgarian National Bank as of the date of the transaction. Foreign exchange rate differences arising from settlement of foreign exchange positions or from reporting these positions at rates different from those of the initial recording, are reported in profit and loss for the respective period.
Since January 1, 1999 the Bulgarian Lev has been fixed against the Euro at rate 1.95583 BGN for 1 Euro.
The monetary positions denominated in foreign currency as at December 31, 2015 and 2014 are stated in the present separate financial statements at the closing exchange rate of the Bulgarian National Bank. The closing exchange rates of the BGN against USD as at the end of current and prior reporting periods are as follows:
31 December 1 USD = 1.79007 BGN 2015: 31 December 1 USD = 1.60841 BGN 2014: 2.5. Accounting assumptions and estimates
The application of IFRS requires that the Management makes certain reasonable assumptions and accounting estimates in the preparation of these financial statements, in order to determine the value of some assets, liabilities, revenue and expenses. These estimates and assumptions are based on the best estimate of the Management, taking into consideration the historical experience and analysis of all factors impacting the circumstances as of the date of preparation of the financial statements. The actual results could differ from the estimates presented in these separate financial statements.
Assumptions made by Management when applying IFRS regarding fair value estimates with a material effect on the financial statements or the accounting estimates, which may lead to significant adjustments in future periods, are disclosed in Note 4.
Information about the uncertainties of assumptions and estimates, that have a significant risk of resulting in a material adjustments within the next financial year are included in the following notes: Note 17 - Investments in subsidiaries
2.6. Subsidiaries
Subsidiary is a company which is controlled by the Parent company. Control is the power to govern the financial and operating policy of a subsidiary in order to benefit from it.
In the preparation of these separate financial statements investment in subsidiaries are accounted at acquisition cost less possible impairment losses.
2.7. Going concern assumption
As at the date of issue of these financial statements the management has made an assessment of the applicability of the going concern concept for the Company. While making this assumption, all available information for the near future was taken into account, which is not necessarily restricted to twelve months from the end of the reporting period. This suggests that the Company will be able to repay regularly its bond liabilities, trade payables, loans and interest due in accordance with the contractual agreements.
The Management of the Company confirms its understanding and the validity of the assumption that these separate financial statements have been prepared under the going concern assumption.
3. Definition and valuation of the statement of financial position and the statement of comprehensive income items
3.1. Property, plant and equipment and intangible assets
Property, plant and equipment and intangible assets are measured initially at acquisition cost. When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate assets.
After initial recognition property, plant and equipment and intangible assets are carried at cost less depreciation and amortisation and any impairment losses (see also note 3.4.2.).
Subsequent costs including replacement of asset's components are capitalised in the cost of the asset, only when it is probable that future economic benefits associated with the expenditure will flow to the Company.. The carrying amount of the replaced items are derecognised in accordance with the requirements of IAS 16 Property, Plant and Equipment. All other subsequent costs are expensed in the period when incurred.
Gains or losses on disposal of property, plant and equipment (determined as a difference between the proceeds from disposal with the carrying amount of the asset) are recognised net within other income/ expenses in profit or loss for the period.
When the use of a property, plant and equipment changes from owner-occupied to investment property, the property is reclassified as investment property.
Depreciation and amortisation are recognised over the estimated useful lives applying the straight-line method. Depreciation and amortisation are recognised in profit or loss of the current period. Land, assets under construction and fully depreciated assets are not depreciated/ amortised.
The estimated useful lives for the current and comparative periods are as follows:
Administrative and commercial 25 years buildings Machinery, plant and 2-25 years equipment Vehicles 4-10 years Office equipment 7 years Intangible assets 2-5 years
Depreciation/amortisation commences from the beginning of the month following the month when the asset is available for use, and ceases at the earlier of the date when the asset is classified as held for sale in accordance with IFRS 5 Non-Current Assets Held for Sale and Discontinued Operations and the date of its derecognition.
As of the end of the reporting period, the Company's management reviews the useful life and the depreciation method of property, plant and equipment and intangible assets. If any difference between expectations and previous accounting estimates exists, then relevant changes are made.
3.2. Inventories
Inventories are stated at the lower of cost and net realisable value. Cost comprises purchase price, transportation costs, customs duties, excise duties and other similar costs. Net realisable value represents the estimated selling price less estimated selling expenses.
Upon consumption, the cost of inventories is calculated using the weighted average cost method.
3.3. Financial instruments
The Company classifies non-derivative financial assets into the loans and receivables category.
The Company classifies non-derivative financial liabilities into the other financial liabilities category.
3.3.1. Non-derivative financial assets and financial liabilities - recognition and derecognition
The Company initially recognises loans and receivables and debt securities issued on the date that they are originated. All other financial assets and financial liabilities are initially recognised on the trade date.
The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred, or it neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control over the transferred asset. Any interest in such derecognised financial assets that is created or retained by the Company is recognised as a separate asset or liability.
The Company derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire.
Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Company has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.
3.3.2. Non-derivative financial assets - measurement
Loans granted and receivables
These assets are initially recognised at fair value plus any directly attributable transaction costs. Subsequent to initial recognition they are measured at amortised cost using the effective interest method less any impairment loss. Current receivables are not amortised.
Cash
In the statement of cash flows, cash comprises cash in hand, cash at banks and cash in transit. Cash in transit comprises cash collected from petrol stations as at the end of the reporting period but actually received in the bank accounts of the Company in the beginning of the next reporting period.
3.3.3. Non-derivative financial liabilities - measurement
Non-derivative financial liabilities are initially recognised at fair value less any directly attributable transaction costs. Subsequent to initial recognition, these liabilities are measured at amortised cost using the effective interest method.
3.4. Impairment 3.4.1. Non-derivative financial assets
Financial assets, not classified as at fair value through profit or loss, are assessed at each reporting date to determine whether there is an objective evidence of impairment. Objective evidence that financial assets are impaired includes:
-- default or delinquency by a debtor;
-- restructuring of an amount due to the Company on terms that the Company would not consider otherwise;
-- indications that a debtor or issuer will enter bankruptcy; -- adverse changes in the payment status of borrowers or issuers; -- the disappearance of an active market for a security;
-- observable data indicating that there is measurable decrease in expected cash flows from a group of financial assets.
For an investment in an equity instrument, objective evidence of impairment includes a significant or prolonged decline in its fair value below its cost.
Financial assets carried at amortised cost
The Company considers evidence of impairment for financial assets measured at amortised cost (loans and receivables and held-to-maturity investments in securities) at both a specific asset and collective level. All individually significant assets are assessed for specific impairment. Those found not to be specifically impaired are then collectively assessed for any impairment that has been incurred but not yet identified. Assets that are not individually significant are collectively assessed for impairment. Collective assessment is carried out by grouping together assets with similar risk characteristics.
In assessing collective impairment the Company uses historical trends of the probability of default, the timing of recoveries and the amount of loss incurred, adjusted for management's judgement as to whether current economic and credit conditions are such that the actual losses are likely to be greater or less than suggested by historical trends.
An impairment loss is calculated as the difference between an asset's carrying amount and the present value of the estimated future cash flows discounted at the asset's original effective interest rate. Losses are recognised in profit or loss and reflected in an allowance account. When the Company considers that there are no realistic prospects of recovery of the asset, the relevant amounts are written off. If the amount of impairment loss subsequently decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, then the previously recognised impairment loss is reversed through profit or loss.
3.4.2. Non-financial assets
The carrying amounts of the Company's non-financial assets (other than inventories and deferred tax assets) are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset's recoverable amount is estimated. Intangible assets that have indefinite useful lives or that are not yet available for use are tested annually for impairment. An impairment loss is recognised if the carrying amount of an asset or its related cash-generating unit (CGU) exceeds its recoverable amount.
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. For impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs.
An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
3.5. Registered capital
The registered capital of the Company is presented at historical cost as of the date of its registration.
3.6. Deferred income and deferred expenses
Deferred income and deferred expenses in the statement of financial position comprises revenue and expenses prepaid in the current period but relating to future periods, such as guarantees, insurance, subscriptions, rent, etc.
