TIDM74JJ
RNS Number : 9506C
Petrol AD
22 October 2020
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
OF PETROL GROUP
AND CONDENSED EXPLANATORY NOTES TO THE INTERIM CONSOLIDATED
FINANCIAL STATEMENTS FOR THE PERIODED JUNE 30, 2020
(This document is a translated condensed version of the original
Bulgarian document,
in case of divergence the Bulgarian original text shall
prevail)
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
For the period ended June 30
Note 2020 2019
BGN'000 BGN'000
Revenue 2 185,144 253,613
Other income 3 382 874
Cost of goods sold (156,554) (224,776)
Materials and consumables 4 (1,770) (1,809)
Hired services 5 (17,324) (18,511)
Employee benefits 6 (9,307) (10,412)
Depreciation and amortisation 10,11,12 (2,803) (1,924)
Impairment losses (2,181) 67
Other expenses 7 (289) (412)
Finance income 8 969 1,437
Finance costs 8 (2,630) (5,186)
Loss before tax (6,363) (7,039)
--------- ---------
Tax income 9 461 32
--------- ---------
Loss for the period (5,902) (7,007)
--------- ---------
Other comprehensive income
Items that will not be reclassified
to profit or loss:
Revaluation 27,730 -
Income tax relating to items not reclassified (2,771) -
--------- ---------
Other comprehensive income for the
period 24,959 -
Total comprehensive income for the
period 19,057 (7,007)
Loss attributable to:
Owners of the Parent company (5,902) (7,007)
Non-controlling interest - -
Loss for the period (5,902) (7,007)
========= =========
Total comprehensive income attributable
to:
Owners of the Parent company 19,057 (7,007)
Non-controlling interest - -
--------- ---------
Total comprehensive income for the
period 19,057 (7,007)
========= =========
Loss per share (BGN) 19 (0.22) (0.26)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Note June 30 Dec. 31
2020 2019
BGN'000 BGN'000
Non-current assets
Property, plant and equipment and intangible
assets 10 40,954 14,489
Investment properties 12 1,723 1,746
Right-of-use asset 11 13,627 10,221
Goodwill 13 19,844 19,844
Investments 3 -
Deferred tax assets 9 1,906 4,216
Total non-current assets 78,057 50,516
--------- --------
Current assets
Trade and other receivables 17 32,429 35,002
Inventories 14 17,101 21,076
Loans granted 16 28,385 25,998
Non-current assets held-for-sale 15 42 3,472
Cash and cash equivalents 18 3,575 3,486
Total current assets 81,532 89,034
--------- --------
Total assets 159,589 139,550
========= ========
Equity
Registered capital 19 109,250 109,250
Reserves 43,792 18,864
Accumulated loss (121,403) (113,564)
--------- ---------
Total equity attributable to the owners
of the Parent company 31,639 14,550
--------- ---------
Non-controlling interests 23 23
--------- ---------
Total equity 31,662 14,573
---------
Non-current liabilities
Loans and borrowings 20 44,424 44,652
Liabilities under lease agreements 11 9,537 7,715
Employee defined benefit obligations 21 656 656
Total non-current liabilities 54,617 53,023
--------- ---------
Current liabilities
Trade and other payables 22 66,895 66,554
Loans and borrowings 20 1,896 2,735
Liabilities under lease agreements 11 4,519 2,662
Current income tax liabilities 23 - 3
Total current liabilities 73,310 71,954
--------- -------------------
Total liabilities 127,927 124,977
========= ===================
Total equity and liabilities 159,589 139,550
========= ===================
COMPREHENSIVE STATEMENT OF CHANGES IN EQUITY
Equity attributable to the Non-controlling Total
owners of the Parent company interests equity
Registered General Reval. Accumulated Total
capital reserves reserve profit
(loss)
BGN'000 BGN'000 BGN'000 BGN'000 BGN'000 BGN'000 BGN'000
Balance at
January
1, 2019 109,250 18,864 - (108,557) 19,557 9 19,566
Comprehensive
income
for the period
Loss for the
period - - - (7,007) (7,007) - (7,007)
----------- ---------- --------- ------------ -------- ---------------- --------
Total
comprehensive
income - - (7,007) (7,007) - (7,007)
Transactions with
shareholders,
recognized
directly
in equity
Sale of a
subsidiary
with a
non-controlling
interest - - - - - (9) (9)
----------- ---------- --------- ------------ -------- ---------------- --------
Total
transactions
with
shareholders
recognized
in equity - - - - - (9) (9)
----------- ---------- --------- ------------ -------- ---------------- --------
Balance at June
30,
2019 109,250 18,864 - (115,564) 12,550 - 12,550
=========== ========== ========= ============ ======== ================ ========
Comprehensive
income
for the period
Profit for the
period - - - 2,026 2,026 1 2,027
Other
comprehensive
income - - - (26) (26) - (26)
---------
Total
comprehensive
income - - - 2,000 2,000 1 2,001
----------- ---------- --------- ------------ -------- ---------------- --------
Acquisition of
a subsidiary
with a
non-controlling
interest - - - - - 22 22
---------
Total
transactions
with
shareholders
recognized
in equity - - - - - 22 22
---------
Balance at
December
31, 2019 109,250 18,864 - (113,564) 14,550 23 14,573
=========== ========== ========= ============ ======== ================ ========
Comprehensive
income
for the period
Loss for the
period - - - (5,902) (5,902) - (5,902)
Other
comprehensive
income - - 24,959 (1,968) 22,991 - 22,991
----------- ---------- --------- ------------ -------- ---------------- --------
Total
comprehensive
income - - 24,959 (7,870) 17,089 - 17,089
----------- ---------- --------- ------------ -------- ---------------- --------
Transfer of
revaluation
reserve of sold
assets
to retained
earnings - - (31) 31 - - -
Balance at June
30,
2020 109,250 18,864 24,928 (121,403) 31,639 23 31,662
=========== ========== ========= ============ ======== ================ ========
CONSOLIDATED STATEMENT OF CASH FLOWS
For the period ended June 30
2020 2019
BGN'000 BGN'000
Cash flows from operating activities
Net profit (loss) before taxes (6,363) (7,039)
Adjustments for:
Depreciation/amortization of property, plant
and equipment and intangible assets 2,803 1,924
Interest expense and bank commissions, net 1,663 4,319
Shortages and normal loss, net of excess
assets (163) (583)
Provisions for unused paid leave and retirement
benefits 294 432
(Reversal of) impairment loss on assets 2,181 (67)
Payables written-off (96) -
Gain on sale of subsidiaries - (562)
Loss (profit) on sale of assets 3 (123)
322 (1,699)
Change in trade payables (896) 14,546
Change in inventories 4,138 1,326
Change in trade and other receivables 3,284 (6,361)
Cash flows generated from operating activities 6,848 7,812
Interest, bank fees and commissions paid (2,624) (2,746)
Income tax paid (3) -
-------- --------
Net cash from operating activities 4,221 5,066
Cash flows from investing activities
Payments for purchase of property, plant
and equipment (147) (359)
Proceeds from sale of property, plant and
equipment 40 235
Payments for loans granted, net (3,230) (4,558)
Proceeds from loans granted, net 1,268 7,823
Interest received on loans granted 74 87
Disposals cash from the sale of subsidiaries,
net of proceeds from sale - 173
Proceed (p ayments) for acquisitions of other
investments 158 (5,156)
-------- --------
Net cash flows used in investing activities (1,837) (1,755)
Cash flows from financing activities
Proceeds from loans and borrowings - 19
Payments of loans and borrowings (87) (923)
Lease payments (2,257) (1,585)
Proceed for acquisitions of other investments - 589
-------- --------
Net cash flows from financing activities (2,344) (1,900)
Net decrease in cash flows during the period 40 1,411
Cash and cash equivalents at the beginning
of the period 3,486 4,265
Effect of movements in exchange rates (2) (8)
-------- --------
Cash and cash equivalents at the end of the
period 3,524 5,668
======== ========
Notes
to the interim consolidated financial report
for the period ended June 30, 2020
1. Segments reporting
The Group has identified the following operating segments, based
on the reports presented to the Group's Management, which are used
in the process of strategic decision-making:
-- Wholesale of fuels - wholesale of petroleum products in Bulgaria;
-- Retail of fuels - retail of petroleum and other products
through a network of petrol stations.
