TIDM74JJ
RNS Number : 4938U
Petrol AD
25 June 2009
This document is a translation of the original in Bulgarian text,
in case of divergence the Bulgarian original is prevailing.
INDEPENDENT AUDITOR'S REPORT
To the shareholders of
Petrol AD
Report on the consolidated financial statements
1. We have audited the accompanying consolidated financial statements of Petrol
AD (the "Parent company") and its subsidiaries and associated companies
(together referred to as "the Group"), which comprise the consolidated balance
sheet as of December 31, 2008 and the consolidated income statement,
consolidated statement of changes in equity and consolidated cash flow statement
for the year then ended, and a summary of significant accounting policies and
other explanatory notes.
Managements responsibility for the consolidated financial statements
2. Management is responsible for the preparation and fair presentation of these
consolidated financial statements in accordance with the International Financial
Reporting Standards (IFRS), as adopted by the European Union Commission. This
responsibility includes: designing, implementing and maintaining internal
control relevant to the preparation and fair presentation of financial
statements that are free from material misstatement, whether due to fraud or
error; selecting and applying appropriate accounting policies; and making
accounting estimates that are reasonable in the circumstances.
Auditors responsibility
3. Our responsibility is to express an opinion on these consolidated financial
statements based on our audit. Except as discussed in paragraphs 6 and 7 below,
we conducted our audit in accordance with International Standards on Auditing.
Those standards require that we comply with ethical requirements and plan and
perform the audit to obtain reasonable assurance whether the consolidated
financial statements are free from material misstatement.
4. An audit involves performing procedures to obtain audit evidence about the
amounts and disclosures in the consolidated financial statements. The procedures
selected depend on the auditors judgment, including the assessment of the risks
of material misstatement of the consolidated financial statements, whether due
to fraud or error. In making those risk assessments, the auditor considers
internal control relevant to the Groups preparation and fair presentation of
the consolidated financial statements in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Groups internal control. An audit also
includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by management, as well as evaluating
the overall presentation of the consolidated financial statements.
5. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.
Basis for qualification
6. Trade and other receivables amounting to BGN 77,405 thousand as of December
31, 2008 and
BGN 121,054 thousand as of December 31, 2007 include various
overdue receivables amounting to BGN 27,910 thousand as of December 31, 2008,
from which overdue for more than 360 days are BGN 7,250 thousand and BGN 28,002
thousand as of December 31, 2007. There are indications for impairment of
overdue receivables but as of December 31, 2008 and 2007 the Group has not
performed analysis and review of receivables for impairment and therefore no
impairment losses have been recorded in the accompanying consolidated financial
statements. In our opinion the Group should recognize and record appropriate
adjustment for the impairment of the overdue receivables in compliance with the
requirements of IAS 39 Financial Instruments: Recognition and Measurement.
7. As disclosed in Note 34 to the accompanying consolidated financial
statements, the Group has performed transactions on the Bulgarian Stock Exchange
(BSE) through one of its subsidiaries, and acquired its own shares. As a result
of the transaction, it realised a net loss of BGN 253,045 thousand for 2008 and
BGN 19,060 thousand for 2007 recorded in equity against retained earnings. As
the volume of shares traded on BSE, excluding transactions between related
parties, is relatively insignificant in relation to the total volume of
purchased shares, the prices used may not be representative for the purpose of
the valuation of the reported loss in 2008 and 2007. As a result, we were unable
to satisfy ourselves through other independent sources whether the loss from
redemption of shares of BGN 253,045 thousand for 2008 and BGN 19,060 thousand
for 2007 and the related effects and disclosures thereon were fairly presented
in the consolidated financial statements.
Qualified opinion
8. In our opinion, except for the effects, if any, on the consolidated financial
statements of the matters discussed in paragraphs 6 and 7 above, the
consolidated financial statements present fairly, in all material respects, the
financial position of the Group as of December 31, 2008, and of its financial
performance and its cash flows for the year then ended, in accordance with IFRS,
as adopted by the European Union Commission.
Other Reports on regulatory requirements - Annual consolidated report on the
activities of the Group according to article 33 of the Accountancy Act
11. Pursuant to the requirements of the Bulgarian Accountancy Act, article
38, paragraph 4, we have read the Annual consolidated report on the activities
of the Group, prepared by the Groups management. The Annual consolidated report
on the activities of the Group is not a part of the consolidated financial
statements of the Group or the separate financial statements of the Parent
company. The historical financial information, presented in the Annual
consolidated report on the activities of the Group, prepared by the management,
is consistent, in all material respects, with the financial information,
disclosed in the annual consolidated financial statements of the Group as of
December 31, 2008, prepared in accordance with IFRS, as adopted by the European
Union Commission. Groups management is responsible for the preparation of the
Annual consolidated report on the activities of the Group, dated May 27, 2008.
In accordance with the Accountancy Act, article 33, paragraph 5, the Annual
separate report on the activities and the Annual consolidated report on the
activities may be prepared and presented together, in which case specific
information should be included for the entities that comprise the Group taken as
a whole. Management has elected to prepare only Annual consolidated report on
the activities.
Deloitte Audit OOD
Sylvia Peneva
Managing Director
Registered Auditor
May 30, 2009
Sofia
CONSOLIDATED ANNUAL REPORT
ACCOMPANIED BY
INDEPENDENT AUDITOR'S REPORT AND
CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2008
(This document is a translation of the original Bulgarian text,
in case of divergence the Bulgarian original shall prevail)
May 2009
Table of contents
Selected performance
indicators.....................................................................
.............................. 3
Management Boards
message........................................................................
............................. 5
Group
profile........................................................................
....................................................... 7
Operating and financial
review.........................................................................
........................... 17
Outlook............................................................................
........................................................ 40
Corporate
governance.....................................................................
........................................... 42
Environmental
commitments....................................................................
................................... 45
Independent auditors report on consolidated financial
statement.................................................... 47
Consolidated financial statements as of December 31,
2008........................................................... 51
Notes to the consolidated financial
statements.....................................................................
......... 58
Selected performance indicators
+--------------------------+--------------------------+----------+---------+---------+---------+--------+
| Financial highlights | | 2008 | 2007 | 2006 | 2005 | 2004 |
+--------------------------+--------------------------+----------+---------+---------+---------+--------+
| | | | | | | |
+--------------------------+--------------------------+----------+---------+---------+---------+--------+
| | | | | | | |
+--------------------------+--------------------------+----------+---------+---------+---------+--------+
| Revenue | BGN mln | 1,365.6 | 1,383.8 | 1,348.4 | 1,420.9 | 977.1 |
+ +--------------------------+----------+---------+---------+---------+--------+
| | EUR mln | 698.2 | 707.5 | 689.4 | 726.5 | 499.6 |
+--------------------------+--------------------------+----------+---------+---------+---------+--------+
| | | | | | | |
+--------------------------+--------------------------+----------+---------+---------+---------+--------+
| Gross margin1 | BGN mln | 124.0 | 139.1 | 121.2 | 119.7 | 94.9 |
+ +--------------------------+----------+---------+---------+---------+--------+
| | EUR mln | 63.4 | 71.1 | 62.0 | 61.2 | 48.5 |
+ +--------------------------+----------+---------+---------+---------+--------+
| | % | 9.1 | 10.1 | 9.0 | 8.4 | 9.7 |
+--------------------------+--------------------------+----------+---------+---------+---------+--------+
| | | | | | | |
+--------------------------+--------------------------+----------+---------+---------+---------+--------+
| EBITDA2 | BGN mln | 412.9 | 40.0 | 38.7 | 37.9 | 42.4 |
+ +--------------------------+----------+---------+---------+---------+--------+
| | EUR mln | 211.1 | 20.4 | 19.8 | 19.4 | 21.7 |
+ +--------------------------+----------+---------+---------+---------+--------+
| | % | 23.4 | 2.9 | 2.9 | 2.7 | 4.3 |
+--------------------------+--------------------------+----------+---------+---------+---------+--------+
| | | | | | | |
+--------------------------+--------------------------+----------+---------+---------+---------+--------+
| EBIT3 | BGN mln | 392.2 | 22.4 | 19.7 | 16.0 | 14.8 |
+ +--------------------------+----------+---------+---------+---------+--------+
| | EUR mln | 200.5 | 11.4 | 10.1 | 8.2 | 7.6 |
+ +--------------------------+----------+---------+---------+---------+--------+
| | % | 22.3 | 1.6 | 1.5 | 1.1 | 1.5 |
+--------------------------+--------------------------+----------+---------+---------+---------+--------+
| | | | | | | |
+--------------------------+--------------------------+----------+---------+---------+---------+--------+
| Net profit (loss) | BGN mln | 226.2 | (32.9) | 10.0 | 12.5 | 1.5 |
+ +--------------------------+----------+---------+---------+---------+--------+
| | EUR mln | 115.7 | (16.8) | 5.1 | 6.4 | 0.8 |
+ +--------------------------+----------+---------+---------+---------+--------+
| | % | 12.8 | (2.4) | 0.7 | 0.9 | 0.2 |
+--------------------------+--------------------------+----------+---------+---------+---------+--------+
| | | | | | | |
+--------------------------+--------------------------+----------+---------+---------+---------+--------+
| Earnings per share | BGN | 2.63 | (0.30) | 0.12 | 0.11 | 0. 01 |
+ +--------------------------+----------+---------+---------+---------+--------+
| | EUR | 1.34 | (0.15) | 0.06 | 0.06 | 0.00 |
+--------------------------+--------------------------+----------+---------+---------+---------+--------+
| | | | | | | |
+--------------------------+--------------------------+----------+---------+---------+---------+--------+
| Share price4 | BGN | 10.99 | 5.28 | 4.33 | 3.78 | 3.16 |
+ +--------------------------+----------+---------+---------+---------+--------+
| | EUR | 5.62 | 2.70 | 2.21 | 1.93 | 1.62 |
+--------------------------+--------------------------+----------+---------+---------+---------+--------+
| | | | | | | |
+--------------------------+--------------------------+----------+---------+---------+---------+--------+
| Assets | BGN mln | 389.0 | 658.6 | 653.9 | 449.2 | 407.9 |
+ +--------------------------+----------+---------+---------+---------+--------+
| | EUR mln | 198.9 | 336.7 | 334.3 | 229.7 | 208.6 |
+--------------------------+--------------------------+----------+---------+---------+---------+--------+
| | | | | | | |
+--------------------------+--------------------------+----------+---------+---------+---------+--------+
| Debt5 | BGN mln | 212.1 | 275.2 | 271.1 | 165.9 | 103.1 |
+ +--------------------------+----------+---------+---------+---------+--------+
| | EUR mln | 108.4 | 140.7 | 138.6 | 84.8 | 52.7 |
+--------------------------+--------------------------+----------+---------+---------+---------+--------+
| | | | | | | |
+--------------------------+--------------------------+----------+---------+---------+---------+--------+
| Shareholders' equity | BGN mln | 36.7 | 103.7 | 169.7 | 158.8 | 182.5 |
+ +--------------------------+----------+---------+---------+---------+--------+
| | EUR mln | 18.8 | 53.0 | 86.8 | 81.2 | 93.3 |
+--------------------------+--------------------------+----------+---------+---------+---------+--------+
| | | | | | | |
+--------------------------+--------------------------+----------+---------+---------+---------+--------+
| Working capital6 | BGN mln | 9.6 | 18.0 | 95.4 | (12.2) | 6.2 |
+ +--------------------------+----------+---------+---------+---------+--------+
| | EUR mln | 4.9 | 9.2 | 48.8 | (6.2) | 3.1 |
+--------------------------+--------------------------+----------+---------+---------+---------+--------+
| | | | | | | |
+--------------------------+--------------------------+----------+---------+---------+---------+--------+
| Capital expenditure | BGN mln | 38.8 | 43.8 | 22.4 | 9.4 | 54.2 |
+ +--------------------------+----------+---------+---------+---------+--------+
| | EUR mln | 19.8 | 22.4 | 11.5 | 4.8 | 27.7 |
+--------------------------+--------------------------+----------+---------+---------+---------+--------+
+---------------+--------+---------+--------+--------+--------+
| Financial | 2008 | 2007 | 2006 | 2005 | 2004 |
| ratios | | | | | |
+---------------+--------+---------+--------+--------+--------+
| | | | | | |
+---------------+--------+---------+--------+--------+--------+
| Return | 322.07 | (24.06) | 6.10 | 7.31 | 0.83 |
| on | | | | | |
| equity | | | | | |
| (ROE)7 | | | | | |
| (%) | | | | | |
+---------------+--------+---------+--------+--------+--------+
| Return | 145.26 | 6.54 | 6.38 | 6.41 | 5.56 |
| on | | | | | |
| average | | | | | |
| capital | | | | | |
| employed | | | | | |
| (ROACE)8 | | | | | |
| (%) | | | | | |
+---------------+--------+---------+--------+--------+--------+
| Return | 74.88 | 3.41 | 3.57 | 3.73 | 3.74 |
| on | | | | | |
| assets | | | | | |
| (ROA)9 | | | | | |
| (%) | | | | | |
+---------------+--------+---------+--------+--------+--------+
| Debt | 54.51 | 41.79 | 41.46 | 36.93 | 25.26 |
| to | | | | | |
| assets | | | | | |
| ratio | | | | | |
| (%) | | | | | |
+---------------+--------+---------+--------+--------+--------+
| Shareholders' | 9.44 | 15.75 | 25.95 | 35.50 | 44.73 |
| equity to | | | | | |
| Total assets | | | | | |
| (%) | | | | | |
+---------------+--------+---------+--------+--------+--------+
| Debt | 51.37 | 688.73 | 699.69 | 438.11 | 243.18 |
| to | | | | | |
| EBITDA | | | | | |
| (%) | | | | | |
+---------------+--------+---------+--------+--------+--------+
| Current | 1.06 | 1.05 | 1.35 | 0.94 | 1.04 |
| ratio 10 | | | | | |
+---------------+--------+---------+--------+--------+--------+
| Inventories | 26 | 39 | 32 | 15 | 13 |
| turnover | | | | | |
| (days)11 | | | | | |
+---------------+--------+---------+--------+--------+--------+
| Accounts | 17 | 22 | 19 | 17 | 19 |
| receivable | | | | | |
| collection | | | | | |
| period | | | | | |
| (days)12 | | | | | |
+---------------+--------+---------+--------+--------+--------+
+----------------+--------+--------+--------+--------+--------+
| Operating | 2008 | 2007 | 2006 | 2005 | 2004 |
| data | | | | | |
+----------------+--------+--------+--------+--------+--------+
| | | | | | |
+----------------+--------+--------+--------+--------+--------+
| Volume | 741 | 846 | 877 | 1,044 | 765 |
| of | | | | | |
| fuel | | | | | |
| sales | | | | | |
| (million | | | | | |
| litres) | | | | | |
+----------------+--------+--------+--------+--------+--------+
| Volume | 79 | 55 | 50 | 75 | 80 |
| of | | | | | |
| fuel | | | | | |
| sales | | | | | |
| (thousand | | | | | |
| tonnes) | | | | | |
+----------------+--------+--------+--------+--------+--------+
| Market | 16% | 20% | 19% | 17% | 18% |
| share | | | | | |
| in | | | | | |
| retail | | | | | |
| fuel | | | | | |
| sales | | | | | |
+----------------+--------+--------+--------+--------+--------+
| Market | 14% | 12% | 18% | 23% | 17% |
| share | | | | | |
| in | | | | | |
| wholesale | | | | | |
| fuel | | | | | |
| sales | | | | | |
+----------------+--------+--------+--------+--------+--------+
| Number | 445 | 519 | 492 | 460 | 451 |
| of | | | | | |
| fuel | | | | | |
| stations, | | | | | |
| including | | | | | |
+----------------+--------+--------+--------+--------+--------+
| Renewed | 170 | 149 | 99 | 83 | 81 |
| fuel | | | | | |
| stations | | | | | |
+----------------+--------+--------+--------+--------+--------+
| Number | 44 | 45 | 82 | 82 | 83 |
| of | | | | | |
| storage | | | | | |
| facilities, | | | | | |
| including | | | | | |
+----------------+--------+--------+--------+--------+--------+
| Storage | 12 | 13 | 13 | 13 | 10 |
| facilities | | | | | |
| operating | | | | | |
| during the | | | | | |
| period | | | | | |
+----------------+--------+--------+--------+--------+--------+
| Number | 37 | 34 | 34 | 28 | 31 |
| of | | | | | |
| fuel | | | | | |
| tank | | | | | |
| trucks | | | | | |
+----------------+--------+--------+--------+--------+--------+
| Percentage | 31% | 24% | 22% | 17% | 14% |
| of credit | | | | | |
| card | | | | | |
| sales (%) | | | | | |
+----------------+--------+--------+--------+--------+--------+
| Number | 2,082 | 3,126 | 3,630 | 3,859 | 3,890 |
| of | | | | | |
| personnel | | | | | |
| (at the | | | | | |
| end of | | | | | |
| the | | | | | |
| period) | | | | | |
+----------------+--------+--------+--------+--------+--------+
Management Board's message
Dear shareholders,
The beginning of 2008 marked a major success for the Petrol Group. Following a
series of continued negotiations, Petrol AD and Lukoil Bulgaria EOOD reached
total agreement for settling the controversial points existing between the
companies and withdrew all counter-claims on instituted legal proceedings. By
signing an out-of-court settlement in March 2009, both companies cancelled the
debatable 15-years contract for fuel supply and signed new contracts providing
supplies for the retail and wholesale dealers' network. The signing of the
agreement was to the benefit of both parties and opened new prospects for their
long-term business activities. After settling their business relationship, the
companies signed a historic-price deal for the sale of 75 fuel stations and 1
storage facility, at the total market value of BGN 463.5 million (EUR 237
million). This business transaction will remain a corner-stone for the Bulgarian
petrol business, since it indicates the real market value of the existing and
currently built assets for the distribution of fuels in the country.
In 2008, the Bulgarian fuel market witnessed the trend, continuing from the
previous year, for intensifying of the competition amongst the main market
players. At the same time, the price war that broke forth in former years and
the pressure for the reduction of retail trade margins gradually calmed down.
The last was a result of the growing instability of the crude oil quotations on
the international markets and the general macroeconomic uncertainty that
followed the growing global economic and financial crisis. The beginning of the
third quarter of 2008 was a striking example of the unstable fuel prices, which
reached the historic level of USD 147.27 per barrel, immediately before the
sharp and long drop that continued through the whole of the second half-year.
Distributors of fuels and petroleum products in the country faced new and
serious challenge at the changed circumstances on the commodity and financial
markets
In this difficult market conditions, Petrol AD accounted for good results,
regarding the sales of fuels and other goods. After the property transfer of the
70 commercial sites, which generate about 1/3 of the retail fuel sales, till the
end of 2008 the volume of sales in litres decreased by only 16%, as compared to
2007, and the total revenue from retail sales decreased by only 5%. The Group's
total gross margin increased by BGN 27 million, which represents 32.6% on annual
basis, and reached BGN 109.9 million (EUR 56.2 million) - 8.13% of the
consolidated income from sale of goods (2007: 6.24%). Increase in the average
annual margins from sale of fuels is recorded in absolute, as well as in
relative amount, on the retail and wholesale markets simultaneously.
In 2008 Petrol AD continued to invest in its retail network. The total number of
modernized retail stations is 21, as the Company replaced the tanks of 21 sites
with new ones, changed the appearance of 27 sites with the new Petrol
visualization, and installed 29 vapour recovery units. As at the end of the
year,134 retail stations were offering liquefied petroleum gas (LPG) and 1
natural gas (CNG) station. In compliance with the investment program of the
wholesale sector one storage facility was completely reconstructed. There
continued the process that has started over the last few years of fitting
hydrocarbon vapour recovery units, internal floating roofs for wastage reduction
and automated measurement systems in the storage facilities.
Petrol AD introduced a second innovative product on the Bulgarian fuel market
after the Blue Force Gas fuel. The new fuel brand 96 Extra Force, enriched with
fuel additives, targets the high price segment of the competitive V-Power and
Kinitron 100. At the end of 2008, the sales of 96 Extra force reached 30% of the
total volume high-class fuel sales, which caused an increase in the high-price
segment sales of 25% on annual basis.
In adhering to the adopted policy for social responsibility, Petrol AD financed
the planting of over 200 decares of forest trees and initiated a long-term
programme for reduction of carbon emissions from the burning of fuels. The
lighting fittings of 4 fuel stations were experimentally replaced by LED
fixtures, which is expected to reduce the electricity costs up to 4 times.
Several of the Group's sites had sun collectors installed for the generation of
hot water.
We would like to express our gratitude for the strong performance of the Group
in 2008 to our shareholders, clients and partners, for their trust and support,
to the whole management staff and to all our colleagues from all companies in
the Group for the shared values and for their contribution to the achievement of
our common mission and objectives.
Management Board of Petrol AD
May 27, 2009
Group profile
Petrol - energy for people
Petrol AD has a leading role in petroleum products distribution in Bulgaria.
At the end of 2008 the company is among:
* The first Bulgarian private companies in terms of sales income;
* The four largest companies operating on the market of petroleum products in the
country;
* The major private investors in Bulgaria;
* The companies with highest capitalization on Bulgarian Stock Exchange - Sofia;
* The biggest private taxpayers;
* The twenty largest employers in the country.
The Group (Petrol AD and its subsidiaries) is the owner of the most
well-developed network for distribution of petroleum products in the country,
both wholesale and retail, which includes 445 retail stations, 44 petrol storage
facilities and 3 petrol port terminals, all evenly spread throughout the
country's territory. In 2004 the Group has started large investment programme
for modernization and reconstruction of its retail stations. In the end of 2008
the number of reconstructed new modern sites offering quality services is 170,
which makes Petrol AD the owner of the biggest number of reconstructed sites of
modern European style.
All kinds of unleaded gasoline and Euro diesel are sold in all trade sites of
Petrol AD, LPG is offered in 134 retail stations. Other products available
include the full range of Bulgarian and imported motor and transmission
lubricants, brake and antifreeze fluids, automobile cosmetics, spare parts and
accessories. In many sites additional facilities are placed such as car washes,
inspection/service pits, pits for dismounting, mounting and balance of tyres and
other services.
The company builds up its new retail stations as service stations. In part of
the sites modern kiosk terminals are installed to provide internet access. Debit
and credit cards are accepted, withdrawal/deposit operations with these cards
are also allowed. In terms of offering this package of services and means of
communication and payment Petrol AD has no real competitor on the domestic
market. The newly built retail stations are commercial sites with convenience
stores and fast-food places, furnished with professional machines and equipment.
The range of products in the stores goes from automobile products to food and
beverage (over 4,000 items of leading domestic and foreign producers),
cosmetics, accessories, magazines and newspapers, etc.
The adopted technical and ecological standards in the company's sites exceed
those required within the European Union. All products in the stations and
storage facilities comply with all technological requirements and quality
standards. High quality of products is a priority for the management. Company
policy does not tolerate deviations from technology or ecological standards. The
retail stations are in conformity with all valid standards and the best European
and international practices.
Petrol AD is the sole petrol company in Bulgaria maintaining 4 laboratories for
current fuel quality control. The laboratory in Varna is licensed to perform
examinations on state level, thus able to provide internationally acknowledged
certificates. Own stations are being tested 4 to 6 times annually. Other large
companies operating on Bulgarian fuel market also examine their products in
Petrol AD laboratories. The company works in close co-operation with a number of
state institutions involved in fuel quality control.
History
The beginning of the 20th century saw an industrial boom in the biggest
Bulgarian cities as a result of established trade contacts with European
countries and the enthusiasm of well-educated young men. This economic boom was
most obvious in Rouse - a town on the Danube River - where the Bulgarian petrol
industry was born. The Veshkovi brothers invested their own capital to build a
refinery and established First Bulgarian Petrol Industry. In 1921 in Bourgas, a
city on the Black Sea coast, Standard Oil opened the first factory for the
production of barrels and packaging.
The origins of Petrol AD as a supplier of petroleum
products date back to 1 April 1932 when the predecessor of the Company was
incorporated as a joint stock company under Bulgarian law. Initially, the
company used the warehouse facilities of one of its shareholders and gradually
over time the company invested in the construction of its own facilities.
In 1947, the Bulgarian government nationalised the Bulgarian petrol industry
and the Bulgarian parliament created a state monopoly through the passage of the
Law on the State Monopoly on Petrol Products in February 1948. The following
month, the assets of a number of private companies were amalgamated to form a
state owned petrol supply monopoly. During the period after nationalisation, the
petrol supply monopoly gradually expanded its operations, with petrol stations
and storage facilities being constructed throughout Bulgaria. In 1986, the
petrol supply monopoly was restructured to form a part of the Chimsnab chemical
products monopoly.
In 1990, the business was restructured and reorganised
pursuant to Article 11(2) of Decree No. 56 and was incorporated on 14 March 1990
as a state owned company, registered with the Sofia City Court under company
court file number 1358/1990. In July 1992, the retail fuel supply monopoly was
transformed into Petrol EAD, a joint stock company wholly owned by the state.
During the period from 1992 to 1997, approximately 25% of Petrol's share capital
was distributed to privatisation funds and private individuals as part of the
Bulgarian government's voucher privatisation policy.
As part of this policy, Petrol EAD was re-registered as Petrol AD, a joint stock
company, on 10 June 1997 and, on 1 July 1998, was registered as a public company
in the Public Register of the Financial Supervision Commission. Following a two
year privatisation process, in 1999 a 51% stake in Petrol AD was sold by the
Bulgarian government to International Consortium Bulgaria AD (which was
subsequently renamed Naftex Petrol), a consortium comprising Naftex Bulgaria
Holding AD, a company engaging in oil trading, OMV AG, an oil and gas group and
Petrol Holding Group AD, a company established by former members of the
management of Petrol AD.
In 2001, Naftex Bulgaria Holding AD acquired the interests of the other
members in the consortium. The consideration for the acquisition included the
sale by Petrol AD of 25 retail stations to OMV, who remain one of the Group's
competitors in Bulgaria. One of the obligations imposed on the Company at the
time of its privatisation was that the Company establish an investment programme
under which USD 60 million (EUR 48.4 million) of certain recognised investments
would be made between 2000 and 2004. The Company has since satisfied this
obligation. In December 2003, Naftex Bulgaria Holding AD was renamed Petrol
Holding AD.
Mission
The company's mission is to accomplish a stable growth on shareholders' return
in the long term along with commitment to its clients, employees, partners and
generally to the society.
In achieving its corporate goals, the company's management relies significantly
on professional behaviour, ethics and business integrity towards its partners.
All projects in the investment programme are being implemented on an innovative
basis and complied with the highest international standards for business
management and environmental protection.
The company management believes in Petrol AD's development of a large public
company as a leader in Bulgarian capital market. Clear sight for the future
development and dividend policy, working with bond market instruments, standing
by international standards and practices, together with implementation of modern
high-technology information and communication decisions, prove Petrol AD to be a
modern company with substantial opportunities for further development.
Strategy
The Group's main strategic objective is to maintain its leading position in the
Bulgarian fuel distribution market, while providing shareholders with a stable
long-term return. In achieving this Management Board is pursuing a strategy with
several main elements:
* Asset rationalisation and enhanced efficiency;
* Expansion of retail network;
* Expanded product offering;
* Investment in network and brand; and
* Increase third party storage fees.
Asset rationalisation and enhanced efficiency
In 2007 the Group successfully finished the process of streamlining its business
by disposal of non-core assets. In June, 2008, the management of the Parent
company took a decision for the sale of 105 non-profitable fuel stations and at
the end of the year, 25 of them were sold.
During the last few years, the Group reduced the cost on railway infrastructure,
as a result of the subsided share of this kind of fuel transportation, in favour
of the automobile transport. Since 2006 the Group has been operating a new fleet
of 34 modern tanker trucks with bigger tonnage and higher efficiency than the
old fleet of 67 automobiles. In 2008, the company bought 13 new truck
compositions.
Expansion of retail network
The Company intends to increase its sales and market share by increasing the
size of its site retail network by up to 90 stations by the end of 2010. This
will be achieved via a combination of opening new sites in new high throughput
locations (e.g. on Bulgaria's new motorway network) and via consolidation of its
smaller independent competitors through franchise/ dealership arrangements and
outright acquisition. The Group believes that substantial profitable growth can
be achieved over the medium-term in the retail sector by consolidating the large
number of independent fuel retailers, which together currently account for
approximately 24.3% of retail sector fuel sales.
Expanded product offering
In conformity with the Group's plans to expand its retail product offering,
particularly of higher margin non-fuel products and services, in 2008 the
company built new and renovated the existing convenience stores and café-bars in
21 retail stations. The Group also intends to increase the number of stations
offering internet access to customers through electronic kiosks, as well as
other ancillary services, such as the Transcard credit card. The additional
services usually generate greater fuel sales margins.
On the fuel side, the Group places a high priority on being at the forefront of
customer demand for cleaner and improved performance fuels and plans for
example, to rapidly increase its sales of compressed natural gas (CNG). In
October 2007 Petrol AD introduced innovative product to the Bulgarian fuel
market - LPG enriched with fuel additives. The new fuel brand Blue Force Gas
decreases the total fuel expense of automobiles up to 10%, improves the
lubrication of engines and accelerates the power of automobiles by 8 to 10%. The
new LPG meets all European requirements and exceeds the quality of products
offered on the domestic market. In order to complete the range of products for
automobiles with LPG fuel systems, the Company is currently developing and will
launch on the market a set of special motor lubricants.
In 2008 Petrol AD offered the Bulgarian customers a new fuel - gasoline 96 Extra
Force. It accelerates the power of automobiles due to better fuel burning,
reduced expense up to 10% by improved system efficiency, and increased engine
life. The use of the new product decreases the carbon deposition in the fuel
system and the discharge of harmful emissions (CO, ??2, NOX).
Investments in the network and the brand
The Group plans to further increase sales of both petroleum and non-petroleum
products through continuous investments in the upgrade of retail stations,
including refurbishment and expansion of the total shop-floor areas. Additional
resources will be invested in the further development of the "Petrol" brand,
with increased advertising and the launch of Petrol branded goods and services
as well as carrying out the customer loyalty programme.
In 2008 Petrol AD continued to invest in its retail network. The total number of
modernized retail stations is 21. The Company replaced the tanks of all sites
with new ones, changed the appearance of 27 sites with the new Petrol
visualization, and installed 29 vapour recovery units. As at the end of the
year, there were 134 retail stations offering liquefied petroleum gas (LPG) and
1 new natural gas (CNG) station.
Increase of third party storage fees
The Group is planning to capitalise on the opportunity provided to it by its
dominant position in fuel storage capacity and the increased storage
requirements imposed on Bulgarian producers and importers by the implementation
of EU Stock Directives 68/414/EU and 98/93/EU through the Bulgarian Crude Oil
and Petroleum Products Mandatory Stocks Act 2003. This will require that all
producers and importers of certain oil related products operating in Bulgaria
maintain compulsory stocks of these products equal to 90 days of sales by 2012.
