TIDM74JJ
RNS Number : 8981L
Petrol AD
08 September 2023
PETROL AD
Legal Entity Identifier (LEI): 4851003SBNLWFQX4XS80
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 JUNE 30, 2023
(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 2023 2022
BGN'000 BGN'000
Continuing operations
Revenue 3 265,423 323,058
Other income 4 603 4,091
( 237,
Cost of goods sold 8 78 ) (294,647)
Materials and consumables 5 (2,420) (3,351)
Hired services 6 (10,479) (14,964)
Employee benefits 7 (1 2 ,043) (10,424)
Depreciation and amortisation 11,12 (6,392) (1,707)
Reversal of (impairment) losses ( 31 ) (19)
Other expenses 8 (654) (374)
Finance income 9 739 891
(2, 9 61
Finance costs 9 ) (2,090)
Profit (loss) before tax (6,093) 464
---------- ---------
Tax income 10 102 7
---------- ---------
Profit (loss) for the period from (5 ,9
continuing operations 9 1 ) 471
---------- ---------
Discontinued operation
Profit (loss) from discontinued operation
(net of income tax) - (3 6 6)
---------- ---------
Profit (loss) for the period (5,991) 105
---------- ---------
Total comprehensive income for the
period (5,991) 105
Profit (loss) attributable to:
Owners of the Parent company (5 , 991) 105
Non-controlling interest - -
Profit (loss) for the period (5 , 991) 105
---------- ---------
Total comprehensive income attributable
to:
(5 , 9
Owners of the Parent company 91 ) 105
Non-controlling interest - -
---------- ---------
Total comprehensive income for the
period (5,991) 105
========== =========
Profit (loss) per share (BGN) from
continuing operations and discontinued
operation 20 (0.219) 0.004
Profit (loss) per share (BGN) from
continuing operations (0.219) 0.017
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Note June 30 Dec. 31
2023 2022
BGN'000 BGN'000
Non-current assets
Property, plant and equipment and
intangible assets 11 43,615 4 4 ,434
Investment properties 12 1,577 1,6 0 1
Right-of-use asset 13 46 , 827 5 2 , 578
Goodwill 14 57 57
Deferred tax assets 10 2 , 010 1, 896
Loans granted 17 3 , 022 2,808
Total non-current assets 97 , 108 10 3,374
---------- ----------
Current assets
Inventories 15 17,178 26, 306
Loans granted 17 22,012 19 , 641
Trade and other receivables 18 31,467 3 4 , 051
Cash and cash equivalents 19 1,853 8,773
Total current assets 72 , 510 88,771
---------- ----------
1 69 ,
Total assets 618 1 9 2,145
========== ==========
Equity
Registered capital 20 109,250 109,250
Reserves 4 7 , 110 4 7 ,415
(1 42 ,
Accumulated loss 331 ) (1 3 6,645)
---------- -----------
Total equity attributable to the 14 , 0 2
owners of the Parent company 9 2 0, 0 20
---------- -----------
Non-controlling interests 38 38
---------- -----------
2 0, 05
Total equity 14 , 067 8
----------
Non-current liabilities
Loans and borrowings 21 49,831 49,811
Liabilities under lease agreements 13 40,951 4 2 , 834
Employee defined benefit obligations 22 807 807
Total non-current liabilities 9 1 , 589 93,452
---------- -----------
Current liabilities
Trade and other payables 23 51,879 6 4 , 517
Loans and borrowings 21 1,468 1,184
Liabilities under lease agreements 13 1 0 , 603 12,912
Current income tax liabilities 24 1 2 2 2
Total current liabilities 63 , 962 78,635
---------- -----------------------
Total liabilities 1 55 , 551 1 7 2,087
========== =======================
1 69 , 1 9 2,14
Total equity and liabilities 618 5
========== =======================
COMPREHENSIVE STATEMENT OF CHANGES IN EQUITY
For the period ended June 30, 2023
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 (14 3
January 24, 9 ,1 , 32
1, 2022 109,250 18,864 414 99 ) 9 2 4 3 ,353
=========== ========== ========= ============ ======== ================ ========
Changes in equity
for
2022
Comprehensive
income
for the period
Profit/ (loss)
for
the period - - - 11,705 11,705 (1) 11,704
Remeasurement on
defined
benefits
obligations - - - 86 86 - 86
Remeasurement on
property,
plant and
equipment - - 5,445 - 5,445 17 5,462
Tax effects on
remeasurement
on property,
plant
and equipment - - (545) - (545) (2) (547)
----------- ---------- --------- ------------ -------- ---------------- --------
Other
comprehensive
income - - 4,900 86 4,986 15 5, 001
----------- ---------- --------- ------------ -------- ---------------- --------
Total 4
comprehensive , 9
income - - 00 11,791 16,691 14 16,705
----------- ---------- --------- ------------ -------- ---------------- --------
Transfer of
revaluation
reserve of
assets to
retained
earnings,
net of assets - - (763) 763 - - -
----------- ---------- --------- ------------ -------- ---------------- --------
Balance at
December
31, 2022 109,250 18,864 28,551 (136,645) 20,020 3 8 20,058
=========== ========== ========= ============ ======== ================ ========
Changes in equity
for
2023
Comprehensive
income
for the period
Loss for the
period - - - (5,991) (5,991) - (5,991)
---------
Total
comprehensive
income - - - (5,991) (5,991) - (5,991)
----------- ---------- --------- ------------ -------- ---------------- --------
Transfer of
revaluation
reserve of
assets to
retained
earnings,
net of assets - - (305) 305 - - -
---------
(1
Balance at June 42 ,
30, 28, 331 14 14 ,0
2023 109,250 18,864 246 ) , 029 3 8 67
=========== ========== ========= ============ ======== ================ ========
CONSOLIDATED STATEMENT OF CASH FLOWS
For the period ended June 30
2023 2022
BGN'000 BGN'000
Cash flows from operating activities
Net profit (loss) before taxes (5,991) 105
Adjustments for:
Tax income (102) (47)
Depreciation/amortization of property, plant
and equipment and intangible assets 6 , 392 1,718
Interest expense and bank commissions, net 2 , 202 1,457
Shortages and normal loss, net of excess assets 1 22 (130)
Provisions for unused paid leave and retirement
benefits 458 423
(Reversal of) impairment loss on assets 31 19
Payables written-off (1,536) (2,896)
1 , 576 649
(1 3 ,
Change in trade payables 084 ) 16,208
Change in inventories 8 , 996 (5,347)
Change in trade and other receivables 2 , 627 (25,647)
Cash flows generated from operating activities 11 5 (14,137)
( 1 ,
Interest, bank fees and commissions paid 290 ) (1,196)
Income tax paid ( 22 ) (2)
--------- --------
Net cash from operating activities (1,197) (15,335)
Cash flows from investing activities
Payments for purchase of property, plant and
equipment (97) (2,104)
Proceeds from sale of property, plant and equipment 1 , 378 4,535
Payments for loans granted, net (1,923) (2,163)
Proceeds from loans granted, net 3 3,037
Interest received on loans granted - 716
Proceed (p ayments) for acquisitions of other
investments - (25)
--------- --------
Net cash flows used in investing activities (639) 3,996
Cash flows from financing activities
Proceeds from loans and borrowings 1,400 10,830
Payments of loans and borrowings (1 , 100) (308)
Lease payments (5,404) (1,239)
--------- --------
Net cash flows from financing activities (5,104) 9,283
(6 ,
Net decrease in cash flows during the period 940) (2,056)
Cash and cash equivalents at the beginning
of the period 8,732 3,945
Effect of movements in exchange rates 20 218
--------- --------
Cash and cash equivalents at the end of the
period (see also Note 18) 1,812 2,107
========= ========
Condensed notes
to the interim consolidated financial report
for the period ended June 30, 2023
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, 202 3 and 202 2 is as follows:
June 30 Wholesale Retail All other Total for
of fuels of fuels segments the Group
202 3
BGN'000 BGN'000 BGN'000 BGN'000
Total segment revenue 37,599 230,959 1,601 270,159
Intra-group revenue 3,149 20 964 4,133
Revenue from external
customers 34,450 230,939 637 266,026
Adjusted EBITDA (77) 2,086 543 2,552
Depreciation/amortization 60 6,218 114 6,392
Reversed impairment - - 31 31
June 30 Wholesale Retail All other Total for
of fuels of fuels segments the Group
202 2
BGN'000 BGN'000 BGN'000 BGN'000
Total segment revenue 52,184 274,811 1,677 328,672
Intra-group revenue - 28 475 503
Revenue from external
customers 52,184 274,783 1,202 328,169
Adjusted EBITDA 4,062 (1,885) 857 3,034
Depreciation/amortization 10 1,554 154 1,718
Impairment - (8) 27 19
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[1]. In the
calculation of the adjusted EBITDA the effect of the impairment of
assets is not taken into account.