-- Other activities - financial and accounting services,
consultancy, rental income and other activities.
The segment information, presented to the Group's Management for
the periods ended as of June 30, 2020 and 2019 is as follows:
June 30 Wholesale Retail All other Total for
of fuels of fuels segments the Group
2020
BGN'000 BGN'000 BGN'000 BGN'000
Total segment revenue 11,220 173,823 1,362 186,405
Intra-group revenue - 58 821 879
Revenue from external
customers 11,220 173,765 541 185,526
Adjusted EBITDA 1,501 (2,404) (3,177) (4,080)
Depreciation/amortization 1,137 1,503 163 2,803
Impairment - 278 1,903 2,181
June 30 Wholesale Retail All other Total for
of fuels of fuels segments the Group
2019
BGN'000 BGN'000 BGN'000 BGN'000
Total segment revenue 11,749 242,247 1,221 255,217
Intra-group revenue 5 9 716 730
Revenue from external
customers 11,744 242,238 505 254,487
Adjusted EBITDA 2,747 (4,662) 482 (1,433)
Depreciation/amortization 563 1,273 88 1,924
Impairment - (67) - (67)
The policies for recognition of revenue from intra-group sales
and sales to external clients for the purposes of the reporting by
segments do not differ from these applied by the Group for revenue
recognition in the consolidated statement of profit and loss and
other comprehensive income.
The Management of the Group evaluates the results of the
performance of the segments based on the adjusted EBITDA. In the
calculation of the adjusted EBITDA the effect of the impairment of
assets is not taken into account. The reconciliation of the
adjusted EBITDA and the profit (loss) before tax is presented in
the table below:
June 30 June 30
2020 2019
BGN'000 BGN'000
Adjusted EBITDA - reporting segments (347) (1,915)
Adjusted EBITDA - all other segments 629 482
Depreciation/amortization (2,803) (1,924)
Impairment of assets (2,181) 67
Finance income (costs), net (1,661) (3,749)
Profit (loss) before tax (6,363) (7,039)
========= =========
2. Revenue from sales
June 30 June 30
2020 2019
BGN'000 BGN'000
Sales of goods 180,952 248,567
Sales of services 4,192 5,046
--------- ---------
185,144 253,613
========= =========
3. Other income
June 30 June 30
2020 2019
BGN'000 BGN'000
Surpluses of assets 180 618
Payables written off 96 -
Income from financing 86 -
Penalties and indemnities 10 19
Insurance claims 10 6
Gain on sale of property, plant, equipment
and materials including: - 123
Income from sales - 213
Carrying amount - (90)
Other - 108
--------- ---------
382 874
========= =========
As a result of the negative impact and consequences of the
global pandemic from the spread of a new type of coronavirus -
Covid-19, the Group has taken a series of actions to reorganize the
activities of some of its trade sites and establish reduced working
hours for some of the staff. From the end of March 2020, the
Employment Agency opens an application procedure under Art. 1 of
Decree 55 of March 30, 2020 on determining the terms and conditions
for payment of compensations to employers in order to maintain the
employment of employees in the state of emergency, declared by a
Decision of the National Assembly as of March 13, 2020. The Group
has submitted documents for application under this procedure and as
of June 30, 2020 has received funding from the state in the amount
of BGN 86 thousand.
4. Materials and consumables
June 30 June 30
2020 2019
BGN'000 BGN'000
Electricity and heating 1,013 1,049
Office consumables 196 210
Fuels and lubricants 189 233
Spare parts 122 147
Working clothes 99 38
Water supply 51 46
Advertising materials 14 23
Other 86 63
--------- ---------
1,770 1,809
========= =========
5. Hired services
June 30 June 30
2020 2019
BGN'000 BGN'000
Rents 7,488 7,907
Dealer and other commissions 5,320 5,792
Maintenance and repairs 1,571 1,775
Consulting, training and audit 760 805
Communications 417 420
State, municipal fees and other costs 404 278
Cash collection expense 315 363
Security 305 331
Insurances 181 215
Advertising 159 130
Software licenses 126 128
Transport 25 58
Other 253 309
--------- ---------
17,324 18,511
========= =========
6. Employee benefits
June 30 June 30
2020 2019
BGN'000 BGN'000
Wages and salaries 7,662 8,856
Social security contributions and benefits 1,645 1,556
--------- ---------
9,307 10,412
========= =========
7. Other expenses
June 30 June 30
2020 2019
BGN'000 BGN'000
Local taxes and taxes on expenses 162 153
Entertainment expenses and sponsorship 60 133
Penalties and indemnities 28 61
Scrap and shortages 17 35
Business trips 6 19
Loss on sale of property, plant, equipment 3 -
and materials including:
Carrying amount 45 -
Income from sales (42) -
Other 13 11
--------- ---------
289 412
========= =========
8. Finance income and costs
June 30 June 30
2020 2019
BGN'000 BGN'000
Finance income
Interest income, including 967 867
Interest income on loans granted 900 789
Interest income on trade receivables 67 78
Gain on sale of subsidiaries, incl.: - 562
Revenue from sales - 950
Carrying amount of the Group's interest
in the net assets of the subsidiaries - (388)
Net foreign exchange gain 2 8
969 1,437
--------- ---------
Finance costs
Interest costs, including: (2,396) (1,904)
Interest expenses on debenture loans (1,287) (1,268)
Interest expenses on the lease (483) (331)
Interest expenses on bank loans (221) (272)
Interest expenses to the state budget (19) (21)
Interest expenses on trade and other payables (386) (9)
Interest expenses on trade loans - (3)
Loss from cession contracts - (3,056)
Bank fees, commissions and other financial
expenses (234) (226)
--------- ---------
(2,630) (5,186)
--------- ---------
Finance income (costs), net (1,661) (3,749)
========= =========
9. Taxation
9.1. Tax expenses
Tax expense recognised in profit or loss includes the amount of
current and deferred income tax expenses in accordance with IAS 12
Income taxes.
June 30 June 30
2020 2019
BGN'000 BGN'000
Current tax expense - -
Change in deferred tax, including: (461) (32)
Temporary differences recognised during
the period 96 121
Temporary differences arising during the
period (360) (108)
Adjustments (197) (45)
Tax income (461) (32)
========= =========
9.2. Effective tax rate
The reconciliation between the accounting loss and tax expense,
as well as calculation of the effective tax rate as of June 30,
2020 and June 30, 2019 is presented in the table below:
June 30 June 30
2020 2019
BGN'000 BGN'000
Loss before tax for the period (6,363) (7,039)
Applicable tax rate 10% 10%
Tax expense at the applicable tax rate (636) (704)
Tax effect of permanent differences 16 55
Tax effect of a tax asset recognized in
the current period that arose but was not
recognized in previous reporting periods - (201)
Tax effect of a tax asset not recognised
in the current period that arose in the
current period 371 719
Tax effect of adjustments to a recognized
tax asset that arose in previous reporting
periods (197) -
Tax effect from consolidation adjustments (15) 99
--------- ---------
Tax income (461) (32)
========= =========
Effective tax rate - -
========= =========
The respective tax periods of the Group may be subject to
inspection by the tax authorities until the expiration of 5 years
from the end of the year in which a declaration was submitted, or
should have been submitted. Consequently additional taxes or
penalties may be imposed in accordance with the interpretation of
the tax legislation. The Group's management is not aware of any
circumstances, which may give rise to a contingent additional
liability in this respect.