In addition, the expected amendment of the Excise Duty Act allowing for inland
bound warehousing of petroleum products may result in greater demand for its
storage and distribution infrastructure in Bulgaria.
The Group's strategy for exploiting this opportunity has three components.
First, a marketing campaign among existing and potential customers to execute
long-term storage contracts with the Group which cater for their increasing
storage needs under the above legislation. Secondly, a gradual recommissioning
of the 25 mothballed facilities which have a capacity of 400,000 m3. Thirdly,
investment in key hub storage facilities, over the next three years. In the
short-term, there is sufficient excess capacity (707,573,000 m3) in the 14
storage facilities currently in operation, accounting for 753,731 m3 of the
Group's capacity, to satisfy the anticipated increased demand.
Group structure
The diagram below sets out the principal subsidiaries and affiliates, which are
divided into six primary categories, comprising retail sales of oil products,
wholesale of oil products, storage, distribution and logistics in relation to
oil products, other assets and non-core assets and services.
As of year end 2008, Petrol AD has interests in 6 subsidiaries:
* Naftex Petrol EOOD, a solely owned limited liability company incorporated under
the laws of Bulgaria and registered at the Varna District Court under company
court file 3464/2003, one of the leading suppliers of petroleum products to the
wholesale market in Bulgaria. Following the acquisition of Naftex Petrol AD by
Petrol AD, Naftex Petrol AD was transformed from a joint stock company to a
limited liability company, with the two tier board structure of a supervisory
board and management board being replaced by a single manager. As at 31 December
2008, the Petrol AD owned 100% of the issued share capital of Naftex Petrol
EOOD;
* Petrol Trans Express EOOD, a solely owned limited liability company incorporated
under the laws of Bulgaria and registered at the Bourgas District Court under
company court file number 3203/2000, specialising in the transportation of
fuels. Prior to 2001, the transportation of fuels was performed in-house by
Petrol AD. Petrol Trans Express EOOD was incorporated in 2001 and it now
operates the largest fuel transportation fleet in Bulgaria, with 34 tanker
trucks and capacity of 625 thousand litres of light fuel and 170 thousand litres
of LPG. In addition to transporting fuel to Petrol AD's network of petrol
stations, Petrol Trans Express EOOD has an agreement to transport fuel to each
of Opet's and Lukoil's retail networks, and fuel to Naftex Petrol EOOD's
wholesale customers. As at 31 December 2008, Petrol Trans Express EOOD was
wholly owned by Petrol AD;
* Petrol Technics EOOD, a solely owned limited liability company incorporated
under the laws of Bulgaria and registered at the Sofia City Court under company
court file number 3671/2001, specialising in construction, maintenance and
servicing of petrol stations and petrol storage facilities. Petrol Technics EOOD
provides services both to Petrol AD and to petrol stations and storage
facilities owned or operated by third parties. As at 31 December 2008, Petrol
Technics EOOD was wholly owned by Petrol AD;
* Petrol Gas OOD, a limited liability company incorporated under the laws of
Bulgaria and registered at the Sofia City Court under company court file number
7833/2007, specialising in wholesale trade with LPG. As of 31 December 2008,
Petrol AD owns 90% of the issued share capital of Petrol Gas OOD;
* Petrol Properties EOOD, a solely owned limited liability company incorporated
under the law of Bulgaria and registered at the Sofia City Court under company
court file 20902/2007, specialising in trade with movable property and real
estates. As of 31 December 2008, Petrol Properties EOOD was wholly owned by
Petrol AD.
* Elite Petrol EAD, a solely owned joint-stock company incorporated and registered
at the Registry Agency in November 2008, specializing in consulting and
advertising services in real estate. As of 31 December 2008, Elite Petrol was
wholly owned by Petrol AD.
Management bodies
The parent company has two-tier board structure, which includes Management Board
(MB) and Supervisory Board (SB). Below are presented the names and the functions
of the members of the Supervisory Board and Management Board of Petrol AD. For
each member is presented a short biographical information.
+----------------------+---------------------------------------------------+
| Supervisory Board | |
+----------------------+---------------------------------------------------+
| Mitko Sabev | Chairman |
+----------------------+---------------------------------------------------+
| Stoyan Krastev | Member |
+----------------------+---------------------------------------------------+
| Ivan Neykov | Member |
+----------------------+---------------------------------------------------+
| | |
+----------------------+---------------------------------------------------+
| Management Board | |
+----------------------+---------------------------------------------------+
| Denis Jersov | Chairman |
+----------------------+---------------------------------------------------+
| Svetoslav Yordanov | Chief Executive Officer |
+----------------------+---------------------------------------------------+
| Tsvetan Dimitrov | Executive Director, Finance and Economics |
+----------------------+---------------------------------------------------+
| Ivan Kostadinov | Executive Director, Sales and Marketing |
+----------------------+---------------------------------------------------+
| Kaloyan Karshev | Executive Director, Investments and Technical |
| | Support |
+----------------------+---------------------------------------------------+
Mitko Sabev was born on 8 October 1961. He graduated the Naval Academy in Varna
and worked as a capitan's mate at Navigation Maritime Bulgare. He is the
co-founder and Manager of Festa Holding AD. He has been Executive Director of
Yukos Petroleum Bulgaria AD and a Chairman of the Supervisory Board of Naftex
Bulgaria Holding AD. During the period 2003 - 2005 is Chairman of the
Supervisory Board of Eurobank AD (currently known as Piraeus Bank Bulgaria AD).
Stoyan Krastev was born on 8 August 1956 in Sofia. He graduated Law School at
Sofia University St. Kliment Ohridski. He has been working for the biggest
companies and banking institutions in Bulgaria. He is Chairman of the Board of
directors of Jurex Consult AD. He has been member of the Supervisory Board of
United Bulgarian Bank and member of the Management Board of Bulgarian
Association of Licensed Investment Intermediaries.
Ivan Neykov was born on 17 April 1955 in Haskovo. He graduated Law School at
Sofia University St. Kliment Ohridski. Expert in Law of Labour and Insurance
Law, additional qualification in industrial relations, collective labour
disputes, and pension funds management. He is Chairman of the Management Board
of Balkan Institute for Labour and Social Policy. He was Minister of Employment
and Social Affairs, vice chairman of Confederation of independent trade unions
in Bulgaria - CITUB. At this time he is municipal councillor of Sofia
Municipality. Chairman of the Standing Committee for Budget and Finances, member
of the Standing Committee of Economical Policy and Public Property and of the
Standing Committee of Engineering Infrastructure, Water Supply and Energy
Efficiency. He is the author of a number of publications in the national press
and publications of the International Labour Organization about different
aspects of social policy, labour law, collective labour bargaining and
agreements, labour disputes. He has working level knowledge of Russian language.
Denis Jersov was born on 12 April 1966 in Cheliyabinsk, Russia. In 1988 he
graduated the Tumen Industrial University as mine engineer - expert in
developing oil fields. In 1989 he started business activities and during the
period 1990 - 1991 held the position Vice-president of foreign trade company
Conex, where the majority share is held by Russian state-owned oil trust, being
one of the biggest Russian crude oil exporting companies in those days. In the
end of 1991 he founded the Naftex Group.
Svetoslav Yordanov was born 28 May 1960 in Bourgas. He graduated the University
of Economics in Varna in Accounting and control. He worked in Neftochim Bourgas
as Deputy Chief accountant, Financial Director and Commercial Director. He has
been Executive director of Multigroup AD. From 1999 is Executive Director of
Petrol AD. He is fluent in Russian and English languages.
Tsvetan Dimitrov was born 10 August 1974. He has Master's degree in Economics
and Industrial management at the University of National and World Economy in
Sofia. For 5 years holds different positions in finances in the management of
Petrol AD. His previous position was Head of Controlling Department.
Ivan Kostadinov was born 28 May 1974. He has Master's degree in Insurance and
Social Work at the University of National and World Economy in Sofia. For 4
years held different positions in the Commercial Department. His previous
position was Sales Supervisor.
Kaloyan Karshev was born 5 November 1969. He has Master's degree in Oil
Technology at the University of Chemical Technology and Metallurgy in Sofia and
Master's degree in Ecology and Sustainable Development in Queen Mary University
in Great Britain. He works since 11 years in Petrol AD where holds different
positions, his previous position was Head of Technical Department. He is
responsible for the fuel quality control.
Operating and financial review
1. Analysis of the market environment
The Group's results of operations are affected by a number of factors, including
macroeconomic conditions in Bulgaria, competition, fluctuation of gross margins,
product mix, relationships with suppliers, legislative changes, changes in
currency exchange rates, weather conditions, seasonality and fluctuations in
crude oil and petroleum product prices.
Macroeconomic conditions in Bulgaria
The operations of the Group are influenced by the overall economic situation in
the country, the successful implementations of market-driven economic reforms,
GDP growth and changes in purchasing power of Bulgarian consumers. In general
the variation of consuming fuels is commensurate with the variation of GDP. The
dynamic development of the economy during the past few years continued and
increase in GDP for 2008 is 6% (2007: 6.2%), despite the growth rate slowing
down to 3.5 % in the last quarter of the year. Retail fuel market reports growth
of 6% on the basis of volume of fuels sold. In the conditions of a global
financial and economic crisis, the specialists forecast a decrease in the
economic growth of GDP, which is expected to affect negatively the fuel market
as well.
Competition
In 2008 the retail market of fuels in Bulgaria was influenced to a large extent
by the dynamic changes of the petrol prices on the international market and by
the beginning of the financial and economic crisis. The trend of growing
competition and decrease of gross trade margins continued, as did the process of
small independent player leaving the fuel business so that in 2008 their market
share dropped by 4% to 24.3%. Economies of scale were found to be fatal for the
small businesses and they started to look for survival in disposal or
franchising schemes. Additional factors for the consolidation of the retail
market will be the business development plans of the corporations which are
proprietors of the refineries in the region.
The major competitors on the retail market - Lukoil Bulgaria EOOD, Shell
Bulgaria EAD, OMV Bulgaria EOOD and Eko Bulgaria EAD were aggressive with regard
to their plans about construction and acquisition of new sites. Lukoil Bulgaria
EOOD announced a large investments programme and built significant number of new
sites. Thus the company expanded its fuel station network and increased its
market share. Lukoil intends to invest USD 400 million until 2011 and plans to
extend its retail network to 300 fuel stations until 2014. The Austrian fuel
chain OMV relies mainly on franchise contracts by joining and building of new
small sites under the specially created brand Avanti. The company intends to
build retail network of 44 Avanti sites until 2010 and plans to construct new
OMV sites on strategic locations. The strategy of Shell Bulgaria EAD is to
achieve leader position on the market through partner network of retail
stations, currently the number of company's fuel stations is 109. Only the Greek
fuel chain Eko Bulgaria focuses on construction of new retail stations as the
company plans to invest about BGN 150 million in the next two year and to double
the number of its sites. Two years ago a new big competitor entered the market -
Rompetrol Bulgaria AD. Through franchise and acquisition of sites as at the end
of 2008 Rompetrol Bulgaria AD already owns a chain of 60 fuel stations.
The major competitors on the wholesale market of fuels are Lukoil Bulgaria EOOD,
as exclusive distributor of Lukoil Neftohim Burgas AD, Rompetrol Bulgaria AD,
OMV Bulgaria EOOD. The wholesale market prices were traditionally linked with
the pricing of the only fuel producer in the country Lukoil Neftohim Burgas AD.
Trade margins
Despite the increasing volume of sales the gross profit per litre continues the
trend of decrease in 2008. This is due, on one hand, to the gradual increase of
excise duties and other taxes, which raise the cost price of the fuels, and on
the other hand, to the increasing prices of the producers, the decrease of gross
trade margins as a result of the strong competition and the striving for new
customers. The competition between the companies in relation to offered
different discounts for credit card payments and other promotions put extra
pressure on the profits of the business.
Product mix
The Bulgarian transportation fuels market has witnessed over the recent years a
shift from gasoline to diesel and LPG. There is a clear trend in decline of
consumption of 92 octane gasoline for account of increase of lower priced LPG.
In 2007 the only fuel producer in the country Lukoil Neftochim Burgas AD
discontinued production of 92 octane gasoline and thus redirected fuel
consumption to alternative fuel types. Diesel consumption also increases, though
in slower pace, following the launching of modern diesel engines and the fact
that the transportation industry uses mainly diesel fuel.
Relationships with suppliers
After the cancellation of the long-term contract for direct supply and
distribution of fuels between Petrol AD and Lukoil Bulgaria EOOD, since March
2008 Naftex Petrol EOOD is the sole supplier for the retail network of fuels
provided by import and the wholesale market in the country. From September 2008,
the subsidiary took up the full logistics related to the supply process and
started arranging the spedition and transport of fuels to the fuel stations.
On the wholesale side, the Group continues diversifying its supply base. In 2008
the major suppliers are Lukoil Bulgaria EOOD, Ross Oil EOOD, Eko Bulgaria EAD,
Vyand Oil OOD, Tupras A.S.(Turkey), Cyclon Hellas S.A. (Greece) and Independent
Petroleum Group (Kuwait),.
Legislative changes
The Group's results of operations are affected by the amendments in the existing
legislation in Bulgaria. The most important piece of legislation which will
influence the Group's business is the Law on the Compulsory Reserves of Oil and
Oil Products requiring all importers and producers to accumulate and maintain
compulsory stock of products covering 90 days of their respective annual sales
for the preceding year. According to the law this process is gradual and starts
with 10 days in 2005 which has to reach 90 days by 2012. During 2008 the Group
stored 33,952 cubic meters of products in compliance with the law (2007: 44,447
cubic meters).
With regard to the admission of Bulgaria as a member of European Union effective
January 1, 2007, the requirements for the quality of the petroleum products and
the ecological standards have been raised in accordance with Directive 1999/32/
of the EU Council.
Increase in excise duties
One of the conditions for Bulgaria's accession to the European Union is the
implementation of a step-by-step increase of excise duties on petroleum products
in order to reach the minimum levels permitted in existing EU member states.
This minimum level should be reached in Bulgaria in 2011. Such increased duties
may additionally contribute for lower gross margins of the Group.
Weather conditions and seasonality
The Group's results of operations are affected by weather conditions and
seasonal variations in demand for certain oil products. The demand for heating
gas oil is typically highest in the first and last quarters of each year. The
demand for gasoline is highest in the second and third quarters due to annual
vacations. Therefore, the Group's results of operations in years with severe
winters and/or long summers reflect higher sales of heating gas oil and
gasoline.
Fluctuation in the crude oil and oil product prices
Fluctuations in prices of crude oil and oil products affect the Group's sales
and cost of sales. Increases in crude oil prices leads to increased sales
values, but at the same time this may lead to a reduction in the demand for
petroleum products and to adjustment of margins to reflect the fall in consumer
demand.
2. Results from operations
Revenue
The Group's consolidated revenue for 2008 amounts to BGN 1,761 million (EUR
900.4 million) increased by 26.6% compared to 2007. The following table presents
the change of the amounts of revenue for the period 2006 - 2008 on a
consolidated basis and also by separate business segments:
+----------+------------------------------------+----------+------------------------------------+----------+---------+
| | | 2008 | 2007 | 2006 |
+-----------------------------------------------+----------+------------------------------------+----------+---------+
| | | | | |
+-----------------------------------------------+----------+------------------------------------+----------+---------+
| | | | | |
+-----------------------------------------------+----------+------------------------------------+----------+---------+
| Sales revenue | BGN mln | 1,365.6 | 1,383.8 | 1,348.4 |
+ +----------+------------------------------------+----------+---------+
| | EUR mln | 698.2 | 707.5 | 689.4 |
+-----------------------------------------------+----------+------------------------------------+----------+---------+
| | | | | |
+-----------------------------------------------+----------+------------------------------------+----------+---------+
| Other income | BGN mln | 395.4 | 7.5 | 8.0 |
+ +----------+------------------------------------+----------+---------+
| | EUR mln | 202.2 | 3.9 | 4.1 |
+-----------------------------------------------+----------+------------------------------------+----------+---------+
| | | | | |
+-----------------------------------------------+----------+------------------------------------+----------+---------+
| Total revenue, including | BGN mln | 1,761.0 | 1,391.3 | 1,356.4 |
+ +----------+------------------------------------+----------+---------+
| | EUR mln | 900.4 | 711.4 | 693.5 |
+-----------------------------------------------+----------+------------------------------------+----------+---------+
| | | | | |
+-----------------------------------------------+----------+------------------------------------+----------+---------+
| | Retail | BGN mln | 939.0 | 777.0 | 633.1 |
+ + +----------+------------------------------------+----------+---------+
| | | EUR mln | 480.1 | 397.3 | 323.7 |
+----------+------------------------------------+----------+------------------------------------+----------+---------+
| | | | | | |
+----------+------------------------------------+----------+------------------------------------+----------+---------+
| | Wholesales | BGN mln | 815.2 | 602.3 | 706.8 |
+ + +----------+------------------------------------+----------+---------+
| | | EUR mln | 416.8 | 308.0 | 361.4 |
+----------+------------------------------------+----------+------------------------------------+----------+---------+
| | | | | | |
+----------+------------------------------------+----------+------------------------------------+----------+---------+
| | Other activities | BGN mln | 6.8 | 12.0 | 16.5 |
+ + +----------+------------------------------------+----------+---------+
| | | EUR mln | 3.5 | 6.1 | 8.4 |
+----------+------------------------------------+----------+------------------------------------+----------+---------+
In 2008 the Group reports a considerable growth of other income, which reaches
BGN 395.4 million (EUR 202.2 million). This is due mainly to the significant
amount of realized profit from sale of non-current assets belonging to 75 fuel
stations and 1 storage facility, under and agreement signed with Lukoil Bulgaria
EOOD. Total reported profit from deals with these assets amounts to BGN 389.1
million (EUR 199 million). As a result of this sale, the Group transferred a
considerable part of its market share to its major market competitor. Before
being sold, these sites generated about 30% of the average annual amount of
retail network sales.
As in all former years, the major part of Group's sales revenue is sales of
goods (99%). Their amount in 2008 is BGN 1,351.5 million (EUR 691 million), and
compared to 2007 they have increased by 1.8%. Sales of goods comprise mainly of
retail and wholesale sales of fuel (98%). The amounts of sales of fuel
(excluding intra-Group sales) for the period 2006-2008 are as follows:
+----------------------------------------+----------------------------------------+----------+---------+---------+
| | | 2008 | 2007 | 2006 |
+----------------------------------------+----------------------------------------+----------+---------+---------+
| | | | | |
+----------------------------------------+----------------------------------------+----------+---------+---------+
| | | | | |
+----------------------------------------+----------------------------------------+----------+---------+---------+
| Retail | BGN mln | 668.7 | 702.1 | 573.9 |
+ +----------------------------------------+----------+---------+---------+
| | EUR mln | 341.9 | 359.0 | 293.5 |
+----------------------------------------+----------------------------------------+----------+---------+---------+
| | | | | |
+----------------------------------------+----------------------------------------+----------+---------+---------+
| Wholesale | BGN mln | 650.3 | 582.3 | 688.9 |
+ +----------------------------------------+----------+---------+---------+
| | EUR mln | 332.5 | 297.7 | 352.2 |
+----------------------------------------+----------------------------------------+----------+---------+---------+
| | | | | |
+----------------------------------------+----------------------------------------+----------+---------+---------+
| Total sales of fuel | BGN mln | 1,319.0 | 1,284.4 | 1,262.8 |
+ +----------------------------------------+----------+---------+---------+
| | EUR mln | 674.4 | 656.7 | 645.7 |
+----------------------------------------+----------------------------------------+----------+---------+---------+
The overall increase in sales of fuel of 2.7% during the current year compared
to 2007 is due mainly to the achieved growth of 11.6% in wholesale sales, which
compensates the decline in retail sales by 4.8% (see also Retail market and
Wholesale market). During the current year the relative share of wholesale sales
has increased at the expense of decreased share of retail sales. From 45% in
2007, wholesale sales rose to 49% of consolidated sales of fuel in 2008. This is
due to the growth of wholesale volumes and the decline of the turnover of the
retail network as compared with preceding years, as a result of the sale of part
of the trade network (see above).
The movement in revenue from sales of the major type of oil products traded by
the Group during the period 2008-2006 is presented on the following diagram:
Retail market
The Group's retail sales are made through a network of retail stations owned
and/or operated by Petrol AD. These retail stations are spread throughout
Bulgaria giving the Group comprehensive geographic coverage. As at the end of
2008 the Group had 445 working retail stations (2007: 519).
The table below sets out sales of fuel in retail stations by volume and value
for the years 2006 to 2008.
+------------------------------------+----------+----------+----------+----------+
| | | 2008 | 2007 | 2006 |
+------------------------------------+----------+----------+----------+----------+
| | | | | |
+------------------------------------+----------+----------+----------+----------+
| | | | | |
+------------------------------------+----------+----------+----------+----------+
| Volume of retail sales (million | | 397 | 474 | 419 |
| litres) | | | | |
+------------------------------------+----------+----------+----------+----------+
| incl. corporate clients | | 128 | 125 | 86 |
+------------------------------------+----------+----------+----------+----------+
| Revenue from retail sales | BGN mln | 668.7 | 702.1 | 573.9 |
+ +----------+----------+----------+----------+
| | EUR mln | 341.9 | 359.0 | 293.5 |
+------------------------------------+------------------------------------+----------+----------+----------+
| Market share13 | | 16% | 20% | 19% |
+------------------------------------+----------+----------+----------+----------+
During the current year the volume of fuel sold through the retail stations
declined by 16% which led to a decrease in revenue from retail sales to BGN
668.7 million (EUR 341.9 million). This decrease is mainly due to sale of part
of Petrol trade sites, which cannot be compensated by the reported growth of the
volume of sales to the corporate clients. As a result of the overall decrease in
retail volumes, the Group diminished its presence in the retail market
decreasing its market share to the 16% at the end of 2008.
The following table sets out the number of retail stations operated by the
Group, the ownership of those sites and the volume of fuel sold in 2008 and
2007:
+--------------------------------------+--------+--+---------+--+--------+--+---------+----+
| | 2008 | | 2007 |
+--------------------------------------+---------------------+--+--------------------------+
| | | | | | | | |
+--------------------------------------+--------+--+---------+--+--------+--+---------+
| | number | | million | | number | | million |
| | of | | litres | | of | | litres |
| | sites | | | | sites | | |
+--------------------------------------+--------+--+---------+--+--------+--+---------+
| | | | | | | | |
+--------------------------------------+--------+--+---------+--+--------+--+---------+
| | | | | | | | |
+--------------------------------------+--------+--+---------+--+--------+--+---------+
| Group owned and Group operated | 213 | | 280 | | 291 | | 396 |
+--------------------------------------+--------+--+---------+--+--------+--+---------+
| | | | | | | | |
+--------------------------------------+--------+--+---------+--+--------+--+---------+
| Franchisee operated | 91 | | 37 | | 70 | | 25 |
+--------------------------------------+--------+--+---------+--+--------+--+---------+
| | | | | | | | |
+--------------------------------------+--------+--+---------+--+--------+--+---------+
| Group owned and dealer operated | 141 | | 80 | | 158 | | 53 |
+--------------------------------------+--------+--+---------+--+--------+--+---------+
| | | | | | | | |
+--------------------------------------+--------+--+---------+--+--------+--+---------+
| | | | | | | | |
+--------------------------------------+--------+--+---------+--+--------+--+---------+
| Total | 445 | | 397 | | 519 | | 474 |
+--------------------------------------+--------+--+---------+--+--------+--+---------+----+
In 2008 Petrol AD continued developing its programmes for franchising (joining
independent owners of single stations or small chain of stations under the
Petrol trade mark) and for letting of own retail stations for operation by
dealers. As at the end of 2008 the number of franchisee operated stations has
risen approximately by 30% and the total volume of sales made through them has
risen by 48%. The total volume of sales made through the dealer retail stations
in 2008 has increased by 51%, despite the decrease in the number of dealer
stations by 10%. The increase in sales made through the franchisee and dealer
stations cannot compensate for the decrease of 29% in the volumes sold through
the Group owned stations, which resulted from the sale of Petrol trade sites.
The following table sets out Group's retail sales of fuel by major types of oil
products:
+----------------------------------------+----------+--------+--------+--------+
| | | 2008 | 2007 | 2006 |
+----------------------------------------+----------+--------+--------+--------+
| | | | | |
+----------------------------------------+----------+--------+--------+--------+
| | | | | |
+----------------------------------------+----------+--------+--------+--------+
| Gasoline 9214* | BGN mln | 0.1 | 15.5 | 77.4 |
+ +----------+--------+--------+--------+
| | EUR mln | 0.1 | 7.9 | 39.6 |
+----------------------------------------+----------------------------------------+----------+--------+--------+
| | | | | |
+----------------------------------------+----------+--------+--------+--------+
| Gasoline 95* | BGN mln | 251.4 | 273.8 | 177.5 |
+ +----------+--------+--------+--------+
| | EUR mln | 128.5 | 140.0 | 90.8 |
+----------------------------------------+----------------------------------------+----------+--------+--------+
| | | | | |
+----------------------------------------+----------+--------+--------+--------+
| Gasoline 98* | BGN mln | 13.0 | 13.5 | 9.5 |
+ +----------+--------+--------+--------+
| | EUR mln | 6.6 | 6.9 | 4.9 |
+----------------------------------------+----------------------------------------+----------+--------+--------+
| | | | | |
+----------------------------------------+----------+--------+--------+--------+
| LPG | BGN mln | 58.1 | 67.3 | 62.8 |
+ +----------+--------+--------+--------+
| | EUR mln | 29.7 | 34.4 | 32.1 |
+----------------------------------------+----------------------------------------+----------+--------+--------+
| | | | | |
+----------------------------------------+----------+--------+--------+--------+
| Diesel oil | BGN mln | 337.8 | 329.3 | 244.5 |
+ +----------+--------+--------+--------+
| | EUR mln | 172.7 | 168.4 | 125.0 |
+----------------------------------------+----------------------------------------+----------+--------+--------+
| | | | | |
+----------------------------------------+----------+--------+--------+--------+
| Other fuel | BGN mln | 8.3 | 2.7 | 2.2 |
+ +----------+--------+--------+--------+
| | EUR mln | 4.3 | 1.4 | 1.1 |
+----------------------------------------+----------------------------------------+----------+--------+--------+
| | | | | |
+----------------------------------------+----------+--------+--------+--------+
| Total retail sales of fuel | BGN mln | 668.7 | 702.1 | 573.9 |
+ +----------+--------+--------+--------+
| | EUR mln | 341.9 | 359.0 | 293.5 |
+----------------------------------------+----------+--------+--------+--------+
In 2008 decline is sales applies to all fuel products, with the exception of
diesel oil. The growth in sales of diesel oil is 2.6% as compared to 2007, which
is due to the trend of increase of fuel prices during the first 8 months of the
year. The decline in sales of gasoline 95 is 8% and in the sales of LPG is
13.6%. During the period the Group started offering a new oil product - the 96
Extra Force, enriched with a special additive (see also Expanded product
offering) and the sales revenue reached BGN 5 million (presented in other fuel
in the table above).
The movement in revenue from retail sales of the major type of oil products
during the period 2008 - 2006 is presented on the following diagram:
Wholesale market
The Group's wholesale sales are made through a network of storage facilities
operated by Naftex Petrol EOOD as well as through Petrol Gas OOD, a subsidiary
established in 2007 and specialized in trade with LPG. During 2008 the Group
used 12 of its storage facilities for own trade activities and 2 other
facilities were leased out to third parties. Petrol Gas OOD operates a fleet of
80 rail tank cars for transportation of LPG and has total gas storage capacity
of 1,400 cubic metres.
The table below sets out the result of the period 2008-2006:
+------------------------------------+----------+----------+----------+----------+
| | | 2008 | 2007 | 2006 |
+------------------------------------+----------+----------+----------+----------+
| | | | | |
+------------------------------------+----------+----------+----------+----------+
| | | | | |
+------------------------------------+----------+----------+----------+----------+
| Volume of wholesale sales (million | | 344 | 372 | 457 |
| litres)15 | | | | |
+------------------------------------+----------+----------+----------+----------+
| Volume of wholesale sales | | 79 | 55 | 50 |
| (thousand tonnes)16 | | | | |
+------------------------------------+----------+----------+----------+----------+
| Revenue from wholesale sales | BGN mln | 650.3 | 582.3 | 688.9 |
+ +----------+----------+----------+----------+
| | EUR mln | 332.5 | 297.7 | 352.2 |
+------------------------------------+------------------------------------+----------+----------+----------+
| Market share17 | | 14% | 12% | 18% |
+------------------------------------+----------+----------+----------+----------+
In 2008 the sales volume of gasoline 95 (36%) significantly decreased but was
largely compensated by the increased sales volume of diesel (2%), gas oil (26%),
heating oil (132%) and LPG (151%). As a result, the Group's volume sales
decreased by 7.5% to 344 million litres. Nevertheless, the Group's revenue from
sales on the wholesale market in 2008 increased by 11.7% due to the higher fuel
prices on the international and domestic market and reached BGN 650.3 million
(EUR 332.5 million).
Group's LPG wholesale sales are almost wholly made by the newly-created
subsidiary Petrol Gas OOD (89%). In 2008 the major part of LPG volumes of sales
are realized outside the country (68%).
