RNS Number:1941D
Petrol AD
03 September 2007
REVIEW REPORT
AND
CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2007
Table of contents
Review report.. .............................................................3
Consolidated financial statements as of June 30, 2007........................6
Notes to the consolidated financial statements..............................12
Review report
REPORT on review of interim financial information
TO THE MANAGEMENT OF
PETROL AD
Introduction
1. We have reviewed the accompanying interim consolidated balance sheet of
Petrol AD ("the Parent company") and its subsidiaries ("the Group") as of June
30, 2007, and the related interim consolidated statements of income, changes in
equity and cash flows for the six-month period then ended, and a summary of
significant accounting policies and other explanatory notes. Management is
responsible for the preparation and fair presentation of this interim
consolidated financial information, in accordance with the International
Financial Reporting Standards, as adopted by the European Union Commission. Our
responsibility is to express a conclusion on this interim consolidated financial
information based on our review.
Scope of review
2. Except as discussed in paragraphs 4, 5 and 6 below, we conducted our review
in accordance with the International Standard on Review Engagements 2410,
"Review of Interim Financial Information Performed by the Independent Auditor of
the Entity". A review of interim financial information consists of making
inquiries, primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A review is
substantially less in scope than an audit, conducted in accordance with the
International Standards on Auditing, and consequently does not enable us to
obtain assurance that we would become aware of all significant matters that
might be identified in an audit. Accordingly we do not express an audit opinion.
3. We have not been engaged by management and respectively have not performed
neither an audit nor review of interim financial information as of March 31,
2007 and for the three month periods from April 1, 2007 to June 30, 2007 and
from April 1, 2006 to June 30, 2006, which are presented by management in the
accompanying consolidated financial statements.
Basis for qualified conclusion
4. Trade and other payables as of June 30, 2007 and December 31, 2006, include
net current liabilities of the Parent company to a supplier amounting to BGN
77,753 thousand and BGN 48,781 thousand, respectively presented net of
receivables from the same supplier. We have not received direct confirmation
from this supplier of the balance due to it and currently the Company is in
mutual litigation with the supplier as disclosed in note 39 to the accompanying
consolidated financial statements. The nature of the related agreement between
the counterparties and these court cases give rise to significant uncertainty as
to the outcome of these disputes. As a result, we were not able to satisfy
ourselves as to the valuation, completeness and fair presentation of the
current liabilities to this supplier as of June 30, 2007 and December 31, 2006,
as well as to the overall effect of this litigation on the financial statements
of the Group.
5. Inventories amounting to total BGN 122,290 thousand, include fuels with a
carrying value of BGN 20,406 thousand as of June 30, 2007 (and respectively, BGN
137,968 thousand and BGN 18,313 thousand as of December 31, 2006), purchased
under the fuel supply agreement signed with the supplier referred to in
paragraph 4 above. We have not received confirmation from this supplier
regarding the inventory quantities as of June 30, 2007 and December 31, 2006. As
of June 30, 2006 and December 31, 2005, respectively, we received confirmation
letters from the supplier, which states higher quantities of fuels than those
recorded by the Parent company as of these dates. As a result of the above, we
were not able to satisfy ourselves through other alternative procedures as to
whether inventories and current liabilities amounting to approximately BGN
20,406 thousand and BGN 18,313 thousand are complete and fairly presented in
these consolidated financial statements as of June 30, 2007 and December 31,
2006, respectively.
6. Trade and other receivables amounting to BGN 131,010 thousand and BGN 107,731
thousand as of June 30, 2007 and December 31, 2006 include various overdue
receivables amounting to approximately BGN 2,500 thousand and BGN 1,500
thousand, respectively for which there are indications for impairment. The Group
has not assessed and recorded impairment allowance for such receivables. We have
not been provided with sufficient evidence of the recoverability of these
receivables to enable us to determine whether trade and other receivables
amounting to BGN 2,500 thousand and BGN 1,500 thousand are fairly presented and
valued as of June 30, 2007 and December 31, 2006, respectively.
Qualified conclusion
7. Except for the adjustments to the interim financial information that we might
have become aware of had it not been for the matters described in paragraphs 4,
5 and 6 above, based on our review, nothing has come to our attention that
causes us to believe that the accompanying interim consolidated financial
information does not present fairly, in all material respects, the financial
position of the Group as of June 30, 2007, its financial performance and cash
flows for the six-month period then ended, in accordance with the International
Financial Reporting Standards, as adopted by the European Union Commission.
Deloitte Audit OOD
Sylvia Peneva
Managing Director
Registered Certified Public Accountant
Aug 28, 2007
Sofia
CONSOLIDATED FINANCIAL STATEMENTS
as of June 30, 2007
CONSOLIDATED INCOME STATEMENT
For the six months ended June 30, 2007
Notes Six months Six months Three months Three months
ended June ended June ended June ended June
(1) 30, 30, 30, 30,
2007 2006 2007 2006
BGN'000 BGN'000 BGN'000 BGN'000
(not (not
reviewed) reviewed)
Revenue 6 560,612 631,536 332,051 317,375
Other income 7 1,454 12,139 514 9,907
Total operating revenue 562,066 643,675 332,565 327,282
Cost of goods sold 8 (486,673) (572,641) (290,343) (285,089)
Materials 9 (5,464) (5,803) (3,148) (3,075)
Hired services 10 (16,682) (17,655) (8,951) (7,001)
Employee benefits expenses 11 (15,021) (12,804) (7,375) (6,876)
Depreciation and amortization expenses 12 (8,649) (9,965) (4,256) (4,700)
Other expenses 13 (4,793) (5,052) (3,129) (3,389)
Finance income 14 3,859 2,609 2,159 1,603
Finance costs 14 (31,228) (5,148) (16,573) (2,569)
Share of loss of associates 19 (166) (136) (96) (32)
Profit (loss) before tax (2,751) 17,080 853 16,154
Income tax expense 15 (585) (2,757) (931) (2,202)
Net profit (loss) for the period (3,336) 14,323 (78) 13,952
Earnings (loss) per share (BGN) 32 (0.03) 0.13 0.00 0.13
These consolidated financial statements have been approved on behalf of Petrol
AD by:
Svetoslav Yordanov Desislava Todorova
Executive Director Chief Accountant
August 27, 2007
The accompanying notes from page 12 to page 51 are an integral part of these
consolidated financial statements)
CONSOLIDATED BALANCE SHEET
as of June 30, 2007
Notes June 30, March 31, December 31,
(1) 2007 2007 2006
BGN'000 BGN'000 BGN'000
(restated and (restated)
not reviewed)
Non-current assets
Property, plant and equipment 16 210,790 202,497 201,614
Intangible assets 17 1,343 1,359 1,400
Investment property 18 19,545 18,085 18,252
Investments in associates and other investments 19 1,650 1,746 1,816
Goodwill 20 20,309 20,309 20,309
Interest-bearing loans granted 21 44,698 44,698 44,698
Total non-current assets 298,335 288,694 288,089
Current assets
Inventories 22 122,290 158,030 137,968
Trade and other receivables, net 23 131,010 122,936 107,731
Interest-bearing loans granted 21 27,366 39,746 39,746
Cash and cash equivalents 24 36,608 15,696 62,987
Non-current assets, held for sale 25 2,466 1,387 1,387
Total current assets 319,740 337,795 349,819
Total assets 618,075 626,489 637,908
Current liabilities
Trade and other payables, net 26 175,980 143,382 188,886
Interest-bearing loans 27 62,885 95,698 56,953
Finance lease liabilities 28 2,108 2,014 1,955
Current income tax 29 1,155 273 328
Retirement benefits obligations 33 32 32 32
Liabilities directly associated with non-current 25
assets, held for sale 87 - -
Total current liabilities 242,247 241,399 248,154
Non-current liabilities
Interest-bearing loans 27 207,071 206,975 207,217
Finance lease liabilities 28 4,370 4,663 4,955
Deferred tax liabilities 15 257 817 1,689
Retirement benefits obligations 33 438 438 438
Total non-current liabilities 212,136 212,893 214,299
Net assets 163,692 172,197 175,455
Equity
Share capital 30 109,250 109,250 109,250
Retained earnings 7,143 23,651 26,723
Revaluation reserve 31 28,536 28,631 28,817
Other reserves 18,763 10,665 10,665
Total equity 163,692 172,197 175,455
These consolidated financial statements have been approved on behalf of Petrol
AD by:
Svetoslav Yordanov Desislava Todorova
Executive Director Chief Accountant
August 27, 2007
The accompanying notes from page 12 to page 51 are an integral part of these
consolidated financial statements)
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY
For the six months ended June 30, 2007
Share Revaluation Other Retained
capital reserve reserves earnings Total
BGN'000 BGN'000 BGN'000 BGN'000 BGN'000
Balance at January 1, 109,250 28,865 10,489 12,901 161,505
2006
Revaluation reserve of
disposed non-current
assets - (1,168) - 1,168 -
Net income, recognized
directly in equity - (1,168) - 1,168 -
Profit for the period - - - 14,323 14,323
Total income (expenses)
recognized in the period - (1,168) - 15,491 14,323
Allocation of profit to
the reserves - - 145 (145) -
Dividends - - - (727) (727)
Balance at June 30, 2006 109,250 27,697 10,634 27,520 175,101
Revaluation reserve of
disposed non-current
assets - (480) - 480 -
Change in the tax rate of
deferred tax liabilities,
recognized in equity - 1,600 - - 1,600
Net income, recognized
directly in equity - 1,120 - 480 1,600
Loss for the period - - - (1,246) (1,246)
Total income (expenses)
recognized in the period - 1,120 - (766) 354
Allocation of profit to
the reserves - - 31 (31) -
Dividends - - - - -
Balance at December 31,
2006 109,250 28,817 10,665 26,723 175,455
Revaluation reserve of
disposed non-current
assets - (281) - 281 -
Net income, recognized
directly in equity - (281) - 281 -
Loss for the period - - - (3,336) (3,336)
Total income (expenses)
recognized in the period - (281) - (3,055) (3,336)
Allocation of profit to
the reserves - - 8,098 (8,098) -
Dividends - - - (8,427) (8,427)
Balance at June 30, 2007 109,250 28,536 18,763 7,143 163,692
These consolidated financial statements have been approved on behalf of Petrol
AD by:
Svetoslav Yordanov Desislava Todorova
Executive Director Chief Accountant
August 27, 2007
The accompanying notes from page 12 to page 51 are an integral part of these
consolidated financial statements)
CONSOLIDATED CASH FLOW STATEMENT
For the six months ended June 30, 2007
Six months Six months Three months Three months
ended June 30, ended June 30, ended June 30, ended June 30,
2007 2006 2007 2006
BGN'000 BGN'000 BGN'000 BGN'000
(restated) (not reviewed) (not reviewed)
Cash flows from
operating
activities
Net profit
(loss) before
taxation (2,751) 17,080 853 16,154
Adjustments for:
Depreciation
(amortization)
of non-current
assets 8,649 9,965 4,256 4,700
Interest
expenses and
bank fees and
commissions,
net 12,218 5,148 6,268 2,569
Interest
income and
other
financial
income (3,744) (1,806) (2,159) (1,064)
Shortages and
scrapped
assets, 912 767 566 481
net of excess
assets
Provisions for
unused annual
paid leave and
retirement
benefits 2,192 860 926 734
Low cost
assets written
off - 218 - 218
Net effect
from applying
the equity
method 166 136 96 32
(Gain) loss on
disposal and
liquidation of
assets (534) (2,463) 145 (1,072)
Loss on
dealing with
derivatives 19,010 - 10,003 -
Unrealized
foreign
exchange loss
(gain) (30) (263) 10 (71)
Impairment 8 603 8 576
Cash flows
provided by
operating
activities 36,096 30,245 20,972 23,257
Interest and
bank fees and
commissions
paid (3,869) (5,010) (2,383) (2,845)
Income taxes
paid (1,177) (6,293) (596) (5,296)
Operating
profit before
changes in
working
capital 31,050 18,942 17,993 15,116
Increase
(decrease) in
trade payables (26,029) 58,567 21,686 33,250
(Increase)
decrease in
inventories 14,884 (10,605) 35,292 11,679
(Increase)
decrease in
trade
receivables (16,496) (35,423) (1,908) (53,747)
Net cash
generated by
operating
activities 3,409 31,481 73,063 6,298
Cash flows from
investing
activities
Acquisition of
non-current
assets (21,983) (3,296) (16,789) (1,522)
Proceeds on
disposal of
non-current
assets 1,243 4,447 342 2,189
Payments on
dealing with
derivatives (19,103) - (11,037) -
Interest
received on
investment
loans and
deposits and
other
financial
income 1,178 1,277 171 705
Cash paid for
investment
deposits and
granted loans,
net 12,380 (46,135) 12,380 (8,032)
Net cash used
in investing
activities (26,285) (43,707) (14,933) (6,660)
CONSOLIDATED CASH FLOW STATEMENT (continued)
For the six months ended June 30, 2007
Six months Six months Three months Three months
ended June ended June ended June ended June
30, 30, 30, 30,
2007 2006 2007 2006
BGN'000 BGN'000 BGN'000 BGN'000
(restated) (not (not
reviewed) reviewed)
Cash flows from financing activities
Proceeds from bank and trade loans 250,707 441,887 65,969 224,197
Bank and trade loans and bond issue repaid (253,155) (432,261) (102,658) (221,699)
Dividends paid (5) - (2) -
Finance lease payments (1,049) (465) (526) (252)
Net cash provided by (used in) financing activities (3,502) 9,161 (37,217) 2,246
Net increase (decrease) in cash and cash equivalents (26,378) (3,065) 20,913 1,884
for the period
Cash and cash equivalents at the beginning of period 62,987 11,490 15,696 6,541
Cash and cash equivalents at the end of period (see 36,609 8,425 36,609 8,425
also note 24)
These consolidated financial statements have been approved on behalf of Petrol
AD by:
Svetoslav Yordanov Desislava Todorova
Executive Director Chief Accountant
August 27, 2007
The accompanying notes from page 12 to page 51 are an integral part of these
consolidated financial statements)
Notes
to the consolidated financial statemenets
as of June 30, 2007
1. Legal status
Petrol AD (the Parent company) is registered in Sofia. The headquarters of the
Parent company is located at 43, Cherni Vruh Blvd. Sofia. As of June 30, 2007
the majority shareholder of
Petrol AD is Petrol Holding AD with 68,99 % ownership of the share capital. The
remaining part of the Parent company's share capital is owned by other legal
entities, the State - through the Ministry of Economy and by individual
shareholders (see note 31).