In January 2017, the Parent company received a tax audit
assessment on corporate tax revision for 2013 and VAT until October
2014 amounting to BGN 222 thousand principal and BGN 68 thousand
interest. In order to cease the enforcement of the appealed tax
assessment in January 2017, a bank guarantee of BGN 350 thousand
was issued. In order to secure the additionally calculated interest
liabilities on this tax assessment, in February 2019 was issued an
additional bank guarantee for BGN 60 thousand. In April 2019 the
Administrative Court - Sofia city enacted a decision, which
entirely repealed the obligation for VAT amounting to BGN 112
thousand principal and BGN 37 thousand interest and considerably
reduced the corporate tax liability from BGN 110 principal and BGN
31 thousand interest to BGN 24 thousand principal and BGN 2
thousand interest. In February 2020, with a final decision of the
Supreme Administrative Court, the Decision of April 2019 of the
Sofia City Administrative Court was partially revoked, as at the
date of preparation of these financial statements the obligation
was fully paid and the bank guarantees released and returned from
NAP. Liabilities are recorded as adjusting events as of December
31, 2019 and are reflected in the result for 2019.
In November 2017 the issued tax assessment from March 2016 on
the security contributions tax audit for BGN 543 thousand principal
and BGN 248 thousand interest, appealed entirely by the Parent
company as unjustified and secured by a bank guarantee of BGN 800
thousand, was entirely repealed due to decision of Administrative
Court - Sofia city. The tax administration appealed the decision
and SAC repealed the decision of AC - Sofia city and returned the
court proceeding to the initial judicial body for new examination.
In order to secure the additionally calculated interest liabilities
on this tax assessment, an additional bank guarantee for BGN 255
thousand was issued in February 2019. With a decision from March
2020. the first-instance court has partially annulled the appealed
amended assessment, as a result the liabilities of the Parent
company have been reduced to BGN 53 thousand. The Appel and Tax
Insurance Practice has appealed the decision of the first-instance
court and the case is currently pending.
9.3. Recognised deferred tax assets and liabilities
Asset Recognised Asset Recognised Asset
(liability) in profit (liability) in profit Recognised (liability)
as at and loss as at and loss in other as at
January December compre-hensive June
1, 2019 31, 2019 income 30, 2020
BGN'000 BGN'000 BGN'000 BGN'000 BGN'000 BGN'000
Property, plant and
equipment (198) 23 (175) 213 (2,771) (2,733)
Impairment of assets 4,192 (85) 4,107 218 - 4,325
Tax loss carry-forwards 39 (30) 9 12 - 21
Provisions for unused
paid leave and other
provisions 105 20 125 (2) - 123
Excess of interest
payments in accordance
with CITA 3 101 104 53 - 157
Other temporary differences,
including unpaid benefits
to individuals 45 1 46 (33) - 13
------------- ----------- ------------- ----------- ---------------- -------------
4,186 30 4,216 461 (2,771) 1,906
============= =========== ============= =========== ================ =============
The Company has the right to carry forward deferred tax assets
on tax losses until 2025.
9.4. Unrecognized deferred tax assets
As of June 30, 2020 the Group's Management reviews the
recoverability of deductible temporary differences and tax loss
carry forward, forming tax assets. Because of this review, the
Group's Management estimates that there might be no sufficient
taxable profits in the near future against which the assets will be
utilized. Consequently, the Group does not recognize tax assets on
the following deductible temporary differences and tax loss carry
forward and impairment of assets, incurred during the current and
previous reporting periods.
10. Property, plant, equipment and intangible assets
Land Buildings Plant Vehicles Other Assets Intangible Total
and under assets
equipment constr.
BGN'000 BGN'000 BGN'000 BGN'000 BGN'000 BGN'000 BGN'000
BGN'000
Cost
Balance at
January
1, 2019 6,958 6,031 10,748 572 1,805 185 3,560 29,859
Additions 2 79 53 - 44 279 3 460
Transfers - 61 9 - 169 (239) - -
Disposals (139) (264) (1,099) - (105) - (3,017) (4,624)
Balance at
June
30, 2019 6,821 5,907 9,711 572 1,913 225 546 25,695
-------- ---------- ---------- --------- -------- --------- ----------- ---------
Additions 437 847 339 - 66 155 222 2,066
Transfers - 42 60 - 1 (103) - -
Disposals (57) (35) (394) - (136) (33) (93) (748)
Balance at
December
31, 2019 7,201 6,761 9,716 572 1,844 244 675 27,013
-------- ---------- ---------- --------- -------- --------- ----------- ---------
Additions - 13 - 13 254 20 300
Transfer of
assets
held for
sale 2,345 700 381 - 4 - - 3,430
Transfers - - 146 - 123 (269) - -
Netting
accumulated
depreciation - (3,867) (6,707) (561) (937) - (452) (12,524)
Revaluation 4,817 2,598 16,142 419 1,570 - 308 25,854
Impairment
losses (1,751) (554) (113) - (13) (34) - (2,465)
Disposals - (13) (25) - (2) (5) - (45)
Balance at
June
30, 2020 12,612 5,625 19,553 430 2,602 190 551 41,563
-------- ---------- ---------- --------- -------- --------- ----------- ---------
Accumulated
depreciation
Balance at
January
1, 2019 - 3,771 7,656 560 942 - 3,432 16,361
Accumulated - 89 231 - 87 - 15 422
Disposals for
the
period - (52) (1,003) - (68) - (2,906) (4,029)
-------- ---------- ---------- --------- -------- --------- ----------- ---------
Balance at
June
30, 2019 - 3,808 6,884 560 961 - 541 12,754
-------- ---------- ---------- --------- -------- --------- ----------- ---------
Additions - 83 209 1 97 - 2 392
Transfers - (1) 1 - - - - -
Disposals - (23) (387) - (121) - (91) (622)
Balance at
December
31, 2019 - 3,867 6,707 561 937 - 452 12,524
-------- ---------- ---------- --------- -------- --------- ----------- ---------
Additions - 102 375 5 103 - 26 611
Disposals - - (2) - - - - (2)
Netting
accumulated
depreciation - (3,867) (6,707) (561) (937) - (452) (12,524)
Balance at
June
30, 2020 - 102 373 5 103 - 26 609
-------- ---------- ---------- --------- -------- --------- ----------- ---------
Carrying
amount
at
January 1,
2019 6,958 2,260 3,092 12 863 185 128 13,498
======== ========== ========== ========= ======== ========= =========== =========
Carrying
amount
at
June 30,
2019 6,821 2,099 2,827 12 952 225 5 12,941
======== ========== ========== ========= ======== ========= =========== =========
Carrying
amount
at
December 31,
2019 7,201 2,894 3,009 11 907 244 223 14,489
======== ========== ========== ========= ======== ========= =========== =========
Carrying
amount
at
June 30,
2020 12,612 5,523 19,180 425 2,499 190 525 40,954
======== ========== ========== ========= ======== ========= =========== =========
As at June 30, 2020 property, plant and equipment with carrying
amount of BGN 21,676 thousand are mortgaged or pledged as
collaterals under bank loans, granted to the Group and to unrelated
parties, under credit limit agreements for issuance of bank
guarantees.