The following table sets out Group's wholesale sales of fuel by major types of
petroleum products
+----------------------------------------+----------+--------+--------+--------+
| | | 2008 | 2007 | 2006 |
+----------------------------------------+----------+--------+--------+--------+
| | | | | |
+----------------------------------------+----------+--------+--------+--------+
| | | | | |
+----------------------------------------+----------+--------+--------+--------+
| Gasoline 92 | BGN mln | - | - | 48.0 |
+ +----------+--------+--------+--------+
| | EUR mln | - | - | 24.5 |
+----------------------------------------+----------------------------------------+----------+--------+--------+
| | | | | |
+----------------------------------------+----------+--------+--------+--------+
| Gasoline 95 | BGN mln | 117.4 | 167.0 | 128.6 |
+ +----------+--------+--------+--------+
| | EUR mln | 60.0 | 85.4 | 65.8 |
+----------------------------------------+----------------------------------------+----------+--------+--------+
| | | | | |
+----------------------------------------+----------+--------+--------+--------+
| Jet A1 | BGN mln | 44.4 | 45.8 | 48.0 |
+ +----------+--------+--------+--------+
| | EUR mln | 22.7 | 23.4 | 24.5 |
+----------------------------------------+----------------------------------------+----------+--------+--------+
| | | | | |
+----------------------------------------+----------+--------+--------+--------+
| Diesel oil | BGN mln | 394.8 | 325.2 | 417.6 |
+ +----------+--------+--------+--------+
| | EUR mln | 201.9 | 166.3 | 213.5 |
+----------------------------------------+----------------------------------------+----------+--------+--------+
| | | | | |
+----------------------------------------+----------+--------+--------+--------+
| Gas oil | BGN mln | 43.2 | 30.7 | 37.9 |
+ +----------+--------+--------+--------+
| | EUR mln | 22.1 | 15.7 | 19.4 |
+----------------------------------------+----------------------------------------+----------+--------+--------+
| | | | | |
+----------------------------------------+----------+--------+--------+--------+
| Heating oil | BGN mln | 15.8 | 5.9 | 7.8 |
+ +----------+--------+--------+--------+
| | EUR mln | 8.0 | 3.0 | 4.0 |
+----------------------------------------+----------------------------------------+----------+--------+--------+
| | | | | |
+----------------------------------------+----------+--------+--------+--------+
| LPG | BGN mln | 20.7 | 6.3 | 0.1 |
+ +----------+--------+--------+--------+
| | EUR mln | 10.6 | 3.2 | 0.1 |
+----------------------------------------+----------------------------------------+----------+--------+--------+
| | | | | |
+----------------------------------------+----------+--------+--------+--------+
| Other fuel | BGN mln | 14.0 | 1.4 | 0.9 |
+ +----------+--------+--------+--------+
| | EUR mln | 7.2 | 0.7 | 0.4 |
+----------------------------------------+----------------------------------------+----------+--------+--------+
| | | | | |
+----------------------------------------+----------+--------+--------+--------+
| Total wholesale sales of fuel | BGN mln | 650.3 | 582.3 | 688.9 |
+ +----------+--------+--------+--------+
| | EUR mln | 332.5 | 297.7 | 352.2 |
+----------------------------------------+----------+--------+--------+--------+
The movement in revenue from wholesale sales of the major type of petroleum
products during the period 2008 - 2006 is presented on the following diagram.
Gross margin
The Group's total gross margin calculated as a percentage of consolidated net
income has fallen from 10.1% in 2007 to 9.1% in 2008. The decrease of total
gross margin by BGN 15 million (EUR 7.7 million), is due to the lower revenue
from sales of services in 2008 - BGN 14.1 million (EUR 7.2 million) compared to
BGN 55.6 million (EUR 28.4 million) in 2007. The significant decrease is a
result from the cancellation of the long-term agreement with Lukoil Bulgaria
EOOD under which Petrol Ad received remuneration for operating the distribution
network. In 2008, the gross margin, calculated as a percentage of consolidated
revenue from sales of goods increased by 32.6% to BNG 109.9 million (EUR 56.2
million), which is a positive sign for the development of the business under the
current circumstances of intensified competition in the retail and wholesale
markets and the dynamic alteration in the crude oil and petroleum product
prices. The increase of gross margin in the retail market is by BGN 16.1 million
(50.7%) and it reaches BGN 48 million - or 7.17% (2007:4.53%). The increase of
the gross margin in the wholesale market is by BGN 10.8 million (24%) and the
margin reaches BGN 55.7 million, or 8.56% (2007: 7.71%).
Operating expenses
Hired services
Hired services include various expenses as commissions, transport, repair and
maintenance of assets, consulting and training expenses, advertising, rents,
insurance, security and other expenses. In 2008 hired services increased by
17.9% to BGN 48 million (EUR 24.5 million), which is due mainly to the
considerable growth of the Group's commissions expenses (37%). The greater
amount of the latter is a result of growth in dealer and management commissions,
related to the development of programmes for franchising and lending of own
retail stations for operation by dealers. Group's transport expenses increased
by 46.7% to BGN 7 million (EUR 3.6 million) due to the increased volume of
transported fuels during the year and to the development of Petrol Gas OOD's
activity. Group's expenses for current repair and maintenance increased by 24.8%
to BGN 5.3 million (EUR 2.7 million), which is due to the increased licence fees
for the maintenance of the implemented new software in the fields of retail
market (SAP Retail) and human resources (SAP Human Resources). In 2008,
consolidated financial statements also show growth of expenses for rent and
municipal and state fees which grew by BGN 1.6 million (EUR 0.8 million) and BGN
0.3 million (EUR 0.2 million), respectively. As a result of conducting a more
moderate advertising policy, the Group has reduced its advertising expenses to
BGN 3.9 million (EUR 2 million).
Staff costs
Staff expenses include remuneration, social expenses and other compensations,
paid to the Group's employees. In 2008 staff expenses decreased by 8.6% to BGN
25.9 million (EUR 13.2 million), which is due to the reduction of remuneration
by BGN 1.7 million (EUR 0.9 million) and to the reduction of the social expenses
by BGN 0.7 million (EUR 0.3 million). The main reason for decrease in this group
of expenses is the laying off of all employees at the 75 fuel stations and 1
storage facility, which were sold and became property of the new owner - Lukoil
Bulgaria EOOD (see also section 5 Human Resources).
Depreciation and amortisation
Depreciation and amortisation charges on fixed tangible and intangible assets
and investment property are calculated on the basis of the useful life of assets
by applying the straight-line method (see also note 3.1. to the consolidated
financial statements). Depreciation expenses of the Group show an increase of
17.2% to BGN 20.6 million (EUR 10.5 million) in 2008 compared to BGN 17.6
million (EUR 9.0 million) in 2007.
Materials and consumables used
Fuels, spare parts, office consumables, advertising materials, public utilities
and other expenses are presented in the Group consolidated financial statements
as expenses for materials and consumables. In 2008 these expenses increased by
BGN 1.4 million (EUR 0.7 million) to BGN 12.7 million (EUR 6.5 million). The
growth is due to the fact that during the year the Group wrote off assets at the
amount of BGN 2.4 million (EUR 1.2 million), which are not consistent with the
requirements for non-current assets. During the year all other expenses
decreased, except expenses for fuel and heating, which increased by BGN 0.2
million (EUR 0.1 million) and BGN 0.1 million (EUR 0.1 million), respectively.
The most significant is the decline in water expenses (by 39%) resulting from
the sale of the hydro power plant owned by the Group and whose production
process involved a considerable consumption of water for technological needs.
During the year, decline is also reported in advertising expenses (by 37%),
office consumables (by 27%) and working clothes (by 27%).
Impairment of assets
The expenses for impairment of assets in 2008 were due mainly to the impairment
of inventories to the amount of BGN 2.7 million (EUR 1.4 million), representing
the impairment of the fuels in stock at the airports and storage facilities to
their net fair value, as of December 31, 2008. The decrease in the net fair
value of jet and heating oil is due to their slowed-down turnover during the
second half of 2008 caused by the recorded constant descending trend of crude
oil prices at the international stock markets till the end of the year.
Other operating expenses
The expenses for withholding taxes and municipality taxes, shortages of assets,
receivables written-off, business trips, entertainment expenses and sponsorship,
penalties and defaults, scrapped goods and fixed assets are presented as other
expenses in the consolidated financial statements. These expenses amounted BGN
17.1 million (EUR 8.7 million) in 2008. The main reason for the decrease of 12%
compared to 2007 is the fact that in 2008 the Group did not report a loss from
liquidation and sale of non-current assets in contrast to the previous year. As
a result of the investments in floating roofs and VRU in fuel storage
facilities, as well as of the enhanced control by technical means, in 2008 the
expenses for scrapped goods and shortage of assets decreased to BGN 3.8 million
(EUR 1.9 million), as compared to BGN 6.1 million (EUR 3.1 million) for 2007..
During the year, entertainment expenses and sponsorship decreased by BGN 1.6
million (EUR 0.8 million). In 2008 the Group showed an increase of expenses for
taxes and fees and expenses for business trips by BGN 2.6 million (EUR 1.3
million) and BGN 0.2 million (EUR 0.1 million), respectively. During the current
year, the Group reported as other expenses written off receivables amounted to
BGN 2 million (EUR 1 million).
Profit from operations
The Group's earnings before interest, taxes, depreciation and amortisation
(EBITDA) increased from BGN 40 million (EUR 20.4 million) in 2007 to BGN 412.9
million (EUR 211.1 million) in 2008. Increase of EBITDA by BGN 372.9 million
(EUR 190.7 million) is due mainly to the growth of other income by BGN 387.8
million (EUR 198.3 million), which is a result from the sale of non-current
assets. The EBITDA was positively affected also by the growth of gross margin
from sales of goods by BGN 27.1 million (EUR 13.9 million) and by the fact that
the Group kept its operating expenses (excluding amortization and depreciation)
at the level of 2007 - BGN 107 million.
The greater amount of EBITDA has a positive effect on Group's earnings before
interest and taxes (EBIT). The latter increased by BGN 369.8 million (EUR 189.1
million) in 2008 to the amount of BGN 392.2 million (EUR 200.5) compared to BGN
22.4 million (EUR 11.4 million) in 2007.
Net finance costs
The Group's finance income and costs consist of interest expenses and income,
gains and losses from foreign exchange rates, gains and losses on dealing with
derivatives. Interest expenses include the interest paid by the Group on
debenture loans, trade loans, loans from banks and finance leases. The
contracted margins on interest bearing bank loans granted to the Group varied in
the range between 1.75% and 3.1% above EURIBOR. The interest rate on the two
debenture loans is fixed at 8.375%. In 2008 the interest expense decreased to
BGN 20.9 million (EUR 10.7 million) compared to BGN 25.7 million (EUR 13.1
million) in 2007. The decrease of BGN 4.8 million (EUR 2.5 million) is due to
lower interests on debenture loans, as a result of the repayment of liabilities
on first bond issue of Petrol AD, as well as to the lower interest expenses on
bank loans, in result of the decrease of the current liabilities on bank loans.
During 2008 Group's interest income increased by 34.3% to BGN 9.1 million (EUR
4.7 million) compared to BGN 6.8 million (EUR 3.5 million) in 2007. The growth
is due mainly to the increase in interest on granted trade loans by BGN 1.5
million (EUR 0.8 million), as well as to the increase in interest on bank
deposits by BGN 1.2 million (EUR 0.6 million).
In 2008 the Group has continued to deal with financial derivatives and as a
result, at the end of the year, reported loss from closing and revaluation of
open positions under derivative contracts at the total amount of BGN 126.2
million (EUR 64.5 million). For comparison - in 2007 the loss was BGN 40.1
million (EUR 20.5 million). The realized negative results are related to the
sharp increase of the average volatility of crude oil prices, which reached
51.6% in 2008 (2007: 29.6%). Unlike 2007, 2008 was marked by a continually
changing price trend and big fluctuations in market quotations. At the end of
2007, the crude oil closing price was USD 95.98 per barrel, whereas in July,
2008, the quotations of the WTI front-month futures on NYMEX reached USD 147.27
per barrel, followed by an sharp and continued decrease till the end of the
year, when the closing price was USD 44.60 per barrel. At this unexpected turn
of price trend, in June 2008, the Company decided to stop dealing with financial
derivatives, and as of the end of the year, the Group has no open positions of
derivative contracts for fuel supply.
The trend in the Group's foreign exchange gains and losses generally follows
movements in the exchange rate of the U.S. dollar against the Euro and
consequently, against the Bulgarian lev as the Bulgarian National Bank has fixed
the exchange rate between the Bulgarian lev and Euro. In 2008 the financial
statements of the Group showed exchange rate loss of BGN 2.4 million (EUR 1.2
million).
As a result of the above mentioned changes in finance income and expenses,
Group's net finance costs amounted to BGN 141.5 million (EUR 72.3 million),
which presents an increase of BGN 82.8 million (EUR 42.3 million).
3. Liquidity and capital resources
The Group's major capital requirements consist of general working capital needs,
service of indebtedness and funding of investments. The Group's main sources of
liquidity are cash balances, internal cash flows, long-term and short-term
borrowings and leases, reduction of the periods of receivables and extension of
the periods of payables. Fluctuations in the foreign exchange and interest rates
have an impact on the liquidity and capital resources of the Group. The main
ratios, which describe the financial position of the Group, are presented in the
first section of this annual report Selected Performance Indicators.
In the current year, accounts receivable collection period decreased to 17 days
compared to 22 days in 2007, which was caused by the decrease in trade
receivables by BGN 18.2 million (EUR 9.3 million). Likewise, in 2008 the average
length of time necessary for the goods to turn over decreased to 26 days
compared to 39 days in 2007. This is due to the lower balance of goods at the
end of the current year, compared to 2007, as result of management's decision
for support of lower inventories levels.
The current ratio remained relatively constant in 2008 after its sharp decrease
in 2007. The indicator kept its value as a result of the simultaneous decrease
in current assets and current liabilities by the relatively equal rates - 57.9%
and 58.5%, respectively. Besides the above-mentioned decrease of inventory, the
reduction of current assets is due to the decrease in trade receivables by BGN
43.7 million (EUR 22.3 million), in interest-bearing loans receivables by BGN
32.7 million (EUR 16.7 million) and in cash and cash equivalents by BGN 44.2
million (EUR 22.6 million). The lower amount of current liabilities is due to
the decrease in trade payables by 74.2%, to the lower amount of current
liabilities on bank loans (BGN 1.4 million (EUR 0.7 million) in 2008 compared to
BGN 59.1 million (EUR 30.2 million) in 2007) and to the decrease of the
debenture loans liabilities. The latter decreased by BGN 15.1 millions (EUR 7.7
millions) compared to 2007 as a result of the fact that the maturity of first
bonds issue of Petrol AD was in November and all liabilities on principal and
interest were paid off.
The variation of current assets and current liabilities results in lower working
capital at the end of 2008 - BGN 9.6 million (EUR 4.9 million). In 2007, as a
comparison, the working capital of the Group was BGN 18.0 million (EUR 9.2
million).
In 2008 the consolidated indebtedness of the Group decreased by BGN 63.1 million
(EUR 32.3 million) to BGN 212.1 million (EUR 108.4 million). This drop is due to
the above mentioned decrease of current liabilities under bank and debenture
loans by the total amount of BGN 72.8 million (EUR 37.2 million).
Simultaneously, during the current year, the Group reports long-term liabilities
under bank loans of BGN 4.4 (EUR 2.1 million) and an increase in non-current
obligation under finance lease by BGN 2.5 million (EUR 1.3 million). Regardless
of the decrease in consolidated indebtedness, debt to equity ratio increased to
54.51%, which is a result of the considerable decrease of the Group's total
assets by BGN 269.5 million (EUR 137.8 million).
During the year the Group reports higher values of return indicators as return
on assets, return on equity and return on average invested capital, which is due
mainly to the high value of net profit after taxes - BGN 226.2 million (EUR
115.7 million). The fact that due to the realized profit from selling part of
the trade network, such high annual turnover of assets was achieved (74.88%),
plainly shows that the value of non-current assets in the Group's balance is
significantly underestimated, as compared to the current market price of similar
assets.
Disclosure of additional information in compliance with regulatory
requirements
In compliance with the requirements of Appendix 10 to the Regulation No 2 of the
Financial Supervision Commission, as presented below the Group discloses
information about the loans, received or granted by the issuer, its subsidiaries
or parent company (the ultimate controlling party), including its terms, purpose
and maturity, as well as information about guarantees received and provided and
liabilities assumed, including such to related parties.
* Issuer
Loans granted
+---------------------------+---------------------+------------+------------+
| Type of borrower | Annual interest | Maturity | Principal |
| | rate | | December |
| | | | 31, 2008 |
| | | | BGN'000 |
+---------------------------+---------------------+------------+------------+
| | | | |
+---------------------------+---------------------+------------+------------+
| Ultimate controlling | 3-month SOFIBOR | 21.10.2011 | 36,810 |
| party | plus 2% | | |
+---------------------------+---------------------+------------+------------+
| Subsidiary | 9.5% | 27.10.2011 | 299,781 |
+---------------------------+---------------------+------------+------------+
| Subsidiary | 9.5% | 01.08.2009 | 4,111 |
+---------------------------+---------------------+------------+------------+
| Subsidiary | 9.5% | 29.04.2011 | 14 |
+---------------------------+---------------------+------------+------------+
| Company under common | 8% | 31.12.2006 | 50 |
| control | | | |
+---------------------------+---------------------+------------+------------+
| Total loans granted | | | 340,766 |
+---------------------------+---------------------+------------+------------+
Loans and deposits received
+---------------------------+---------------------+------------+------------+
| Type of lender/depositor | Annual interest | Maturity | Principal |
| | rate | | December |
| | | | 31, 2008 |
| | | | BGN'000 |
+---------------------------+---------------------+------------+------------+
| | | | |
+---------------------------+---------------------+------------+------------+
| Corporate bond | 8.375% | 26.10.2011 | 193,828 |
| noteholders | | | |
+---------------------------+---------------------+------------+------------+
| Total loans received | | | 193,828 |
+---------------------------+---------------------+------------+------------+
Guarantees provided
+--------------------------------------------+----------+---------+---------+
| | December | Up to | From 2 |
| | 31, 2008 | 1 year | to 5 |
| | BGN'000 | BGN'000 | years |
| | | | BGN'000 |
+--------------------------------------------+----------+---------+---------+
| | | | |
+--------------------------------------------+----------+---------+---------+
| Avalized promissory notes issued in favor | 113,823 | 100,000 | 13,823 |
| of financing institutions under bank loan | | | |
| and finance lease agreements of related | | | |
| parties | | | |
+--------------------------------------------+----------+---------+---------+
| Guarantees granted in favor of financing | 15,842 | 15,842 | - |
| institutions under bank loan agreements of | | | |
| related parties | | | |
+--------------------------------------------+----------+---------+---------+
| Total guarantees provided | 129,665 | 115,842 | 13,823 |
+--------------------------------------------+----------+---------+---------+
* Subsidiary companies
Loans granted
+---------------------------+----------------------+------------+------------+
| Type of borrower | Annual interest rate | Maturity | Principal |
| | | | December |
| | | | 31, 2008 |
| | | | BGN'000 |
+---------------------------+----------------------+------------+------------+
| | | | |
+---------------------------+----------------------+------------+------------+
| Individuals | 1-month SOFIBOR plus | 02.09.2009 | 51 |
| | 1% | | |
+---------------------------+----------------------+------------+------------+
| Total loans granted | | | 51 |
+---------------------------+----------------------+------------+------------+
Loans received
+---------------------------+----------------------+-------------+------------+
| Type of lender | Annual interest rate | Maturity | Principal |
| | | | December |
| | | | 31, 2008 |
| | | | BGN'000 |
+---------------------------+----------------------+-------------+------------+
| | | | |
+---------------------------+----------------------+-------------+------------+
| Commercial bank | 3-month EURIBOR plus | 28.02.2018 | 4,800 |
| | 3.1% | | |
+---------------------------+----------------------+-------------+------------+
| Commercial bank | 1-month EURIBOR plus | 30.06.2009 | 964 |
| | 1.75% | | |
+---------------------------+----------------------+-------------+------------+
| Total bank loans | | | 5,764 |
+---------------------------+----------------------+-------------+------------+
| Parent company | 9.5% | 27.10.2011 | 299,781 |
+---------------------------+----------------------+-------------+------------+
| Parent company | 9.5% | 01.08.2009 | 4,111 |
+---------------------------+----------------------+-------------+------------+
| Parent company | 9.5% | 29.04.2011. | 14 |
+---------------------------+----------------------+-------------+------------+
| Ultimate controlling | 3-month SOFIBOR plus | 30.09.2009 | 4,604 |
| party | 1% | | |
+---------------------------+----------------------+-------------+------------+
| Total trade loans from related parties | | 308,510 |
+--------------------------------------------------+-------------+------------+
| Total loans received | | | 314,274 |
+---------------------------+----------------------+-------------+------------+
Guarantees provided and received
+----------------------------------------------+----------+---------+---------+
| | December | Up to | From 2 |
| | 31, 2008 | 1 year | to 5 |
| | BGN'000 | BGN'000 | years |
| | | | BGN'000 |
+----------------------------------------------+----------+---------+---------+
| | | | |
+----------------------------------------------+----------+---------+---------+
| Avalized promissory notes issued in favour | 8,277 | - | 8,277 |
| of financing institutions under finance | | | |
| lease agreements of related parties | | | |
+----------------------------------------------+----------+---------+---------+
| Guarantees granted in favour of financing | 5,867 | 5,867 | - |
| institutions under bank loan agreements of | | | |
| related parties | | | |
+----------------------------------------------+----------+---------+---------+
| Total guarantees provided | 14,144 | 5,867 | 8,277 |
+----------------------------------------------+----------+---------+---------+
| Bank guarantees issued in favour of custom | 52,024 | 52,024 | - |
| authorities as collateral to excise and | | | |
| customs duties and corporate clients under | | | |
| public tender contracts | | | |
+----------------------------------------------+----------+---------+---------+
| Promissory notes avalized by related parites | 11,608 | - | 11,608 |
| issued in favour of financing institutions | | | |
| under finance lease agreements | | | |
+----------------------------------------------+----------+---------+---------+
| Promissory notes avalized by related parites | 100,000 | 100,000 | - |
| issued in favour of financing institutions | | | |
| under bank loan agreements | | | |
+----------------------------------------------+----------+---------+---------+
| Total guarantees received | 163,632 | 152,024 | 11,608 |
+----------------------------------------------+----------+---------+---------+
Ultimate controlling party
Loans granted
+------------------------+------------------------+------------+------------+
| Type of borrower | Annual interest rate | Maturity | Principal |
| | | | December |
| | | | 31, 2008 |
| | | | BGN'000 |
+------------------------+------------------------+------------+------------+
| Individuals | 8.375% | 31.10.2009 | 9,975 |
| | | | |
+------------------------+------------------------+------------+------------+
| Individuals | 3-month SOFIBOR plus | 31.12.2009 | 1,664 |
| | 1% | | |
+------------------------+------------------------+------------+------------+
| Individuals | 3-month SOFIBOR plus | 31.05.2009 | 1,095 |
| | 1% | | |
+------------------------+------------------------+------------+------------+
| Individuals | 9% | 28.08.2018 | 49 |
| | | | |
+------------------------+------------------------+------------+------------+
| Individuals | 3-month SOFIBOR plus | 31.08.2009 | 47 |
| | 1% | | |
+------------------------+------------------------+------------+------------+
| Individuals | 3-month SOFIBOR plus | 31.12.2009 | 37 |
| | 5% | | |
+------------------------+------------------------+------------+------------+
| Total loans to | | | 12,867 |
| individuals | | | |
+------------------------+------------------------+------------+------------+
| Companies under common | 3-month SOFIBOR plus | 31.12.2009 | 59,747 |
| control | 1% | | |
+------------------------+------------------------+------------+------------+
| Companies under common | 3-month EURIBOR plus | 21.11.2010 | 9,772 |
| control | 2.75% | | |
+------------------------+------------------------+------------+------------+
| Companies under common | BIR plus 3.5% | 31.12.2010 | 8,520 |
| control | | | |
+------------------------+------------------------+------------+------------+
| Companies under common | 3-month SOFIBOR plus | 31.12.2012 | 5,523 |
| control | 1% | | |
+------------------------+------------------------+------------+------------+
| Companies under common | 3-month SOFIBOR plus | 28.07.2009 | 930 |
| control | 1% | | |
+------------------------+------------------------+------------+------------+
| Associate | 3-month SOFIBOR plus | 31.12.2009 | 338 |
| | 5%, BIR plus 6% | | |
+------------------------+------------------------+------------+------------+
| Associate | 3-month SOFIBOR plus | 31.12.2009 | 108 |
| | 1% | | |
+------------------------+------------------------+------------+------------+
| Total trade loans to related parties | | 84,938 |
+-------------------------------------------------+------------+------------+
| Trade company | 3-month SOFIBOR plus | 31.12.2009 | 12,581 |
| | 4% | | |
+------------------------+------------------------+------------+------------+
| Total trade loans to non-related parties | | 12,581 |
+-------------------------------------------------+------------+------------+
| Total loans granted | | | 110,386 |
+------------------------+------------------------+------------+------------+
Loans and deposits received
+---------------------------+----------------------+------------+------------+
| Type of lender/depositor | Annual interest rate | Maturity | Principal |
| | | | December |
| | | | 31, 2008 |
| | | | BGN'000 |
+---------------------------+----------------------+------------+------------+
| Company under common | 3-month SOFIBOR plus | 21.10.2011 | 36,810 |
| control | 2% | | |
+---------------------------+----------------------+------------+------------+
| Company under common | 3-month SOFIBOR plus | Not | 79,687 |
| control | 1% | agreed | |
+---------------------------+----------------------+------------+------------+
| Company under common | 1-month EURIBOR plus | 18.10.2019 | 19,637 |
| control | 2.85% | ?. | |
+---------------------------+----------------------+------------+------------+
| Company under common | 8.85% | Not | 480 |
| control | | agreed | |
+---------------------------+----------------------+------------+------------+
| Total trade loans and deposits from related | | 136,614 |
| parties | | |
+--------------------------------------------------+------------+------------+
| Commercial bank | BIR plus 3% | 31.01.2009 | 3,975 |
| | | ?. | |
+---------------------------+----------------------+------------+------------+
| Commercial bank | 1-month EURIBOR plus | 31.03.2008 | 10,491 |
| | 2.5% | ?. | |
+---------------------------+----------------------+------------+------------+
| Total bank loans | | 14,466 |
+--------------------------------------------------+------------+------------+
| Trade company | 3-month SOFIBOR plus | Not | 2 |
| | 1% | agreed | |
+---------------------------+----------------------+------------+------------+
| Total trade loans from non-related parties | | 2 |
+--------------------------------------------------+------------+------------+
| Total loans and deposits received | | 151,082 |
+---------------------------+----------------------+------------+------------+
Guarantees provided and received
+---------------------------+----------+---------+---------+---------+---------+
| | December | Up to | From 1 | From 3 | Over 5 |
| | 31, | 1 year | to 2 | to 5 | years |
| | 2008 | BGN'000 | years | years | BGN'000 |
| | BGN'000 | | BGN'000 | BGN'000 | |
+---------------------------+----------+---------+---------+---------+---------+
| | | | | | |
+---------------------------+----------+---------+---------+---------+---------+
| Avalized promissory notes | 300,195 | 113,397 | 39,117 | 13,823 | 133,858 |
| issued in favour of | | | | | |
| financing institutions | | | | | |
| under bank loan and | | | | | |
| finance lease agreements | | | | | |
| of related parties | | | | | |
+---------------------------+----------+---------+---------+---------+---------+
| Issued corporate | 36,378 | 1,558 | - | - | 34,820 |
| guarantees, including, in | | | | | |
| favour of: | | | | | |
+---------------------------+----------+---------+---------+---------+---------+
| Supplier of a related | 1,558 | 1,558 | - | - | - |
| party under a trade | | | | | |
| loan | | | | | |
+---------------------------+----------+---------+---------+---------+---------+
| Supplier of a related | 34,820 | - | - | - | 34,820 |
| party under a finance | | | | | |
| lease agreement | | | | | |
+---------------------------+----------+---------+---------+---------+---------+
| Other guarantees granted, | 24,730 | 19,680 | - | 5,050 | - |
| including, in favour of: | | | | | |
+---------------------------+----------+---------+---------+---------+---------+
| A trustee bank under | 14,730 | 9,680 | - | 5,050 | - |
| a debenture loan | | | | | |
| emission of a related | | | | | |
| party | | | | | |
+---------------------------+----------+---------+---------+---------+---------+
| Related party under | 10,000 | 10,000 | - | - | - |
| option contract for | | | | | |
| sale of receivables | | | | | |
+---------------------------+----------+---------+---------+---------+---------+
| Total guarantees provided | 361,303 | 134,635 | 39,117 | 18,873 | 168,678 |
+---------------------------+----------+---------+---------+---------+---------+
| Guarantees received under | 21,710 | 21,710 | - | - | - |
| bank loan agreements | | | | | |
+---------------------------+----------+---------+---------+---------+---------+
| Total guarantees received | 21,710 | 21,710 | - | - | - |
+---------------------------+----------+---------+---------+---------+---------+
The financial risks which the Group is exposed to are discussed in detail in
note 41 to the consolidated financial statements as of December 31, 2008.
4. Share capital
The registered and fully paid-in share capital of Petrol AD as at 31 December
2008 amounts to BGN 109.25 millions (EUR 55.73 millions) and is distributed into
109,249,612 ordinary registered shares with voting rights, with a par value of
BGN 1 each. The shares, issued by the Company are transferable with no
limitations or conditions, by its owner's free will, in accordance with the
Bulgarian legislation, and according to the rules of Central Depository AD
concerning the acquiring and ordering with registered shares, as well as in
compliance with the regulations of the market they are traded on. Detailed
information about the rules and procedures for trading Petrol's shares is
available in the published prospectuses of the Company.
The following table sets out information about the changes in the structure of
share capital:
+---------------+--------+--------+--------+
| In | 2008 | 2007 | 2006 |
| percentage | | | |
+---------------+--------+--------+--------+
| | | | |
+---------------+--------+--------+--------+
| Petrol | 55.39 | 69.10 | 71.75 |
| Holding | | | |
| AD | | | |
+---------------+--------+--------+--------+
| Naftex | - | 18.84 | 18.84 |
| Refining | | | |
| and | | | |
| Petrochemical | | | |
| Engineering | | | |
| Services | | | |
| (former | | | |
| Naftex Oil | | | |
| Shipping | | | |
| Corporation | | | |
| Limited, U??) | | | |
+---------------+--------+--------+--------+
| Naftex | 41.90 | 5.15 | - |
| Petrol | | | |
| EOOD | | | |
+---------------+--------+--------+--------+
| Ministry | 0.84 | 0.86 | 0.94 |
| of | | | |
| Economics | | | |
+---------------+--------+--------+--------+
| Other | 1.87 | 6.05 | 8.47 |
| minor | | | |
| shareholders | | | |
+---------------+--------+--------+--------+
| Total | 100.00 | 100.00 | 100.00 |
+---------------+--------+--------+--------+
In 2007 and 2008 Naftex Petrol EOOD, a subsidiary, made deals on Bulgarian stock
exchange and hence the Group acquired own shares. As a result the share capital
of the Group as of December 31, 2008 decreased to BGN 63.5 million (EUR 32.5
million).
Shares owned by other minor shareholders are held by investors, which have
acquired them through trading at the regulated stock market and there is none of
them who owns more than 5% of Company's shares. Petrol AD does not have
shareholders with special controlling rights.
Petrol AD did not grant any options over the shares in favour of the members of
the MB and the SB. There are no agreements about participation of employees in
share the capital of Petrol AD, including through issuing stocks, options or
other financial instruments.
Persons or entities directly or indirectly controlling Petrol AD
Under paragraph 1, point 13 of the Public Offering of Securities Act, one person
or entity exercises directly or indirectly control over the company, when that
person or entity holds over 50% of the votes of the GMS or may appoint directly
or indirectly more than half of the members of the company's bodies, or may
otherwise exercise a decisive influence on decision-making in relation to the
business of the legal entity. Petrol Holding AD, with address of registered
office 22A Bratya Miladinovi Street Varna, registered under company file No.
