RNS Number : 2538J
Petrol AD
01 December 2008
CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2008
Table of contents
Consolidated financial statements as of September 30, 2008 3
Notes to the consolidated financial statements 9
Consolidated financial statements
as of September 30, 2008
CONSOLIDATED INCOME STATEMENT
For the nine months ended September 30, 2008
Notes Nine months ended Nine months ended Three months ended Three months ended
No September 30, 2008 September 30, September 30, 2008 September 30,
BGN'000 2007 BGN'000 2007
BGN'000 BGN'000
(restated) (restated)
Revenue 6 1,126,669 952,359 396,106 388,684
Other income 7 402,058 2,244 41,431 790
Cost of goods sold 8 (1,033,468) (854,757) (371,265) (354,448)
Materials 9 (9,062) (8,349) (3,196) (2,885)
Hired services 10 (41,717) (26,818) (12,097) (10,136)
Employee benefits expenses 11 (19,162) (22,221) (5,823) (7,200)
Depreciation and amortization
expenses 12 (12,156) (13,185) (3,830) (4,536)
Other expenses 13 (7,782) (8,534) (1,707) (3,741)
Finance income 14 8,861 14,211 8,242 11,309
Finance cost 14 (91,778) (37,734) (7,732) (7,463)
Share of loss of associates 18 459 (200) 242 (34)
Profit (loss) before tax 322,922 (2,984) 40,371 10,340
Income tax benefit (expense) 15 (41,786) 243 (3,529) (229)
Net profit (loss) for the 281,136 (2,741) 36,842 10,111
period
Owners of the Parent 281,174 (2,735) 36,842 10,117
Minority interests (38) (6) - (6)
Earnings (loss) per share 31 3.13 (0.03) 0.45 0.09
(BGN)
These consolidated financial statements have been approved on behalf of Petrol AD by:
Svetoslav Yordanov Desislava Todorova
Executive Director Chief Accountant
November 28, 2008
(The accompanying notes from page 9 to page 48 are an integral part of these consolidated financial statements)
CONSOLIDATED BALANCE SHEET
as of September 30, 2008
Notes September 30, June 30, December 31,
No 2008 2008 2007
BGN'000 BGN'000 BGN'000
Non-current assets
Property, plant and equipment 16 162,296 161,379 209,163
Intangible assets 17 710 579 1,215
Investments in associates and 18 15,384 15,142 14,925
other investments
Goodwill 19 18,297 18,297 18,297
Deferred tax assets 15 - - 1,432
Interest-bearing loans granted 20 36,810 36,810 36,810
Total non-current assets 233,497 232,207 281,842
Current assets
Inventories 21 56,197 66,856 139,428
Trade and other receivables, 22 222,062 203,443 121,054
net
Interest-bearing loans granted 20 89,485 44,091 40,692
Derivative receivables - 365 808
Cash and cash equivalents 23 51,228 89,454 67,537
Current income tax receivable 28 - - 7,196
Non-current assets, held for 24 4,854 6,955 -
sale
Total current assets 423,826 411,164 376,715
Total assets 657,323 643,371 658,557
Current liabilities
Trade and other payables 25 93,601 122,853 275,225
Interest-bearing loans 26 45,174 27,790 77,426
Finance lease liabilities 27 1,496 1,744 2,085
Derivative liabilities - 3,827 3,957
Current income tax payable 28 9,486 16,558 -
Retirement benefits 32 42 42 42
obligations
Total current liabilities 149,799 172,814 358,735
Non-current liabilities
Interest-bearing loans 26 198,815 197,225 192,302
Finance lease liabilities 27 2,307 2,566 3,370
Deferred tax liabilities 15 12,991 12,991 -
Retirement benefits 32 416 416 416
obligations
Total non-current liabilities 214,529 213,198 196,088
Net assets 292,995 257,359 103,734
Equity attributable to the
equity holders of the Parent
Share capital 29 82,551 82,686 103,623
Retained earnings 168,963 130,580 (46,928)
Revaluation reserve 30 22,617 25,229 28,137
Other reserves 18,864 18,864 18,864
Total equity attributable to 103,696
the equity holders of the 292,995 257,359
Parent
Minority interest - - 38
Total equity 292,995 257,359 103,734
These consolidated financial statements have been approved on behalf of Petrol AD by:
Svetoslav Yordanov Desislava Todorova
Executive Director Chief Accountant
November 28, 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 nine months ended September 30, 2008
Equity attributable to the equity holders of the Parent Minority Total equity
interests
Share Revaluation Other Retained Total
capital reserve reserves earnings
BGN'000 BGN'000 BGN'000 BGN'000
BGN'000 BGN'000 BGN'000
Balance at January 1, 2007 109,250 28,817 10,665 26,723 175,455 - 175,455
Effects from prior period - - - (5,763) (5,763) - (5,763)
errors
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 - (542) - 542 - - -
Net income, recognized
directly in equity - (542) - 542 - - -
Loss for the period - - - (2,741) (2,741) - (2,741)
Total income (expenses)
recognized in the period - (542) - (2,199) (2,741) - (2,741)
Allocation of profit to the
reserves - - 8,199 (8,199) - - -
Dividends - - - (8,427) (8,427) - (8,427)
Balance at September 30, 2007,
restated 109,250 28,275 18,864 2,135 158,524 - 158,524
Revaluation reserve of
disposed non-current assets - (138) - 138 - - -
Net income, recognized
directly in equity - (138) - 138 - - -
Loss for the period - - - (30,141) (30,141) (12) (30,153)
Total income (expenses)
recognized in the period - (138) - (30,003) (30,141) (12) (30,153)
Change in minority interest - - - - - 50 50
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 - (5,520) - 5,520 - - -
Net income, recognized
directly in equity - (5,520) - 5,520 - - -
Profit for the period - - - 281,174 281,174 (38) 281,136
Total income (expenses)
recognized in the period - (5,520) - 286,694 281,174 (38) 281,136
Treasury shares (21,072) - - (70,803) (91,875) - (91,875)
Balance at September 30, 2008
82,551 22,617 18,864 168,963 292,995 - 292,995
These consolidated financial statements have been approved on behalf of Petrol AD by:
Svetoslav Yordanov Desislava Todorova
Executive Director Chief Accountant
November 28, 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 nine months ended September 30, 2008
Nine months ended Nine months ended Three months ended Three months ended
September 30, 2008 September 30, September 30, September 30,
BGN'000 2007 2008 2007
BGN'000 BGN'000 BGN'000
(restated) (restated)
Cash flows from operating
activities
Net profit (loss) before 322,922 (2,984) 40,371 10,340
taxation
Adjustments for:
Depreciation and amortization
of non-current assets 12,156 13,185 3,830 4,536
Interest expenses and bank
fees and commissions 18,337 19,631 5,799 7,413
Interest income and other (6,442) (5,545) (2,456) (1,801)
financial income
Shortages and scrapped assets,