The assets under construction include mainly incurred expenses
for reconstruction of trade sites.
From January 1, 2020 the Group has changed its approach to the
subsequent valuation of property, plant and equipment under the
revaluation model under IAS 16 and intangible assets under IAS 38.
The revaluation model provides, after initial recognition for an
asset, any property, plant and equipment whose fair value may to be
measured reliably, to be carried at revalued amount, which is the
fair value of the asset at the date of revaluation less any
subsequent accumulated depreciation as well as subsequent
accumulated impairment losses. Revaluations should be carried out
at sufficiently regular intervals to ensure that the carrying
amount does not differ materially from the fair value that would be
determined using the fair value at the statement of financial
position date.
Property, plant and equipment are presented in the financial
statements at revalued amount, less accumulated depreciation and
impairment losses.
The revalued (to fair) value of property, plant and equipment
and intangible assets was initially determined through a market
valuation by an independent appraiser and applied in the accounting
policy as of January 1, 2020.
11. Assets and liabilities under leases
The consolidated statement of financial position as at June 30,
2020 and December 31, 2019 presents the following items and amounts
related to lease agreements:
Consolidated statement of financial position June 30, December
31,
2020 2019
BGN'000 BGN'000
Right-of-use assets, incl.: 13,627 10,221
Properties (lands and buildings) 4,793 5,513
Transport vehicles 1,034 378
Machinery, plants and equipment 7,800 4,330
Liabilities under leases, incl.: (14,056) (10,377)
Current liabilities (4,519) (2,662)
Non-current liabilities (9,537) (7,715)
--------- ---------
Net effect on equity (429) (156)
========= =========
Costs recognised in the consolidated statement of comprehensive
income
Consolidated statements of comprehensive June 30, June 30,
income
2020 2019
BGN'000 BGN'000
Depreciation costs of right-of-use asset 2,169 1,479
Interest for right-of-use assets on lease
contracts 483 331
--------- ---------
2,652 1,810
========= =========
The total outgoing cash flow under lease agreements for
right-of-use assets as at June 30, 2020 is BGN 2,257 thousand. The
amount does not include the value added tax paid.
12. Investment property
June 30, December
31,
2020 2019
BGN'000 BGN'000
Cost
Balance at the beginning of the period 1,883 1,883
Acquisitions - -
Balance at the end of the period 1,883 1,883
--------- ---------
Accumulated depreciation
Balance at the beginning of the period 137 90
Depreciation 23 47
Balance at the end of the period 160 137
--------- ---------
Carrying amount at the beginning of the
period 1,746 1,793
========= =========
Carrying amount at the end of the period 1,723 1,746
========= =========
Investment property representing land and building were acquired
through business combination in December 2016. The carrying amount
of the investment property as at June 30, 2020 and December 31,
2019 is a maximum approximation of their fair value. The Group
determines the fair value of the investment property for reporting
purposes, using a valuation report of independent appraiser, which
is calculated by method of net assets value and discounted free
cash flows. The investment properties are part of a set of assets,
which worth BGN 1,500 thousand, serving to secure the credit limit
under a revolving credit line agreement concluded in 2016.
13. Goodwill
June 30, December
31,
2020 2019
BGN'000 BGN'000
Cost 19,844 19,844
Impairment loss - -
19,844 19,844
========= =========
The recognised goodwill as at June 30, 2020 and December 31,
2019 arose as a result of the acquisition of the subsidiaries:
Varna Storage EOOD at the amount of BGN 19,787 thousand, Lozen
Asset AD at the amount of BGN 29 thousand and Petrol Technologies
OOD at the amount of BGN 28 thousand.
14. Inventory
June 30, December
31,
2020 2019
BGN'000 BGN'000
Goods, including: 16,494 20,469
Fuels 9,331 12,733
Lubricants and other goods 7,163 7,736
Materials 607 607
---------
17,101 21,076
========= =========
15. Non-current assets held for sale
December
June 30, 31,
2020 2019
BGN'000 BGN'000
Non-current assets held for sale incl.: 42 3,472
Land 34 2,379
Buildings 8 708
Plant and equipment - 381
Others - 4
42 3,472
========= =========
In 2018 the Group has acquired trade sites - petrol stations and
storage facilities on purpose to sell them. Classified in previous
reporting periods as held for sale non-current assets amounting to
BGN 3,430 thousand as of January 1, 2020 do not meet the criteria
for recognition as such and are reclassified as property, plant and
equipment.
16. Loans granted
December
June 30, 31,
2020 2019
BGN'000 BGN'000
Loans granted to unrelated parties, including 28,385 25,998
Initial value 39,608 37,230
Allowance for impairment (11,223) (11,232)
---------
28,385 25,998
========= =========
In January 2019, the Group granted a cash loan to an unrelated
party with a credit limit of up to BGN 5,500 thousand with an
interest rate of 6.7% and additionally annexed until December 31,
2020. As of June 30, 2020 the receivables under the contract amount
to BGN 5,181 thousand principal, net of impairment under IFRS 9,
and BGN 444 thousand interest.
In April 2019 the Group entered into an agreement for granting a
cash loan to an unrelated party with credit limit up to BGN 1,300
thousand at 6.7% annual interest. As June 30, 2020 the receivables
under this contract are at the amount of BGN 1,293 thousand
principal and BGN 108 thousand interest.
In May 2019 the Group granted a cash loan to an unrelated party
with credit limit up to BGN 10 thousand and interest rate of 6.7%.
As at June 30, 2020 the granted funds are at the amount of BGN 6
thousand.
In August 2019 the Group granted a cash loan to an unrelated
party with credit limit up to BGN 1,000 thousand with interest rate
of 6.7%, available in tranches for one year since the date of
signing. In 2019, the loan limit has been increased. As of June 30,
2020, the loan principal has been repaid.
In February 2018 the Group granted a cash loan to unrelated
party at the amount of BGN 2,000 thousand, subsequently the amount
was increased to BGN 3,500 thousand at 6.7% interest and refund
period until December 31, 2018. With annexes from the end of 2019
the credit limit was increased up to BGN 5,000 thousand and the
term of loan was prolonged to December 31, 2020. As June 30, 2020
the receivables under this loan are BGN 4,431 thousand principal
and BGN 426 thousand interest net of impairment.
In February 2020, the Group granted a cash loan to an unrelated
party with a credit limit of up to BGN 1,000 thousand for a period
up to December 18, 2020 and with an interest rate of 5.7%. The
Group makes counter-offsets against trade receivables under a
contract for the supply of goods. As of June 30, 2020 the Group has
receivables in the amount of BGN 603 thousand principal and BGN 4
thousand interest.
In March 2018 the Group entered into an agreement for granting a
cash loan to unrelated party with a credit limit up to BGN 300
thousand at 6.7% annual interest and repayment period until
December 31, 2018. With an annex the term of the loan was prolonged
until December 31, 2020. In 2019 the loan limit was increased, and
as at June 30, 2020 the granted funds under this contract were BGN
648 thousand principal and BGN 54 thousand interest.
In November 2017 the Group signed two contracts for granting
interest bearing loans with unrelated parties amounting up to BGN
5,050 thousand and up to BGN 6,150 thousand at 6.7% annual interest
and term until December 31, 2020. The deadline is annexed to
December 31, 2020.As at June 30, 2020 the granted amounts under
these contracts are BGN 3,729 thousand net of impairments principal
and BGN 883 thousand interest and BGN 4,443 thousand net of
impairments principal and BGN 985 thousand interest.