A reconciliation of the reported segments with the interim
consolidated financial report figures for the period ended June 30,
2023 and 2022 is presented in the table below:
June 30 June 30
202 3 202 2
BGN'000 BGN'000
Revenue
Total revenue from reporting segments 268,558 326,995
Revenue from other segments 1,601 1,677
( 4,133
Elimination of revenue from inter-Group sales ) (503)
--------- ---------
328 ,
Revenue from external customers 266,026 169
Elimination of revenue from discontinued
operation - (1,020)
Consolidated revenue from continuing operations 266,026 327,149
--------- ---------
Adjusted EBITDA
Adjusted EBITDA - reporting segments 2,009 2,177
Adjusted EBITDA - all other segments 543 857
Elimination of adjusted EBITDA from discontinued
operation - 355
Consolidated adjusted EBITDA before taxes
from continuing operations 2 , 552 3,389
--------- ---------
( 6 ,
Depreciation from continuing operations 392 ) (1,707)
Impairment loss from continuing operations ( 31 ) (19)
Finance costs from continuing operations, ( 2 ,
net 222 ) (1,199)
Profit (loss) before tax from continuing
operations (6,093) 464
========= =========
2. Discontinued operations
At the end of February 2022 the subsidiary Varna Storage EOOD
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 this consolidated financial report the operation is
classified as discontinued as the comparative period of the
statement of profit or loss and other comprehensive income is
restated to present the discontinued operation separate from the
continuing operations.
The result from discontinued operations and net cash flows,
related to the operating, investing and financial operations are
disclosed, as follows:
June 30,
2022
BGN
Revenue from discontinued operation 1,031
Costs of discontinued operation (1,437)
Loss before taxes (406)
Tax income 40
--------
Profit (loss) for the period from discontinued operation (366)
--------
Basic earnings (loss) per share (BGN) (0.013)
========
The loss from discontinued operation of BGN 366 thousand (June
30, 2021: profit of 409 thousand) is fully attributable to the
owners of the Group.
June 30,
2022
BGN
Net cash flow from operating activities (636)
Net cash flow from financial activities (1)
Net cash flow decrease for the period (637)
=============
3. Revenue from sales
June 30 June 30
2023 2022
BGN'000 BGN'000
262 ,
Sales of goods 862 320,395
Sales of services 2, 561 2,663
--------- ---------
265 ,
423 323,058
========= =========
4. Other income
June 30 June 30
2023 2022
BGN'000 BGN'000
Gain on sale of property, plant, equipment
and materials including: 327 2,896
Income from sales 676 5,900
( 349
Carrying amount ) (3,004)
Income from grants and financing 141 959
Surpluses 26 95
Insurance claims 6 6
Penalties and indemnities 5 7
Other 98 128
--------- ---------
603 4,091
========= =========
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. The Group has submitted documents to
the Employment Agency under the employers compensation programme in
order to preserve the employees in state of emergency since the
beginning of 2020 and for the period ended June 30, 2022 the Group
has received funding from the state in the amount of BGN 147
thousand
By Decision No 739 of 26.10.2021, amended by Decision No 771 of
06.11.2021 and Decision No 885 of 16.12.2021, the Council of
Ministers adopted a program for compensation of non-residential end
customers of electricity. The program aims to protect and assist
all non-household end-users to deal with the effects of
fluctuations in electricity prices. At the end of the reporting
period the Group received and reported income from financing for
the period ended June 30, 2023 and June 30, 2022 under this program
of BGN 141 thousand and BGN 812 thousand, respectively.
5. Materials and consumables
June 30 June 30
2023 2022
BGN'000 BGN'000
Electricity and heating 1,495 2,514
Fuels and lubricants 316 304
Office consumables 219 208
Spare parts 152 119
Working clothes 96 95
Water supply 62 48
Advertising materials 10 15
Other 70 48
--------- ---------
2,420 3,351
========= =========
6. Hired services
June 30 June 30
2023 2022
BGN'000 BGN'000
Dealer and other commissions 5,510 5,411
Maintenance and repairs 1,731 1,115
Rents 603 5,696
Consulting, training and audit 524 574
Security 384 388
State, municipal fees and other costs 318 345
Communications 298 327
Cash collection 269 291
Insurances 187 168
Software licenses 144 157
Advertising 142 103
Transport 43 49
Other 326 340
--------- ---------
10,479 14,964
========= =========
The rent expenses include rent costs of trade sites for BGN 446
thousand (June, 30 2022: BGN 5,586 thousand) leased under operating
lease, which fall under the exclusions of IFRS 16 and whose
agreements comprise a contractual clause, that the both parties
have the right to cease the contract for separate trade sites or as
a whole with an insignificant sanction.
7. Employee benefits
June 30 June 30
2023 2022
BGN'000 BGN'000
Wages and salaries 9,351 8,629
Social security contributions and benefits 2,692 1,795
--------- ---------
12,043 10,424
========= =========
The Group has signed a contract with licensed operators for
giving food vouchers to its workers and/or employees, working under
employment obligations or to persons hired under management and
control agreements, separately of their remuneration. As a result
as at June 30, 2023 are given food vouchers for total amount of BGN
1,076 thousand (BGN 329 thousand as at June 30, 2022).
8. Other expenses
June 30 June 30
2023 2022
BGN'000 BGN'000
Local taxes and taxes on expenses 204 149
Entertainment expenses and sponsorship 1 96 122
Scrap and shortages 136 43
Penalties and indemnities 6 0 6
Loss on liquidation of property, plant,
equipment and materials including: 12 -
Carrying amount 12 -
Revenue from sales - -
Business trips 8 9
Other 38 45
--------- ---------
654 374
========= =========
9. Finance income and costs
June 30 June 30
2023 2022
BGN'000 BGN'000
Finance income
Interest income, including 73 9 673
Interest income on loans granted 706 652
Interest income on trade receivables 33 21
Foreign exchange gain, net - 218
739 891
--------- ---------
Finance costs
Interest costs, including: (2,713) (1,879)
Interest expenses on debenture loans (851) (851)
Interest expenses on trade and other payables (310) (715)
Interest expenses on bank loans (366) (179)
Interest expenses on leases (1,181) (128)
Interest expenses on trade loans (5) (6)
Loss from cession contracts (20) -
Bank fees, commissions and other financial
expenses (228) (211)
--------- ---------
(2,961) (2,090)
--------- ---------
Finance costs, net (2,222) (1,199)
========= =========
10. Taxation
10.1. 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
202 3 202 2
BGN'000 BGN'000
Current tax expense 12 -
Change in deferred tax, including: (114) (7)
Temporary differences recognised during
the period 77 169
Temporary differences arising during the
period (191) (172)
Adjustments - (4)
Tax income from continuing operations (102) (7)
========= =========
A at June 30, 2022 the amount does not comprise the tax income
from discontinued operation of BGN 40 thousand, which is included
in the profit (loss) from discontinued operation, net of taxes in
the interim financial statement for profit or loss and other
comprehensive income (see Note 2).
10.2. 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,
2023 and June 30, 2022 is presented in the table below:
June 30 June 30
2023 2022
BGN'000 BGN'000
Profit (loss) before tax for the period
from continuing operations (6,093) 464
Applicable tax rate 10% 10%
Tax expense at the applicable tax rate (609) 46
Tax effect of permanent differences 96 12
Tax effect of a tax asset not recognised
in the current period that arose in the
current period 400 (67)
Tax effect from consolidation adjustments 11 2
--------- ---------
Tax income (102) (7)
========= =========
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 August 2022 the Parent company was given an order for
initiation of a tax audit concerning the declared and paid by the
Parent company corporate tax and taxes on expenses for the period
2016-2021 and value added tax for the period 2016 - July 2022. At
the time of issuance of the these consolidated financial statements
the tax audit was not concluded.
