TIDM74JJ
RNS Number : 0965U
Petrol AD
30 November 2021
PETROL AD
Legal Entity Identifier (LEI): 4851003SBNLWFQX4XS80
30 November 2021
Petrol AD ("74JJ"), announces the publication of its
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
OF PETROL GROUP
AND CONDENSED EXPLANATORY NOTES TO THE INTERIM CONSOLIDATED
FINANCIAL STATEMENTS FOR THE PERIODED SEPTEMBER 30, 2021
(This document is a translation of the original Bulgarian
document,
in case of divergence the Bulgarian original shall prevail)
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
For the period ended September 30
2021 2020
BGN'000 BGN'000
Revenue 366,889 295,976
Other income 4,283 1,824
Cost of goods sold (318,073) (250,407)
Materials and consumables (3,013) (2,659)
Hired services (25,909) (26,223)
Employee benefits (16,477) (14,535)
Depreciation and amortisation (4,307) (4,183)
Impairment losses 6 (2,181)
Other expenses (822) (501)
Finance income 1,096 1,432
Finance costs (3,656) (3,809)
Profit (loss) before tax 17 (5,266)
--------- ---------
Tax income (32) 474
--------- ---------
Loss for the period (15) (4,792)
--------- ---------
Other comprehensive income
Items that will not be reclassified
to profit or loss:
Revaluation - 27,730
Income tax relating to items not reclassified - (2,767)
--------- ---------
Other comprehensive income for the
period - 24,963
Total comprehensive income for the
period (15) 20,171
Loss attributable to:
Owners of the Parent company (15) (4,792)
Non-controlling interest - -
Loss for the period (15) (4,792)
========= =========
Total comprehensive income attributable
to:
Owners of the Parent company (15) 20,171
Non-controlling interest - -
--------- ---------
Total comprehensive income for the
period (15) 20,171
========= =========
Loss per share (BGN) (0.00) (0.18)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Sept. 30 Dec. 31
2021 2020
BGN'000 BGN'000
Non-current assets
Property, plant and equipment and
intangible assets 39,583 40,479
Investment properties 1,662 1,699
Right-of-use asset 10,856 14,176
Goodwill 19,844 19,844
Deferred tax assets 2,049 1,977
Total non-current assets 73,994 78,175
-------- --------
Current assets
Inventories 22,291 18,779
Loans granted 23,601 23,202
Trade and other receivables 35,143 26,779
Non-current assets held-for-sale 1,422 8
Cash and cash equivalents 2,969 2,773
Total current assets 85,426 71,541
-------- --------
Total assets 159,420 149,716
======== ========
Equity
Registered capital 109,250 109,250
Reserves 43,329 43,682
Accumulated loss (123,815) (124,153)
--------- ---------
Total equity attributable to the
owners of the Parent company 28,764 28,779
--------- ---------
Non-controlling interests 23 23
--------- ---------
Total equity 28,787 28,802
---------
Non-current liabilities
Loans and borrowings 36,289 36,543
Liabilities under lease agreements 7,195 9,796
Employee defined benefit obligations 773 773
Total non-current liabilities 44,257 47,112
--------- ---------
Current liabilities
Trade and other payables 75,778 59,543
Loans and borrowings 6,740 10,008
Liabilities under lease agreements 3,754 4,251
Income tax liability 104 -
Total current liabilities 86,376 73,802
--------- -------------------
Total liabilities 130,633 120,914
--------- -------------------
Total equity and liabilities 159,420 149,716
========= ===================
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Equity attributable to the Non-controlling Total
owners of the Parent company interests equity
Registered General Reval. Accumulated Total
capital reserves reserve profit
(loss)
BGN'000 BGN'000 BGN'000 BGN'000 BGN'000 BGN'000 BGN'000
Balance at
January
1, 2020 109,250 18,864 - (113,564) 14,550 23 14,573
Comprehensive
income
for the period
Loss for the
period - - - (8,929) (8,929) - (8,929)
Revaluation of
defined
benefit
obligations - - - (27) (27) - (27)
Revaluation of
property,
plant and
equipment - - 27,730 (1,968) 25,762 - 25,762
Tax effect on
revaluation
of property,
plant
and equipment - - (2,774) 197 (2,577) - (2,577)
----------
Total
comprehensive
income - - 24,956 (10,727) 14,229 - 14,229
----------- ---------- ---------- ------------ -------- ---------------- --------
Transfer of
revaluation
reserve of sold
assets
to retained
earnings,
net of taxes - - (138) 138 - - -
----------- ---------- ---------- ------------ -------- ---------------- --------
Balance at
December
31, 2020 109,250 18,864 24,818 (124,153) 28,779 23 28,802
=========== ========== ========== ============ ======== ================ ========
Comprehensive
income
for the period
Loss for the
period - - - (15) (15) - (15)
Total
comprehensive
income - - - (15) (15) - (15)
----------- ---------- ---------- ------------ -------- ---------------- --------
Transfer of
revaluation
reserve of sold
assets
to retained
earnings,
net of taxes - - (353) 353 - - -
Balance at
September
30, 2021 109,250 18,864 24,465 (123,815) 28,764 23 28,787
=========== ========== ========== ============ ======== ================ ========
CONSOLIDATED STATEMENT OF CASH FLOWS
For the period ended September 30
2021 2020
BGN'000 BGN'000
Cash flows from operating activities
Receipts from customers 534,891 441,255
Payments to suppliers (470,500) (378,262)
VAT and excise paid to the budget, net (42,070) (42,513)
Payments related to personnel (15,796) (13,815)
Income tax paid - (3)
Other cash flows from operating activities,
net 1,621 (1,274)
---------- ----------
Net cash flows from operating activities 8,146 5,388
Cash flows from investing activities
Payments for purchase of property, plant
and equipment (643) (454)