In December 2017, the Group signed a contract for granting cash
loan, which requires the Group to grant interest bearing loan up to
BGN 3,000 thousand to unrelated party at 6.7% annual interest and
term until December 31, 2020. As at June 30, 2020 the contracted
amount was entirely granted.
17. Trade and other receivables
June 30, December
31,
2020 2019
BGN'000 BGN'000
Receivables from clients, including 19,839 26,449
Initial value 21,026 27,636
Allowance for impairment (1,187) (1,187)
Prepaid expenses 5,792 889
Receivables under cession agreements, assumption
of debt and regress 3,383 3,378
Initial value 4,007 4,161
Allowance for impairment (624) (783)
Financial assets, measured at fair value
through profit or loss 2,235 2,235
Guarantees for participation in tender procedures 855 913
Advances granted, including 234 252
Initial value 304 322
Allowance for impairment (70) (70)
Tax refundable, incl.: 2 31
VAT 2 31
Litigations and writs - -
Initial value 10 10
Allowance for impairment (10) (10)
Other 89 855
Initial value 118 885
Allowance for impairment (29) (30)
--------- ---------
32,429 35,002
========= =========
In accordance with the established policy, the Group provides
its clients a credit period, after which an interest for delay is
charged on the unpaid balance. An interest for delay is provided
for in every particular contract. As at the end of every reporting
period the Group carries out a detailed review and analysis of the
significant due trade receivables and the assessed as uncollectible
are impaired. All other unsecured trade receivables, usually due
with more than 365 days, are impaired because the historical
experience show that such receivables are non-recoverable.
The Group considers that unimpaired overdue receivables are
collectible based on historical information about payments,
guarantees received and a detailed analysis of the credit risk and
collaterals of its customers.
18. Cash and cash equivalents
June 30, December
31,
2020 2019
BGN'000 BGN'000
Cash in transit 1,725 2,075
Cash at banks 1,711 1,332
Cash on hand 88 79
--------- ---------
Cash on statement of cash flows 3,524 3,486
--------- ---------
Blocked cash 51 -
--------- ---------
Cash on statement of financial position 3,575 3,486
========= =========
Cash in transit comprises cash collected from fuel stations as
at the end of the reporting period, but actually received in the
bank accounts of the Group in the beginning of the next reporting
period.
At the end of the reporting period, cash in the amount of BGN 51
thousand, blocked in enforcement court cases to which the Group is
a party, were presented as blocked cash.
19. Registered capital
The Group's registered capital is presented at its nominal
value. The registered capital of the Group represents the
registered capital of the Parent company Petrol AD.
As at June 30, 2020 and December 31, 2019 the shareholders in
the Parent company are as follows:
Shareholder June 30, December
31,
2020 2019
Alfa Capital AD 28.85% 28.85%
Yulinor EOOD 23.11% 23.11%
Perfeto consulting EOOD 16.43% 16.43%
Correct Pharm EOOD 10.98% 10.98%
Trans Express Oil EOOD 9.86% 9.86%
Corporate Commercial Bank AD 5.51% 5.51%
VIP Properties EOOD 2.26% 2.26%
The Ministry of Economy of the Republic
of Bulgaria 0.65% 0.65%
Other minority shareholders 2.35% 2.35%
--------- ---------
100.00% 100.00%
========= =========
The Management of the Parent company has undertaken series of
measures related to optimization of its capital adequacy. At
several General Meetings of Shareholders (GMS) held in the period
of 2016 - 2017 a decision for reverse-split procedure for merging 4
old shares with a nominal value of BGN 1 into 1 share with a
nominal value of BGN 4 and consequent decrease of the capital of
the Parent company in order to cover losses by decreasing the
nominal value of the shares from BGN 4 to BGN 1, was voted. In
March 2018, following a decision of the Lovech Regional Court,
which repealed the refusal of the Commercial Register (CR) to
register the decision voted on EGMS for merging 4 old shares with a
nominal value of BGN 1 into 1 new share with a nominal value of BGN
4, the applied change was registered in CR resulting in registered
capital of the Parent company of BGN 109 249 612, distributed in 27
312 403 shares with a nominal value of BGN 4 each. The change in
the capital structure of the Parent company was registered also in
Central Depositary AD. The submitted in April 2018 application for
registration of the voted on EGMS decision for the second stage of
the procedure of the Parent company's capital to be decreased by
decreasing the nominal value of the shares from BGN 4 to BGN 1 in
order to cover losses, was refused by the Commercial Register.
At EGMS of Petrol AD held on November 8, 2018 the decision to
decrease the capital of the Parent company in order to cover losses
by decreasing the nominal value of the shares from BGN 4 to BGN 1
was voted again. A refusal of the application for registration of
the decision in CR was enacted, which was appealed by the Parent
company within the statutory term. The minority shareholders
disputed the decision of the EGMS and additionally to the refusal
the application proceeding was postponed until the pronouncing of
the Lovech Regional Court on the court proceedings, initiated on
minority shareholders request. In March 2019 the Lovech Regional
Court enacted a decision, which rules the CR to register the
decrease of the capital after a resumption of the registration
proceedings following the pronouncing on the legal proceedings
initiated by the minority shareholders request.
In February 2019 was held a new EGMS, where the decision for
reduction of capital was voted again and a decision for
substitution of the deceased member of Supervisory Board Ivan
Voynovski with Rumen Konstantinov was taken. A refusal on the
application for registration of these circumstances in the file of
the Parent company was enacted, which was appealed by the Parent
company within the statutory term. In addition to the refusal, the
registration proceeding was ceased on request of minority
shareholders until the Lovech Regional Court rules on. In May 2019
the Lovech Regional Court enacted a decision, which repealed the
enacted refusal and turn back the case to the Registry Agency for a
registration of the application after a resumption of the ceased
registration proceedings. At present, the court proceedings for
repealing of the decisions of EGMS from February 2019 are
pending.
The procedure for distribution of profits and coverage of losses
is provided in the Commercial Act and the Articles of Association
of the Parent company.
Loss per share
The loss per share is calculated by dividing the net loss for
the period by the weighted average number of ordinary shares held
during the reporting period.
June 30, June 30,
2020 2019
Weighted average number of shares
(BGN'000) 27,312 27,312
Loss (BGN'000) (5,902) (7,007)
--------- ---------
Loss per share (BGN) (0.22) (0.26)
========= =========
20. Loans and borrowings
June 30, December
31,
2020 2019
BGN'000 BGN'000
Non-current liabilities
Debenture loans 36,859 36,909
Loans from financial institutions 7,565 7,743
44,424 44,652
========= =========
Current liabilities
Debenture loans 1,174 2,210
Loans from financial institutions 721 524
Trade loans from unrelated parties 1 1
1,896 2,735
========= =========
46,320 47,387
========= =========
20.1. Debenture loans
In October 2006, the Parent company issued 2,000 registered
transferable bonds with fixed annual interest rate of 8.375% and
emission value of 99.507% of the nominal, which is determined at
EUR 50,000 per bond. The principal is due in one payment at the
maturity date and the interest is paid once per year. At the
general meetings of the bondholders conducted in October and
December 2011, it was decided to extend the term of the issue until
January 26, 2017. On 23 December 2016, a procedure for extension of
the bond issue to 2022 and reduction of the interest rate in the
range from 5.5% to 8% was successfully completed.
Following the prolongation of the debenture loan, the annual
effective interest rate is 6.78%. The purpose of the bond issue is
to provide funds for working capital, financing of investment
projects and restructuring of the previous debt of the Group. The
debenture loan liabilities are presented in the statement of
financial position at amortized cost.