3.7. Employment benefits
Defined contribution plans
The Government of the Republic of Bulgaria is responsible for providing pensions under a defined benefit pension plan. Costs related to payment of contributions under these schemes are recognised in the profit or loss in the period they are incurred.
Defined benefit plans
In accordance with the Labour Code, the Company has an obligation to pay retirement benefits to its employees upon retirement, based on the length of service, age and labour category. Since these benefits qualify for defined benefits plan in accordance with IAS 19 Employee benefits, in accordance with the requirements of this standard the Company recognises the present amount of the benefits as a liability.
The Company's obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in the current and prior periods and that amount is discounted.
The calculation is performed annually by a qualified actuary using the projected unit credit method. The Company determines the net interest expense on the net defined benefit liability for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the net defined benefit liability.
The projected unit credit method presents a liability that may arise in future, based on a number of assumptions. From this point of view, the method is sensitive to assumptions of values of main parameters, on which the obligation and the due amount are dependent. The main assumptions on which the amount of the obligation is dependent are based on demographic, financial and other assumptions.
Remeasurements arising from defined benefit plans comprise actuarial gains and losses and are recognised in OCI. Net interest expense and other expenses related to defined benefit plans are recognised in profit or loss as personnel expenses.
Short-term employee benefits
Short-term employee benefit obligations are expensed as the related service is provided. A liability is recognised for the amount expected to be paid if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.
3.8. Income tax
Income tax expense comprises current and deferred tax. It is recognised in profit or loss except to the extent that it relates to a business combination, or items recognised directly in equity or in other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable or receivable in respect of previous years.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for:
-- temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss;
-- temporary differences related to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future; and
-- taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.
In accordance with the tax legislation enforceable for the years ended 2014 and 2013 the tax rate applied in calculation of the tax payables of the Company is 10%. For the calculation of the deferred tax assets and liabilities as at December 31, 2015 and 2014 a tax rate of 10% has been used.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority.
A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
In determining the amount of current and deferred tax the Company takes into account the impact of uncertain tax positions and whether additional taxes and interest may be due. This assessment relies on estimates and assumptions and may involve a series of judgments about future events. New information may become available that causes the Company to change its judgment regarding the adequacy of existing tax liabilities; such changes to tax liabilities will impact tax expense in the period that such a determination is made.
3.9. Revenue and expenses recognition 3.9.1. Revenue from sales of goods, services and other income
Revenue is recognised when significant risks and rewards of ownership have been transferred to the customer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably.
Revenue is recognised at the fair value of the consideration received or receivable net of any granted discounts and including the gross economic benefits received by or due to the Company. The amounts gathered on behalf of third parties such as sales taxes (value added tax) are excluded from revenue. Revenue generated from sale of fuel is reported at its gross amount with the excise due, which is considered an integral part of the price of the goods.
When the result of a transaction for services rendering can be estimated reliably, revenue is recognised by reference to the stage of completion of the transaction at the end of the reporting period. When the outcome of a transaction cannot be reliably estimated, the revenue is recognised to the extent that the expenses recognised are recoverable.
Gain (loss) from the sale of property, plant and equipment, and intangible assets and materials are presented as other income (expenses).
When economic benefits are expected to arise in several financial periods and their relation to revenue can only be generally or indirectly estimated, expenses are recognised in profit or loss based on procedures for systematic and rational distribution.
In exchange of assets, revenue/ (expense) is reported as a result of the exchange transaction to the amount of the difference between the fair value of the received asset and the carrying amount of the exchanged asset.
3.9.2. Finance income and finance costs
Finance income comprises interest income, income from dividends, foreign currency gains, etc.
Finance costs comprise interest expense on borrowings, foreign currency losses, bank fees, commissions and other finance costs.
Borrowing costs, which may be directly attributable to the acquisition, construction or production of an asset before it is ready for the intended use or sale, shall be capitalised in the cost of the asset.
All other finance income and costs are accrued through profit or loss for all instruments measured at amortised cost using the effective interest rate method.
Due to the lack of guidance and clarification in the adopted IFRS as at the reporting date, that specifically address the accounting treatment of transactions related to in-kind contribution in the equity of subsidiaries, the Management decided to account the result from in-kind contribution transactions as finance expense or income.
Income for equity interests is recognised when the Company is entitled to receive the income.
Foreign currency gains and losses are reported on a net basis.
3.10. Leases 3.10.1. Operating lease
Costs incurred for assets leased under operating lease contracts are recognised in profit or loss under the straight-line method over the contract term.
Revenue realised from assets under operating lease contracts is recognised in profit or loss on a straight-line basis for the contract term. Initial costs directly related to agreement conclusion are capitalized in the cost of the asset and are recognised as expenses on a straight-line basis for the operating lease contract term.
3.10.2. Lease payments
Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease.
3.10.3. Finance Lease
Minimum lease payments under finance leases are apportioned between finance charges and reduction of the outstanding obligations. Finance costs are allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remainder of the debt.
3.11. Government grants
The Company recognizes government (incl.: EU fund grants) grants initially as deferred income at fair value when there is reasonable assurance that they will be received and the Company will comply with the conditions associated with the grant. Grants that compensate the Company for expenses incurred are recognised in profit or loss as other income on a systematic basis in the same periods in which the expenses are recognised. Grants that compensate the Company for an asset are recognized in profit or loss as other income on a systematic basis in the course of the useful life of the asset.
4. Determination of fair values
Certain Company's accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities.
The Company has an established control framework with respect to the measurement of fair values. This includes a valuation team that has overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values.
The significant unobservable inputs and valuation adjustments are reviewed regularly. If third party information, such as broker quotes or pricing services is used to measure fair values, then the valuation team assesses the evidence obtained from third parties to support the conclusion that such valuations meet the requirements of IFRS, including the level in the fair value hierarchy in which such valuations should be classified.
Significant valuation issues are reported to the Management of the Company.
When measuring the fair value of an asset or liability, the Company uses market observable data as far as possible. Fair values are categorised into different level in a fair value hierarchy based on the inputs in the valuation techniques as follows.
-- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
-- Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
-- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
If the inputs used to measure the fair value of an asset or liability might be categorised in different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.
The Company recognises transfers between levels of the fair value hierarchy at end of the reporting period during which the change has occurred.
5. Revenue from sales
2015 2014
BGN "000 BGN "000
Sales of goods 635,950 754,819
Sales of services 3,983 3,269
---------- ----------
639,933 758,088
========== ==========
Revenue from sales of goods comprises:
2015 2014
BGN "000 BGN "000
Fuels 601,161 723,974
Lubricants and other goods 34,789 30,845
---------- ----------
635,950 754,819
========== ==========
6. Other income
2015 2014
BGN'000 BGN'000
Surpluses of assets 858 458
Gain from sales of property, plant
and equipment, including 219 -
Income from sales 1,672 -
Carrying amount (1,453) -
Fees and penalties 72 50
Insurance claims 70 38
Payables written-off 40 345
Gain from sales of materials,
including. 3 60
Income from sales 3 64
Carrying amount - (4)
Government grants - 142
Other 332 387
--------- ---------
1,594 1,480
========= =========
Revenue from government grants in year 2014 is received under the Operational Programme 'Development of Human Resources'.
7. Cost of goods sold
2015 2014
BGN'000 BGN'000
Fuels 544,362 667,863
Lubricants and other goods 28,857 25,961
573,219 693,824
========= =========
8. Materials and consumables
2015 2014
BGN'000 BGN'000
Electricity and heating 2,143 2,016
Fuels and lubricants 447 535
Office consumables 383 474
Working clothing 200 416
Advertising materials 153 88
Spare parts 149 205
Water 127 109
Other 124 158
--------- ---------
3,726 4,001
========= =========
9. Hired services
2015 2014
BGN'000 BGN'000
Rent 19,896 18,444
Commissions 6,789 6,938
Consulting and training 1,775 1,303
Security expenses 1,424 383
Maintenance and repairs 1,224 1,164
Communications 835 723
Cash collection expenses 757 877
State and municipal fees 726 264
Advertising costs 699 694
Insurance expense 515 436
Commodity control 260 498
Software licenses 209 428
Transportation 150 127
Other 364 679
--------- ---------
35,623 32,958
========= =========
Rental costs include BGN 17,617 thousands (2014: 16,056 thousands) rent of petrol stations, under operating lease agreements.