10.3. Recognised deferred tax assets and liabilities
Asset Recognised Recognised Asset Recognised Asset (liability)
(liability) in profit in Equity (liabilitiy) in other as at
as at and loss- as at compre-hensive June 30,
January all operations December income-all 2023
1, 2022 31, 2022 operations
BGN'000 BGN'000 BGN'000 BGN'000 BGN'000 BGN'000
Property, plant
and (5 47 (3,0 31
equipment (2,624) 1 40 ) ) 55 (2,976)
Impairment of
assets 4,659 56 - 4, 715 - 4, 715
Tax loss
carry-forwards 12 23 - 35 (4) 3 1
Provisions for
unused
paid leave and
other
provisions 139 9 - 14 8 5 153
Excess of
interest
payments in
accordance (25 4
with CITA 254 ) - - 52 52
Other temporary
differences,
including unpaid
benefits
to individuals 25 4 - 2 9 6 35
------------- ---------------- ----------- -------------- ---------------- ------------------
(5 47
2,465 (22) ) 1, 896 114 2,010
============= ================ =========== ============== ================ ==================
The Group has the right to carry forward deferred tax assets on
tax losses until 2028.
10.4. Unrecognized deferred tax assets
As of June 30, 2023 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.
11. 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, 2022 12,559 5,656 19,572 430 2,774 168 558 41,717
-------- ---------- ---------- --------- -------- -------- ----------- --------
T
Additions 5 78 110 - 26 28 73 320
Transfers - 14 94 - - (108) - -
Accumulated
depreciation - (636) (2,211) (5) (674) - (133) (3,659)
Increase/decrease
as a result of
revaluation,
which are
recognized
in other
comprehensive
income 1,302 2,174 1,379 3 522 - 82 5,462
Increase/decrease
as a result of
revaluation,
which are
recognized
in profit or
loss 1,140 (433) (45) - (13) - (61) 588
Disposals (181) (267) (667) - (228) (13) (1) (1,357)
Balance at
December 15 7 , 18 2 , 44 ,
31, 2022 , 455 145 , 205 428 571 86 588 478
-------- ---------- ---------- --------- -------- -------- ----------- --------
Additions 6 7 70 - 37 1 27 148
Transfers 15 - 8 - - (8) (15) -
Disposals (39) (15) (292) - (18) (15) - (379)
Balance at June
30, 2023 15,437 7,137 17,991 428 2,590 64 600 44,247
-------- ---------- ---------- --------- -------- -------- ----------- --------
Accumulated
depreciation
Balance at January 42 1,51 2,
1, 2022 - 3 2 21 454 - 82 492
-------- ---------- ---------- --------- -------- -------- ----------- --------
2 2 78
Accumulated - 6 9 10 2 61 - 51 1,337
Netting of
accumulated
depreciation - (636) (2,211) (5) (674) - (133) (3,659)
Disposals for (7 (1 26
the period - (12) 3 ) - (41) - - )
Balance at
December
31, 2022 - 1 17 26 - - - 44
-------- ---------- ---------- --------- -------- -------- ----------- --------
Additions - 104 353 5 114 - 24 600
(1 2
Transfers - - (6) - (6) - - )
Balance at June 1
30, 2023 - 05 364 31 108 - 24 632
-------- ---------- ---------- --------- -------- -------- ----------- --------
Carrying amount 5, 18,
at 79 03 40 2, 40,
January 1, 2022 13,189 2 3 9 484 1 79 546 63 2
======== ========== ========== ========= ======== ======== =========== ========
Carrying amount
at 7, 18,
December 31, 15, 14 18 4 2,5 44,
2022 455 4 8 02 71 8 6 588 434
======== ========== ========== ========= ======== ======== =========== ========
Carrying amount 1
at 15, 7, 7 , 2, 4 3
June 30, 2023 437 032 627 397 482 6 4 576 , 615
======== ========== ========== ========= ======== ======== =========== ========
As at June 30, 2023 property, plant and equipment with a
carrying amount of BGN 24,843 thousand (December 31, 2022: BGN
25,242 thousand) are mortgaged or pledged as collaterals under bank
loans, granted to the Parent company 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.
The initially revalued (to fair) amount of the property, plant,
equipment and other intangible fixed assets is determined by an
independent appraiser's fair value valuation applied from January
01, 2020. Based on the NSI Consumer Price Index in December 2022
compared to December 2021, which shows annual inflation rate of
16.9%, the Management has made a judgement that there could be a
material deviation in the fair values of the assets and has ordered
a new market valuation as at December 31, 2022. In these interim
consolidated financial statements the property, plant and equipment
and intangible fixed assets are presented based on the valuation
prepared by an independent valuer as at December 31, 2022. The
valuation report of the independent licensed appraiser used the
methods of intermediate comparisons, capitalized rental income and
the tangible fixed asset method to determine the fair value of
property, plant, equipment and intangible fixed assets.
12. Investment property
June 30, December
31,
2023 2022
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 282 233
Depreciation 24 4 9
Balance at the end of the period 306 282
--------- ---------
Carrying amount at the beginning of the
period 1,6 01 1,6 50
========= =========
Carrying amount at the end of the period 1, 577 1,6 01
========= =========
Investment property representing land and building were acquired
through business combination in December 2016. The Group determines
the fair value of the investment property for reporting purposes,
using a valuation report of independent appraiser, which is
calculated by the method of comparatives, the method of discounted
free cash flows and the amortised cost method. The fair value of
the investment properties as at June 30, 2023 and December 31, 2022
is BGN 2,101 thousand. The investment properties are part of a set
of assets, which serve to secure a revolving credit line of BGN
1,500 thousand signed in 2016.
13. Assets and liabilities under leases
In the consolidated statement of financial position as at June
30, 2023 and December 31, 2022 are disclosed the following items
and amounts related to lease agreements:
Consolidated statement of financial position June 30, December
31,
2023 2022
BGN'000 BGN'000
Right-of-use assets, incl.: 46,827 52,578
5 1 ,
Property (lands and buildings) 46,135 7 26
Machinery, plants and equipment 25 17
Transport vehicles 667 835
(5 1
, 554 (55,
Liabilities under leases, incl.: ) 746 )
(1 0 (1 2
, 6 0 , 912
Current liabilities 3 ) )
Non-current liabilities ( 4 0,951) ( 4 2,834)
----------- -----------
Net effect on equity (4,727) (3,168)
=========== ===========
The expenses recognized in the these consolidated statement of
profit or loss and other comprehensive income from continuing
operations and discontinued operations:
As a result the amendments signed in 2022 to the operating lease
agreements for renting petrol stations, which extended the term of
the agreements to the end of 2027 in order to secure Group's
operations and provided for a significant termination penalty in
respect of each petrol stations, these agreements no longer meet
the criteria for exceptions under the standard and consequently the
lease assets and liabilities have been recognised in accordance
with the requirements of IFRS 16.
The total outgoing cash flow under right-of-use assets lease
agreements as at June 30, 2023 is at the amount of BGN 5,404
thousand (June 30, 2022: BGN 1,239 thousand) excluding the paid
value added tax.
The Group has leased various assets: land, retail premises,
small offices and buildings, vehicles, photocopiers. The leases are
normally for a period of 3 to 10 years, but may contain extension
options.
14. Goodwill
June 30, December
31,
202 3 202 2
BGN'000 BGN'000
Cost of goods 19,844 19,844
Impairment loss (19,787) (19,787)
57 57
========= =========
The recognised goodwill as at June 30, 202 3 and December 31,
202 2 arose as a result of the acquisition of the subsidiaries:
Varna Storage EOOD - BGN 19,787 thousand, Lozen Asset AD - BGN 29
thousand and Petrol Technologies OOD - BGN 28 thousand.
At the end of February 2022 the subsidiary Varna Storage EOOD
returned a Licence No 544 for tax warehouse operation, issued by
the Customs Agency, due to an inability to negotiate an acceptable
remuneration for the lease tax warehouse, subject to the license.
In this relation in the consolidated financial statement for the
year ended on December 31, 2021, an impairment of the goodwill
arising from the acquisition of the subsidiary at the amount of BGN
19,787 thousand is reported.
