TIDM74JJ
RNS Number : 1555I
Petrol AD
30 November 2022
PETROL AD
Legal Entity Identifier (LEI): 4851003SBNLWFQX4XS80
30 November 2022
Petrol AD ("74JJ"), announces the publication of its
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
OF PETROL GROUP
AND CONDENSED EXPLANATORY NOTES TO THE INTERIM CONSOLIDATED
FINANCIAL STATEMENTS FOR THE PERIODED SEPTEMBER 30, 2022
(This document is a translation of the original Bulgarian
document,
in case of divergence the Bulgarian original shall prevail)
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
For the period ended September 30
2022 2021
BGN'000 BGN'000
restated
Continuing operations
Revenue 559,208 362,770
Other income 5,144 3,664
Cost of goods sold (504,971) (317,465)
Materials and consumables (5,525) (2,911)
Hired services (25,208) (25,791)
Employee benefits (15,921) (15,499)
Depreciation and amortisation (2,444) (2,610)
Reversal of (impairment) losses (39) 6
Other expenses (582) (811)
Finance income 1,015 1,064
Finance costs (3,316) (3,371)
Profit (loss) before tax 7,361 (954)
--------- ---------
Tax income (expense) (159) 63
--------- ---------
Profit (loss) for the period from
continuing operations 7,202 (891)
--------- ---------
Discontinued operation
Profit (loss) from discontinued operation
(net of income tax) (273) 876
Profit (loss) for the period 6,929 (15)
--------- ---------
Total comprehensive income for the
period 6,929 (15)
Profit (loss) attributable to:
Owners of the Parent company 6,929 (15)
Non-controlling interest - -
Profit (loss) for the period 6,929 (15)
========= =========
Total comprehensive income attributable
to:
Owners of the Parent company 6,929 (15)
Non-controlling interest - -
--------- ---------
Total comprehensive income for the
period 6,929 (15)
========= =========
Profit (loss) per share (BGN) from
continuing operations and discontinued
operation 0.25 (0.00)
Profit (loss) per share (BGN) from
continuing operations 0.26 (0.03)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Sept. 30 Dec. 31
2022 2021
BGN'000 BGN'000
Non-current assets
Property, plant and equipment and
intangible assets 38,905 40,632
Investment properties 1,613 1,650
Right-of-use asset 5,344 6,851
Goodwill 57 57
Deferred tax assets 2,388 2,465
Trade loans granted 2,808 3,708
Total non-current assets 51,115 55,363
--------- ---------
Current assets
Inventories 25,681 20,866
Loans granted 19,990 18,423
Trade and other receivables 36,670 28,349
Cash and cash equivalents 2,378 4,027
Total current assets 84,719 71,665
--------- ---------
Total assets 135,834 127,028
========= =========
Equity
Registered capital 109,250 109,250
Reserves 42,635 43,278
Accumulated loss (141,627) (149,199)
--------- ---------
Total equity attributable to the
owners of the Parent company 10,258 3,329
--------- ---------
Non-controlling interests 24 24
--------- ---------
Total equity 10,282 3,353
---------
Non-current liabilities
Loans and borrowings 49,801 41,724
Liabilities under lease agreements 3,797 4,799
Employee defined benefit obligations 805 870
Total non-current liabilities 54,403 47,393
--------- ---------
Current liabilities
Trade and other payables 67,797 73,183
Loans and borrowings 1,797 1,139
Liabilities under lease agreements 1,451 1,766
Income tax liability 104 194
Total current liabilities 71,149 76,282
--------- ---------
Total liabilities 125,552 123,675
--------- ---------
Total equity and liabilities 135,834 127,028
========= =========
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Equity attributable to the owners of the Non-controlling Total
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, 2021 109,250 18,864 24,818 (124,153) 28,779 23 28,802
Changes in
equity
for 2021
Comprehensive
income
for the period
Loss for the
period - - - (25,387) (25,387) 1 (25,386)
Other
comprehensive
income - - - (63) (63) - (63)
---------
Total
comprehensive
income - - - (25,450) (25,450) 1 (25,449)
----------- --------- --------- ------------ ----------- ---------------- ----------
Transfer of
revaluation
reserve of
sold assets
to retained
earnings,
net of taxes - - (404) 404 - - -
----------- --------- --------- ------------ ----------- ---------------- ----------
Balance at
December
31, 2021 109,250 18,864 24,414 (149,199) 3,329 24 3,353
=========== ========= ========= ============ =========== ================ ==========
Changes in equity for the
period of 2022
Comprehensive
income
for the period
Profit for the
period - - - 6,929 6,929 - 6,929
Total
comprehensive
income - - - 6,929 6,929 - 6,929
----------- --------- --------- ------------ ----------- ---------------- ----------
Transfer of
revaluation
reserve of
sold assets
to retained
earnings,
net of taxes - - (643) 643 - - -
Balance at
September
30, 2022 109,250 18,864 23,771 (141,627) 10,258 24 10,282
=========== ========= ========= ============ =========== ================ ==========
CONSOLIDATED STATEMENT OF CASH FLOWS
For the period ended September 30
2022 2021
BGN'000 BGN'000
Cash flows from operating activities
Receipts from customers 721,736 534,891