10. Personnel expenses
2015 2014
BGN'000 BGN'000
Wages and salaries 14,856 14,748
Social security contributions
and benefits 2,908 2,987
Expenses related to defined benefit
plans 72 72
--------- ---------
17,836 17,807
========= =========
11. Impairment losses
2015 2014
BGN'000 BGN'000
Recognised impairment loss on
financial assets, including.: 122,442 271,297
Impairment loss on investment
in subsidiaries 111,366 228,311
Impairment loss on interest-bearing
loans granted 6,961 40,807
Impairment loss on trade receivables 4,115 2,179
Reversed impairment loss on financial
assets, including: (14,213) (43)
Reversed impairment loss on interest-bearing
loans (14,011) -
Reversed impairment loss on trade
receivables (202) (43)
--------- ---------
108,229 271,254
========= =========
For the period ending on December 31, 2015 in connection with Naftex Petrol EOOD's cessation of business activity and insolvency proceedings, Petrol AD has fully impaired its investment in that subsidiary and recognised impairment loss of BGN 40.000 thousand. As at the end of 2015, Naftex Petrol EOOD is no longer part of Petrol AD's group. In December 2015, a contract signed at a certified public notary was concluded and according to the terms of the contract Petrol AD transferred its entire shareholding in Naftex Petrol EOOD to a company, not belonging to Petrol AD's group. The change in ownership of Naftex Petrol EOOD was timely filed in for inscription with Commercial Register of the Registry Agency, but the change is not reflected due to incomplete information being field in. However, insofar the contract dated December 2015 was signed in a form prescribed by the Commercial Act, it raises legal consequences between the parties involved, therefore Petrol AD is no longer to be considered sole owner of Naftex Petrol EOOD's share capital and respectfully, the investment in that subsidiary is full written off (see also note 17).
As at December 31, 2015, Management has performed analysis of Elite Petrol AD's investment value. During the reporting period due to foreclosure imposed on assets controlled by Elit Petrol's subsidiaries, Company fully impaired its investment in Elit Petrol AD, which resulted in impairment losses of BGN 70,915 thousand
As at December 31, 2015 Management has performed analysis of Petrol Gas EOOD's investment value. That subsidiary's net assets are a negative figure and throughout the year its main assets were disposed of. Therefore the investment is fully impaired at 100%.
As at the date of approval of these financial statements for issuance, the Company managed to collect receivables impaired in prior periods representing loans granted to related parties, resulting in recovered impairment losses of BGN 14,149 thousand and trade receivables, resulting in recovered impairment losses if BGN 202 thousand (see also note 20 and 21).
12. Other expenses
2015 2014
BGN'000 BGN'000
Receivables written-off 556 4
Scrap, shortages and written off
assets 535 827
Penalties and indemnities 524 168
Entertainment expenses and sponsorship 412 563
Local taxes and taxes on expenses 403 442
Expenses for insurance claims 99 40
Business trips 87 80
Loss on sale of PPE, incl.:. - 634
Sale proceeds - (2,735)
Carrying value - 3,369
Other 30 62
--------- ---------
2,646 2,820
========= =========
13. Finance income and costs
2015 2014
BGN'000 BGN'000
Finance income
Interest income, including 1,952 6,634
Interest income on loans granted 1,604 6,146
Interest income on trade receivables 328 476
Other interest income 20 12
Foreign exchange gains, net 17 -
Gain on disposal of investments
in subsidiaries 34,225 -
Gain from in-kind contribution
of PPE 1,278 -
Income from share capital investments 15,185 413
52,657 7,047
--------- ---------
Finance costs
Interest costs, including (5,662) (13,445)
Interest expenses on debenture
loans (3,242) (3,227)
Interest expenses on trade loans (2,079) (7,798)
Interest expenses on trade and
other payables (341) (2,420)
Negative exchange differences,
net - (10,206)
Loss on PPE contributed to a subsidiary's
equity - (2,410)
Bank fees, commissions and other
finance costs (224) (55)
--------- ---------
(5,886) (26,116)
--------- ---------
Finance income (cost), net 46,771 (19,069)
========= =========
14. Taxation
14.1. 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
2015 2014
BGN'000 BGN'000
Change in deferred tax, including (16,049) 26,915
Temporary differences arising
during the period (12,291) 27,113
Temporary differences recognised
during the period 28,563 (198)
Tax assets adjustments (223) -
Total tax expense (benefit) (16,049) 26,915
========= =========
14.2. Effective tax rate
Reconciliation between accounting profit and tax expense and calculation of the effective tax rate as of December 31, 2015 and 2014 is presented in the table below:
2015 2014
BGN'000 BGN'000
Accounting loss for the year 55,072 284,982
Applicable tax rate 10% 10%
Corporate tax expense (benefit) at the applicable tax rate 5,507 28,498
Tax effect of :
Permanent differences 1,471 (38)
Tax asset in current year, arising in previous periods (23,250) (1,545)
Adjustments in current period in tax assets (liability), arising in previous periods 223 -
Tax expense (income) (16,049) 26,915
========= =========
Effective tax rate - -
========= =========
The respective tax periods of the Company 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 Company's management is not aware of any circumstances which may give rise to a contingent additional liability in this respect.
The last tax audit of the Company commenced in December 2014 and encompasses social security's and personal income tax for the period December 2008 till December 2013, corporate income tax and value added tax for year 2013. The latest tax inspection dates from August, 2015and encompasses review of company's corporate income tax for year 2014 and value added tax as at June, 2015.
As at the date of approval of these financial statements the tax audit stipulates a breach relating to social securities' amounting to BGN 543 thousand principal and BGN 248 thousand interest. The tax audit stipulations are being challenged by the Company (see also Note 33).
14.3. Recognised deferred tax assets and liabilities
The Company has recognised deferred tax assets and liabilities and respective movement attributable to the following positions:
Recognised Asset Recognised Asset
Asset in profit (liability) in profit (liability)
(liability) and as at and as at
as at loss December loss December
January 31 , 31 2015
2014 2014
BGN'000 BGN'000 BGN'000 BGN'000 BGN'000
Property, plant
and equipment (598) (111) (709) 363 (346)
Impairment of
assets 1,246 27,082 28,328 (16,417) 11,911
Provisions for
unused paid leave
and other provisions 97 (37) 60 5 65
Other temporary
differences, including
unpaid benefits
to individuals 19 (19) - - -
------------- ----------- ------------- ----------- -------------
764 26,915 27,679 (16,049) 11,630
============= =========== ============= =========== =============
The Company has the right to carry forward tax loss till year 2020 incl. The Company has not recognised tax asset on carry forward tax losses due to uncertainty in ability to realize sufficient future tax profits.
15. Property, plant and equipment
Land Buildings Plant Vehicles Other Assets Total
and under
equipment constr.