Effective from July 1, 1998 Petrol AD is registered as a public company in the
Public Register of the Financial Supervision Commission.
The main activities of Petrol AD and its subsidiaries (the Group) comprise
retail and wholesale of oil and non-oil products, rendering of transport
services and maintenance. The Parent company is one of the oldest commercial
companies in Bulgaria and owns the largest network of fuel stations in the
country.
These consolidated financial statements have been approved for issue by the
management on August 27, 2007.
2. Basis for preparation of the consolidated financial statements and
accounting principles
2.1. Basis for preparation of the consolidated financial statements
The Group prepares and presents its consolidated financial statements in
accordance with International Financial Reporting Standards (IFRS), issued by
the International Accounting Standards Board (IASB) and the interpretations,
issued by the International Financial Reporting Interpretations Committee
(IFRIC), approved by the European Commission. The Bulgarian Accountancy Act (the
Act), effective for 2007 requires the application of IFRS, adopted by the
European Commission. Based on the amendments of the Act, effective January 1,
2007 direct application of the updated version of IFRS is allowed. IFRS as
adopted by the European Commission do not differ from IFRS, issued by the IASB,
and are effective for reporting periods ended as of June 30, 2007, except for
certain requirements for hedge reporting in accordance with the IAS 39 Financial
Instruments: Recognition and Measurement, which has not been adopted by the
Commission. The management believes that if the hedge requirements has been
approved by the Commission it would have no influence on the consolidated
financial statements.
These interim consolidated financial statement for the first six months of 2007
have been prepared in accordance to the IAS 34 Interim Financial Reporting and
include the full set of financial statements in compliance with IAS 1
Presentation of Financial Statements. The accounting policies adopted are
consistent with those to the annual period ended 31 December 2006.
These consolidated financial statements are prepared under the historical cost
convention, except for the assets (liabilities), which are stated at fair value
- financial assets (liabilities), including derivatives, reported at fair value
in the income statement.
2.2. Functional and presentation currency of the consolidated
financial statements
Functional currency is the currency of the primary economic environment in which
an entity operates and in which it primary generates and expends cash. A Group's
functional currency reflects the underlying transactions, events and conditions
that are relevant to it.
The Group keeps its records and prepares its financial statements in the
national currency of the Republic of Bulgaria - the Bulgarian Lev, which is
adopted by the Company as its functional currency. Effective January 1, 1999,
the Bulgarian Lev is fixed to the EUR at the rate of
BGN 1.95583 = EUR 1.
These consolidated financial statements are presented in thousand Bulgarian
Levs.
2.3. Foreign currency
Transactions in foreign currency are initially recorded at the official rate of
exchange of the Bulgarian National Bank (BNB) as of the date of the transaction.
The foreign exchange rate differences, arising upon the settlement of these
monetary positions or at restatement of these positions at rates, different from
those when initially recorded, are reported as financial income or financial
expenses in the income statement for the period in which they arise.
The monetary positions denominated in foreign currency as of June 30, 2007 and
December 31, 2006 are stated in these consolidated financial statements at the
closing exchange rate of BNB. The closing exchange rates of BGN against USD as
of the respective reporting period are as follows:
June 30, 2007 1 USD = BGN 1.44823
March 31, 2007 1 USD = BGN 1.46856
December 31, 2006 1 USD = BGN 1.48506
2.4. Subsidiary companies and consolidation
The consolidated financial statements incorporate the financial statements of
the Parent company and its subsidiaries. A subsidiary is an entity that is
controlled by the Parent company. Control is the power to govern the financial
and operating policies of an enterprise so as to obtain benefits from its
activities.
For consolidation purposes, the separate financial statements of the Parent
company and its subsidiaries have been combined on a line-by-line basis by
adding together like items of assets, liabilities, equity, income and expenses.
For consolidation purposes all intra-group balances as at March, 31 and June 30,
2007 and December 31, 2006 and intra-group transactions, as well as all
intra-group profits and losses, including unrealized profits and losses as of
June 30, 2007 and 2006 are eliminated in full.
The carrying amount of the Parent company's investment in each subsidiary and
the Parent company's portion of equity of each subsidiary are eliminated
The results of subsidiaries, which have been acquired or disposed during the
year, are included in the consolidated income statement from the date of the
acquisition, till the date at which control ceases.
2.5. Associates
An associate is an enterprise over which the Parent company has significant
influence. Significant influence is the right of participation in, but not
control over, the financial and operating policy decisions of the invitee.
Interests in associates are presented in the balance sheet in accordance with
IAS 28 Investments in Associates, using the equity method of accounting,
according to which the investment is recorded initially at cost as adjusted by
post-acquisition changes in the investor's share in the net assets of the
associate.
2.6. Business combinations
In accordance with IFRS 3 Business combinations, a business combination is the
bringing together of separate enterprises or businesses into one reporting
entity. If an entity obtains control over another entity, which does not
represent a separate business, the bringing together of these enterprises is not
a business combination. When there is no business combination, the purchase
method cannot be used and instead of this the transaction should be presented as
a merger.
If the transaction meets the criteria for a business combination, it should be
determined if the business combination is involving companies under common
control. According to IFRS 3, two enterprises are under common control, when the
combining enterprises or businesses are ultimately controlled by the same party
(parties) both before and after the business combination and when the control is
not temporary (transitional).
IAS 22 Business Combinations (replaced by the effective IFRS 3 Business
Combinations) and IFRS 3 Business Combinations, applicable as of the date of the
present consolidated financial statements exclude from their scopes business
combinations involving entities under common control. IFRS do not provide
guidance for the accounting treatment of business combinations involving
companies under common control.
IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors effective
from January 1, 2005, requires that upon absence of a specific Standard or
Interpretation, management should develop accounting policy, which is reliable
and relevant to the economic decision making needs of the users of the financial
statements. The acquirer should take into consideration the requirements and
guidance of standards and pronouncements of other international standard setting
bodies, other accounting literature and established best practices, treating
similar issues, to the extent that they do not conflict with sources of
directions of the IASB (including IFRS, Interpretations and Framework for
preparation and presentation of financial statements).
On the basis of these sources, management should select an appropriate policy
for reporting of business combinations involving entities under common control
and apply it consistently.
The present international practices provide guidance for two alternative methods
of accounting for business combinations involving entities under common control
- the purchase method and the method of uniting of interests.
Management believes that the use of the method of uniting of interests is not
appropriate, since its application for business combinations is not allowed by
IFRS 3. In addition, according to the international practices, the method of
uniting of interests can be applied in exceptionally rare circumstances, mostly
in the cases when it cannot be determined which of the combining enterprises is
the acquirer. According to IASB in most of the business combinations, as well as
in the particular situation, the acquirer can be identified.
2.6. Business combinations (continued)
Taking into account the above arguments, management has decided to adopt the
purchase method and apply it consistently for all similar transactions within
the Group for the current and prior reporting periods.
In October 2003 the Ultimate parent company, Petrol Holding AD, performs
reorganization of the companies and the business within the economic group, as a
result of which the Parent company acquires Naftex Petrol EOOD through purchase
from the Ultimate parent company. The cost of acquisition amounts to BGN 100,966
thousand, and is based on market valuation of BGN 1.058 per share, made by a
licensed appraiser, in compliance with the requirements of art. 114 of the
Public Offering of Securities Act. The performed reorganization meets the
criteria for a business combination, as Petrol AD obtains control over the
business of Naftex Petrol EOOD - wholesale with fuels, which represents bringing
together of two separate businesses into one economic entity, within the meaning
of IFRS 3. As the Ultimate parent company before and after the transaction is
Petrol Holding AD, this is a business combination involving entities under
common control. The management accounted for that transaction in 2003, applying
the purchase method. The management considers that the use of the purchase
method of accounting is appropriate within the given circumstances.
International Accounting Standard Board has deferred till the second phase of
Business Combination Standard project to deal with accounting methods for
business combination of companies under common control. Depending on the outcome
of this project in the future, further considerations to the accounting method
used might be required.
2.7. Goodwill
Goodwill represents the excess of the cost of acquisition over the Group's
interest in the net fair value of identifiable assets, liabilities and
contingent liabilities of the acquired entity as of the date of the exchange
operation and is recognized as an asset. When the acquisition cost is lower than
the fair value of the net assets acquired by the Group, the acquirer should
reassess the identification and measurement of the acquiree's identifiable
assets, liabilities and contingent liabilities and the measurement of the cost
of the business combination and any excess remaining after that reassessment
should be recognized immediately in profit or loss
Subsequent to its initial recognition goodwill is not amortized, in compliance
with IFRS 3, applicable for reporting periods after March 31, 2004. At the end
of each reporting period a test for impairment is performed (see also note 4).
2.8. Accounting estimates and reasonable assumptions
The preparation of the consolidated financial statements in accordance with IFRS
requires management to make some accounting estimates and reasonable assumptions
that affect some of the reported amounts of assets, liabilities, revenues and
expenses. These estimates and assumptions are based on the best estimate of
management, taking into account historical experience and analysis of all
factors of significance in the circumstances as of the date of the consolidated
financial statements. The actual results could differ from those estimates,
presented in these consolidated financial statements.