Payments to suppliers (734,529) (470,500)
VAT and excise paid to the budget, net (2,038) (42,070)
Payments related to personnel (14,193) (15,796)
Income tax paid (143) -
Other cash flows from operating activities,
net 17,985 1,621
---------- ----------
Net cash flows from operating activities (11,182) 8,146
Cash flows from investing activities
Payments for purchase of property, plant
and equipment (2,129) (643)
Proceeds from sale of property, plant and
equipment 5,919 1,818
Payments for loans granted (3,469) (535)
Proceeds from loans granted 3,043 439
Interest received on loans and deposits 713 7
Payments for investments acquired (25)
Proceeds from other investments 3 20
Net cash flows used in investing activities 4,055 1,106
Cash flows from financing activities
Proceeds from loans 9,600 152
Repayment of loans and borrowings (513) (1,957)
Lease payments (1,649) (3,591)
Interest, bank fees and commissions paid,
net (1,917) (3,490)
Other cash flows from financing activities,
net (287) (210)
Net cash flows from financing activities 5,234 (9,096)
Net decrease in cash flows during the period (1,893) 156
Cash at the beginning of the period 4,027 2,773
Effect of movements in exchange rates 203 (11)
---------- ----------
Cash as per cash flow statement at the
end of the period 2,337 2,918
Restricted cash 41 51
---------- ----------
Cash as per statement of financial position 2,378 2,969
========== ==========
I. General Information
Petrol AD (the Parent company) was registered in Bulgaria in
1990 and entered in the Commercial Register to the Registry Agency
with UIC 831496285. The headquarter address of the Parent company
is 12 Tyrgovska Str., Hotel Lovetch in Lovetch city. As at the end
of the reporting period shareholders are legal entities, the
country - through the Ministry of Economy and Industry and
individuals.
The main activity of Petrol AD and its subsidiaries (the Group)
is related with trading of petrol products, non-oil products,
merchandise and services.
These explanatory notes are prepared according to the
requirements of Art. 100o1, par.5 of the Public Offering of
Securities Act (POSA) and Appendix 4 to the Ordinance No 2 of
November 09, 2021 for initial and subsequent disclosure of
information during public offering of securities and admission of
securities to trading on a regulated market by the public companies
and other issuers of securities, and represent information about
important events occurred during the third quarter of 2022. The
explanatory notes reflect their influence on the results in the
statements for the third quarter of 2022 and describe of the main
risks and uncertainties, which stay ahead of the Petrol Group for
the rest of the financial year and comprise information for
transactions with related parties and/or interested parties, as
well as information for emerging significant receivables and/or
payables during the same period.
II. Information on important events, occurred in the third
quarter of 2022 and cumulatively from the beginning of the
financial year to the end of the current quarter
General
These interim consolidated financial statements have been
prepared in accordance with International Financial Reporting
Standards (IFRS) as adopted by the Commission of the European Union
(EU).
These interim consolidated financial statements have been
prepared under the historical cost convention, except for
provisions, assets and liabilities under IFRS 16 reported at the
present value of expected future payments. When compiling it, the
same accounting policy and calculation methods applied in the last
annual financial statement have been followed.
Property, plant, equipment, intangible assets and non-current
assets held for sale
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. The revalued (to fair) value of
property, plant and equipment and intangible assets was initially
determined through a market valuation by an independent appraiser.
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.
As at September 30, 2022 the Group has property, plant,
equipment and intangible assets with total carrying amount of BGN
38,905 thousand.
Property, plant and equipment with a carrying amount of BGN
20,906 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.
Investment property
The investment properties of the Group, representing a land and
a building, were acquired in December 2016 through a business
combination. The carrying amount of the investment property is the
maximum approximation of their fair value, which as at September
30, 2022 is BGN 1,613 thousand. The Group measures the fair value
of investment property for disclosure purposes using an appraisal
of an independent appraiser done using the methods of market
comparison, rental income capitalization and the method of
depreciated replacement cost. As at September 30, 2022 the fair
value of the investment properties is BGN 1,987 thousand. The
investment properties are part of a set of assets serving to secure
liabilities of up to BGN 1,500 thousand under a revolving credit
line agreement signed in 2016.