Proceeds from sale of property, plant and
equipment 1,818 40
Payments for loans granted (535) (2,470)
Proceeds from loans granted 439 3,146
Interest received on loans and deposits 7 97
Proceeds from other investments 20 158
Net cash flows used in investing activities 1,106 517
Cash flows from financing activities
Proceeds from loans 152 -
Repayment of loans and borrowings (1,957) (241)
Lease payments (3,591) (3,532)
Interest, bank fees and commissions paid,
net (3,490) (2,567)
Other cash flows from financing activities,
net (210) (168)
Net cash flows from financing activities (9,096) (6,508)
Net decrease in cash flows during the period 156 (603)
Cash at the beginning of the period 2,773 3,486
Effect of movements in exchange rates (11) 4
---------- ----------
Cash as per cash flow statement at the
end of the period 2,918 2,887
Restricted cash 51 130
---------- ----------
Cash as per statement of financial position 2,969 3,017
========== ==========
I. General Information
Petrol AD (the Parent company) was registered in Bulgaria in
1990 and entered in the Commercial Register to the Registry Agency
with UIC 831496285. The headquarter address of the Parent company
is 12 Tyrgovska Str., Hotel Lovetch in Lovetch city. As at the end
of the reporting period shareholders are legal entities, the
country - through the Ministry of Energy and individuals.
The main activity of Petrol AD and its subsidiaries (the Group)
is related with trading of petrol products, non-oil products,
merchandise and services.
These explanatory notes are prepared according to the
requirements of Art. 100o1, para.5 of the Public Offering of
Securities Act (POSA) in relation to Art. 33, para.1, item 2 of the
Ordinance No 2 of September 17, 2003 on the prospectuses in public
offering and admission of securities for trading on a regulated
market and for disclosure of information by the public companies
and other issuers of securities, and represent information about
important events occurred during the first quarter of 2021. The
explanatory notes reflect their influence on the results in the
statements for the first quarter of 2021 and describe of the main
risks and uncertainties, which stay ahead of the Petrol Group in
the rest of the financial year and comprise information for
transactions with related parties and/or interested parties, as
well as information for emerging significant receivables and/or
payables during the same period.
II. Information on important events, occurred in the third
quarter of 2021 and cumulatively from the beginning of the
financial year to the end of the current quarter
General
These interim consolidated financial statements have been
prepared in accordance with International Financial Reporting
Standards (IFRS) as adopted by the Commission of the European Union
(EU).
These interim consolidated financial statements have been
prepared under the historical cost convention, except for
provisions, assets and liabilities under IFRS 16 reported at the
present value of expected future payments. When compiling it, the
same accounting policy and calculation methods applied in the last
annual financial statement have been followed.
Property, plant, equipment, intangible assets and non-current
assets held for sale
From January 1, 2020 the Group has changed its approach to the
subsequent valuation of property, plant and equipment under the
revaluation model under IAS 16 and intangible assets under IAS 38.
The revaluation model provides, after initial recognition for an
asset, any property, plant and equipment whose fair value may to be
measured reliably, to be carried at revalued amount, which is the
fair value of the asset at the date of revaluation less any
subsequent accumulated depreciation as well as subsequent
accumulated impairment losses. The revalued (to fair) value of
property, plant and equipment and intangible assets was initially
determined through a market valuation by an independent appraiser.
Revaluations should be carried out at sufficiently regular
intervals to ensure that the carrying amount does not differ
materially from the fair value that would be determined using the
fair value at the statement of financial position date.
As at September 30, 2021 the Group has property, plant,
equipment and intangible assets with total carrying amount of BGN
39,583 thousand.
Property, plant and equipment with a carrying amount of BGN
23,589 thousand are mortgaged or pledged as collaterals under bank
loans, granted to the Group and to unrelated parties, under credit
limit agreements for issuance of bank guarantees.
In January 2021, as a creditor in an enforcement proceeding
against an unrelated party, from which there are overdue
receivables on loans granted and trade and other receivables, the
Group was declared as a buyer through a distribution protocol by
(Private Bailiff) PB for a public sale of property owned by an
unrelated party - debtor. The acquisition price of the property was
paid by offsetting counter receivables on loan granted in previous
periods and interest on it, as well as trade receivables,
re-invoicing and legal interest on them at the total amount of BGN
1,340 thousand and by additional payment at the amount of BGN 210
thousand. The Group paid the price within the statutory term and in
February 2021, when the award decree, issued by the PB, came into
force, the Group made the set-off and acquired the ownership of the
property. In the consolidated statement of financial position as at
September 30, 2021 the property is classified as a held-for-sale
asset.