3320/1995 in the Varna District Court, holds directly voting shares equal to
55.39% of the votes of the GMS of the Company.
Stock market information
On 15 January 2007 the shares of Petrol AD were listed and are now traded on the
"B" segment of the Official market of the Bulgarian stock exchange - Sofia. In
2008 the shares of Petrol AD are included in the Bulgarian stock exchange index
BG-40.
The following table sets out summarised market information about the trading of
Company's shares on the Bulgarian Stock Exchange - Sofia:
+--------------------------------+-----------+-----------+-----------+-----------+
| | | 2008 | 2007 | 2006 |
+--------------------------------+-----------+-----------+-----------+-----------+
| | | | | |
+--------------------------------+-----------+-----------+-----------+-----------+
| | | | | |
+--------------------------------+-----------+-----------+-----------+-----------+
| Share capital as at 31 | BGN mln | 109.3 | 109.3 | 109.3 |
| December | | | | |
+ +-----------+-----------+-----------+-----------+
| | EUR mln | 55.73 | 55.73 | 55.73 |
+--------------------------------+--------------------------------+-----------+-----------+-----------+
| | | | . | |
+--------------------------------+-----------+-----------+-----------+-----------+
| Share price as at 31 December | BGN | 10.99 | 5.28 | 4.33 |
+ +-----------+-----------+-----------+-----------+
| | EUR | 5.62 | 2.70 | 2.21 |
+--------------------------------+--------------------------------+-----------+-----------+-----------+
| | | | | |
+--------------------------------+-----------+-----------+-----------+-----------+
| Market capitalisation as at 31 | BGN mln | 1,201.2 | 577 | 473 |
| December | | | | |
+ +-----------+-----------+-----------+-----------+
| | EUR mln | 614.3 | 295 | 242 |
+--------------------------------+--------------------------------+-----------+-----------+-----------+
| | | | | |
+--------------------------------+-----------+-----------+-----------+-----------+
| Average daily volume of traded | number | 205,437 | 31,687 | 29,476 |
| shares | | | | |
+--------------------------------+-----------+-----------+-----------+-----------+
| | | | | |
+--------------------------------+-----------+-----------+-----------+-----------+
| Highest price throughout the | BGN | 11.8 | 6.40 | 4.43 |
| year | | | | |
+ +-----------+-----------+-----------+-----------+
| | EUR | 6.03 | 3.27 | 2.27 |
+--------------------------------+--------------------------------+-----------+-----------+-----------+
| | | | | |
+--------------------------------+-----------+-----------+-----------+-----------+
| Lowest price throughout the | BGN | 3.65 | 4.25 | 3.20 |
| year | | | | |
+ +-----------+-----------+-----------+-----------+
| | EUR | 1.87 | 2.17 | 1.64 |
+--------------------------------+-----------+-----------+-----------+-----------+
The price of shares of Petrol AD rose from BGN 5.28 (EUR 2.70) in the beginning
of 2008 to BGN 10.99 (EUR 5.62) as at the end of the year, which accounts for an
increase in the market capitalisation of the company by BGN 624.2 million (EUR
319.2 million). The price of parent company's share was not influenced by the
negative trend of stock exchange indices at the end of the year. 5.Human
resources
Management of Human Resources of the Group
The Management believes that the employees of the Group play key role in the
development of the business and the achievement of common corporate goals.
Consequently, special attention is paid to elaboration and development of
general strategy and policies regarding human resources management. The policies
in this field are oriented towards achieving of responsibility and commitment of
the personnel during its performance of assigned tasks and goals. Simultaneously
the senior executive staff makes efforts to support the mid-level management and
the employees in order to fulfil the Group's management priorities.
The goals of the human resources development strategy and policies are:
* Keeping the employees with a high potential and assisting their professional
growth by planning their careers and introducing bonus package systems;
* Selection of new employees with significant potential and result-oriented
personality;
* Broadening the scope of the traineeship programmes;
* Improvement of communications between the separate organizational bodies;
* Development and introducing of new systems for career management of the key
employees;
* Development of programme for introducing training for newly employed personnel.
The Group applies adequate criteria for selection of personnel and has a
professional and motivated team, which is capable for pursuing the defined
strategic and operational goals. An organization network has been created for
fair evaluation of the personnel's individual and collective contribution, as
well as for evaluation of its content grade. The Group invests in its employees
by offering them adequate programmes for training and development of the
necessary professional and management skills. The Group's policy is oriented
towards providing of safe healthy work conditions, adequate remuneration and
motivation system, and opportunities for professional growth.
The number of average payroll staff has decreased significantly during the last
three years, which is due to the fact that Parent Company sold its shares in a
number of subsidiaries and associates and in 2008 sold a considerable part of
the commercial sites it operated (see also Operating and financial review). The
sale results in drop of the number of Parent company's personnel by 33.4%. As of
the end of 2008, the average payroll staff of the Group was 2,082 employees,
most of whom worked for the Parent company (1,574 employees). Among the other
companies in the Group, the one with the second largest staff by the end of 2008
was Naftex Petrol EOOD (280 employees).
Information about the Group's senior executive staff
Complying with the requirements of Art. 187d and Art. 247 from the Commerce Act,
Petrol AD presents the following information about its management bodies'
members:
* The total amounts of remuneration sums paid to the members of the Management
Board and the Supervisory Board in 2008 are BGN 0.8 million (EUR 0.4 million)
and BGN 0.3 million (EUR 0.2 million), respectively;
* Kaloyan Karshev owns 3,480 shares of Petrol AD. None of other members of
management bodies own shares of Petrol AD;
* The Management Board and Supervisory Board members unlimited liability
partnership in other companies, their ownership of more than 25 % of the capital
of other companies, as well as their participation in the management of other
companies and cooperatives as procurators, managers or board members are, as
follows:
Mitko Sabev - Chairman of Supervisory Board of Petrol AD, Chairman of Board of
Directors (BD) of Petrol Holding AD, Chairman of BD of Trans Operator AD,
Chairman of BD of Transhold Bulgaria Holding AD, Chairman of BG of Transcard
Payment Services EAD Chairman of Supervisory Board of Chernomorets Burgas PSFC
AD, member of BD of Sportelit AD, member of BD of Transcard Financial Services
EAD, member of Control Council of Bulgarian-Rumanian Chamber of Commerce and
Industry, Manager of Ros Oil EOOD, Manager of Civil Partnership (Under the
Obligations and Contracts Act (OCA) Balkan Petrol Consortium. Mitko Sabev owns
47.5% of the capital of Petrol Holding AD;
Stoian Krastev - member of Supervisory Board of Petrol AD. Deputy Chairman of BD
of Petrol Holding AD, Chairman of BD of Jurex Consult AD, Chairman of BD of
Eurocapital Bulgaria EAD, Chairman of "Union of Private Petrol Companies"
Association, member of Management Board (MB) of "Family" National Association,
member of MB of Almina AD. He owns directly 50% of the shares of Pas Consult
OOD, indirectly (through Pas Consult OOD) 50% of the shares of Consult -98 EOOD,
50% of the shares of Consult 2002 EOOD, and 50% of the shares of Pas Consult
Prim EOOD;
Ivan Neykov - member of Supervisory Board of Petrol AD. Chairman of MB of
"Balkan Labor and Social Policy Institute" Association, member of MB of
"Institute for Regional Economic Research" Association. He does not own more
than 25% of other company capital;
Denis Ershov - Chairman of MB of Petrol AD. Mr. Ershov is neither a member of
any management or supervisory bodies of other companies nor a procurator of
other legal entities. He owns 47.5% of the capital of Petrol Holding AD;
Svetoslav Yordanov - member of MB of Petrol AD, member of the MB of "St. Nikola"
Foundation, member of MB of "St. Panteleymon" Foundation, member of MB of
Bulgarian-Romanian Chamber of Commerce and Industry. He owns directly 50% of the
capital of Albatros Tours OOD and 50% of the capital of "St. Panteleymon"
Specialized Surgery Clinic;
Tzvetan Dimitrov - member of MB of Petrol AD, Manager of Adakta OOD and ET
Star-99-Tzvetan Ivanov. He owns 100 % of the capital; of ET Star-99-Tzvetan
Ivanov and 50% of the capital of Adakta OOD;
Kaloian Karshev - member of MB of Petrol AD. He is not a member of management or
supervisory bodies of any other company and he is not a procurator of other
legal entity. Mr. Karshev does not own more than 25% of other company capital;
Ivan Kostadinov - member of MB of Petrol AD. He is not a member of management or
supervisory bodies of any other company and he is not a procurator of other
legal entity. Mr. Kostadinov does not own more than 25% of other company
capital.
* In 2008 no deals have been contracted with any members of the boards that are
out of the scope of the ordinary activities of the parent company or materially
deviate from normal market conditions.
6. Events after balance sheet date
The subsequent events after the balance sheet date and prior to the date of
issuance of the annual report are disclosed in note 44 to the consolidated
financial statements as of December 31, 2008.
Outlook
The management of the Group expects the competition between the main players in
fuel trade to continually grow during the next few years and more minor
independent traders to drop out of business. The results of the Group will
depend to a great extent on the possibility for new investments in the dealers'
network and on the successful completion of new projects and products.
In the following years the Group's investment programme will continued to be
focused mainly on the transformation of the older retail stations to modern
places for complex services. The management will continue the programme for
repairs of old retail stations. During the period 2009-2010 under this programme
23 sites will be refurbished at an estimated cost of around BGN 16.8 million
(EUR 8.6 million).
During the period 2009-2010 the Group plans to invest BGN 12.5 million (EUR 6.4
million) in the enlarging of the existing retail stations type "Perfect". The
latter will be built on new locations in the major cities of the country and
will be direct competitors to the sites of the other big chains. In view of the
trend of increase in the consumption of the lower priced CNG and LPG, the Group
intends to install 6 new CNG modules and 2 new LPG modules at a total cost of
BGN 3.8 million (EUR 1.9 million).
In 2009 the Group will expand its retail market share by expansion of its
network of fuel stations. In order to achieve this objective in 2008 the Group
will further develop its dealership programme and will offer about 30 own fuel
stations for operation by independent dealers. Furthermore, the Company plans to
attract 40 more petrol stations beneath the flag of Petrol under the franchising
programme and intents to invest BGN 1 million (EUR 0.5 million) for this
purpose. This will broaden Group's retail market share.
With regard to the completion of the corporate policy on quality management and
environment, Management will continue the construction of vapour recovery
systems on the retail stations, and for 2009 are budgeted BGN 0.2 million (EUR
0.1 million) for construction of vapour recovery systems on 25 retail stations.
Other investment goal of the Management is the completion of process of
implementing an information system for active sales management within the
implemented enterprise resource planning system SAP for Retail.
During the period 2009-2010 the Group plans to invest BGN 43.4 million (EUR 22.2
million) in order to fulfil its investment programme for the retail business
line. In addition, the Group will invest BGN 7.5 million (EUR 3.8 million) more
in the wholesale business line during the period 2009 - 2011. This includes
investments amounting to BGN 4.1 million (EUR 2.1 million) that will be made in
order to meet the environmental requirements. The investments in storage
facilities are aimed to fulfilling of the legislation requirements, reduction of
technological arising on usage of equipment and development and maintenance of
the storage services rendered to third parties.
In addition to its ambitious investment programme, the management of the Group
will direct its efforts to the fulfilment of active marketing strategy. One of
its main lines will be increase in sales of Petrol brands - Blue Force Gas and
gasoline 96 Extra Force and their development , as well as active placement of
prepaid mobile service Petrol Mobile. The Group plans launching of new branded
diesel fuel. With regard to clients, the guidelines for future development are
attraction of new client target groups and creation of group of loyal corporate
clients, who will increase their share in the total revenue from sales in retail
stations. Group's strategy for 2009 is focusing on the end customer. This
includes wide-range marketing activities - games, promotions and other
media-supported events.
Corporate governance
In its activity the Management of the Group follows the approved Programme for
applying of international standards for good corporate governance (the
Programme). The management believes that such standards are essential to
business integrity and performance.
The Programme is developed in accordance with the Bulgarian business law, the
principles for corporate governance of the Organization for Economic
Co-operation and Development, the International standards for good corporate
governance adopted by the Financial Supervision Commission, The Code for
Corporative Governance adopted by the Board of Directors of the Bulgarian Stock
Exchange - Sofia, the By-laws of Petrol AD and the rules and procedures for
functioning of the management bodies of the parent company.
The Programme is approved by a decision of the Management Board (MB) on 10 April
200318 and its implementation is monitored and controlled by the Supervisory
Board (SB) of Petrol AD. The Programme sets out the main principles and policies
that the management bodies should comply with in order to achieve the goals set
in the Programme, namely:
* Protection of the shareholders' rights and guaranteeing equity amongst them
(including minor and foreign shareholders);
* Timely and accurate disclosure of information about all issues relevant to
Petrol AD in compliance with the Public Offering of Securities Act, Law on
Measures against Market Abuse with Financial Instruments and the other acts;
* Providing strategic management of the parent company, efficient control of the
work of the MB and reporting of the MB and the SB to the General Meeting of the
Shareholders (GMS);
* Creating interactive connection between the Management of Petrol AD and its
shareholders and potential investors.
The main principles of the Programme are set below.
Shareholders' rights
The Programme sets clearly the rights of the shareholders of Petrol AD and the
main goal of the managers' team is to ensure their observation. The shareholders
have the right to:
* Participate and vote in the GMS;
* Be equally treated in the GMS;
* Request convocation of regular or extraordinary GMS;
* Access the materials in writing, relevant to the agenda of the GMS;
* Access to the records of the previous sessions of the GMS;
* Make proposals for election of members of the SB and to vote for their electing;
* Take part in the distribution of the company's profit commensurably to their
participation of the share capital;
* Receive regularly and timely information about corporate events related to the
activities and condition of Petrol AD;
* Participate in the increase of the capital of Petrol AD and in tender offers.
Board Structure
Petrol AD has two-tier board structure, which includes Management Board (MB) and
Supervisory Board (SB).
Management Board
The parent company is managed and represented by a MB, whose 5 members are
elected by the SB for a 5-year period.
The MB has the authority to prepare and the annual report and financial
statements of the company submit them for approval by the GMS; to adopt projects
and programmes for the activity of the company; to make proposals for increase
or decrease of the company's capital to the GMS; to elect and dismiss the
executive directors; to approve the organisational and management structure of
the company and other internal regulations; to open and close down branches and
to make decisions to acquire or terminate participations in the capital of other
domestic or foreign companies etc.
For all MB resolutions is needed qualified majority of ¾ of all members, unless
consensus is needed. MB holds its sessions at least once a month and reports for
its activity to the SB at least on a quarterly basis.
The MB authorises the rules for its activities, which strictly determine all the
rights, obligations and functions of the members of the MB.
Supervisory Board
The SB administrates and controls the activities of the MB in view of the
conformity of its actions with the legislation, the By-laws of the Petrol AD and
the decisions of the GMS. The SB is a collective body, elected by and directly
reporting to the GMS.
SB's is mandate is 5 years; at least 1/3 of its members should be independent
persons under the definition of the Public Offering of Securities Act.
The SB controls generally and continuously the activities of the company,
revises the annual reports and financial statements of the company, submits
written annual reports for the final results from the audits and analyses of the
business to the GMS, elects and dismisses the members of the MB, approves the
financial plans and investment programmes of the Company, etc.
The SB holds its sessions at least on a quarterly basis and reports for its
activity to the GMS. The SB takes its decisions in accordance with the
authorities given to it by the GMS, the By-laws and the current legislation.
GMS determines the remuneration of the members of the SB and the MB, taking into
consideration the responsibility, the engagement and the involvement of each
board member with the management of the company.
Disclosure of information
Being a public company Petrol AD submits to the Financial Supervision Commission
and the Bulgarian Stock Exchange - Sofia periodical reports and notifications
about insider information under the Law on Measures against Market Abuse with
Financial Instruments. The company submits individual and consolidated quarterly
financial statements, annual report and individual and consolidated annual
financial statements.
According to the requirements of the published prospectus for the Euro notes
issue made at the end of October 2006, the company prepares and submits to the
Trustee (The Bank of New York) and to the Noteholders consolidated quarterly and
annual financial statements and annual report.
The management bodies of the parent company and the Investor Relations Director
should provide easy and timely access of the shareholders and investors to the
information, to which they are legally entitled being shareholders and/or
investors in order to take informed and adequate investment decisions.
Control over the fulfilment of the Programme
The control over the Programme is exercised by the MB. The effectiveness and
efficiency of the Programme is assessed annually by the MB. The results of this
assessment and further measures proposed should be included be noticed in the
annual report provided to Financial Supervision Commission and to the Bulgarian
Stock Exchange - Sofia.
Environmental commitments
Following its privatisation in 1999, Petrol AD started the implementation of an
investment programme aimed to bring the Group's facilities in line with the
requirements of the best environmental practices in European Union. The Group's
operations include a number of activities which are governed by environmental or
health and safety laws in Bulgaria, which also cover historic environmental
liabilities associated with past environmental damage, storage and handling of
petroleum products, soil and groundwater contamination, waste management, water
supply, waste water management, atmospheric emissions, use and disposal of
hazardous materials and land use and planning requirements, including community
issues, associated with the development of new green field retail stations.
The principal legislation acts in Bulgaria which set out the framework for
environmental protection and sustainable development are the Law on Environment
Protection, the Law on Waste Management and sector-specific legislation,
including the Law on Ambient Air Purity, the Law on Water, the Law on Soil
Protection, the Law on Underground Resources and various regulations on their
implementation. As part of Bulgaria's preparation for accession to the European
Union, each of these laws has been brought into line with European Union
standards, with the new standards being phased in over time. Any failure by the
Group to comply with such laws may be a ground for civil and/or administrative
liability.
With regard to the Group's retail stations, Bulgarian law requires that a number
of air, water, land and noise emissions are monitored and recorded and processes
established for minimising such emissions and rendering them harmless. The
following are monitored pursuant to these obligations:
* Air emissions are monitored for dust, hydrogen sulphide, sulphurous dioxide,
nitrogen dioxide, lead aerosols, ammonia, carbolic acid and hydrocarbon;
* Water emissions are monitored for temperature, pH, dissolved oxygen,
conductance, turbidity, phosphates, copper, zinc, lead and oil products;
* Surrounding soil is monitored for pH, nitrate nitrogen, copper, chlorides,
phosphates, zinc, lead and oil products; and
* Noise levels are monitored.
The Group is in compliance in all material respects with environmental
requirements currently applicable to its operations and, with the planned
additional investment, believes it will be able to maintain compliance with
known forthcoming requirements. The Group's intention is to continue to ensure
environmental compliance and pollution prevention in advance of regulatory
requirements.
Vapour recovery systems
One of the major areas in which the Group has invested, and will continue to
invest, is the meeting of the Bulgarian and European Union requirements for the
control of volatile organic compounds (known as VOCs). VOCs are compounds
containing carbon that evaporate into the air, such as vapour arising from
certain petroleum products. European Union Directive 94/63/EC Directive on VOCs
emissions resulting from storage and distribution of petrol set limits on the
permitted levels of such emissions. The Directive has been implemented in
Bulgarian legislation in the form of Ordinance No. 16 dated 12 August 1999,
which limits the emissions of VOCs connected with the storage, loading or
unloading and transportation of petrol.
The legal acts set up very strict requirements to fuel stations, fuel storage
terminals, and fuel tank trucks. Pursuant to these standards the tanks of fuel
stations are made with double walls willed with inert liquid. The Group
installed level measuring systems reacting to the slightest changes in the level
of fuel, as well as systems for sending vapours back into the fuel tank truck
during unloading of the fuel. Thus all dangers of fuel leaks and pollution with
carbon oxides are minimized.
In order for the group to be in line with the environmental criteria, the
loading and storage terminals are currently being reconstructed. Floating roofs
limiting the vapours to a minimum are installed, new mounting platforms for down
filling of fuel trucks and vapour recovery system are built.
European Directive 94/63/EC also requires that fuel tanker trucks used to
transport fuels must meet certain ecological criteria which aim to keep VOC
emissions into the atmosphere at a minimum level during loading and unloading.
In order to comply with these requirements, the Group acquired 36 new fuel tank
trucks from IVECO Spa and Mercedes, which meet the requirements of the Directive
and Euro 3 emission standards. This standard requires compliance with
significant restrictions on noise and nitrogen, carbon oxides and hydrocarbon
emissions.
The Group will continue to invest in environmental expenditures in its retail
network and on its storage facilities within the next five years in order to
meet European Union requirements for the control of VOC air emissions. More
detailed information for the amount of expected additional investments with
regards to the fulfilment of Group's environmental commitments can be found in
note 43 to the consolidated financial statements.
ISO Certification
In December 2004, the Management Board of Petrol AD decided to obtain
certifications for its quality management standards under ISO 9001:2000 and its
environmental management system under ISO 14001:1996. This intention confirms
the commitment of the Management to implement the best European practices in
process management. This process includes the preparation, documentation and
implementation of written rules and procedures and an audit of the procedures by
an independent third party. In October 2007 The Company obtained an ISO
9001:2000 certification. The Management continues the completion of the
commitments undertaken for meeting the requirements of the ISO 14001:1996
standard.
independent auditor's report
on consolidated financial statements
CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2008
CONSOLIDATED INCOME STATEMENT
For the year ended December 31, 2008
+-----------------------------------------+--------+--------------+--------------+
| | Note | December 31, | December 31, |
| | | 2008 | |
| | | BGN'000 | 2007 |
| | | | BGN'000 |
+-----------------------------------------+--------+--------------+--------------+
| | | | |
+-----------------------------------------+--------+--------------+--------------+
| Revenue | 6 | 1,365,636 | 1,383,786 |
+-----------------------------------------+--------+--------------+--------------+
| Other income | 7 | 395,376 | 7,538 |
+-----------------------------------------+--------+--------------+--------------+
| | | | |
+-----------------------------------------+--------+--------------+--------------+
| Cost of goods sold | 8 | (1,241,680) | (1,244,696) |
+-----------------------------------------+--------+--------------+--------------+
| Materials | 9 | (12,703) | (11,336) |
+-----------------------------------------+--------+--------------+--------------+
| Hired services | 10 | (48,033) | (40,725) |
+-----------------------------------------+--------+--------------+--------------+
| Employee benefits expenses | 11 | (25,864) | (28,286) |
+-----------------------------------------+--------+--------------+--------------+
| Depreciation and amortization expenses | 12 | (20,625) | (17,601) |
+-----------------------------------------+--------+--------------+--------------+
| Impairment of assets | 13 | (2,741) | (6,850) |
+-----------------------------------------+--------+--------------+--------------+
| Other expenses | 14 | (17,133) | (19,476) |
+-----------------------------------------+--------+--------------+--------------+
| | | | |
+-----------------------------------------+--------+--------------+--------------+
| Finance income | 15 | 9,965 | 9,109 |
+-----------------------------------------+--------+--------------+--------------+
| Finance costs | 15 | (151,539) | (67,754) |
+-----------------------------------------+--------+--------------+--------------+
| Share of profit of | 19 | 851 | 1,149 |
| associates | | | |
+-----------------------------------------+--------+--------------+--------------+
| | | | |
+-----------------------------------------+--------+--------------+--------------+
| Profit (loss) before taxes | | 251,510 | (35,142) |
+-----------------------------------------+--------+--------------+--------------+
| | | | |
+-----------------------------------------+--------+--------------+--------------+
| Income tax benefit (expense) | 16 | (25,327) | 2,248 |
+-----------------------------------------+--------+--------------+--------------+
| | | | |
+-----------------------------------------+--------+--------------+--------------+
| Net profit (loss) for the period | | 226,183 | (32,894) |
+-----------------------------------------+--------+--------------+--------------+
| | | | |
+-----------------------------------------+--------+--------------+--------------+
| Owned by: | | | |
+-----------------------------------------+--------+--------------+--------------+
| | | | |
+-----------------------------------------+--------+--------------+--------------+
| Owners of the Parent company | | 226,221 | (32,882) |
+-----------------------------------------+--------+--------------+--------------+
| Minority interest | | (38) | (12) |
+-----------------------------------------+--------+--------------+--------------+
| | | | |
+-----------------------------------------+--------+--------------+--------------+
| Earnings per share (BGN) | 36 | 2.63 | (0.30) |
+-----------------------------------------+--------+--------------+--------------+
| | | | |
+-----------------------------------------+--------+--------------+--------------+
These consolidated financial statements have been approved on behalf of Petrol
AD by:
+---------------------------------+--------+---------------------------------+
| | | |
+---------------------------------+--------+---------------------------------+
| Svetoslav Yordanov | | Desislava Todorova |
+---------------------------------+--------+---------------------------------+
| Executive Director | | Chief Accountant |
+---------------------------------+--------+---------------------------------+
May 27, 2009
Sylvia Peneva
Registered Auditor
May 30, 2009
(The accompanying notes from page 58 to page 110 are an integral part of these
consolidated financial statements)
CONSOLIDATED BALANCE SHEET
As of December 31, 2008
+------------------------------------------+--------+-------------+-------------+
| | Note | December | December |
| | | 31, | 31, |
| | | 2008 | 2007 |
| | | BGN'000 | BGN'000 |
+------------------------------------------+--------+-------------+-------------+
| Non-current assets | | | |
+------------------------------------------+--------+-------------+-------------+
| | | | |
+------------------------------------------+--------+-------------+-------------+
| Property, plant and | 17 | 167,135 | 209,163 |
| equipment | | | |
+------------------------------------------+--------+-------------+-------------+
| Intangible assets | 18 | 203 | 1,215 |
+------------------------------------------+--------+-------------+-------------+
| Investments in associates | 19 | 15,776 | 14,925 |
| | | | |
+------------------------------------------+--------+-------------+-------------+
| Goodwill, net | 20 | 18,297 | 18,297 |
+------------------------------------------+--------+-------------+-------------+
| Deferred tax assets | 16 | - | 1,432 |
+------------------------------------------+--------+-------------+-------------+
| Interest-bearing loans | 21 | 28,922 | 36,810 |
| granted | | | |
+------------------------------------------+--------+-------------+-------------+
| Other long-term | 22 | 274 | - |
| receivables | | | |
+------------------------------------------+--------+-------------+-------------+
| | | | |
+------------------------------------------+--------+-------------+-------------+
| Total non-current assets | | 230,607 | 281,842 |
+------------------------------------------+--------+-------------+-------------+
| | | | |
+------------------------------------------+--------+-------------+-------------+
| Current assets | | | |
+------------------------------------------+--------+-------------+-------------+
| | | | |
+------------------------------------------+--------+-------------+-------------+
| Inventories | 23 | 45,912 | 139,428 |
+------------------------------------------+--------+-------------+-------------+
| Trade and other | 24 | 77,405 | 121,054 |
| receivables, net | | | |
+------------------------------------------+--------+-------------+-------------+
| Interest-bearing loans | 21 | 7,989 | 40,692 |
| granted | | | |
+------------------------------------------+--------+-------------+-------------+
| Derivative financial | 25 | - | 808 |
| assets | | | |
+------------------------------------------+--------+-------------+-------------+
| Cash and cash equivalents | 26 | 23,318 | 67,537 |
| | | | |
+------------------------------------------+--------+-------------+-------------+
| Current income tax | 32 | - | 7,196 |
| receivable | | | |
+------------------------------------------+--------+-------------+-------------+
| Non-current assets, held | 27 | 3,807 | - |
| for sale | | | |
+------------------------------------------+--------+-------------+-------------+
| | | | |
+------------------------------------------+--------+-------------+-------------+
| Total current assets | | 158,431 | 376,715 |
+------------------------------------------+--------+-------------+-------------+
| | | | |
+------------------------------------------+--------+-------------+-------------+
| Total assets | | 389,038 | 658,557 |
+------------------------------------------+--------+-------------+-------------+
| | | | |
+------------------------------------------+--------+-------------+-------------+
| Current liabilities | | | |
+------------------------------------------+--------+-------------+-------------+
| | | | |
+------------------------------------------+--------+-------------+-------------+
| Trade and other payables | 28 | 136,183 | 275,225 |
+------------------------------------------+--------+-------------+-------------+
| Interest-bearing loans | 29 | 9,194 | 77,426 |
+------------------------------------------+--------+-------------+-------------+
| Finance lease liabilities | 30 | 1,989 | 2,085 |
+------------------------------------------+--------+-------------+-------------+
| Derivative financial | 31 | 205 | 3,957 |
| liabilities | | | |
+------------------------------------------+--------+-------------+-------------+
| Current income tax payable | 32 | 1,193 | - |
+------------------------------------------+--------+-------------+-------------+
| Retirement benefits | 33 | 46 | 42 |
| obligations | | | |
+------------------------------------------+--------+-------------+-------------+
| | | | |
+------------------------------------------+--------+-------------+-------------+
| Total current liabilities | | 148,810 | 358,735 |
+------------------------------------------+--------+-------------+-------------+
| | | | |
+------------------------------------------+--------+-------------+-------------+
| Non-current liabilities | | | |
+------------------------------------------+--------+-------------+-------------+
| | | | |
+------------------------------------------+--------+-------------+-------------+
| Interest-bearing loans | 29 | 195,002 | 192,302 |
+------------------------------------------+--------+-------------+-------------+
| Finance lease liabilities | 30 | 5,884 | 3,370 |
+------------------------------------------+--------+-------------+-------------+
| Deferred tax liabilities | 16 | 2,297 | - |
+------------------------------------------+--------+-------------+-------------+
| Retirement benefits | 33 | 325 | 416 |
| obligations | | | |
+------------------------------------------+--------+-------------+-------------+
| | | | |
+------------------------------------------+--------+-------------+-------------+
| Total non-current liabilities | | 203,508 | 196,088 |
+------------------------------------------+--------+-------------+-------------+
| | | | |
+------------------------------------------+--------+-------------+-------------+
| Net assets | | 36,720 | 103,734 |
+------------------------------------------+--------+-------------+-------------+
| | | | |
+------------------------------------------+--------+-------------+-------------+
CONSOLIDATED BALANCE SHEET (continued)
As of December 31, 2008
+------------------------------------------+--------+-------------+-------------+
| | Note | December | December |
| | | 31, | 31, |
| | | 2008 | 2007 |
| | | BGN'000 | BGN'000 |
+------------------------------------------+--------+-------------+-------------+
| Equity, owned by the owners of the | | | |
| Parent Company | | | |
+------------------------------------------+--------+-------------+-------------+
| | | | |
+------------------------------------------+--------+-------------+-------------+
| Share capital | 34 | 63,471 | 103,623 |
+------------------------------------------+--------+-------------+-------------+
| Accumulated loss | | (67,395) | (46,928) |
+------------------------------------------+--------+-------------+-------------+
| Other reserves | 35 | 21,780 | 28,137 |
+------------------------------------------+--------+-------------+-------------+
| Statutory and additional | 35 | 18,864 | 18,864 |
| reserves | | | |
+------------------------------------------+--------+-------------+-------------+
| | | | |
+------------------------------------------+--------+-------------+-------------+
| Total equity, owned by the owners of the | | 36,720 | 103,696 |
| Parent Company | | | |
+------------------------------------------+--------+-------------+-------------+
| | | | |
+------------------------------------------+--------+-------------+-------------+
| Minority interest | | - | 38 |
+------------------------------------------+--------+-------------+-------------+
| | | | |
+------------------------------------------+--------+-------------+-------------+
| Total equity and reserves | | 36,720 | 103,734 |
+------------------------------------------+--------+-------------+-------------+
These consolidated financial statements have been approved on behalf of Petrol
AD by:
+---------------------------------+--------+---------------------------------+
| | | |
+---------------------------------+--------+---------------------------------+
| Svetoslav Yordanov | | Desislava Todorova |
+---------------------------------+--------+---------------------------------+
| Executive Director | | Chief Accountant |
+---------------------------------+--------+---------------------------------+
May 27, 2009
Sylvia Peneva
Registered Auditor
May 30, 2009
(The accompanying notes from page 58 to page 110 are an integral part of these