Leases
The consolidated statement of financial position as at September
30, 2022 presents the following items and amounts related to lease
agreements:
Consolidated statement of financial position September
30, 2022
BGN'000
Right-of-use assets, incl.: 5,344
Properties (lands and buildings) 5,287
Transport vehicles 37
Machinery, plants and equipment 20
Liabilities under leases, incl.: (5,248)
Current liabilities (1,451)
Non-current liabilities (3,797)
The Group has chosen to use the exclusions, provided by the
Standard for lease contracts which ended within 12 months and lease
contracts for which the base asset is with low value. The analysis
of the terms of the main rent contracts for petrol stations shows
that they should be treated as short-term within the scope of the
exclusion, because they do not have a guaranteed period, the rent
price is determined for six months periods, and both parties have
the right to cease the contract for any petrol site with one to
three months advance notice without any onerous sanctions, that
would justify the Group's assessment of the probability of
exercising the termination option by landlords as unlikely.
Loans Granted
As at 30 September, 2022 the Group reports receivables on
short-term trade loans, net of impairment at the total amount of
BGN 22,798 thousand, including BGN 19,990 thousand short-term
receivables. The loans are granted to unrelated parties with the
following interest rates and maturity:
Debtor Net Receivables Principal Interest Annual
as at Accrued interest
Sept.30,2022 impairment
BGN'000 %
BGN'000 BGN'000 BGN'000 Maturity
31 December
Company 8,441 8,107 1,384 (1,050) 6.70% 2022
31 December
Company 4,398 4,045 1,105 (752) 6.70% 2022
31 December
Company 4,355 3,555 1,547 (747) 5.00% 2025
31 December
Company 3,142 3,000 888 (746) 5.00% 2022
31 December
Company 884 907 89 (112) 6.70% 2019
31 December
Company 718 715 3 - 5.00% 2022
31 December
Company 429 - 429 - 6.70% 2019
Company 379 314 65 - 7.00% 7 August 2022
31 December
Company 52 121 5 (74) 5.00% 2022
28 October
Company - 5,190 - (5,190) 0.00% 2015
28 October
Company - 2,210 - (2,210) 9.50% 2015
Company - 1,500 133 (1,633) 8.75% 17 July 2015
31 December
Company - 1,263 303 (1,566) 6.70% 2022
21 January
Company - 44 - (44) 9.50% 2017
31 December
Company - 22 3 (25) 6.70% 2022
26 August
Company - 12 1 (13) 8.50% 2015
--------- ---------------- ---------- ---------- --------------
22,798 31,005 5,955 (14,162)
========= ================ ========== ========= ============ ========== ==============
Cash and cash equivalents
As at September 30, 2022 the Group reported cash amounted to BGN
2,378 thousand as BGN 41 thousand are blocked as collateral under
enforcement cases.
In the notes under Appendix No4 of Ordinance No2 and the Public
Offering of Securities Act (POSA), as cash equivalents of BGN 1,344
thousand, is presented the cash collected from the trade sites as
at the end of the reporting period and actually registered in the
Group's bank accounts at the beginning of the next reporting
period.
Registered capital
The Group's registered capital is presented at its nominal
value. The registered capital of the Group represents the
registered capital of the Parent company Petrol AD.
As at the end of the reporting period shareholders in the Parent
company are as follows:
Shareholder Sept. 30,
2022
Alfa Capital AD 28.85 %
Yulinor EOOD 23.11 %
Perfeto Consulting EOOD 16.43 %
Trans Express Oil EOOD 9.82 %
Petrol Bulgaria AD 7.05 %
Corporate Commercial Bank AD 5.49 %
Storage Invest EOOD 3.66 %
VIP Properties EOOD 2.02 %
The Ministry of Economy of the Republic of Bulgaria 0.65 %
Other minority shareholders 2.92 %
----------
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 new 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 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 on 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.
On EGMS of Petrol AD held on November 8, 2018 the decision to
decrease the capital of the Parent company in order to cover losses
by decreasing the nominal value of the shares from BGN 4 to BGN 1
was voted again. A refusal of the application for registration of
the decision in CR was enacted, which was appealed by the Parent
company within the 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 Parent company's capital after a resumption of the
registration proceedings following the pronouncing on the legal
proceedings initiated be the minority shareholders request. At
present the court proceedings requesting a cancellation of the
decisions taken on EGMS in November 2018 are pending.
In February 2019 was held a new EGMS, where the decision for
reduction of capital was voted again and a decision for
substitution of the deceased member of Supervisory Board Ivan
Voynovski with Rumen Konstantinov was taken. A refusal on the
application for registration of these circumstances in the file of
the Parent company was enacted, which was appealed by the Parent
company within the statutory term. In addition to the refusal, the
registration proceeding was ceased on request of minority
shareholders until the RC - Lovech rules on. In May 2019 the Lovech
Regional Court enacted a decision, which repealed the enacted
refusal and turn back the case to the Registry Agency for
registration of the application after a resumption of the ceased
registration proceedings. At present, the court proceedings
requesting a cancellation of the decisions taken on EGMS in
February 2019 are pending.