2.9. Errors in prior reporting periods and changes in accounting policy
Prior year errors represent omissions and misstatements in the consolidated
financial statements of the Group for prior periods, arising as a result of
omitted or inaccurately used reliable information. This is information, which
was available when the consolidated financial statements for those periods have
been authorised for issue or which could reasonably be expected to have been
obtained and taken into account upon preparation and presentation of those
consolidated financial statements. Prior year errors can arise upon recognition,
measurement, presentation or disclosure of elements of the consolidated
financial statements. They are restated retrospectively by restating the
comparative information for the prior periods or the opening balances of assets,
liabilities and equity (if the errors occurred before the earliest prior period
presented). The restatement is reported in the first consolidated financial
statements authorised for issuance after the errors have been identified.
3. Definition and valuation of the balance sheet and income statement items
3.1. Property, plant and equipment and intangible assets
Property, plant and equipment and intangible assets are recognized and initially
carried at cost, including the purchase price, import duties and non-refundable
taxes, as well as any costs directly attributable to bringing the asset to the
location and condition necessary for it to be capable of operating in the manner
intended by management. Assets, acquired by means of a business combination are
carried at fair value. After initial recognition, property, plant and equipment
and intangible assets are stated at cost less accumulated depreciation
(amortization) and accumulated impairment loss, if any (see note 3.3).
Some tangible fixed assets, available at December 31, 2002, have been revalued
by coefficients, based on the accounting legislation, applicable as of the end
of 2001, as a result of which a revaluation reserve has been created. In
compliance with the changes in accounting legislation, management has reviewed
all material items of property, plant and equipment as of December 31, 2002 to
verify the measurement of their carrying amount. Those assets, for which the
carrying amount was materially different from their fair value, were revalued to
their fair value as of the same date. The so formed revaluation reserve was
added to the revaluation reserve, resulting from the accounting legislation
applicable as of December 31, 2001.
When property, plant and equipment include parts with different useful lives and
a cost that is significant in relation to the total cost of the item, such parts
are recognized as separate assets.
Subsequent costs, including costs for replacement of an item of property, plant
and equipment are recognized in the carrying amount of the asset, if they
satisfy the recognition principle. The carrying amount of the replaced item is
derecognized in accordance with the requirements of IAS 16 Property, Plant and
Equipment. All other subsequent costs are recognized as expense for the period
as incurred.
Depreciation and amortization are charged over the estimated useful lives, using
the straight-line method.
3.1. Property, plant and equipment and intangible assets (continued)
The assets' estimated useful lives are as follows:
Useful life 2007 2006
25 years 25 years
Administrative and trade buildings
Machines, fixtures and equipment 2, 3 and 25 years 2, 3 and 25 years
Vehicles 5 and 10 years 5 and 10 years
Office furniture 7 years 7 years
Intangible assets 2 and 7 years 2 and 7 years
Depreciation of an asset begins in the month following the month in which the
asset is available for use and ceases at the earlier of the date when the asset
is classified as held for sale, in accordance with IFRS 5 Non-current Assets
Held for Sale and Discontinued Operations, and the date when the asset is
derecognized.
Land, assets under construction and fully depreciated assets are not
depreciated.
3.2. Investment property
Investment property is property held by the Group to earn rentals or for capital
appreciation, or for both.
Investment property is measured at cost less accumulated depreciation and
impairment loss, if any (see note 3.3).
When some properties comprise portion that is held to be used in Group's
operations, another portions to earn rentals, and these portions cannot be
reported separately, these properties are presented in compliance with IAS 16 -
Property, Plant and Equipment.
Depreciation on investment properties is charged to the income statement, by
applying the straight line method, on the basis of their estimated useful life,
as follows:
Useful life 2007 2006
25 years 25 years
Administrative and trade buildings
Machines, fixtures and equipment 2, 3 and 25 years 2, 3 and 25 years
Office furniture 7 years 7 years
3.3. Impairment of property, plant and equipment and intangible assets,
investment property and goodwill
At each balance sheet date, the management reviews the carrying amounts of its
property, plant and equipment, intangible assets, investment property and
goodwill to determine whether there is any indication for impairment of these
assets. If any such indication exists, the recoverable amount of the respective
asset is estimated. Where it is not possible to estimate the recoverable amount
of an individual asset, the Group estimates the recoverable amount of the
cash-generating unit, to which the asset belongs.
The recoverable amount is the higher of the asset's fair value less costs to
sell the asset and its value in use. If the recoverable amount of an asset (or
cash-generating unit) is estimated to be less than its carrying amount, the
carrying amount of the asset (cash generating unit) is reduced to its
recoverable amount. Impairment loss is recognized in the income statement
immediately, unless the asset is carried at a revalued amount, in which case the
impairment loss is treated as a decrease in the revaluation reserve (see note
3.1).
Where an impairment loss subsequently reverses, the carrying amount of the asset
(cash generating unit) is increased to the revised estimate of its recoverable
amount, but so that the increased carrying amount does not exceed the carrying
amount that would have been determined had no impairment loss been recognized
for the asset (cash generating unit) in prior years. A reversal of an impairment
loss is recognized as income immediately, unless the relevant asset is carried
at a revalued amount, in which case the reversal of the impairment loss is
treated as an increase in the revaluation reserve.
An impairment loss is recognized for a cash-generating unit to which goodwill
was allocated if and only if the recoverable amount is lower than its carrying
amount. The impairment loss is allocated to reduce the carrying amount of the
assets in the cash-generating unit, first to reduce the carrying amount of
goodwill and then, the carrying amount of other assets in the unit, pro rata on
the basis of the carrying amount of each asset in the unit. The impairment loss
of goodwill could not be reversed.
3.4. Non-current assets and disposal groups, held for sale
Non-current assets (or disposal groups) are classified as held for sale if their
carrying amounts would be recovered principally through a sale transaction
rather than through continuing use. This condition is regarded to be met only
when the asset (disposal group) is available for immediate sale in its present
condition and its sale is highly probable.
Non-current assets (or disposal groups), held for sale are measured at the lower
of carrying amount and fair value, less costs to sell.
3.5. Inventories
Inventories are stated at lower of cost and net realizable value. Cost comprises
purchase price, transportation, customs duties and other similar costs. Net
realizable value represents the estimated selling price less all estimated costs
to be incurred in selling.
Upon consumption, the cost of inventories is calculated using the following
methods:
Petroleum Specific identification price of each delivery
Fuel and other inventories Weighted average cost
Materials Weighted average cost
3.6. Financial instruments
A financial instrument is any contract that gives rise to a financial asset of
one entity and a financial liability or equity instrument of another entity.
Financial assets (liabilities) are recognized in the consolidated balance sheet
only when the Group becomes a party to the contractual provisions of the
instrument. Financial assets are removed from the balance sheet after the
contractual rights for receiving cash flows are expired or the asset is
transferred and the transfer meets the derecognition requirements under IAS 39
Financial Instruments: Recognition and Measurement. Financial liability is
removed from the consolidated balance sheet when, and only when, it is
extinguished - that is when the obligation specified in the contract is
discharged, cancelled, or expires.
On initial recognition financial assets (liabilities) are measured at fair
value. Transaction costs, which are directly attributable to the acquisition or
issue of the financial assets (liabilities) are included in their value, except
when the financial assets (liabilities) are measured at fair value through
profit or loss.
For the purposes of subsequent measurement, the Group classifies the financial
assets and financial liabilities into the following categories: financial assets
and financial liabilities reported at fair value through profit or loss, loans
granted and other trade receivables and other financial liabilities (other than
those, measured at fair value through profit or loss). Classification under each
category depends on the purpose and term of the respective contract.
3.6.1. Financial assets (liabilities), measured at fair value through profit
or loss
This category of financial instruments are acquired with the purpose of trading.
This category includes derivatives, which comprises options and futures
contracts, concluded on the American stock exchanges (CME and NYMEX), expect if
derivatives are designated and effective hedging instrument.
After their initial recognition these financial assets are measured at fair
value as of the reporting date and differences from this value are recognized in
the income statement for the period when they arise.
3.6.2. Trade and other receivables, net
Trade and other receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. They originate
when the Group provides cash, goods for sale or services having no intention to
trade them. Receivables are stated at amortized cost by applying the effective
interest method, excluding current receivables, which are not subject to
amortization.
3.6.3. Cash and cash equivalents
Cash and cash equivalents comprise short-term highly liquid investments that are
readily convertible to a known amount of cash and are subject to an
insignificant risk of change in value. For the purposes of cash flow
presentation, cash represents cash on hand and cash in bank accounts, cash in
transfer, as well as margin deposits, which are short-term collaterals on
options and futures contracts concluded by the Group. Cash in transfer comprise
cash, collected by the fuel stations as of the balance sheet date, but actually
received at the bank accounts of the Group at the beginning of the following
reporting period.
3.6.4. Trade and other payables, net
Trade and other payables incurred because of purchases of goods and services or
receipts of cash, which are not classified as financial liabilities measured at
fair value through profit and loss, are stated in the balance sheet at amortized
cost. Current liabilities are not amortized.
3.6.5. Interest bearing loans
Interest bearing loans are initially recorded at the fair value of proceeds
received, net of transaction cost. After initial recognition, interest bearing
loans are measured at amortized cost, as any difference between the initial cost
and maturity cost is recognized in income statement over the loan period, using
the effective interest method. If no transaction costs have been incurred in
negotiating an interest bearing loan, the loan is not subject to amortization.
The same applies to bank overdrafts, where the borrower is entitled to multiple
borrowings or repayments of the borrowed funds within a pre-determined overdraft
limit.
Financial expenses, including direct issue costs, are accounted for on an
accrual basis to the income statement using the effective interest method,
except for transaction costs on bank overdrafts, which are recognized in the
income statement on a straight line basis over the overdraft period.
Interest bearing loans are considered short-term when they should be settled no
later than twelve months after the balance sheet date.
3.6.6. Share capital
The share capital of the Parent company is presented at historical cost as of
the date of its registration.
3.6.7. Risk assessment and management
Market risk
Market risk arises when the value of financial instruments fluctuates as a
result of changes in market prices. Market risk relates to trading with
short-term financial assets, reported at fair value.
Currency risk
The Group performs transactions denominated in foreign currency. As a result it
is exposed to the risk of possible deviations of the USD / BGN ratio. The Group
does not use derivative financial instruments for currency risk hedging, but is
sufficiently insured against this risk, as the national currency is fixed to the
EUR (see note 2.2).
Interest rate risk
Financial instruments that potentially expose the Group to interest rate risk
are mainly loans received and loans granted. Most of them bear fixed interest
rate, due to which the Group is potentially exposed to fair value interest rate
risk, in case that market interest rates rise significantly over or fall below
the contracted rates. As the rest of the loans bear floating interest rate with
fixed margin over the base interest rate (BIR) and SOFIBOR, respectively LIBOR/
EURIBOR, the Group is potentially exposed to cash flow interest rate risk.
Management believes that due to the limit movement in market interest rates, the
Group is not exposed to significant fair value and cash flows interest rate
risks.
Information on the applicable interest rates is disclosed in the respective
notes.
Credit risk
Financial assets that potentially expose the Group to credit risk are primarily
its trade receivables and loans granted. Basically, the Group is exposed to
credit risk, in case the clients do not meet their payment obligations. The
Group's policy is directed primarily to sales of goods and services in cash, in
advance, as well as sales on credit to clients with appropriate credit rating.
Credit risk of cash at banks is insignificant as the Group deals only with banks
with high credit rating.
3.7. Retirement benefits to employees
The Government of the Republic of Bulgaria is to provide pensions according to
defined retirement benefits schemes. Costs related to payment of contributions
under these schemes are recognized by the Group in profit or loss in the period
they occur.
