RNS Number : 9713C
Petrol AD
08 September 2008
CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2008
Table of contents
Consolidated financial statements as of June 30, 2008*..**..*...*...3
Notes to the consolidated financial statements***.*******.9
Consolidated financial statements
as of June 30, 2008
CONSOLIDATED INCOME STATEMENT
For the six months ended June 30, 2008
Notes Six months ended Six months ended Three months ended Three months ended June
* June 30, 2008 June 30, June 30, 2008 30,
BGN'000 2007 BGN'000 2007
BGN'000 BGN'000
(restated) (restated)
Revenue 6 730,563 563,675 432,032 330,028
Other income 7 360,627 1,454 360,039 514
Cost of goods sold 8 (662,203) (500,309) (392,538) (293,513)
Materials 9 (5,866) (5,464) (3,305) (3,148)
Hired services 10 (29,620) (16,682) (19,464) (8,951)
Employee benefits expenses 11 (13,339) (15,021) (5,836) (7,375)
Depreciation and amortization
expenses 12 (8,326) (8,649) (3,711) (4,256)
Other expenses 13 (6,075) (4,793) (3,209) (3,129)
Finance income 14 3,986 3,859 1,906 2,159
Finance costs 14 (87,413) (31,228) (72,816) (16,573)
Share of loss of associates 18 217 (166) 54 (96)
Profit (loss) before tax 282,551 (13,324) 293,152 (4,340)
Income tax expense 15 (38,257) 472 (39,633) (412)
Net profit (loss) for the 244,294 (12,852) 253,519 (4,752)
period
Owners of the Parent 244,332 (12,852) 253,541 (4,752)
Minority interests (38) - (22) -
Earnings (loss) per share 32 2.61 (0.12) 3.08 (0.04)
(BGN)
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 9 to page 48 are an integral part of these consolidated financial statements)
CONSOLIDATED BALANCE SHEET
as of June 30, 2008
Notes June 30, March 31, December 31,
* 2008 2008 2007
BGN'000 BGN'000 BGN'000
Non-current assets
Property, plant and equipment 16 161,379 159,654 209,163
Intangible assets 17 579 886 1,215
Investments in associates and 18 15,142 15,088 14,925
other investments
Goodwill 19 18,297 18,297 18,297
Deferred tax asset 15 - 2,839 1,432
Interest-bearing loans granted 20 36,810 36,810 36,810
Total non-current assets 232,207 233,574 281,842
Current assets
Inventories 21 66,856 130,353 139,428
Trade and other receivables, 22 203,443 143,691 121,054
net
Interest-bearing loans granted 20 44,091 31,370 40,692
Derivatives 23 365 7,869 808
Cash and cash equivalents 24 89,454 130,701 67,537
Current income tax receivable 29 - 7,220 7,196
Non-current assets, held for 25 6,955 53,714 -
sale
Total current assets 411,164 504,918 376,715
Total assets 643,371 738,492 658,557
Current liabilities
Trade and other payables 26 122,853 416,250 275,225
Interest-bearing loans 27 27,790 21,404 77,426
Finance lease liabilities 28 1,744 2,010 2,085
Derivative liabilities 23 3,827 - 3,957
Current income tax payable 29 16,558 - -
Retirement benefits 33 42 42 42
obligations
Total current liabilities 172,814 439,706 358,735
Non-current liabilities
Interest-bearing loans 27 197,225 199,900 192,302
Finance lease liabilities 28 2,566 2,895 3,370
Deferred tax liabilities 15 12,991 - -
Retirement benefits 33 416 416 416
obligations
Total non-current liabilities 213,198 203,211 196,088
Net assets 257,359 95,575 103,734
Equity owned by the
shareholders of the Parent
Share capital 30 82,686 103,839 103,623
Retained earnings 130,580 (55,275) (46,928)
Revaluation reserve 31 25,229 28,125 28,137
Other reserves 18,864 18,864 18,864
Total equity attributable to 95,553 103,696
the equity holders of the 257,359
Parent
Minority interest - 22 38
Total equity 257,359 95,575 103,734
These consolidated financial statements have been approved on behalf of Petrol AD by:
Svetoslav Yordanov Desislava Todorova
Executive Director Chief Accountant
August 27, 2008
The accompanying notes from page 9 to page 48 are an integral part of these consolidated financial statements)
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY
For the six months ended June 30, 2008
Equity attributable to the owners of the Parent Minority Total equity
interest
s
Share Revaluation Other Retained Total
capital reserve reserv earnings
es
BGN'000 BGN'000 BGN'000
BGN' BGN'000 BGN'000 BGN'000
000
Balance at January 1, 2007 109,250 28,817 10,665 26,723 175,455 - 175,455
Prior period errors - - - (5,763) (5,763) - (5,763)
Balance at January 1, 2007, 109,250 28,817 10,665 20,960 169,692 - 169,692
restated
Revaluation reserve of
disposed non-current assets - (281) - 281 - - -
Net income, recognized
directly in equity - (281) - 281 - - -
Loss for the period - - - (12,852) (12,852) - ( 12,852)
Total income (expenses)
recognized in the period - (281) - (12,571) (12,852) - (12,852)
Allocation of profit to the
reserves - - 8,098 (8,098) - - -
Dividends - - - (8,427) (8,427) - (8,427)
Balance at June 30, 2007 , 109,250 28,536 18,763 (8,136) 148,413 - 148,413
restated
Revaluation reserve of
disposed non-current assets - (399) - 399 - - -
Net income, recognized
directly in equity - (399) - 399 - - -
Loss for the period - - - (20,030) (20,030) (12) (20,042)
Total income (expenses)
recognized in the period - (399) - (19,631) (20,030) (12) (20,042)
Change in minority interest - - - - - 50 50
Allocation of profit to the
reserves - - 101 (101) - - -
Treasury shares (5,627) - - (19,060) (24,687) - (24,687)
Balance at December 31, 2007 103,623 28,137 18,864 (46,928) 103,696 38 103,734
Revaluation reserve of
disposed non-current assets - (2,908) - 2,908 - - -
Net income, recognized
directly in equity - (2,908) - 2,908 - - -
Loss for the period - - - 244,332 244,332 (38) 244,294
Total income (expenses)
recognized in the period - (2,908) - 247,240 244,332 (38) 244,294
Treasury shares (20,937) - - (69,732) (90,669) - (90,669)
Balance at June 30, 2008 82,686 25,229 18,864 130,580 257,359 - 257,359
These consolidated financial statements have been approved on behalf of Petrol AD by:
Svetoslav Yordanov Desislava Todorova
Executive Director Chief Accountant
August 27, 2008
(The accompanying notes from page 9 to page 48 are an integral part of these consolidated financial statements)
CONSOLIDATED CASH FLOW STATEMENT
For the six months ended June 30, 2008
Six months ended Six months ended Three months ended Three months ended
June 30, 2008 June 30, June 30, June 30,
BGN'000 2007 2008 2007
BGN'000 BGN'000 BGN'000
(restated) (restated)
Cash flows from operating
activities
Net profit (loss) before 282,551 (13,324) 293,152 (4,340)
taxation
Adjustments for:
Depreciation (amortization) of
non-current assets 8,326 8,649 3,711 4,256
Interest expenses and bank
fees and commissions, net 12,538 12,218 5,660 6,268
Interest income and other (3,986) (3,744) (1,906) (2,159)
financial income
Shortages and scrapped assets,
978 912 608 566
net of excess assets
Provisions for unused annual
paid leave and retirement 297 2,192 (148) 926
benefits
Low cost assets written off 1,080 - 1,080 -
Net effect from applying the (217) 166 (54) 96
equity method
(Gain) loss on disposal and
liquidation of assets (359,525) (534) (359,531) 145
Loss on dealing with 71,508 19,010 67,085 10,003
derivatives
Unrealized foreign exchange 2,258 (30) 10 10
loss (gain)
Impairment - 8 - 8
Cash flows provided by 15,808 25,523 9,667 15,779
operating activities
Interest and bank fees and (3,422) (3,869) (1,348) (2,383)
commissions paid
Income taxes paid (80) (1,177) (25) (596)
Operating profit before
changes in working capital 12,306 20,477 8,294 12,800
Increase (decrease) in trade (74,880) (13,342) (105,157) 27,917
payables
(Increase) decrease in 71,673 14,884 62,872 35,292
inventories
(Increase) decrease in trade (77,860) (18,610) (56,928) (2,946)
receivables
Net cash generated by (68,761) 3,409 (90,919) 73,063
operating activities
Cash flows from investing
activities
Acquisition of non-current (16,620) (21,983) (8,566) (16,789)
assets
Proceeds on disposal of 328,342 1,243 218,698 342
non-current assets
Payments on dealing with (73,771) (27,078) (57,464) (14,777)
derivatives
Interest received on
investment loans and deposits 1,479 1,178 1,291 171
and other financial income
Cash paid for investment 12,380 12,380
deposits and granted loans, (5,704) (12,789)
net
Net cash used in investing 233,726 (34,260) 141,170 (18,673)
activities
CONSOLIDATED CASH FLOW STATEMENT (continued)
For the six months ended June 30, 2008
Six months ended Six months ended Three months ended Three months ended
June 30, 2008 June 30, June 30, June 30,
BGN'000 2007 2008 2007
BGN'000 BGN'000 BGN'000
(restated) (restated)
Cash flows from financing
activities
Payments for treasury shares (90,669) - (91,735) -
Proceeds from bank and trade 5,760 - 5,760 -
loans
Repayments of bank and trade (58,860) (2,448) (5,924) (36,689)
loans
Dividends paid (10) (5) (6) (2)
Finance lease payments (1,077) (1,049) (527) (526)
Net cash used in financing (144,856) (3,502) (92,432) (37,217)
activities
Net increase (decrease) in (34,353) 17,173
cash and cash equivalents for 20,109 (42,181)
the period
Cash and cash equivalents at 61,132 9,606
the beginning of period 55,956 118,246
Cash and cash equivalents at 26,779 26,779
the end of period (see also 76,065 76,065
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, 2008
The accompanying notes from page 9 to page 48 are an integral part of these consolidated financial statements)
Notes
to the consolidated financial statemenets
as of June 30, 2008
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, 2008 the majority shareholder of
Petrol AD is Petrol Holding AD with 72.67 % 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 30).