Current income tax liabilities and tax audits
As at September 30, 2022 the Group has current corporate tax
liabilities of BGN 104 thousand.
In August 2022 the Parent company received an ordinance for tax
audit of the declared and paid corporate tax and taxes on expenses
for the period 2016-2021 and value added tax for the period
December 2016 - July 2022. As at the time of the issuance of these
explanatory notes the tax audit is not completed.
Loans and borrowings and factoring liabilities
As at September 30, 2022 the Group has total liabilities under
received bank, debenture and trade loans of BGN 51,598 thousand,
including BGN 1,797 thousand current liabilities.
Bank loans
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 a mortgage of property,
acquired through finance lease and pledge of receivables. The term
of the contract is May 2022 and the contracted interest rate is
3mEuribor+5.25 per cent. In April 2020 the Group renegotiated the
terms of the investment loan agreement, as the interest rate on
regular principal was reduced to 3mEuribor + 3.5 per cent, but not
less than 3.5 per cent. With an annex from the beginning of 2021,
the term of the loan has been extended until September 30, 2022. As
at the date of the preparation of these explanatory notes the
credit is fully paid.
In September 2018 the Group entered into a credit-overdraft
agreement on current account in commercial bank, intended for
working capital with maximum allowed amount of BGN 2,000 thousand
and repayment period until January 31, 2019 and contracted interest
rate as Savings-based Interest Rate (SIR) plus added amount of
6,1872 points, but cumulatively not less than 6.5 per cent
annually. The credit is secured with a special pledge of its goods
in turnover, representing oil products and with pledge of
receivables on bank accounts. In December 2018, as a result of a
signed annex to an agreement from 2016 for revolving credit line
with the same bank, the Group negotiated an increase of the amount
of the credit line of BGN 9,500 thousand with an additional amount
of BGN 11,500 thousand, by which the total amount of credit line
rose to BGN 21,000 thousand. The line is separated in total limit
of BGN 13,500 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 and special pledge on goods in
turnover, representing oil products. 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 December 31, 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 and achieved a reduction of the
annual compound interest of SIR + 5,2802 per cent, but not less
than 5.5 per cent. In March 2021 and September 2021 the Group
repaid BGN 1,650 thousand principal of this tranche of the credit
line. In December 2021 the bank granted additional tranche for BGN
100 thousand and the repayment term is extended to December 15,
2024. As at September 30, 2022 the Group has a principal liability
under this loan for BGN 5,400 thousand.
In April 2022 the Parent company negotiated an increase for
working capital under this credit line by a new tranche with a
maximum amount of BGN 4,500 thousand, as with the same amount the
line for bank guarantees was decreased. The amount is received and
as at September 30, 2022 the Group has an principal liability under
this tranche for BGN 4,500 thousand. The contracted annual interest
is Savings-based Interest Rate (SIR) plus added margin of 4.174
points, but not less than 4.25 per cent. The payment term is until
December 16, 2024.
In June 2022 the Parent company negotiated another increase for
working capital under this credit line by a new tranche with a
maximum amount of BGN 3,600 thousand, as with the same amount the
line for bank guarantees was decreased. The amount is received and
as at September 30, 2022 the Group has an principal liability under
this tranche for BGN 3,600 thousand. The contracted annual interest
is Savings-based Interest Rate (SIR) plus added margin of 4.1764
points, but not less than 4.25 per cent. The payment term is until
December 14, 2024.
On September 30, 2022 the Group received a letter from the
bank-creditor for one-sided increase of the added margin to the
interest rate by 0.5 per cent on the granted by the bank three
tranches, due to changed interest environment and high inflation
rates.
Debenture loans
In October 2006, the Parent company issued 2,000 registered
transferable bonds with fixed annual interest rate of 8.375 per
cent and emission value of 99.507 per cent of the nominal, which is
determined at EUR 50,000 per bond. The purpose of the bond issue is
to provide funds for working capital, investment projects financing
and restructuring of previous Group's debt. The principal was due
in one payment at the maturity date and the interest was 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 December 23, 2016, a procedure for
extension of the bond issue to 2022 and reduction of the interest
rate in the range from 5.5 per cent to 8 per cent was successfully
completed.
In September 2020, the Parent company successfully completed a
procedure for renegotiation of the terms of the debenture loan. The
maturity of the principal of the debenture loan is deferred until
January 2027, and the agreed interest rate is reduced to 4.24 per
cent per year, as the periodicity of the due interest (coupon)
payments is every six months - in January and in July of each year
until the maturity of the loan.