BGN'000 BGN'000 BGN'000 BGN'000 BGN'000 BGN'000
BGN'000
Cost
Balance at January
2014 9,935 12,191 27,351 841 6,555 1,786 58,659
Additions 68 52 579 1 110 2,704 3,514
Transfers - 689 2,691 - 287 (3,667) -
Disposals (2,239) (4,360) (7,031) (151) (1,748) (1) (15,530)
--------- ---------- ----------- --------- --------- --------- ---------
Balance at December
2014 7,764 8,572 23,590 691 5,204 822 46,643
--------- ---------- ----------- --------- --------- --------- ---------
Additions 2,609 1,270 193 - 58 607 4,737
Transfers - - 390 - 17 (407) -
Disposals (1,667) (4,209) (12,704) - (2,275) (140) (20,995)
--------- ---------- ----------- --------- --------- --------- ---------
Balance at December
2015 8,706 5,633 11,469 691 3,004 882 30,385
--------- ---------- ----------- --------- --------- --------- ---------
Accumulated
depreciation
Balance at January
2014 - 5,035 15,076 780 4,717 - 25,608
Accumulated - 470 1,595 17 465 - 2,547
Transfers - - (2) - 2 - -
Disposals - (1,481) (3,646) (151) (1,415) - (6,693)
--------- ---------- ----------- --------- --------- --------- ---------
Balance at December
2014 - 4,024 13,023 646 3,769 - 21,462
--------- ---------- ----------- --------- --------- --------- ---------
Accumulated - 312 1,243 9 349 - 1,913
Disposals - (1,586) (6,463) - (1,577) - (9,626)
--------- ---------- ----------- --------- --------- --------- ---------
Balance at December
2015 - 2,750 7,803 655 2,541 - 13,749
--------- ---------- ----------- --------- --------- --------- ---------
Carrying amount
at
1 January 2014 9,935 7,156 12,275 61 1,838 1,786 33,051
========= ========== =========== ========= ========= ========= =========
Carrying amount
at
31 December
2014 7,764 4,548 10,567 45 1,435 822 25,181
========= ========== =========== ========= ========= ========= =========
Carrying amount
at
31 December
2015 8,706 2,883 3,666 36 463 882 16,636
========= ========== =========== ========= ========= ========= =========
Property, plant and equipment with carrying amount of BGN 4,474 thousand (2014: BGN 7,079 thousand) were mortgaged as collateral under bank loans granted to the Controlling company until November 2013 and to subsidiaries and third not related parties.
BGN 4,474 thousand also comprises PPP given as a security in favour of National Revenue Agency in relation to a tax inspection report (see also note 32).
The carrying amount of assets acquired through finance leases as at December 31, 2015 comes up to BGN 3, 279 thousand(see Note 26.2). Assets under construction include expenses in relation to reconstruction of 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.
The book value of all fully depreciated property, plant and equipment still in use amounts to BGN 7,136 thousand.
The statement of financial position of the company includes assets with low value, which book value at December 31, 2015 totals BGN 1,068 thousand and carrying amount of BGN 133 thousand.
16. Intangible assets
Software Licenses Other Total
BGN'000 BGN'000 BGN'000 BGN'000
Cost
Balance at January
1, 2014 367 3,116 702 4,185
Additions - 43 10 53
Disposals (7) (111) - (118)
--------- --------- --------- ---------
Balance at December
31, 2014 360 3,048 712 4,120
--------- --------- --------- ---------
Disposals - (2,857) - (2,857)
--------- --------- --------- ---------
Balance at December
31, 2015 360 191 712 1,263
--------- --------- --------- ---------
Accumulated depreciation
Balance at January
1, 2014 219 2,990 449 3,658
Accumulated 120 43 107 270
Disposals (7) (111) - (118)
--------- --------- --------- ---------
Balance at December
31, 2014 332 2,922 556 3,810
--------- --------- --------- ---------
Accumulated 28 41 109 178
Disposals - (2,814) - (2,814)
Balance at December
31, 2015 360 149 665 1,174
--------- --------- --------- ---------
Carrying amount
at 1 January 2014 148 126 253 527
========= ========= ========= =========
Carrying amount
at 31 December
2014 28 126 156 310
========= ========= ========= =========
Carrying amount
at 31 December
2015 - 42 47 89
========= ========= ========= =========
The statement of financial position of the company includes intangible assets with low value, which book value at December 31, 2015 totals BGN 36 thousand and nill carrying amount.
The book value of all fully depreciated intangible assets still in use amounts to BGN 440 thousand.
17. Investments in subsidiaries
Subsidiary Activity 31 December 31 December
2015 2014
BGN Share BGN Share
'000 (%) '000 (%)
Grifon Power
EAD Asset Management 11,233 100 - -
Real estate
BPI AD management 5,342 99.60 5,364 100
Petrol Technologies
OOD IT services 821 98.8 - -
Financial and
Petrol Finance accounting
OOD services 99 99.0 - -
Petrol Properties Trade with
EOOD immovable properties 5 100 5 100
Elit Petrol
AD Asset Management - 99.99 70,915 99.99
Petrol Gas Wholesale of
EOOD fuels - 100 451 100
Naftex Petrol Wholesale of
EOOD fuels - - 40,000 100
Petrol Eco Consultancy
Tour Invest and engineering
EOOD services - - 5 100
Trade with
Varna Storage petrol and
EOOD petrol products - - 18,749 100
Petrol Trans
Expres EOOD Transport services - - 996 100
Service and
Petrol Technika maintenance
EOOD of petrol stations - - 50 100
Petrol Zapad Trade with
EOOD petrol products - - 2,991 100
17,500 139,526
======= ========
In November, 2014 the Company established a 100% subsidiary Petrol Zapad EOOD by a non-monetary equity contribution of property, plant and equipment and other tangible and intangible assets pertaining the 10 fuel stations total valued at BGN 2,992 thousand with carrying amount of BGN 5,402 thousand. As a result from the equity contribution a loss of BGN 2,410 thousand was accumulated. In the beginning of January, 2015 a decision to sell the investment in Petrol Zapad EOOD was met to a third not related party. Selling price agreed comes up to BGN 2,992 thousand and which was paid at the date on signing the agreement.
In February, 2015 the company acquired 99% of the share capital of Petrol Technologies EOOD for BGN 495, which was subsequently renamed to Petrol Finances OOD. In August, 2015 the Company participated in the capital increase subscribing 98,505 new shares for a cash contribution in the amount of BGN 99 thousand.
In March 2015 the Company sold 100% of its participation in Varna Storage EOOD to another subsidiary company for a selling price of BGN 51,600 thousand. At the date of signing of contracts for the sale of shares, obligations arising under the transaction aforementioned are fully paid.
In August 2015 the Company became a shareholder in Petrol Technologies OOD and subscribed for 3,800 new shares, each with par value of BGN 100 in a capital increase for a cash contribution of BGN 380 thousand, representing 99.74% of the share capital the subsidiary. In the same month the Managing Board of the Company met the decision that the Company is to participate in the capital increase of Petrol Technologies OOD from BGN 381 thousand to BGN 831 thousand and subscribed for further 4,410 new shares for a cash contribution of BGN 441 thousand.
In August, the Company sold 100% of its share in Petrol Trans Express EOOD and in Petrol Technika EOOD to third not related parties for the selling price of BGN 2,360 thousand and BGN 80 thousand.
In October 2015, the Company in its capacity of a sole shareholder of BPI EAD transferred by selling the right of ownership of one share of Petrol Finance OOD and one share of Petrol Technologies OOD. Each share represents 0.2% of capital and was sold at par value of BGN 100.
In December 2015 the Company established a new subsidiary Grifon Power EAD by in kind contribution of property, plant, equipment and other tangible and intangible assets valued at BGN 11,233 thousand. The carrying amount of assets contributed to the equity of the newly incorporated subsidiary comes up to BGN 9,955 thousand. As a result of the in kind contribution a profit of BGN 1,278 thousand was reported.
As at December 31, 2015 Management performed analysis of Elit Petrol AD's investment value, based on which a decision to fully impair that investment was met. The decision was driven by a foreclosure imposed on assets controlled by Elit Petrol AD's subsidiaries.
As at December 31, 2015 the investment in Petrol Gas EOOD was fully impaired mainly because key assets were sold and net assets value for the year were below the registered capital value.
In December 2015 a contract for sale of the entire 100% participation in Naftex Petrol EOOD was signed at a public notary for the amount of 1 lev. The change in Naftex Petrol EOOD's equity owner is not inscribed in Commercial Register as at the end of 2015, where the application for inscription of the new circumstances was rejected by the authority due to incomplete information submitted with the application.
However, insofar the contract dated December 2015 was signed in a form prescribed by the Commercial Act, it raises legal consequences between the parties involved, therefore Petrol AD is no longer to be considered sole owner of Naftex Petrol EOOD's share capital.
All subsidiaries are domiciled in Bulgaria.
18. Financial assets available for sale
As a result from the loss of control over the subsidiary company Petrol Eco Tur Invest EOOD, the investment cost amounting to BGN 5 thousand in shown in these financial statements as non-current asset available for sale.