1,378 2,497 400 1,585
net of surpluses
Provisions for unused annual
paid leave and retirement 749 2,375 452 183
benefits
Low cost assets written off 1,631 - 551 -
Net effect from applying the (459) 200 (242) 34
equity method
(Gain) loss on disposal and
liquidation of assets (399,954) (511) (40,429) 23
Gain on sale of subsidiaries - (8,601) - (8,601)
Loss on dealing with 73,441 18,103 1,933 (907)
derivatives
Unrealized foreign exchange 2,270 (40) 12 (10)
differences
Impairment - 16 - 8
Cash flows provided by 26,029 38,326 10,221 12,803
operating activities
Interest and bank fees and (3,891) (5,246) (469) (1,377)
commissions paid
Income taxes paid (10,681) (1,933) (10,601) (756)
Operating profit before
changes in working capital 11,457 31,147 (849) 10,670
Increase (decrease) in trade (77,780) (14,031) (2,900) (689)
payables
(Increase) decrease in 82,018 17,258 10,345 2,374
inventories
(Increase) decrease in trade (94,454) (38,050) (16,594) (19,440)
receivables
Net cash used in operating (78,759) (3,676) (9,998) (7,085)
activities
Cash flows from investing
activities
Acquisition of non-current (25,296) (35,417) (8,676) (13,434)
assets
Proceeds on disposal of 346,714 1,485 18,372 242
non-current assets
Proceeds on sales of
subsidiaries, net of cash - 9,202 - 9,202
disposed
Payments on dealing with (65,934) (18,672) 7,837 8,406
derivatives
Interest received on
investment loans and deposits 1,723 1,835 244 657
and other financial income
Investment deposits and loans (51,123) 15,467 (45,419) 3,087
granted, net
Net cash provided by (used in) (26,100) 8,160
investing activities 206,084 (27,642)
CONSOLIDATED CASH FLOW STATEMENT (continued)
For the nine months ended September 30, 2008
Nine months ended Nine months ended Three months ended Three months ended
September 30, 2008 September 30, September 30, September 30,
BGN'000 2007 2008 2007
BGN'000 BGN'000 BGN'000
(restated) (restated)
Cash flows from financing
activities
Payments for treasury shares (91,875) - (1,206) -
Proceeds from bank and trade 20,277 9,876 14,517 9,598
loans
Repayments of bank and trade (59,218) (2,090) (358) 636
loans
Dividends paid (10) (8,261) - (8,256)
Finance lease payments (1,584) (1,567) (507) (518)
Net cash provided by (used in) (2,042) 1,460
financing activities (132,410) 12,446
Net increase (decrease) in (31,818) 2,535
cash and cash equivalents for (5,085) (25,194)
the period
Cash and cash equivalents at 61,132 26,779
the beginning of period 55,956 76,065
Cash and cash equivalents at 29,314 29,314
the end of period (see also 50,871 50,871
note 23)
These consolidated financial statements have been approved on behalf of Petrol AD by:
Svetoslav Yordanov Desislava Todorova
Executive Director Chief Accountant
November 28, 2008
(The accompanying notes from page 9 to page 48 are an integral part of these consolidated financial statements)
Notes
to the consolidated financial statements
as of September 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 September 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 29).
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 November 28, 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
September 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.
2.2 Functional and presentation currency of the consolidated financial statements
Functional currency is the currency of the primary economic environment in which an entity operates and in which it primary generates
and expends cash. A Group's functional currency reflects the underlying transactions, events and conditions that are relevant to it.
The Group keeps its records and prepares its financial statements in the national currency of the Republic of Bulgaria - the Bulgarian
Lev, which is adopted by the Company as its functional currency. Effective January 1, 1999, the Bulgarian Lev is fixed to the EUR at the
rate of
BGN 1.95583 = EUR 1.
These consolidated financial statements are presented in thousand Bulgarian Levs.
2.3. Foreign currency
Transactions in foreign currency are initially recorded at the official rate of exchange of the Bulgarian National Bank (BNB) as of the
date of the transaction. The foreign exchange rate differences, arising upon the settlement of these monetary positions or at restatement of
these positions at rates, different from those when initially recorded, are reported as financial income or financial expenses in the income
statement for the period in which they arise.
The monetary positions denominated in foreign currency as of September 30, 2008, June 30, 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:
September 30, 2008 1 USD = BGN 1.36743
June 30, 2008 1 USD = BGN 1.24069
December 31, 2007 1 USD = BGN 1.33122
2.4. Subsidiary companies and consolidation
The consolidated financial statements incorporate the financial statements of the Parent company and its subsidiaries. A subsidiary is
an entity that is controlled by the Parent company. Control is the power to govern the financial and operating policies of an enterprise so
as to obtain benefits from its activities.
For consolidation purposes, the separate financial statements of the Parent company and its subsidiaries have been combined on a
line-by-line basis by adding together like items of assets, liabilities, equity, income and expenses.
For consolidation purposes all intragroup balances as at September 30, 2008, June 30, 2008 and December 31, 2007 and intragroup
transactions, as well as all intragroup profits and losses, including unrealised profits and losses as of September 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. Prior period errors
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
3.1. Property, plant and equipment and intangible assets
Property, plant and equipment and intangible assets are recognized and initially carried at cost, including the purchase price, import
duties and non-refundable taxes, as well as any costs directly attributable to bringing the asset to the location and condition necessary
for it to be capable of operating in the manner intended by management. Assets, acquired by means of a business combination are carried at
fair value. After initial recognition, property, plant and equipment and intangible assets are stated at cost less accumulated depreciation
(amortization) and accumulated impairment loss, if any (see note 3.2).