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, 2008.
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), as approved by the European Union Commission (the Commission) and applicable in the Republic of
Bulgaria. IFRS as adopted by the Commission do not differ from IFRS, issued by the IASB, and are effective for reporting periods ended as of
June 30, 2008, 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 these financial statements.
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.
* 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, 2008, March 31, 2008 and December 31, 2007 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, 2008 1 USD = BGN 1.24069
March 31, 2008 1 USD = BGN 1.23693
December 31, 2007 1 USD = BGN 1.33122
* 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 intragroup balances as at June 30, 2008, March 31, 2008 and December 31, 2007 and intragroup
transactions, as well as all intragroup profits and losses, including unrealised profits and losses as of June 30, 2008 and 2007 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 period, 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 investee.
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. 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 recognised 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.
2.7. Errors from prior periods
Prior period errors are omissions from, and misstatements in the Group's consolidated financial statements for prior periods arising
from failure to use, or misuse of reliable information. This is information, which was available at the date of issue of the consolidated
financial statements or information that could reasonably be expected to have been obtained and taken into account in preparation and
presentation of those consolidated financial statements. Prior year errors may occur at recognition, measurement, presentation or disclosure
of items of the consolidated financial statements. They are corrected by retrospective restatement of comparative data or the opening
balances of assets, liabilities and equity (if they occurred in prior periods for which no data in the financial statements is presented).
Corrections are recognized in the first set of consolidated financial statements authorized for issue after their discovery.
2.8. Changes in accounting policy
The Group changes its accounting policy when this change is required by a Standard or an Interpretation, or when the adopted change
result in providing of reliable and more relevant information about the effects of transactions, other events or conditions, having effect
on the entity's financial position, financial performance or cash flows.
Change in accounting policy as a result of the initial application of IFRS should be accounted in accordance with the transitional
provisions of the respective IFRS (if any). Where there are no such provisions, the change is applied retrospectively by adjusting the
opening balances of each item of the equity to which this applies or the other comparative amounts and by assuming that the newly adopted
policy has always been applied.
The Group has adopted a policy to disclose payments and proceeds from bank overdrafts net in the cash flow statement. This change has
been applied retrospectively and as a result comparative information has also been changed.
2.9. 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.
3. Definition and valuation of the balance sheet and income statement items
* 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 3.2).
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.
* Property, plant and equipment and intangible assets (continued)
The assets' estimated useful lives are as follows:
Useful life 2008 2007
Administrative and trade buildings 25 years 25 years
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. Impairment of property, plant and equipment and intangible assets and goodwill
At each balance sheet date, the management reviews the carrying amounts of its property, plant and equipment, intangible assets 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.
3.3. Non-current assets, held for sale
Non-current assets are classified as held for sale if their carrying amounts would be recovered principally through a sale transaction
rather than through continuing use. For this to be the case, the asset must be available for immediate sale in its present condition and its
sale must be highly probable. These criteria are considered to be met only when the sale is very probable and the asset is available for
sale in its present condition.
Non-current assets, held for sale are measured at the lower of carrying amount and fair value, less costs to sell.
3.4. Inventories
Inventories are stated at lower of cost and net realizable value. Cost comprises purchase price, transportation, customs and excise
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
3.5. Financial instruments
A financial instrument is a contract that gives rise to both a financial asset of one enterprise and a financial liability or equity
instrument of another enterprise.
Financial assets/liabilities are recognized in the 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 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 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, in accordance with IAS Financial Instruments: Recognition and Measurement, the Group
classifies the financial assets and financial liabilities into the following categories: financial assets or financial liabilities at fair
value through profit and loss; loans and receivables; and financial liabilities at amortized cost. The Group does not apply this
classification of assets and liabilities for the purposes of their presentation in the balance sheet.
3.5.1. Financial assets (liabilities) at fair value through profit and loss
A financial asset or liability is classified as held for trading when it is acquired mainly for the purpose of selling or being bought
back in the near future or is a derivative instrument, for example, option of futures contracts concluded on international stock exchange
markets.
After its initial recognition financial assets at fair value through profit and loss are measured at fair value as of the date of the
preparation of the consolidated financial statements and every difference up to this amount is recognized in the income statement in the
period in which it arises.
3.5.2. Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable terms for settlement, which are not quoted on an
active market. The assets from this category are presented in the balance sheet as receivables under interest loans, trade and other
receivables and cash.
3.5.2. Loans and receivables (continued)
Receivables on interest bearing loans, trade and other receivables
After initial recognition, trade receivables and receivables on interest bearing loans are measured at amortized cost by using the
effective interest rate method, less impairment loss, if any. Current receivables are not subject to amortization. Impairment loss is
accrued if any objective evidence exists, such as material financial difficulties of the borrower, probability the borrower to be entered
into liquidation and other (see also note 3.5.3).
Cash
For the purposes of the cash flow statement preparation, cash comprise cash in hand and cash at banks, as well as cash in transfer,
excluding restricted cash, temporary not available for use such 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.
3.5.3. Impairment of financial assets
As of the date of the preparation of these consolidated financial statements the management of the Group assesses whether there is any
objective indication for impairment of all financial assets with the exception of financial assets at fair value through profit and loss. A
financial asset is considered impaired only when there is objective evidence that the estimated future cash flows have decreased as a result
of one or more future events that occurred after the initial recognition of the asset.
When such indications exist for assets carried at cost, the impairment loss is measured as the difference between the carrying amount
and the present value of the estimated future cash flows discounted at the current market interest rate for similar assets.
Impairment loss on loans and receivables carried at amortised cost is measured as the difference between the asset's carrying amount and
the present value of the estimated future cash flows discounted at the financial asset's original effective interest rate. Impairment losses
are recognized in the income statement. It is reversed if a subsequent increase of the recoverable amount could be objectively tied to the
occurrence of an event after the date on which the impairment loss was recognized.
3.5.4. Financial liabilities at amortized cost
After initial recognition the Company measures all financial liabilities at amortized cost with the exception of financial liabilities
measured at fair value through profit and loss, financial liabilities originating when the transfer of an asset does not qualify for
derecognition; financial guarantee contracts, commitments for providing loans at below-market interest rate. These liabilities are presented
in the balance sheet of the Group as trade and other liabilities and interest-bearing loans.
Trade and other payables, net
Trade and other payables incurred as a result of purchases of goods and services. Current liabilities are not subject to amortisation.
3.5.4. Financial liabilities at amortized cost (continued)
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.
3.5.5. Share capital and treasury shares
The share capital of the Parent company is presented at historical cost as of the date of its registration.
When the Parent Company or other members of the Group reacquires equity instruments of the Parent Company, those instruments ('treasury
shares') are deducted from equity. No gain or loss is recognised in the income statement on the purchase, sale, issue or cancellation of the
Parent Company's own equity instruments. Consideration paid or received is recognized directly in equity and is stated net.