As at the date of preparation of these financial statements the
nominal value of the debenture loan is EUR 18,659 thousand.
The liabilities under the debenture loan are disclosed in the
statement of financial position at amortised cost. The annual
effective interest rate after the term extension of the bond issue
is 4.67 per cent. (incl. 4.24 per cent annual coupon rate).
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 per cent
of the value of the transferred receivables including VAT. The
commission for factoring services is 0.35 per cent 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 per cent, accrued daily and paid on monthly
basis at the end of every calendar month. In November 2021 a new
Annex for special terms with a regression right, decrease of the
commission to 0.13 per cent on the total amount of the transferred
invoices including VAT, and decrease of the interest to Base
Deposit Index for Legal Entities + 1.60 per cent accrued daily and
paid on monthly basis at the end of every calendar month, was
signed. As at September 30, 2022, the Group has BGN 717 thousand
exposure under this factoring agreement.
Operating lease agreements
The Group is lessee under operating lease agreements. As at
September 30, 2022 the recognised rental expenses in the statement
of profit or loss and other comprehensive income, include expense
at the amount of BGN 8,442 thousand for renting of fuel stations
under operating lease, which fall within the exceptions of IFRS 16
and which agreements include clause stipulating that both parties
have the right to cease the agreement for each separate fuel
station or as a whole with an immaterial penalty.
Subsidiaries
The Parent company (the Controlling company) is Petrol AD. The
subsidiaries included in the consolidation, over which the Group
has control as at September 30, 2022 and December 31, 2021 are as
follows:
Subsidiary Main activity Ownership Ownership
interest interest
Petrol Properties Trading movable and immovable 100 per 100 per
EOOD property cent cent
Varna Storage Trade with petrol and petroleum 100 per 100 per
EOOD products cent cent
Petrol Finance Financial and accounting 100 per 100 per
EOOD services cent cent
Elit Petrol -Lovech Trade with petrol and petroleum 100 per 100 per
AD products cent cent
Lozen Asset AD Acquisition, management and 100 per 100 per
exploitation of property cent cent
Kremikovtsi Oil Processing, import, export
EOOD and trading with petroleum 100 per 100 per
products cent cent
Shumen Storage Processing, import, export
EOOD and trading with petroleum 100 per 100 per
products cent cent
Office Estate Ownership and management 100 per 100 per
EOOD of real estates cent cent
Svilengrad Oil Processing, import, export
EOOD and trading with petroleum 100 per 100 per
products cent cent
Varna 2130 EOOD Trade with petrol and petroleum 100 per 100 per
products cent cent
Petrol Export Export wholesale trading 100 per
EOOD with fuels cent -
Petrol Investment Acquisition, management and 99,98 per -
AD exploitation of property cent
Petrol Finances Financial and accounting 99 per 99 per
OOD services cent cent
Petrol Technologies IT services and consultancy 98,80 per 98,80 per
OOD cent cent
Petrol Technology IT services and consultancy 98,80 per 98,80 per
OOD cent cent
In the period from May to the end of June 2022, through share
purchase agreements, Petrol AD acquired 4,999 (four thousand nine
hundred and ninety-nine) shares with a nominal value of BGN 10
(ten), which represent 99.98 per cent of the capital of Petrol
Investment AD.
In July 2022, in order to separate and facilitate the
administration of the wholesale export trading with fuels, the
Group established a new subsidiary Petrol Export EOOD.
Contingent liabilities, including information for newly arising
significant liabilities for the reporting period
As at September 30, 2022 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 20,906 thousand, including in favour
of First Investment Bank AD BGN 16,125 thousand, Investbank AD -
BGN 3,415 thousand and DSK AD - BGN 1,366 thousand.
Pursuant to an agreement from October 17, 2018 and its annexes,
the Group is a joint debtor and a guarantor on a promissory note
for the amount of BGN 48,750 thousand in favour of Investbank AD
under a credit facility on unrelated party - supplier, including,
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 Investbank AD with total amount of BGN 10 thousand as at
September 30, 2022 and a special pledge on receivables from
contractors for BGN 4,000 thousand average monthly turnover.
Pursuant to an agreement from June 22, 2020 and annexes, the
Group is a joint debtor and a guarantor on a promissory note in
favour of Investbank AD for BGN 7,000 thousand under overdraft
credit agreement, received by unrelated party - supplier.
Pursuant to an agreement from June 17, 2021 the Group is a joint
debtor in favour of Investbank AD under credit line for bank
guarantees for BGN 600 thousand, received by an unrelated party -
supplier.
Pursuant to an agreement from February 24, 2022 the Group is a
joint debtor in favour of Investbank AD under an investment credit
line agreement for USD 1,260 thousand, received by unrelated party
- supplier.