Certain number of tangible fixed assets, assets, available at December 31, 2002, have been revalued by coefficients, based on the
accounting legislation, applicable as of the end of 2001, as a result of which a revaluation reserve has been created. In compliance with
the changes in accounting legislation, management has reviewed all material items of property, plant and equipment as of December 31, 2002
to verify the measurement of their carrying amount. Those assets, for which the carrying amount was materially different from their fair
value, were revalued to their fair value as of the same date. The so formed revaluation reserve was added to the revaluation reserve,
resulting from the accounting legislation applicable as of December 31, 2001.
When property, plant and equipment include parts with different useful lives and a cost that is significant in relation to the total
cost of the item, such parts are recognized as separate assets.
Subsequent costs, including costs for replacement of an item of property, plant and equipment are recognized in the carrying amount of
the asset, if they satisfy the recognition principle. The carrying amount of the replaced item is derecognized in accordance with the
requirements of IAS 16 Property, Plant and Equipment. All other subsequent costs are recognized as expense for the period as incurred.
Depreciation and amortization are charged over the estimated useful lives, using the straight-line method.
3.1. Property, plant and equipment and intangible assets (continued)
The assets' estimated useful lives are as follows:
Useful life 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:
Grude oil 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.
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.
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 and withholding taxes, 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 their par value is reflected in retained earnings, according to IAS 32 Financial Instruments: Disclosure and
Presentation.
3.6. Retirement benefits obligations
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 September 30, 2008, June 30, 2008 and December 31, 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 September 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 October 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 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, 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
Nine months ended Nine months ended Three months ended Three months ended
September 30, September 30, September 30, September 30,
2008 2007 2008 2007
BGN'000 BGN'000 BGN'000 BGN'000
(restated) (restated)
Sales of goods 1,115,130 912,897 392,762 375,796
Sales of services 9,315 36,406 2,185 11,839
Rental income 2,224 2,364 1,159 779
Sales of finished goods - 692 - 270
Total 1,126,669 952,359 396,106 388,684
Revenue from sales of goods comprises:
Nine months ended Nine months ended Three months ended Three months ended September
September 30, 2008 September 30, September 30, 30,
BGN'000 2007 2008 2007
BGN'000 BGN'000 BGN'000
(restated) (restated)
Light fuels
(gasoline, diesel oil and jet 1,067,754 879,561 374,223 362,631
oil)
Lubricants and other goods 23,149 30,381 10,915 11,595
Heavy fuels (heating oil) 24,227 2,955 7,624 1,570
Total 1,115,130 912,897 392,762 375,796
7. Other income
Nine months ended Nine months ended Three months ended Three months ended
September 30, 2008 September 30, September 30, September 30,
BGN'000 2007 2008 2007
BGN'000 BGN'000 BGN'000
Gain on sales of non-current
assets, including: 399,924 555 40,429 17
Revenue from sales of
non-current assets 453,852 1,220 45,987 27
Carrying amount of non-current
assets written-off (51,583) (665) (4,964) (10)
Expenses related to sales of
non-current assets (2,345) - (594) -
Insurance claims 545 182 156 8
Surplus of assets 386 391 168 238
Income from penalties 177 698 20 436
Gain on liquidation of -
non-current assets, including: 30 - -
Revenue from liquidation of -
non-current assets 32 - -
Carrying amount of non-current -
assets written-off (2) - -
Other 996 418 658 91
Total 402,058 2,244 41,431 790
In March 2008 as a result of negotiations with a Counterparty (see also note 36), 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 September 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 sixty eight stations. As result revenue from sales of
non-current assets of BGN 295,019 thousand has been recognized in these consolidated financial statements.
8. Cost of goods sold
Nine months ended Nine months ended Three months ended Three months ended September
September 30, 2008 September 30, September 30, 30,
BGN'000 2007 2008 2007
BGN'000 BGN'000 BGN'000
(restated) (restated)
Light fuels (gasoline, diesel
oil and gas oil) 991,082 826,126 354,612 343,320
Lubricants and other goods 22,580 25,808 10,632 9,599
Heavy fuels (heating oil) 19,806 2,823 6,021 1,529
Total 1,033,468 854,757 371,265 354,448
9. Materials
Nine months ended Nine months ended Three months ended Three months ended September
September 30, 2008 September 30, September 30, 30,
BGN'000 2007 2008 2007
BGN'000 BGN'000 BGN'000
Fuel 2,505 2,195 926 778
Electricity 2,060 1,977 432 696
Low-cost assets 1,631 - 551 -
Spare parts 1,020 1,726 455 874
Office consumables 603 881 154 254
Advertising materials 574 932 390 55
Working clothes 209 203 126 56
Water supply 144 263 58 105
Heating 120 31 29 3
Others 196 141 75 64
Total 9,062 8,349 3,196 2,885
10. Hired services
Nine months ended Nine months ended Three months ended Three months ended
September 30, 2008 September 30, September 30, September 30,
BGN'000 2007 2008 2007
BGN'000 BGN'000 BGN'000
Consulting and training 11,727 2,608 1,179 773
Commissions 9,722 7,190 3,478 3,634
Transportation 4,192 2,698 1,582 1,061
Maintenance and repairs 2,823 2,156 1,115 658
Advertisement 2,697 3,962 1,039 1,588
Rents 2,451 1,229 1,108 451
Security 1,887 1,792 605 586
Insurances 1,807 1,021 559 139
Communications 1,008 1,260 289 378
Cash collection 921 1,102 305 367