consolidated financial statements)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended December 31, 2008
+----------------------+-----------+----------+------------+-----------+-----------+-----------+-----------+
| | Equity attributable to the owners of the | Minority | Total |
| | Parent Company | interests | equity |
+----------------------+-----------------------------------------------------------+-----------+-----------+
| | Share | Other | Statutory | Retained | Total | BGN'000 | BGN'000 |
| | capital | reserves | and | Earnings | BGN'000 | | |
| | BGN'000 | BGN'000 | additional | (loss) | | | |
| | | | reserves | BGN'000 | | | |
| | | | BGN'000 | | | | |
+----------------------+-----------+----------+------------+-----------+-----------+-----------+-----------+
| | | | | | | | |
+----------------------+-----------+----------+------------+-----------+-----------+-----------+-----------+
| Balance as of | 109,250 | 28,817 | 10,665 | 20,960 | 169,692 | - | 169,692 |
| January 1, 2007 | | | | | | | |
+----------------------+-----------+----------+------------+-----------+-----------+-----------+-----------+
| | | | | | | | |
+----------------------+-----------+----------+------------+-----------+-----------+-----------+-----------+
| Revaluation reserve | - | (680) | - | 680 | - | - | - |
| of disposed | | | | | | | |
| non-current assets | | | | | | | |
+----------------------+-----------+----------+------------+-----------+-----------+-----------+-----------+
| | | | | | | | |
+----------------------+-----------+----------+------------+-----------+-----------+-----------+-----------+
| Net income, | - | (680) | - | 680 | - | - | - |
| recognized directly | | | | | | | |
| in equity | | | | | | | |
+----------------------+-----------+----------+------------+-----------+-----------+-----------+-----------+
| Net loss for the | - | - | - | (32,882) | (32,882) | (12) | (32,894) |
| year | | | | | | | |
+----------------------+-----------+----------+------------+-----------+-----------+-----------+-----------+
| Total income/expense | - | (680) | - | (32,202) | (32,882) | (12) | (32,894) |
| recognized for the | | | | | | | |
| period | | | | | | | |
+----------------------+-----------+----------+------------+-----------+-----------+-----------+-----------+
| | | | | | | | |
+----------------------+-----------+----------+------------+-----------+-----------+-----------+-----------+
| Change in minority | - | - | - | - | - | 50 | 50 |
| interest | | | | | | | |
+----------------------+-----------+----------+------------+-----------+-----------+-----------+-----------+
| Allocation of profit | - | - | 8,199 | (8,199) | - | - | - |
| to reserves | | | | | | | |
+----------------------+-----------+----------+------------+-----------+-----------+-----------+-----------+
| Dividends | - | - | - | (8,427) | (8,427) | - | (8,427) |
+----------------------+-----------+----------+------------+-----------+-----------+-----------+-----------+
| Treasury shares | (5,627) | - | - | (19,060) | (24,687) | - | (24,687) |
+----------------------+-----------+----------+------------+-----------+-----------+-----------+-----------+
| | | | | | | | |
+----------------------+-----------+----------+------------+-----------+-----------+-----------+-----------+
| Balance as of | 103,623 | 28,137 | 18,864 | (46,928) | 103,696 | 38 | 103,734 |
| December 31, 2007 | | | | | | | |
+----------------------+-----------+----------+------------+-----------+-----------+-----------+-----------+
| | | | | | | | |
+----------------------+-----------+----------+------------+-----------+-----------+-----------+-----------+
| Revaluation reserve | - | (6,357) | - | 6,357 | - | - | - |
| of disposed | | | | | | | |
| non-current assets | | | | | | | |
+----------------------+-----------+----------+------------+-----------+-----------+-----------+-----------+
| | | | | | | | |
+----------------------+-----------+----------+------------+-----------+-----------+-----------+-----------+
| Net income, | - | (6,357) | - | 6,357 | - | - | - |
| recognized directly | | | | | | | |
| in equity | | | | | | | |
+----------------------+-----------+----------+------------+-----------+-----------+-----------+-----------+
| Net profit for the | - | - | - | 226,221 | 226,221 | (38) | 226,183 |
| period | | | | | | | |
+----------------------+-----------+----------+------------+-----------+-----------+-----------+-----------+
| Total income/expense | - | (6,357) | - | 232,578 | 226,221 | (38) | 226,183 |
| recognized for the | | | | | | | |
| period | | | | | | | |
+----------------------+-----------+----------+------------+-----------+-----------+-----------+-----------+
| | | | | | | | |
+----------------------+-----------+----------+------------+-----------+-----------+-----------+-----------+
| Treasury shares | (40,152) | - | - | (253,045) | (293,197) | - | (293,197) |
+----------------------+-----------+----------+------------+-----------+-----------+-----------+-----------+
| | | | | | | | |
+----------------------+-----------+----------+------------+-----------+-----------+-----------+-----------+
| Balance as of | 63,471 | 21,780 | 18,864 | (67,395) | 36,720 | - | 36,720 |
| December 31, 2008 | | | | | | | |
+----------------------+-----------+----------+------------+-----------+-----------+-----------+-----------+
These consolidated financial statements have been approved on behalf of Petrol
AD by:
+---------------------------------+--------+---------------------------------+
| | | |
+---------------------------------+--------+---------------------------------+
| Svetoslav Yordanov | | Desislava Todorova |
+---------------------------------+--------+---------------------------------+
| Executive Director | | Chief Accountant |
+---------------------------------+--------+---------------------------------+
May 27, 2009
Sylvia Peneva
Registered Auditor
May 30, 2009
(The accompanying notes from page 58 to page 110 are an integral part of these
consolidated financial statements)
CONSOLIDATED CASH FLOW STATEMENT
For the year ended December 31, 2008
+---------------------------------------------------+-------------+-------------+
| | December | December |
| | 31, | 31, |
| | 2008 | 2007 |
| | BGN'000 | BGN'000 |
+---------------------------------------------------+-------------+-------------+
| Cash flows from operating activities | | |
+---------------------------------------------------+-------------+-------------+
| | | |
+---------------------------------------------------+-------------+-------------+
| Net profit (loss) before | 251,510 | (35,142) |
| taxation | | |
+---------------------------------------------------+-------------+-------------+
| | | |
+---------------------------------------------------+-------------+-------------+
| Adjustments for: | | |
+---------------------------------------------------+-------------+-------------+
| | | |
+---------------------------------------------------+-------------+-------------+
| Depreciation/amortization of | 20,625 | 17,601 |
| non-current assets | | |
+---------------------------------------------------+-------------+-------------+
| Interest expense, bank fees | 13,858 | 20,295 |
| and commissions, net | | |
+---------------------------------------------------+-------------+-------------+
| Shortages and normal loss, | 3,046 | 5,170 |
| net of surpluses | | |
+---------------------------------------------------+-------------+-------------+
| Provisions for unused paid | 1,104 | 1,620 |
| leave and retirement benefits | | |
+---------------------------------------------------+-------------+-------------+
| Impairment of assets and | 4,738 | 6,850 |
| receivables written-off | | |
+---------------------------------------------------+-------------+-------------+
| Disposed low-cost assets | 2,359 | - |
+---------------------------------------------------+-------------+-------------+
| Liabilities written-off | - | (4,800) |
+---------------------------------------------------+-------------+-------------+
| Loss on liquidation of assets | 999 | 117 |
| | | |
+---------------------------------------------------+-------------+-------------+
| Net effect from applying the | (851) | (1,149) |
| equity method | | |
+---------------------------------------------------+-------------+-------------+
| Loss on transactions with | 126,240 | 40,089 |
| derivatives | | |
+---------------------------------------------------+-------------+-------------+
| Loss (gain) on sale of | (392,256) | 4,665 |
| non-current assets | | |
+---------------------------------------------------+-------------+-------------+
| Gain on redeemed bonds | (880) | - |
+---------------------------------------------------+-------------+-------------+
| Loss on sale of associates | - | 140 |
+---------------------------------------------------+-------------+-------------+
| Gain on sale of subsidiaries | - | (2,286) |
+---------------------------------------------------+-------------+-------------+
| Unrealized foreign exchange | 2,156 | (94) |
| differences | | |
+---------------------------------------------------+-------------+-------------+
| | | |
+---------------------------------------------------+-------------+-------------+
| Cash flows provided by operating | 32,648 | 53,076 |
| activities | | |
+---------------------------------------------------+-------------+-------------+
| | | |
+---------------------------------------------------+-------------+-------------+
| Interest and bank fees and commissions paid | (21,851) | (23,887) |
+---------------------------------------------------+-------------+-------------+
| Corporate income taxes paid | (13,209) | (2,090) |
+---------------------------------------------------+-------------+-------------+
| | | |
+---------------------------------------------------+-------------+-------------+
| Operating profit (loss) before changes in working | (2,412) | 27,099 |
| capital | | |
+---------------------------------------------------+-------------+-------------+
| | | |
+---------------------------------------------------+-------------+-------------+
| Increase (decrease) in trade payables | (18,129) | 65,453 |
+---------------------------------------------------+-------------+-------------+
| Decrease (increase) in inventories | 87,774 | (5,959) |
+---------------------------------------------------+-------------+-------------+
| Decrease (increase) in trade receivables | 28,251 | (9,002) |
+---------------------------------------------------+-------------+-------------+
| | | |
+---------------------------------------------------+-------------+-------------+
| Net cash provided by operating activities | 95,484 | 77,591 |
+---------------------------------------------------+-------------+-------------+
| | | |
+---------------------------------------------------+-------------+-------------+
| | | |
+---------------------------------------------------+-------------+-------------+
CONSOLIDATED CASH FLOW STATEMENT (continued)
For the year ended December 31, 2008
+---------------------------------------------------+-------------+-------------+
| | December | December |
| | 31, | 31, |
| | 2008 | 2007 |
| | BGN'000 | BGN'000 |
+---------------------------------------------------+-------------+-------------+
| | | |
+---------------------------------------------------+-------------+-------------+
| Cash flows from investing activities | | |
+---------------------------------------------------+-------------+-------------+
| | | |
+---------------------------------------------------+-------------+-------------+
| Payments for acquisition of non-current assets | (30,745) | (40,585) |
+---------------------------------------------------+-------------+-------------+
| Proceeds on sale of non-current assets | 319,792 | 1,370 |
+---------------------------------------------------+-------------+-------------+
| Interest received on investment loans and | 10,860 | 2,722 |
| deposits | | |
+---------------------------------------------------+-------------+-------------+
| Payments for transactions | (118,636) | (45,999) |
| with derivatives | | |
+---------------------------------------------------+-------------+-------------+
| Proceeds (payments) for | 38,259 | (7,524) |
| investment deposits and | | |
| loans granted, net | | |
+---------------------------------------------------+-------------+-------------+
| Proceeds from sale of | - | 30,428 |
| subsidiaries, net of cash | | |
| disposed | | |
+---------------------------------------------------+-------------+-------------+
| Proceeds from sale of associates | - | 1,452 |
+---------------------------------------------------+-------------+-------------+
| | | |
+---------------------------------------------------+-------------+-------------+
| Net cash provided by (used in) investing | 219,530 | (58,136) |
| activities | | |
+---------------------------------------------------+-------------+-------------+
| | | |
+---------------------------------------------------+-------------+-------------+
| Cash flows from financing activities | | |
+---------------------------------------------------+-------------+-------------+
| | | |
+---------------------------------------------------+-------------+-------------+
| Cash provided by minority | - | 50 |
+---------------------------------------------------+-------------+-------------+
| Proceeds from bank and trade loans | 11,328 | 491,611 |
| and bond issue | | |
+---------------------------------------------------+-------------+-------------+
| Payments for bank and trade loans | (76,426) | (481,543) |
| and bond issue | | |
+---------------------------------------------------+-------------+-------------+
| Treasury shares buy-back | (293,582) | (24,687) |
+---------------------------------------------------+-------------+-------------+
| Dividends paid | (14) | (8,439) |
+---------------------------------------------------+-------------+-------------+
| Paid back dividends | - | 449 |
+---------------------------------------------------+-------------+-------------+
| Lease payments | (2,262) | (2,072) |
+---------------------------------------------------+-------------+-------------+
| | | |
+---------------------------------------------------+-------------+-------------+
| Net cash provided by /(used in) financing | (360,956) | (24,631) |
| activities | | |
+---------------------------------------------------+-------------+-------------+
| | | |
+---------------------------------------------------+-------------+-------------+
| Net decrease in cash and cash equivalents for the | (45,942) | (5,176) |
| year | | |
+---------------------------------------------------+-------------+-------------+
| | | |
+---------------------------------------------------+-------------+-------------+
| Cash and cash equivalents at the beginning of the | 55,956 | 61,132 |
| year | | |
+---------------------------------------------------+-------------+-------------+
| | | |
+---------------------------------------------------+-------------+-------------+
| Cash and cash equivalents at the end of year | 10,014 | 55,956 |
| (see also note 26) | | |
+---------------------------------------------------+-------------+-------------+
These consolidated financial statements have been approved on behalf of Petrol
AD by:
+---------------------------------+--------+---------------------------------+
| | | |
+---------------------------------+--------+---------------------------------+
| Svetoslav Yordanov | | Desislava Todorova |
+---------------------------------+--------+---------------------------------+
| Executive Director | | Chief Accountant |
+---------------------------------+--------+---------------------------------+
May 27, 2009
Sylvia Peneva
Registered Auditor
May 30, 2009
(The accompanying notes from page 58 to page 110 are an integral part of these
consolidated financial statements)
Notes
to the Consolidated Financial Statements
as of December 31, 2008
1. Legal status
Petrol AD (the Parent Company) is registered in the city of Sofia. The
registered office of the Parent Company is 43 Cherni Vruh Blvd, Sofia. As of the
balance sheet date, the majority shareholder of Petrol AD is Petrol Holding AD
with 55.45% ownership of the share capital. (see also note 34).
As of July 1, 1998 Petrol AD is registered as a public company in the public
registry of the Financial Supervision Commission.
The main activities of Petrol AD and its subsidiaries (the Group) are retail and
wholesale of oil and non-oil products, rendering of transport and maintenance
services. 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 were approved for issue by the
Management on May 27, 2009.
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 the 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 December 31, 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 have been approved by the Commission,
this would have no influence on these consolidated financial statements.
During 2008, the Group has adopted all new and revised IFRS by IASB, as approved
by the Commission, effective for 2008, which are applicable to the Group's
business, and these are the amendments to IAS 39 Financial instruments:
Recognition and Measurement and to IFRS 7 Financial Instruments: Disclosures
(effective as of July 1, 2008), which refer to the reclassification of financial
assets. The application of these amendments and interpretations does not affect
the accounting policy of the Group.
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, and represent consolidated financial statements, whose
preparation is required by the Bulgarian accounting legislation and IAS 27
Consolidated and Separate Financial Statements.
These financial statements are prepared under the assumption, that the Group
will continue its operations as a going concern in foreseeable future.
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. An
entity's functional currency reflects the major transactions, events and
conditions that are significant to the Group.
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 Group 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
currency positions or at restatement of these positions at rates, different from
those when initially recorded, are reported in the income statement for the
period in which they arise.
The monetary positions denominated in foreign currency as of December 31, 2008
and 2007 are stated in these consolidated financial statements at the closing
exchange rate of BNB. The closing exchange rates of BGN against USD for the
respective reporting period of the consolidated financial statements are as
follows:
+---------------------+-----------------------------------------------------+
| December 31, 2008: | 1 USD = BGN 1.38731 |
+---------------------+-----------------------------------------------------+
| December 31, 2007: | 1 USD = BGN 1.33122 |
+---------------------+-----------------------------------------------------+
* Subsidiary companies and consolidation
The consolidated financial statements incorporate the financial statements of
the Parent company and its subsidiaries. A subsidiary is an entity that is
controlled by the Parent company. Control is the power to govern the financial
and operating policies of an enterprise, so as to obtain benefits from its
activities.
For consolidation purposes, the separate financial statements of the Parent
Company and its subsidiaries have been combined on a line-by-line basis by
adding together like items of assets, liabilities, equity, income and expenses.
For consolidation purposes all intragroup balances and intragroup transactions
as of December 31, 2008 and 2007, as well as all intragroup profits and losses,
including unrealized profits and losses as of December 31, 2008 and 2007 are
eliminated in full.
The carrying amount of the investments in each subsidiary, held by the Parent
company or any of the subsidiaries, and the Parent company's portion of equity
of each subsidiary are eliminated.
The results of subsidiaries, which have been acquired by or left the Group
during the reporting period, are included in the consolidated income statement
from the date of the acquisition, till the date at which control ceases.
* Subsidiary companies and consolidation (continued)
Minority interest presented in the consolidated financial statements is based on
the current equity structure of the subsidiaries, as of December 31, 2008 and
2007, in accordance with IAS 27 Consolidated and Separate Financial Statements
and represents that part of the net assets of the subsidiaries related to
interest, which is not owned directly or indirectly through other subsidiaries
of the Parent Company. Minority interest, as of the date of the business
combination, is calculated as interest in the fair values of the acquired
identifiable assets and liabilities.
Losses related to minority interest in a consolidated subsidiary cannot exceed
the interest of the minority in the net assets. The excess, as well as other
future losses, owned by the minority, are included in the share of the Group,
except when the minority has a commitment and is able to make additional
investments to cover these losses. If, afterwards, the subsidiary realizes
profits, then they are allocated through the income statement to the share of
the majority, until the losses assumed earlier are recovered. When these losses
are recovered not through profits realized by the subsidiary, but as a result of
other increase of its net assets, recognized directly in equity, then the
recovered losses are reported directly in equity of the Group.
2.5. Associates
An associate is an enterprise over which the Group has a significant influence.
Significant influence is the right of participation in, but not control over,
the financial and operating policy decisions of the investee.
Investments 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 and 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 recognized as an asset. When the acquisition cost is lower
than the fair value of the net assets acquired by the Group, the acquirer should
reassess the identification and measurement of the acquiree's identifiable
assets, liabilities and contingent liabilities, and the measurement of the cost
of the business combination, and any excess remaining after that reassessment
should be recognized immediately in profit or loss.
Subsequent to its initial recognition, goodwill is not amortized, in compliance
with IFRS 3, applicable for reporting periods after March 31, 2004. At the end
of each reporting period, a test for impairment is performed (see also note 4).
2.7.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. Key sources of estimation
uncertainty include impairment of receivables and estimation of useful life of
property, plant and equipment.
2.8.Prior period errors
Prior period errors are omissions from, and misstatements in the Group's
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.
2.9.Changes in accounting policy
The Group changes its accounting policy only when this change is required by
Standard or Interpretation, or when the adopted change results 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.
A change in the accounting policy resulting from first time adoption of a new
Standard or Interpretation is stated according to the transitional or final
provisions of the given Standard or Interpretation. When there is no such
Standard or Interpretation or the changes are made of the Company's own accord,
they are applied retrospectively, by adjusting the opening balances of each
equity item concerned or other comparative amounts, assuming that the newly
adopted policy has been always applied.
In the current period, the Group has adopted the policy to present the payments
and proceeds from interest-bearing loans, which have overdraft characteristics,
net in the cash flow statement. The change is applied retrospectively, and the
comparative information presented in these consolidated financial statements is
restated.
3.Definition and valuation of the balance sheet and income statement items
* Property, plant and equipment and intangible assets
Property, plant and equipment and intangible assets are recognized initially 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 also note 3.2).
Some tangible fixed assets, available as of 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 reliability 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. As a result from these revaluations, for
some of the assets was formed other reserve, resulting from the accounting
legislation applicable as of December 31, 2001.
When property, plant and equipment include parts with different useful lives,
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, only 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.
The assets' estimated useful lives are as follows:
+------------------------------------------+----------------+----------------+
| Useful life | 2008 | 2007 |
+------------------------------------------+----------------+----------------+
| | | |
+------------------------------------------+----------------+----------------+
| Administrative and trade buildings | 25 years | 25 years |
+------------------------------------------+----------------+----------------+
| Machines, plant and equipment | 2, 3 and 25 | 2, 3 and 25 |
| | years | 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 from 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, or 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 the end of each reporting period, the management reviews the carrying amounts
of property, plant and equipment, intangible assets and goodwill, to determine
whether there is any indication for impairment of these assets. If 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 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 revalued amount, in which case the reversal of the impairment loss is treated
as an increase in the revaluation reserve.
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 to reduce the carrying amount of the assets in
the cash-generating unit, allocated first to reduce the carrying amount of
goodwill and then, to the carrying amount of other assets in the unit, pro rata
on the basis of the carrying amount of each asset. 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.
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 expenses, customs duties, excise and other
similar. Net realizable value represents the estimated selling price less all
estimated costs to be incurred in selling.
Upon consumption, the cost of inventories is calculated using the following
methods:
+----------------------------+----------------------------------------------+
| Petroleum | Specific identification price of each |
| | delivery |
+----------------------------+----------------------------------------------+
| Fuel and other goods | Weighted average cost |
+----------------------------+----------------------------------------------+
| Materials | Weighted average cost |
+----------------------------+----------------------------------------------+
3.5. Financial instruments
A financial instrument is any contract that simultaneously gives rise to a
financial asset of one entity and a financial liability or equity instrument of
another entity.
Financial assets (liabilities) are recognized in the consolidated balance sheet
when, and only when the Group becomes a party to the contractual provisions of
the instrument. Financial assets are derecognized from the consolidated balance
sheet after the contractual rights for receiving cash flows have expired or the
asset is transferred, and the transfer meets the derecognition requirements
under IAS 39 Financial Instruments: Recognition and Measurement. Financial
liability is derecognized from the consolidated balance sheet when, and only
when, it is settled - i.e. the obligation specified in the contract is
discharged, cancelled, or expires.
On initial recognition, financial assets (liabilities) are measured at fair
value, including all the transaction costs directly attributable to the
acquisition or issue of the financial assets (liabilities), except for financial
assets (liabilities) measured at fair value through profit or loss.
For the purposes of subsequent measurement, the Group classifies the financial
assets and financial liabilities, in accordance with IAS 39 Financial
Instruments: Recognition and Measurement, into the following categories:
financial assets and financial liabilities reported at fair value through profit
or loss, loans and other receivables, and financial liabilities at amortized
cost. The Group does not apply this classification of the assets and liabilities
for the purpose of their presentation in the balance sheet. The information for
the respective category of financial instruments is included in note 41.
3.5.1. Financial assets (liabilities), measured at fair value through profit
or loss
A financial asset or liability is classified as held-for-trading, when it is
acquired mainly for the purpose of selling or repurchasing in the near future or
when it is a derivative instrument, for example - options and futures contracts,
concluded on international stock markets.
After their initial recognition, financial assets at fair value though profit or
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 for the period in which it arises.
3.5.2. Loans granted and other receivables
Loans and receivables are non-derivative financial assets with fixed or
determinable terms for settlement that are not quoted on an active market. In
the balance sheet of the Group, the assets from this category are presented as
receivables on interest-bearing loans, trade and other receivables, cash and
cash equivalents.
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 and cash equivalents
For the purposes of the cash flow statement preparation, cash and cash
equivalents comprise cash in hand, cash at banks and cash in transfer, with the
exception of restricted cash, which the Group temporarily has no right to use.
3.5.3. Impairment of financial assets
As of the date of the consolidated financial statements, the Group's management
reviews whether there is any indication for impairment of all financial assets,
except for financial assets carried at fair value through profit or loss.
Financial assets are impaired only when there is any objective evidence that as
a result of one or more events occurred after their initial recognition, the
expected cash flows have declined.
3.5.3. Impairment of financial assets (continued)
Impairment loss on receivables and loans granted, stated at amortized cost, is
calculated as a difference between the carrying amount and the present value of
future cash flows, discounted by the initial effective interest rate. Impairment
loss is recognized in the income statement and is reversed if the subsequent
increase of the recoverable amount may be objectively related to an event
occurring after the date on which the impairment loss has been recognized.
3.5.4. Financial liabilities at amortized cost
After their initial recognition, the Group measures all financial liabilities at
amortized cost, except for : the financial liabilities at fair value through
profit or loss; financial liabilities incurred when the transfer of an asset
does not qualify for derecognition; financial guarantee contracts, commitments
to provide a loan at below-market interest rate. These liabilities are presented
in the Group's balance sheet as trade and other payables and interest-bearing
loans.
Trade and other payables
Trade and other payables are incurred as a result of the purchase of goods or
services. Current liabilities are not amortized.
Interest-bearing loans
Interest bearing loans are initially measured at fair value, determined from the
cash proceeds less transaction costs. After initial recognition, interest
bearing loans are measured at amortized cost, as any difference between the
initial value and the maturity value is recognized in profit or loss over the
loan period, using the effective interest rate method. If no transaction costs
have been incurred in negotiating an interest bearing loan, the loan is not
subject to amortisation. The same applies to bank overdrafts, where the borrower
is entitled to utilize or repay the borrowed funds many times within the
pre-determined overdraft limit.
Financial expenses, including direct issue costs, are accounted for on accrual
basis in the profit and loss ,using the effective interest rate method, except
for transaction costs on bank overdrafts, which are recognized on a
straight-line basis for the overdraft period.
Interest bearing loans are classified as short-term when they are expected to be
settled within 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, as of the balance sheet date, the Group - through Parent company or
subsidiary - has reacquired shares of the Parent company, their par value is
deducted from share capital, and the difference paid below or above the par
value - in retained earnings, according to IAS 32 Financial Instruments:
Disclosure and Presentation.
3.6.Retirement benefits obligations
The Government of the Republic of Bulgaria is responsible for providing pensions
under plans for defined pension contributions. The Group's expenses related to
payment of contributions under these plans are recognized in profit or loss for
the period in which they occur.
In accordance with the Labour Code, the Company has an obligation to pay
retirement benefits to its employees, based on length of service, age and labour
category. In accordance with the requirements of IAS 19 Employee benefits, the
Group recognizes the present amount of the benefits as a liability. All
actuarial gains and losses, and past service costs, are recognized immediately
in profit or loss.
3.7. Income tax
Income tax expense comprises of current income tax and deferred tax.
The current tax payable is based on the combined taxable profit (tax loss) for
the year of each company within the Group, as reported in their separate
corporate income-tax returns, 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 and liabilities are calculated at the tax rates that are
expected to apply in the period when the liability is to be settled or the asset
realized, based on the information that the Group is provided with as of the
date of the issuance of the financial statements. 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 accounted
directly in equity, without being recognized in the income statement.
3.7. Income tax (continued)
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 by the Group at each date
of preparation of the consolidated financial statements 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 on a net basis when they are
subject to a unified tax regime.
In accordance with the tax legislation enforceable for the years ended 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 December 31, 2008
are calculated by using the tax rate of 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
receivable, less any discounts allowed, and includes the gross inflow of
economic benefits received by or due to the Group. The amounts collected on
behalf of third parties, such as sales taxes - like value added tax, are
excluded from revenue. Revenue from fuel sales are presented gross with the
excise duty, which is considered an integral part of the goods' price.
Revenue from sales of goods and production is recognized when:
* The significant risks and rewards of ownership of the goods and production are
transferred to the buyer;
* The Group retains neither continuing managerial involvement nor effective
control over the goods or production sold;
* It is probable that economic benefits associated with the transaction will flow
to the Group;
* The amount of revenue and costs, directly arising from the transaction, can be
reliably measured.
When the outcome of a transaction involving rendering of services can be
reliably estimated, 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 extent that the expenses recorded
are recoverable.
3.8. Revenue and expenses recognition (continued)
Gain or loss 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.
The effective interest rate method is a method of calculating the amortized cost
of a financial asset or a financial liability and of allocating the interest
income or interest expense over the relevant period. The effective interest rate
is the rate that exactly discounts the estimated future cash payments or
proceeds through the expected life of the financial instrument or, in some
cases,for a shorter period, to the net carrying amount of the financial asset or
financial liability. When calculating the effective interest rate, the Group
estimates cash flows considering all contractual terms of the financial
instrument, except for anticipated future impairment losses. The calculation
includes all fees, transaction costs, premiums or discounts paid or received
between parties to the contract, that are an integral part of the effective
interest rate.
3.9. Deferred expenses and income
The Group has recognized in the balance sheet as deferred income and deferred
expenses, income and expenses that are paid in the current, but refer to future
reporting periods - guarantees, insurances, subscriptions, rents and other.
3.10. Leases
* Finance lease
Finance lease is a lease agreement, which substantially transfers all risks and
rewards incidental to the ownership of an asset.
Assets acquired under finance lease are recognized at the lower of the fair
value of the leased asset at the acquisition date, and the present value of the
minimum lease payments The corresponding liability to the lessor is included in
the Group's balance sheet as finance lease liabilities .
Lease payments are divided in interest charges and principal payments, so that a
constant interest rate of the residual lease liability is obtained.
Finance lease gives rights 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.
For the purpose of presenting the financial instruments in categories, defined
in accordance with IAS 39 Financial Instruments: Recognition and measurement,
liabilities under finance lease are classified as financial liabilities at
amortized cost.
* Operating lease
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 in the income statement on a
straight-line basis over the lease term. Initial direct costs incurred in
negotiating an operating lease contract are capitalized in the cost of the asset
and recognized as expense on a straight-line basis over the lease term.
3.11. Segment reporting
For the purposes of segment reporting, identifiable components from the Group's
activity (reportable segments) are established, each of them referring to the
provision of separate or group of products and services, which are subject to
risks and return, different from those of the other business segments.
The results, assets and liabilities of the segment comprise such elements, which
can be directly attributed to the segment, as well as elements, which can be
allocated to the segment on a reasonable basis.