Investment property
The investment properties of the Group, representing a land and
a building, were acquired in December 2016 through a business
combination. The carrying amount of the investment property is the
maximum approximation of their fair value, which as at September
30, 2021 is BGN 1,662 thousand. The Group measures the fair value
of investment property for disclosure purposes using an appraisal
of an independent appraiser done using the methods of market
comparison, rental income capitalization and the method of real
value. The investment properties are part of a set of assets
serving to secure liabilities of up to BGN 1,500 thousand under a
revolving credit line agreement signed in 2016.
Leases
The consolidated statement of financial position as at September
30, 2021 presents the following items and amounts related to lease
agreements:
Consolidated statement of financial position September
30, 2021
BGN'000
Right-of-use assets, incl.: 10,856
Properties (lands and buildings) 5,666
Transport vehicles 219
Machinery, plants and equipment 4,971
Liabilities under leases, incl.: (10,949)
Current liabilities (3,754)
Non-current liabilities (7,195)
The Group has chosen to use the exclusions, provided by the
Standard for lease contracts, which ended within 12 months and
lease contracts for which the base asset is with low value. The
analysis of the terms of the main rent contracts for petrol
stations shows that they should be treated as short-term within the
scope of the exclusion, because they do not have a guaranteed
period, the rent price is determined for six months periods, and
both parties have the right to cease the contract for any petrol
site with one to three months advance notice without any onerous
sanctions, that would justify the Group's assessment of the
probability of exercising the termination option by landlords as
unlikely.
Loans Granted
As at 30 September, 2021 the Group reports receivables on
short-term trade loans, net of impairment at the total amount of
BGN 23,601 thousand. The loans are granted to unrelated parties
with the following interest rates and maturity:
Debtor Receivables Initial Accrued Annual
on loans amount impairment interest
granted
BGN'000 BGN'000 BGN'000 % Maturity
31 December
Company 6,019 6,669 (650) 6.70 % 2021
31 December
Company 5,510 6,028 (518) 5.00 % 2021
31 December
Company 4,575 5,072 (497) 6.70 % 2021
31 December
Company 3,219 3,736 (517) 5.00 % 2021
31 December
Company 2,740 2,750 (10) 6.70 % 2021
31 December
Company 610 610 - 6.70 % 2019
31 December
Company 429 429 - 6.70 % 2019
Company 356 356 - 7.00 % 7 August 2021
31 December
Company 73 73 - 5.00 % 2021
31 December
Company 65 1,502 (1,437) 6.70 % 2021
31 December
Company 5 17 (12) 6.70 % 2021
28 October
Company - 5,190 (5,190) 0.00 % 2015
28 October
Company - 2,210 (2,210) 9.50 % 2015
Company - 1,633 (1,633) 8.75 % 17 July 2015
21 January
Company - 44 (44) 9.50 % 2017
26 August
Company - 13 (13) 8.50 % 2015
--------- ------------ --------- ---------- --------------
23,601 36,332 (12,731)
========= ============ ========= ============ ========== ==============
In April 2021 the Group granted a loan to an unrelated party
with a credit limit of up to BGN 500 thousand, used in tranches for
one-year period from the signing date at 5 per cent interest rate.
With an annex form August 2021 the contracted credit limit is
increased to BGN 1,600 thousand. As at the date of preparation of
these financial statements, the Group has no unsettled receivables
under this loan granted.
In April 2021 the Group granted a loan to an unrelated party
with a credit limit of up to BGN 75 thousand, used in tranches
until December 31, 2021 at 5 per cent annual interest rate. As at
September 30, 2021 the Group has receivables of BGN 72 thousand
principal and BGN 1 thousand interest.
In March 2018 the Group entered into an agreement for granting a
money loan to unrelated party with a credit limit up to BGN 300
thousand at 6.7 per cent annual interest rate and repayment period
until December 31, 2018. With an annex the term of the loan was
extended and the limit was increased. In February 2021, the Group
made a set-off on counter-liabilities in connection with the
acquisition of property rights through a public sale by a Private
Bailiff. As at September 30, 2021 the receivables under the loan
are BGN 572 thousand principal and BGN 38 thousand interest.
Cash and cash equivalents
As at September 30, 2021 the Group reported cash amounted to BGN
2,969 thousand as BGN 51 thousand are blocked as collateral under
enforcement cases.
In the notes under Art. 33a2 of Ordinance No2 to the Public
Offering of Securities Act (POSA), as cash equivalents of BGN 1,282
thousand, is presented the cash collected from the trade sites as
at the end of the reporting period and actually registered in the
Group's bank accounts at the beginning of the next reporting
period.
Registered capital
The Group's registered capital is presented at its nominal
value. The registered capital of the Group represents the
registered capital of the Parent company Petrol AD.
As at the end of the reporting period shareholders in the Parent
company are as follows:
Shareholder Sept. 30,
2021
Alfa Capital AD 28.85 %
Yulinor EOOD 23.11 %
Perfeto Consulting EOOD 16.43 %
Trans Express Oil EOOD 9.86 %
Petrol Bulgaria AD 7.32 %
Corporate Commercial Bank AD 5.51 %
Storage Invest EOOD 3.66 %
VIP Properties EOOD 2.26 %
The Ministry of Economy of the Republic of Bulgaria 0.65 %
Other minority shareholders 2.35 %
----------
100.00 %
==========
The Management of the Parent company has undertaken series of
measures related to optimization of its capital adequacy. At
several General Meetings of Shareholders (GMS) held in the period
of 2016 - 2017 a decision for reverse-split procedure for merging 4
old shares with a nominal value of BGN 1 into 1 new share with a
nominal value of BGN 4 and consequent decrease of the capital of
the Parent company in order to cover losses by decreasing the
nominal value of the shares from BGN 4 to BGN 1, was voted. In
March 2018, following a decision of the Lovech Regional Court,
which repealed the refusal of the Commercial Register to register
the decision voted on EGMS for merging 4 old shares with a nominal
value of BGN 1 into 1 new share with a nominal value of BGN 4, the
applied change was registered in CR resulting in registered capital
of the Parent company of BGN 109 249 612, distributed in 27 312 403
shares with a nominal value of BGN 4 each. The change in the
capital structure of the Parent company was registered also in
Central Depositary AD.