State and municipal charges 744 386 250 53
Others 1,738 1,414 588 448
Total 41,717 26,818 12,097 10,136
11. Employee benefits expenses
Nine months ended Nine months ended Three months ended Three months ended September 30,
September 30, 2008 September 30, September 30, 2007
BGN'000 2007 2008 BGN'000
BGN'000 BGN'000
Wages and salaries 15,162 17,443 4,593 5,658
Social security contributions
and benefits 4,000 4,778 1,230 1,542
Total 19,162 22,221 5,823 7,200
12. Depreciation and amortization expenses
Nine months ended Nine months ended Three months ended Three months ended September 30,
September 30, 2008 September 30, September 30, 2007
BGN'000 2007 2008 BGN'000
BGN'000 BGN'000
Depreciation of property, 12,412 4,297
plant and equipment 11,928 3,741
Depreciation of investment - 491 - 164
property
Amortization of intangible 228 282 89 75
assets
Total 12,156 13,185 3,830 4,536
13. Other expenses
Nine months ended Nine months ended Three months ended Three months ended
September 30, 2008 September 30, September 30, September 30,
BGN'000 2007 2008 2007
BGN'000 BGN'000 BGN'000
Entertainment expenses and 1,978 2,502 77 792
sponsorship
Taxes and charges 1,521 1,751 276 699
Shortages of assets 1,467 2,142 541 1,256
Penalties and indemnities 1,003 592 14 157
Business trips 436 296 156 99
Scrapped non-current assets 297 746 27 567
Insurance claims 277 207 32 99
Loss on sales of non-current
assets, including: - 44 - 40
Revenue from sales of
non-current assets - (222) - (92)
Net book value of non-current - 266 - 132
assets
Impairment loss - 16 - 8
Others 803 238 584 24
Total 7,782 8,534 1,707 3,741
14. Finance income and cost
Nine months ended Nine months ended Three months ended Three months ended
September 30, 2008 September 30, September 30, September 30,
BGN'000 2007 2008 2007
BGN'000 BGN'000 BGN'000
Finance income
Interest on loans granted 4,278 3,664 1,642 1,211
Interest on trade receivables 1,134 1,181 566 497
Other interest 1,030 348 248 92
Gain on sale of subsidiaries, - 8,601 - 8,601
incl.:
Proceeds from sale - 9,376 - 9,376
Carrying amount of the Group's - (775) - (775)
interest in the net assets of
subsidiaries
Gain on dealings with - - - 907
derivatives, including
Gain from dealings - - - 3,345
Remeasurment at fair value - - - (2,438)
Foreign exchange rate gains 2,419 65 5,786 -
Discount of purchased - 52 - -
receivable
Other finance income - 300 - 1
Total 8,861 14,211 8,242 11,309
Finance cost
Interest on debenture loans (15,133) (13,585) (5,161) (4,695)
Interest on bank loans (1,288) (3,362) (127) (1,000)
Interest on finance lease (264) (369) (75) (121)
Interest on trade loans (327) (222) - (83)
Other interest - (33) - -
Foreign exchange rate losses - - - (50)
Losses on dealings with (18,103) -
derivatives, including (73,441) (1,933)
Loss from dealings (79,792) (15,758) (7,427) -
Remeasurement at fair value 6,351 (2,345) 5,494 -
Bank fees, commissions and (1,325) (2,060) (436) (1,514)
other costs
Total (91,778) (37,734) (7,732) (7,463)
During the first nine months of 2007 the Group sold two of its subsidiaries to the Ultimate parent company. The first one - New Co
Zagora EOOD was sold in July and the second one - Trans Operator AD in September. The interest of the Group in the net assets of these
companies is presented below. The net assets of New Co Zagora EOOD were presented in June consolidated financial statements as disposal
group, held for sale.
14. Finance income and cost (continued)
New Co Zagora EOOD Trans Operator AD Total
Property, plant and equipment 759 1,400 2,159
and intangible assets
Trade and other receivables 383 1 384
Cash 64 110 174
Trade and other payables (94) (1,833) (1,927)
Income tax payable (2) - (2)
Deferred tax liability (13) - (13)
Total net assets 1,097 (322) 775
Minority interest - - -
Group's interest 1,097 (322) 775
Consideration received, 9,376 - 9,376
satisfied in cash
Cash disposed of (64) (110) (174)
Net cash flow as stated in the 9,312 (110) 9,202
cash flow statement
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.
Nine months ended Nine months ended Three months ended Three months ended
September 30, 2008 September 30, September 30, September 30,
BGN'000 2007 2008 2007
BGN'000 BGN'000 BGN'000
(restated) (restated)
Current tax expense 27,363 1,036 3,529 89
Change in deferred taxes, 14,423 (1,279) - 140
including:
Temporary differences reversed
during the period 9,185 51 - 11
Temporary differences
originated during the period 5,238 (1,330) - 129
Total tax expense/(income) 41,786 (243) 3,529 229
The reconciliation of the tax expense to the accounting profit, and the calculations of the effective tax rate as at September 30, 2008
and September 30, 2007 are as follows:
Nine months ended Nine months ended
September 30, September 30,
2008 2007
BGN'000 BGN'000
(restated)
Consolidated accounting profit 322,922 (2,984)
(loss)
Applicable tax rate 10% 10%
Income tax at the applicable 32,292 (298)
tax rate
Combined tax effect on 158 (9)
permanent differences
Tax effect on tax
assets/liabilities originated 79
and unrecognized in the
current reporting period
Tax effect on consolidation 9,336 (15)
adjustments
Total tax expense (income) 41,786 (243)
Effective tax rate 12.94% 8.14%
15. Taxation (continued)
September 30, June 30, December 31,
2008 2008 2007
BGN'000 BGN'000 BGN'000
Temporary Tax Temporary Tax Temporary Tax
difference effect difference effect difference effect
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
Investment of associates (16,869) (1,687) (16,869) (1,687) - -
Fixed assets (26,289) (2,628) (26,289) (2,628) (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 614 61 762 76 27,697 2,769
Impairment of assets - - - - 6,833 683
Investment of associates - - - - (16,869) (1,687)
Fixed assets (650) (66) (25) (2) (1,873) (187)
Excess of interest payments - - - - 10,973 1,098
Subsequent remeasurement of (92,550) (9,255) (92,875) (9,288) 2,708 271
finance assets
Liabilities related to unused 1,620 162
paid leave and retirement 749 75 297 29
benefits