15. Inventory
June 30, December
31,
202 3 202 2
BGN'000 BGN'000
Goods, including: 16 , 495 25,615
Fuels 9 , 638 18,778
6,8 5
Lubricants and other goods 7 6,837
Materials 6 83 691
---------
17 , 2 6 ,
178 306
========= =========
1 6 . Loans granted
December
June 30, 31,
202 3 202 2
BGN'000 BGN'000
Non-current receivables
Loans granted to unrelated parties, including 3,022 2,808
Initial value 3,555 3,555
Allowance for impairment (533) (747)
--------- ---------
3,022 2,808
--------- ---------
Current receivables
Loans granted to unrelated parties, including 22,012 19,641
Initial value 36,208 33,583
Allowance for impairment (14,196) (13,942)
22,012 19,641
--------- ---------
25,034 22,449
========= =========
Borrower Receivables Principal Interest Accrued Annual Maturity
June, 30 Interest Interest
202 3
net
BGN'000 BGN'000 BGN'000 BGN'000 %
8 , 1 ,
Commercial company 8 , 921 172 799 (1 , 050) 6.70% 31.dec.22
5 , 1 ,
Commercial company 5 , 657 410 334 (1 , 087) 6.70% 31.dec.23
Commercial company 4,704 3,555 1,682 (533) 5.00% 31.dec.25
3 , 1 ,
Commercial company 3 , 470 000 002 (532) 5.00% 31.dec.23
1 ,
Commercial company 1 , 080 167 142 (229) 6.70% 31.dec.19
Commercial company 737 715 22 - 5.00% 31.dec.23
Commercial company 396 314 82 - 7.00% 7.aug.23
Commercial company 66 65 1 - 6.70% 31.dec.23
Commercial company 3 121 10 (128) 5.00% 31.dec.23
Commercial company - 5,190 - (5,190) 0.00% 28.oct.15
2 ,
Commercial company - 210 - (2 , 210) 9.50% 28.oct.15
1 ,
Commercial company - 500 133 (1 , 633) 8.75% 17.jul.15
1 ,
Commercial company - 257 368 (1 , 625) 6.70% 31.dec.23
Commercial company - - 429 (429) 6.70% 31.dec.19
Commercial company - 44 - (44) 9.50% 21.jan.17
Commercial company - 22 4 (26) 6.70% 31.dec.23
Commercial company - 12 1 (13) 8.50% 26.aug.15
-------------------- ------------ ---------- --------- ---------- ---------- ----------
( 14,729
2 5 , 034 32,754 7,009 )
==================== ============ ========== ========= ========== ========== ==========
Borrower Receivables Principal Interest Accrued Annual Maturity
Dec., 31 Interest Interest
2022
net
BGN'000 BGN'000 BGN'000 BGN'000 %
8 , 1 ,
Commercial company 8 , 646 172 524 (1 , 050) 6.70% 31.dec.22
3 , 1 ,
Commercial company 4 , 614 555 592 (533) 5.00% 31.dec.25
4 , 1 , (1,08
Commercial company 4 , 168 080 17 7 9 ) 6.70% 31.dec.23
3 ,
Commercial company 3 , 395 000 927 (532) 5.00% 31.dec.23
1 ,
Commercial company 880 004 105 (229) 6.70% 31.dec.22
Commercial company 385 314 71 - 7.00% 31.dec.19
Commercial company 361 350 11 - 5.00% 07.aug.23
Commercial company - 121 7 (128) 5.00% 31.dec.23
5 ,
Commercial company - 190 - (5 , 190) 0.00% 28.oct.15
2 ,
Commercial company - 210 - (2 , 210) 9.50% 28.oct.15
1 ,
Commercial company - 500 133 (1 , 633) 8.75% 17.jul.15
1 ,
Commercial company - 260 324 (1 , 584) 6.70% 31.dec.23
Commercial company - 44 - (44) 9.50% 21.jan.17
Commercial company - 22 3 (25) 6.70% 31.dec.23
Commercial company - 12 1 (13) 8.50% 26.aug.15
Commercial company - - 429 (429) 6.70% 31.dec.19
--------------------- ------------ ---------- --------- ---------- ---------- ----------
30 , (14 ,689
22 ,449 834 6,304 )
===================== ============ ========== ========= ========== ========== ==========
17. Trade and other receivables
June 30, December
31,
2023 2022
BGN'000 BGN'000
2 2 ,
Receivables from clients, including 102 21,300
2 4 ,
Initial value 318 23,525
(2,2
Allowance for impairment 16 ) (2,225)
Prepaid expenses 3,899 3 42
Financial assets, measured at fair value
through profit or loss 2,200 2,200
Receivables under cession agreements, assumption
of debt and regress 1, 915 1,840
Initial value 4, 173 4,098
Allowance for impairment (2,258) (2,258)
Guarantees for participation in tender procedures 784 879
Advances granted, including 243 391
Initial value 312 460
Allowance for impairment (69) (69)
Value added tax refunded 176 4,957
Litigations and writs, including 92 92
Initial value 102 102
Allowance for impairment (10) (10)
Fuels compensations received - 1,925
Other 56 125
Initial value 67 136
Allowance for impairment (11) (11)
--------- ---------
31 ,
4 67 3 4,051
========= =========
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.
The adoption of the new IFRS 9 changed essentially the
accounting of the impairment losses of financial assets and
substitute the method of the accrued losses under IAS 39 with the
oriented to a greater extent to the future model of the expected
credit losses. The IFRS 9 obligates the Group to recognize a
provision for the expected credit losses for all debt instruments,
which are not recognised at fair value in the profit or loss and
for the assets under contracts.
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,
2023 2022
BGN'000 BGN'000
Cash in transit 390 6,889
Cash at banks 1,338 1,777
Cash on hand 84 66
--------- ---------
Cash in statement of cash flows 1,812 8,732
--------- ---------
Blocked cash 41 41
--------- ---------
Cash in statement of financial position 1,853 8,773
========= =========
As at June 30, 2023 and December 31, 2022 cash at the amount of
BGN 41 thousand, blocked under enforcement court cases to which the
Group is a party, were presented as blocked cash.
Cash in transit comprises cash collected from fuel stations as
at the end of the reporting period, but actually received in the
bank accounts of the Group in the beginning of the next reporting
period.
19. Registered capital
The Group's registered capital is presented at its nominal
value. The registered capital of the Group represents the
registered capital of the Parent company Petrol AD.
As at June 30, 2023 and December 31, 2022 the shareholders in
the Parent company are as follows:
Shareholder June 30, December
31,
2023 2022
Alfa Capital AD 28.85% 28.85%
Yulinor EOOD 23.11% 23.11%
Perfeto consulting EOOD 16.43% 16.43%
Trans Express Oil EOOD 9.82% 9.8 2 %
Petrol Bulgaria AD 7.05% 7. 05 %
Gryphon Power AD 5.49% 5.49%
Storage Invest EOOD 3.66% 3.66%
VIP Properties EOOD 1.94% 1.94%
The Ministry of Energy 0.65% 0.65%
Other minority shareholders 3.00% 3.00%
--------- ---------
100.00% 100.00%
========= =========
Given the structure of shareholding, there is no ultimate Parent
company above the Parent company Petrol AD.
The Management of the Parent company has undertaken a series of
measures to optimize its capital adequacy. As a result of several
general meetings of shareholders held in the period 2016-2017, a
resolution was passed to implement the reverse share split
procedure to merge 4 old shares with a par value of BGN 1 into 1
new share with a par value of BGN 4 and a subsequent reduction of
the Parent company's capital to cover losses by reducing the par
value of the shares from BGN 4 to BGN 1. In March 2018, following a
ruling of the Lovech District Court, which reversed the refusal of
the Commercial Register (CR) to register the decision taken by the
EGMS to merge 4 old shares with a nominal value of BGN 1 into 1 new
share with a par value of BGN 4, the requested change was
registered in the CR, resulting in the registered capital of the
Parent company amounting to BGN 109,249,612, divided into
27,312,403 shares with a par value of BGN 4 each. The change in the
capital structure was also entered in the register of the Central
Depository AD. The application filed in April 2018 for the
registration of the EGMS's decision on the second stage of the
procedure to reduce the Parent company's capital by reducing the
nominal value of the shares from BGN 4 to BGN 1 to cover losses was
rejected 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 legal term. 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 Lovech Regional Court
enacted a decision, which indicates CR to register the decrease of
the capital after a resumption of the registration proceedings
after the pronouncing on the legal proceedings initiated by the
minority shareholders.
At EGMS held in February 2019 a decision for the replacement of
the deceased member of the Supervisory Board Ivan Voynovski with
Rumen Konstantinov was taken. 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 on applications for
annulment of the decision.
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 applied entry 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.
Profit (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, 2022
2023
Continuing Discontinued Total
operations operations
Weighted-average number
of shares (in thousand) 27,312 27,312 27,312 27,312
Profit (loss) in BGN
thousand (5,991) 471 (366) 105
--------- ------------ ------------- ---------
Profit (loss) per (0.2 19 (0.01 3
share (BGN) ) 0.0 17 ) 0.004
========= ============ ============= =========
20. Loans and borrowings
June 30, December
31,
2023 2022
BGN'000 BGN'000
Non-current liabilities
36, 3
Debenture loans 3 1 36, 311
Loans from financial institutions 13,500 13,500
49 , 49 ,
8 3 1 811
========= =========
Current liabilities
Debenture loans 66 1 668
Loans from financial institutions 403 516
Trade loans from unrelated parties 404 -
1 , 4
68 1 , 184
========= =========
5 1,2 50 ,
9 9 995
========= =========
20.1. Debenture loans
In October 2006, the Parent company issued 2,000 registered
transferable bonds with fixed annual interest rate of 8.375% and
issue value 99.507% of the face value, which is determined at EUR
50,000 per bond. The purpose of the emission is to provide working
capital funds, financing of investment projects and restructuring
of outstanding debt of the Parent company. The principal is due in
one payment at the maturity date. The bond term is 5 years and the
maturity date is in October 2011. At the general meetings of the
bondholders conducted in October and December 2011, it was decided
to extend the term of the issue until January 26, 2017. On December
23, 2016, a procedure of extension of the bond issue to 2022 and
reduction of the interest rate in the range from 5.5% to 8% was
successfully completed with payments of interest once in a
year.