The submitted on April 2018 application for registration of the
voted on EGMS decision for the second stage of the procedure of the
Parent company's capital to be decreased by decreasing the nominal
value of the shares from BGN 4 to BGN 1 in order to cover losses,
was refused by the Commercial Register.
On EGMS of Petrol AD held on November 8, 2018 the decision to
decrease the capital of the Parent company in order to cover losses
by decreasing the nominal value of the shares from BGN 4 to BGN 1
was voted again. A refusal of the application for registration of
the decision in CR was enacted, which was appealed by the Parent
company within the statutory term. The minority shareholders
disputed the decision of the EGMS and additionally to the refusal
the application proceeding was postponed until the pronouncing of
the Lovech Regional Court on the court proceedings, initiated on
minority shareholders request. In March 2019 the Lovech Regional
Court enacted a decision, which rules the CR to register the
decrease of the capital after a resumption of the registration
proceedings following the pronouncing on the legal proceedings
initiated be the minority shareholders request.
In February 2019 was held a new EGMS, where the decision for
reduction of capital was voted again and a decision for
substitution of the deceased member of Supervisory Board Ivan
Voynovski with Rumen Konstantinov was taken. A refusal on the
application for registration of these circumstances in the file of
the Parent company was enacted, which was appealed by the Parent
company within the statutory term. In addition to the refusal, the
registration proceeding was ceased on request of minority
shareholders until the RC - Lovech rules on. In May 2019 the Lovech
Regional Court enacted a decision, which repealed the enacted
refusal and turn back the case to the Registry Agency for
registration of the application after a resumption of the ceased
registration proceedings. At present, the court proceedings for the
repealing of the decisions of EGMS from February 2019 are
pending.
Current income tax liabilities and tax audits
As at September 30, 2021 the Group has current corporate tax
liabilities of BGN 104 thousand.
Loans and borrowings and factoring liabilities
As at September 30, 2021 the Group has total liabilities under
received bank, debenture and trade loans of BGN 43,029 thousand,
including BGN 6,740 thousand current liabilities.
Bank loans
In July 2016, the Parent company entered into an investment loan
agreement, prepaying the liabilities on finance lease contract from
November 2015. Collateral of the loan is a mortgage of property,
acquired through finance lease and pledge of receivables. The term
of the contract is May 2022 and the contracted interest rate is
3mEuribor+5.25 per cent. In April 2020 the Group renegotiated the
terms of the investment loan agreement, as the interest rate on
regular principal was reduced to 3mEuribor + 3.5 per cent, but not
less than 3.5 per cent. With an annex from the beginning of 2021,
the term of the loan has been extended until September 30, 2022. As
at September 30, 2021 the liabilities under the bank loan amount to
BGN 616 thousand.
In September 2018 the Group entered into a credit-overdraft
agreement on current account in commercial bank, intended for
working capital with maximum allowed amount of BGN 2,000 thousand
and repayment period until January 31, 2019 and contracted interest
rate as Savings-based Interest Rate (SIR) plus added amount of
6,1872 points, but cumulatively not less than 6.5 per cent
annually. The credit is secured with a special pledge of its goods
in turnover, representing oil products and with pledge of
receivables on bank accounts. In December 2018, as a result of a
signed annex to an agreement from 2016 for revolving credit line
with the same bank, the Group negotiated an increase of the amount
of the credit line of BGN 9,500 thousand with an additional amount
of BGN 11,500 thousand, by which the total amount of credit line
rose to BGN 21,000 thousand. The line is separated in total limit
of BGN 13,500 for issuance of bank guarantees and BGN 7,500 for
refinancing of the received credit-overdraft of BGN 2,000 thousand
and the rest for working capital. The increased amount of the
credit limit on the revolving credit line is covered additionally
with establishment of mortgages and pledges of properties, plants
and equipment and special pledge on goods in turnover, representing
oil products. In June 2019 the loan was partially repaid and the
limit for working capital decreased from BGN 7,500 thousand to BGN
7,000 thousand as at December 31, 2020. In January 2020 the Parent
company renegotiated the terms of the used credit line granted to
it by a commercial bank under a revolving credit line agreement and
achieved a reduction of the annual compound interest of SLP +
5,2802 per cent, but not less than 5.5 per cent. In March 2021 and
September 2021 the Group partially repaid the principal of this
tranche of the credit line and as at September 30, 2021 is BGN
5,350 thousand.