Others - - - - 24 2
Total (91,837) (9,185) (91,841) (9,185) 31,113 3,111
Reversed during the period
Tax loss carried forward (32,428) (3,243) (32,433) (3,243) (241) (24)
Impairment of assets - - - - 2 -
Fixed assets (1,461) (146) (1,893) (190) (3,692) (369)
Excess of interest payments (10,926) (1,093) (10,926) (1,093) - -
Subsequent remeasurement of (6,444) (644) (6,444) (644) - -
finance assets
Liabilities related to unused (1,148) (115)
paid leave and retirement (1,095) (110) (660) (66)
benefits
Others (24) (2) (24) (2) - -
Total (52,378) (5,238) (52,380) (5,238) (5,079) (508)
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 708 70 851 85 32,522 3,252
Impairment of assets 8,650 865 8,650 865 8,650 865
Investment of associates (16,869) (1,687) (16,869) (1,687) (16,869) (1,687)
Fixed assets (28,400) (2,840) (28,207) (2,820) (26,289) (2,628)
Excess of interest payments 47 5 47 5 10,973 1,098
Subsequent remeasurement of (96,286) (9,628) (96,611) (9,661) 2,708 271
finance assets
Liabilities related to unused 2,591 259
paid leave and retirement 2,245 224 2,228 222
benefits
Others - - - - 24 2
Total (129,905) (12,991) (129,911) (12,991) 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 1,156 - 601 797 80 28,849 31,483
Disposals (465) (822) (1,458) (146) (102) (28) (3,021)
Disposals in business (19) (470) (7,498) - (28) (84) (8,099)
combinations
Transfers - 4,577 13,999 10 1,733 (20,319) -
Balance at September 30, 2007 49,021 69,735 162,798 20,897 22,795 21,429 346,675
Additions 21 - 294 57 42 8,774 9,188
Disposals (4,379) (1,609) (1,519) (19) (24) 7 (7,543)
Disposals in business (417) (7,653) (1,372) - (717) (327) (10,486)
combinations
Transfers 259 3,356 12,051 - (2,307) (13,358) 1
Balance at December 31, 2007 44,505 63,829 172,252 20,935 19,789 16,525 337,835
Additions 1,949 1,093 2,824 209 387 17,277 23,739
Disposals (1,536) (14,189) (23,427) (624) (7,705) (1,994) (49,475)
Transfers 323 5,286 15,705 - 3,934 (25,248) -
Transfers to current assets,
held for sale (7,761) (10,246) (33,251) - (3,959) - (55,217)
Balance at September 30, 2008 37,480 45,773 134,103 20,520 12,446 6,560 256,882
Accumulated depreciation
Balance at January 1, 2007 - 32,763 71,190 8,606 12,139 - 124,698
Charged for the period - 1,293 6,617 2,253 2,249 - 12,412
Disposals for the period - (383) (901) (142) (74) - (1,500)
Disposals in business (86) (5,860) - (23) - (5,969)
combinations
Transfers - - (4) - 4 - -
Balance at September 30, 2007 - 33,587 71,042 10,717 14,295 - 129,641
Charged for the period - 414 2,373 729 773 - 4,289
Disposals for the period - (948) (1,110) (5) (19) - (2,082)
Disposals in business - (1,658) (1,213) - (305) - (3,176)
combinations
Balance at December 31, 2007 - 31,395 71,092 11,441 14,744 - 128,672
Charged for the period - 1,050 7,329 2,010 1,539 - 11,928
Disposals for the period - (12,268) (19,417) (393) (8,339) - (40,417)
Transfers to non current
assets held for sale - (1,548) (3,370) - (679) - (5,597)
Balance at September 30, 2008 - 18,629 55,634 13,058 7,265 - 94,586
Carrying amount at
January 1, 2007 48,349 33,687 85,964 11,630 8,973 13,011 201,614
Carrying amount at 49,021 36,148 91,756 10,180 8,500 21,429 217,034
September 30, 2007
Carrying amount at December
31, 2007 44,505 32,434 101,160 9,494 5,045 16,525 209,163
Carrying amount at
September 30, 2008 37,480 27,144 78,469 7,462 5,181 6,560 162,296
Non-current assets with carrying amount as of September 30, 2008 totaling BGN 10,869 thousand are mortgaged/pledged as collateral under
bank and trade loans granted to a company from the Group and related parties (see also note 37).
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 5 15 75 104 199
Disposals in business (21) (15) - - (36)
combinations
Balance at September 30, 2007 1,488 1,001 188 314 2,991
Additions (2) - - (1) (3)
Disposals (2) - - - (2)
Disposals in business (9) (1) - - (10)
combinations
Transfers 2 - - - 2
Balance at December 31, 2007 1,477 1,000 188 313 2,978
Additions 37 10 71 - 118
Disposals (185) - - (4) (189)
Transfers 31 - - (31) -
Transfers to current assets,
held for sale (13) (18) - (278) (309)
Balance at September 30, 2008 1,347 992 259 - 2,598
Accumulated amortization
Balance at January 1, 2007 1,095 275 58 - 1,428
Charged for the period 144 112 26 - 282
Disposals in business (7) - - - (7)
combinations
Balance at September 30, 2007 1,232 387 84 - 1,703
Charged for the period 25 37 10 - 72
Disposals for the period (2) - - - (2)
Disposals in business (9) (1) - - (10)
combinations
Balance at December 31, 2007 1,246 423 94 - 1,763
Charged for the period 72 112 44 - 228
Disposals for the period (72) - - - (72)
Transfers (13) (18) - - (31)
Balance at September 30, 2008 1,233 517 138 - 1,888
Carrying amount at
January 1, 2007 409 726 55 210 1,400
Carrying amount at 256 614 104 314 1,288
September 30, 2007
Carrying amount at December
31, 2007 231 577 94 313 1,215
Carrying amount at
September 30, 2008 114 475 121 - 710
18. Investments in associates and other investments
For the nine months For the twelve months ended at For the
nine months ended at
ended at 31 December 2007 30
September 2007
30 September 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)
BGN'000 BGN'000 BGN'000 BGN'000
BGN'000 BGN'000
Eurocapital Bulgaria AD 36.92% 15,384 459 14,925 1,373
- -
Varna Business Services **D
- - - - (224)
1,616 (200)
Petrol Engineering AD, net of -
impairment - - - -
- -
Total 15,384 459 14,925 1,149
1,616 (200)
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 assets, liabilities, income and profit (loss) of the associate as at September 30, 2008, June 30, 2008 and December 31, 2007 are as
follows:
Assets Liabilities Net Revenue Profit
assets (loss)
BGN'000 BGN'000
BGN'000 BGN'000 BGN'000
September 30, 2008 106,086 43,668 62,418 2,261 1,243
June 30, 2008 94,314 32,550 61,764 1,270 589
December 31, 2007 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 September 30, 2008, June 30, 2008 and
December 31, 2007 the total carrying amount of the goodwill is BGN 18,297 thousand.