When at the balance sheet date the Group has outstanding treasury shares, their nominal value is deducted from share capital, and the
difference paid below or above the par value - in retained earnings, according to IAS 32 Financial Instruments: Disclosure and
Presentation.
3.6. 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 the income statement 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. 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.
3.7. 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 income 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.
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 2008 and 2007, the tax rate applied for the calculation of the Group's current tax liabilities is 10%. Deferred
tax assets and liabilities as of June 30, 2008, March 31, 2008 and December 2007 are calculated by using the tax rate at 10%, applicable for
2008.
3.8. Revenue and expenses recognition
Revenues and expenses are accounted for on an accrual basis, regardless of cash receipts and payments. They are reported in compliance
with the matching concept.
Revenue is recognized at the fair value of the consideration received or expected to be received, less any discounts allowed and
includes the economic benefits received by or due to the Group. The amounts gathered on behalf of third parties as tax on sales, such as the
value added tax, are excluded from the income. Revenue generated from sale of fuel is reported in its gross amount with the due excise,
which is regarded as inseparable part of the product's price
Revenue from sales of goods is recognized when:
* The significant risks and rewards of ownership of the goods 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 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.
3.9. 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 consolidated 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 3.2., 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. According to IAS 36 Impairment of assets, the most recent detailed calculation made
in preceding period of the recoverable amount of a cash-generated unit to which the goodwill has been allocated may be used in impairment
test of that unit in the current period provided that the assets and liabilities, making the cash generating unit, have not changed
significantly since the most recent calculation; no events or circumstances with possible negative effect have arisen in the current period;
and upon current calculation of the recoverable amount there is minimum probability that it might be lower than the current carrying amount
of the cash generating .unit.
As of June 30, 2008 management has not identified any indications of impairment.
The impairment test of the goodwill from the acquisition of Naftex Petrol EOOD (see also notes 2.6 and 19) has been performed as of
December 31, 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 December 31, 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 December 31, 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, amendments in IFRS and interpretations are adopted by IASB and IFRIC as of the date of issue of these financial
statements, but are effective for annual periods after July 1, 2008.
IFRS or IFRIC, effective date Title of IFRS or IFRIC
IFRS 1, effective for annual First Time Adoption of
periods beginning on or after International Financial
January 1, 2009 reporting Standards
IFRS 2 (amended) effective for Share-based Payment: terms and
periods beginning on or after conditions for acquisition of
January 1, 2009 rights and cancellations
IFRS 3, effective for annual Business Combinations
periods beginning on or after
July 1, 2009
IFRS 8, effective for annual Operating Segments
periods beginning on or after
January 1, 2009
IFRIC 13, effective for annual Customer Loyalty Programmes
periods beginning on or after
July 1, 2008
IFRIC 14, effective for annual IAS 19: The Limit on a Defined
periods beginning on or after Benefit Asset Minimum Funding
January 1, 2008 Requirements and their
Interaction
IFRIC 15, effective for annual Agreements for the
periods beginning on or after Construction of Real Estate
January 1, 2009
IFRIC 16, effective for annual Hedges of a Net Investment in
periods beginning on or after a Foreign Operation
October 1, 2008
IAS 1 (amended) effective for Presentation of Financial
annual periods beginning on or Statements
after
January 1, 2009
IAS 23 (amended) effective for Borrowing Costs
periods beginning on or after
January 1, 2009
IAS 27 (amended) effective for Consolidated and Separate
periods beginning on or after Financial Statements
July 1, 2009
IAS 28 (amended) effective for Investments in Associates
periods beginning on or after
July 1, 2009
IAS 31 (amended) effective for Interests in Joint Ventures
periods beginning on or after
July 1, 2009
IAS 32 (amended) effective for Financial Instruments:
periods beginning on or after Presentation
January 1, 2009
IAS 39 (amended) effective for Financial Instruments:
periods beginning on or after Recognition and Measurement
July 1, 2009
Many standards such as IAS 1 Presentation of Financial Statements, IAS 16 Property, Plant and Equipments, IAS 19 Employees Benefits,
etc. have been amended as a result from May 2008 Annual Improvements in IFRS.
IFRIC 12 Service Concession Arrangements, IAS 32 and IAS 1 Puttable Financial Instruments and Obligations Arising on Liquidation, IFRS 1
and IAS 27 Cost of an investment in a subsidiary, jointly-controlled entity or associate and the Annual improvements in IFRSs have been
suggested but not adopted by the European Union Commission as of the date on which the present consolidated financial statements have been
authorized for issue. As of this date, IFRIC 13 Customer Loyalty Programmes, IFRIC 14 IAS 19 - The Limit on a Defined Benefit Asset, Minimum
Funding Requirments and their Interaction, IAS 23 Borrowing Costs, IAS 1 Presentation of Financial Statements: A Revised Presentation and
IFRS 2 Share-based Payments: Vesting Conditions and Cancellations have been approved for issue by the European Union Commission. No
suggestions for endorsement of the rest of the above mentioned standards and interpretations have been made.
6. Revenue
Six months ended Six months ended Three months ended Three months ended
June 30, 2008 June 30, June 30, June 30,
BGN'000 2007 2008 2007
BGN'000 BGN'000 BGN'000
(restated) (restated)
Sales of goods 722,368 537,101 428,263 316,038
Sales of services 7,130 24,567 3,127 12,738
Rental income 1,065 1,585 642 898
Sales of finished goods - 422 - 354
Total 730,563 563,675 432,032 330,028
Revenue from sales of goods comprises:
Six months ended Six months ended Three months ended Three months ended
June 30, 2008 June 30, June 30, June 30,
BGN'000 2007 2008 2007
BGN'000 BGN'000 BGN'000
(restated) (restated)
Light fuels
(gasoline, diesel oil and 693,531 516,930 412,154 306,354
jet oil)
Lubricants and other goods 16,603 18,786 7,085 9,556
Heavy fuels (heating oil) 12,234 1,385 9,024 128
Total 722,368 537,101 428,263 316,038
7. Other income
Six months ended Six months ended Three months ended Three months ended
June 30, 2008 June 30, June 30, June 30,
BGN'000 2007 2008 2007
BGN'000 BGN'000 BGN'000
Gain on sales of non-current
assets, including: 359,495 538 359,501 -
Revenue from sales of
non-current assets 407,865 1,193 407,777 -
Carrying amount of non-current
assets written-off (46,619) (655) (46,525) -
Expenses related to sales of
non-current assets (1,751) - (1,751) -
Insurance claims 389 187 121 70
Surplus of assets 218 153 136 69
Income from penalties 157 262 157 166
Gain on liquidation of -
non-current assets, including: 30 30 8
Revenue from liquidation of -
non-current assets 32 32 17
Carrying amount of non-current -
assets written-off (2) (2) (9)
Other 338 314 94 201
Total 360,627 1,454 360,039 514
In March 2008 as a result of negotiations with a Counterparty (see also note 37), the Group concluded a preliminary agreement for the
sale of seventy five fuel stations and one fuel storage facility. The final contract for the sale of the latter was signed in April for the
amount of BGN 158,227 thousand. Till the end of June 2008 the Group has sold to the Counterparty plant and equipment available in all
seventy five fuel stations and has transferred the title of land and building of thirty eight stations. As result revenue from sales of
non-current assets of BGN 249,522 thousand has been recognized in these consolidated financial statements.