Debenture loans
In October 2006, the Parent company issued 2,000 registered
transferable bonds with fixed annual interest rate of 8.375 per
cent and emission value of 99.507 per cent of the nominal, which is
determined at EUR 50,000 per bond. The purpose of the bond issue is
to provide funds for working capital, investment projects financing
and restructuring of previous Group's debt. The principal was due
in one payment at the maturity date and the interest was paid once
per year. At the general meetings of the bondholders conducted in
October and December 2011, it was decided to extend the term of the
issue until January 26, 2017. On December 23, 2016, a procedure for
extension of the bond issue to 2022 and reduction of the interest
rate in the range from 5.5 per cent to 8 per cent was successfully
completed.
In September 2020, the Parent company successfully completed a
procedure for renegotiation of the terms of the debenture loan. The
maturity of the principal of the debenture loan is deferred until
January 2027, and the agreed interest rate is reduced to 4.24 per
cent per year, as the periodicity of the due interest (coupon)
payments is every six months - in January and in July of each year
until the maturity of the loan.
As at the date of preparation of these financial statements the
nominal value of the debenture loan is EUR 18,659 thousand.
The liabilities under the debenture loan are disclosed in the
statement of financial position at amortised cost. The annual
effective interest rate after the term extension of the bond issue
is 4.66 per cent. (incl. 4.24 per cent annual coupon rate).
Loans from non-financial institutions
In February 2021 the Group received a short-term loan from
unrelated party with a credit limit of BGN 200 thousand, used in
tranches at 4 per cent annual interest rate due to December 31,
2021. With additional annexes the contracted credit limit is
increased to BGN 800 thousand. As at the date of preparation of
these consolidated financial statements the Group has liabilities
under this loan for BGN 400 thousand principal and BGN 1 thousand
interest.
Factoring
In February 2019 the Group entered into an agreement with a
commercial bank for factoring with special terms and without
regress for transferring of preliminary approved receivables with a
maximum period of the deferred payments up to 120 days from the
date of invoice issuance with a payment in advance of 90 per cent
of the value of the transferred receivables including VAT. The
commission for factoring services is 0.35 per cent of the total
value of the transferred invoices plus additional annual taxes. The
interest for the amounts paid in advance is Base Deposit Index for
Legal Entities + 1.95 per cent, accrued daily and paid on monthly
basis at the end of every calendar month. With an annex from March
2021 the factoring commission was decreased to 0.25 per cent on the
total amount of the transferred invoices including VAT. As at
September 30, 2021, the Group has BGN 109 thousand exposure under
this factoring agreement.
In March 2021 the Group entered into an agreement with a
commercial bank for purchasing of trade receivables (standard
factoring) with a total limit of the advanced payments up to BGN
402 thousand and interest rate based on savings in BGN increased by
3.8382 points, but not less than 4 per cent per annum on the amount
of the advanced payment. The contract is covered with a pledge of
receivables on bank accounts of the Parent company and its
subsidiary with a book value as at September 30, 2021 of BGN 145
thousand. As at September 30, 2021, the Group has no outstanding
liabilities under this factoring agreement.
Operating lease agreements
The Group is lessee under operating lease agreements. The
recognised rental expenses in the statement of profit or loss and
other comprehensive income, include expense at the amount of BGN
11,149 thousand for renting of fuel stations under operating lease,
which fall within the exceptions of IFRS 16 and which agreements
include clause stipulating that both parties have the right to
cease the agreement for each separate fuel station or as a whole
with an immaterial penalty.
Subsidiaries
The Parent company (the Controlling company) is Petrol AD. The
subsidiaries included in the consolidation, over which the Group
has control as at September 30, 2021 and December 31, 2020 are as
follows:
Subsidiary Main activity Ownership Ownership
interest interest
Petrol Properties Trading movable and immovable 100 per 100 per
EOOD property cent cent
Varna Storage Trade with petrol and petroleum 100 per 100 per
EOOD products cent cent
Petrol Finance Financial and accounting 100 per 100 per
EOOD services cent cent
Elit Petrol -Lovech Trade with petrol and petroleum 100 per 100 per
AD products cent cent
Lozen Asset AD Acquisition, management and 100 per 100 per
exploitation of property cent cent
Kremikovtsi Oil Processing, import, export
EOOD and trading with petroleum 100 per 100 per
products cent cent
Shumen Storage Processing, import, export
EOOD and trading with petroleum 100 per 100 per
products cent cent
Office Estate Ownership and management 100 per 100 per
EOOD of real estates cent cent
Svilengrad Oil Processing, import, export
EOOD and trading with petroleum 100 per 100 per
products cent cent
Varna 2130 EOOD Trade with petrol and petroleum 100 per 100 per
products cent cent
Petrol Finances Financial and accounting 99 per 99 per
OOD services cent cent
Petrol Technologies IT services and consultancy 98,80 per 98,80 per
OOD cent cent
Contingent liabilities, including information for newly arising
significant liabilities for the reporting period
As at September 30, 2021 the Group has contingent liabilities,
including issued mortgages and pledges of property, plant and
equipment and non-current assets held for sale, which serve as a
collateral for bank loans granted to the Group and unrelated
parties and credit limits for issuance of bank guarantees with
total carrying amount of BGN 23,589 thousand.
The Group is a joint co-debtor under loan agreement of unrelated
supplier, including limit for overdraft and limit for stand-by
credit for issuance of bank guarantees in favour of Customs Agency.