In accordance with the Labour Code, the Group has an obligation to pay
retirement benefits to its employees, based on length of service, age and labour
category. As these retirement benefits meet the definition of other long-term
employee benefits according to IAS 19 Employee benefits and its provisions, the
Group recognizes the present amount of the benefits as a liability. All
actuarial gains and losses and past service cost is recognized immediately in
the income statement.
3.8. Deferred income and deferred expense
Deferred income and deferred expense represent income and expense, which are
paid in the current, but refer to future accounting periods - guarantees,
insurance, subscription, rent, etc.
3.9. Income tax
Income tax expense comprises current income tax and deferred tax.
The tax currently payable is based on the combined taxable profit (tax loss) for
the year of the Patent company and its subsidiaries, as reported in their
separate corporate tax returns, by applying the effective tax rate according to
the tax legislation as of the date of the financial statements. Deferred tax is
the tax expected to be payable (recoverable) in future periods on taxable
(deductible) temporary differences. Temporary difference is the difference
between the carrying amount of an asset or liability in the balance sheet and
its tax base. Deferred income taxes are calculated using the balance sheet
liability method. Deferred tax liabilities are recognized for all taxable
temporary differences, whereas deferred tax assets are recognized for deductible
temporary differences, only to the extent that it is probable that taxable
profit will be available against which the deductible temporary difference can
be utilized.
3.9. Income tax (continued)
Deferred tax assets (liabilities) are calculated at the tax rates that are
expected to apply in the period when the liability is settled or the asset
realized, based on the tax rates that have been enacted or substantively enacted
by the balance sheet date. Deferred tax is charged or credited in the income
statement, except when it relates to items charged or credited directly to
equity, in which case the deferred tax is also charged or credited in equity.
Although income tax in Bulgaria is not calculated on a consolidation basis, the
Group has adopted the policy of accruing deferred tax assets (liabilities) on
all temporary differences, arising from the elimination of unrealized
intra-group income from sale of non-current assets, which are treated as timing
differences. These temporary differences are reversed by the subsequent
adjustments to depreciation expenses by the acquiring company or upon disposal
of the respective assets by the Group, when the profit on sale is realized for
the Group.
The carrying amount of deferred tax assets is reviewed at each balance sheet
date and reduced to the extent that it is no longer probable that sufficient
taxable profit will be available to allow the benefit of all or a part of the
deferred tax asset to be utilized.
Deferred tax assets and liabilities are reported net when they are subject to an
unified tax regime. In accordance with the tax legislation enforceable for 2007
and 2006, the tax rate applied for the calculation of the Group's current tax
liabilities is 10 % and 15 %. Deferred tax assets and liabilities as of June 30,
2007 are calculated by using the tax rate at 10%, applicable for 2007.
3.10. Revenue and expenses recognition
Revenue and expenses are accrued when they arise, regardless of cash receipts
and payments. They are reported in compliance with the matching concept.
Revenue is measured at the fair value of the consideration received or
receivable, less any discounts allowed by the Group.
Revenue from sales of goods and production is recognized when:
* The significant risks and rewards of ownership of the goods or production
are transferred to the buyer;
* The Group retains neither continuing managerial involvement to the degree
usually associated with ownership nor effective control over the goods and
production sold;
* It is probable that economic benefits associated with the transaction
will flow to the Group;
* Income and expenses, directly arising from the transaction can be
measured reliably.
When the outcome of a transaction involving rendering of services can be
estimated reliably, revenue recognition is based on the stage of completion of
the transaction at the balance sheet date. If the outcome cannot be estimated
reliably, revenue is recognized only to the of the expenses recognized that are
recoverable.
Gains or losses on sales of property, plant and equipment and intangible assets
are stated as other income or other expense.
Interest income (expense) is accrued by using the effective interest method.
3.11. Leases
A finance lease is a lease that transfers substantially all the risks and
rewards incidental to ownership of an asset.
Assets acquired under finance lease are recognized at the lower of the fair
value of the leased asset and the present value of the minimum lease payments,
determined at the inception of the lease. The corresponding liability to the
lessor is included in the Group's balance sheet as finance lease obligations.
Lease payments are apportioned between interest charges and principal payments,
so as to achieve a constant rate of interest on the remaining balance of the
liability.
A finance lease gives rise to depreciation expense for depreciable assets, as
well as finance expense for each reporting period. The depreciation policy for
depreciable leased assets is consistent with that for depreciable assets that
are owned.
Costs incurred for assets leased under operating leases are recognized in the
income statement on a straight line basis over the lease term.
Lease income from operating leases is recognized as income on a straight line
basis over the lease term. Initial direct costs incurred in negotiating an
operating lease are added to the carrying amount of the leased asset and are
recognized as an expense on a straight line basis over the lease term.
4. Critical accounting estimates and key sources of estimation
uncertainty
In the application of the adopted accounting policy, management makes certain
estimates (other than the disclosed in note 2.8), which have significant effect
on these financial statements. Such estimates, by definition, may differ from
actual results. Due to their nature, they are subject to constant review and
update, and comprise the historical experience and other factors, including
expectation of future events, which the management believes are reasonable under
the present circumstances.
A critical accounting estimate, which includes significant risk of considerable
adjustments to the carrying amount of assets and liabilities in subsequent
reporting periods, is the test for impairment of goodwill, arising from a
business combination.
As disclosed in notes 2.7 and 3.3, goodwill is not subject to amortisation, but
is reviewed for impairment at each year end, as well as at any time when any
indications for impairment exist.
The impairment test of the goodwill from the acquisition of Naftex Petrol EOOD
(see also notes 2.6 and 20) has been performed as of June 30, 2007 by using the
methodology of the discounted net cash flows. This methodology is based on
current forecasts of net cash flows, prepared by management of the subsidiary
for a three-year period after June 30, 2007. The net cash flows for the periods
after the last forecast period, are calculated at a 3% increase towards the
latter, by applying the "eternal rent" method with constantly increasing rate
and discounting of the resulting terminal value by observing the above stated
methodology. The applied discount rate of 9 % is equal to the weighted average
cost of the subsidiary's equity. As of June 30, 2007, according to the
calculation performed under the above methodology, the estimated value of the
investment in the subsidiary exceeds the sum of carrying amount of the
investment before its elimination and the carrying amount of goodwill, goodwill
has not been impaired.
5. Changes in IFRS
The stated below IFRS, IFRS revisions, and IFRIC, have been approved by IASB and
IFRIC as of the date of the consolidated financial statements, but are effective
for annual periods beginning on or after June 1, 2007.
IFRS or IFRIC, effective date Title of IFRS or IFRIC
IFRS 8, effective for reporting periods Operating Segments
beginning on or after January 1, 2009
IFRIC 12, effective for reporting periods Service Concession Agreements
beginning on or after January 1, 2008
IFRIC 13, effective for reporting periods Customer Loyalty Programmes
beginning on or after July 1, 2008
IFRIC 14, effective for reporting IAS 19: The Limit on a Defined
periods beginning on or after January 1, 2008 Benefit Asset Minimum Funding
Requirements and their
Interaction
Amendment to IAS 23, effective for reporting Borrowing Costs
periods beginning on or after January 1, 2009
IFRS 8 Operating Segments, IFRIC 10 Interim Financial Reporting and Impairment,
IFRIC 11 IFRS 2 Group and Treasury Share Transactions and IFRIC 12 Concession
Service Agreements have been suggested, but as of the date on which these
consolidated financial statements have been approved for issue, are not endorsed
by the European Commission. No suggestion for endorsement of the amendment to
IAS 23 Borrowing Costs, IFRIC 13 Customer Loyalty Programmes and IFRIC 14 IAS
19: The Limit on a Defined Benefit Asset Minimum Funding Requirements and their
Interaction, have been made as of the same date.
6. Revenue
Six months Six months Three months Three months
ended June 30, ended June 30, ended June 30, ended June 30,
2007 2006 2007 2006
BGN'000 BGN'000 BGN'000 BGN'000
(not reviewed) (not reviewed)
Sales of goods 534,038 606,881 318,061 304,845
Sales of services 24,567 21,839 12,738 11,496
Rental income 1,585 1,092 898 279
Sales of finished goods 422 1,724 354 755
Total 560,612 631,536 332,051 317,375
Until December 31, 2005, according to the terms of a fuel supply agreement with
a counterparty (the Counterparty), the Parent company has recognized income in
the revenue, which represents increase of the remuneration of the Company for
incurred operating expenses and discounts given to customers. The management
believes that the total amount of BGN 25,830 thousand as of December 31, 2005 is
correct and is in accordance with the terms of the agreement. Considering the
fact that the above amount is disputed by the Counterparty and it is unlikely to
be paid in the near future, as of December 31, 2005 the management has found
indications for this receivable to be doubtful. Due to these facts the Parent
company has fully impaired this receivable.
Due to the intense disagreements with the Counterparty and the uncertain
collection of the receivables, as well as on the grounds of revenue recognition
principle of IAS 18 Revenue, from January 1, 2006 the Parent company excludes
revenue from the income statement and presents this claim off balance. The
increase of the remuneration, which is not included in these consolidated
financial statements as at June 30, 2007 and 2006 amounts to BGN 2,990 and BGN
3,750 thousand respectively (as at March 31, 2007- BGN 1,182 thousand, as at
December 31, 2006 - BGN 7,263 thousand).