The Group bears a joint obligation according to an debt
agreement from January 13, 2017 on an obligation of a subsidiary
until March 2018 - Elit Petrol AD for BGN 2,346 thousand as at
September 30, 2022.
Under a bank agreement for revolving credit line signed on
September 21, 2016, bank guarantees were issued for a total amount
of BGN 5,078 thousand as at September 30, 2022, including BGN 2,250
thousand in favor of third parties - Group's suppliers, BGN 500
thousand in favour of Ministry of Economy for securing the
operations of the Parent company related to its registration under
the Law on the Administrative Regulation of Economic Activities
Related to Oil and Petroleum Products, and BGN 2,028 thousand to
secure own liabilities related to contracts under the Public
Procurement Act. As a collateral of an investment loan signed in
July 2016, a mortgage of property, acquired through the investment
loan and a pledge of receivables, arising from opened bank accounts
of the Parent company to the amount of the outstanding balance of
the loan, which as at the September 30, 2022 amounting to BGN 219
thousand. In July 2017 the credit limit under the revolving credit
line was increased from BGN 8,500 thousand to BGN 9,500 thousand.
Assets amounted to BGN 1,500 thousand, owned by a subsidiary,
additionally secured the credit limit. With annex from December
2018 the limit is increased to BGN 21,000 thousand and is
additionally secured with mortgages and pledge of property, plants
and equipment. In March 2021, the Group partially repays BGN 270
thousand principal of this tranche and in September 2021 another
BGN 1,380 thousand.
In December 2021 the bank granted an additional tranche at the
amount of BGN 100 thousand, and the repayment term of the loan was
extended until December 15, 2024. As at September 30, 2022 the
Group has a liability under this credit line of BGN 5,400
thousand.
There is a pending litigation in relation to a signed in 2015
guarantee contract of the liabilities of a subsidiary until
February 2018, arising of a cession contract of BGN 245 thousand.
In April 2020 a final decision on the pending case was ruled. The
court held that the Group is responsible as a guarantor for the
obligations of the subsidiary under the cession contract. The Court
of Appeal annulled the decision of the first-instance court in its
entirety and found that the Group's claim under the warranty
agreement had been established jointly with the other related
party. The decision of the Court of Appeal was appealed by the
Parent company in the Supreme Court of Cassation, but was not
allowed to appeal. The Group has filed a claim to establish the
non-existence of these receivables, and the case initiated is
pending. A collateral at the amount of BGN 25 thousand to the
court's account was admitted for a future claim against the
provision of a guarantee in favor of the Group, as a result of
which the enforcement proceedings initiated against the Group for
these receivables were suspended. By a decision of November 2021,
the Court recognized as established on the negative claim filed by
the Parent company that the Group does not owe the defendant these
claims. The decision of November 2021 was appealed by the defendant
and the case is currently pending at second instance.
The funds given as collateral under Art. 180 and Art. 181 of the
Law on Obligations and Contracts (LOC) at 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 (until December 2015) for USD 15,000 thousand
and USD 20,000 thousand, respectively. In 2015 the bank -creditor
acquired court orders for immediate execution and receiving orders
against the subsidiaries - joint debtors. In relation to the claims
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 court 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 under Art. 147, par. 1 of the LOC is final and
upon its expiration the Parent company's guarantee has been
terminated, so the objection of the Parent company was granted by
the court and imposed liens on bank accounts were lifted.
Following the cancellation of the writ of execution, pursuant to
order proceedings, which 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 Parent company.
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 ruling, which is important for the correct resolution
of the case.
On November 4, 2021, the Group signed with Allianz Bank Bulgaria
AD a factoring agreement with regress and interest rate of Base
Deposit Index for Legal Entities +1.6%, but not less than 1.6 per
cent per year on the amount of the advance provided. As at
September 30, 2022, the Group has liabilities at the amount of BGN
717 thousand related with financing received under this factoring
agreement.
The Group deposited as a collateral under Agreement for purchase
of electricity the amount of BGN 50 thousand in favour of CEZ Trade
Bulgaria EAD.
As at September 30, 2022 cash in Group's bank account for BGN 41
thousand are blocked under enforcement proceedings against the
Group.
In May 2020, the Parent company received from the Commission for
Protection of Competition a decision for initiated proceedings to
establish any violations under Art. 15 and Art. 21 of LPC and / or
under Art. 101 and Art. 102 of the Treaty on the Functioning of the
European Union (TFEU) in determining the prices of mass automotive
fuels in the production / import - storage - wholesale - retail
trade, both at the individual horizontal and vertical levels, by
eleven companies, including the Parent company. At present, the
proceedings in the case are pending at the CPC.