Capital expenditures of the segment represent investments, made in the period of
acquisition of the segment assets, which are expected to be used by the segment
for more than one reporting period.
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 2.7), 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 a 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 2.6 and 3.2, goodwill is not subject to amortisation, but
is reviewed for impairment at the end of each year, as well as at any time when
any indications for impairment exist.
As of December 31, 2008 management has not identified any indications of
impairment.
The impairment test of the goodwill from the acquisition of Naftex Petrol EOOD
(see also note 20) has been performed as of December 31, 2008, 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, 2008. Forecasted net cash flows,
after last forecasted period, are calculated by applying 3% growth of the net
cash flows, compared to the last forecasted period, using the method of
"perpetuity with constantly increasing interest rate" and discount of estimated
terminal value, in compliance with the methodology stated above. The applied
discount rate of 9% is calculated as a weighted average cost of the equity of
the subsidiary. Since, as a result of the applied methodology, the value of the
investment in the subsidiary exceeds the total amount of the net assets and
goodwill, as of December 31, 2008 goodwill is not impaired.
5. Changes in IFRS
The following IFRS, amendments to IFRS and interpretations, are adopted by IASB
and IFRIC as of the date of issue of these financial statements, but are
effective for annual periods after July 1, 2008, as stated below:
5.1. Standards and interpretations approved by the Commission, as of the
date of the financial statements
+--------------------------------------+--------------------------------------+
| IFRS or IFRIC, effective date | Title of IFRS or IFRIC |
+--------------------------------------+--------------------------------------+
| Amendments to IFRS 1, effective for | First Time Adoption of International |
| annual periods beginning on or after | Financial Reporting Standards |
| January 1, 2009 | |
+--------------------------------------+--------------------------------------+
| Amendments to IFRS 2, effective for | Share-based Payment: terms and |
| annual periods beginning on or after | conditions for acquisition of rights |
| January 1, 2009 | and cancellations |
| | |
+--------------------------------------+--------------------------------------+
| IFRS 8, effective for annual periods | Operating Segments |
| beginning on or after January 1, | |
| 2009 | |
| | |
+--------------------------------------+--------------------------------------+
| IFRIC 13, effective for annual | Customer Loyalty Programmes IAS 1 |
| periods beginning on or after July | (amended) effective for annual |
| 1, 2008 | periods beginning on or after |
| | January 1, 2009 |
+--------------------------------------+--------------------------------------+
| IAS 1 (amended) effective for annual | Presentation of Financial Statements |
| periods beginning on or 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 Financial |
| periods beginning on or after | Statements |
| January 1, 2009 | |
+--------------------------------------+--------------------------------------+
| IAS 32 (amended) effective for | Financial Instruments: Disclosure |
| periods beginning on or after | and Presentation |
| January 1, 2009 | |
+--------------------------------------+--------------------------------------+
| Improvements to IFRS 2008, effective | Affect the interpretations, |
| for annual periods beginning on or | presentation, recognition and the |
| after January 1, 2009 | principles of measurement in IFRS 5, |
| | 7, IAS 1, 7, 16, 19, 20, 23, 27, 28, |
| | 29, 31, 32, 36, 38, 39, 40, 41 |
+--------------------------------------+--------------------------------------+
5.2. Standards and interpretations, which are not approved by the Commission
as of the date of the financial statements (continued)
+--------------------------------------+--------------------------------------+
| IFRS or IFRIC, effective date | Title of IFRS or IFRIC |
+--------------------------------------+--------------------------------------+
| IFRS 1(Revised), effective for | First Time Adoption of International |
| annual periods beginning on or after | Financial Reporting Standards |
| July 1, 2009 | |
+--------------------------------------+--------------------------------------+
| IFRS 3 (Revised), and the related | Business Combinations |
| changes in IAS 27, IAS 28 and IAS | |
| 31, effective for annual periods | |
| beginning on or after July 1, 2009 | |
+--------------------------------------+--------------------------------------+
| Amendments to IFRS 7, effective for | Financial Instruments: Disclosure |
| annual periods beginning on or after | |
| January 1, 2009 | |
+--------------------------------------+--------------------------------------+
| IFRIC 12, effective for annual | Service Concession Arrangements |
| periods beginning on or after | |
| January 1, 2008 | |
+--------------------------------------+--------------------------------------+
| IFRIC 15, effective for annual | Agreements for the Construction of |
| periods beginning on or after | Real Estate |
| January 1, 2009 | |
+--------------------------------------+--------------------------------------+
| IFRIC 16, effective for annual | Hedges of a Net Investment in a |
| periods beginning on or after | Foreign Operation |
| October 1, 2008 | |
+--------------------------------------+--------------------------------------+
| IFRIC 17, effective for annual | Distributions of Non-cash Assets to |
| periods beginning on or after July | Owners |
| 1, 2009 | |
+--------------------------------------+--------------------------------------+
| IFRIC 18, effective on or after July | Transfer of Assets from Customers |
| 1, 2009 | |
+--------------------------------------+--------------------------------------+
| Amendment to IAS 39, effective for | Financial Instruments: Recognition |
| annual periods beginning on or after | and Measurement regarding |
| July 1, 2008 | reclassification of assets, |
| | effective date and transitional and |
| | final provisions |
+--------------------------------------+--------------------------------------+
| Amendment to IAS 39, effective for | Financial Instruments: Recognition |
| annual periods beginning on or after | and Measurement regarding allowable |
| July 1, 2009 | hedged instruments |
| | |
+--------------------------------------+--------------------------------------+
Most of the IFRS and IFRIC stated above are not applicable to the Group's
activity. Therefore, they will have no material effect on the financial
statements. The application of IAS 1 Presentation of Financial Statements will
lead to change in the titles and presentation in the consolidated financial
statements - mostly in the income statement and the statement of changes in
shareholder's equity. The adoption of IAS 23 Borrowing Costs will have effect on
the recognition of interest expenses, as the expenses referring to the
acquisition or construction of an asset will be capitalized in its cost.
6. Revenue
+------------------------------------------------+----------------------------+----------------------------+
| | December | December |
| | 31, | 31, |
| | 2008 | 2007 |
| | BGN'000 | BGN'000 |
+------------------------------------------------+----------------------------+----------------------------+
| | | |
+------------------------------------------------+----------------------------+----------------------------+
| Sale of | 1,351,532 | 1,327,519 |
| goods | | |
+------------------------------------------------+----------------------------+----------------------------+
| Sale of | 14,104 | 55,575 |
| services | | |
+------------------------------------------------+----------------------------+----------------------------+
| Sale of | - | 692 |
| finished | | |
| goods | | |
+------------------------------------------------+----------------------------+----------------------------+
| | | |
+------------------------------------------------+----------------------------+----------------------------+
| Total | 1,365,636 | 1,383,786 |
+------------------------------------------------+----------------------------+----------------------------+
Revenue from sales of goods consists of:
+------------------------------------------------+----------------------------+----------------------------+
| | December | December |
| | 31, | 31, |
| | 2008 | 2007 |
| | BGN'000 | BGN'000 |
+------------------------------------------------+----------------------------+----------------------------+
| | | |
+------------------------------------------------+----------------------------+----------------------------+
| Fuels | 1,318,966 | 1,284,386 |
+------------------------------------------------+----------------------------+----------------------------+
| Lubricants | 32,566 | 43,133 |
| and other | | |
| goods | | |
+------------------------------------------------+----------------------------+----------------------------+
| | | |
+------------------------------------------------+----------------------------+----------------------------+
| Total | 1,351,532 | 1,327,519 |
+------------------------------------------------+----------------------------+----------------------------+
7. Other income
+-------------------------------------------------+-------------------------------------------+-----------------------------------------+
| | December | December |
| | 31, | 31, |
| | 2008 | 2007 |
| | BGN'000 | BGN'000 |
+-------------------------------------------------+-------------------------------------------+-----------------------------------------+
| | | |
+-------------------------------------------------+-------------------------------------------+-----------------------------------------+
| Gain on | 392,256 | - |
| sales of | | |
| non-current | | |
| assets, | | |
| including: | | |
+-------------------------------------------------+-------------------------------------------+-----------------------------------------+
| Income | 460,511 | - |
| from sales | | |
+-------------------------------------------------+-------------------------------------------+-----------------------------------------+
| Carrying | (53,419) | - |
| amount | | |
+-------------------------------------------------+-------------------------------------------+-----------------------------------------+
| Expenses | (14,836) | - |
| related to | | |
| sales | | |
+-------------------------------------------------+-------------------------------------------+-----------------------------------------+
| Surplus of | 765 | 928 |
| assets | | |
+-------------------------------------------------+-------------------------------------------+-----------------------------------------+
| Insurance | 667 | 286 |
| claims | | |
+-------------------------------------------------+-------------------------------------------+-----------------------------------------+
| Income | 386 | 694 |
| from | | |
| penalties | | |
+-------------------------------------------------+-------------------------------------------+-----------------------------------------+
| Liabilities | - | 4,800 |
| written-off | | |
+-------------------------------------------------+-------------------------------------------+-----------------------------------------+
| Other | | |
| | 1,302 | 830 |
+-------------------------------------------------+-------------------------------------------+-----------------------------------------+
| | | |
+-------------------------------------------------+-------------------------------------------+-----------------------------------------+
| Total | 395,376 | 7,538 |
+-------------------------------------------------+-------------------------------------------+-----------------------------------------+
In March 2008, a preliminary sale agreement was signed between the Group and a
third party for the sale of 75 petrol stations and 1 storage facility. The sale
of the storage facility, with a carrying amount of BGN 8,166 thousand, is
performed in April 2008, at the price of BGN 158,227 thousand. In 2008, the
Group sold the available equipment for all 75 petrol stations to the third
party, as per the agreement signed and transferred the ownership rights of the
properties belonging to 70 of these petrol stations with a carrying amount of
BGN 45,106 thousand. As a result, the Group has recorded income from sale of
non-current assets in the amount of BGN 298,998 thousand in these consolidated
financial statements. The amount of the expenses related to sales of non-current
assets includes BGN 8.200 thousand - representing lawyers' fees connected with
the preliminary agreement stated above, as well as BGN 3,500 thousand
-remunerations for the Group's management referring to the signing of the
preliminary agreement.
7. Other income (continued)
In addition, in June 2008, the management of the Group made a decision to sell
105 of the less profitable petrol stations. As of December 31, 2008, 25 of these
petrol stations were sold and as a result, income from the sale of non-current
assets amounting to BGN 1,232 thousand is included in the consolidated financial
statements of the Group. All the remaining, unsold petrol stations as of
December 31, 2008, are presented as non-current assets held for sale in the
current consolidated financial statements (see note 27).
Income from liabilities written-off in 2007 results from corrected amount of the
trade payables to a Contractor, recorded on the basis of a signed agreement
concerning the arrangement of the accounts payable and receivable under a
suspended contract for fuel supply (see also note 42.1).
8. Cost of goods sold
+------------------------------------------------+--------------+----------------------------+
| | December 31, | December |
| | 2008 | 31, |
| | BGN'000 | 2007 |
| | | BGN'000 |
+------------------------------------------------+--------------+----------------------------+
| | | |
+------------------------------------------------+--------------+----------------------------+
| Fuels | 1,215,336 | 1,207,755 |
+------------------------------------------------+--------------+----------------------------+
| Lubricants | 26,344 | 36,941 |
| and other | | |
| goods | | |
+------------------------------------------------+--------------+----------------------------+
| | | |
+------------------------------------------------+--------------+----------------------------+
| Total | 1,241,680 | 1,244,696 |
+------------------------------------------------+--------------+----------------------------+
9. Materials
+------------------------------------------------+--------------+-------------------------------------------+
| | December 31, | December |
| | 2008 | 31, |
| | BGN'000 | 2007 |
| | | BGN'000 |
+------------------------------------------------+--------------+-------------------------------------------+
| | | |
+------------------------------------------------+--------------+-------------------------------------------+
| Fuels | 3,187 | 2,967 |
+------------------------------------------------+--------------+-------------------------------------------+
| Electricity | 2,807 | 2,949 |
+------------------------------------------------+--------------+-------------------------------------------+
| Low cost assets | 2,359 | - |
+------------------------------------------------+--------------+-------------------------------------------+
| Spare parts | 1,807 | 2,112 |
+------------------------------------------------+--------------+-------------------------------------------+
| Office consumables | 832 | 1,140 |
+------------------------------------------------+--------------+-------------------------------------------+
| Advertising materials | 699 | 1,101 |
+------------------------------------------------+--------------+-------------------------------------------+
| Working clothes | 294 | 400 |
+------------------------------------------------+--------------+-------------------------------------------+
| Heating | 236 | 105 |
+------------------------------------------------+--------------+-------------------------------------------+
| Water supply | 197 | 323 |
+------------------------------------------------+--------------+-------------------------------------------+
| Other | 285 | |
| | | 239 |
+------------------------------------------------+--------------+-------------------------------------------+
| | | |
+------------------------------------------------+--------------+-------------------------------------------+
| Total | 12,703 | 11,336 |
+------------------------------------------------+--------------+-------------------------------------------+
10. Hired services
+------------------------------------------------+----------------------------+----------------------------+
| | December | December |
| | 31, | 31, |
| | 2008 | 2007 |
| | BGN'000 | BGN'000 |
+------------------------------------------------+----------------------------+----------------------------+
| | | |
+------------------------------------------------+----------------------------+----------------------------+
| Commissions | 14,146 | 10,349 |
+------------------------------------------------+----------------------------+----------------------------+
| Transportation | 6,986 | 4,762 |
+------------------------------------------------+----------------------------+----------------------------+
| Maintenance and repairs | 5,305 | 4,252 |
+------------------------------------------------+----------------------------+----------------------------+
| Consulting and training | 4,517 | 4,468 |
+------------------------------------------------+----------------------------+----------------------------+
| Advertisement costs | 3,883 | 5,208 |
+------------------------------------------------+----------------------------+----------------------------+
| Rents | 2,867 | 1,267 |
+------------------------------------------------+----------------------------+----------------------------+
| Insurances | 2,607 | 2,429 |
+------------------------------------------------+----------------------------+----------------------------+
| Security | 2,515 | 2,428 |
+------------------------------------------------+----------------------------+----------------------------+
| Communications | 1,497 | 1,913 |
+------------------------------------------------+----------------------------+----------------------------+
| Cash collection expenses | 1,208 | 1,444 |
+------------------------------------------------+----------------------------+----------------------------+
| State and municipal fees | 1,047 | 753 |
+------------------------------------------------+----------------------------+----------------------------+
| Other | 1,455 | 1,452 |
+------------------------------------------------+----------------------------+----------------------------+
| | | |
+------------------------------------------------+----------------------------+----------------------------+
| Total | 48,033 | 40,725 |
+------------------------------------------------+----------------------------+----------------------------+
11. Employee benefits expenses
+------------------------------------------------+--------------+----------------------------+
| | December 31, | December |
| | 2008 | 31, |
| | BGN'000 | 2007 |
| | | BGN'000 |
+------------------------------------------------+--------------+----------------------------+
| | | |
+------------------------------------------------+--------------+----------------------------+
| Wages and salaries | 20,539 | 22,288 |
+------------------------------------------------+--------------+----------------------------+
| Social security contributions and benefits | 5,325 | 5,998 |
+------------------------------------------------+--------------+----------------------------+
| | | |
+------------------------------------------------+--------------+----------------------------+
| Total | 25,864 | 28,286 |
+------------------------------------------------+--------------+----------------------------+
12. Depreciation and amortization expenses
+------------------------------------------------+--------------+----------------------------+
| | December 31, | December |
| | 2008 | 31, |
| | BGN'000 | 2007 |
| | | BGN'000 |
+------------------------------------------------+--------------+----------------------------+
| | | |
+------------------------------------------------+--------------+----------------------------+
| Depreciation of property, plant and | 19,906 | 16,701 |
| equipment | | |
+------------------------------------------------+--------------+----------------------------+
| Amortisation of intangible assets | 719 | 354 |
+------------------------------------------------+--------------+----------------------------+
| Depreciation of investment properties | - | 546 |
+------------------------------------------------+--------------+----------------------------+
| | | |
+------------------------------------------------+--------------+----------------------------+
| Total | 20,625 | 17,601 |
+------------------------------------------------+--------------+----------------------------+
Expenses for the depreciation of investment properties recognized in 2007 are
related to assets of subsidiaries of which the Group disposed during the
previous reporting period (see also note 15).
13. Impairment of assets
+------------------------------------------------+--------------+----------------------------+
| | December 31, | December |
| | 2008 | 31, |
| | BGN'000 | 2007 |
| | | BGN'000 |
+------------------------------------------------+--------------+----------------------------+
| | | |
+------------------------------------------------+--------------+----------------------------+
| Impairment of inventories | 2,739 | 3 |
+------------------------------------------------+--------------+----------------------------+
| Impairment of receivables | 2 | 6,847 |
+------------------------------------------------+--------------+----------------------------+
| | | |
+------------------------------------------------+--------------+----------------------------+
| Total | 2,741 | 6,850 |
+------------------------------------------------+--------------+----------------------------+
Expenses for impairment of inventories for 2008 comprise expenses for impairment
of available as of December 31, 2008 fuels to their net realizable value.
Expenses for impairment of receivables in 2007 comprise expenses for impairment
of receivables at the amount of BGN 4,723 thousand for expenses incurred (state
and lawyers' fees) under a litigation with a Counterparty (see also note 42.1),
impairment of unrecoverable receivables from customers at the amount of BGN
2,108 thousand, and impairment of receivables on litigation, at the amount of
BGN 16 thousand.
14. Other expenses
+------------------------------------------------+--------------+----------------------------+
| | December 31, | December |
| | 2008 | 31, |
| | BGN'000 | 2007 |
| | | BGN'000 |
+------------------------------------------------+--------------+----------------------------+
| | | |
+------------------------------------------------+--------------+----------------------------+
| Taxes and charges | 5,288 | 2,698 |
+------------------------------------------------+--------------+----------------------------+
| Shortages and assets disposed | 3,811 | 6,098 |
+------------------------------------------------+--------------+----------------------------+
| Receivables written-off | 1,997 | - |
+------------------------------------------------+--------------+----------------------------+
| Entertainment expenses and | 2,117 | 3,686 |
| sponsorship | | |
+------------------------------------------------+--------------+----------------------------+
| Penalties and indemnities | 1,164 | 1,083 |
+------------------------------------------------+--------------+----------------------------+
| Loss on liquidation of non-current | 999 | 117 |
| assets, including: | | |
+------------------------------------------------+--------------+----------------------------+
| Income from liquidation | (38) | (247) |
+------------------------------------------------+--------------+----------------------------+
| Carrying amount | 1,037 | 364 |
+------------------------------------------------+--------------+----------------------------+
| Business trips | 687 | 462 |
+------------------------------------------------+--------------+----------------------------+
| Loss on sale of non-current assets | - | 4,665 |
| and materials, including: | | |
+------------------------------------------------+--------------+----------------------------+
| Income from sales | - | (1,253) |
+------------------------------------------------+--------------+----------------------------+
| Carrying amount | - | 5,918 |
+------------------------------------------------+--------------+----------------------------+
| Other | 1,070 | 667 |
+------------------------------------------------+--------------+----------------------------+
| | | |
+------------------------------------------------+--------------+----------------------------+
| Total | 17,133 | 19,476 |
+------------------------------------------------+--------------+----------------------------+
15. Finance income and costs
+------------------------------------------------+--------------+----------------------------+
| | December 31, | December |
| | 2008 | 31, |
| | BGN'000 | 2007 |
| | | BGN'000 |
+------------------------------------------------+--------------+----------------------------+
| | | |
+------------------------------------------------+--------------+----------------------------+
| Finance income | | |
+------------------------------------------------+--------------+----------------------------+
| | | |
+------------------------------------------------+--------------+----------------------------+
| Interest income on interest-bearing loans | 6,536 | 5,027 |
| granted | | |
+------------------------------------------------+--------------+----------------------------+
| Interest income on trade and other | 951 | 1,371 |
| receivables | | |
+------------------------------------------------+--------------+----------------------------+
| Other interest income | 1,598 | 368 |
+------------------------------------------------+--------------+----------------------------+
| Gains on bought-back bonds | 880 | - |
+------------------------------------------------+--------------+----------------------------+
| Gains from sale of subsidiaries, including: | - | 2,286 |
+------------------------------------------------+--------------+----------------------------+
| Income from sales | - | 30,700 |
+------------------------------------------------+--------------+----------------------------+
| Net assets | - | (28,414) |
+------------------------------------------------+--------------+----------------------------+
| Discount of purchased receivables and other | - | 57 |
| income | | |
+------------------------------------------------+--------------+----------------------------+
| | | |
+------------------------------------------------+--------------+----------------------------+
| Total | 9,965 | 9,109 |
+------------------------------------------------+--------------+----------------------------+
| | | |
+------------------------------------------------+--------------+----------------------------+
| Finance costs | | |
+------------------------------------------------+--------------+----------------------------+
| | | |
+------------------------------------------------+--------------+----------------------------+
| Interest expenses on debenture loans | (18,171) | (20,393) |
+------------------------------------------------+--------------+----------------------------+
| Interest expenses on bank loans received | (1,507) | (4,505) |
+------------------------------------------------+--------------+----------------------------+
| Interest expenses on obligations under finance | (439) | (488) |
| lease | | |
+------------------------------------------------+--------------+----------------------------+
| Interest expenses on trade loans received | (796) | (246) |
+------------------------------------------------+--------------+----------------------------+
| Interest expenses on trade and other payables | (2) | (40) |
+------------------------------------------------+--------------+----------------------------+
| Loss from dealings with derivatives, | (126,240) | (40,089) |
| including: | | |
+------------------------------------------------+--------------+----------------------------+
| Losses on transactions | (132,479) | (33,869) |
+------------------------------------------------+--------------+----------------------------+
| Revaluations at fair value | 6,239 | (6,220) |
+------------------------------------------------+--------------+----------------------------+
| Foreign exchange rate losses, net | (2,356) | (407) |
+------------------------------------------------+--------------+----------------------------+
| Loss from sale of associates, including: | - | (140) |
+------------------------------------------------+--------------+----------------------------+
| Income from sale | - | 1,452 |
+------------------------------------------------+--------------+----------------------------+
| Carrying amount | - | (1,592) |
+------------------------------------------------+--------------+----------------------------+
| Bank fees, commissions and other costs | (2,028) | (1,446) |
+------------------------------------------------+--------------+----------------------------+
| | | |
+------------------------------------------------+--------------+----------------------------+
| Total | (151,539) | (67,754) |
+------------------------------------------------+--------------+----------------------------+
In 2007, the Group sold its interest in seven subsidiaries and two associates to
the Controlling Company (see also note 38).
15. Finance income and costs (continued)
The share of the Group in the net assets in the subsidiary companies sold in
2007 is as follows:
+-------------------------------------------------+------------------------+----------------------------+-----------------------+------------------------+----------------------------+---------+-------------+-------------------------+
| | New | Trans | BPI | PCS | Vratsata | Petrol | Eurocapital | Total |
| | Co | Operator | ?AD | | ???D | Trade | | |
| | ???D | ?D | | EO?D | | ???D | ?D | |
+-------------------------------------------------+------------------------+----------------------------+-----------------------+------------------------+----------------------------+---------+-------------+-------------------------+
| | | | | | | | | |
+-------------------------------------------------+------------------------+----------------------------+-----------------------+------------------------+----------------------------+---------+-------------+-------------------------+
| Property, plant | 759 | 1,400 | 6,830 | 3 | 436 | - | 41 | 9,469 |
| and equipment | | | | | | | | |
| and intangible | | | | | | | | |
| assets | | | | | | | | |
+-------------------------------------------------+------------------------+----------------------------+-----------------------+------------------------+----------------------------+---------+-------------+-------------------------+
| Investment | - | - | - | - | - | | 20,617 | 20,617 |
| property | | | | | | | | |
+-------------------------------------------------+------------------------+----------------------------+-----------------------+------------------------+----------------------------+---------+-------------+-------------------------+
| Inventories and | 383 | 1 | 369 | 340 | 9 | 530 | 15,603 | 17,235 |
| receivables | | | | | | | | |
+-------------------------------------------------+------------------------+----------------------------+-----------------------+------------------------+----------------------------+---------+-------------+-------------------------+
| Cash | 64 | 110 | 4 | 16 | 6 | 13 | 59 | 272 |
| and | | | | | | | | |
| cash | | | | | | | | |
| equivalents | | | | | | | | |
+-------------------------------------------------+------------------------+----------------------------+-----------------------+------------------------+----------------------------+---------+-------------+-------------------------+
| Non-current | - | - | - | - | - | - | 1,387 | 1,387 |
| assets held for | | | | | | | | |
| sale | | | | | | | | |
+-------------------------------------------------+------------------------+----------------------------+-----------------------+------------------------+----------------------------+---------+-------------+-------------------------+
| Trade and other | (94) | (1,833) | (2,564) | (365) | (560) | (2,574) | (970) | (8,960) |
| payables | | | | | | | | |
+-------------------------------------------------+------------------------+----------------------------+-----------------------+------------------------+----------------------------+---------+-------------+-------------------------+
| Income tax | (2) | - | (13) | 4 | - | - | (44) | (55) |
| receivable | | | | | | | | |
| (payable) | | | | | | | | |
+-------------------------------------------------+------------------------+----------------------------+-----------------------+------------------------+----------------------------+---------+-------------+-------------------------+
| Deferred tax | (13) | - | - | - | (11) | - | | (11) |
| asset | | | | | | | 13 | |
| (liability) | | | | | | | | |
+-------------------------------------------------+------------------------+----------------------------+-----------------------+------------------------+----------------------------+---------+-------------+-------------------------+
| | | | | | | | | |
+-------------------------------------------------+------------------------+----------------------------+-----------------------+------------------------+----------------------------+---------+-------------+-------------------------+
| Total | 1,097 | (322) | 4,626 | (2) | (120) | (2,031) | 36,706 | 39,954 |
| net | | | | | | | | |
| assets | | | | | | | | |
+-------------------------------------------------+------------------------+----------------------------+-----------------------+------------------------+----------------------------+---------+-------------+-------------------------+
| | | | | | | | | |
+-------------------------------------------------+------------------------+----------------------------+-----------------------+------------------------+----------------------------+---------+-------------+-------------------------+
| Positive | | | 2,012 | | | | | 2,012 |
| goodwill | | | | | | | | |
+-------------------------------------------------+------------------------+----------------------------+-----------------------+------------------------+----------------------------+---------+-------------+-------------------------+
| | | | | | | | | |
+-------------------------------------------------+------------------------+----------------------------+-----------------------+------------------------+----------------------------+---------+-------------+-------------------------+
| Total net assets | 1,097 | (322) | 6,638 | (2) | (120) | (2,031) | 36,706 | 41,966 |
| and positive | | | | | | | | |
| goodwill | | | | | | | | |
+-------------------------------------------------+------------------------+----------------------------+-----------------------+------------------------+----------------------------+---------+-------------+-------------------------+
| | | | | | | | | |
+-------------------------------------------------+------------------------+----------------------------+-----------------------+------------------------+----------------------------+---------+-------------+-------------------------+
| Residual | - | - | - | - | - | - | (13,552) | (13,552) |
| investment of | | | | | | | | |
| the Group | | | | | | | | |
+-------------------------------------------------+------------------------+----------------------------+-----------------------+------------------------+----------------------------+---------+-------------+-------------------------+
| | | | | | | | | |
+-------------------------------------------------+------------------------+----------------------------+-----------------------+------------------------+----------------------------+---------+-------------+-------------------------+
| Group's share in | 1,097 | (322) | 6,638 | (2) | (120) | (2,031) | 23,154 | 28,414 |
| the net assets | | | | | | | | |
| of the disposed | | | | | | | | |
| companies | | | | | | | | |
+-------------------------------------------------+------------------------+----------------------------+-----------------------+------------------------+----------------------------+---------+-------------+-------------------------+
| | | | | | | | | |
+-------------------------------------------------+------------------------+----------------------------+-----------------------+------------------------+----------------------------+---------+-------------+-------------------------+
| Total cash | 9,800 | - | 5,000 | - | - | - | 15,900 | 30,700 |
| proceeds from | | | | | | | | |
| sale | | | | | | | | |
+-------------------------------------------------+------------------------+----------------------------+-----------------------+------------------------+----------------------------+---------+-------------+-------------------------+
| | | | | | | | | |
+-------------------------------------------------+------------------------+----------------------------+-----------------------+------------------------+----------------------------+---------+-------------+-------------------------+
| Cash and cash | (64) | (110) | (4) | (16) | (6) | (13) | | (272) |
| equivalents | | | | | | | (59) | |
| disposed | | | | | | | | |
+-------------------------------------------------+------------------------+----------------------------+-----------------------+------------------------+----------------------------+---------+-------------+-------------------------+
| | | | | | | | | |
+-------------------------------------------------+------------------------+----------------------------+-----------------------+------------------------+----------------------------+---------+-------------+-------------------------+
| Net cash flow in | 9,736 | (110) | 4,996 | (16) | (6) | (13) | 15,841 | 30,428 |
| the cash flow | | | | | | | | |
| statement | | | | | | | | |
+-------------------------------------------------+------------------------+----------------------------+-----------------------+------------------------+----------------------------+---------+-------------+-------------------------+
16. Taxation
Tax expense (income) in the income statement includes the amount of current and
deferred income taxes in accordance with the requirements of IAS 12 Income
Taxes.