Revenue from sales of goods comprises:
Six months Six months Three months Three months
ended June 30, ended June 30, ended June 30, ended June 30,
2007 2006 2007 2006
BGN'000 BGN'000 BGN'000 BGN'000
(not reviewed) (not reviewed)
Light fuels (gasoline, diesel oil and jet
oil) 513,867 588,155 308,377 296,205
Lubricants and other goods 18,786 14,217 9,556 7,509
Heavy fuels (heating oil) 1,385 4,509 128 1,131
Total 534,038 606,881 318,061 304,845
7. Other income
Six months Six months Three months Three months
ended June 30, ended June 30, ended June 30, ended June 30,
2007 2006 2007 2006
BGN'000 BGN'000 BGN'000 BGN'000
(not reviewed) (not reviewed)
Gain on sales of non-current assets,
including: 538 2,457 - 1,043
Revenue from sales of non-current assets 1,193 4,345 - 2,513
Carrying amount of non-current assets
written-off (655) (1,888) - (1,470)
Income from penalties 262 9,076 166 8,511
Insurance claims 187 244 70 159
Surplus of assets 153 228 69 161
Gain on liquidation of non-current assets, - 6 8 29
including:
Revenue from liquidation of non-current - 480 17 272
assets
Carrying amount of non-current assets - (474) (9) (243)
written-off
Other 314 128 201 4
Total 1,454 12,139 514 9,907
8. Cost of goods sold
Six months Six months Three months Three months
ended June 30, ended June 30, ended June 30, ended June 30,
2007 2006 2007 2006
BGN'000 BGN'000 BGN'000 BGN'000
(not reviewed) (not reviewed)
Light fuels (gasoline, diesel oil and gas
oil) 469,170 555,055 282,164 276,985
Lubricants and other goods 16,209 13,222 8,051 6,999
Heavy fuels (heating oil) 1,294 4,364 128 1,105
Total 486,673 572,641 290,343 285,089
9. Materials
Six months Six months Three months Three months
ended June 30, ended June 30, ended June 30, ended June 30,
2007 2006 2007 2006
BGN'000 BGN'000 BGN'000 BGN'000
(not reviewed) (not reviewed)
Fuels 1,417 1,505 759 802
Electricity 1,281 1,496 634 588
Advertising materials 877 327 689 6
Spare parts 852 980 473 691
Office consumables 627 557 338 316
Water supply 158 234 114 186
Working clothes 147 279 115 215
Heating 28 27 7 7
Disposals of assets with low value - 218 - 218
Other expense 77 180 19 46
Total 5,464 5,803 3,148 3,075
10. Hired services
Six months Six months Three months Three months
ended June 30, ended June 30, ended June 30, ended June 30,
2007 2006 2007 2006
BGN'000 BGN'000 BGN'000 BGN'000
(not reviewed) (not reviewed)
Commissions 3,556 2,355 2,280 1,617
Advertisement costs 2,374 2,566 1,485 1,490
Consulting and training 1,835 1,630 884 (1,895)
Transportation 1,637 4,021 576 2,009
Maintenance and repairs 1,498 1,691 748 1,148
Security 1,206 1,315 597 637
Communications 882 1,018 439 495
Insurances 882 487 420 274
Rents 778 779 327 337
Cash collection 735 925 345 440
State and municipal fees 333 427 203 241
Other expense 966 441 647 208
Total 16,682 17,655 8,951 7,001
11. Employee benefits expenses
Six months Six months Three months Three months
ended June 30, ended June 30, ended June 30, ended June 30,
2007 2006 2007 2006
BGN'000 BGN'000 BGN'000 BGN'000
(not reviewed) (not reviewed)
Wages and salaries 11,785 9,838 5,691 5,333
Social security contributions and benefits 3,236 2,966 1,684 1,543
Total 15,021 12,804 7,375 6,876
12. Depreciation and amortization expenses
Six months Six months Three months Three months
ended June 30, ended June 30, ended June 30, ended June 30,
2007 2006 2007 2006
BGN'000 BGN'000 BGN'000 BGN'000
(not reviewed) (not reviewed)
Depreciation of property, plant and
equipment 8,115 9,289 4,003 4,392
Depreciation of investment property 327 417 163 192
Amortization of intangible assets 207 259 90 116
Total 8,649 9,965 4,256 4,700
13. Other expenses
Six months Six months Three months Three months
ended June 30, ended June 30, ended June 30, ended June 30,
2007 2006 2007 2006
BGN'000 BGN'000 BGN'000 BGN'000
(not reviewed) (not reviewed)
Entertainment expenses and sponsorship 1,710 460 908 225
Taxes and tax charges 1,052 1,057 790 756
Shortages of assets 886 916 456 615
Penalties and indemnities 435 1,152 346 558
Business trips 197 185 104 107
Scraped non-current assets 179 79 179 27
Impairments 8 603 8 576
Loss from liquidation of non-current
assets, including: 4 - - -
Revenue from liquidation of non-current
assets (130) - - -
Net book value of scraped non-current
assets 134 - - -
Loss on sales of non-current assets,
including: - - 153 -
Revenue from sales of non-current assets - - (295) -
Net book value of non-current assets - - 448 -
Insurance claims - 318 - 318
Preservations of assets - 163 - 163
Other 322 119 185 44
Total 4,793 5,052 3,129 3,389
14. Finance income and costs
Six months Six months Three months Three months
ended June 30, ended June 30, ended June 30, ended June 30,
2007 2006 2007 2006
BGN'000 BGN'000 BGN'000 BGN'000
(not reviewed) (not reviewed)
Finance income
Interest income 3,393 1,769 2,107 1,032
Foreign exchange rate gains 115 803 - 539
Discount of purchased receivable 52 33 52 32
Other finance income 299 4 - -
Total 3,859 2,609 2,159 1,603
Finance costs
Interest expense (11,672) (4,638) (6,001) (2,317)
Foreign exchange rate losses - - (302) -
Losses on dealings with derivatives,
including
(19,010) - (10,003) -
Loss from dealings (19,103) - (11,037) -
Revaluations at fair value 93 - 1,034 -
Bank fees, commissions and other costs (546) (510) (267) (252)
Total (31,228) (5,148) (16,573) (2,569)
15. Taxation
Tax expense in the income statement includes the amount of current and deferred
income taxes in accordance with the requirements of IAS 12 Income Taxes.
Six months Six months Three months Three months
ended June 30, ended June 30, ended June 30, ended June 30,
2007 2006 2007 2006
BGN'000 BGN'000 BGN'000 BGN'000
(not reviewed) (not reviewed)
Current tax expense 2,004 2,593 1,478 2,075
Change in deferred taxes, including:
Temporary differences reversed during the
period 40 1,204 (29) 1,167
Temporary differences originated during
the period (1,459) (1,040) (518) (1,040)
Total (1,419) 164 (547) 127
Total tax expense (income) 585 2,757 931 2,202
As at June 30, 2007 the deferred tax liability of the subsidiary company New-Co
Zagora EOOD (former Petrol Storage EOOD) has been presented as liabilities
directly associated with non-current assets, held for sale.
Six months ended June 30, Six months ended June 30,
2007 2006
BGN'000 BGN'000
Consolidated accounting profit (loss) (2,751) 17,080
Applicable tax rate 10% 15 %
Income tax at the applicable tax rate (275) 2,562
Combined tax effect on permanent (99) 71
differences
Tax effect on tax assets/liabilities 26 83
originated and unrecognized in the current
reporting period
Tax effect on consolidation adjustments 933 41
Total tax expense 585 2,757
Effective tax rate 21.30% 16.14%
Tax effect from consolidation adjustments as at 30, June 2007 includes mainly
intragroup profits arising as result of valuation to market value of assets
transferred by in kind contribution from the Parent company to New-Co Zagora
EOOD, eliminated intragroup dividends and effect of applying equity method for
associate companies. Although the Group has adopted the policy of accruing
deferred tax assets (liabilities) on all temporary differences, arising from the
elimination of unrealized intra-group income from sale of non-current assets, in
this particular case no deferred tax has been presented. The reason is the fact
that as at 30, June 2007 the assets transferred by in kind contribution has been
classified as held for sale.
The deferred tax liability, presented net in the balance sheet, arises as a
result of the income tax charges on deductible and taxable temporary
differences, the effect of which is as follows:
15. Taxation (continued)
June 30, March 31, December 31,
2007 2007 2006
BGN'000 BGN'000 BGN'000
(not reviewed)
Temporary Tax Temporary Tax Temporary Tax
difference effect difference effect difference effect
Balance at the beginning of the period
Tax loss to be carried forward - - - - 7,653 1,148
Impairment of assets 1,940 194 1,940 194 1,963 295
Property, plant and equipment (20,972) (2,096) (20,972) (2,096) (28,738) (4,311)
Liabilities related to unused paid leave 2,124 213 2,124 213 1,392 208
and retirement benefits
Total (16,908) (1,689) (16,908) (1,689) (17,730) (2,660)
Originated during the period
Tax loss to be carried forward 12,234 1,223 7,537 754 - -
Impairment of assets - - - - 32 3
Property, plant and equipment (9) (1) 616 61 5,827 584
Liabilities related to unused paid leave 2,192 221 1,266 126 1,726 173
and retirement benefits
Subsequent measurement of financial
instruments 162 16 - - - -
Total 14,579 1,459 9,419 941 7,585 760
Reversed during the period
Tax loss to be carried forward - - - - (7,653) (1,148)
Impairment of assets - - - - (55) (8)
Property, plant and equipment 202 20 (388) (39) 1,939 291
Liabilities related to unused paid leave (604) (60) (306) (30) (994) (149)
and retirement benefits
Total (402) (40) (694) (69) (6,763) (1,014)
Adjustment originated from the change in
tax rate
Impairment of assets - - - - - (96)
Property, plant and equipment - - - - - 1,340
Liabilities related to unused paid leave - - - - - (19)
and retirement benefits
Total - - - - - 1,225
Included in disposal group
Property, plant and equipment 133 13 - - - -
Total 133 13 - - - -
Balance at the end of the period
Tax loss to be carried forward 12,234 1,223 7,537 754 - -
Impairment of assets 1,940 194 1,940 194 1,940 194
Property, plant and equipment (20,646) (2,064) (20,744) (2,074) (20,972) (2,096)
Liabilities related to unused paid leave 3,712 374 3,084 309 2,124 213
and retirement benefits
Subsequent measurement of financial
instruments 162 16 - - - -
Total (2,598) (257) (8,183) (817) (16,908) (1,689)
16. Property, plant and equipment
Land Buildings Plant and Vehicles Other Assets under Total
equipment construction
BGN'000 BGN'000 BGN'000 BGN'000 BGN'000 BGN'000 BGN'000
Cost
Balance at January 1, 2006 50,122 68,636 159,795 16,204 21,722 2,348 318,827
Additions - 22 341 6,633 123 2,448 9,567
Impairment - - - (27) - - (27)
Disposals (45) (318) (1,975) (3,357) (1,138) (21) (6,854)
Transfers (1,445) (925) 168 88 256 (840) (2,698)
Balance at June 30, 2006 48,632 67,415 158,329 19,541 20,963 3,935 318,815
Additions 17 - 225 1,148 213 10,736 12,339
Disposals (252) (1,077) (2,979) (454) (74) (7) (4,843)
Impairment - - - 1 - - 1
Transfers (48) 112 1,579 - 10 (1,653) -
Balance at December 31, 2006 48,349 66,450 157,154 20,236 21,112 13,011 326,312
Additions 500 - 425 694 50 17,310 18,979
Disposals (445) (407) (783) (145) (24) (22) (1,826)
Impairment - - - - - - -
Transfers (19) 3,149 5,942 10 605 (15,655) (5,968)
Balance at June 30, 2007 48,385 69,192 162,738 20,795 21,743 14,644 337,497
Accumulated depreciation
Balance at January 1, 2006 - 31,965 64,797 9,022 10,226 - 116,010
Charged for the period - 871 5,741 1,208 1,469 - 9,289
Disposals for the period - (139) (1,450) (2,724) (1,069) - (5,382)
Transfers - (328) (156) (14) 103 - (395)
Balance at June 30, 2006 32,369 68,932 7,492 10,729 - 119,522
-
Charged for the period - 853 4,673 1,467 1,525 - 8,518
Disposals for the period - (459) (2,414) (354) (115) - (3,342)
Transfers - - (1) 1 - - -
Balance at December 31, 2006 - 32,763 71,190 8,606 12,139 - 124,698
Charged for the period - 844 4,293 1,496 1,482 - 8,115
Disposals for the period - (181) (532) (141) (13) - (867)
Transfers - (86) (5,155) - 2 - (5,239)
Balance at June 30, 2007 - 33,340 69,796 9,961 13,610 - 126,707
Carrying amount at
January 1, 2006 50,122 36,671 94,998 7,182 11,496 2,348 202,817
Carrying amount at
June 30, 2006 48,632 35,046 89,397 12,049 10,234 3,935 199,293
Carrying amount at
December 31, 2006 48,349 33,687 85,964 11,630 8,973 13,011 201,614
Carrying amount at
June 30, 2007 48,385 35,852 92,942 10,834 8,133 14,644 210,790
17. Intangible assets
Software Licenses Other Assets under Total
construction
BGN'000 BGN'000 BGN'000 BGN'000 BGN'000
Cost
Balance at January 1, 2006 1,178 1,014 406 52 2,650
Additions 70 8 - 110 188
Disposals (30) (22) - - (52)
Transfers 232 - (293) (12) (73)
Balance at June 30, 2006 1,450 1,000 113 150 2,713
Additions 54 2 2 60 118
Disposals - (1) (2) - (3)
Transfers - - - - -
Balance at December 31, 2006 1,504 1,001 113 210 2,828
Additions - 15 75 87 177
Disposals - - - - -
Transfers (16) (15) - - (31)
Balance at June 30, 2007 1,488 1,001 188 297 2,974
Accumulated amortization
Balance at January 1, 2006 691 150 228 - 1,069
Charged for the period 170 74 15 - 259
Disposals for the period (31) (23) - - (54)
Transfers 96 - (194) - (98)
Balance at June 30, 2006 926 201 49 - 1,176
Charged for the period 169 74 10 - 253
Disposals for the period - - (1) - (1)
Balance at December 31, 2006 1,095 275 58 - 1,428
Charged for the period 118 74 15 - 207
Disposals for the period - - - - -
Transfers (4) - - - (4)
Balance at June 30, 2007 1,209 349 73 - 1,631
Carrying amount at
January 1, 2006 487 864 178 52 1,581
Carrying amount at
June 30, 2006 524 799 64 150 1,537
Carrying amount at
December 31, 2006 409 726 55 210 1,400
Carrying amount at
June 30, 2007 279 652 115 297 1,343
18. Investment property
Land Buildings Plant and Other Total
equipment
BGN'000 BGN'000 BGN'000 BGN'000 BGN'000
Cost
Balance at January 1, 2006 2,443 18,818 2,019 1,847 25,127
Additions - 8 34 14 56
Disposals (680) (415) (295) (611) (2,001)
Impairment (549) - - - (549)
Transfers 1,445 1,073 25 228 2,771
Balance at June 30, 2006 2,659 19,484 1,783 1,478 25,404
Additions - 101 12 46 159
Transfers (390) (814) (4) (221) (1,429)
Balance at December 31, 2006 2,269 18,771 1,791 1,303 24,134
Additions 1,628 - - - 1,628
Disposals - - (5) - (5)
Transfers - - (3) - (3)
Balance at June 30, 2007 3,897 18,771 1,783 1,303 25,754
Accumulated depreciation
Balance at January 1, 2006 - 2,851 1,501 1,181 5,533
Charged for the period - 340 30 47 417
Disposals for the period - (109) (278) (429) (816)
Transfers - 328 (15) 180 493
Balance at June 30, 2006 - 3,410 1,238 979 5,627
Charged for the period - 241 6 50 297
Disposals for the period - - - - -
Transfers - (42) - - (42)
Balance at December 31, 2006 - 3,609 1,244 1,029 5,882
Charged for the period - 258 17 52 327
Balance at June 30, 2007 - 3,867 1,261 1,081 6,209
Carrying amount at 2,443 15,967 518 666 19,594
January 1, 2006
Carrying amount at 2,659 16,074 545 499 19,777
June 30, 2006
Carrying amount at 2,269 15,162 547 274 18,252
December 31, 2006
Carrying amount at 3,897 14,904 522 222 19,545
June 30, 2007
18. Investment property (continued)
Non-current assets and investment properties with total carrying amount as of
June 30, 2007 amounting to BGN 50,193 thousand are pledged as collateral under
bank and trade loans granted to the Parent company and to the Ultimate parent
company (see also note 37).