8. Cost of goods sold
Six months ended Six months ended Three months ended Three months ended June 30,
June 30, 2008 June 30, June 30, 2007
BGN'000 2007 2008 BGN'000
BGN'000 BGN'000 (restated)
(restated)
Light fuels (gasoline, diesel
oil and gas oil) 636,470 482,806 377,953 285,334
Lubricants and other goods 13,785 16,209 5,723 8,051
Heavy fuels (heating oil) 11,948 1,294 8,862 128
Total 662,203 500,309 392,538 293,513
9. Materials
Six months ended Six months ended Three months ended Three months ended
June 30, 2008 June 30, June 30, June 30,
BGN'000 2007 2008 2007
BGN'000 BGN'000 BGN'000
Electricity 1,628 1,281 612 634
Fuel 1,579 1,417 825 759
Assets with low value 1,080 - 1,080 -
Spare parts 565 852 322 473
Office consumables 449 627 137 338
Advertising materials 184 877 102 689
Heating 91 28 79 7
Water supply 86 158 43 114
Working clothes 83 147 21 115
Others 121 77 84 19
Total 5,866 5,464 3,305 3,148
10. Hired services
Six months ended Six months ended Three months ended Three months ended
June 30, 2008 June 30, June 30, June 30,
BGN'000 2007 2008 2007
BGN'000 BGN'000 BGN'000
Consulting and training 10,548 1,835 9,323 884
Commissions 6,244 3,556 3,400 2,280
Transportation 2,610 1,637 1,119 576
Maintenance and repairs 1,708 1,498 955 748
Advertisement costs 1,658 2,374 891 1,485
Rents 1,343 778 773 327
Security 1,282 1,206 666 597
Insurances 1,248 882 634 420
Communications 719 882 410 439
Cash collection 616 735 282 345
State and municipal charges 494 333 279 203
Others 1,150 966 732 647
Total 29,620 16,682 19,464 8,951
11. Employee benefits expenses
Six months ended Six months ended Three months ended Three months ended June 30,
June 30, 2008 June 30, June 30, 2007
BGN'000 2007 2008 BGN'000
BGN'000 BGN'000
Wages and salaries 10,569 11,785 4,594 5,691
Social security contributions
and benefits 2,770 3,236 1,242 1,684
Total 13,339 15,021 5,836 7,375
12. Depreciation and amortization expenses
Six months ended Six months ended Three months ended Three months ended June 30,
June 30, 2008 June 30, June 30, 2007
BGN'000 2007 2008 BGN'000
BGN'000 BGN'000
Depreciation of property,
plant and equipment 8,187 8,115 3,648 4,003
Depreciation of investment - 327 - 163
property
Amortization of intangible 139 207 63 90
assets
Total 8,326 8,649 3,711 4,256
13. Other expenses
Six months ended Six months ended Three months ended Three months ended June
June 30, 2008 June 30, June 30, 30,
BGN'000 2007 2008 2007
BGN'000 BGN'000 BGN'000
Entertainment expenses and 1,901 1,710 637 908
sponsorship
Taxes and charges 1,245 1,052 1,093 790
Penalties and indemnities 989 435 335 346
Shortages of assets 926 886 543 456
Business trips 280 197 137 104
Scrapped non-current assets 270 179 201 179
Insurance claims 245 - 245 -
Loss on sales of non-current
assets, including: - - - 153
Revenue from sales of
non-current assets - - - (295)
Net book value of non-current - - - 448
assets
Others 219 334 18 193
Total 6,075 4,793 3,209 3,129
14. Finance income and costs
Six months ended Six months ended Three months ended Three months ended June
June 30, 2008 June 30, June 30, 30,
BGN'000 2007 2008 2007
BGN'000 BGN'000 BGN'000
Finance income
Interest income on loans 2,636 2,453 1,075 1,226
granted
Interest income on trade 568 684 236 684
receivables
Other interest income 782 256 595 197
Foreign exchange rate gains - 115 - -
Discount of purchased - 52 - 52
receivable
Other finance income - 299 - -
Total 3,986 3,859 1,906 2,159
Finance costs
Interest expense on debenture (9,972) (8,890) (4,980) (4,590)
loans
Interest expense on bank loans (1,161) (2,362) (110) (1,184)
Interest expense on finance (189) (248) (91) (122)
lease
Interest expense on trade (327) (139) - (72)
loans
Other interest expense - (33) - (33)
Foreign exchange rate losses (3,367) - (71) (302)
Losses on dealings with
derivatives, including (71,508) (19,010) (67,085) (10,003)
Loss from dealings (72,365) (19,103) (71,704) (11,037)
Remeasurement at fair value 857 93 4,619 1,034
Bank fees, commissions and (889) (546) (479) (267)
other costs
Total (87,413) (31,228) (72,816) (16,573)
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 ended Six months ended Three months ended Three months ended June
June 30, 2008 June 30, June 30, 30,
BGN'000 2007 2008 2007
BGN'000 BGN'000 BGN'000
(restated) (restated)
Current tax expense 23,834 947 23,803 845
Change in deferred taxes, 14,423 (1,419) 15,830 (433)
including:
Temporary differences reversed
during the period 9,185 40 8,386 (29)
Temporary differences
originated during the period 5,238 (1,459) 7,444 (404)
Total tax expense/(income) 38,257 (472) 39,633 412
The reconciliation of the tax expense to the accounting profit, and the calculations of the effective tax rate as at June 30, 2008 and
June 30, 2007 are as follows:
Six months ended Six months ended
June 30, June 30,
2008 2007
BGN'000 BGN'000
(restated)
Consolidated accounting profit 282,551 (13,324)
(loss)
Applicable tax rate 10% 10%
Income tax at the applicable 28,255 (1,332)
tax rate
Combined tax effect on 46 (99)
permanent differences
Tax effect on tax 26
assets/liabilities originated -
and unrecognized in the
current reporting period
Tax effect on consolidation 9,956 933
adjustments
Total tax expense (income) 38,257 (472)
Effective tax rate 13.54% 3.55%
15. Taxation (continued)
June 30, March 31, December 31,
2008 2008 2007
BGN'000 BGN'000 BGN'000
Temporary Tax Temporary Tax Temporary Tax
differenc effect differenc effect differenc effect
e e e
Balance at the beginning of
the period
Tax loss carried forward 32,522 3,252 32,522 3,252 5,066 507
Impairment of assets 8,650 865 8,650 865 1,940 194
Fixed assets (43,158) (4,315) (43,158) (4,315) (20,972) (2,096)
Excess of interest payments 10,973 1,098 10,973 1,098 - -
Subsequent remeasurement of 2,708 271 2,708 271 - -
finance assets
Liabilities related to unused 2,124 213
paid leave and retirement 2,591 259 2,591 259
benefits
Others 24 2 24 2 - -
Total 14,310 1,432 14,310 1,432 (11,842) (1,182)
Originated during the period
Tax loss carried forward 762 76 19,703 1,970 27,697 2,769
Impairment of assets - - - - 6,833 683
Fixed assets (25) (2) (69) (7) (18,607) (1,861)
Excess of interest payments - - 3,260 326 10,973 1,098
Subsequent remeasurement of (92,875) (9,288) (1,280) (128) 2,708 271
finance assets
Liabilities related to unused 1,620 162
paid leave and retirement 297 29 445 45
benefits
Others - - - - 24 2
Total (91,841) (9,185) 22,059 2,206 31,248 3,124
Reversed during the period
Tax loss carried forward (32,433) (3,243) - - (241) (24)
Impairment of assets - - - - 2
Fixed assets (1,893) (190) (1,439) (144) (3,827) (382)
Excess of interest payments (10,926) (1,093) - - - -
Subsequent remeasurement of (6,444) (644) (6,203) (620) - -
finance assets
Liabilities related to unused (1,148) (115)
paid leave and retirement (660) (66) (338) (33)
benefits
Others (24) (2) (24) (2) - -
Total (52,380) (5,238) (8,004) (799) (5,214) (521)
Disposed in a business
combination
Impairment of assets - - - - (125) (12)
Fixed assets - - - - 248 24
Liabilities related to unused (5) (1)
paid leave and retirement - - - -
benefits
Total - - - - 118 11
Balance of the end of the
period
Tax loss carried forward 851 85 52,225 5,222 32,522 3,252
Impairment of assets 8,650 865 8,650 865 8,650 865
Fixed assets (45,076) (4,507) (44,666) (4,466) (43,158) (4,315)
Excess of interest payments 47 5 14,233 1,424 10,973 1,098
Subsequent remeasurement of (96,611) (9,661) (4,775) (477) 2,708 271
finance assets
Liabilities related to unused 2,591 259
paid leave and retirement 2,228 222 2,698 271
benefits
Others - - - - 24 2
Total (129,911) (12,991) 28,365 2,839 14,310 1,432
16. Property, plant and equipment
Land Buildings Plant and Vehicles Other assets Assets under Total
equipment construction
BGN'000
BGN'000
BGN'000
BGN'000 BGN'000 BGN'000 BGN'000
Cost
Balance at January 1, 2007 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)
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
Additions 677 - 470 160 72 20,313 21,692
Disposals (4,399) (2,024) (2,194) (20) (102) 1 (8,738)
Disposals in business (436) (8,123) (8,870) - (745) (411) (18,585)
combinations
Transfers 278 4,784 20,108 - (1,179) (18,022) 5,969
Balance at December 31, 2007 44,505 63,829 172,252 20,935 19,789 16,525 337,835
Additions 1,825 1,093 2,296 141 132 9,216 14,703
Disposals (1,536) (12,042) (23,299) (395) (7,907) (706) (45,885)
Transfers (5,808) (5,152) (19,945) - 237 (15,492) (46,160)
Balance at June 30, 2008 38,986 47,728 131,304 20,681 12,251 9,543 260,493
Accumulated depreciation
Balance at January 1, 2007 - 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
Charged for the period - 863 4,697 1,486 1,540 - 8,586
Disposals for the period - (1,150) (1,479) (6) (80) - (2,715)
Disposals in business - (1,744) (7,073) - (328) - (9,145)
combinations
Transfers to non current
assets held for sale - 86 5,151 - 2 - 5,239
Balance at December 31, 2007 - 31,395 71,092 11,441 14,744 - 128,672
Charged for the period - 740 4,915 1,375 1,157 - 8,187
Disposals for the period - (10,117) (18,581) (182) (7,872) - (36,752)
Transfers to non current
assets held for sale - 56 (621) - (428) - (993)
Balance at June 30, 2008 - 22,074 56,805 12,634 7,601 - 99,114
Carrying amount at
January 1, 2007 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
Carrying amount at December
31, 2007 44,505 32,434 101,160 9,494 5,045 16,525 209,163
Carrying amount at
June 30, 2008 38,986 25,654 74,499 8,047 4,650 9,543 161,379
Non-current assets with carrying amount as of June 30, 2008 totaling BGN 10,839 thousand are mortgaged/pledged as collateral under bank
and trade loans granted to a company from the Group and related parties (see also note 38).