As at the date of preparation of these financial statements the
nominal value of the debenture loan is EUR 18,659 thousand and the
Group has finalized a procedure for rescheduling the maturity of
the principal until 2027 and reducing the annual interest rate to
4.24%. (see also note 28. Events after the end of the reporting
period).
20.2. Loans from financial institutions
In July 2016, the Parent company entered into an investment loan
agreement, prepaying the liabilities on finance lease contract from
November 2015. Collateral of the loan is mortgage of property,
acquired through finance lease and pledge of receivables. The term
of the contract is May 2022 and the contracted interest rate is
3mEuribor+5.25%. As at June 30, 2020 the liabilities under the bank
loan amounting to BGN 624 thousand current liabilities and BGN 565
thousand non-current liabilities. In April 2020 the Parent company
has renegotiated the terms under the investment loan agreement, as
the agreed interest rate on principal was reduced to 3mEuribor plus
3.5%, but not less than 3.5%.
In September 2018 the Parent company entered into a
credit-overdraft agreement on current account in commercial bank,
intended for working capital with maximum allowed amount of BGN
2,000 thousand and repayment period until January 31, 2019 and
contracted interest rate as Savings-based Interest Rate (SIR) plus
added amount of 6,1872 points, but cumulatively not less than 6.5%
annually. The credit is secured with a special pledge of its goods
in turnover, representing oil products and with a pledge of
receivables on bank accounts. In December 2018, as a result of a
signed annex to an agreement from 2016 for revolving credit line
with the same bank, the Group negotiated an increase of the amount
of the credit line of BGN 9,500 thousand with an additional amount
of BGN 11,500 thousand, by which the total amount of credit line
rose to BGN 21,000 thousand. The line is separated in total limit
of BGN 13,500 for issuance of bank guarantees and BGN 7,500 for
refinancing of the received credit-overdraft of BGN 2,000 thousand
and the rest for working capital. The increased amount of the
credit limit on the revolving credit line is covered additionally
with establishment of mortgages and pledges of properties, plants
and equipment with a carrying amount of BGN 6,543 thousand as at
June 30, 2020. In June 2019 the loan was partially repaid and the
limit for working capital decreased from BGN 7,500 thousand to BGN
7,000 thousand as at June 30, 2020. In January 2020 the Parent
company renegotiated the terms of the used credit line granted to
it by a commercial bank under a revolving credit line agreement
dated September 21, 2016, with a credit limit of BGN 7,000 thousand
and achieved a reduction of the annual compound SIR + 5,2802%, but
not
less than 5.5%.
20.3. Factoring
In February 2019 the Group entered into an agreement with a
commercial bank for factoring with special terms and without
regress for transferring of preliminary approved receivables with a
maximum period of the deferred payments up to 120 days from the
date of invoice issuance with a payment in advance of 90% of the
value of the transferred receivables including VAT. The commission
for factoring services is 0.35% of the total value of the
transferred invoices plus additional annual taxes. The interest for
the amounts paid in advance is Base Deposit Index for Legal
Entities + 1.95%, accrued daily and paid on monthly basis at the
end of every calendar month. As of June 30, 2020, the Group has no
exposure under this factoring agreement.
In December 2019 the Group entered into an agreement with a
commercial bank for purchasing of trade receivables (standard
factoring) with a total limit of the advanced payments up to BGN
430 thousand and interest rate based on savings in BGN increased by
a mark up of 3.7767 points, but not less than 4% per annum on the
amount of the advanced payment. The contract is secured by a pledge
of receivables on opened bank accounts of the Group in the bank
with a carrying amount of BGN 363 thousand as at June 30, 2020. As
of June 30, 2020, the Group has no received payments in advance
under this factoring agreement.
21. Obligation for defined benefit retirement compensations
As at June 30,2020 and December 31, 2019, the Group accrued
obligation for defined benefit retirement compensations amounting
to BGN 656 thousand. The amount of the liability is determined
based on an actuarial valuation, based on assumptions for
mortality, disability, employment turnover, salary increases, etc.
The present value of the liability is calculated using a discount
factor of 0.68% and increase of the expected salary by 4%
The demographic assumptions are related to the likelihood
individuals to leave the plan before retirement due to various
reasons: withdrawal, staff reduction, illness, death, disability,
etc. They are based on a statistical information about the
population and are attached to the staff structure by gender and
age at the time of the assessment.
22. Trade and other payables
June 30, December
31,
2020 2019
BGN'000 BGN'000
Payables to suppliers 58,652 56,453
Tax payables, including 4,787 5,938
Excise duty and other taxes 4,513 5,418
VAT 274 520
Payables to personnel and social security
funds 2,133 2,491
Advances received and deferred income 418 637
Payables to related parties 12 12
Other 893 1,023
--------- ---------
66,895 66,554
========= =========
The Group accrues unused paid leave provision of employees in
compliance with IAS 19 Employee Benefits. The movement of these
provisions for the period is as follows:
June 30, December
31,
2020 2019
BGN'000 BGN'000
Balance at the beginning of the year 608 500
Accrued during the year 294 527
Utilised during the year (322) (419)
Balance at the end of the year, including: 580 608
========= =========
Paid leaves 489 512
Social security on paid leaves 91 96
The balance at the end of the year is presented in the
consolidated statement of financial position together with current
payable to personnel.
23. Current income tax
June 30, December
31,
2020 2019
BGN'000 BGN'000
Income tax payable at the beginning of the 3 -
period
Corporate income tax accrued - 3
Corporate income tax paid 3 -
Refundable corporate income tax at the end
of the period - 3
================ =========
24. Subsidiaries
The subsidiaries, included in the consolidation, over which the
Group has control as of June 30, 2020 and December 31, 2019 are as
follows:
Subsidiary Main activity Investment Investment
at June at Dec.
30 2020 31 2019
Trade with petrol and petroleum
Varna Storage EOOD products 100% 100%
Petrol Finance Financial and accounting
EOOD services 100% 100%
Elit Petrol -Lovech Trade with petrol and petroleum
AD products 100% 100%
Acquisition, management
Lozen Asset AD and exploitation of property 100% 100%
Petrol Properties Trading movable and immovable
EOOD property 100% 100%
Processing, import, export
Kremikovtsi Oil and trading with petroleum
EOOD products 100% 100%
Processing, import, export
Shumen Storage and trading with petroleum
EOOD products 100% 100%
Ownership and management
Office Estate EOOD of real estates 100% 100%
Processing, import, export
Svilengrad Oil and trading with petroleum
EOOD products 100% 100%
Trade with petrol and petroleum
Varna 2130 EOOD products 100% 100%
Petrol Finances Financial and accounting
OOD services 99% 99%
Petrol Technologies
OOD IT services and consultancy 98,80% 98,80%
25. Disclosure of transactions with related parties
Related parties that the Parent company controls and over which
it exercises significant influence are disclosed in note 24.
The parent company (Controlling company) is Petrol AD.
In the first half of 2020 transactions with related parties have
been not carried out.
The total amount of the accrued remunerations of the members of
Management and Supervisory Board of the Parent company, included in
the personnel expenses as at June 30, 2020 , amounted to BGN 511
thousand and unsettled liabilities of BGN 73 thousand.
26. Capital management
In order to ensure the going concern functioning of the Group,
the Management has undertaken series of purely procedural and
business oriented measures, aimed to bring the capital of the
Parent company in consistence with the requirements of Art. 252,
par. 1, item 5 of the Commercial Act (CA) and overall improvement
of the financial position of the Group.