19. Inventories
31 December 31 December
2015 2014
BGN'000 BGN'000
Goods, including: 17,858 18,831
Petrol products 11,052 12,407
Other goods 6,806 6,424
Materials 1,724 1,881
19,582 20,712
============ ============
20. Loans granted
31 December 31 December
2015 2014
BGN'000 BGN'000
Long-term loans
Loans granted to related parties,
including - 22,609
Initial value - 38,034
Allowance for impairment - (15,425)
Loans granted to third parties,
including - -
Initial value 23,288 21,034
Allowance for impairment (23,288) (21,034)
- 22,609
------------ ------------
Short-term loans
Loans granted to related parties,
including 672 10,627
Initial value 10,434 16,133
Allowance for impairment (9,762) (5,506)
Loans granted to third parties,
including - 810
Initial value 6,686 5,999
Allowance for impairment (6,686) (5,189)
672 11,437
------------ ------------
672 34,046
============ ============
Receivables from loans granted to related parties are disclosed in note 31.
In 2014 the company recognised an impairment loss on receivables from the related party that was a controlling entity till November 2013 on loans granted and interest receivable in the amount of BGN 25,382 thousand. Impairment loss was recognised because insolvency proceedings were initiated and difficulties in collecting the receivables were experienced.
In 2014 due to fall in trading volumes an allowance for impairment was made on a loan granted to a subsidiary company coming up to BGN 15,425 thousand, which represented the amount of outstanding liability as at the date of issuance of the individual financial statements of the Company for the year ending 2014. As at the date of these financial statements, the subsidiary managed to partially repay its obligation, thus resulting in a reversed impairment allowance of BGN 13,171 thousand.
The loan and impairment allowance losses are reclassified as loans to unrelated parties, since as at December 31, 2015 this company is no longer part of the Petrol Group.
For the year ending on December 31, 2015 Company managed to collect BGN 840 thousand from loans granted to other related parties, which were fully impaired in previous periods.
Management performed an analysis of loans granted in order to determine their fair values and their respective level in the fair value hierarchy. Management considers that the carrying amounts of granted loans in the statement of financial position are reasonable approximations of their fair value as at December 31, 2015 and December 31, 2014 within Level 3 category.
Company's exposure to credit and foreign currency risks and impairment losses related to loans granted is disclosed in Note 29.
21. Trade and other receivables
31 December 31 December
2015 2014
BGN'000 BGN'000
Receivables from clients, including 20,970 23,554
Initial value 24,503 29,297
Allowance for impairment (3,533) (5,743)
Cession and assumption of debt 2,742 -
Initial value 4,146 227
Allowance for impairment (1,404) (227)
Receivables from related parties 449 25,828
Initial value 1,993 25,895
Allowance for impairment (1,544) (67)
Advances granted 6,806 1,218
Initial value 7,031 2,267
Allowance for impairment (225) (1,049)
Guarantees for participation in
tender procedures 1,396 1,477
Value Added Tax refundable 587 -
Deferred expenses 145 109
Litigations and writs 2 45
Initial value 252 345
Allowance for impairment (250) (300)
Other 1,864 1,146
Initial value 2,176 2,341
Allowance for impairment (312) (1,195)
------------ ------------
34,961 53,377
============ ============
Receivables from related parties are disclosed in note 31.
In accordance with the adopted policy, the Company grants to its customers a credit period after the expiry of which penalty interest for overdue payment is accrued on the unsettled balance to the amount set in each individual contract.
As at the end of each reporting period the Company performs a detailed review and analysis of overdue trade receivables, as a result of which receivables evaluated as uncollectable are impaired. Other trade receivables usually overdue by more than 360 days are completely impaired, since the historical experience indicates they are not recoverable.
Management 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 statement of financial position are reasonable approximations of their fair value as at December 31, 2015 and 2014 within Level 3 category.
The Company is of the opinion 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.
The Company's exposure to credit, currency and impairment losses related to loans provided is disclosed in note 29.
22. Current income tax
The excess of corporate taxes paid during the current and prior periods above tax payables at the amount of BGN 499 thousand as at December 31, 2015 and 2014 is presented in the statement of financial position as refundable income tax.
23. Cash and cash equivalents
31 December 31 December
2015 2014
BGN'000 BGN'000
Cash at banks 2,807 3,167
Cash in transit 3,423 2,855
Cash on hand 128 71
------------ ------------
Cash and cash equivalents in Statement
of Cash Flows 6,358 6,093
------------ ------------
Blocked cash amount 2,326 450
------------ ------------
Cash and cash equivalents in the
Statement of Financial Position 8,684 6,543
============ ============
The amounts presented as blocked cash as at December 31, 2015 in Cash and Cash Equivalents comprise: BGN 1,119 thousand held at a bank account that is blocked as a bank guarantee under a bank loan agreement to serve as a security for a public tender participation; BGN 1,207 thousand bank guarantees issued in favor of National Revenue Agency with respect to a proceeding of an appeal against a tax audit.
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 Company in the beginning of the next reporting period
24. Registered capital
The registered capital is presented at its nominal value in accordance with the court decision for registration. As at December 31, 2015 and 2014 The fully paid-in capital to the amount of BGN 109,250 thousand is distributed in 109,249,612 registered shares with a nominal value of BGN 1 each.
As of the end of the reporting period, the shareholders in the Company are as follows:
Shareholder 31 December 31 December
2015 2014
Alfa Capital AD 28.85% 28.85%
Julinor EOOD 23.11% 23.11%
Correct Pharm EOOD 18.31% 18.31%
Perfeto consulting EOOD 16.43% -
Corporate Commercial Bank AD 5.51% 5.51%
El Trading EOOD 2.54% -
VIP Properties EOOD 2.26% 18.31%
The Ministry of Economy of the
Republic of Bulgaria 0.65% 0.65%
Naftex Petrol EOOD - 0.34%
Varna Storage EOOD - 0.04%
Other minority shareholders 2.34% 4.88%
------------ ------------
100.00% 100.00%
============ ============
The order of distribution of profits and covering of losses is set out in the Commercial Act and the Articles of Association of the Company. The Company retains at least 1/10 of the profit in fund "Reserves" until it reaches 1/10 of the capital.
25. Basic net earnings (loss) per share
Loss per share is calculated on the basis of net profit (loss) attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding during the period.
31 December 31 December
2015 2014
Weighted average number of shares
(in thousands) 109,250 109,250
Profit (loss) in thousands of
BGN (71,166) (258,067)
------------ ------------
Earnings (loss) per share in BGN (0.65) (2,36)
============ ============
26. Loans and borrowings
31 December 31 December
2015 2014
BGN'000 BGN'000
Non-current liabilities
Debenture loans 36,258 36,073
Finance Leasing 2,685 -
Loan from related parties - 81,149
38,943 117,222
============ ============
Current liabilities
Debenture loans 2,838 2,838
Finance Leasing 589 -
Loan from related parties 29 -
3,456 2,838
============ ============
42,399 120,060
============ ============
Liabilities on loans received from related parties are disclosed in note 31.
26.1. Debenture loans
In October, 2006 the Company issued 2,000 registered transferable debenture notes 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. At the general meetings of the note holders conducted in the end of year 2011, it was decided to extend the term of the issue until January 26, 2017.
The issue is secured by the Company's receivables on granted loans to the Controlling Company until November 2013 and by a corporate guarantee issued by a subsidiary. Interest is paid once a year. The annual effective interest rate after the extension is 8.6%. The purpose of issue is providing of working capital, financing in investment projects and restructuring of a previous Company's debt.
The bond liabilities are presented in the statement of financial position at amortised cost.
The fair value of the bond liability as at December 31, 2015 is BGN 34,224 thousand (2014: BGN 36,494 thousand) calculated at an interest rate of 9.12% (2014: 9.12%).
Additional information related to Company's exposure to credit, currency and impairment losses related to loans and borrowing receiver is disclosed in note 29.
26.2. Finance lease liabilities
31 December 2015
Present
Interest value of
Future minimum on lease minimum
lease payments payments lease payments
BGN '000 BGN '000 BGN '000
Up to 1 year 796 (207) 589
Between 1 and 5
years 2,940 (377) 2,563
Over 5 years 123 (1) 122
---------------- ---------- ----------------
3,859 (585) 3,274
================ ========== ================
In November, 2015 Company acquired a property under a finance lease agreement. Lease term period is 6 years. As at December 31, 2015 the effective interest rate in 6.35%.