17. Intangible assets
Software Licenses Other assets Assets under Total
construction
BGN'000
BGN'000 BGN'000 BGN'000 BGN'
000
Cost
Balance at January 1, 2007 1,504 1,001 113 210 2,828
Additions - 15 75 87 177
Transfers (16) (15) - - (31)
Balance at June 30, 2007 1,488 1,001 188 297 2,974
Additions 3 - - 16 19
Disposals (2) - - - (2)
Disposals in business (30) (16) - - (46)
combinations
Transfers 18 15 - - 33
Balance at December 31, 2007 1,477 1,000 188 313 2,978
Additions - 3 71 - 74
Disposals (185) - - (253) (438)
Transfers 51 (276) - - (225)
Balance at June 30, 2008 1,343 727 259 60 2,389
Accumulated amortization
Balance at January 1, 2007 1,095 275 58 - 1,428
Charged for the period 118 74 15 - 207
Transfers (4) - - - (4)
Balance at June 30, 2007 1,209 349 73 - 1,631
Charged for the period 51 75 21 - 147
Disposals for the period (2) - - - (2)
Disposals in business (16) (1) - - (17)
combinations
Transfers 4 - - - 4
Balance at December 31, 2007 1,246 423 94 - 1,763
Charged for the period 55 56 28 - 139
Disposals for the period (72) - - - (72)
Transfers (2) (18) - - (20)
Balance at June 30, 2008 1,227 461 122 - 1,810
Carrying amount at
January 1, 2007 409 726 55 210 1,400
Carrying amount at
June 30, 2007 279 652 115 297 1,343
Carrying amount at December
31, 2007 231 577 94 313 1,215
Carrying amount at
June 30, 2008 116 266 137 60 579
18. Investments in associates and other investments
For the six months For the twelve months ended at For
the six months ended at
ended at 31 December 2007
30 June 2007
30 June 2008
Investments in associates % of capital Value of investments Share of profit/ Value of investments Share of profit/ Value of
investments Share of profit/
(loss) (loss)
(loss)
BGN'000 BGN'000 BGN'000 BGN'000
BGN'000 BGN'000
Eurocapital Bulgaria AD 36.92% 15,142 217 14,925 1,373
- -
Varna Business Services **D
- - - - (224)
1,650 (166)
Petrol Engineering AD, -
net of impairment - - - -
- -
Total 15,142 217 14,925 1,149
1,650 (166)
In 2007 the Group has sold its interests in the associates Varna Business Services OOD and Petrol Engineering AD to the Ultimate
controlling party. The investments in the latter had been fully impaired in prior periods. In the same period the Group also sold to the
Ultimate controlling party its investments in seven subsidiaries retaining 36.92% interest in the capital of Eurocapital Bulgaria AD. The
investment in the latter is presented in these consolidated financial statements as an investment in an associate.
The total amounts of the assets, liabilities, income and profit (loss) of the associates as at June 30, 2008, March 31, 2008 and
December 31, 2007 are as follows:
Assets Liabilities Net Revenue Profit
assets (loss)
BGN' BGN'000
BGN' BGN'000 000 BGN'000
000
June 30, 2008
Eurocapital Bulgaria AD 94,314 32,550 61,764 1,270 589
March 31, 2008
Eurocapital Bulgaria AD 76,614 14,998 61,616 599 441
December 31, 2007
Eurocapital Bulgaria AD 63,881 2,706 61,175 2,123 (211)
19. Goodwill
The goodwill presented in these consolidated financial statement has arisen from the acquisition of the subsidiary Naftex Petrol EOOD.
The acquisition 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, the acquisition has been measured by using the purchase method. According to the
requirements of IFRS 3 Business combinations as of January 1, 2005 the accumulated amortisation of goodwill was eliminated with a
corresponding decrease in goodwill and as of the same date the Group discontinued amortising it. As of June 30, 2008, March 31, 2008 and
December 31, 2007 the total carrying amount of the goodwill is BGN 18,297 thousand.
20. Interest-bearing loans granted
June 30, March 31, December 31,
2008 2008 2007
BGN'000 BGN'000 BGN'000
Non-current receivables under
interest-bearing loans
Non-current portion of
interest-bearing loans granted to 36,810 36,810 36,810
related parties
Total 36,810 36,810 36,810
Short term interest-bearing loans
and deposits granted
Current portion of interest-bearing
loans and deposits granted to 44,076 31,355 40,677
related parties
Finance lease receivables 15 15 15
Total 44,091 31,370 40,692
Receivables from related parties are disclosed in note 35.
21. Inventories
June 30, March 31, December 31,
2008 2008 2007
BGN'000 BGN'000 BGN'000
Light fuels (gasoline, diesel oil 53,872 118,809 127,728
and gas oil)
Lubricants and other goods 4,242 5,520 5,738
Materials 3,987 4,142 4,462
Heavy fuels (heating oil) 4,755 1,882 1,500
Total 66,856 130,353 139,428
As of June 30, 2008 inventories amounting totally to BGN 49,054 thousand are pledged as collaterals to bank loans utilized by the Group
(see also note 38).
22. Trade and other receivables, net
June 30, March 31, December 31,
2008 2008 2007
BGN'000 BGN'000 BGN'000
Trade receivables, net of 121,893 71,798 82,172
impairment losses
Initial cost 124,204 74,109 84,483
Impairment loss (2,311) (2,311) (2,311)
Related party receivables 65,667 58,125 7,553
VAT and excise duties refundable 5,516 2,960 3,490
Advances granted 3,529 3,357 2,836
Litigations and writs, net of 527 517 507
impairment losses
Initial cost 5,765 5,755 5,745
Impairment loss (5,238) (5,238) (5,238)
Tax recoverable, result of - - 18,667
corrections of errors
Other 6,311 6,934 5,829
Total 203,443 143,691 121,054
As of June 30, 2008 trade receivables amounting totally to BGN 23,892 thousand are pledged as collaterals to bank loans utilized by the
Group (see also note 38).
23. Derivatives
Derivative assets as of June 30, 2008 comprise of 1,400 put options crude oil at the amount of BGN 2,205 thousand remeasured as of the
balance sheet date at market prices for the amount of BGN 365 thousand.
Derivative liabilities as of June 30, 2008 amounting to BGN 3,827 thousand include only remeasurement at market prices of open positions
on standard commodity futures and options (2007: BGN 3,957 thousands). These open positions as of June 30, 2008 comprise sold 600 lots crude
oil futures (2007: 600 lots crude oil futures sold) and purchased 300 crude oil put options (2007: 2,900 crude oil put options purchased).
24. Cash and cash equivalents
June 30, March 31, December 31,
2008 2008 2007
BGN'000 BGN'000 BGN'000
Cash at banks 72,546 114,888 46,507
Cash in transfer 3,277 3,501 9,245
Cash on hand 242 170 204
Cash and cash equivalents
as of cash flow statement 76,065 118,559 55,956
Restricted cash 13,389 12,142 11,581
Total 89,454 130,701 67,537
Restricted cash as of June 30, 2008, March 31, 2008 and December 31, 2007 comprises mainly margin deposits on dealings with derivatives
at the amount of BGN 13,232 thousand, BGN 11,496 thousand and BGN 10,656 thousand, respectively.
24. Cash and cash equivalents (continued)
Cash in transfer comprises 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.