The Management of the Group has undertaken series of measures in
order to optimize the capital adequacy of the company. As a result
of the several General Meetings of Shareholders held during 2016
and 2017 a decision for reverse split procedure for merging 4 old
shares with a nominal of BGN 1 into 1 new share with nominal of BGN
4 and subsequent decrease of capital of the Parent company in order
to cover losses by decreasing the nominal value of the shares from
BGN 4 to BGN 1 was voted. In March 2018 following a decision of the
Lovech Regional Court, which cancelled the refusal of the
Commercial Register (CR) to register the decision taken on EGMS for
merging of 4 old shares with BGN 1 nominal in 1 new share with BGN
4 nominal. The submitted change was registered in Commercial
Register and the registered capital of the Parent company of BGN
109,249,612 was distributed in 27,312,403 shares with nominal of
BGN 4 each. The change in capital structure was registered also in
the register of Central Depository AD. The Commercial Register
enacted a refusal on the submitted in April 2018 application for
registration of the decision of EGMS for the second stage of the
procedure reducing the nominal value of the shares from BGN 4 to
BGN 1 in order to cover losses.
At EGSM of Petrol AD held on November 8, 2018 the decision for
reduction of capital of the Parent company in order to cover losses
by decreasing the nominal value of the shares from BGN 4 to BGN 1
was voted again. A refusal was given on the application for
registration of the decision in CR, which was appealed by the Group
within the statutory term. The minority shareholders disputed the
decision of the EGMS and additionally to the refusal, the
application proceedings was postponed until the pronouncing of the
Lovech Regional Court on the court proceedings, initiated on
minority shareholders request. In March 2019, the Lovech Regional
Court ruled a decision instructing Commercial Register to reflect
the reduction of capital after the resumption of the registration
proceedings and ruling on the cases initiated at the request of the
minority shareholders.
The decision for reduction of the capital was voted again on a
new EGMS held in February 2019. On the same EGMS was also taken a
decision for replacement of the deceased member of the Supervisory
Board Ivan Voynovski with Rumen Konstantinov. The application for
registration of these circumstances in the account of the Parent
company was refused, which was disputed within the legal term by
the Parent company.
In addition to the refusal the registration proceedings was
postponed by a request of minority shareholders until the
pronouncing of the Lovech Regional Court. In May 2019 the Lovech
Regional Court enacted a decision, which repealed the enacted
refusal and turn back the case to the Registry Agency for a
registration of the application after a resumption of the ceased
registration proceedings. At present, the court proceedings for
repealing of the decisions of EGMS from February 2019 are
pending.
Next capital adequacy measure, which the Group has taken is a
change in accounting policy in relation to non-current tangible
assets - property, plant and equipment of the policy applied in its
financial statements until 2019 including the cost model, with the
application from the beginning of 2020 of the other applicable
model - the revaluation model, which the Management considers to
reflect more objectively the value of the held non-current tangible
and intangible assets.
To carry out its business activity the Group needs free capital
to provide the necessary working capital, to pay its obligations on
timely manner and to follow its investment intentions. Major
sources of liquidity are cash and its equivalents, intra-group cash
flows, long-term and short-term loans, the decrease of receivables
collection period and extension of the liabilities paying
period.
The Group's Management expectations are that in the coming years
as a result of a growing competition mainly in retail market, part
of the small independent players would be forced out gradually of
fuel business. At the same time, the expectations in terms of the
levels of trade margins, in particular on the retail market, are
the margins to stabilize around the average European levels.
At the end of 2019, a new coronavirus was identified in China.
Due to the fast widespread of the virus across the world at the
beginning of 2020, the World Health Organization declared a global
pandemic. On March 13, 2020 the Parliament declared a state of
emergency on request of the Government of Republic of Bulgaria and
on March 24, 2020 the Law on Measures and Actions during a State of
Emergency became effective. In order to restrict the widespread of
coronavirus infection, an Order of the Health Minister was issued
for the introduction of anti-epidemic measures, which directly
affect the business activity of the Group. Part of the measures
include extension and interruption of the administrative deadlines,
extension of the of administrative acts, suspension of the
procedural court terms and the statute of limitations, changes in
the labor legislation, referring to new working hours, suspension
of work and / or reduction of working hours and use of leave, etc.
The pandemic causes a significant reduction in economic activity in
the country and raises significant uncertainty about future
processes in macroeconomics in 2020 and beyond.
The Group's Management monitors the emergence of risks and
negative consequences in the outcome of the pandemic with Covid-19,
currently assessing the possible effects on the assets, liabilities
and activities of the Group, striving to comply with contractual
commitments, despite the uncertainties and force majeure
circumstances. In view of the introduced anti-epidemic measures and
restrictions in the pandemic, which cause a significant reduction
in economic activity and creates significant uncertainty about
future business processes, there is a real risk of a decline in
sales of the Group. However, Management believes that it will be
able to successfully bring the Group out of the state of emergency
in which it is placed
The plans for the future development of the company are closely
related and depend to a greater extent to the stated expectations
for changes in the market environment. The Management continues to
follow the program outlined and started in the beginning of 2014
for restructuring the activities of Petrol Group, aiming to
concentrate the efforts to optimize and develop the core business -
wholesale and retail trading with fuels. With the aim to improve
the financial position, the Management continues to analyze
actively all expenses and to look for hidden reserves for
optimization.
In the coming years the results of the Group will also depend on
the possibilities to carry out the investments and the successful
delivering of new projects. The investments of the Group will be
focused predominantly on the development of new sites and
increasing the sales and market share of Petrol AD, mainly through
transformation of the trade sites managed by the Parent - company
into modern places for complex customer service.
Following the strategy of expanding the market share in retail
market, the Group plans to attract new sites under Petrol brand
through the franchise program.
In the next year the Management of the Group will direct its
effort towards conducting an active marketing campaign. It is
provided marketing activities - games, promotions and other,
supported by enough media appearances to increase the sales of
fuels. The Management will continue to develop its card system and
plans to create a loyalty clients system.
The Group's Management activities are directed to validation of
the principles and traditions of good corporate governance,
increasing the trust of the interested parties, namely
shareholders, investors and counterparties, and to disclosure of
timely and precise information in accordance with the legal
requirements.
27. Contingent liabilities
As at June 30, 2020 the Group has contingent liabilities,
including issued mortgages and pledges of property, plant and
equipment and non-current assets held for sale, which serve as a
collateral for bank loans granted to the Group and unrelated
parties and credit limits for issuance of bank guarantees with
total carrying amount of BGN 21,676 thousand. The Group is a joint
co-debtor under loan agreement of unrelated supplier, including
limit for overdraft and limit for stand-by credit for issuance of
bank guarantees in favour of Customs Agency. The total amount of
the utilized funds and issued bank guarantees of all borrower's
exposures to the Bank shall not exceed BGN 45,000 thousand. In
relation to this credit agreement, the Group has established a
special pledge on its cash in the bank account opened in the
bank-creditor with total amount of BGN 51 thousand as at June 30,
2020 and a special pledge on receivables from contractors for BGN
4,000 thousand average monthly turnover.
The Group bears a joint obligation according to a contract for
debt from January 2017 on an obligation of a subsidiary until
February 2018 for BGN 2,346 thousand as at June 30, 2020.
Under a bank agreement for revolving credit line signed in 2016,
bank guarantees were issued for a total amount of BGN 9,420
thousand as at June 30, 2020, including BGN 6,950 thousand in favor
of third parties - Group's suppliers, BGN 1,055 thousand in favor
of National Revenue Agency, for issuance of appealed by the Parent
company amended assessment and BGN 1,415 thousand to secure own
liabilities related to contracts under the Public Procurement Act.