The Company's management believes that the fair value of finance lease liabilities is not materially different from their carrying value.
27. Obligation for defined benefit retirement compensations
During the current reporting period the Company accrued retirement benefits to the amount of BGN 397 thousand. The liability is determined on the basis of an actuarial valuation grounded on assumptions for mortality, disability, employment turnover, salary increases, etc. The present value of the liability is calculated using a discount factor of 3.0% (2014: 3.5%).
Movement in the present value of the defined benefit retirement compensations:
31 December 31 December
2015 2014
BGN'000 BGN'000
Present value of defined benefit
obligations at 1 January 383 384
Benefits paid by the plan (76) (85)
Current service cost 54 52
Interest expense 12 13
Past service cost 6 7
------------ ------------
Expenses recognized in profit
or loss (4) (13)
------------ ------------
Remeasurements of defined benefit
retirement compensations recognised
in other comprehensive income 18 12
------------ ------------
Present value of defined benefit
obligations at 31 December 397 383
============ ============
Actuarial assumptions
The following are the principal actuarial assumptions at the reporting date:
31 December 31 December
2015 2014
Discount rate 3.0% 3.5%
Future salary increases 4% 4%
Assumptions regarding mortality growth presents the probability employees to live to a certain age giving them right to a pension. It is calculated for each employee separately based on their gender and their current age at the moment of performing the valuation. As at December 31, 2015 and December 31, 2014 a table was used indicating mortality and average longevity of Bulgarian population for the period 2008-2010 of the National Statistical Institute.
The following table presents a sensitivity analysis against the main mortality assumptions as at December 31, 2015 based on a method which extrapolates the effect on the retirement benefit obligations with a reasonable change in the main assumptions as at the end of the reporting period.
Main assumptions Change Effect
with BGN'000
one point
Discount rate 1% (28)
Discount rate -1% 32
Staff turnover, annually -1 29
Staff turnover, annually 1 (29)
Salary growth 1% 20
Salary drop -1% (20)
Mortality (probability for dying
by age) -1 (2)
Mortality (probability for dying
by age) 1 2
Although the analysis does not take account of the full distribution of cash flows expected under the plan, it does provide an approximation of the sensitivity of the assumptions shown.
28. Trade and other payables
31 December 31 December
2015 2014
BGN'000 BGN'000
Payables to suppliers 15,999 38,111
Payables to personnel and social
security funds 1,390 1,346
Advances received 1,246 1,212
Payables to related parties 1,173 27,402
Tax payables 656 1,219
Other 961 964
------------ ------------
21,425 70,254
============ ============
Related party payables are disclosed in note 31.
The Company accrues unused paid leave provision of employees in compliance with IAS 19 Employee Benefits. The movement in the provision for the period is as follows:
31 December 31 December
2015 2014
BGN'000 BGN'000
Balance at the beginning of the
year 300 343
Accrued during the year 228 165
Utilised during the year (180) (208)
Other movements (59) -
------------ ------------
Balance at the end of the year,
including: 289 300
============ ============
Paid leaves 246 243
Social security on paid leaves 43 57
The balance at the end of the year is presented in the statement of financial position together with current payable to personnel.
Management performed an analysis of trade payables in order to determine their fair values and their level in the fair value hierarchy. Management considers that the carrying amounts of the current payables in the statement of financial position are reasonable approximations of their fair value as at December 31, 2015 and 2014 within Level 3 category.
The Company's exposure to currency and liquidity risk related to trade and other payables is disclosed in note 29.
29. Financial instruments and risk management 29.1. Accounting classifications and fair values
The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy. It does not include fair value information for current financial instruments for which Management believes that their carrying amount in the statement of financial position is a reasonable approximation of fair value.
31 December 2015, Note Financial assets and Fair
BGN '000 liabilities value,
Level
3
Loans Other Total
granted financial
and receivables liabilities
Financial assets
Loans granted 20 672 - 672 672
Trade and other
receivables, net 21 27,421 - 27,421 -
Cash and cash
equivalents 23 8,684 - 8,684 -
----------------- ------------- --------- ---------
36,777 - 36,777 672
================= ============= ========= =========
Financial liabilities
Trade and other
payables 28 - (18,133) (18,133) -
Loans and borrowings 26 - (42,399) (42,399) (37,527)
----------------- ------------- --------- ---------
- (60,532) (60,532) (37,527)
================= ============= ========= =========
31 December 2014, Note Financial assets and Fair
BGN '000 liabilities value,
Level
3
Loans Other Total
granted financial
and receivables liabilities
Financial assets
Loans granted 20 34,046 - 34,046 34,046
Trade and other
receivables, net 21 49,427 - 49,427 -
Cash and cash
equivalents 23 6,543 - 6,543 -
----------------- ------------- ---------- ----------
90,016 - 90,016 34,046
================= ============= ========== ==========
Financial liabilities
Trade and other
payables 28 - (59,667) (59,667) -
Loans and borrowings 26 - (120,060) (120,060) (117,222)
----------------- ------------- ---------- ----------
- (179,727) (179,727) (117,222)
================= ============= ========== ==========
29.2. Measurement of fair values
Trade and other receivables
Determining the fair value of trade and other receivables includes the following:
-- analysis of analytical trail balances and reporting of internal transformations;
-- differentiation between receivables and payables, excluding the presumption of future offsetting of receivables from different customers;
-- valuation of receivables based on their collectability;
-- revaluation of receivables in foreign currencies at the respective rates as at the date of the financial statements.
Debenture loan
The fair value of the debenture liability is determined on the basis of a quotable price as at the date of the financial statement, in case the instrument is quoted at an active market. In case it is not actively traded, the fair value is determined on the basis of alternative valuation techniques. The valuation techniques used include analysis of discounted cash flows through expected future cash flows and discount level in relation with the market, the credit rating of the issuer, etc. The fair value is determined only for disclosure purposes.
Trade and other payables
Determining the fair value of trade and other payables includes the following:
-- complete review of payables as at the date of valuation; -- identification of overdue payables and determination of interests and penalties due;
revaluation of payables in foreign currencies at rates as at the date of the financial statements
Receivables and payables in relation with trade loans
Fair values of received and granted trade loans are determined for the purposes of disclosure and are calculated on the basis of the present value of future cash flows of principals and interest discounted at a market interest rate as at the date of the financial statements.
29.3. Financial risk management 29.3.1. Risk management framework
The use of financial instruments exposes the Company to market, credit and liquidity risk. In the present note information about the purposes, policies and procedures in risk management and equity management is presented.
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 Company operates. In addition, there is a significant increase in price risk, market risk, credit risk, interest rate risk, liquidity risk and other types of financial risks to which the Company is exposed.
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 separate financial statements. The Management of the Company applies the necessary procedures to manage these risks.
29.3.2. 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 Company'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 optimising the return. Because of the nature of its activity, the Company is exposed to price, currency and interest rate risk.
Currency risk
The Company performs transactions in a currency other than its functional currency then it is exposed to risk related to potential foreign exchange rate fluctuations. Such risk arises mainly from the fluctuations of the of the US dollar, since the Company perform purchases and has received loans denominated in US dollars. Transactions primarily denominated in euro do not expose the Company to currency risk, since the Bulgarian lev is fixed to the euro effective January 1, 1999.
Financial assets and liabilities denominated in US dollars are presented in the following table:
31 December 31 December
2015 2014
USD'000 BGN'000 USD'000 BGN'000
Financial assets
Cash and cash
equivalents 7 12 10 16
-------- -------- -------- --------
7 12 10 16
======== ======== ======== ========
The sensitivity analysis to currency risk is calculated based on an 11% fluctuation in the exchange rate of the US dollar towards the Bulgarian lev. The Management considers that it is a reasonably possible fluctuation on the basis of statistical data for the dynamics of fluctuations in the exchange rate in the previous period based on the daily deviation calculated for 250 days. If as at December 31, 2015 the rate of the US dollar had decreased/ increased by 11% assuming that all other variables remained constant, the profit after tax would have increased/decreased by BGN 1 thousand, mainly as a result of exchange rate differences from revaluation of bank loans in US dollars.