Other significant events occurred during the reporting quarter
and cumulatively from the beginning of the financial year
As a result of the negative impact and the consequences of the
global pandemic and the widespread of the new coronavirus COVID-19,
the Group has undertaken series of measures for reorganizing the
activities of some of its trade sites, establishing a reduced
working time of part of the personnel, renegotiation of the terms
with contractors, deferral of liabilities and optimization of
costs. At the end of March 2020 the Employment Agency opens an
application procedure under Art. 1 of Decree No 55 from March 30,
2020 determining the terms and conditions for the payment of
compensation to employers in order to preserve the employees under
the State of Emergency, announced with a decision by the Parliament
on March 13, 2020, substituted later by Decree No 151 from 2020. In
2022 the Group continued to submit application documents under this
program for the months it fulfill the requirements and until
September 30, 2021 the Group reported revenue from State financing
at the amount of BGN 147 thousand.
In connection with the drastic increase in electricity prices in
2021 and as a result of an approved program of the Council of
Ministers for granting compensation to businesses, the Group has
reported for the nine months of 2022 income from financing under
this measure at the amount of BGN 1,818 thousand.
At the end of February 2022, the subsidiary Varna Storage OOD
returned a License No. 544 for tax warehouse operation, issued by
the Customs Agency, due to inability to negotiate an acceptable
level of remuneration for the leased storage depot, subject to the
license. In these explanatory notes, the operations has been
classified as discontinued and the comparative period of the income
statement has been restated.
III. Disclosure of transactions with related parties
The total amount of the accrued remunerations of the members of
Management and Supervisory Board of the Parent company, included in
the personnel expenses, amounted to BGN 897 thousand, and the
unsettled liabilities as at September 30, 2022 are at the amount of
BGN 79 thousand.
During the reporting period of 2022 no other related party
transactions took place.
IV. Risks and uncertainties ahead of the Group for the rest of
the financial year
Macroeconomic environment
The Petrol Group's activity is influenced by the general
economic condition of the country and in particular the degree of
the successful adoption of the market-oriented economic reforms by
the government, changes in the gross domestic product (GDP) and the
purchasing power of the Bulgarian customers. In the long term the
change in the fuels consumption in the country is commensurate with
the GDP.
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
At the end of February 2022, a number of countries (including
the United States, the United Kingdom, Canada, Switzerland, Japan
and the EU) imposed sanctions on certain legal entities and
individuals in Russia due to its official recognition of two
regions separating from Ukraine, the Donetsk Republic and the
Luhansk Republic and the military operations on the territory of
Ukraine started on February 24, 2022. Subsequently, additional
sanctions against Russia were announced. The recent events arising
from the military conflict in Ukraine have created challenges for
businesses located and operating there. As a result of the
beginning of 2022, there has been a significant increase in the
fuel prices - a sector in which the Group also operates.
The Group has no assets in the affected countries, no direct
relationships with counterparties operating in these countries. The
Management is in the process of analyzing the risks and effects on
the Group.
The arising military conflict and the imposed by EU, US
economic, financial and other sanctions on Russia to end the
conflict are blocking economic activity between the European Union
and Russia, restricting payments and the free movement of people,
goods and services.
The military conflict has further affected the prices of many
goods, resources and services, as Russia is a major exporter of
fossil fuels, metals and other resources, and the purpose of
sanctions imposed by the European Union and the United States is to
limit Russia's economic activity. Fossil fuels are still a major
part of the process from the creation to final consumption of
almost all goods in the EU, as a result of which a future
uncertainty about prices and availability of fossil fuels and other
resources worsens the economic prospects for the EU and Bulgaria in
particular.
As the main activity of the Petrol Group is wholesale and retail
trade and storage of fuels and other petroleum products, a lasting
increase in international fossil fuel prices will have a negative
impact on the Group's sales, leading to significant losses and
deterioration of the financial condition and operational results of
the Petrol Group. As the majority of fossil fuel supplies in the
country are of Russian origin, a potential complete ban on fuel
supplies from Russia could lead to a shortage of fuels in the
country and problems for the Petrol Group to secure its sales, with
the risk of closure of retail petrol stations, temporary working
hours and other negative consequences. To respond to this scenario,
the Group's management is examining the possibility of importing
fuels from third countries, thus being able to reduce the potential
future consequences for the Petrol Group of the EU and the US
sanctions imposed on Russia and potential reciprocal sanctions.
On April 26, 2022 the Ministry of Energy announced to the public
that Bulgargaz EAD has received notification that the supplies of
natural gas from Gazprom Export would be ceased as of April 27,
2022. The Bulgaria has fully fulfilled its obligations and made all
payments required under this agreement, in a timely manner,
strictly and in accordance with the clauses of the agreement. The
ministry assures that they have taken steps for alternative
agreements for the supply of natural gas and to deal with the
situation. As of the date of preparation of this consolidated
report, the Management Board of the Parent-company is not able to
assess the future effects on the activities of the Group.