The total amount of the utilized funds and issued bank guarantees
of all borrower's exposures to the Bank shall not exceed BGN 45,000
thousand. In relation to this credit agreement, the Group has
established a special pledge on its cash in the bank account opened
in the bank-creditor with total amount of BGN 51 thousand as at
September 30, 2021 and a special pledge on receivables from
contractors for BGN 4,000 thousand average monthly turnover.
The Group bears a joint obligation according to a contract for
debt from January 2017 on an obligation of a subsidiary until
February 2018 for BGN 2,346 thousand as at September 30, 2021.
Under a bank agreement for revolving credit line signed in 2016,
bank guarantees were issued for a total amount of BGN 9, 850
thousand as at September 30, 2021, including BGN 7, 800 thousand in
favor of third parties - Group's suppliers, BGN 500 thousand for
securing the operations of the Parent company related to its
registration under the Law on the Administrative Regulation of
Economic Activities Related to Oil and Petroleum Products, and BGN
1,550 thousand to secure own liabilities related to contracts under
the Public Procurement Act. In December 2020, bank guarantees at
the amount of BGN 1,055 thousand, securing audited acts appealed by
the Group, were returned to the bank by the National Revenue Agency
as a result of the final completion of the court proceedings. The
bank agreement is secured by mortgages of property, pledge of
plants and equipment, pledge of all receivables on bank accounts of
the Parent company and a subsidiary. In July 2017 the credit limit
under the revolving credit line was increased from BGN 8,500
thousand to BGN 9,500 thousand. Assets amounted to BGN 1,500
thousand, owned by a subsidiary, additionally secured the credit
limit. With an annex from December 2018 the limit is increased to
BGN 21,000 thousand and is additionally secured with mortgages and
pledge of property, plants and equipment, and special pledge of
goods in turnover, namely petroleum products. In 2021 the Group
partially repaid the principal of the credit line and as at
September 30, 2021 it amounts to BGN 5,350 thousand.
As a collateral of an investment loan signed in July 2016, a
mortgage of property, acquired through the investment loan and a
pledge of receivables, arising from opened bank accounts of the
Parent company to the amount of the outstanding balance of the
loan, which as at the September 30, 2021 amounting to BGN 616
thousand.
There is a pending litigation in relation to a signed in 2015
guarantee contract of the liabilities of a subsidiary until
February 2018, arising of a cession contract with outstanding book
value as at December 31, 2019 of BGN 245 thousand. In April 2020 a
final decision on the pending case was ruled. The court held that
the Group is responsible as a guarantor for the obligations of the
subsidiary under the cession contract. The Court of Appeal annulled
the decision of the first-instance court in its entirety and found
that the Group's claim under the warranty agreement had been
established jointly with the other related party. The decision of
the Court of Appeal was appealed by the Parent company in the
Supreme Court of Cassation, but was not allowed to appeal. The
Group has filed a claim to establish the non-existence of these
receivables, and the case initiated is pending. A collateral at the
amount of BGN 25 thousand to the court's account was admitted for a
future claim against the provision of a guarantee in favor of the
Group, as a result of which the enforcement proceedings initiated
against the Group for these receivables were suspended. The funds
given as collateral under Art. 180 and Art. 181 of the Law on
Obligations and Contracts (LOC) at the amount of BGN 245 thousand
in the case initiated against the Group in 2015, together with the
amount of BGN 93 thousand, were collected by the bailiff in the
course of the enforcement proceedings initiated against the Group.
However, they have not been distributed due to the suspension of
the enforcement case, based on the security of a future claim
provided in favor of the Group and remain blocked on the account of
the bailiff until the final conclusion of the litigation.
In the previous reporting periods companies from the Group have
entered into the debt under two loan agreements of a subsidiary
with a bank-creditor (until December 2015) for USD 15,000 thousand
and USD 20,000 thousand, respectively. In 2015 the bank -creditor
acquired court orders for immediate execution and receiving orders
against the subsidiaries - joint debtors. In relation to the claims
filed by the subsidiaries, the competent court has revoked the
immediate enforcement orders and has invalidated the receiving
orders. In October and December 2015 the creditor has filed claims
under Art. 422 of Civil Procedure Code (CPC) against the
subsidiaries for the existence of the receivables under each loan
agreement. The court proceedings of the creditor are still
pending.
In December 2016 the first-instance court decreed a decision
(the Decision) which admit for established that the bank has a
receivable amounted to USD 15,527 thousand from the subsidiaries -
joint debtors, arising from a signed loan agreement for USD 15,000
thousand. With the same decision the court has ordered the
joint-debtors to pay BGN 411 thousand to the bank - creditor for
legal advisory fees and court dispute expenses and BGN 538 thousand
state fee in favor of the judiciary state for the ordered
proceedings and BGN 538 thousand state fee for claim proceedings.
In January 2017, the co-debtors have filed in time appeals against
the court decision, because of that the decision did not come into
force. As at the date of the preparation of these 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 explanatory notes,
the filed proceedings against the subsidiaries - joint debtors for
estimation of the bank receivables due to the loan agreement for
USD 20,000 thousand is pending before the first-instance court. The
Management expects favorable decision by the competent court. In
2018 the Parent company sold its interest in one of co-debtor
subsidiaries and the potential risk for the Group is reduced to the
court proceedings against the second subsidiary.
A creditor of a subsidiary (until December 2015) unreasonably
claimed in court the responsibility of the Parent company under a
contract of guarantee for liabilities arising from a contract for a
framework credit limit as a result of that the bank accounts of the
Parent company amounting to USD 29,983 thousand were garnished.