Interest rate risk
As at the date of these separate financial statements the structure of the interest-bearing financial instruments is as follows:
Instruments with fixed interest 31 December 31 December
rate 2015 2014
BGN'000 BGN'000
Financial assets 615 29,083
Financial liabilities (36,258) (115,857)
------------ ------------
(35,643) (86,774)
============ ============
Instruments with floating interest
rate
Financial liabilities (3,274) -
============ ============
(3,274) -
============ ============
The Company constantly monitors and analyses the main interest rate exposures and develops different optimization scenarios such as refinancing, renewing existing loans, alternative financing (sale and leaseback contracts of assets) and calculates the impact of the fluctuation of the interest rate on the financial result.
Price risk
The Company is exposed to a risk of frequent and sharp fluctuations in fuels prices and other tradable goods. In order to decrease sensitivity to fluctuations in the prices of fuels, the Company updates its selling prices on a daily basis in accordance with the geographic region and the selling prices of its main competitors.
The Company maintains relatively high inventories turnover. Inventories are sold and replaced for approximately 13 days, which limits the Company's exposure to price risk
29.3.3. Credit risk
Credit risk is the risk that one of the parties on the financial instrument will fail to perform its obligation, thus causing loss in the other party. Financial assets, which potentially expose the Company to credit risk, are mostly receivables on sales and loans granted.
Exposure to credit risk
The carrying amount of financial assets represents the maximum credit risk the Company is exposed to. The maximum exposure to credit risk as at the reporting date is as follows:
Note 31 December 31 December
2015 2014
BGN'000 BGN'000
Loans granted 20 672 34,046
Trade and other receivables 21 27,421 49,427
Cash and cash equivalents 23 8,556 6,472
------------ ------------
36,649 89,945
============ ============
Trade and other receivables
The Company is mainly exposed to credit risk in case its customers do not meet their payment obligations. The policy of the Company regarding credit risk is to sell goods and services only to customers with appropriate credit standing and to use adequate collaterals as a means of reducing the risk of financial losses. The creditworthiness of customers is estimated by taking into consideration financial position, past experience and other factors. Credit limits have been stipulated and their compliance is regularly monitored. Retail sales are settled in cash predominantly or by credit cards.
Impairment of trade and other receivables
The aging of trade and other receivables overdue at the reporting date that were not impaired was as follows:
31 December 31 December
2015 2014
BGN'000 BGN'000
Less than 30 days 1,418 774
31 - 120 days 1,365 663
121 - 210 days 188 195
211 - 360 days 301 135
Over 360 days 67 3,860
------------ ------------
3,339 5,627
============ ============
The Company considers that overdue amounts that have not been impaired are collectable on the basis of historical information for payments, guarantees granted and a detailed analysis of credit risk and collaterals from the respective clients. Until the reporting date 80% of the overdue amounts were collected.
Receivables not overdue and not impaired amount to BGN 30,891 thousand as at December 31, 2015. (2014: BGN 47,641 thousand).
Cash and cash equivalents
The cash and cash equivalents are held with financial institutions, which ratings are good.
Guarantees
The Company presents guarantees mainly for participation in tender procedures under the Public Procurement Act. Petrol AD is exposed to credit risk relating to payables to related and third parties (see also note 31).
29.3.4. Liquidity risk
Liquidity risk is the risk that the Company will fail to meet its financial liabilities when due. The policy regarding liquidity risk is focused on holding enough liquid resources to serve the Company's liabilities when they become due, including emergency and unpredicted situations.
The following table represents the contractual maturities of financial liabilities based on the earliest date, on which the Company may be obliged to settle them. The table shows undiscounted cash flows, including principals and interest, excluding the impact of netting agreements:
:
31 December 2015, Carrying Contracted Up to From
BGN '000 amount cash 1 1 to
flows year 5 years
Debenture loans 39,096 42,607 3,057 39,550
Finance leasing 3,274 3,859 796 3,063
Trade loans 29 29 29 -
Trade and other payables 18,133 18,133 18,133 -
60,532 64,628 22,015 42,613
========= =========== ======= =========
31 December 2014, Carrying Contracted Up to From
BGN '000 amount cash 1 1 to
flows year 5 years
Debenture loans 38,911 45,663 3,057 42,606
Trade loans 81,149 99,046 9,130 89,916
Trade and other payables 59,667 59,667 59,667 -
179,727 204,376 71,854 132,522
========= =========== ======= =========
The Company does not expect cash flows included in the table to arise significantly earlier, or at significantly different amounts.
Equity management
In accordance with the requirements of art. 252 of the Commercial law the Company shall maintain its net assets above the value of registered capital. As at December 31, 2014 the Company meets these requirements, since its net assets are BGN 117,176 thousand and registered capital is BGN 109,250 thousand. As at December 31, 2015 Company's net assets come up to BGN 45,992 thousand.
30. Operating lease
The Company is a lessee under an operating lease contract. As at December 31, 2015 in relation with the operating lease contract the Company recognised expenses in profit or loss amounting to BGN 17,617 thousand. (2014: BGN 16,056 thousand), which represent lease of petrol stations leased under an operating lease contract.
31. Disclosure of related parties and related parties transactions
Related parties which the Company controls are disclosed in note 17.
During the reporting period transactions with the following related parties have been performed:
Related Party
Naftex Petrol EOOD Subsidiary till December
2015
Naftex Security EAD Subsidiary of Naftex Petrol
EOOD
Jurex Consult AD Subsidiary of Naftex Petrol
EOOD till November 2014
Eurocapital Bulgaria Subsidiary of Naftex Petrol
EAD EOOD
Other related parties due
to loss of control in October
2014 till December 2015
Varna Storage EOOD Subsidiary of Petrol AD till
March 2015 and subsidiary
of Elit Petrol AD from March
2015
Elit Petrol - Lovech Subsidiary of Elit Petrol
EAD AD
Petrol Trans Express Subsidiary till July 2015
EOOD
Petrol Technika EOOD Subsidiary till August 2015
BPI AD Subsidiary
Petrol Gas EOOD Subsidiary
Petrol Properties Subsidiary
EOOD
Elit Petrol AD Subsidiary
Petrol Eco Tur Invest Subsidiary till September
EOOD 2014; till September 2014,
Other related parties due
to loss of control in October
2014
Subsidiary from February
Petrol Finances OOD 2015
Petrol Zapad EOOD Subsidiary till January 2015
Subsidiary of Naftex Petrol
Petrol Sever EOOD EOOD
Petrol Technologies Subsidiary from August 2015
OOD
Grifon Power EAD Subsidiary
The performed transactions mainly relate to:
-- purchase and sale of liquid fuels; -- loans grants and receipts; -- purchase and sale of property, plant and equipment; -- rental fees and other services.
Transactions with related parties for the year ending on December 31, 2015 and 2014 is as follows:
Related party 2015 2014 2015 2014
BGN'000 BGN'000 BGN'000 BGN'000
Sales Sales Purchase Purchase
of goods of goods of goods of goods
and services and services and services and services
Subsidiaries 1,347 4,155 9,235 217,507
Subsidiaries of Naftex
Petrol EOOD - 36 7 439
Subsidiaries of Elit
Petrol AD 20 - 6,249 -
Other related parties 26 - 38 -
------------- ------------- ------------- -------------
1,393 4,191 15,529 217,946
============= ============= ============= =============
Related party 2015 2014 2015 2014
BGN'000 BGN'000 BGN'000 BGN'000
Finance Finance Finance Finance
income income costs costs
Subsidiaries 69,690 4,508 21,023 10,126
Subsidiaries of Elit
Petrol AD - - 130 -
69,690 4,508 21,153 10,126
======== ======== ======== ========
As at December 31, 2015 and As at December 31, 2014 outstanding balances with related parties are as follows:
Related party 31 December 31 December 31 December 31 December
2015 2014 2015 2014
BGN'000 BGN'000 BGN'000 BGN'000
Receivables Receivables Payables Payables
Subsidiaries, including 988 59,054 530 108,551
Long-term loans - 22,609 - 81,149
Short-term loans 672 10,627 29 -
Receivables from
dividends 142 23,470 - -
Subsidiaries of Naftex - -
Petrol EOOD 10 -
Subsidiaries of Elit
Petrol AD 131 - 672 -
Other related parties 2 - -
1,121 59,064 1,202 108,551
============ ============ ============ ============
In December 2011 the Company received a long-term loan from a subsidiary in relation with the repurchase of issued bonds at the amount of USD 80,400 thousand, at nominal interest rate 9.6% and with maturity date November 25, 2018. In December 2014 the currency of the loan was changed from USD to BGN. As at December 31, 2015 the principal under that loan is fully repaid.