25. Non-current assets, held for sale
The major classes of assets classified as held for sale are as follows:
Land Buildings Plant and Other Intangible Total
equipment Assets
BGN'000 BGN'000
BGN'000 BGN'000 BGN'000 BGN'000
Balance at January 1, 2007 390 988 4 5 - 1,387
Balance at June 30, 2007 390 988 4 5 - 1,387
Disposed in a business (390) (988) (4) (5) - (1,387)
combination
Balance at December 31, 2007 - - - - - -
Transfer from non-current 5,808 7,802 28,218 3,266 278 45,372
assets
Disposals (2,716) (4,538) (28,038) (3,125) - (38,417)
Balance at June 30, 2008 3,092 3,264 180 141 278 6,955
Non current assets held for sale as of June 30, 2008 comprise mainly of land and buildings of fuel stations for which preliminary
contract for sale was signed with a Counterparty in March 2008 (see also note 7 and 37).
26. Trade and other payables
June 30, March 31, December 31,
2008 2008 2007
BGN'000 BGN'000 BGN'000
Payables to suppliers 50,454 84,015 201,167
VAT and excise duties payable 39,605 31,699 59,686
Deferred income 16,081 88,012 -
Prepayments received 7,411 169,886 1,018
Payables to personnel and social 3,602 4,669 4,353
security funds
Related party payables 2,183 34,705 3,050
Other 3,517 3,264 5,951
Total 122,853 416,250 275,225
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,
2008 2008 2007
BGN'000 BGN'000 BGN'000
Balance at the beginning of the 2,133 2,133 1,667
period
Accrued during the period 297 445 1,562
Utilized during the period (660) (338) (1,084)
Disposed in a business combination - - (12)
Balance at the end of the period, 1,770 2,240 2,133
including:
For salaries on unused paid leave 1,471 1,870 1,780
For social security contributions
on unused paid leaves 299 370 353
27. Interest-bearing loans
June 30, March 31, December 31,
2008 2008 2007
BGN'000 BGN'000 BGN'000
Current liabilities under
interest-bearing loans
Current portion of liabilities on 1,322 1,384 59,091
bank loans
Current portion of liabilities on 26,468 20,020 18,335
debenture loans
Total 27,790 21,404 77,426
Non-current liabilities under
interest-bearing loans
Non-current portion of liabilities 4,622 4,756 -
on bank loans
Non-current portion of liabilities 192,603 195,144 192,302
on debenture loans
Total 197,225 199,900 192,302
Non-current liabilities under bank loans mature as follows:
June 30, March 31, December 31,
2008 2008 2007
BGN'000 BGN'000 BGN'000
Between one and two years 533 533 -
Between three and five years 1,600 1,600 -
Over 5 years 2,489 2,623 -
Total 4,622 4,756 -
The liabilities under interest-bearing loans analyzed by currency type are as follows:
June 30, March 31, December 31,
2008 2008 2007
Currency type Original BGN'000 Original BGN'000 Original BGN'000
currency currency currency
in thousands in thousands in thousands
BGN, including:
Bank loans - - - - 55,811 55,811
Debenture loans 15,078 15,078 20,020 20,020 18,335 18,335
EUR, including:
Bank loans 3,039 5,944 3,139 6,140 361 705
Debenture loans 104,300 203,993 99,776 195,144 98,322 192,302
USD including:
Bank loans - - - - 1,934 2,575
Total 225,015 221,304 269,728
27. Interest-bearing loans (continued)
In November 2003 the Parent company issued registered, dematerialised, ordinary, interest bearing and freely transferable corporate
bonds at a total amount of BGN 15,000 thousand and a par value of BGN 1,000 for each note. 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 Ultimate controlling party.
Interest is payable twice a year, at every six months, during 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 of the bond is 5 years. The issue is secured by
Group's receivables under loans, granted to related parties and a corporate guarantee, issued by a subsidiary company. The transaction costs
for the bond issued amounted to BGN 3,049 thousand. Interest is paid annually. The annual effective interest rate is 9.409%. The net
proceeds of the issue of the notes would be used for the refinancing of existing debt, financing of working capital and capital
expenditure.
28. Finance lease liabilities
Minimum lease payments Present value of minimum lease payments
June 30, March 31, 2008 December 31, 2007 June 30, March 31, 2008 December 31, 2007
2008 BGN'000 BGN'000 2008 BGN'000 BGN'000
BGN'000 BGN'000
Amounts payable under finance
leases
Within one year 2,021 2,325 2,445 1,744 2,010 2,085
From one to two years 1,171 1,302 1,520 999 1,109 1,304
From two to five years 1,688 1,942 2,262 1,567 1,786 2,066
Less: Interest payable
Within one year (277) (315) (360) - - -
From one to two years (172) (193) (216) - - -
From two to five years (121) (156) (196) - - -
Present value of finance lease 4,310 4,310 5,455
obligations 4,905 5,455 4,905
Less: Present value of finance (1,744) (2,085)
lease obligations with (2,010)
maturity less than 1 year
Present value of finance lease 2,566 2,895
obligations with maturity over 3,370
1 year
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,
2008 2008 2007
BGN'000 BGN'000 BGN'000
Income tax receivable as of January 7,196 7,196 5,406
1, net
Accrued corporate income tax (23,834) (31) (355)
Corporate income tax paid 80 55 2,090
Disposed in a business combination - - 55
Income tax receivable (payable) at
the end of the period, net (16,588) 7,220 7,196
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,
2008 2008 2007
% of share capital % of share capital % of share capital
Petrol Holding AD 72.67 71.53 69.10
Naftex Refining and
Petrochemical Engineering
Services
(former Naftex Oil Shipping
Corporation Limited (United
Arab Emirates)) - 18.84 18.84
Naftex Petrol EOOD 24.32 4.95 5.15
Ministry of Economy and Energy 0.85 0.85 0.86
Other minority shareholders 2.16 3.83 6.05
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 30 June, 2008 March 31, 2008 and December 31, 2007
at the amount of BGN 25,229 thousand, BGN 28,125 thousand and 28,137 thousand, respectively, has been 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 ended Six months ended Three months ended Three months ended June 30,
June 30, 2008 June 30, June 30, 2007
BGN'000 2007 2008 BGN'000
BGN'000 BGN'000 (restated)
(restated)
Weighted average number of 93,516 109,250 82,198 109,250
shares ('000)
Profit (loss) (BGN'000) 244,332 (12,852) 253,541 (4,752)
Earnings(loss) per share (BGN) 2.61 (0.12) 3.08 (0.04)
The weighted average number of shares in circulation is as follows:
Changes in ordinary shares Issued ordinary Purchased (sold) Shares in
during the period shares treasury circulation
shares
('000)
('000)
('000)
January 1, 2008 Balance at the
beginning of the 103,623 - 103,623
period
January 15, 2008 Sold treasury shares - (10) 103,633
February 28, 2008 Sold treasury shares - (15) 103,648
February 29, 2008 Sold treasury shares - (106) 103,754
March 4, 2008 Sold treasury shares - (32) 103,786
March 5, 2008 Sold treasury shares - (8) 103,794
March 6, 2008 Sold treasury shares - (15) 103,809
March 18, 2008 Sold treasury shares - (4) 103,813
March 25, 2008 Sold treasury shares - (20) 103,833
March 26, 2008 Sold treasury shares - (6) 103,839
April 2, 2008 Purchased treasury - 20,584 83,255
shares
April 7, 2008 Sold treasury shares - (43) 83,298
April 8, 2008 Sold treasury shares - (1) 83,299
April 9, 2008 Sold treasury shares - (4) 83,303
April 18, 2008 Purchased treasury - 9 83,294
shares
April 22, 2008 Purchased treasury - 8 83,286
shares
April 23, 2008 Purchased treasury - 15 83,271
shares
April 24, 2008 Purchased treasury - 282 82,989
shares
April 25, 2008 Purchased treasury - 52 82,937
shares
April 29, 2008 Purchased treasury - 152 82,785
shares
May 10, 2008 Purchased treasury - 10 82,775
shares
May 13, 2008 Purchased treasury - 38 82,737
shares
May 14, 2008 Purchased treasury - 3 82,734
shares
May 17, 2008 Purchased treasury - 16 82,718
shares
May 21, 2008 Purchased treasury - 6 82,712
shares
May 22, 2008 Purchased treasury - 3 82,709
shares
June 9, 2008 Sold treasury shares - (2) 82,711
June 26, 2008 Purchased treasury - 25 82,686
shares
June 30, 2008 Balance as of the
end of the period 103,623 20,937 82,686
33. Liabilities for retirement benefits to employees
The Group accrued liabilities for retirement benefits at the amount of BGN 458 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, over which the Parent company exercises control as of June 30, 2008, March 31, 2008 and December 31,
2007, are as follows:
Subsidiary Main activities Investments as of Investments Investments
June 30, as of as of
2008 March 31, December 31,
2008 2007
Petrol Trans Express EOOD Transport services 100.0% 100.0 % 100.0 %
Petrol Technics EOOD Service and
maintenance of fuel 100.0% 100.0 % 100.0 %
stations
Naftex Petrol EOOD Wholesale of fuel 100.0% 100.0 % 100.0 %
Petrol Gas OOD Wholesale of fuel 90.0% 90.0 % 90.0 %
Petrol Properties EOOD Trade with real
estate and other 100.0% 100.0 % 100.0 %
property
35. Related parties transactions
The Parent company exercises control and significant influence over related parties, disclosed in note 18 and 34. The Ultimate parent
company is Petrol Holding AD.