The bank agreement is secured by mortgages of property, pledge of
plants and equipment, pledge of all receivables on bank accounts of
the Parent company and a subsidiary. In July 2017 the credit limit
under the revolving credit line was increased from BGN 8,500
thousand to BGN 9,500 thousand. Assets amounted to BGN 1,500
thousand, owned by a subsidiary, additionally secured the credit
limit. With an annex from December 2018 the limit is increased to
BGN 21,000 thousand and is additionally secured with mortgages and
pledge of property, plants and equipment, and special pledge of
goods in turnover, namely petroleum products. In June 2019, the
credit limit for working capital granted under this credit line was
partially repaid as its amount decreased from BGN 7,500 thousand to
BGN 7,000 thousand.
As a collateral of an investment loan signed in July 2016, a
mortgage of property, acquired through the investment loan and a
pledge of receivables, arising from opened bank accounts of the
Parent company to the amount of the outstanding balance of the
loan, which as at the June 30, 2020 amounting to BGN 1,179
thousand.
In relation to a signed in 2015 guarantee contract for
obligations of another subsidiary, arising of a cession contract
with outstanding book value as at June 30, 2020 of BGN 245
thousand, the Court ruled a final decision on this pending
litigation. The Court assumed that the Parent company is
responsible as a guarantor for the obligations of the subsidiary
under the cession agreement. The Court of Appeal has entirely
annulled the decision of the first instance court and admitted the
receivable of the Parent company under the guarantee contract
jointly with the other related party. The decision of the appellate
court was appealed by the Company before the Supreme Court of
Cassation, but was not allowed to appeal. The Group intends to file
a claim to establish the non-existence of these receivables.
Collateral for the future claim against the provision of a
guarantee in the amount of BGN 25 thousand to the account of the
court was admitted in favor of the Group, as a result of which the
enforcement proceedings initiated against the Group for these
claims were suspended. The funds given as collateral under Art. 180
and Art. 181 of the CPA in the amount of BGN 245 thousand in the
case initiated against the Group in 2015, together with the amount
of BGN 93 thousand, were collected by the bailiff in the course of
the enforcement proceedings initiated against the Group. However,
they have not been distributed due to the suspension of the
enforcement case, based on the security of a future claim provided
in favor of the Group and remain blocked on the account of the
bailiff until the final conclusion of the litigation.
In the previous reporting periods companies from the Group have
entered into the debt under two loan agreements of a subsidiary
with a bank-creditor for USD 15,000 thousand and USD 20,000
thousand, respectively. In 2015 the bank -creditor acquired court
orders for immediate execution and receiving orders against the
subsidiaries - joint debtors. In relation to the complains filed by
the subsidiaries, the competent court has revoked the immediate
enforcement orders and has invalidated the receiving orders. In
October and December 2015 the creditor has filed claims under Art.
422 of Civil Procedure Code (CPC) against the subsidiaries for the
existence of the receivables under each loan agreement. The court
proceedings of the creditor are still pending.
In December 2016 the first instance court decreed a decision
(the Decision) which admit for established that the bank has a
receivable amounted to USD 15,527 thousand from the subsidiaries -
joint debtors, arising from a signed loan agreement for USD 15,000
thousand. With the same decision the court has ordered the
joint-debtors to pay BGN 411 thousand to the bank - creditor for
legal advisory fees and court dispute expenses and BGN 538 thousand
state fee in favor of the judiciary state for the ordered
proceedings and BGN 538 thousand state fee for claim proceedings.
In January 2017, the co-debtors have filed in time appeals against
the court decision, because of that the decision did not come into
force. As at the date of the preparation of these explanatory
notes, the dispute is pending in the appeal court. The Group's
Management considers that there are grounded chances the Decision
to be entirely repealed.
As at the date of the preparation of these explanatory notes,
the filed proceedings against the subsidiaries - joint debtors for
estimation of the bank receivables due to the loan agreement for
USD 20,000 thousand is pending before the first-instance court. The
Management expects favorable decision by the competent court. In
2018 the Parent company sold its interest in one of co-debtor
subsidiaries and the potential risk for the Group is reduced to the
court proceedings against the second subsidiary.
A creditor of a subsidiary (until December 2015) unreasonably
claimed in court the responsibility of the Parent company under a
contract of guarantee for liabilities arising from a contract for a
framework credit limit as a result of that the bank accounts of the
Parent company amounting to USD 29,983 thousand were garnished.
This claim was disputed in court by Petrol AD because the liability
as guarantor has not occurred and / or extinguished pursuant to
Art. 147, par. 2 of the LOC. At the time of conclusion of the
guarantee deadline of the arrangements between the lender and
subsidiary contractual framework for credit limit was July 1, 2014.
The term of the framework credit limit was extended without the
consent of the customer, therefore the responsibility of the latter
has fallen by six months after initially agreed period, during
which the creditor has brought an action against the principal
debtor. The term of Art. 147, par. 1 of the LOC is final and upon
its expiration the company's guarantee has been terminated, so the
objection of the Parent company was granted by the court and
imposed liens on bank accounts lifted.
After the writ of execution, pursuant to order proceedings, was
canceled on which were imposed liens on bank accounts of the Parent
company, the creditor has initiated legal claim proceedings under
Art. 422 of the CPC to establish the same claims against the
subsidiary (until December 2015) and the guarantor Petrol AD. In
these proceedings the objections are repeated, that liability as
guarantor has not occurred and / or extinguished pursuant to Art.
147, par. 2 of the LOC, and therefore the Management expects that
the claim of the creditor against the Parent company will be
dismissed permanently by a court decision on those cases. At
present, the case is suspended due to the existence of a
preliminary rulling, which is important for the correct resolution
of the case.
In December 2019, the Parent company entered into an Agreement
with a commercial bank for the purchase of trade receivables
(standard factoring) with a total advance limit of up to BGN 430
thousand and an interest rate based on savings for BGN, increased
by a mark-up of 3.7767 points, but not less than 4% per annum on
the amount of the granted advance. The contract is secured by a
pledge of receivables on opened bank accounts of the Parent Company
with a book value as at June 30, 2020 at the amount of BGN 2
thousand.
The Group is a joint and several debtor and avalist of a
promissory note under a Loan Agreement - overdraft from a financial
institution, granted to an unrelated person - a major fuel supplier
with a total amount of BGN 12,000 thousand.
28. Events after the reporting date
From the beginning of 2019, the Bulgarian legislation has in
force the Law on the Administrative Regulation of Economic
Activities Related to Oil and Petroleum Products. The operation of
the law directly concerns the main activity of the Group. In
September 2020 the Parent company was entered in the register to
the Ordinance on the terms and conditions for keeping a register of
persons engaged in economic activities related to oil and petroleum
products for economic activity wholesale and has issued a bank
guarantee in favor of the Ministry of Economy in the amount of BGN
500 thousand. As of the date of publication of these financial
statements the registration procedure of the company for retail
trade in oil and oil products is at the stage of processing by the
Ministry of Economy of the documentation provided by the Parent
company, as the Parent company expects to receive the registration
act in a short time.
In September 2020, the Group successfully completed a procedure
for renegotiating the terms of the debenture loan granted to it in
2006. The maturity of the principal of the debenture loan is
rescheduled until January 2027, the agreed interest rate is reduced
to 4.24% per annum, and the periodicity of interest (coupon)
payments is every six months - in January and in July of each
month.
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END
IR FLLFLBBLZFBF
(END) Dow Jones Newswires
October 22, 2020 07:45 ET (11:45 GMT)
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