20. Interest-bearing loans granted
September 30, June 30, December 31,
2008 2008 2007
BGN'000 BGN'000 BGN'000
Non-current receivables
Loans granted to related parties 36,810 36,810 36,810
Total 36,810 36,810 36,810
Current receivables
Loans and deposits granted to related 89,432 44,076 40,677
parties
Trade loans 51 - -
Finance lease 2 15 15
Total 89,485 44,091 40,692
Receivables from related parties are disclosed in note 34.
21. Inventories
September 30, June 30, December 31,
2008 2008 2007
BGN'000 BGN'000 BGN'000
Light fuels (gasoline, diesel oil and 46,265 53,872 127,728
gas oil)
Lubricants and other goods 5,685 4,242 5,738
Materials 3,755 3,987 4,462
Heavy fuels (heating oil) 492 4,755 1,500
Total 56,197 66,856 139,428
As of September 30, 2008 inventories amounting totally to BGN 68,604 thousand are pledged as collaterals to bank loans utilized by the
Group (see also note 37).
22. Trade and other receivables, net
September 30, June 30, December 31,
2008 2008 2007
BGN'000 BGN'000 BGN'000
Trade receivables, net of impairment 96,387 121,893 82,172
losses
Initial cost 98,698 124,204 84,483
Impairment loss (2,311) (2,311) (2,311)
Related party receivables 100,451 65,667 7,553
VAT and excise duties refundable 15,379 5,516 3,490
Advances granted 2,790 3,529 2,836
Litigations and writs, net of 531 527 507
impairment losses
Initial cost 5,769 5,765 5,745
Impairment loss (5,238) (5,238) (5,238)
Tax recoverable, result of - - 18,667
corrections of errors
Other 6,524 6,311 5,829
Total 222,062 203,443 121,054
As of September 30, 2008 trade receivables amounting totally to BGN 38,445 thousand are pledged as collaterals to bank loans utilized by
the Group (see also note 37).
23. Cash and cash equivalents
September 30, June 30, December 31,
2008 2008 2007
BGN'000 BGN'000 BGN'000
Cash at banks 47,800 72,546 46,507
Cash in transfer 2,803 3,277 9,245
Cash on hand 268 242 204
Cash and cash equivalents
as of cash flow statement 50,871 76,065 55,956
Restricted cash 357 13,389 11,581
Total 51,228 89,454 67,537
Restricted cash as of September 30, 2008 comprise of bank guarantees issued as collaterals in favour of the Customs Agency and the
National Revenue Agency at the amount of BGN 357 thousand. As of June 30, 2008 and December 31, 2007 restricted cash comprises mainly margin
deposits on dealings with derivatives at the amount of BGN 13,232 thousand and BGN 10,656 thousand, respectively.
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.
24. 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 September 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 7,761 8,698 29,881 3,280 278 49,898
assets
Disposals (5,636) (7,619) (28,245) (3,267) (277) (45,044)
Balance at September 30, 2008 2,125 1,079 1,636 13 1 4,854
Part of non-current assets held for sale as of September 30, 2008, amounting to BGN 505 thousand, comprise 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 36).
In June 2008 the management of the Group decided to dispose of one hundred and five fuel stations due to their economic inefficiency.
Accordingly, as of July 1, 2008 the non-current assets pertaining to these sites had been transferred to non-current assets, held for sale.
Seven of the fuel stations from the disposal group have been sold till the end of the current reporting period. The book value of the
ninety-eight fuel stations remaining as of September 30, 2008 amounted to BGN 4,349 thousand.
25. Trade and other payables
September 30, June 30, December 31,
2008 2008 2007
BGN'000 BGN'000 BGN'000
Payables to suppliers 59,476 50,454 201,167
VAT and excise duties payable 18,235 39,605 59,686
Deferred income 4,550 16,081 -
Prepayments received 2,408 7,411 1,018
Payables to personnel and social 3,822 3,602 4,353
security funds
Related party payables 2,005 2,183 3,050
Other 3,105 3,517 5,951
Total 93,601 122,853 275,225
Related party payables are disclosed in note 34.
The Group accrues liabilities for unused annual paid leave of employees in compliance with IAS 19 Employee Benefits. The movement of
these liabilities during the reported periods is as follows:
September 30, June 30, 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 749 297 1,562
Utilized during the period (1,095) (660) (1,084)
Disposed in a business combination - - (12)
Balance at the end of the period, 1,787 1,770 2,133
including:
For salaries on unused paid leave 1,487 1,471 1,780
For social security contributions on
unused paid leaves 300 299 353
26. Interest-bearing loans
September 30, June 30, December 31,
2008 2008 2007
BGN'000 BGN'000 BGN'000
Current liabilities
Bank loans 15,614 1,322 59,091
Debenture loans 29,560 26,468 18,335
Total 45,174 27,790 77,426
Non-current liabilities
Bank loans 4,489 4,622 -
Debenture loans 194,326 192,603 192,302
Total 198,815 197,225 192,302
Non-current liabilities under bank loans mature as follows:
September 30, June 30, 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 2,356 2,489 -
Total 4,489 4,622 -
The liabilities under interest-bearing loans analyzed by currency type are as follows:
September 30, June 30, 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 15,406 15,406 15,078 15,078 18,335 18,335
EUR, including:
Bank loans 10,279 20,103 3,039 5,944 361 705
Debenture loans 106,594 208,480 104,300 203,993 98,322 192,302
USD including:
Bank loans - - - - 1,934 2,575
Total 243,989 225,015 269,728
26. 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.
27. Finance lease liabilities
Minimum lease payments Present value of minimum lease payments
September 30, June 30, December 31, 2007 September 30, June 30, December 31, 2007
2008 2008 BGN'000 2008 2008 BGN'000
BGN'000 BGN'000 BGN'000 BGN'000
Amounts payable under finance
leases
Within one year 1,732 2,021 2,445 1,496 1,744 2,085
From one to two years 1,123 1,171 1,520 977 999 1,304
From two to five years 1,422 1,688 2,262 1,330 1,567 2,066
Less: Interest payable
Within one year (236) (277) (360) - - -
From one to two years (146) (172) (216) - - -
From two to five years (92) (121) (196) - - -
Present value of finance lease 3,803 4,310 3,803 4,310 5,455
obligations 5,455
Less: Present value of finance (1,496) (1,744) (2,085)
lease obligations with
maturity less than 1 year
Present value of finance lease 2,307 2,566
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.