As at June 30, 2007 property, plant and equipments and intangible assets of the
subsidiary New-Co Zagora EOOD, amounting to BGN 759 thousand have been
transferred to non - current assets, held for sale (see also note 25).
19. Investments in associates and other investments
For the six months For the twelve months For the six months
ended ended ended
30 June 2007 31 December 2006 30 June 2006
Investments in associates % of Value of Share in Value of Share in Value of Share in
capital investments loss investments loss investments loss
BGN'000 BGN'000 BGN'000 BGN'000 BGN'000 BGN'000
Varna Business Services
IID 42.69% 1,650 (166) 1,816 (231) 1,911 (136)
Petrol Engineering AD,
net of impairment 40.00% - - - - - -
Total 1,650 (166) 1,816 (231) 1,911 (136)
Capital 3000 AD,
net of impairment 6.92% - - - - - -
Total 1,650 (166) 1,816 (231) 1,911 (136)
The investments in Petrol Engineering AD and Capital 3000 AD have been fully
impaired in previous reporting periods.
The total amounts of the assets, liabilities, income and loss of the associate
company Varna Business Services IID as at June 30, 2007, March 31, 2007 and
December 31, 2006 are as follows:
Assets Liabilities Net Revenue Profit
assets (loss)
BGN'000 BGN'000 BGN'000 BGN'000 BGN'000
June 30, 2007 6,602 2,738 3,864 854 (391)
March 31, 2007 6,766 2,676 4,090 481 (165)
December 31, 2006 7,191 2,936 4,255 2,116 (539)
20. Goodwill
The goodwill presented in the consolidated financial statement of the Group
arose from the acquisition of two subsidiary companies - BPI EAD and Naftex
Petrol EOOD. The acquisition of the latter was a result of the restructuring
policy of the companies within the group of the ultimate controlling party -
Petrol Holding AD. According to the adopted accounting policy these acquisitions
has been measured by using the purchase method. According to the requirements of
IFRS 3 Business combinations as of January 1, 2005 the accumulated amortization
of goodwill was eliminated with a corresponding decrease in the cost of the
goodwill and as of the same date the Group discontinued amortizing it. As of
June 30, 2007, 2006 the total carrying amount of the goodwill is BGN 20,309
thousand.
21. Interest bearing loans granted
Interest bearing loans include receivables from related parties (see also note
35). The contracted interest rate on the long term loan granted is 3 m. SOFIBOR
plus a fixed margin of 2 %, and the interest rate on the short term loans
granted is 3 m. SOFIBOR plus a fixed margin of 1 %.
22. Inventories
June 30, March 31, December 31,
2007 2007 2006
BGN'000 BGN'000 BGN'000
(not reviewed)
Light fuels (gasoline, diesel oil and jet oil) 108,719 139,302 126,472
Lubricants and other goods 8,728 8,056 7,299
Materials 4,697 4,231 4,080
Heavy fuels (heating oil) 146 6,441 117
Total 122,290 158,030 137,968
As of June 30, 2007 available and future inventories amounting totally to BGN
79,218 thousand, BGN are pledged as securities for bank loans utilized by the
Group (see also note 27 and 37).
23. Trade and other receivables, net
June 30, March 31, December 31,
2007 2007 2006
BGN'000 BGN'000 BGN'000
(not reviewed and (restated)
restated)
Trade receivables and advances granted,
net of impairment losses 107,221 81,380 93,389
Related party receivables 4,809 32,211 9,472
VAT and excise duties refundable 8,197 2,754 -
Litigations and writs, net of impairment losses 484 467 547
Other, net of impairment losses 10,299 6,124 4,323
Total 131,010 122,936 107,731
23. Trade and other receivables, net (continued)
Due to a technical error current trade receivables and advances granted and
current payables to suppliers and advances received as at December 31, 2006 and
March 31, 2007 were understated by the amount of BGN 25,830 thousand, as
reported in the consolidated financial statements for these periods. The
presentation error was discovered in the current reporting period and was
corrected retrospectively in the comparative amounts of the respective items in
compliance with the requirements of IAS 8 Accounting Policies, Changes in
Accounting Estimates and Errors (see also note 26).
Trade receivables as of June 30, 2007, March 31,2007 and December 31, 2006 do
not include Company's claims against the Counterparty for 2006, at the
cumulative amount respectively of BGN 10,253 thousand, BGN 8,445 thousand and
BGN 7,263 thousand, excluding VAT (see also note 6).
As of June 30, 2007 other receivables include deposited court guarantee related
to the claim against the Counterparty amounting to BGN 4,719 thousand.
As of June 30, 2007 a subsidiary of the Group has receivables amounting to BGN
16,595 thousand (see also note 37), which are pledged as collateral under
utilized bank loans.
Group's management believes that the carrying amount of trade and other
receivables approximates to their fair value as of as of June 30, 2007 and
December 31, 2006.
24. Cash and cash equivalents
June 30, March 31, December 31,
2007 2007 2006
BGN'000 BGN'000 BGN'000
(not reviewed)
Cash at banks 30,972 10,817 56,325
Cash in transfer 5,323 4,481 6,472
Cash on hand 313 398 190
Total 36,608 15,696 62,987
Cash included in a disposal group 1 - -
Total in cash flow 36,609 15,696 62,987
The cash in transfer comprises of cash, collected from the fuel stations as of
the balance sheet date, but deposited in the Group's bank accounts at the
beginning of the next reporting period.
Cash at banks as at June 30, 2007 includes also restricted cash on margin
deposits amounting to BGN 9,830 thousand.
25. Non-current assets, held for sale
The major classes of assets and liabilities classified as held for sale are as
follows:
June 30, March 31, December 31,
2007 2007 2006
BGN'000 BGN'000 BGN'000
(not reviewed)
Land, buildings and other assets held for sale 1,387 1,387 1,387
Assets of the subsidiary company New Co Zagora EOOD 1,079 - -
Total 2,466 1,387 1,387
Liabilities associated with non-current assets
held for sale 87 - -
Land, buildings and other assets held for sale
In 2006 the Group classified some of its investment properties, mainly land and
buildings, as non-current assets, held for sale. The Group management believes
that the sale of these assets is very probable, since it has engaged itself in a
plan of sale and has initiated steps in locating buyers.
Net assets of subsidiary company New Co Zagora EOOD
As at June 30, 2007 the Group intends to dispose of its subsidiary company New
Co Zagora EOOD, to which the electric power business has been transferred. The
decision for the sale of the subsidiary to the Ultimate Parent Company is taken
on the Annual General Meeting. The subsidiary company is sold in July 2007 (see
also note 40).
June 30, March 31, December 31,
2007 2007 2006
BGN'000 BGN'000 BGN'000
(not reviewed)
Property, plant and equipment 759 - -
Trade and other receivables 319 - -
Cash and cash equivalent 1 - -
Assets of subsidiary company New Co Zagora EOOD
classified as held for sale 1,079 - -
Trade and other payables (74) - -
Deferred tax (13) - -
Liabilities of subsidiary company New Co Zagora
EOOD with assets classified as held for sale (87) - -
Net assets of subsidiary company New Co Zagora
EOOD classified as held for sale 992 - -
26. Trade and other payables, net
June 30, March 31, December 31,
2007 2007 2006
BGN'000 BGN'000 BGN'000
(restated and not (restated)
reviewed)
Payables to suppliers and advances received, net 110,537 127,969 121,681
Relate party payables 30,654 3,355 2,022
VAT and excise duties payable 23,812 1,239 57,407
Payables to personnel and social security funds 5,326 4,772 3,790
Other 5,651 6,047 3,986
Total 175,980 143,382 188,886
The Group has adopted the policy to present its payables to the Counterparty net
of its receivables decreased by the accrued impairment of these receivables. As
it was disclosed in note 23, due to a technical error, when calculating the net
balance payable to the Counterparty as of December 31, 2006 and March 31, 2007,
the amount of impairment of BGN 25,830 thousand accrued in previous accounting
periods was not taken into account. The error does not affect equity, but as a
result current trade receivables and advances granted and current payables to
suppliers and advances received as at December 31, 2006 and March 31, 2007 were
understated by the amount of BGN 25,830 thousand, as reported in the
consolidated financial statements for these periods. The presentation error was
discovered in the current reporting period and was corrected retrospectively in
the comparative amounts of the respective items under the requirement of IAS 8
Accounting Policies, Changes in Accounting Estimates and Errors.
A company from the Group has obtained a license for the management of tax
warehouse for eleven storage facilities. These licenses allow the following
activities: to receive energy products both under deferred excise payment regime
and with a paid excise in the tax warehouses; to store energy products both
under deferred excise payment regime and with a paid excise in one joint
reservoir; to store additives for energy products; to blend energy products; to
add additives to energy products for trade and technical purposes; to mark
energy products; to empty energy products' reservoirs and remove the waste from
the bottom. The receipt and storage of energy products under the deferred excise
payment regime is secured by bank guarantees at the amount of BGN 53,938
thousand (see also note 37).
Related party payables are disclosed in note 35.