In 2008 and 2007 the Group has performed transactions with the following related parties:
Related party
Petrol Holding AD ultimate parent company
BPI EAD subsidiary of Petrol AD till October 2007, subsidiary of Petrol Holding
AD since November 2007
Eurocapital Bulgaria AD subsidiary of Petrol AD till October 2007, associate of Petrol AD since
November 2007
Petrol Trade EOOD subsidiary of Petrol AD till November 2007, subsidiary of Petrol Holding
AD since December 2007
Vratzata EOOD subsidiary of Petrol AD till November 2007, subsidiary of Petrol Holding
AD since December 2007
Trans Operator AD subsidiary of Petrol AD till September 2007, subsidiary of Petrol
Holding AD since October 2007
New Co Zagora EOOD subsidiary of Petrol AD till July 2007, subsidiary of Petrol Holding AD
since August 2007
Petrol Card Service EOOD subsidiary of Petrol AD till November 2007, subsidiary of Petrol Holding
AD since December 2007
Petrol Engineering AD associate of Petrol AD till November 2007, associate of Petrol Holding
AD since December 2007
Varna Business Services OOD associate of Petrol AD till October 2007, subsidiary of Petrol Holding
AD since November 2007
Izvor Bottling Company AD subsidiary of Petrol Holding AD
Air Lazur - General Aviation subsidiary of Petrol Holding AD
EOOD
Interhotel Bulgaria Burgas subsidiary of Petrol Holding AD
EOOD
Balneohotel Pomorie AD subsidiary of Petrol Holding AD
Naftex Security EAD subsidiary of Petrol Holding AD
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
Tema News AD subsidiary of Petrol Holding AD
PSFC Chernomorets 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 subsidiary of Transhold Bulgaria Holding AD
EAD
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.
35. Related parties transactions (continued)
In the first six months of 2008 and 2007 transactions with related parties are as follows:
Related party Six months ended Six months ended Three months ended Three months ended
June 30, June 30, June 30, June 30,
2008 2007 2008 2007
BGN'000 BGN'000 BGN'000 BGN'000
Sale of goods, Sale of goods, Sale of goods, Sale of goods,
non-current assets non-current assets non-current assets non-current assets
and services and services and services and services
Ultimate parent company 174 392 76 106
Companies under common control
1,640 2,229 845 879
Associates 9 22 7 8
Total 1,823 2,643 928 993
Related party Six months ended Six months ended Three months ended Three months ended
June 30, June 30, June 30, June 30,
2008 2007 2008 2007
BGN'000 BGN'000 BGN'000 BGN'000
Purchase of goods, Purchase of goods, Purchase of goods, Purchase of goods,
non-current assets non-current assets non-current assets non-current assets
and services and services and services and services
Ultimate parent company 1,802 1,687 914 704
Companies under common control
56,239 30,953 53,130 24,025
Associates 209 234 112 117
Total 58,250 32,874 54,156 24,846
Related party Six months ended Six months ended Three months ended Three months ended
June 30, June 30, June 30, June 30,
2008 2007 2008 2007
BGN'000 BGN'000 BGN'000 BGN'000
Finance income Finance income Finance income Finance income
Ultimate parent company 2,096 2,436 1,011 1,234
Companies under common control
556 9 69 5
Associates 217 - 54 -
Total 2,869 2,445 1,134 1,239
Related party Six months ended Six months ended Three months ended Three months ended June
June 30, June 30, June 30, 30,
2008 2007 2008 2007
(restated) (restated)
BGN'000 BGN'000 BGN'000 BGN'000
Finance Finance Finance Finance
costs costs costs costs
Ultimate parent company 376 139 - 72
Associates - 166 - 96
Total 376 305 - 168
* Related parties transactions (continued)
The outstanding balances with related parties as of June 30, 2008, March 31, 2008 and December 31, 2007 are as follows:
Related party June 30, March 31, December 31, June 30, March 31, December 31,
2008 2008 2007 2008 2008 2007
BGN'000 BGN'000 BGN'000 BGN'000 BGN'000 BGN'000
Amounts receivable Amounts Amounts Amounts payable Amounts Amounts
receivabl receivable payable payable
e
Ultimate parent company,
incl.: 50,358 50,443 56,435 1,030 436 804
Interest-bearing loans -
non current portion 36,810 36,810 36,810 - - -
Interest- bearing loans
-current portion 7,888 8,760 15,846 - - -
Companies under common
control, incl.: 96,172 75,826 28,605 1,122 34,248 2,246
Interest-bearing loans
-current portion 36,188 22,595 24,831 - - -
Associates 23 21 - 31 21 -
Total 146,553 126,290 85,040 2,183 34,705 3,050
The total amount of the management remuneration of the members of the Managing and Supervisory Board for the first six months of 2008
recognized as employee benefit expenses in these consolidated financial statements is BGN 375 thousand.
36. Segment reporting
The Group has identified the following business segments, based on the organizational structure and the activities effected.
* Wholesale of fuel - wholesale of oil products and storage services in own storage facilities of the Group;
* Retail of fuel - retail trade of oil and other products in network of own fuel stations of the Group;
* Other activities - Transportation of oils with own and hired vehicles, maintenance and repairs of fuel stations and accompanied
facilities for trade and services and other activities.
June 30, 2008 Wholesale Retail Other Elimi-nations Consolidated
of fuels of activit
fuels ies
BGN'000 BGN'000 BGN'000 BGN'000 BGN'000
June 30, 2008 Wholesale Retail Other Elimi-nations Consolidated
of fuels of activit
fuels ies
BGN'000 BGN'000 BGN'000 BGN'000 BGN'000
External sales 507,998 579,145 4,047 - 1,091,190
Inter-segment sales 75,214 2,271 6,350 (83,835) -
Total revenue 583,212 581,416 10,397 (83,835) 1,091,190
Result of the segment 170,440 194,031 1,290 - 365,761
Share of net profits of 217 217
associates
Foreign exchange rate gains, - - - - (3,367)
net
Loss on dealings with - - - - (71,508)
derivatives
Interest expenses and fees and - - - - (8,552)
other financial expenses, net
Tax expense - - - - (38,257)
Net profit of the Group - - - - 244,294
Depreciation and amortization (1,363) (5,485) (1,478) - (8,326)
Impairment of assets - - - - -
June 30, 2007, restated Wholesale Retail Other Elimi-nations Consolidated
of fuels of fuels activit
ies
BGN'000 BGN'000 BGN'000 BGN'000 BGN'000
June 30, 2007, restated Wholesale Retail Other Elimi-nations Consolidated
of fuels of fuels activit
ies
BGN'000 BGN'000 BGN'000 BGN'000 BGN'000
External sales 215,040 343,416 6,673 - 565,129
Inter-segment sales 31,873 1,243 7,393 (40,509) -
Total revenue 246,913 344,659 14,066 (40,509) 565,129
Result of the segment 1,407 9,795 3,009 - 14,211
Share of net profits of - - (166) - (166)
associates
Foreign exchange rate gains, - - - - 115
net
Loss on dealings with - - - - (19,010)
derivatives
Interest expenses and fees and - - - - (8,474)
other financial expenses, net
Tax income - - - - 472
Net profit of the Group - - - - (12,852)
Depreciation and amortization (1,338) (4,964) (2,347) - (8,649)
Impairment of assets (8) - - - (8)
36. Segment reporting (continued)
Wholesale Retail Other Consolidated
of fuels of activit
fuels ies
BGN'000 BGN'000 BGN'000 BGN'000
Wholesale Retail Other Consolidated
of fuels of activit
fuels ies
BGN'000 BGN'000 BGN'000 BGN'000
June 30, 2008
Segment assets 296,357 317,405 14,467 628,229
Investment in equity method - - 15,142 15,142
associates
Segment liabilities 88,151 279,150 5,720 373,021
Capital expenditure 6,014 8,533 230 14,777
December 31, 2007
Segment assets 306,335 318,910 16,955 642,200
Investment in equity method 14,925 14,925
associates
Segment liabilities 186,660 361,239 6,924 554,823
Capital expenditure 4,966 34,408 4,412 43,786
37. Prior period errors
Changes in income statement June 30, June 30, June 30,
2007 2007 2007
effect of error restated
BGN'000 BGN'000
BGN'000
Revenue 560,612 3,063 563,675
Other income 1,454 - 1,454
Cost of goods sold (486,673) (13,636) (500,309)
Materials (5,464) - (5,464)
Hired services (16,682) - (16,682)
Employee benefits expenses (15,021) - (15,021)
Depreciation and amortization (8,649) - (8,649)
expenses
Other expenses (4,793) - (4,793)
Finance income 3,859 - 3,859
Finance cost (31,228) - (31,228)
Share of loss of associates (166) - (166)