28. 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.
September 30, June 30, 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 (27,363) (23,834) (355)
Corporate income tax paid 10,681 80 2,090
Disposed in a business combination - - 55
Income tax receivable (payable) at
the end of the period, net (9,486) (16,558) 7,196
29. 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 September 30, June 30, December 31,
2008 2008 2007
% of share capital % of share capital % of share capital
Petrol Holding AD 72.67 72.67 69.10
Naftex Refining and
Petrochemical Engineering
Services
(former Naftex Oil Shipping
Corporation Limited (United
Arab Emirates)) - - 18.84
Naftex Petrol EOOD 24.44 24.32 5.15
Ministry of Economy and Energy 0.84 0.85 0.86
Other minority shareholders 2.05 2.16 6.05
Total 100.00 100.00 100.00
The number of treasury shares held by the Group as at September 30, 2008, June 30, 2008 and December 31, 2007 is 26,69 thousand, 26,564
thousand and 5,627 thousand, respectively
30. Revaluation reserve
The reserve of revaluation of non-current assets, net of accrued deferred tax, as of September 30, 2008, June 30, 2008 and December 31,
2007 at the amount of BGN 22,617 thousand, BGN 25,229 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.
31. 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.
Nine months ended Nine months ended Three months ended Three months ended
September 30, 2008 September 30, September 30, September 30,
BGN'000 2007 2008 2007
BGN'000 BGN'000 BGN'000
(restated) (restated)
Weighted average number of 89,844 109,250 82,613 109,250
shares ('000)
Profit (loss) (BGN'000) 281,174 (2,735) 36,842 10,117
Earnings(loss) per share (BGN) 3.13 (0.03) 0.45 0.09
The weighted average number of shares is calculated as follows:
Nine months ended Nine months ended Three months ended Three months ended
September 30, 2008 September 30, September 30, September 30,
2007 2008 2007
Balance at the beginning of 103,623 109,250 82,686 109,250
the period ('000)
Effect of treasury shares held (13,779) - (73) -
Weighted average number of 89,844 109,250 82,613 109,250
shares ('000)
32. Retirement benefits obligations
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%.
33. Subsidiaries
The consolidated subsidiaries, over which the Parent company exercises control as of September 30, 2008, June 30, 2008 and December 31,
2007, are as follows:
Subsidiary Main activities Investments as of Investments Investments
September 30, as of as of
2008 June 30, 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
34. Related parties transactions
The Parent company exercises control and significant influence over the related parties, disclosed in notes 33 and 18 respectively. 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.
34. Related parties transactions (continued)
In the first six months of 2008 and 2007 transactions with related parties are as follows:
Related party Nine months ended Nine months ended Three months ended Three months ended
September 30, September 30, September 30, September 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 240 564 66 172
Companies under common control
2,946 3,287 1,306 1,058
Associates 10 30 1 8
Total 3,196 3,881 1,373 1,238
Related party Nine months ended Nine months ended Three months ended Three months ended
September 30, September 30, September 30, September 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 2,876 2,547 1,074 860
Companies under common control 74,644 43,691
119,948 63,709
Associates 325 369 116 135
Total 123,149 77,560 64,899 44,686
Related party Nine months ended Nine months ended Three months ended Three months ended
September 30, September 30, September 30, September 30,
2008 2007 2008 2007
BGN'000 BGN'000 BGN'000 BGN'000
Finance income Finance income Finance income Finance income
Ultimate parent company 3,155 13,006 1,059 10,570
Companies under common control
1,491 15 935 6
Associates 459 - 242 -
Total 5,105 13,021 2,236 10,576
Related party Nine months ended Nine months ended Three months ended Three months ended
September 30, September 30, September 30, September 30,
2008 2007 2008 2007
BGN'000 BGN'000 BGN'000 BGN'000
Finance Finance Finance Finance
costs costs costs costs
Ultimate parent company 376 222 - 83
Total 376 222 - 83
34. Related parties transactions (continued)
The outstanding balances with related parties as of September 30, 2008, June 31, 2008 and December 31, 2007 are as follows:
Related party September 30, 2008 June 30, December 31, September 30, June 30, December 31,
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
receivable receivable payable payable
Ultimate parent company,
incl.: 96,827 50,358 56,435 1,072 1,030 804
Interest-bearing loans -
non current portion 36,810 36,810 36,810 - - -
Interest- bearing loans
-current portion 53,182 7,888 15,846 - - -
Companies under common
control, incl.: 129,756 96,172 28,605 844 1,122 2,246
Interest-bearing loans
-current portion 36,250 36,188 24,831 - - -
Associates 110 23 - 89 31 -
Total 226,693 146,553 85,040 2,005 2,183 3,050
The total amount of the management remuneration of the members of the Managing and Supervisory Board for the first nine months of 2008
recognized as employee benefit expenses in these consolidated financial statements is BGN 659 thousand.
35. 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 adjacent
facilities, etc.