The Group accrues liabilities for unused annual paid leave of employees in
compliance with IAS 19 Employee Benefits. The movement of these liabilities for
the reported periods is as follows:
June 30, March 31, December 31,
2007 2007 2006
BGN'000 BGN'000 BGN'000
(not reviewed)
Balance at the beginning of the period 1,667 1,667 1,409
Accrued during the period 2,192 1,266 1,263
Utilized during the period (605) (307) (1,005)
Balance at the end of the period, including: 3,254 2,626 1,667
For salaries on unused paid leave 2,651 2,128 1,357
For social security contributions on unused paid
leaves 603 498 310
The balance at the end of the period is presented in the balance sheet together
with the current liabilities to employees and Social security funds. The Group's
management believes that the carrying amount of the Group's current liabilities,
presented in the balance sheet as of June 30, 2007, March 31, 2007 and December
31, 2006 , approximates to their fair value.
27. Interest-bearing loans
June 30, March 31, December 31,
2007 2007 2006
BGN'000 BGN'000 BGN'000
(not reviewed)
Current liabilities under interest-bearing loans
Current portion of liabilities on bank loans 46,429 83,173 48,741
Current portion of liabilities on trade loans from
related parties 5,435 5,273 5,157
Current portion of liabilities on debenture loans 11,021 7,252 3,055
Total 62,885 95,698 56,953
Non-current liabilities under interest-bearing loans
Non-current portion of liabilities on bank loans 282 380 725
Non-current portion of liabilities on debenture loans 206,789 206,595 206,492
Total 207,071 206,975 207,217
Total current liabilities under interest bearing loans 269,956 302,673 264,170
Non-current liabilities under bank loans mature within the period of one to two
years.
The liabilities under interest-bearing loans analyzed by currency type are as
follows:
June 30, March 31, December 31,
2007 2006 2006
(not reviewed)
Currency type Original BGN'000 Original BGN'000 Original BGN'000
currency currency currency
in thousands in thousands in thousands
BGN, including:
Bank loans 45,446 45,446 79,636 79,636 47,308 47,308
Debenture loans 15,035 15,035 15,348 15,348 15,011 15,011
Trade loans 5,435 5,435 5,273 5,273 5,157 5,157
EUR, including:
Bank loans 647 1,265 866 1,694 1,104 2,158
Debenture loans 103,677 202,775 101,491 198,499 99,465 194,536
USD including:
Bank loans - - 1,514 2,223 - -
Total 269,956 302,673 264,170
27. Interest-bearing loans (continued)
For 2007 the average interest rates on bank loans are in the range between 5,44
% and 7,92 %, and respectively 4.37% and 6.86% for 2006. The contracted interest
rate on trade loans from related parties is 3 m. SOFIBOR plus a fixed margin of
1%.
In November 2003 the Parent company issued registered, dematerialized, ordinary,
interest bearing and freely transferable corporate bonds at the total amount of
BGN 15,000 thousand, with BGN 1,000 par value per bond. The maturity of the
corporate bond is 5 years. The interest rate on the bond is 8.375% per annum. It
is secured by a corporate guarantee, issued by the majority shareholder of the
Parent company. Interest is payable twice a year, for the term of the loan.
In October 2006 the Parent company issued 2,000 registered, transferable notes
with fixed annual interest rate of 8.375% and issue price - 99.507% of the
principal amount determined at EUR 50,000 for each note. The maturity date of
the bond is in 5 years period. The issue is secured by Group's receivables under
loans, granted to related parties and a corporate guarantee, issued by a
subsidiary. The transaction costs for the bond issue amount to BGN 3,049
thousand. Interest is paid annually. The annual effective interest rate is
8.557%.
28. Obligations under finance lease
Minimum lease payments Present value of minimum lease
payments
June 30, March 31, December 31,June 30, March 31, December 31,
2007 2007 2006 2007 2007 2006
BGN'000 BGN'000 BGN'000 BGN'000 BGN'000 BGN'000
(not (not
reviewed) reviewed)
Amounts payable under finance
leases
Within one year 2,458 2,394 2,360 2,108 2,014 1,955
More than one year 5,022 5,197 5,558 4,370 4,663 4,955
Less: Interest payable (1,002) (914) (1,008) - - -
Present value of finance lease
obligations 6,478 6,677 6,910 6,478 6,677 6,910
Less: Present value of finance
lease obligations with maturity
less than 1 year (2,108) (2,014) (1,955)
Present value of finance lease
obligations with maturity over 1
year 4,370 4,663 4,955
Assets acquired by the Group under finance leases comprise mainly of vehicles.
The lease term of the contracts is between 3 to 6 years.
Management believes that the fair value of the obligations under finance leases
does not differ significantly from their carrying amount.
29. Current income tax
Income tax payable includes the amount of the corporate income tax for the
current and prior reporting periods, payable as of the balance sheet date.
June 30, March 31, December 31,
2007 2007 2006
BGN'000 BGN'000 BGN'000
(not reviewed)
Income tax payable as of January 1, net 328 328 3,396
Accrued corporate income tax 2,004 526 4,562
Corporate income tax paid (1,177) (581) (7,630)
Income tax payable at the end of the period, net 1,155 273 328
30. Share capital
The share capital is presented at par value, according to the court decision for
registration. The fully paid-in share capital, at the amount of BGN 109,250
thousand, is distributed into 109,249,612 registered shares with a par value of
BGN 1 each.
Shareholders of the Parent company are as follows:
Shareholder June 30, March 31, December 31,
2007 2007 2006
% of share capital % of share capital % of share capital
(not reviewed)
Petrol Holding AD 68.99 69.84 71.75
Naftex Refining and Petrochemical
Engineering Services
(Former Naftex Oil Shipping Corporation
Limited)
(United Arab Emirates) 18.84 18.84 18.84
Ministry of Economics 0.86 0.91 0.94
Other minority shareholders 11.31 10.41 8.47
Total 100.00 100.00 100.00
31. Revaluation reserve
The reserve of revaluation of non-current assets, net of accrued deferred tax,
as of June 30, 2007, March 31, 2007 and December 31, 2006 at the amount of BGN
28,536 thousand, BGN 28,631 thousand and BGN 28,817 thousand, respectively, is
allocated as a result of revaluations of property, plant and equipment and
intangible assets, carried out in the period 1997 - 2001, as well as of
revaluation as of December 31, 2002 in compliance with the changes of the
applicable Bulgarian accounting legislation (see also note 3.1).
The revaluation reserve is transferred to retained earnings on the disposal of
the respective asset.
32. Earnings (loss) per share
Earnings (loss) per share are calculated by dividing the net distributable
profit (loss) by the weighted average number of ordinary shares held during the
reporting period. There are no dilutive instruments in issue.
Six months Six months Three months Three months
ended June ended June ended June ended June
30, 30, 30, 30,
2007 2006 2007 2006
BGN'000 BGN'000 BGN'000 BGN'000
(not (not
reviewed) reviewed)
Weighted average number of shares ('000) 109,250 109,250 109,250 109,250
Profit (loss) (BGN'000) (3,336) 14,323 (78) 13,952
Earnings(loss) per share (BGN) (0.03) 0.13 0.00 0.13
33. Liabilities for retirement benefits to employees
As of December 31, 2006 the Group has accrued liabilities for retirement
benefits at the amount of BGN 470 thousand. This amount was based on an actuary
valuation taking into consideration assumptions for mortality, disability,
employment turnover, salaries' growth, etc. The present value of the liability
was calculated by applying a discount factor of 4%.
34. Subsidiaries
The consolidated subsidiaries, on which the Parent company exercises control as
of June 30, 2007, March 31,2007 and December 31, 2006, are as follows:
Subsidiary Main activities Investments Investments Investments
as of as of as of
June 30, March 31, December 31,
2007 2007 2006
(not reviewed)
Petrol Trans Express EOOD Transport services 100.0% 100.0% 100.0%
Petrol Technica EOOD Service and maintenance
of fuel stations 100.0% 100.0% 100.0%
New Co Zagora EOOD (Petrol Electricity generating
Storage EOOD) 100.0% 100.0% 100.0%
Petrol Trade EOOD Trade 100.0% 100.0% 100.0%
BPI EAD Trade with fuels and rents 100.0% 100.0% 100.0%
Naftex Petrol EOOD Wholesale with fuels 100.0% 100.0% 100.0%
Eurocapital Bulgaria EAD Investing activities 100.0% 100.0% 100.0%
Petrol Card Service OOD Trade with fuels with fleet
cards 100.0% 100.0% 100.0%
Trans Operator AD Trade, intermediation and
(Translotto AD) representation 99.9% 99.9% 99.9%
Vratzata EOOD Recreation services 100.0% 100.0% 100.0%
Petrol Gaz OOD Trade with petrol products 90% - -
34. Subsidiaries
A new subsidiary Petrol Gaz OOD was established in May 2007.
According to the Law for Public Offering of Securities, General meeting of the
shareholders of the Parent company, held on June 11, 2007, empowered the
Managing Board and the Executive Director to conclude contracts for the sale of
the shares of the subsidiary company New Co Zagora to the Ultimate Parent
Company Petrol Holding AD (see also note 25 and 40).
35. Related parties transactions
The Parent company exercises control and significant influence over related
parties, disclosed in note 19 and 34. The Ultimate parent company is Petrol
Holding AD.
In 2007 and 2006 the Group has performed transactions with the following related
parties:
Related party
Petrol Holding AD ultimate parent company
Varna Business Services OOD associate
Izvor Bottling Company AD subsidiary of Petrol Holding AD
Air Lazur - General Aviation EOOD subsidiary of Petrol Holding AD
Interhotel Bulgaria Burgas EOOD subsidiary of Petrol Holding AD
Naftex Security EAD subsidiary of Petrol Holding AD
PFC Naftex AD subsidiary of Petrol Holding AD till
August 2006
Ross Oil EOOD subsidiary of Petrol Holding AD
Transhold Bulgaria Holding AD subsidiary of Petrol Holding AD
Jurex Consult AD subsidiary of Petrol Holding AD
Tema Sport OOD subsidiary of Petrol Holding AD
PSFC Chernomorets AD subsidiary of Petrol Holding AD
Balneohotel Pomorie AD subsidiary of Petrol Holding AD
Transat AD subsidiary of Transhold Bulgaria Holding AD
Trans Telecom EOOD subsidiary of Transhold Bulgaria Holding AD
Transcard AD subsidiary of Transhold Bulgaria Holding AD
Transcard Financial Services EAD subsidiary of Transcard AD
The transactions performed relate primarily to:
* purchase and sale of liquid fuels and other goods;
* purchase and sale of property, plant and equipment;
* holding fees and services;
* rents;
* supply of materials;
* maintenance and servicing;
* legal consultations;
* telecommunication services;
* other.
There are no unusual conditions or deviations from the average market prices in
these transactions.