This claim was disputed in court by Petrol AD because the liability
as guarantor has not occurred and / or extinguished pursuant to
Art. 147, para. 2 of the LOC. At the time of conclusion of the
guarantee deadline of the arrangements between the lender and
subsidiary contractual framework for credit limit was July 1, 2014.
The term of the framework credit limit was extended without the
consent of the customer, therefore the responsibility of the latter
has fallen by six months after initially agreed period, during
which the creditor has brought an action against the principal
debtor. The term under Art. 147, para. 1 of the LOC is final and
upon its expiration the Parent company's guarantee has been
terminated, so the objection of the Parent company was granted by
the court and imposed liens on bank accounts were lifted.
Following the cancellation of the writ of execution, pursuant to
order proceedings, which imposed liens on bank accounts of the
Parent company, the creditor has initiated legal claim proceedings
under Art. 422 of the CPC to establish the same claims against the
subsidiary (until December 2015) and the guarantor Parent company.
In these proceedings the objections are repeated that liability as
guarantor has not occurred and / or extinguished pursuant to Art.
147, para. 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.
In March 2021 the Group entered into an agreement with a
commercial bank for purchasing of trade receivables (standard
factoring) with a total limit of the advanced payments up to BGN
402 thousand and interest rate based on savings in BGN increased by
3.8382 points, but not less than 4 per cent per annum on the amount
of the advanced payment. The contract is covered with a pledge of
receivables on bank accounts of the Group with a book value as at
September 30, 2021 of BGN 145 thousand. As at September 30, 2021,
the Group has no outstanding liabilities under this factoring
agreement.
The Group is a joint debtor and a guarantor on a promissory note
under a loan agreement - overdraft from a financial institution,
granted to an unrelated party - a major fuel supplier with a total
amount of BGN 60,975 thousand.
The Group has signed a promissory note as a collateral to a
contract for electricity for the amount of BGN 100 thousand.
In May 2020, the Parent company received from the Commission for
Protection of Competition a decision for initiated proceedings to
establish any violations under Art. 15 and Art. 21 of LPC and / or
under Art. 101 and Art. 102 of the Treaty on the Functioning of the
European Union (TFEU) in determining the prices of mass automotive
fuels in the production / import - storage - wholesale - retail
trade, both at the individual horizontal and vertical levels, by
eleven companies, including the Parent company. At present, the
proceedings in the case are pending at the CPC.
As at September 30, 2021 cash at bank accounts at the amount of
BGN 51 thousand are blocked under enforcement proceedings.
Other significant events occurred during the reporting quarter
and cumulatively from the beginning of the financial year
As a result of the negative impact and the consequences of the
global pandemic and the widespread of the new coronavirus COVID-19,
the Group has undertaken series of measures for reorganizing the
activities of some of its trade sites, establishing a reduced
working time of part of the personnel, renegotiation of the terms
with contractors, deferral of liabilities and optimization of
costs. At the end of March 2020 the Employment Agency opens an
application procedure under Art. 1 of Decree No 55 from March 30,
2020 determining the terms and conditions for the payment of
compensation to employers in order to preserve the employees under
the State of Emergency, announced with a decision by the Parliament
on March 13, 2020, substituted later by Decree No 151 from 2020. In
2021 the Group continued to submit application documents under this
program for the months it fulfill the requirements and until
September 30, 2021 the Group reported revenue from State financing
at the amount of BGN 2,070 thousand.
III. Disclosure of transactions with related parties
The total amount of the accrued remunerations of the members of
Management and Supervisory Board of the Parent company, included in
the personnel expenses, amounted to BGN 1,153 thousand, and the
unsettled liabilities as at September 30, 2021 are at the amount of
BGN 72 thousand.
During the reporting period of 2021 no other related party
transactions took place.
IV. Risks and uncertainties ahead of the Group for the rest of
the financial year
Macroeconomic environment
The Petrol Group's activity is influenced by the general
economic condition of the country and in particular the degree of
the successful adoption of the market-oriented economic reforms by
the government, changes in the gross domestic product (GDP) and the
purchasing power of the Bulgarian customers. In the long term the
change in the fuels consumption in the country is commensurate with
the GDP.
At the end of 2019, a new coronavirus was identified in China.
Due to the fast widespread of the virus across the world at the
beginning of 2020, the World Health Organization declared a global
pandemic. On March 13, 2020 the Parliament declared a state of
emergency on request of the Government of Republic of Bulgaria and
on March 24, 2020 the Law on Measures and Actions during a State of
Emergency became effective. In order to restrict the widespread of
coronavirus infection, an Order of the Health Minister was issued
for the introduction of anti-epidemic measures, which directly
affect the business activity of the Group. Part of the measures
include extension and interruption of the administrative deadlines,
extension of the of administrative acts, suspension of the
procedural court terms and the statute of limitations, changes in
the labor legislation, referring to new working hours, suspension
of work and / or reduction of working hours and use of leave, etc.
The pandemic causes a significant reduction in economic activity in
the country and raises significant uncertainty about future
processes in macroeconomics in 2020 and beyond.