+------------------------------------------------+--------------+----------------------------+
| | December 31, | December |
| | 2008 | 31, |
| | BGN'000 | 2007 |
| | | BGN'000 |
+------------------------------------------------+--------------+----------------------------+
| | | |
+------------------------------------------------+--------------+----------------------------+
| Current tax expense | 21,598 | 355 |
+------------------------------------------------+--------------+----------------------------+
| | | |
+------------------------------------------------+--------------+----------------------------+
| Change in deferred taxes, including: | 3,729 | (2,603) |
+------------------------------------------------+--------------+----------------------------+
| Temporary differences recognized | (4,944) | 508 |
| during the year | | |
+------------------------------------------------+--------------+----------------------------+
| Temporary differences originated | 842 | (3,111) |
| during the year | | |
+------------------------------------------------+--------------+----------------------------+
| Adjustments of temporary differences during | 373 | - |
| the year | | |
+------------------------------------------------+--------------+----------------------------+
| | | |
+------------------------------------------------+--------------+----------------------------+
| Total tax expense (income) | 25,327 | (2,248) |
+------------------------------------------------+--------------+----------------------------+
The deferred tax assets (liabilities), presented net in the balance sheet, arise
as a result of the income tax charges on deductible and taxable temporary
differences, the effect of which is as follows:
16. Taxation (continued)
+-------------------------------------+-----------------+----------+-----------------+----------+
| | December | December |
| | 31, 2008 | 31, 2007 |
| | BGN'000 | BGN'000 |
+-------------------------------------+----------------------------+----------------------------+
| | Temporary | Tax | Temporary | Tax |
| | difference | effect | difference | effect |
+-------------------------------------+-----------------+----------+-----------------+----------+
| | | | | |
+-------------------------------------+-----------------+----------+-----------------+----------+
| Balance at the beginning of the | | | | |
| period | | | | |
+-------------------------------------+-----------------+----------+-----------------+----------+
| | | | | |
+-------------------------------------+-----------------+----------+-----------------+----------+
| Tax loss to be carried forward | 32,522 | 3,252 | 5,066 | 507 |
+-------------------------------------+-----------------+----------+-----------------+----------+
| Impairment of assets | 8,650 | 865 | 1,940 | 194 |
+-------------------------------------+-----------------+----------+-----------------+----------+
| Investments in associates | (16,869) | (1,687) | - | - |
+-------------------------------------+-----------------+----------+-----------------+----------+
| Non-current assets | (26,289) | (2,628) | (20,972) | (2,096) |
+-------------------------------------+-----------------+----------+-----------------+----------+
| Exceed of interest payment | 10,973 | 1,098 | - | - |
+-------------------------------------+-----------------+----------+-----------------+----------+
| Subsequent measurement of financial | 2,708 | 271 | - | - |
| assets | | | | |
+-------------------------------------+-----------------+----------+-----------------+----------+
| Unused paid leave and retirement | 2,591 | 259 | 2,124 | 213 |
| benefits | | | | |
+-------------------------------------+-----------------+----------+-----------------+----------+
| Other | 24 | 2 | - | - |
+-------------------------------------+-----------------+----------+-----------------+----------+
| | | | | |
+-------------------------------------+-----------------+----------+-----------------+----------+
| Total | 14,310 | 1,432 | (11,842) | (1,182) |
+-------------------------------------+-----------------+----------+-----------------+----------+
| | | | | |
+-------------------------------------+-----------------+----------+-----------------+----------+
| Originated during the period | | | | |
+-------------------------------------+-----------------+----------+-----------------+----------+
| | | | | |
+-------------------------------------+-----------------+----------+-----------------+----------+
| Tax loss to be carried forward | 686 | 69 | 27,697 | 2,769 |
+-------------------------------------+-----------------+----------+-----------------+----------+
| Impairment of assets | 2,864 | 287 | 6,833 | 683 |
+-------------------------------------+-----------------+----------+-----------------+----------+
| Investment in associates | - | - | (16,869) | (1,687) |
+-------------------------------------+-----------------+----------+-----------------+----------+
| Non-current assets | (798) | (80) | (1,873) | (187) |
+-------------------------------------+-----------------+----------+-----------------+----------+
| Excess of interest payment | 768 | 76 | 10,973 | 1,098 |
+-------------------------------------+-----------------+----------+-----------------+----------+
| Subsequent measurement of financial | 206 | 20 | 2,708 | 271 |
| assets | | | | |
+-------------------------------------+-----------------+----------+-----------------+----------+
| Unused paid leave and retirement | 1,181 | 119 | 1,620 | 162 |
| benefits | | | | |
+-------------------------------------+-----------------+----------+-----------------+----------+
| Other | 3,507 | 351 | 24 | 2 |
+-------------------------------------+-----------------+----------+-----------------+----------+
| | | | | |
+-------------------------------------+-----------------+----------+-----------------+----------+
| Total | 8,414 | 842 | 31,113 | 3,111 |
+-------------------------------------+-----------------+----------+-----------------+----------+
| | | | | |
+-------------------------------------+-----------------+----------+-----------------+----------+
| Reversed during the period | | | | |
+-------------------------------------+-----------------+----------+-----------------+----------+
| | | | | |
+-------------------------------------+-----------------+----------+-----------------+----------+
| Tax loss to be carried forward | (30,490) | (3,049) | (241) | (24) |
+-------------------------------------+-----------------+----------+-----------------+----------+
| Impairment of assets | (4,721) | (472) | 2 | - |
+-------------------------------------+-----------------+----------+-----------------+----------+
| Non-current assets | 4,484 | 448 | (3,692) | (369) |
+-------------------------------------+-----------------+----------+-----------------+----------+
| Excess of interest payment | (10,926) | (1,093) | - | - |
+-------------------------------------+-----------------+----------+-----------------+----------+
| Subsequent measurement of financial | (6,444) | (644) | - | - |
| assets | | | | |
+-------------------------------------+-----------------+----------+-----------------+----------+
| Unused paid leave and retirement | (1,313) | (131) | (1,148) | (115) |
| benefits | | | | |
+-------------------------------------+-----------------+----------+-----------------+----------+
| Other | (30) | (3) | - | - |
+-------------------------------------+-----------------+----------+-----------------+----------+
| | | | | |
+-------------------------------------+-----------------+----------+-----------------+----------+
| Total | (49,440) | (4,944) | (5,079) | (508) |
+-------------------------------------+-----------------+----------+-----------------+----------+
| | | | | |
+-------------------------------------+-----------------+----------+-----------------+----------+
| Disposed through business | | | | |
| combinations | | | | |
+-------------------------------------+-----------------+----------+-----------------+----------+
| | | | | |
+-------------------------------------+-----------------+----------+-----------------+----------+
| Impairment of assets | - | - | (125) | (12) |
+-------------------------------------+-----------------+----------+-----------------+----------+
| Non-current assets | - | - | 248 | 24 |
+-------------------------------------+-----------------+----------+-----------------+----------+
| Unused paid leave and retirement | - | - | (5) | (1) |
| benefits | | | | |
+-------------------------------------+-----------------+----------+-----------------+----------+
| | | | | |
+-------------------------------------+-----------------+----------+-----------------+----------+
| Total | - | - | 118 | 11 |
+-------------------------------------+-----------------+----------+-----------------+----------+
| | | | | |
+-------------------------------------+-----------------+----------+-----------------+----------+
| Adjustments of temporary | - | - | - | - |
| differences | | | | |
+-------------------------------------+-----------------+----------+-----------------+----------+
| | | | | |
+-------------------------------------+-----------------+----------+-----------------+----------+
| Subsequent measurement of financial | 3,736 | 373 | - | - |
| assets | | | | |
+-------------------------------------+-----------------+----------+-----------------+----------+
| | | | | |
+-------------------------------------+-----------------+----------+-----------------+----------+
| Total | 3,736 | 373 | - | - |
+-------------------------------------+-----------------+----------+-----------------+----------+
| | | | | |
+-------------------------------------+-----------------+----------+-----------------+----------+
| Balance at the end of the period | | | | |
+-------------------------------------+-----------------+----------+-----------------+----------+
| | | | | |
+-------------------------------------+-----------------+----------+-----------------+----------+
| Tax loss to be carried forward | 2,718 | 272 | 32,522 | 3,252 |
+-------------------------------------+-----------------+----------+-----------------+----------+
| Impairment of assets | 6,793 | 680 | 8,650 | 865 |
+-------------------------------------+-----------------+----------+-----------------+----------+
| Investment in associates | (16,869) | (1,687) | (16,869) | (1,687) |
+-------------------------------------+-----------------+----------+-----------------+----------+
| Non-current assets | (22,603) | (2,260) | (26,289) | (2,628) |
+-------------------------------------+-----------------+----------+-----------------+----------+
| Excess of interest payment | 815 | 81 | 10,973 | 1,098 |
+-------------------------------------+-----------------+----------+-----------------+----------+
| Subsequent measurement of financial | 206 | 20 | 2,708 | 271 |
| assets | | | | |
+-------------------------------------+-----------------+----------+-----------------+----------+
| Unused paid leave and retirement | 2,459 | 247 | 2,591 | 259 |
| benefits | | | | |
+-------------------------------------+-----------------+----------+-----------------+----------+
| Other | 3,501 | 350 | 24 | 2 |
+-------------------------------------+-----------------+----------+-----------------+----------+
| | | | | |
+-------------------------------------+-----------------+----------+-----------------+----------+
| Total | (22,980) | (2,297) | 14,310 | 1,432 |
+-------------------------------------+-----------------+----------+-----------------+----------+
16. Taxation (continued)
The reconciliation between the accounting profit/(loss) and tax (income)/expense
as well as the calculations of the effective tax rate as at December 31, 2008
and 2007, are presented in the following table:
+-----------------------------------------------+---------------+---------------+
| | December 31, | December 31, |
| | 2008 | 2007 |
| | BGN'000 | BGN'000 |
+-----------------------------------------------+---------------+---------------+
| | | |
+-----------------------------------------------+---------------+---------------+
| Consolidated accounting profit (loss) | 251,510 | (35,142) |
+-----------------------------------------------+---------------+---------------+
| Applicable tax rate | 10% | 10 % |
+-----------------------------------------------+---------------+---------------+
| Income tax at the applicable tax rate | 25,151 | (3,514) |
+-----------------------------------------------+---------------+---------------+
| Combined tax effect on permanent differences | 386 | 386 |
+-----------------------------------------------+---------------+---------------+
| Tax effect from the difference between the | - | 165 |
| tax and | | |
| accounting revaluation reserve written off | | |
+-----------------------------------------------+---------------+---------------+
| Unrecognized tax asset in the current period | 11 | 87 |
+-----------------------------------------------+---------------+---------------+
| Tax effect on consolidation adjustments | (221) | 628 |
+-----------------------------------------------+---------------+---------------+
| | | |
+-----------------------------------------------+---------------+---------------+
| Tax expense (income) | 25,327 | (2,248) |
+-----------------------------------------------+---------------+---------------+
| | | |
+-----------------------------------------------+---------------+---------------+
| Effective tax rate | 10,07% | 6.39% |
+-----------------------------------------------+---------------+---------------+
The tax effect from the consolidation adjustments for the current period
includes mainly the differences between the profits (losses) from the sales of
subsidiaries and associates, recognized in the separate and consolidated
financial statements, the elimination of intra-group profit, originating as a
result of the measurement of assets contributed in kind in ? subsidiary at fair
value, the effect of the application of the equity method, elimination of income
and dividends recognized by the Group, and others.
17. Property, plant and equipment
+------------------+---------+-----------+-----------+----------+---------+--------------+----------+
| | Land | Buildings | Plant | Vehicles | Other | Assets | Total |
| | BGN'000 | BGN'000 | and | BGN'000 | BGN'000 | under | BGN'000 |
| | | | equipment | | | construction | |
| | | | BGN'000 | | | BGN'000 | |
+------------------+---------+-----------+-----------+----------+---------+--------------+----------+
| Cost | | | | | | | |
+------------------+---------+-----------+-----------+----------+---------+--------------+----------+
| | | | | | | | |
+------------------+---------+-----------+-----------+----------+---------+--------------+----------+
| Balance at | 48,349 | 66,450 | 157,154 | 20,236 | 21,112 | 13,011 | 326,312 |
| January 1, 2007 | | | | | | | |
+------------------+---------+-----------+-----------+----------+---------+--------------+----------+
| | | | | | | | |
+------------------+---------+-----------+-----------+----------+---------+--------------+----------+
| Additions | 1,177 | - | 895 | 854 | 122 | 37,623 | 40,671 |
+------------------+---------+-----------+-----------+----------+---------+--------------+----------+
| Disposals | (4,844) | (2,431) | (2,977) | (165) | (126) | (21) | (10,564) |
+------------------+---------+-----------+-----------+----------+---------+--------------+----------+
| Disposed in | (436) | (8,123) | (8,870) | - | (745) | (411) | (18,585) |
| business | | | | | | | |
| combinations | | | | | | | |
+------------------+---------+-----------+-----------+----------+---------+--------------+----------+
| Transfers to | 259 | 7,933 | 26,050 | 10 | (574) | (33,677) | 1 |
| non-current | | | | | | | |
| assets and | | | | | | | |
| investment | | | | | | | |
| properties | | | | | | | |
+------------------+---------+-----------+-----------+----------+---------+--------------+----------+
| | | | | | | | |
+------------------+---------+-----------+-----------+----------+---------+--------------+----------+
| Balance at | 44,505 | 63,829 | 172,252 | 20,935 | 19,789 | 16,525 | 337,835 |
| December 31, | | | | | | | |
| 2007 | | | | | | | |
+------------------+---------+-----------+-----------+----------+---------+--------------+----------+
| | | | | | | | |
+------------------+---------+-----------+-----------+----------+---------+--------------+----------+
| Additions | 1,954 | 1,086 | 3,739 | 5,110 | 211 | 26,497 | 38,597 |
+------------------+---------+-----------+-----------+----------+---------+--------------+----------+
| Disposals | (22) | (8,486) | (6,749) | (961) | (1,113) | (1,696) | (19,027) |
+------------------+---------+-----------+-----------+----------+---------+--------------+----------+
| Transfers | 423 | 7,410 | 22,590 | - | 1,290 | (31,713) | - |
+------------------+---------+-----------+-----------+----------+---------+--------------+----------+
| Transfers to | (8,959) | (17,336) | (56,565) | - | (8,632) | - | (91,492) |
| non-current | | | | | | | |
| assets held for | | | | | | | |
| sale | | | | | | | |
+------------------+---------+-----------+-----------+----------+---------+--------------+----------+
| | | | | | | | |
+------------------+---------+-----------+-----------+----------+---------+--------------+----------+
| Balance at | 37,901 | 46,503 | 135,267 | 25,084 | 11,545 | 9,613 | 265,913 |
| December 31, | | | | | | | |
| 2008 | | | | | | | |
+------------------+---------+-----------+-----------+----------+---------+--------------+----------+
| | | | | | | | |
+------------------+---------+-----------+-----------+----------+---------+--------------+----------+
| Accumulated | | | | | | | |
| depreciation | | | | | | | |
+------------------+---------+-----------+-----------+----------+---------+--------------+----------+
| | | | | | | | |
+------------------+---------+-----------+-----------+----------+---------+--------------+----------+
| Balance at | - | 32,763 | 71,190 | 8,606 | 12,139 | - | 124,698 |
| January 1 2007 | | | | | | | |
+------------------+---------+-----------+-----------+----------+---------+--------------+----------+
| | | | | | | | |
+------------------+---------+-----------+-----------+----------+---------+--------------+----------+
| Charged | - | 1,707 | 8,990 | 2,982 | 3,022 | - | 16,701 |
+------------------+---------+-----------+-----------+----------+---------+--------------+----------+
| Disposed for the | - | (1,331) | (2,011) | (147) | (93) | - | (3,582) |
| period | | | | | | | |
+------------------+---------+-----------+-----------+----------+---------+--------------+----------+
| Disposed in | - | (1,744) | (7,073) | - | (328) | - | (9,145) |
| business | | | | | | | |
| combinations | | | | | | | |
+------------------+---------+-----------+-----------+----------+---------+--------------+----------+
| Transfers to | - | - | (4) | - | 4 | - | - |
| non-current | | | | | | | |
| assets and | | | | | | | |
| investment | | | | | | | |
| properties | | | | | | | |
+------------------+---------+-----------+-----------+----------+---------+--------------+----------+
| | | | | | | | |
+------------------+---------+-----------+-----------+----------+---------+--------------+----------+
| Balance at | - | 31,395 | 71, 092 | 11,441 | 14,744 | - | 128,672 |
| December 31, | | | | | | | |
| 2007 | | | | | | | |
+------------------+---------+-----------+-----------+----------+---------+--------------+----------+
| | | | | | | | |
+------------------+---------+-----------+-----------+----------+---------+--------------+----------+
| Charged | - | 1,358 | 11,416 | 5,177 | 1,955 | - | 19,906 |
+------------------+---------+-----------+-----------+----------+---------+--------------+----------+
| Disposed for the | - | (7,655) | (6,110) | (730) | (778) | - | (15,273) |
| period | | | | | | | |
+------------------+---------+-----------+-----------+----------+---------+--------------+----------+
| Transfers to | - | (7,090) | (18,949) | - | (8,488) | - | (34,527) |
| non-current | | | | | | | |
| assets held for | | | | | | | |
| sale | | | | | | | |
+------------------+---------+-----------+-----------+----------+---------+--------------+----------+
| | | | | | | | |
+------------------+---------+-----------+-----------+----------+---------+--------------+----------+
| Balance at | - | 18,008 | 57,449 | 15,888 | 7,433 | - | 98,778 |
| December 31, | | | | | | | |
| 2008 | | | | | | | |
+------------------+---------+-----------+-----------+----------+---------+--------------+----------+
| | | | | | | | |
+------------------+---------+-----------+-----------+----------+---------+--------------+----------+
| Carrying amount | 48,349 | 33,687 | 85,964 | 11,630 | 8,973 | 13,011 | 201,614 |
| at January 1, | | | | | | | |
| 2007 | | | | | | | |
+------------------+---------+-----------+-----------+----------+---------+--------------+----------+
| | | | | | | | |
+------------------+---------+-----------+-----------+----------+---------+--------------+----------+
| Carrying amount | 44,505 | 32,434 | 101,160 | 9,494 | 5,045 | 16,525 | 209,163 |
| at | | | | | | | |
| December 31, | | | | | | | |
| 2007 | | | | | | | |
+------------------+---------+-----------+-----------+----------+---------+--------------+----------+
| | | | | | | | |
+------------------+---------+-----------+-----------+----------+---------+--------------+----------+
| Carrying amount | 37,901 | 28,495 | 77,818 | 9,196 | 4,112 | 9,613 | 167,135 |
| at | | | | | | | |
| December 31, | | | | | | | |
| 2008 | | | | | | | |
+------------------+---------+-----------+-----------+----------+---------+--------------+----------+
17. Property, plant and equipment (continued)
Additions to assets under construction for the current year comprise mainly of
expenses related to the construction of fuels stations under the Universal
program.
As of December 31, 2008, land and buildings with carrying amount of BGN 9,043
thousand are mortgaged as collaterals under bank and trade loans, extended to
the Group, the Controlling Company and other related parties (see also note 42).
18. Intangible assets
+----------------------+-----------+-----------+-----------+--------------+-----------+
| | Software | Licenses | Other | Assets | Total |
| | BGN'000 | BGN'000 | BGN'000 | under | BGN'000 |
| | | | | construction | |
| | | | | BGN'000 | |
+----------------------+-----------+-----------+-----------+--------------+-----------+
| Cost | | | | | |
+----------------------+-----------+-----------+-----------+--------------+-----------+
| | | | | | |
+----------------------+-----------+-----------+-----------+--------------+-----------+
| Balance at January | 1,504 | 1,001 | 113 | 210 | 2,828 |
| 1, 2007 | | | | | |
+----------------------+-----------+-----------+-----------+--------------+-----------+
| | | | | | |
+----------------------+-----------+-----------+-----------+--------------+-----------+
| Additions | 3 | 15 | 75 | 103 | 196 |
+----------------------+-----------+-----------+-----------+--------------+-----------+
| Disposals | (2) | - | - | - | (2) |
+----------------------+-----------+-----------+-----------+--------------+-----------+
| Disposed in business | (30) | (16) | - | - | (46) |
| combinations | | | | | |
+----------------------+-----------+-----------+-----------+--------------+-----------+
| ?ransfers | 2 | - | - | - | 2 |
+----------------------+-----------+-----------+-----------+--------------+-----------+
| | | | | | |
+----------------------+-----------+-----------+-----------+--------------+-----------+
| Balance at December | 1,477 | 1,000 | 188 | 313 | 2,978 |
| 31, 2007 | | | | | |
+----------------------+-----------+-----------+-----------+--------------+-----------+
| | | | | | |
+----------------------+-----------+-----------+-----------+--------------+-----------+
| Charged | 69 | 7 | 84 | - | 160 |
+----------------------+-----------+-----------+-----------+--------------+-----------+
| Disposals | (689) | (66) | (72) | (313) | (1,140) |
+----------------------+-----------+-----------+-----------+--------------+-----------+
| Transfers to | (195) | - | - | - | (195) |
| non-current assets | | | | | |
| held for sale | | | | | |
+----------------------+-----------+-----------+-----------+--------------+-----------+
| | | | | | |
+----------------------+-----------+-----------+-----------+--------------+-----------+
| Balance at December | 662 | 941 | 200 | - | 1,803 |
| 31, 2008 | | | | | |
+----------------------+-----------+-----------+-----------+--------------+-----------+
| | | | | | |
+----------------------+-----------+-----------+-----------+--------------+-----------+
| Accumulated | | | | | |
| amortization | | | | | |
+----------------------+-----------+-----------+-----------+--------------+-----------+
| | | | | | |
+----------------------+-----------+-----------+-----------+--------------+-----------+
| Balance at January | 1,095 | 275 | 58 | - | 1,428 |
| 1, 2007 | | | | | |
+----------------------+-----------+-----------+-----------+--------------+-----------+
| | | | | | |
+----------------------+-----------+-----------+-----------+--------------+-----------+
| Charged | 169 | 149 | 36 | - | 354 |
+----------------------+-----------+-----------+-----------+--------------+-----------+
| Disposed for the | (2) | - | - | - | (2) |
| period | | | | | |
+----------------------+-----------+-----------+-----------+--------------+-----------+
| Disposed in business | (16) | (1) | - | - | (17) |
| combinations | | | | | |
+----------------------+-----------+-----------+-----------+--------------+-----------+
| | | | | | |
+----------------------+-----------+-----------+-----------+--------------+-----------+
| Balance at December | 1,246 | 423 | 94 | - | 1,763 |
| 31, 2007 | | | | | |
+----------------------+-----------+-----------+-----------+--------------+-----------+
| | | | | | |
+----------------------+-----------+-----------+-----------+--------------+-----------+
| Charged | 86 | 575 | 58 | - | 719 |
+----------------------+-----------+-----------+-----------+--------------+-----------+
| Disposals | (667) | (66) | (67) | - | (800) |
+----------------------+-----------+-----------+-----------+--------------+-----------+
| Transfers to | (82) | - | - | - | (82) |
| non-current assets | | | | | |
| held for sale | | | | | |
+----------------------+-----------+-----------+-----------+--------------+-----------+
| | | | | | |
+----------------------+-----------+-----------+-----------+--------------+-----------+
| Balance at December | 583 | 932 | 85 | - | 1,600 |
| 31, 2008 | | | | | |
+----------------------+-----------+-----------+-----------+--------------+-----------+
| | | | | | |
+----------------------+-----------+-----------+-----------+--------------+-----------+
| Balance at December | 409 | 726 | 55 | 210 | 1,400 |
| 31, 2007 | | | | | |
+----------------------+-----------+-----------+-----------+--------------+-----------+
| | | | | | |
+----------------------+-----------+-----------+-----------+--------------+-----------+
| Carrying amount at | 231 | 577 | 94 | 313 | 1,215 |
| December 31, 2007 | | | | | |
+----------------------+-----------+-----------+-----------+--------------+-----------+
| | | | | | |
+----------------------+-----------+-----------+-----------+--------------+-----------+
| Carrying amount at | 79 | 9 | 115 | - | 203 |
| December 31, 2008 | | | | | |
+----------------------+-----------+-----------+-----------+--------------+-----------+
19.Investments in associates and other companies
+-------------------------------------------+------------------------+---------------------------+---------+---------+---------------------------+---------+
| | December | December |
| | 31, | 31, |
| | 2008 | 2007 |
+ +--------------------------------------------------------------+-----------------------------------------------+
| | BGN'000 | % | Share | BGN'000 | % | Share |
| | | of | in | | of | in |
| | | capital | profit | | capital | profit |
| | | | (loss) | | | (loss) |
| | | | for the | | | for the |
| | | | period | | | period |
+-------------------------------------------+------------------------+---------------------------+---------+---------+---------------------------+---------+
| | | | | | | |
+-------------------------------------------+------------------------+---------------------------+---------+---------+---------------------------+---------+
| Investments in | | | | | | |
| associates | | | | | | |
+-------------------------------------------+------------------------+---------------------------+---------+---------+---------------------------+---------+
| | | | | | | |
+-------------------------------------------+------------------------+---------------------------+---------+---------+---------------------------+---------+
| Eurocapital | 15,776 | 36.92% | 851 | 14,925 | 36.92% | 1,373 |
| Bulgaria AD | | | | | | |
+-------------------------------------------+------------------------+---------------------------+---------+---------+---------------------------+---------+
| Varna | - | - | - | - | - | (224) |
| Business | | | | | | |
| Services | | | | | | |
| ??D | | | | | | |
+-------------------------------------------+------------------------+---------------------------+---------+---------+---------------------------+---------+
| Petrol Engineering AD, | - | - | - | - | - | - |
| net of impairment | | | | | | |
+-------------------------------------------+------------------------+---------------------------+---------+---------+---------------------------+---------+
| | | | | | | |
+-------------------------------------------+------------------------+---------------------------+---------+---------+---------------------------+---------+
| Total | 15,776 | | 851 | 14,925 | | 1,149 |
+-------------------------------------------+------------------------+---------------------------+---------+---------+---------------------------+---------+
| | | | | | | |
+-------------------------------------------+------------------------+---------------------------+---------+---------+---------------------------+---------+
| Other | | | | | | |
| investments | | | | | | |
+-------------------------------------------+------------------------+---------------------------+---------+---------+---------------------------+---------+
| | | | | | | |
+-------------------------------------------+------------------------+---------------------------+---------+---------+---------------------------+---------+
| Capital 3000 ?D, net | - | 6.92 % | - | - | 6.92 % | - |
| of impairment | | | | | | |
+-------------------------------------------+------------------------+---------------------------+---------+---------+---------------------------+---------+
| | | | | | | |
+-------------------------------------------+------------------------+---------------------------+---------+---------+---------------------------+---------+
| Total | - | | - | - | | - |
+-------------------------------------------+------------------------+---------------------------+---------+---------+---------------------------+---------+
| | | | | | | |
+-------------------------------------------+------------------------+---------------------------+---------+---------+---------------------------+---------+
In 2007 the Group sold its entire interest in the associates Varna Business
Services OOD and Petrol Engineering AD. The investment in Petrol Engineering AD
was fully impaired in prior reporting periods. In addition, in 2007 the Group
sold to the Controlling company seven of its subsidiaries. In one of them -
Eurocapital Bulgaria AD, the Group kept participation of 36.92%.
The total amount of the assets, liabilities, income and financial results of the
associates as of December 31, 2008 and 2007 is as follows:
+-------------------------------------------+---------------------------+-------------------------------+---------------------------+---------------------------+---------------------------+
| | Assets | Liabilities | Net | Revenue | Profit/ |
| | BGN'000 | BGN'000 | assets | BGN'000 | (loss) |
| | | | BGN'000 | | BGN'000 |
+-------------------------------------------+---------------------------+-------------------------------+---------------------------+---------------------------+---------------------------+
| | | | | | |
+-------------------------------------------+---------------------------+-------------------------------+---------------------------+---------------------------+---------------------------+
| December | | | | | |
| 31, 2008 | | | | | |
+-------------------------------------------+---------------------------+-------------------------------+---------------------------+---------------------------+---------------------------+
| | | | | | |
+-------------------------------------------+---------------------------+-------------------------------+---------------------------+---------------------------+---------------------------+
| Eurocapital | 94,899 | 31,419 | 63,480 | 4,632 | 2,305 |
| Bulgaria AD | | | | | |
+-------------------------------------------+---------------------------+-------------------------------+---------------------------+---------------------------+---------------------------+
| | | | | | |
+-------------------------------------------+---------------------------+-------------------------------+---------------------------+---------------------------+---------------------------+
| Total | 94,899 | 31,419 | 63,480 | 4,632 | 2,305 |
| | | | | | |
+-------------------------------------------+---------------------------+-------------------------------+---------------------------+---------------------------+---------------------------+
| | | | | | |
+-------------------------------------------+---------------------------+-------------------------------+---------------------------+---------------------------+---------------------------+
| December | | | | | |
| 31, 2007 | | | | | |
+-------------------------------------------+---------------------------+-------------------------------+---------------------------+---------------------------+---------------------------+
| | | | | | |
+-------------------------------------------+---------------------------+-------------------------------+---------------------------+---------------------------+---------------------------+
| Eurocapital | 63,881 | 2,706 | 61,175 | 2,138 | (211) |
| Bulgaria AD | | | | | |
+-------------------------------------------+---------------------------+-------------------------------+---------------------------+---------------------------+---------------------------+
| | | | | | |
+-------------------------------------------+---------------------------+-------------------------------+---------------------------+---------------------------+---------------------------+
| Total | 63,881 | 2,706 | 61,175 | 2,138 | (211) |
| | | | | | |
+-------------------------------------------+---------------------------+-------------------------------+---------------------------+---------------------------+---------------------------+
20.Goodwill, net
+-------------------------------------+-------------+-------------+-------------+
| | | | Goodwill |
| | | | BGN'000 |
+-------------------------------------+-------------+-------------+-------------+
| Cost | | | |
+-------------------------------------+-------------+-------------+-------------+
| | | | |
+-------------------------------------+-------------+-------------+-------------+
| Balance at January 1, 2007 | | | 20,309 |
+-------------------------------------+-------------+-------------+-------------+
| | | | |
+-------------------------------------+-------------+-------------+-------------+
| Disposed in business combinations | | | (2,012) |
+-------------------------------------+-------------+-------------+-------------+
| | | | |
+-------------------------------------+-------------+-------------+-------------+
| Balance at December 31, 2007 and | | | 18,297 |
| 2008 | | | |
+-------------------------------------+-------------+-------------+-------------+
| | | | |
+-------------------------------------+-------------+-------------+-------------+
| | | | |
+-------------------------------------+-------------+-------------+-------------+
In 2007, the Group sold its subsidiary BPI EAD to the Controlling company. As a
result of this, part of the goodwill at the amount of BGN 2,012 thousand was
written-off, which originated upon the acquisition of the company.
21. Interest-bearing loans and deposits granted
+-------------------------------------------------+----------------------------+----------------------------+
| | December | December |
| | 31, 2008 | 31, 2007 |
| | BGN'000 | BGN'000 |
+-------------------------------------------------+----------------------------+----------------------------+
| | | |
+-------------------------------------------------+----------------------------+----------------------------+
| Non-current receivables | | |
+-------------------------------------------------+----------------------------+----------------------------+
| | | |
+-------------------------------------------------+----------------------------+----------------------------+
| Interest-bearing loans, granted to related | 28,922 | 36,810 |
| parties | | |
+-------------------------------------------------+----------------------------+----------------------------+
| | | |
+-------------------------------------------------+----------------------------+----------------------------+
| Total | 28,922 | 36,810 |
+-------------------------------------------------+----------------------------+----------------------------+
| | | |
+-------------------------------------------------+----------------------------+----------------------------+
| Current receivables | | |
+-------------------------------------------------+----------------------------+----------------------------+
| | | |
+-------------------------------------------------+----------------------------+----------------------------+
| Interest-bearing loans and deposits granted to | 7,938 | 40,677 |
| related parties | | |
+-------------------------------------------------+----------------------------+----------------------------+
| Finance lease receivables | - | 15 |
+-------------------------------------------------+----------------------------+----------------------------+
| Interest-bearing loans granted to other | 51 | - |
| companies | | |
+-------------------------------------------------+----------------------------+----------------------------+
| | | |
+-------------------------------------------------+----------------------------+----------------------------+
| Total | 7,989 | 40,692 |
+-------------------------------------------------+----------------------------+----------------------------+
Receivables on interest-bearing loans granted to related parties are disclosed
in note 39.