The loans granted and trade receivables from related parties are not secured.
The total amount of key management personnel remuneration of the Company included in the personnel expenses amounts to BGN 1, 324 thousand. (2014: BGN 1,190 thousand).
32. Contingent liabilities
As at December 31, 2015 the Company has contingent liabilities including guaranteed promissory notes amounting to BGN 15 thousand;
promissory notes for mortgages on plant, machinery and equipment in relation with bank loans granted to third parties and related parties with a total carrying amount of BGN 3,890 thousand. Pledged property in NRA's favor is with total carrying value of BGN 584 thousand.
The Company is a co-debtor and a guarantor under a loan agreement for amounts up to BGN 35,000 thousand; a guarantor of a stand-by credit to a third party for the issuance of a bank guarantee of BGN 10,000 thousand to a third party; a guarantor of a subsidiary for the amount of BGN 29,541 thousand.
The Company has pledged inventory in the amount of BGN 459 thousand and cash equivalents in the amount of BGN 2,326 thousand.
In order to secure its liabilities under the Public Procurement Act the Company has set up a bank guarantee amounting to BGN 1,418 thousand in favor of National Revenue Agency with respect to a proceeding of an appeal against a tax audit act for the amount of BGN 1,962 thousand.
In April 2015 the Company signed a guarantor contract securing the liabilities of a subsidiary resulting from the cession agreement with exposure as at the end of the reporting period amounting to BGN 234 thousand (see note 33).
A creditor of a subsidiary (till December 2015) has unreasonably claimed in court responsibility of Petrol AD under a guarantee contract for credit limit, which resulted in restriction imposed on the bank accounts of the Parent company up to the amount of USD 29,983 thousand. That claim is disputed in court by Petrol AD, since its responsibility as a guarantor is not occurred or/and is extinguished pursuant to art. 147 paragraph 2 of the Obligations and Contracts Act. At the time of signing the guarantee agreement, the due term to settle the contractual framework arrangements between the lender and subsidiary was July 1, 2014.
The term of the credit limit agreement was further extended without the consent of the guarantor, so that the latter responsibility has fallen upon the expiration of six months after the originally agreed time limit, within which the creditor has brought an action against the principal debtor.
The term set forth in art. 147, paragraph 1 of Obligations and Contracts Act is final and upon its expiry it represents a termination of the Company's guarantee obligation. Therefore Petrol AD's arguments were upheld in full by the competent court and restrictions imposed on bank accounts were removed.
Following the cancellation of the writs, which were issued pursuant to orders production and were imposing liens on bank accounts of Petrol AD, the creditor has initiated legal proceedings for the same receivables against the subsidiary and against Petrol AD in his capacity of guarantor. Regarding the latter proceedings, Company has repeated its objection by claiming its liability as guarantor has been extinguished pursuant to Art. 147 para 2 of Obligations and Contracts Act. Therefore Management expects the creditor's claim against Petrol AD will be definitively rejected by the court. As at the date of these financial statements, the redress proceedings are still pending.
33. Events after the reporting period
In January 2016, a creditor of a subsidiary under a cession agreement has claimed in court responsibility of Petrol AD in its capacity of guarantor, which resulted into a restraint being imposed on bank accounts of the Company for the amount of BGN 245 thousand.
Petrol AD appeals against the creditor's claim stating its liability as guarantor has been extinguished or has not occurred pursuant to Art. 147 para 2 of Obligations and Contracts Act. The repayment term under the cession agreement was extended without the consent of the guarantor, therefore the responsibility of the latter was extinguished upon the expiry of six months following the initial deadline agreed, within which the creditor failed to file a claim against the principal debtor.
The term defined in Art. 147, paragraph 1 of the Obligations and Contracts Act is preclusive and upon its expiry the guarantor's relationship is terminated. At present the case is pending and Management expects a favorable decision by the competent court to be issued. Meanwhile creditor's proceedings were ceased and a security in creditor's favor has been provided in the form of cash collateral under Art. 180 and Art. 181 Obligations and Contracts Act.
In February 2016 the Commission for Protection of Competition served the Company a decision for initialization of proceedings for infringement of Art. 15 of the Law on Protection of Competition and art. 101 of Treaty on the Functioning of the European Union in relation to the agreement / concerted practices between seven companies, retailers of fuels, including the Company.
In March 2016 the Company was imposed a coercive administrative measure by the Financial Supervision Commission in connection with the netting the purchase and sale price of transactions with shares of EuroCapital Bulgaria EAD, under contracts signed in March 2015. Shares' rights transfer is incomplete because a dispute about ownership of shares between the seller Naftex Petrol EOOD and a third party is in progress.
In the same month the Company withdraw its statement for netting the transactions' prices, which fulfills the imposed by the Commission measure. It also amended with annexes the contracts for buying and selling, so the price is payable after an endorsement of shares in favor the Company and respectively to the final buyer, including an indexation on the basis of a market valuation, taking into account the financial position of EuroCapital Bulgaria EAD at the time of laying the endorsement. Agreements concluded and netting made based on these have a retroactive effect and their effect is reflected in the current individual financial statements. Company has voluntarily fulfilled the coercive administrative measure imposed by the Financial Supervision Commission, because the measure is subject to preliminary performance, but has filed a dispute against its compliance with applicable laws with the Supreme Administrative Court.
In March 2016, once again, the change of the sole owner of Naftex Petrol EOOD was filed in for inscription registration with in the commercial register, where a complete set of documents as instructed by the officials were submitted. However, the inscription was suspended at the request of a shareholder of the Company, on the grounds that the sale contract was challenged in court because executives were not authorized to enter into the agreement for sale of shares by the general meeting of the company contrary to the provisions of Public Offering Of Securities Act( POSA). Prior to entering into arrangements for the same transaction, it was thoroughly checked for compliance with law and it was confirmed that it falls below the thresholds for conveying a general meeting pursuant to Art. 114 of the POSA, where documents proving this circumstance are duly filed in with the Commercial Register with the application for registration of the change of the sole owner of the subsidiary. For these reasons, Company's management believes that the claim is to be found inconsistent and after a judgment that is expected to be in favor of Petrol AD, the sale of shares will be inscribed in Commercial Register, by which it will be enacted for third parties also.
As disclosed in note 14 above, in the end of March 2016 the company received a tax audit act for the amount of BGN 791 thousand, which was appealed against in its entirety. In order to stop the operation of the contested act, the Company took action and concluded a contract for credit limit of BGN 1,000 thousand. Based on that contract, in April 2016, a bank guarantee in favor of the National Revenue Agency was issued for the amount of BGN 800 thousand.
In May 2016 the lender bank took enforcement actions for securing its receivables from unrelated parties (companies under common control and controlling company till November 2013, and a subsidiary till December 2015), whose liabilities were secured by the Company with mortgages on properties with carrying amount BGN 1,966 thousand. As at the date of issue of these financial statements a public sale of the mortgaged property of the Company was held and property with carrying amount of BGN 574 thousand was sold. As a result of the actions of the lending bank, regressive receivables arose for the Company from companies-borrowers and their co-debtors, equivalent to the selling price of expropriated property. The regressive receivables' collection is unlikely.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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(END) Dow Jones Newswires
June 09, 2016 09:02 ET (13:02 GMT)
1 Year Petrol 4.24% Chart |
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