In September 2020 the Parent company successfully completed a
new procedure for renegotiating the conditions of the debenture
loan. The maturity of the debenture loan principal is deferred
until January 2027, the agreed interest rate is reduced to 4.24%
per annum, with six months regularity of the interest (coupon)
payments - 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, and the
fair value is BGN 31,253 thousand, calculated at 14.56 % interest
rate .
The debenture loan liabilities are disclosed in the statement of
financial position at amortised cost. The annual interest rate as
at June 30, 202 3 is 4.67% (including 4.24% annual coupon
rate).
20.2. Loans from financial institutions
In September 2018, the Group entered into a loan agreement -
overdraft on a current account with a commercial bank, intended for
working capital with a maximum allowed amount of up to BGN 2,000
thousand with a repayment term of January 31, 2019 and an agreed
interest rate as Savings-based interest rate (SIR) plus added
amount of 6,1872 points, but cumulatively not less than 6.5% per
annum. The loan is secured by a specific pledge of goods in
circulation, representing petroleum products, and a pledge of
receivables on bank accounts. In December 2018, as a result of an
annex to the 2016 agreement for a revolving credit line with the
same bank with an initial amount of BGN 6,500 thousand and a
subsequent increase by annexes of 2016 and 2017 to BGN 9,500
thousand, the Parent company has agreed to increase the amount of
the credit line granted by an additional amount of BGN 11,500
thousand, This brings the total amount to BGN 21,000 thousand, of
which BGN 13,500 thousand represents a limit for the issue of bank
guarantees, BGN 7,500 thousand for the refinancing of the granted
credit facility - overdraft in the amount of BGN 2,000 thousand 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. In June 2019 the limit
granted for working capital under this credit line was partially
repaid and as at December 31, 2020 its amount was BGN 7,000
thousand. In January 2020 the Parent company renegotiated the terms
of the used credit line and has achieved a reduction of the annual
compound interest rate of SIR (Saving based interest rate) +
5.2802%, but not less than 5.5%. In March and September 2021, the
Group repaid BGN 1,650 thousand from the principal of this tranche
of the credit line. In December 2021 the bank granted an additional
tranche in the amount of BGN 100 thousand, and the term for
repayment of the loan was extended until December 15, 2024. As at
June 30, 2023 the Group has a liability under this loan for
principal in the amount of BGN 5,400 thousand.
In April 2022 the Group negotiated an increase of working
capital with a credit line under new tranche with a maximum amount
of up to BGN 4,500 thousand, and with the same amount the credit
line for bank guarantees is decreased. The amount is received and
as at June 30, 2023 the principal liability under this tranche is
BGN 4,500 thousand. The contracted annual interest rate is at the
amount of the Interest Rate based on Savings increased by a margin
of 4.174 points, but not less than 4.25%. The maturity of this
tranche is December 16, 2024.
In June 2022, the Group negotiated a further increase in the
working capital facility with a new tranche up to a maximum amount
of BGN 3,600 thousand, reducing the portion provided for bank
guarantees by the same amount to BGN 5,400 thousand and bringing
the total limit of the revolving bank facility to BGN 18,900
thousand. The amount has been drawn down and as at June 30, 2023
the Group has a liability under this tranche for the principal
amount of BGN 3,600 thousand. The agreed annual interest rate is
the SIR per BGN plus a margin of 4.1764 percentage points but not
less than 4.25%. This tranche matures on December 14, 2024. On
September 30, 2022, the Group received a notice from the lending
bank to unilaterally increase the agreed annual interest rate
premium on the three tranches provided by the bank by 0.5% from
October 1, 2022, as a result of the changed interest rate
environment and high inflation rates.
In April 2023, the Group negotiated a new tranche of working
capital in the amount of BGN 1,000 thousand under the revolving
credit facility provided with a drawdown period until May 31, 2023.
As a result of the new tranche, the total limit under the revolving
credit line amounts to BGN 19,900 thousand. The agreed annual
interest rate is the SIR for BGN plus a margin of 5.3608 percentage
points, but not less than 5.5%. The maturity date of this tranche
is November 1, 2023 and a repayment plan of five equal monthly
principal instalments of BGN 200 thousand each has been agreed. The
tranche amount has been fully drawn down and as at June 30, 2023
the Group has repaid BGN 600 thousand of principal early, resulting
in a liability of BGN 400 thousand as at the date of this
report.
20.3 Trade loans received
In January 2023, the Group received a short-term loan from an
unrelated party commercial company with a credit limit of BGN 2,000
thousand and interest of 5% on the amount drawn down. The maturity
of the loan is December 31, 2023. The Group's liability at June 30,
2023 is BGN 3 thousand for interest.
In June 2022, the Group received a short-term commercial loan
from an unrelated party with a credit limit of BGN 1,000 thousand
granted against a consideration in the form of annual interest at
5% on the drawn amount due by December 31, 2022. In December, the
agreement was amended and the term was extended to June 2023. As at
the date of these financial statements, the Group has no
liabilities under this loan.
In June 2022, the Group received a short-term commercial loan
from an unrelated party. The loan was provided for consideration in
the form of interest at 4.5% per annum and has a maturity date of
December 31, 2022. The term of the loan has been extended to
December 31, 2023 by an amendment. The liability thereunder as at
June 30, 2023 is BGN 400 thousand.
20.4. Factoring
In March 2021 the Group signed with a commercial bank an
agreement for purchasing of receivables on trade invoices (standard
factoring) with a total limit of advance payment of BGN 402
thousand and interest rate, based on savings (IRBS) in BGN,
increased with a margin of 3.8382 points, but not less than 4%
annually on the amount paid in advance. The contract is secured by
a pledge of receivables on bank accounts of the Group opened in the
bank. As at June 30, 2023 the Group has no liabilities related to
this factoring agreement.
In November 2021 an annex was signed for special conditions with
a right of regress, reduction of the commission fee by 0.13% on the
total value of the transferred VAT invoices, and the interest rate
was reduced to BDILE + 1.60%, charged daily and deducted monthly at
the end of each calendar month. As at June 30, 2023 the Group has
net liabilities in connection with received financing under this
factoring agreement in the amount of BGN 99 thousand, which are
presented as a decrease of the trade receivables concerning this
agreement.
21. Obligation for defined benefit retirement compensations
As at June 30,2023 and December 31, 2022 the Group accrued
obligation for defined benefit retirement compensations amounting
to BGN 807 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 0.15% 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,
2023 2022
BGN'000 BGN'000
Payables to suppliers 45,165 50,062
Payables to personnel and social security
funds 3,023 2,824
1 0 ,
Advances received and deferred income 1, 749 49 4
Tax payables, including 752 28 1
Excise duty and other taxes 372 25 1
VAT 3 8 0 30
Payables to related parties 12 12
Other 1,178 844
--------- ---------
51,879 6 4,517
========= =========
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,
2023 2022
BGN'000 BGN'000
Balance at the beginning of the year 6 68 6 29
Accrued during the period 458 5 80
(5 41
Utilised during the period (406) )
Balance at the end of the period, including: 720 6 68
========= =========
Paid leaves 606 5 63
Social security on paid leaves 114 105
The balance at the end of the year is presented in the
consolidated statement of financial position together with current
payables to personnel.
23. Current income tax
June 30, December
31,
2023 2022
BGN'000 BGN'000
Income tax payable at the beginning of the
period 22 194
Corporate income tax accrued 1 2 22
Corporate income tax paid ( 22 ) (194)
Refundable corporate income tax at the
end of the period 1 2 22
========= =========
24. Subsidiaries
The subsidiaries, included in the consolidation, over which the
Group has control as of June 30, 2023 and December 31, 2022 are as
follows:
Subsidiary Main activity Investment Investment
at June at Dec.