September 30, 2008 Wholesale Retail Other Elimi-nations Consolidated
of fuels of fuels activities
BGN'000 BGN'000 BGN'000 BGN'000 BGN'000
September 30, 2008 Wholesale Retail Other Elimi-nations Consolidated
of fuels of fuels activities
BGN'000 BGN'000 BGN'000 BGN'000 BGN'000
External sales 717,522 805,244 5,961 - 1,528,727
Inter-segment sales 166,040 3,049 10,372 (179,461) -
Total revenue 883,562 808,293 16,333 (179,461) 1,528,727
Result of the segment 171,647 232,023 1,710 - 405,380
Share of net profits of - - 459 - 459
associates
Foreign exchange rate gains, - - - - 2,419
net
Loss on dealings with - - - - (73,441)
derivatives
Interest expenses and fees and - - - - (11,895)
other financial expenses, net
Tax expense - - - - (41,786)
Net profit of the Group - - - - 281,136
Depreciation and amortization (1,288) (8,721) (2,147) - (12,156)
September 30, 2007, restated Wholesale Retail Other Elimi-nations Consolidated
of fuels of fuels activities
BGN'000 BGN'000 BGN'000 BGN'000 BGN'000
September 30, 2007, restated Wholesale Retail Other Elimi-nations Consolidated
of fuels of fuels activities
BGN'000 BGN'000 BGN'000 BGN'000 BGN'000
External sales 378,676 566,690 9,237 - 954,603
Inter-segment sales 52,274 2,562 10,961 (65,797) -
Total revenue 430,950 569,252 20,198 (65,797) 954,603
Result of the segment 15,119 2,078 3,542 - 20,739
Share of net profits of - - (200) - (200)
associates
Foreign exchange rate gains, - - - - 65
net
Loss on dealings with - - - (18,103)
derivatives
Gain on sale of subsidiaries - - - - 8,601
Interest expenses and fees and - - - - (14,086)
other financial expenses, net
Tax income - - - - 243
Net profit of the Group - - - - (2,741)
Depreciation and amortization (2,036) (7,641) (3,508) - (13,185)
Impairment of assets (5) (11) - - (16)
35. Segment reporting (continued)
Wholesale Retail Other Consolidated
of fuels of fuels activities
BGN'000 BGN'000 BGN'000 BGN'000
Wholesale Retail Other Consolidated
of fuels of fuels activities
BGN'000 BGN'000 BGN'000 BGN'000
September 30, 2008
Segment assets 328,048 300,376 13,515 641,939
Investment in equity method - - 15,384 15,384
associates
Segment liabilities 88,792 257,114 5,431 351,337
Capital expenditure 8,316 15,235 306 23,857
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
36. Prior period errors
Changes in income statement September 30, September 30, September 30,
2007 2007 2007
effect of error restated
BGN'000 BGN'000
BGN'000
Revenue 952,180 179 952,359
Other income 2,244 - 2,244
Cost of goods sold (832,469) (22,288) (854,757)
Materials (8,349) - (8,349)
Hired services (26,818) - (26,818)
Employee benefits expenses (22,221) - (22,221)
Depreciation and amortization (13,185) - (13,185)
expenses
Other expenses (8,534) - (8,534)
Finance income 14,211 - 14,211
Finance cost (37,734) - (37,734)
Share of loss of associates (200) - (200)
Profit (loss) before tax 19,125 (22,109) (2,984)
Income tax benefit (expense) (1,968) 2,211 243
Net profit (loss) for the 17,157 (19,898) (2,741)
period
36. Prior period errors (continued)
Changes in the balance sheet January 1, January 1, January 1, January 1, September 30,
September 30, September 30, September 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 - - 201,614 217,034
- - 217,034
Intangible assets 1,400 - - 1,400 1,288
- - 1,288
Investment property 18,252 - - 18,252 20,662
- - 20,662
Investments in associates and 1,816 - - 1,816
- -
other investments 1,616
1,616
Goodwill 20,309 - - 20,309 20,309
- - 20,309
Deferred tax assets - - - - -
- 110 110
Interest-bearing loans granted 44,698 - - 44,698 44,698
- - 44,698
Total non-current assets 288,089 - - 288,089 305,607
- 110 305,717
Current assets
Inventory 137,968 - - 137,968 118,749
- - 118,749
Trade and other receivables, 81,901 36,528 (363) 118,066 148,255
15,120 (255) 163,120
net
Interest-bearing loans granted 39,746 - 259 40,005 24,226
- 255 24,481
Cash and cash equivalents 62,987 - - 62,987 34,083
- - 34,083
Current income tax receivables - 5,406 - 5,406 -
5,406 899 6,305
Non-current assets, held for 1,387 - - 1,387 1,387
- - 1,387
sale
Total current assets 323,989 41,934 (104) 365,819 326,700
20,526 899 348,125
Total assets 612,078 41,934 (104) 653,908 632,307
20,526 1,009 653,842
Current liabilities
Trade and other payables, net 163,056 48,532 (359) 211,229 156,385
49,233 (2,601) 203,017
Interest-bearing loans 56,953 - - 56,953 76,127
- - 76,127
Finance lease liabilities 1,955 - - 1,955 2,099
- - 2,099
Derivatives liabilities - - 255 255 -
- 2,601 2,601
Current income tax 328 (328) - - 1,640
(2,539) 899 -
Retirement benefits 32 - - 32 32
- - 32
obligations
Total current liabilities 222,324 48,204 (104) 270,424 236,283
46,694 899 283,876
Non-current liabilities
Interest-bearing loans 207,217 - - 207,217 207,145
- - 207,145
Finance lease liabilities 4,955 - - 4,955 3,859
- - 3,859
Deferred tax liabilities 1,689 (507) - 1,182 397
(507) 110 -
Retirement benefits 438 - - 438 438
- - 438
obligations
Total non-current liabilities 214,299 (507) - 213,792 211,839
(507) 110 211,442
Net assets 175,455 (5,763) - 169,692 184,185
(25,661) - 158,524
Equity
Share capital 109,250 - - 109,250 109,250
- - 109,250
Retained earnings 26,723 (5,763) - 20,960 27,796
(25,661) - 2,135
Revaluation reserve 28,817 - - 28,817 28,275
- - 28,275
Other reserve 10,665 - - 10,665 18,864
- - 18,864
Total equity 175,455 (5,763) - 169,692 184,185
(25,661) - 158,524
36. 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 were terminated, 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 36,528
thousand, increased trade and other payables with BGN 48,532 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 nine months of 2007 arise from increase in revenue with BGN 179 thousand, increase in cost of goods
sold with BGN 22,288 thousand which leads to an decrease in tax expense with BGN 2,211 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.
37. Contingent assets and liabilities
Contingent assets
As of September 30, 2008 bank guarantees at the amount of BGN 4,339 thousand and promissory notes at the amount of BGN 20,860 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 September 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 September 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 19,848 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 500 thousand.
As of June 30, 2008 assets with total carrying amount of BGN 117,918 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).
38. Events after the balance sheet date
According to the agreement signed with a Counterparty, the land and buildings of two fuel stations have been sold and as a result gain
has been recognized at the amount of BGN 778 thousand (see also note 36).
In accordance with management decision, the assets of thirteen fuel stations have been sold and as a result gain has been recognized at
the amount of BGN 225 thousand (see also note 24).
In November 2008 the Company established a new subsidiary Elite Petrol EAD and made a capital contribution of BGN 50 thousand in its
share capital.
The Group has acquired 15,638 thousand treasury shares after the balance sheet date.
This information is provided by RNS
The company news service from the London Stock Exchange
END
QRTUUGQUPUPRURG
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