35. Related parties transactions (continued)
In 2007 and 2006 transactions with related parties are as follows:
Related party Six months ended Six months ended Three months Three months ended
June 30, June 30, ended June 30, June 30,
2007 2006 2007 2006
(not reviewed) (not reviewed)
BGN'000 BGN'000 BGN'000 BGN'000
Sale of goods, Sale of goods, Sale of goods, Sale of goods,
non-current non-current non-current non-current assets
assets and assets and assets and and services
services services services
Ultimate parent company 392 428 106 252
Companies under common control 2,229 1,626 879 755
Associates 22 34 8 11
Total 2,643 2,088 993 1,018
Related party Six months ended Six months ended Three months Three months ended
June 30, June 30, ended June 30, June 30,
2007 2006 2007 2006
(not reviewed) (not reviewed)
BGN'000 BGN'000 BGN'000 BGN'000
Purchase of Purchase of Purchase of Purchase of goods,
goods, goods, goods, non-current assets
non-current non-current non-current and services
assets and assets and assets and
services services services
Ultimate parent company 1,687 3,065 704 (773)
Companies under common control 30,953 4,175 24,025 (813)
Associates 234 207 117 74
Total 32,874 7,447 24,846 (1,512)
Related party Six months ended Six months ended Three months Three months ended
June 30, June 30, ended June 30, June 30,
2007 2006 2007 2006
(not reviewed) (not reviewed)
BGN'000 BGN'000 BGN'000 BGN'000
Finance income Finance income Finance income Finance income
Ultimate parent company 2,436 1,699 1,234 995
Companies under common control 9 - 5 -
Total 2,445 1,699 1,239 995
Related party Six months ended Six months ended Three months Three months ended
June 30, June 30, ended June 30, June 30,
2007 2006 2007 2006
(not reviewed) (not reviewed)
BGN'000 BGN'000 BGN'000 BGN'000
Finance Finance Finance Finance
costs costs costs costs
Ultimate parent company 139 129 72 60
Total 139 129 72 60
35. Related parties transactions (continued)
The outstanding balances with related parties as of June 30, 2007, March 31,
2007 and December 31, 2006 are as follows:
Related party June 30, March 31, December 31,
2007 2007 2006
(not reviewed)
BGN'000 BGN'000 BGN'000
Amounts Amounts Amounts
receivable receivable receivable
Ultimate parent company, incl.: 75,135 86,044 85,372
Interest-bearing loans - non current portion 44,698 44,698 44,698
Interest- bearing loans -current portion 27,315 39,695 39,695
Companies under common control, incl.: 1,630 30,597 8,441
Interest- bearing loans -current portion 51 51 51
Associates 108 14 103
Total 76,873 116,655 93,916
Related party June 30, March 31, December 31,
2007 2007 2006
(not reviewed)
BGN'000 BGN'000 BGN'000
Amounts Amounts Amounts
payable payable payable
Ultimate parent company, incl.: 12,482 6,689 5,863
Interest- bearing loans -current portion 5,435 5,273 5,157
Companies under common control 21,038 1,838 1,207
Associates 80 54 60
Others 2,489 47 49
Total 36,089 8,628 7,179
Payables to other related parties as at June 30, 2007 comprise mainly of
dividend payables to minority shareholders of the Parent company, net of tax
due.
36. Segment reporting
June 30, 2007 Wholesale Retail Other
of fuels of fuels activities Elimi-nations Consolidated
BGN'000 BGN'000 BGN'000 BGN'000 BGN'000
External sales 211,977 343,416 6,673 - 562,066
Inter-segment sales 31,873 1,243 7,393 (40,509) -
Total revenue 243,850 344,659 14,066 (40,509) 562,066
Result of the segment 11,980 9,795 3,009 - 24,784
Share of net profits of associates - - (166) - (166)
Foreign exchange rate gains, net - - - - 115
Loss on dealings with derivatives - - - - (19,010)
Interest expenses and fees and other - - - - (8,474)
financial expenses, net
Tax expense - - - - (585)
Net profit of the Group - - - - (3,336)
Depreciation and amortization (1,338) (4,964) (2,347) - (8,649)
Impairment of assets (8) - - - (8)
June 30, 2006 Wholesale Retail Other
of fuels of fuels activities Elimi-nations Consolidated
BGN'000 BGN'000 BGN'000 BGN'000 BGN'000
External sales 357,061 278,357 8,257 - 643,675
Inter-segment sales 19,352 2,837 7,918 (30,107) -
Total revenue 376,413 281,194 16,175 (30,107) 643,675
Result of the segment 14,428 2,292 3,035 - 19,755
Share of net profits of associates - - (136) - (136)
Foreign exchange rate gains, net - - - - 803
Interest expenses and fees and other
financial expenses, net - - - - (3,342)
Tax expense - - - - (2,757)
Net profit of the Group - - - - 14,323
Depreciation and amortization (1,262) (6,192) (2,511) - (9,965)
Impairment of assets - (27) (576) - (603)
36. Segment reporting (continued)
Wholesale Retail Other
of fuels of fuels activities Consolidated
BGN'000 BGN'000 BGN'000 BGN'000
June 30, 2007
Segment assets 275,455 275,050 65,920 616,425
Investment in equity method associates - - 1,650 1,650
Segment liabilities 117,220 323,690 13,216 454,126
Capital expenditure 2,329 15,746 2,709 20,784
December 31, 2006
Segment assets (restated) 307,138 267,902 61,052 636,092
Investment in equity method associates - - 1,816 1,816
Segment liabilities (restated) 146,803 301,827 12,134 460,764
Capital expenditure 3,856 9,972 8,599 22,427
37. Contingent assets and liabilities
Contingent liabilities
As of June 30, 2007 the Group has contingent liabilities under guaranteed
promissory notes to third parties for liabilities of related parties, at the
amount of BGN 37,636 thousand, and for available and future assets are mortgaged
and/or pledged as collateral under bank and trade loans, granted to the Group
and to related parties, at the amount of BGN 146,006 thousand.
As at June 30, 2007 a company from the Group has issued bank guarantees
amounting to BGN 53,938 thousand in favour of the Customs Agency according to
the requirements of Excise Duties and Tax Warehouses Act. Bank guarantees
amounting to BGN 114 thousand were issued related to public orders.
37. Contingent assets and liabilities (continued)
Contingent assets
In 2006 the Group has recognized income from penalties amounting to BGN 8,196
thousand, calculated to a counterparty because of a quantitative non-execution
of a fuel supply contract. As of December 31, 2006 the income has been reversed,
because the management has assessed that the income recognition criteria in
accordance with IAS 18 Revenue have not been met. In view of this fact as of
June 30, 2007a contingent asset amounting to BGN 8,196 thousand arises for the
Group, because the receivable from the counterparty was not recognized in the
consolidated financial statements, but the management believes that it has
reasonable and justifiable legal grounds to claim this receivable.
As of June 30, 2007 bank guarantees at the amount of BGN 5,430 thousand;
promissory notes at the amount of BGN 6,368 thousand, mortgage at the amount of
BGN 1,200 thousand serve as collateral for receivables from customers.
38. Environment
In relation to the privatization of Petrol AD in 1999 for most of the Company's
sites (storage facilities and fuel stations) reports for valuation of the
influence on the environment are prepared and approved by a council of experts
with the Ministry of Environment and Waters (MoEW). Based on these reports
Permissions for Exploitation of MoEW are issued. After the privatization the
Parent company undertakes a large-scale investment programme aiming to set its
sites in compliance with the best European practices. Hence, the sites are
reconstructed in compliance with Directive 94/63/EC, which has been transferred
to the Bulgarian legislation by means of Regulation No 16 of August 12, 1999
(the Regulation) on the control of volatile organic compound emissions resulting
from the storage, loading or unloading and transportation of petrol, issued
based on Art. 9, par. 1 of the Clean Air Act. The reconstruction of the fuel
stations is preceded by environmental characteristics for each investment offer.
These characteristics are presented to the Regional Inspections of Environment
and Waters (RIEW) for construction permission.
During the period 2007 - 2009, depending on the technological characteristics
and by observing the requirements of the Regulation, 282 fuel stations and 11
storage facilities will be set in compliance with the respective standards. The
approximate estimation of the management of the total value of the
reconstructions for the whole period amounts to BGN 23,780 thousand.
The actual results and the time for construction works may differ significantly
from the approximate estimates.
As of the date of these consolidated financial statements there is no obligating
event under IAS 37 - Provisions, Contingent Liabilities and Contingent Assets,
related to the commitment of the Company for environment protection, according
to the current legislation in Bulgaria, and therefore no provisions have been
accrued.
39. Legal proceeding
On February 13, 2007, in reply to a letter from Lukoil Bulgaria EOOD (the
Counterparty) dated January 17, 2007, the Parent company officially requests the
Counterparty to pay its debt of BGN 83,973 thousand within 20 days of the date
of the letter. The Parent company's claims are based on the contract for sale of
fuels, signed by the parties in July 2001 (see also note 6), according to which
the Counterparty should pay to the Parent company remuneration, calculated under
a formula specified in the contract, and also should reimburse the Parent
company for some expenses (budget), related to the contract execution. The total
Parent company's claim of BGN 83,973 thousand includes claim for non-reimbursed
expenses, related to the contract execution, at the amount of BGN 43,568
thousand, and claim for an additional remuneration at total amount of BGN 40,405
thousand. The claimed amounts do not include interest on overdue payment, which
should be calculated additionally.
The Parent company's claims are related to depreciation charges under the signed
contract not covered by the Counterparty, expenses at the actual amount spent
not covered by the Counterparty, as well as expenses incurred by the Parent
company for discounts given to customers as a result of its marketing policy.
Until December 31, 2005 the Parent company has recognized only part of the
claims (see also note 6), as it was convinced in its entitlement to receive
them, based on the concluded contract. In the view of the intensifying
disagreement with the Counterparty, arising doubt of the collectibility of these
receivables; and the grounds for revenue recognition in compliance with IAS 18
Revenue, since January 1, 2006 the Parent company ceased to include these
receivables, and respectively revenue, in its financial statements, and started
to present these claims off balance sheet.
In reply to the Parent company's request for payment of the claimed amounts
under the signed contract, the Counterparty filed an appeal with the Petrich
District Court for securing a future claim of the Counterparty against the
Parent company, at the approximate amount of BGN 60,000 thousand. The security
measure, requested by the Counterparty, for real estates owned by the Parent
company (99 fuel stations) to be placed under interdiction, has been satisfied.
These fuel stations have been mortgaged under a contract between the Ultimate
parent company and the Counterparty, signed in 2001.
In March 2007 the Counterparty filed a claim against the Parent company at the
amount of BGN 89,557 thousand, including principal of BGN 70,946 thousand and
penalty interest for delay of BGN 18,611 thousand, in relation to the contract
signed by the parties in July 2001. The Counterparty's claims for the principal,
according to the filed statement of claim, are based on "incorrect execution of
transactions, reported by the Company, at the amount of BGN 59,585 thousand" and
"amounts retained by the Company in the form of reported lower sales at the
amount of BGN 11,361 thousand". The first hearing of the court took place in May
2007. The Counterparty was asked by the court to specify its claim in a more
understandable manner and to make a breakdown of the amount claimed for the each
of the five years envisaged in the claim. The next hearing is scheduled for
September 2007.
On its turn Parent company filed a partial claim against the Counterparty for
BGN 117,982 thousand, including principal of BGN 84,878 thousand, value added
tax amounting to BGN 16,975 thousand and penalty interest of BGN 16,129 thousand
for unpaid expenses due to the Parent company since 2001. The first hearing of
the court took place in June 2007. As a result the court appointed independent
experts to carry out an accounting investigation with regard to the filed claim.
The next hearing is scheduled for September 2007.
39. Legal proceeding (continued)
In view of the fact that the lawsuit is in its initial phase and the parties'
counter claims are significant, the Parent company has not accrued provisions
for obligations arising on the lawsuit in the present consolidated financial
statements. The Parent company's management believes that the Counterparty's
claims are unfounded, whereas the Parent company's claims are in full compliance
with the Company's rights under the retail fuel supply agreement, signed in July
2001. The Parent company is confident in the strength of its legal position
based on legal opinion sought from both in-house and outside lawyers and law
firms, including reputed international law firms represented in Bulgaria.
40. Post balance sheet events
According to the decision of the General meeting of the shareholders of the
Parent company, in July 2007 the subsidiary New Co Zagora EOOD was sold to the
Ultimate parent company Petrol Holding AD. The net assets of the company are
presented in these consolidated financial statements as disposal group (see also
note 25 and 34).
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR ILFSSALIVIID
Petrol 4.24% (LSE:74JJ)
과거 데이터 주식 차트
부터 6월(6) 2024 으로 7월(7) 2024
Petrol 4.24% (LSE:74JJ)
과거 데이터 주식 차트
부터 7월(7) 2023 으로 7월(7) 2024