30 2023 31 2022
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 Export EOOD Trade of fuels for export 100% -
Bulgaria Cargo Export and transport of 100% -
Rail EOOD petrol and petroleum products
Petrol Oil Recycling Organizing and collecting 100% -
EOOD the wastes of oil
Petrol Investment Investment activity
AD 99.98% -
Petrol Finances Financial and accounting
OOD services 99% 99%
Petrol Technologies
OOD IT services and consultancy 98.80% 98,80%
Petrol Technology
OOD IT services and consultancy 98.80% 98.80%
In June 2023, a new subsidiary named Petrol Oil Recycling EOOD
was incorporated by way of a cash contribution. Against the cash
contribution made, the Parent company acquired 5,000 (five
thousand) shares representing 100% of the share capital.
In the period between May and the end of June 2022, through
share purchase agreements, the Group acquired 4,999 (four thousand
nine hundred ninety nine) shares with a nominal value of 10 BGN,
which represent 99.98% of the capital of Petrol Investment AD.
There is no difference between the consideration transferred for
the acquisition of a controlling interest and the fair value of the
net assets. As at June 30, 2023, the consideration transferred for
the acquisition of Petrol Investment EOOD has been partially paid -
BGN 25 thousand and the unpaid portion of BGN 25 thousand is
presented in Trade and other payables. As a result of the
acquisition the Group has recognised cash acquired of BGN 50
thousand.
In July 2022, the Group established a new subsidiary, Petrol
Export EOOD, in order to separate and facilitate the administration
of the wholesale of fuels for export.
In December 2022, a new subsidiary Bulgaria Cargo Rail EOOD was
established with 100% shareholding and with the business of export
and transport of petroleum and petroleum products.
All subsidiaries are with address and registration in Republic
of Bulgaria
Disposal of interest in subsidiaries during previous years
In December 2015 a contract with notarized signatures, whereby
Petrol AD transferred to a company outside the Group 100% of Naftex
Petrol EOOD's equity shares against BGN 1. Changing the sole owner
of Naftex Petrol EOOD is filed timely for entry in the Commercial
register at the Registry Agency but has not been recorded because
of incompleteness in the documents attached to the application.
However, since the contract, as at December 2015, has been
concluded properly according to the prescribed by the Commercial
Code form, it raises legal action between the parties involved, due
to which Petrol AD is no longer the sole shareholder of Naftex
Petrol EOOD. Consequently, it is accepted that the Group has lost
control and assets and liabilities of the subsidiary were written
off and the gain was recognized resulting from the loss of control
in the consolidated statement of profit or loss and other
comprehensive income. As at the transaction date the consolidated
net assets of the subsidiary amounted to negative BGN 314,452
thousand. The result of the sale of the Group was a profit amounted
to BGN 314,452 thousand.
In March 2016, the change of the sole owner of Naftex Petrol
EOOD (subsidiary until December 2015) has been repeatedly applied
for registration with the Commercial Register when a completed set
of documents as instructed by the officials has been submitted. The
registration was suspended by the court because of a request by a
shareholder of the Parent company, on the grounds that the sale
contract was challenged in court because executives were not
authorized to conclude the agreement by the general meeting of the
company contrary to the provisions of POSA. Before the conclusion
of the transaction, it was thoroughly checked for compliance with
the law and that fall below the thresholds for convening the
General Meeting pursuant to Art. 114 of the POSA as documents
proving this circumstance are duly implemented in the Commercial
Register with the application for registration of the change of the
sole owner of the Group. In December 2021, the Lovech District
Court issued a final decision on the pending litigation, rejecting
the claim filed against the Parent company. In its decision, the
court found that the contract for sale of company's shares was
concluded validly in the form required by law and in compliance
with the provisions of the POSA. The procedure for change in
Commercial Register must be initiated again by the buyer.
25. Capital management
In accordance with the provisions of Art. 252 of the Commercial
Act (CA), the Group must maintain the value of its net assets above
the value of its registered capital.
As of June 30, 2023 and December 31, 2022, the net assets are
BGN 14,067 thousand and BGN 20,058 thousand, respectively.
In order to ensure the functioning of the Group as a going
concern, Management has undertaken a series of measures, both
purely procedural and business-oriented, aimed at bringing the
Group's capital in line with the requirements of the Commercial Act
(CA) as well as improving the overall financial position.
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.
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 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 of the Parent company from BGN 4 to BGN 1 in order to cover
losses. 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 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 decreasing 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 Group. 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 and intangible fixed assets
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 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, reduction of receivables
collection period and extension of the liabilities paying
period.
The major ratios, which give an information about the financial
position of the Group are disclosed in Selected performance
indicators from the Interim Consolidated Management Report of
Petrol Group for 2023.
In the first half of 2023, the Group's current ratio maintained
at 1.13 compared to 1.13 at the end of 2022. As at June 30, 2023,
current assets decreased by BGN 16,261 thousand (EUR 8,314
thousand) to BGN 72,510 thousand (EUR 37,074 thousand), while
current liabilities decreased by BGN 14,673 thousand (EUR 7,502
thousand) compared to the end of 2022 to BGN 63,962 thousand (EUR
32,703 thousand). The decrease in current assets and liabilities is
the result of the decrease in activity during the period and sales
revenues and the related lower fuel inventories, as well as the
repayment during the period of trade payables.
An additional effect is the reduction in selling prices in the
current period, which results in less working capital being
committed.
During the current period, the Group's consolidated indebtedness
including trade loans, loans from financial institutions and
finance lease contracts increased by BGN 304 thousand (EUR 155
thousand) to BGN 51,299 thousand (EUR 26,229 thousand).The increase
in total debt is mainly due to the drawdown of BGN 1,000 thousand
(EUR 500 thousand) under a revolving bank credit facility during
the period, with the Group's liability under bank borrowings
increasing to BGN 13,904 thousand (EUR 7,109 thousand) at the end
of the period. As at the end of the first half of 2023, the
Debt/Assets ratio increased marginally to 0.30 compared to 0.27 as
at December 31, 2022.
In the first half of 2023, the turnover ratio increases to 16
days compared to 11 days at the end of 2022. The time taken by the
Group to collect its receivables from customers increases to 15
days vs. 10 days for 2022.
Macroeconomic conditions and legal framework
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.
In 2022 the consumer price inflation continued to rise
significantly with the CPI recording double-digit growth towards
the end of the year. During the year the central banks of the
leading economies, in their efforts to normalize the rampant
inflation, significantly raised the base interest rates, but this
did not lead to a significant reversal of the upward trend in
prices that started in 2020. The situation in Bulgaria followed the
global trend of rising prices, as at the end of the year, the
consumer price index published by the National Statistical
Institute recorded an increase of 16.9% year over year, with
inflation declining at the end of the year as a result of the
reported significant slowdown in the annual increase of petrol and
gas prices. The main reason for the increase compared to 2022 is
the increase in the prices of food and non-food goods, which rose
by 25.6% and 13.3% respectively over the period, while the cost of
services increased by 10.3% compared to the same month of the
previous year. The main reasons for the increase in the inflation
rate in 2022 are the anti-crisis measures taken by the government
in the last three years, the military conflict that occurred in
Ukraine in February 2022, as well as the disruption caused by
sanctions, and the change in some cases of supply chains led to the
rise in prices of fuels and other goods and resources caused by
increased demand.
The high inflation was a factor that Management considered and
assigned a new valuation as at December 31, 2022 to the property,
plant and equipment carried at revalued carrying amounts.
The tightening of monetary policy by leading central banks that
began in 2022, combined with the sharp rise in key interest rates,
has begun to have an impact on economic activity and the financial
health of companies in both the financial and non-financial
sectors.
If these restrictive actions by the central banks continue, it
will inevitably lead to a future long-term slowdown in the
country's economic life and, combined with the sustained
containment of inflation and price increases, will create risks and
curtail consumption of goods and services in the country, including
fuel, which in turn will lead to a reduction in the Group's
earnings, difficulties in servicing regular payments and the
generation of a loss from operations.
COVID-19 influence on the Group's activity
Long-term impact of the COVID-19 pandemic
The global spread of the COVID-19 virus and the subsequent
imposition of anti-epidemic measures in the country have created a
number of obstacles and negative consequences for the Bulgarian
economy. As a result of the disturbances in the supply chains
internationally, the forced restriction of the movement of
citizens, as well as the temporary suspension of the activity of
specific business sectors, led to disturbances in the economic
activity in the country. Unlike the previous two consecutive years,
in 2022 no anti-epidemic measures limiting the movement of people
and goods were imposed. In 2021, the government of the Republic of
Bulgaria, represented by the Minister of Health, twice imposed
anti-epidemic measures limiting the movement of people and goods.