Loss before tax (2,751) (10,573) (13,324)
Tax income (585) 1,057 472
Net loss for the period (3,336) (9,516) (12,852)
37. Prior period errors (continued)
Changes in the balance sheet January 1, January 1, January 1, January 1, June 30, June
30, June 30, June 30,
2007 2007 2007 2007 2007
2007 2007 2007
audited effect of error reclassified restated effect of
error reclassified restated
BGN'000
BGN'000 BGN'000
BGN'000
BGN'000 BGN'000
BGN'000 BGN'000
Non-current assets
Property, plant and equipment 201,614 - - 201,614 210,790
- - 210,790
Intangible assets 1,400 - - 1,400 1,343
- - 1,343
Investment property 18,252 - - 18,252 19,545
- - 19,545
Investments in associates and 1,816 - - 1,816
other investments 1,650
- - 1,650
Goodwill 20,309 - - 20,309 20,309
- - 20,309
Deferred tax assets - - - - -
- 250 250
Interest-bearing loans granted 44,698 - - 44,698 44,698
- - 44,698
Total non-current assets 288,089 - - 288,089 298,335
- 250 298,585
Current assets
Inventory 137,968 - - 137,968 122,290
- - 122,290
Trade and other receivables, 81,901 36,528 (363) 118,066 131,010
12,812 (255) 143,567
net
Interest-bearing loans granted 39,746 - 259 40,005 27,366
- 255 27,621
Cash and cash equivalents 62,987 - - 62,987 36,608
- - 36,608
Current income tax receivables - 5,406 - 5,406 -
6,463 (827) 5,636
Non-current assets, held for 1,387 - - 1,387 2,466
- - 2,466
sale
Total current assets 323,989 41,934 (104) 365,819 319,740
19,275 (827) 338,188
Total assets 612,078 41,934 (104) 653,908 618,075
19,275 (577) 636,773
Current liabilities
Trade and other payables, net 163,056 48,532 (359) 211,229 175,980
35,389 211,369
Interest-bearing loans 56,953 - - 56,953 62,885
- - 62,885
Finance lease liabilities 1,955 - - 1,955 2,108
- - 2,108
Derivatives liabilities 255 255 -
- -
Current income tax 328 (328) - - 1,155
(328) (827) -
Retirement benefits 32 - - 32 32
- - 32
obligations
Liabilities associated with
non-current assets - - - - 87
- - 87
Total current liabilities 222,324 48,204 (104) 270,424 242,247
35,061 (827) 276,481
Non-current liabilities
Interest-bearing loans 207,217 - - 207,217 207,071
- - 207,071
Finance lease liabilities 4,955 - - 4,955 4,370
- - 4,370
Deferred tax liabilities 1,689 (507) - 1,182 257
(507) 250 -
Retirement benefits 438 - - 438 438
- - 438
obligations
Total non-current liabilities 214,299 (507) - 213,792 212,136
(507) 250 211,879
Net assets 175,455 (5,763) - 169,692 163,692
(15,279) - 148,413
Equity
Share capital 109,250 - - 109,250 109,250
- - 109,250
Retained earnings 26,723 (5,763) - 20,960 7,143
(15,279) - (8,136)
Revaluation reserve 28,817 - - 28,817 28,536
- - 28,536
Other reserve 10,665 - - 10,665 18,763
- - 18,763
Total equity 175,455 (5,763) - 169,692 163,692
(15,279) - 148,413
37. Prior period errors (continued)
According to the terms of a fuel supply agreement dated July 27, 2001 signed with Lukoil Bulgaria EOOD (the Counterparty), during the
period 2004 - 2006 the Group recognized income from remuneration and trade receivables respectively at the amount of BGN 101,285 thousand.
Due to the occurred disagreement with the Counterparty regarding the method of calculation of the part of the accrued remuneration, the
Group impaired disputed trade receivables at the total amount of BGN 25,830 thousand as of December 31, 2004 and December 31, 2005. By the
reason of the profound disagreement with the Counterparty and the increasing uncertainty of future economic benefits, as well as on the
ground of revenue recognition principle of IAS 18 Revenue, from January 1, 2006 the Group excludes these revenue from the income statement
and presents its claim off balance. Simultaneously accrued claims are deducted from the current payments to Counterparty. As a result of the
accumulation of considerable unpaid amounts and after the exhaustion of all opportunities for their disposition in the course of ordinary trade negotiations, the Group and the Counterparty
submitted counter-claims with the Sofia City Court during the first half of 2007.
In addition, in 2005 the Group recognized income from remuneration under a signed fuel storage agreement with the Counterparty at the
amount of BGN 16,744 thousand. The Counterparty has argued the method of calculation and refused to pay a part of the remuneration at the
amount of BGN 8,068 thousand. In accordance with the adopted policy, payables to Counterparty as of December 31, 2005 are presented net of
part of these receivables at the amount of BGN 7,909 thousand.
In the beginning of 2008 the parties conducted new negotiation series that resulted in out-of-court agreement contracted on March 12,
2008. According to this agreement initiated legal proceedings and the Contract are abolished, effective January 1, 2008. In the course of
negotiations the Group accepted that it has incorrectly estimated the amount of the claimed remuneration under the two mentioned above
contracts and on the basis of credit notes issued in March 2008 the Group corrects the amount of the accrued income from remuneration for
the previous reporting periods and the accrued impairment of receivables, respectively. The effects of corrections are reported
retrospectively in 2007 consolidated financial statements as errors in prior reporting periods. As a result from these corrections the Group
has decreased the accumulated profit as of December 31, 2006 with BGN 5,763 thousand, increased trade and other receivables with BGN 10,698
thousand, increased trade and other payables with BGN 22,702 thousand, decreased the current income tax payables with BGN 5,734 thousand and decrease the deferred tax liabilities with BGN 507 thousand. The
effects of corrections for the first six months of 2007 arise from increase in revenue with BGN 3,063 thousand, increase in cost of goods
sold with BGN 13,636 thousand which leads to an decrease in tax expense with BGN 1,057 thousand.
Additionally due to a technical mistake, trade and other receivables and trade and other payables in the balance sheet as of December
31, 2006 have been understated by BGN 25,830 thousand. The presentation error has been corrected in the consolidated financial statements as
of June 30, 2007 retrospectively.
38. Contingent assets and liabilities
Contingent assets
As of June 30, 2008 bank guarantees at the amount of BGN 3,199 thousand and promissory notes at the amount of BGN 19,940 thousand issued
in favour of the Group and mortgages at the amount of BGN 1,200 thousand serve as collaterals for receivables from customers.
In 2007 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, 2007 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, as of June 30, 2008 the
Group has a contingent asset amounting to BGN 8,196 thousand, 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.
Contingent liabilities
As of June 30, 2008 the Group has contingent liabilities under guaranteed promissory notes to third parties for liabilities of related
parties at the amount of BGN 24,831 thousand and under corporate guarantees issued as collaterals under bank loans of related parties at the
amount of BGN 15,842 thousand. Furthermore, the Group has contingent liabilities under bank guarantees issued as collaterals to commercial
contracts at the amount of BGN 640 thousand, issued in favour of the Customs Agency for application of the deferred excise duties payment
regime at the amount of BGN 9,777 thousand, issued as collateral for import customs duties at the amount of BGN 1,350 thousand and also
issued as collateral under a fuel supply agreements at the amount of BGN 7,730 thousand.
As of June 30, 2008 assets with total carrying amount of BGN 83,785 thousand are pledged/mortgaged as collaterals under bank and trade
loans, granted to companies within the Group and related parties (see also notes 16, 21 and 22).
39. Post balance sheet events
As of the date of issue of these consolidated financial statements, according to the agreement signed with a Counterparty (see also note
37), the land and buildings of twenty eight fuel stations have been sold and as a result gain has been recognized at the amount of BGN
41,259 thousand.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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