The Group's Management monitors the emergence of risks and
negative consequences in the outcome of the pandemic with COVID-19,
currently assessing the possible effects on the assets, liabilities
and activities of the Group, striving to comply with contractual
commitments, despite the uncertainties and force majeure
circumstances. In view of the introduced anti-epidemic measures and
restrictions in the pandemic, which cause a significant reduction
in economic activity and creates significant uncertainty about
future business processes, there is a real risk of a decline in
sales of the Group. However, Management believes that it will be
able to successfully bring the Group out of the state of emergency
in which it is placed
The Group's results from operations are affected by a number of
factors, including macroeconomic conditions in Bulgaria,
competition, variation of gross margins, fluctuations in crude oil
and petroleum
product prices, product mix, relationships with suppliers,
legislative changes, and changes in currency exchange rates,
weather conditions and seasonality.
The plans for the future development of the company are closely
related and depend to a greater extent to the stated expectations
for changes in the market environment. The Management continues to
follow the program outlined and started in the beginning of 2014
for restructuring the activities of Petrol Group, aiming to
concentrate the efforts to optimize and develop the core business -
wholesale and retail trading with fuels. With the aim to improve
the financial position, the Management continues to analyze
actively all expenses and to look for hidden reserves for
optimization.
Future uncertainty about the ability of customers to repay their
obligations, in accordance with the agreed conditions, may lead to
an increase of impairment losses on interest loans granted, trade
receivables, financial assets available-for-sale and other
financial instruments, as well as the values of other accounting
estimates in subsequent periods might materially differ from those
specified and recorded in these consolidated financial statements.
The Group's Management applies the necessary procedures to manage
these risks.
The Group's Management activities are directed to validation of
the principles and traditions of good corporate governance,
increasing the trust of the interested parties, namely
shareholders, investors and counterparties, and to disclosure of
timely and precise information in accordance with the legal
requirements.
Legislature
The Parent company is supervised by a number of regulatory
bodies in the country and a potential change in the regulatory
framework, regulating the Parent company's activity may have a
negative impact on the Group's financial results. In July 2018 the
Government of the Republic of Bulgaria adopted a new Law for
Administrative Regulation of the Economic Activities, Related to
Petrol and Petroleum Products, which aims to provide security and
predictability in trading with petrol and petroleum products and
increase the energy security of the country. Due to its core
business, this law will affect the Group. As at the date of
issuance of these financial statements, the Parent company is
entered in the register to the Ordinance on the terms and
conditions for keeping a register of entities carrying out economic
activities related to oil and petroleum products for the wholesale
trading activity and has issued a bank guarantee in favor of the
Ministry of Economy at the amount of BGN 500 thousand. As at the
date of issuance of these financial statements, the registration
procedure of the Parent company for retail trading with oil and
petroleum products is finished.
Suppliers
Due to the specific of the primary business of Petrol Group,
namely retail and wholesale trading with fuels, the Group's fuels
supplies are provided by a small number of suppliers, as a result
of which the Group is at risk of discontinuation of relationships
with key suppliers, which may lead to a short-term depletion of
inventories and trading activity difficulties;
Petrol Group's wholesale and retail trading with fuels,
lubricants and other goods, and storage of fuels is carried out
through its own and rented from third parties petrol stations and
storage facilities. There is a risk from a suspension of the
relationships with the lessors and termination of the lease
agreements for the petrol stations and/or storage facilities, which
can have a significant negative impacts on Petrol Group as
deteriorating of sales, worsening of the financial results and
substantial loss of market share.
Competition
In the last few years, there has been a tendency for consumers
to increasingly turn to established and well-known brands with a
tradition in fuel retail. As a result, some small retailers were
forced to close down or enter into franchise or dealership
agreements with one of the major market participants. Due to the
general decline in economic activity, consumer attitudes and the
introduction of additional regulatory control by the government,
the share of small independent players continues to decline.
The lack of strategic deals and significant investments by large
participants in the retail fuel market has led to a minimal change
in the market shares of companies in the sector;
Price risk
The Group is at risk of frequent and sharp changes in prices of
fuels and non-petroleum goods. Because of that, the future
financial results may diverge significantly from the expectations
of the Group's Management. Any future sharp fluctuations in the
price of fuels and non-petroleum goods may lead to a deterioration
of the financial position of the Group;
Market risk
The Group is exposed to the risk of change in currency rate,
movement in the interest rates and the prices of the capital
instruments, which may impact the Group's financial instruments or
the value of its investments.
Interest rate risk
Risks arising from the increase in the price of the Group's
financing;
Credit risk
The risk of inability of the Group's trade partners to fulfill
their contractual obligations, which may lead to losses for the
Group;
Exceptional costs
There is a risk of incurring unforeseeable costs, which to
affect negatively the financial position of the Group;
Political risk
Risks to the Group arising from global and regional political
and economic crises;
Climate conditions and seasonality
Climate conditions and seasonal fluctuations in demand for
certain petroleum products affect the Group's operating results.
Gasoline and diesel demand peaked in the second and third quarters,
due to both the summer holiday season and the increased demand from
farmers, who traditionally increase their consumption during the
autumn season
Liquidity risk
Liquidity risk is the risk that the Group may not be able to
meet its financial obligations when they fall due. The policy is
aimed at ensuring sufficient liquidity with which to serve
liabilities when they fall due, including abnormal and emergency
situations.
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END
QRTWPGUCGUPGGQU
(END) Dow Jones Newswires
November 30, 2021 11:42 ET (16:42 GMT)
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