The Group's results from operations are affected by a number of
factors, including macroeconomic conditions in Bulgaria,
competition, variation of gross margins, fluctuations in crude oil
and petroleum
product prices, product mix, relationships with suppliers,
legislative changes, and changes in currency exchange rates,
weather conditions and seasonality. In 2021 and the nine months of
2022, the Group suffered negative consequences from the drastic
increase in the prices of electricity and raw materials, both on
the domestic and global markets.
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.
Future uncertainty about the ability of customers to repay their
obligations, in accordance with the agreed conditions, may lead to
an increase of impairment losses on interest loans granted, trade
receivables, financial assets available-for-sale and other
financial instruments, as well as the values of other accounting
estimates in subsequent periods might materially differ from those
specified and recorded in these consolidated financial statements.
The Group's Management applies the necessary procedures to manage
these risks.
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.
Legislature
The Parent company is supervised by a number of regulatory
bodies in the country and a potential change in the regulatory
framework, regulating the Parent company's activity may have a
negative impact on the Group's financial results. In July 2018 the
Government of the Republic of Bulgaria adopted a new Law for
Administrative Regulation of the Economic Activities, Related to
Petrol and Petroleum Products, which aims to provide security and
predictability in trading with petrol and petroleum products and
increase the energy security of the country. Due to its core
business, this law will affect the Group. As at the date of
issuance of these financial statements, the Parent company is
entered in the register to the Ordinance on the terms and
conditions for keeping a register of entities carrying out economic
activities related to oil and petroleum products for the wholesale
trading activity and has issued a bank guarantee in favor of the
Ministry of Economy at the amount of BGN 500 thousand. As at the
date of issuance of these financial statements, the registration
procedure of the Parent company for retail trading with oil and
petroleum products is finished.
Suppliers
Due to the specific of the primary business of Petrol Group,
namely retail and wholesale trading with fuels, the Group's fuels
supplies are provided by a small number of suppliers, as a result
of which the Group is at risk of discontinuation of relationships
with key suppliers, which may lead to a short-term depletion of
inventories and trading activity difficulties;
Petrol Group's wholesale and retail trading with fuels,
lubricants and other goods, and storage of fuels is carried out
through its own and rented from third parties petrol stations and
storage facilities. There is a risk from a suspension of the
relationships with the lessors and termination of the lease
agreements for the petrol stations and/or storage facilities, which
can have a significant negative impacts on Petrol Group as
deteriorating of sales, worsening of the financial results and
substantial loss of market share.
Competition
In the last few years, there has been a tendency for consumers
to increasingly turn to established and well-known brands with a
tradition in fuel retail. As a result, some small retailers were
forced to close down or enter into franchise or dealership
agreements with one of the major market participants. Due to the
general decline in economic activity, consumer attitudes and the
introduction of additional regulatory control by the government,
the share of small independent players continues to decline.
The lack of strategic deals and significant investments by large
participants in the retail fuel market has led to a minimal change
in the market shares of companies in the sector;
Price risk
The Group is at risk of frequent and sharp changes in prices of
fuels and non-petroleum goods. Because of that, the future
financial results may diverge significantly from the expectations
of the Group's Management. Any future sharp fluctuations in the
price of fuels and non-petroleum goods may lead to a deterioration
of the financial position of the Group;
Market risk
The Group is exposed to the risk of change in currency rate,
movement in the interest rates and the prices of the capital
instruments, which may impact the Group's financial instruments or
the value of its investments.
Interest rate risk
Risks arising from the increase in the price of the Group's
financing;
Credit risk
The risk of inability of the Group's trade partners to fulfill
their contractual obligations, which may lead to losses for the
Group;
Exceptional costs
There is a risk of incurring unforeseeable costs, which to
affect negatively the financial position of the Group;
Political risk
Risks to the Group arising from global and regional political
and economic crises;
Climate conditions and seasonality
Climate conditions and seasonal fluctuations in demand for
certain petroleum products affect the Group's operating results.
Gasoline and diesel demand peaked in the second and third quarters,
due to both the summer holiday season and the increased demand from
farmers, who traditionally increase their consumption during the
autumn season
Liquidity risk
Liquidity risk is the risk that the Group may not be able to
meet its financial obligations when they fall due. The policy is
aimed at ensuring sufficient liquidity with which to serve
liabilities when they fall due, including abnormal and emergency
situations.
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END
QRTWPGUPGUPPGMU
(END) Dow Jones Newswires
November 30, 2022 12:25 ET (17:25 GMT)
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