Despite the imposed restrictive measures in 2021, the country's GDP
recorded a growth of 7.6% on an annual basis compared to 2020, with
a decrease of 4% in 2020 compared to 2019. For 2022 the GDP of the
country grew by 3.4% on an annual basis and for the first half of
2023 by 1.8% compared to the same period of 2022.
In 2020 and 2021 COVID-19 had a significant impact on the
activities of the Petrol Group, as in 2020 the Group reduced its
sales revenue by 27.5% on an annual basis, which in the past 2021
were partially recovered to BGN 499,841 thousand (before
restatement for discontinued operations) compared to BGN 538,499
thousand for 2019. In 2022 the Group increases its sales revenue to
BGN 812,431 thousand. Despite the growth of sales revenue over the
last two consecutive years, the Petrol Group cannot restore its
retail sales to pre-pandemic levels, which in the event of
unfavorable future development and further spread of the virus
could become a long-term negative effect from the pandemic for the
Group.
The accumulated historical information on the financial
condition of the Petrol Group for the last three consecutive years
and the effects on the Group caused by COVID-19 for this period
create future preconditions in the medium and long term if the
pandemic continues to spread at certain intervals, the Group will
fail to restore sales to its pre-pandemic levels. Subsequent
restrictions on the movement of people may permanently change
people's attitudes and habits in the medium term, which would
directly reflect on the financial performance, liquidity, cash flow
and sales of the Group, as double-digit sales declines close to
those of 2020 (-27.5%) and loss of market share in such a scenario
are not excluded.
In response to the complex economic and geopolitical situation,
the Group's management takes action to optimize costs and diversify
products and services for its customers. One of the projects in
this direction is the construction of a chain of self-service
petrol stations that provide customers with an alternative to the
standard service, reduce the carbon footprint, including
electricity, heating and water consumption, and last but not least
the costs for the Group. As at June 30, 2023 the Group operates 16
full or partial self-service petrol stations, and the Group plans
to double them in two years. With the self-service chain projects
and processes undertaken by the Petrol Group management, the Group
will try to respond to the change in consumer demand and the new
challenges posed by COVID-19 and the increase in expenses during
the last year.
COVID-19 recovery
Following the initial shock caused by COVID-19, in 2021 the
Petrol Group recovered part of the sales lost due to COVID-19, as
at December 31, 2021 the Group reports an annual increase in sales
revenue of goods and services of 28% to BGN 499,841 thousand
(before restatement for discontinued operations). In 2022 the Group
managed to realize an additional growth of 64.7% on an annual
basis, with a major contribution of sales of wholesale fuels.
Despite the rise in revenue from sales of goods and services in two
consecutive years, in 2022 the Petrol Group failed to reach the
retail fuel sales from pre-pandemic levels. The rapid recovery
after the pandemic inspires a dose of optimism that the main
upheavals for the Petrol Group caused by the virus have passed.
Growth in revenues from sales of fuel and other goods in 2021 and
2022 have helped the Group to restore to a large extent the normal
rhythm of work, however, the negative effects on liquidity, retail
fuel sales and the general financial condition of the Petrol Group
have not completely faded away. In the first half of 2023 the sales
revenue decreased. The high inflation, the growth of the minimum
wage and the increase in fuel prices have prevented the Group from
reaching pre-pandemic levels of financial results and retail fuel
sales.
In addition, the dynamics of the spread of COVID-19 combined
with the emerging military conflict between Russia and Ukraine and
its potential risks, as well as the high volatility of
international crude oil prices in recent months, which directly
affect the activities of the Petrol Group, create significant risks
in front of the Group and at the same time hinder the coverage and
the successful planning of the potential intensity of the negative
effects on the activity of the Petrol Group.
War conflict between Russia and Ukraine
On February 24, 2022 Russian military units enter the territory
of Ukraine, while the Russian army begins to launch missile strikes
on strategic Ukrainian targets. From that day in February, the
military conflict between Russia and Ukraine began. The clash
between the two countries and the departure of Ukrainian civilians
of their homelands to save themselves from Russia's military
invasion in Ukraine has created an unprecedented humanitarian
crisis in Europe since World War II. All business sectors are
influenced to some extent by the military conflict.
The arising military conflict and the imposed by the EU and the
US economic, financial and other sanctions on Russia to end the
conflict are blocking the economic activity between the European
Union and Russia, restricting the payments and the free movement of
people, goods and services, and simultaneously cause significant
ubiquitous disruptions on financial markets and non-financial
sector.
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. The warm winter and the increase in the fossil supplies
from alternative sources help the EU countries to overcome the
breaking out short-term anomalies caused by the sanctions and
restrictions.
As the main activity of the Petrol Group is wholesale and retail
trading 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 in 2022 and the first half of 2023 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.
An important decision for the activities of Petrol Group is the
amendment by the Council of the European Union, adopted on June 4,
2022 of Council Regulation (CR) 833/2014 of July 31, 2014 regarding
the restrictive measures concerning the Russia's destabilizing
actions in Ukraine, which amendment allows, after approval by the
Council of Ministers of Republic of Bulgaria, import by sea of
crude oil and petroleum products under Annex XXV of Council
Regulation (EU) 833/2014 with a origin from Russia under contracts
signed before June 4, 2022 or under additional contracts necessary
for execution of such contracts.
Additionally, with a decision of the Council of Ministers from
December 2, 2022 is allowed the execution in the period from
December 5, 2022 to December 31, 2024 of contracts signed before
June 4, 2022 or of additional contracts necessary for the execution
of such contracts, for the purchase, import or transfer of crude
oil transported by sea, and of petroleum products listed in Annex
XXV of Council Regulation (EU) 833/2014 concerning restrictive
measures in view of Russia's actions destabilizing the situation in
Ukraine, originating in Russia or exported from Russia, in
accordance with Art. 3m, paragraph 5 of the European
Regulation.
The Petrol Group does not carry out business activities on the
territory of Ukraine or Russia and does not bear direct negative
consequences of the breaking out military conflict. Moreover in
2022 the Group generating a significant increase in wholesales of
fuels, which reached BGN 220,554 thousand compared to BGN 16,817
thousand for the previous year, as BGN 168,557 thousand are from
export of fuels to third countries.
With the adopted decisions by the Council of the European Union
and the Council of Ministers aiming to ensure the consumption of
fuels, the Management of the Group believes that in the short-term
disruptions leading to significant losses for the Group should not
be expected. However in a situation of war on the territory of a
country close to Bulgaria, there is always a risk of expansion
and/or worsening of the military conflict with a subsequent
destructive consequences.
As a result of the effects of the pandemic and the resulting
military conflict in early 2022 and the economic consequences they
have caused and continue to cause, together with geopolitical risks
and high commodity prices, the Group's management expects
competition to intensify in the coming years, mainly in the retail
market, with a gradual exit of some of the smaller independent
traders from the fuel business. At the same time, trading margins,
particularly in the retail market, are forecast to be around or
below the European average.
In 2023, the Management will continue the process of analyzing
and exploring opportunities to expand the wholesale business,
including through the import and export of petroleum products.
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 of improving
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
delivery of new projects. From the end of 2021, an active program
is underway to increase the number of sites - self-service petrol
stations. The Group's investments will be primarily focused on the
construction of new petrol stations and increase the sales and
market share of Petrol AD, mainly through the transformation of
retail outlets into modern places for comprehensive customer
service.
The specifics of the Group's core business challenge the Group
to meet the expectations of shareholders, creditors and other
stakeholders, while developing its business model in line with the
environment, contributing to reducing carbon emissions and the
overall impact on the environment.
In the process of managing petrol stations and storage depots
and selling of fuels, petroleum products and other wholesale and
retail goods, the Group is responsible for addressing environmental
challenges in working with fuels and derivative chemicals,
minimizing the environmental impact of sales of wholesale and
retail fuels, as well as reducing the depletion of natural
resources.
The significant risks related to the impact of climate and
climate change, as well as the main commitments and activities
undertaken by the Group in this regard are detailed and are part of
the annual activity report of the Group.
Following the strategy for expanding the market share of the
retail market under the franchise program, the Group plans and
attracts more new petrol stations under the Petrol brand, as well
as develops and increases the structure of franchised petrol
stations leased.
The Group's management has conducted an active marketing policy.
Marketing events are planned, supported by sufficient media
appearances to lead to an increase of fuel sales. The Group will
continue to develop its card system and create a customer loyalty
system.
At the beginning of 2023, the Group's Board of Directors has
decided to take action to actively advertise and organize tenders
for the sale of unprofitable and non-operational sites in order to
eliminate maintenance costs and improve the Group's liquidity.
In addition to the above measures to increase the value of the
Group's equity, active actions have also been taken to expand the
Group's market share by securing the long-term use of oil depots -
licensed fuel storage depots strategically located in the country.
The management is in the process of analyzing and exploring
opportunities to increase the wholesale business, including through
importation of petroleum products.
The Group's management monitors the emergence of risks and
negative consequences as a result of the pandemic caused by
COVID-19, the military conflict between Russia and Ukraine and the
high levels of inflation, making ongoing assessments of the
possible effects on the Group's assets, liabilities and operations,
seeking to comply as far as possible with contractual commitments,
despite the force majeure circumstances that have arisen. In view
of the effects of the pandemic, military conflict and high
inflation, which are challenging economic activity in the country
and creating significant uncertainty about future business
developments, there is a real risk of a decline in sales and losses
for the Group. However, management believes that it will be able to
successfully steer the Group out of the emergency situation in
which it has been placed.
26. Disclosure of transactions with related parties
The Parent company (Controlling company) is Petrol AD. It has a
two-tier management system, which includes a Management Board (MB)
and a Supervisory Board (SB). Below are the names and functions of
the members of the Supervisory and Management Board of Petrol
AD.
Supervisory Board
Ivan Voynovski[2] Chairman
Petrol Correct EOOD, represented Member
by Nikolay Gergov
Petrol Asset Management Member
EOOD, represented by Armen
Nazaryan
Management Board
Grisha Ganchev Chairman of the Management Board
Georgy Tatarski Deputy chairman of MB and Executive
director
Milko Dimitrov Member of MB and Executive director
Lachezar Gramatikov Member of MB
Kiril Shilegov Member of MB
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, 2023 , amounts to BGN 652
thousand (BGN 626 thousand as at June 30, 2022) and unsettled
liabilities of BGN 79 thousand (BGN 90 thousand as at December 31,
2022), including liabilities to legal entities.
In the first half of 2023 other transactions with related
parties have been not carried out.
27. Contingent liabilities
As at June 30, 2023 the Group has contingent liabilities,
including issued mortgages and pledges of property, plant and
equipment, which serve as a collateral for bank loans and credit
limits for issuance of bank guarantees, as well as factoring
agreements granted to the Group and unrelated parties with a total
carrying amount of BGN 24,843 thousand, including in favour of
First Investment Bank AD - BGN 19,358 thousand, in favour of
Investbank AD - 3,413 thousand, and in favour of DSK AD - BGN 2,072
thousand.
Pursuant to an agreement dated October 17, 2018 and its annexes
the Group is a joint co-debtor and avalist on promissory note for
BGN 48,750 thousand in favour of Investbank AD 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 in favour of Investbank AD a special
pledge on its cash in the bank account opened in the bank-creditor
with total amount of BGN 10 thousand as at June 30, 2023 and a
special pledge on receivables from contractors for BGN 4,000
thousand average monthly turnover.
Pursuant to an agreement dated June 22, 2020 and its annexes the
Group is a joint debtor and avalist of a promissory note in favour
of Investbank AD under a credit agreement - overdraft from a
financial institution, granted to an unrelated party - a major fuel
supplier for a total amount of BGN 7,000 thousand.
Pursuant to an agreement dated June 17, 2021 the Group is a
joint debtor for BGN 600 thousand in favour of Investbank AD under
a credit limit for bank guarantees, granted to an unrelated party -
a supplier.
Pursuant to an agreement dated February 24, 2022 the Group is a
joint debtor for USD 1,260 thousand in favour of Investbank AD
under an investment loan agreement, granted to unrelated party -
supplier, totally repaid on June 26, 2023.
As at June 30, 2023 the Group bears a joint obligation for BGN
2,346 thousand according to a contract for debt dated January 13,
2017 on an obligation of a subsidiary until March 2018 - Elit
Petrol AD.
Under a bank agreement for revolving credit line dated September
21, 2016, bank guarantees were issued for a total amount of BGN
5,392 thousand as at June 30, 2023, including BGN 2,850 thousand in
favor of third parties - Group's suppliers, BGN 500 thousand in
favour of Ministry of Economy to its registration under the Law on
the Administrative Regulation of Economic Activities Related to Oil
and Petroleum Products and BGN 2,042 thousand to secure own
liabilities related to contracts under the Public Procurement Act.
As at June 30, 2023 the contract is secured by a pledge of all
receivables on bank accounts of the Parent company for BGN 47
thousand and mortgage of real estate and pledge of plants and
equipment, as well as assets owned by a subsidiary totaling BGN
1,500 thousand.
There is pending litigation in relation to a signed in 2015
guarantee contract of the liabilities of a subsidiary until
February 2018, arising of a cession contract with outstanding book
value of BGN 245 thousand. In April 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. The decision from
November 2021 has been appealed by the defendant and the case is
currently pending before a second instance. In August 2022, the
Sofia Court of Appeals (SCA) overturned the decision of the first
instance court in its entirety. The decision of the SCA has been
appealed and the case is currently pending before the Supreme Court
of Cassation.
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
under 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 consolidated
financial statements, 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 financial statements,
the filed proceedings against the subsidiaries - joint debtors for
estimation of the bank receivables due to the loan agreement for
USD 20,000 thousand is pending before the first-instance court. The
Management expects favorable decision by the competent court. 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.
Corporate Commercial bank AD (in insolvency) - 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 the Group because the liability as guarantor
has not occurred and / or extinguished pursuant to Art. 147, par. 2
of the LOC. At the time of signing of the guarantee agreement, the
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 the 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.
The Group has appealed its receivables to the subsidiary (until
December 2015). The filed receivables are included in the list of
accepted receivables under Art. 686 of the Commercial Act (CA), but
the same are disputed by another creditor in the bankruptcy
proceedings. At present, the pending court proceedings to establish
the existence of these receivables under Art. 694 of the CA ended
with a decision, as the court accepted the receivables of the Group
up to the amount of BGN 4,794 thousand.
On March 10, 2021 the Group signed with a commercial bank an
agreement for purchasing of receivables on trade invoices (standard
factoring) with a total limit of advance payment of BGN 402
thousand and interest rate, based on savings (IRBS) in BGN,
increased with a margin of 3.8382 points, but not less than 4%
annually on the amount paid in advance. The contract is secured by
a pledge of receivables on bank accounts of the Group, opened in
the bank for 47 thousand. As at June 30, 2023 the Group has no
liabilities related to this factoring agreement.
On November 4, 2021, the Group signed with Allianz Bank Bulgaria
AD a factoring agreement with a regress with an interest rate, Base
Deposit Index for Companies +1.6%, but not less than 1.6% per year
on the amount of the advance provided. As at June 30, 2023, the
Group has liabilities at the amount of BGN 99 thousand in
connection with the financing received under this factoring
agreement.
As at June 30, 2023 funds in bank accounts at the amount of BGN
41 thousand are blocked in enforcement cases to which the Group is
a party.
28. Events after the reporting date
At the end of July 2023, the Group signed an agreement for the
sale of 100% of the capital of the subsidiary Svilengrad Oil EOOD
with a sale price of BGN 2,500 thousand.
At the end of July 2023, the Group entered into a revolving
credit facility agreement with a total limit of BGN 220,000
thousand and a drawdown period until August 15, 2033. The funds are
intended for investment purposes, refinancing of current exposures
for working capital and credit lines under which bank guarantees
and letters of credit have been issued, as well as for working
capital related to the Parent company's core business, including
fuel supplies and prepayments in order to negotiate better supply
prices, purchase and storage of fuels, settlement of accounts with
counterparties and expansion of operations through import and
reexport of fuels and other petroleum products. The funds will be
disbursed in phases in four tranches once the conditions set out in
the agreement have been met.
[1] EBITDA ( earnings before interest , tax , depreciation and
amortization )
[2] Ivan Alipiev Voinovski - died on February 23, 2017. On
February 18, 2019, an EGMS of Petrol AD was held, where was voted a
replacement of the deceased Ivan Voynovski. The application for
entry in the CR was rejected, which was appealed by Petrol AD
within the statutory term, and the registration proceedings were
suspended at the request of minority shareholders until the
District Court - Lovech rules on proceedings for annulment of
decisions taken. In May 2019, the Lovech District Court ruled with
a decision revoking the refusal and returning the file to the
Registry Agency to make the requested entry after the resumption of
the suspended registration proceedings. At present, the court
proceedings on the claims for annulment of the decisions of EGMS
from February 2019 are pending.
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END
IR FVLFBXKLLBBE
(END) Dow Jones Newswires
September 08, 2023 07:42 ET (11:42 GMT)
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