22. Other non-current receivables
Other non-current receivables comprise a paid by the Group guarantee deposit,
related to lease agreements for vehicles, at the amount of BGN 274 thousand,
with repayment term December, 2014
23. Inventories
+------------------------------------------------+----------------------------+----------------------------+
| | December | December |
| | 31, | 31, |
| | 2008 | 2007 |
| | BGN'000 | BGN'000 |
+------------------------------------------------+----------------------------+----------------------------+
| | | |
+------------------------------------------------+----------------------------+----------------------------+
| Goods, including: | 42,402 | 134,966 |
+------------------------------------------------+----------------------------+----------------------------+
| Fuels | 35,339 | 128,123 |
+------------------------------------------------+----------------------------+----------------------------+
| Lubricants and other | 7,063 | 6,843 |
| goods | | |
+------------------------------------------------+----------------------------+----------------------------+
| Materials | 3,510 | 4,462 |
+------------------------------------------------+----------------------------+----------------------------+
| | | |
+------------------------------------------------+----------------------------+----------------------------+
| Total | 45,912 | 139,428 |
+------------------------------------------------+----------------------------+----------------------------+
As of December 31, 2008, inventories with carrying amount of BGN 36,015 thousand
(2007: BGN 64,464 thousand) are pledged as collateral under bank loans
utilized by the Group
(see also note 42).
24. Trade and other receivables, net
+--------------------------------------------------+----------------------------+----------------------------+
| | December | December |
| | 31, | 31, |
| | 2008 | 2007 |
| | BGN'000 | BGN'000 |
+--------------------------------------------------+----------------------------+----------------------------+
| | | |
+--------------------------------------------------+----------------------------+----------------------------+
| Trade receivables, | 63,950 | 82,172 |
| net of impairment | | |
| losses | | |
+--------------------------------------------------+----------------------------+----------------------------+
| Initial cost | 66,046 | 84,483 |
+--------------------------------------------------+----------------------------+----------------------------+
| Impairment loss | (2,096) | (2,311) |
+--------------------------------------------------+----------------------------+----------------------------+
| Tax | - | 18,667 |
| recoverable, | | |
| result of | | |
| corrections | | |
| of errors | | |
+--------------------------------------------------+----------------------------+----------------------------+
| Related | 3,276 | 7,553 |
| party | | |
| receivables | | |
+--------------------------------------------------+----------------------------+----------------------------+
| Litigations and | 1,350 | 507 |
| writs, net of | | |
| impairment losses | | |
+--------------------------------------------------+----------------------------+----------------------------+
| Initial cost | 1,366 | 5,745 |
+--------------------------------------------------+----------------------------+----------------------------+
| Impairment loss | (16) | (5,238) |
+--------------------------------------------------+----------------------------+----------------------------+
| VAT and excise | 2,485 | 3,490 |
| duties refundable | | |
+--------------------------------------------------+----------------------------+----------------------------+
| Advances granted | 957 | 2,836 |
+--------------------------------------------------+----------------------------+----------------------------+
| Other | 5,387 | 5,829 |
+--------------------------------------------------+----------------------------+----------------------------+
| | | |
+--------------------------------------------------+----------------------------+----------------------------+
| Total | 77,405 | 121,054 |
+--------------------------------------------------+----------------------------+----------------------------+
24. Trade and other receivables, net (continued)
Overdue receivables at the amount of BGN 27,910 thousand and BGN 28,002 thousand
are included in the balance of the trade and other receivables as of December
31, 2008 and 2007, respectively. The Group has no collateral for these
receivables, since there is no significant change in the quality of the
creditworthiness of the counterparties and they are still considered
recoverable.
The ageing analysis of the overdue, but not impaired receivables, is presented
in the table below:
+-------------------------------------------------+----------------------------+----------------------------+
| | December | December |
| | 31, | 31, |
| | 2008 | 2007 |
| | BGN'000 | BGN'000 |
+-------------------------------------------------+----------------------------+----------------------------+
| | | |
+-------------------------------------------------+----------------------------+----------------------------+
| Up to 30 days | 8,405 | 12,036 |
+-------------------------------------------------+----------------------------+----------------------------+
| 31 - 120 days | 8,420 | 3,727 |
+-------------------------------------------------+----------------------------+----------------------------+
| 121 - 210 days | 1,418 | 2,022 |
+-------------------------------------------------+----------------------------+----------------------------+
| Over 211 days | 9,667 | 10,217 |
+-------------------------------------------------+----------------------------+----------------------------+
| | | |
+-------------------------------------------------+----------------------------+----------------------------+
| Total | 27,910 | 28,002 |
+-------------------------------------------------+----------------------------+----------------------------+
The Group believes that overdue receivables are recoverable, since, as of the
date of the authorization for issue of the present consolidated financial
statements, approximately 53% of them are paid.
Receivables at the amount of BGN 6,020 thousand as of December 31, 2008, are
receivables from a customer with whom the Group's management is negotiation an
offsetting. The receivable is not stated as overdue, although originating prior
to 211 days, since the offsetting occurred in March, 2009 (see also note 44).
As of December 31, 2008, a company within the Group has receivables at the
amount of BGN 23,313 thousand (2007: BGN 25,291 thousand), which are provided as
collateral under utilized bank loans (see also note 42).
Receivables from related parties are disclosed in note 39.
Group's management believes that the carrying amount of trade and other
receivables approximates their fair value as of December 31, 2008 and 2007.
25. Derivative financial assets
As of December 31, 2007, derivatives in the balance sheet of the Group comprise
2,000 put options crude oil with original value of BGN 3,326 thousand. As of
December 31, 2007, these options were restated at fair value amounting to BGN
808 thousand and the difference is reported in profit or loss (see also note
15).
26. Cash and cash equivalents
+------------------------------------------------+--------------+--------------+
| | December 31, | December 31, |
| | 2008 | 2007 |
| | BGN'000 | BGN'000 |
+------------------------------------------------+--------------+--------------+
| | | |
+------------------------------------------------+--------------+--------------+
| Cash at banks | 5,163 | 46,507 |
+------------------------------------------------+--------------+--------------+
| Cash in transfer | 4,631 | 9,245 |
+------------------------------------------------+--------------+--------------+
| Cash on hand | 220 | 204 |
+------------------------------------------------+--------------+--------------+
| | | |
+------------------------------------------------+--------------+--------------+
| Cash as stated in cash flow statement | 10,014 | 55,956 |
+------------------------------------------------+--------------+--------------+
| | | |
+------------------------------------------------+--------------+--------------+
| Restricted cash | 13,304 | 11,581 |
+------------------------------------------------+--------------+--------------+
| | | |
+------------------------------------------------+--------------+--------------+
| Cash as stated on the balance sheet | 23,318 | 67,537 |
+------------------------------------------------+--------------+--------------+
As of December 31, 2008 restricted cash include mainly cash at the amount of BGN
12, 872 thousand, which serve as collateral for an excise liability, as well as
margin deposits on transactions with derivatives and bank guarantees.
As of December 31, 2007 restricted cash include mainly margin deposits at the
amount of BGN 10,656 on transactions with derivatives, as well as cash at bank
accounts, which serve as collateral for an open letter of credit.
Cash in transfer include cash collected from the commercial outlets as of the
balance sheet date, which are transferred to the accounts of the Group at the
beginning of the next reporting period.
27. Non-current assets, held for sale
+--------------------------+---------+-----------+-----------+----------+------------+-----------+
| | Land | Buildings | Plant | Other | Intangible | Total |
| | BGN'000 | BGN'000 | and | tangible | assets | BGN'000 |
| | | | equipment | assets | BGN'000 | |
| | | | BGN'000 | BGN'000 | | |
+--------------------------+---------+-----------+-----------+----------+------------+-----------+
| | | | | | | |
+--------------------------+---------+-----------+-----------+----------+------------+-----------+
| Balance at January 1, | 390 | 988 | 4 | 5 | - | 1,387 |
| 2007 | | | | | | |
+--------------------------+---------+-----------+-----------+----------+------------+-----------+
| | | | | | | |
+--------------------------+---------+-----------+-----------+----------+------------+-----------+
| Disposed in business | (390) | (988) | (4) | (5) | - | (1,387) |
| combinations | | | | | | |
+--------------------------+---------+-----------+-----------+----------+------------+-----------+
| | | | | | | |
+--------------------------+---------+-----------+-----------+----------+------------+-----------+
| Balance at December 31, | - | - | - | - | - | - |
| 2007 | | | | | | |
+--------------------------+---------+-----------+-----------+----------+------------+-----------+
| | | | | | | |
+--------------------------+---------+-----------+-----------+----------+------------+-----------+
| Transfer from | 8,959 | 10,246 | 37,616 | 144 | 113 | 57,078 |
| non-current assets | | | | | | |
+--------------------------+---------+-----------+-----------+----------+------------+-----------+
| Disposals | (7,242) | (9,395) | (36,377) | (144) | (113) | (53,271) |
+--------------------------+---------+-----------+-----------+----------+------------+-----------+
| | | | | | | |
+--------------------------+---------+-----------+-----------+----------+------------+-----------+
| Balance at December 31, | 1,717 | 851 | 1,239 | - | - | 3,807 |
| 2008 | | | | | | |
+--------------------------+---------+-----------+-----------+----------+------------+-----------+
Part of non-current assets, held for sale as of December 31, 2008 at the amount
of BGN 483 thousand represent land and gas station buildings for which, in March
2008, was signed a preliminary sales contract with a third party (see also note
7).
In June 2008, the Group's management decided to sell 105 unprofitable gas
stations. Till the end of the same year, 25 of them were sold. As of December
31, 2008, the remaining gas stations, at the carrying amount of BGN 3,324
thousand, are stated in the present consolidated financial statements as
non-current assets held for sale (see also note 7).
28.Trade and other payables
+------------------------------------------------+----------------------------+----------------------------+
| | December | December |
| | 31 | 31 |
| | 2008 | 2007 |
| | BGN'000 | BGN'000 |
+------------------------------------------------+----------------------------+----------------------------+
| | | |
+------------------------------------------------+----------------------------+----------------------------+
| Payables to suppliers | 51,514 | 201,167 |
+------------------------------------------------+----------------------------+----------------------------+
| VAT and excise duty payables | 44,401 | 59,686 |
+------------------------------------------------+----------------------------+----------------------------+
| Related party payables | 22,893 | 3,050 |
+------------------------------------------------+----------------------------+----------------------------+
| Payables to personnel and social security | 6,742 | 4,353 |
| funds | | |
+------------------------------------------------+----------------------------+----------------------------+
| Deferred income | 2,032 | 91 |
+------------------------------------------------+----------------------------+----------------------------+
| Advances received | 1,125 | 1,018 |
+------------------------------------------------+----------------------------+----------------------------+
| Other | 7,476 | 5,860 |
+------------------------------------------------+----------------------------+----------------------------+
| | | |
+------------------------------------------------+----------------------------+----------------------------+
| Total | 136,183 | 275,225 |
+------------------------------------------------+----------------------------+----------------------------+
Related party payables are disclosed in note 39.
In accordance with a preliminary agreement signed between the Group and a third
party in March, 2008, as disclosed in note 7, payables at the amount of BGN
105,614 thousand (VAT incl.) were offset by receivables of the same amount. This
offsetting is a non-monetary operation, which is not included in the cash flow
statement of the present financial statements. The cash flow statement includes
only the actual received sum related to the sale of non-current assets,
disclosed in note 7. The actual received sum in 2008 is in the amount of BGN
191,933 (VAT incl.).
The Group accrues liabilities for unused annual paid leave of employees in
compliance with IAS 19 Employee Benefits. The movement of these liabilities for
the reported periods is, as follows:
+------------------------------------------------+-----------------------------------+-----------------------------------+
| | December | December |
| | 31 | 31 |
| | 2008 | 2007 |
| | BGN'000 | BGN'000 |
+------------------------------------------------+-----------------------------------+-----------------------------------+
| | | |
+------------------------------------------------+-----------------------------------+-----------------------------------+
| Balance at the beginning of the period | 2,133 | 1,667 |
+------------------------------------------------+-----------------------------------+-----------------------------------+
| Accrued during the period | 1,166 | 1,562 |
+------------------------------------------------+-----------------------------------+-----------------------------------+
| Utilized during the period | (1,223) | (1,084) |
+------------------------------------------------+-----------------------------------+-----------------------------------+
| Other changes | (278) | - |
+------------------------------------------------+-----------------------------------+-----------------------------------+
| Disposed in business combinations | - | (12) |
+------------------------------------------------+-----------------------------------+-----------------------------------+
| | | |
+------------------------------------------------+-----------------------------------+-----------------------------------+
| Balance at the end of the period, including: | | |
| | 1,798 | 2,133 |
+------------------------------------------------+-----------------------------------+-----------------------------------+
| For salaries on unused paid leave | 1,471 | 1,780 |
+------------------------------------------------+-----------------------------------+-----------------------------------+
| For social security contributions on | 327 | 353 |
| unused paid leaves | | |
+------------------------------------------------+-----------------------------------+-----------------------------------+
The balance at the end of the period is presented in the balance sheet together
with the current liabilities for employee benefits and social security
organizations.
The management believes that the carrying amount of the current liabilities,
presented in the balance sheet as of December 31, 2008 and 2007, approximates
their fair value.
29. Interest-bearing loans
+------------------------------------------------+-------------------------------------------+--------------------------------------------+
| | December | December |
| | 31 | 31 |
| | 2008 | 2007 |
| | BGN'000 | BGN'000 |
+------------------------------------------------+-------------------------------------------+--------------------------------------------+
| | | |
+------------------------------------------------+-------------------------------------------+--------------------------------------------+
| Current liabilities | | |
+------------------------------------------------+-------------------------------------------+--------------------------------------------+
| | | |
+------------------------------------------------+-------------------------------------------+--------------------------------------------+
| Current portion of liabilities on bank loans | 1,408 | 59,091 |
+------------------------------------------------+-------------------------------------------+--------------------------------------------+
| Current portion of liabilities on debenture | 3,182 | 18,335 |
| loans | | |
+------------------------------------------------+-------------------------------------------+--------------------------------------------+
| Current portion of liabilities to related | 4,604 | - |
| parties on trade loans | | |
+------------------------------------------------+-------------------------------------------+--------------------------------------------+
| | | |
+------------------------------------------------+-------------------------------------------+--------------------------------------------+
| Total | | |
| | 9,194 | 77,426 |
+------------------------------------------------+-------------------------------------------+--------------------------------------------+
| | | |
+------------------------------------------------+-------------------------------------------+--------------------------------------------+
| Non-current liabilities | | |
+------------------------------------------------+-------------------------------------------+--------------------------------------------+
| | | |
+------------------------------------------------+-------------------------------------------+--------------------------------------------+
| Non-current portion of liabilities on bank | 4,356 | - |
| loans | | |
+------------------------------------------------+-------------------------------------------+--------------------------------------------+
| Non-current portion of liabilities on | 190,646 | 192,302 |
| debenture loans | | |
+------------------------------------------------+-------------------------------------------+--------------------------------------------+
| | | |
+------------------------------------------------+-------------------------------------------+--------------------------------------------+
| Total | 195,002 | 192,302 |
+------------------------------------------------+-------------------------------------------+--------------------------------------------+
For the current and prior reporting period, the average effective interest rates
on bank loans are in the range between 5% and 9%. Loans are secured by pledge on
goods, cash at current accounts, receivables and promissory note.
In November 2003, the Parent company issued registered, dematerialized,
ordinary, interest bearing and freely transferable corporate bonds, at a total
par value of BGN 15,000 thousand and a par value of BGN 1,000 per one bond. The
maturity of the corporate bond is 5 years. The interest rate on the bond is
8.375% per annum. It is secured by a corporate guarantee, issued by the majority
shareholder of the Parent company. Interest is payable twice a year, at every
six months, for the term of the loan. The last due payments of interest and
principal under this debenture loan were settled in November 2008 and the bond
issue was closed.
In October 2006, the Parent company issued 2,000 registered, transferable bonds
with fixed annual interest rate of 8.375% and issue price - 99.507% of the
principal amount determined at EUR 50,000 per bond. The maturity of the bond is
5 years and the maturity date is in October 2011. The principal is due in one
payment at the maturity date. As of December 31, 2008 the fair value of these
bonds, based on quoted market prices is 46% of their nominal value. The issue is
secured by Group's receivables under loans, granted to related parties and a
corporate guarantee, issued by a subsidiary. The transaction costs for the bond
issue amount to BGN 3,049 thousand. Interest is paid annually. The annual
effective interest rate is 9.249%. The purpose of the issue is financing of
working capital, financing of investment projects and restructuring of the
Group's debt.
In October 2008, the Group bought back bonds from the issue stated above, with a
nominal of EUR 1,183 thousand, at a price of EUR 727 thousand. These bought back
bonds are presented as a reduction of the debenture loan and included in
calculating the loan depreciated cost as of December 31, 2008.
Liabilities to related parties are stated in note 39.
30. Finance lease liabilities
+----------------------------+----------------------------+----------------------------+----------------------------+----------------------------+
| | Minimum | Present |
| | lease | value |
| | payments | of |
| | | minimum |
| | | lease |
| | | payments |
+----------------------------+---------------------------------------------------------+---------------------------------------------------------+
| | | |
+----------------------------+---------------------------------------------------------+---------------------------------------------------------+
| | December | December | December | December |
| | 31, 2008 | 31, 2007 | 31, 2008 | 31, 2007 |
| | BGN'000 | BGN'000 | BGN'000 | BGN'000 |
+----------------------------+----------------------------+----------------------------+----------------------------+----------------------------+
| Amounts payable under | | | | |
| finance leases | | | | |
+----------------------------+----------------------------+----------------------------+----------------------------+----------------------------+
| | | |
+----------------------------+---------------------------------------------------------+---------------------------------------------------------+
| Within one year | 2,396 | 2,445 | 1,989 | 2,085 |
+----------------------------+----------------------------+----------------------------+----------------------------+----------------------------+
| From one to two years | 1,981 | 1,520 | 1,691 | 1,304 |
+----------------------------+----------------------------+----------------------------+----------------------------+----------------------------+
| From three to five years | 4,595 | 2,262 | 4,193 | 2,066 |
+----------------------------+----------------------------+----------------------------+----------------------------+----------------------------+
| | | |
+----------------------------+---------------------------------------------------------+---------------------------------------------------------+
| Less: Interest payable | | | | |
+----------------------------+----------------------------+----------------------------+----------------------------+----------------------------+
| Within one year | (407) | (360) | - | - |
+----------------------------+----------------------------+----------------------------+----------------------------+----------------------------+
| From one to two years | (290) | (216) | - | - |
+----------------------------+----------------------------+----------------------------+----------------------------+----------------------------+
| From three to five years | (402) | (196) | - | - |
+----------------------------+----------------------------+----------------------------+----------------------------+----------------------------+
| | | |
+----------------------------+---------------------------------------------------------+---------------------------------------------------------+
| Present value of amounts | 7,873 | 5,455 | 7,873 | 5,455 |
| payable under finance | | | | |
| leases | | | | |
+----------------------------+----------------------------+----------------------------+----------------------------+----------------------------+
| | | |
+----------------------------+---------------------------------------------------------+---------------------------------------------------------+
| Less: Present value of | | | (1,989) | (2,085) |
| amounts due for settlement | | | | |
| with maturity less than 1 | | | | |
| year | | | | |
+----------------------------+----------------------------+----------------------------+----------------------------+----------------------------+
| | | |
+----------------------------+---------------------------------------------------------+---------------------------------------------------------+
| Present value of amounts | | | 5,884 | 3,370 |
| payable under finance | | | | |
| leases with maturity over | | | | |
| 1 year | | | | |
+----------------------------+----------------------------+----------------------------+----------------------------+----------------------------+
Assets acquired by the Group under finance leases comprise of vehicles. The
lease term of the contracts is between 3 to 6 years. As of December 31, 2008 the
average effective interest rate under finance lease agreements is 6.8%.
The Group's management believes that the fair value of the amounts payable under
finance leases does not differ significantly from their carrying amount.
Liabilities under finance lease agreements are secured by promissory notes,
issued by the Group, in favour of the lessors and expire at the termination date
of the respective agreements.
31. Derivative financial liabilities
Derivative financial liabilities comprise of revaluation at market prices of
open positions, as of December 31, 2008 and 2007, on signed standardized
commodity and financial futures and options contracts on NYMEX. Open positions,
as of December 31, 2008, represent 150 lots put options EUR FX, and as of
December 31, 2007 - open positions represent 600 lots of crude oil futures sold
and 2,900 put options of crude oil bought.
32. Current income tax
Current income tax is calculated as a difference between the tax accrued and tax
paid, as of the balance sheet date.
+------------------------------------------------+-----------------------------------+-------------------------------------+
| | December | December |
| | 31 | 31 |
| | 2008 | 2007 |
| | BGN'000 | BGN'000 |
+------------------------------------------------+-----------------------------------+-------------------------------------+
| | | |
+------------------------------------------------+-----------------------------------+-------------------------------------+
| Income tax receivable as of January 1, net | (7,196) | (5,406) |
+------------------------------------------------+-----------------------------------+-------------------------------------+
| | | |
+------------------------------------------------+-----------------------------------+-------------------------------------+
| Accrued corporate income tax | 21,598 | 355 |
+------------------------------------------------+-----------------------------------+-------------------------------------+
| Corporate income tax paid | (13,209) | (2,090) |
+------------------------------------------------+-----------------------------------+-------------------------------------+
| Disposed in business combinations | - | (55) |
+------------------------------------------------+-----------------------------------+-------------------------------------+
| | | |
+------------------------------------------------+-----------------------------------+-------------------------------------+
| Income tax receivable (payable) as of December | | (7,196) |
| 31, net | 1,193 | |
+------------------------------------------------+-----------------------------------+-------------------------------------+
33. Retirement benefits obligations
In the current period, the Group has accrued liabilities for retirement
benefits, based on an actuary valuation taking into consideration assumptions
for mortality, disability, employment turnover, salaries' growth, etc. The
present value of the liability is calculated by applying a discount factor of
4%.
The amount of liabilities for retirement benefits consists of, as follows:
+-------------------------------------------------+----------------------------+----------------------------+
| | December | December |
| | 31 | 31 |
| | 2008 | 2007 |
| | BGN'000 | BGN'000 |
+-------------------------------------------------+----------------------------+----------------------------+
| | | |
+-------------------------------------------------+----------------------------+----------------------------+
| Balance at the beginning of the period | 458 | 470 |
+-------------------------------------------------+----------------------------+----------------------------+
| | | |
+-------------------------------------------------+----------------------------+----------------------------+
| Interest accrued during the period | 18 | 18 |
+-------------------------------------------------+----------------------------+----------------------------+
| Retirement benefits paid during the period | (25) | (70) |
+-------------------------------------------------+----------------------------+----------------------------+
| Current service cost | 45 | 44 |
+-------------------------------------------------+----------------------------+----------------------------+
| Actuarial profit | (125) | (4) |
+-------------------------------------------------+----------------------------+----------------------------+
| | | |
+-------------------------------------------------+----------------------------+----------------------------+
| Balance at the end of the period | 371 | 458 |
+-------------------------------------------------+----------------------------+----------------------------+
The effect on the gain or loss from the accrued retirement benefits is, as
follows:
+-------------------------------------------------+----------------------------+----------------------------+
| | December | December |
| | 31 | 31 |
| | 2008 | 2007 |
| | BGN'000 | BGN'000 |
+-------------------------------------------------+----------------------------+----------------------------+
| | | |
+-------------------------------------------------+----------------------------+----------------------------+
| Interest accrued during the period | 18 | 18 |
+-------------------------------------------------+----------------------------+----------------------------+
| Value of acquired rights for the period | 45 | 44 |
+-------------------------------------------------+----------------------------+----------------------------+
| Actuarial profit | (125) | (4) |
+-------------------------------------------------+----------------------------+----------------------------+
| | | |
+-------------------------------------------------+----------------------------+----------------------------+
| Total | (62) | 58 |
+-------------------------------------------------+----------------------------+----------------------------+
34. Share capital
The share capital of the Group is presented at its nominal value, according to
the court decision for registration. During 2008 and 2007 the Group, through one
of its subsidiaries, performed transactions on the Bulgarian Stock Exchange that
allowed the Group to acquire and sell own shares. The acquired own shares are
not subject to legal cancelation. As a result of these transactions, in 2008 and
2007, realized net loss of BGN 253,045 thousand and BGN 19,060 thousand,
respectively, is recorded in accordance with IAS 32 Financial Instruments:
Disclosure and Presentation, directly in equity, against retained earnings.
As of December 31, 2008 and 2007 the shareholders of the Parent company are, as
follows:
+------------------------------------------------+---------------------------------+---------------------------------+
| Shareholder | December | December |
| | 31, | 31, |
| | 2008 | 2007 |
| | % of | % of |
| | share | share |
| | capital | capital |
+------------------------------------------------+---------------------------------+---------------------------------+
| | | |
+------------------------------------------------+---------------------------------+---------------------------------+
| Petrol Holding AD | 55.45 | 69.10 |
+------------------------------------------------+---------------------------------+---------------------------------+
| Naftex Petrol EOOD | 41.90 | 5.15 |
+------------------------------------------------+---------------------------------+---------------------------------+
| Ministry of Economics | 0.84 | 0.86 |
+------------------------------------------------+---------------------------------+---------------------------------+
| Naftex Refining and Petrochemical Engineering | - | 18.84 |
| Services | | |
+------------------------------------------------+---------------------------------+---------------------------------+
| Other minority shareholders | 1.81 | 6.05 |
+------------------------------------------------+---------------------------------+---------------------------------+
| | | |
+------------------------------------------------+---------------------------------+---------------------------------+
| Total | 100 | 100 |
+------------------------------------------------+---------------------------------+---------------------------------+
35. Other, statutory and additional reserves
The other reserves, which are net of accrued deferred tax, as of December 31,
2008 and 2007 at the amount of BGN 21,780 thousand and BGN 28,137 thousand,
respectively, have been allocated as a result of revaluations of property, plant
and equipment and intangible assets, carried out in the period 1998 - 2001, as
well as of revaluation as of December 31, 2002, in relation to the first time
application of IFRS in the preparation of the Parent company's separate
financial statements in 2003 year. These reserves are not distributable.
The statutory and additional reserves as of December 31, 2008 and 2007 are BGN
18,696 thousand. The statutory reserves are formed due to the requirements of
the Bulgarian legislation. Local legislation requires at least 10% of the
Group's net profit to be transferred from retained earnings to a
non-distributable statutory reserve until this reserve represents 10% of the
Group's share capital. The Group may not pay dividends before making
contributions to the Reserve Fund.
36. Earnings per share
Earnings per share are calculated by dividing the net distributable
profit/(loss) for the period by the weighted average number of ordinary shares
held during the reporting period. The Parent company has not issued any
potential ordinary shares.
+------------------------------------------------+----------------------------------+------------------------------------+
| | December | December |
| | 31, | 31, |
| | 2008 | 2007 |
+------------------------------------------------+----------------------------------+------------------------------------+
| | | |
+------------------------------------------------+----------------------------------+------------------------------------+
| Weighted average number of shares (in | 85,989 | 108,821 |
| thousands) | | |
+------------------------------------------------+----------------------------------+------------------------------------+
| Profit (loss) (BGN'000) | 226,221 | (32,882) |
+------------------------------------------------+----------------------------------+------------------------------------+
| | | |
+------------------------------------------------+----------------------------------+------------------------------------+
| Earnings per share (BGN) | 2.63 | |
| | | (0.30) |
+------------------------------------------------+----------------------------------+------------------------------------+
Weighted average number of shares in circulation in 2008 is, as follows:
+------------------------------------------------+------------------------------------+-------------------------------------+
| | December | December |
| | 31, | 31, |
| | 2008 | 2007 |
+------------------------------------------------+------------------------------------+-------------------------------------+
| | | |
+------------------------------------------------+------------------------------------+-------------------------------------+
| Number of shares at the beginning of the year | 103,623 | 109,250 |
+------------------------------------------------+------------------------------------+-------------------------------------+
| Effect from lost own shares | (17,634) | (429) |
+------------------------------------------------+------------------------------------+-------------------------------------+
| | | |
+------------------------------------------------+------------------------------------+-------------------------------------+
| Weighted average number of shares | | 108,821 |
| | 85,989 | |
+------------------------------------------------+------------------------------------+-------------------------------------+
37. Dividends
In 2007, in accordance with a decision of the General Meeting of the Parent
company held on June 11, 2007, dividends were distributed proportionally to the
shareholders participation at the amount of BGN 0.077 per share (see also note
34).
38. Subsidiaries
The subsidiaries, included in the consolidation, over which the Group has
control, as of
December 31, 2008 and 2007, are, as follows:
+------------------------------------------+-------------------------+-------------+-------------+
| Subsidiary | Main activity | Investment | Investment |
| | | as of | as of |
| | | December | December |
| | | 31, 2008 | 31, 2007 |
+------------------------------------------+-------------------------+-------------+-------------+
| | | | |
+------------------------------------------+-------------------------+-------------+-------------+
| Naftex Petrol EOOD | Wholesale with fuels | 100% | 100% |
+------------------------------------------+-------------------------+-------------+-------------+
| Petrol Trans Express | Transport services | 100% | 100% |
| EOOD | | | |
+------------------------------------------+-------------------------+-------------+-------------+
| Petrol Technika EOOD | Service and maintenance | 100% | 100% |
| | of fuel stations | | |
+------------------------------------------+-------------------------+-------------+-------------+
| Petrol | Wholesale with fuels | 90% | 90% |
| Gas | | | |
| OOD | | | |
+------------------------------------------+-------------------------+-------------+-------------+
| Petrol | Real estate and | 100% | 100% |
| Properties | moveable property trade | | |
| EOOD | | | |
+------------------------------------------+-------------------------+-------------+-------------+
| Elit | Real estate advisory | 100% | - |
| Petrol | and intermediation | | |
| EAD | services | | |
+------------------------------------------+-------------------------+-------------+-------------+
| Eurocapital Bulgaria AD | Investment activity | 36.92 % | 36.92 % |
+------------------------------------------+-------------------------+-------------+-------------+
| New | Power generation | - | - |
| Co | | | |
| Zagora | | | |
| EOOD | | | |
| (former | | | |
| name | | | |
| Petrol | | | |
| Storage | | | |
| EOOD) | | | |
+------------------------------------------+-------------------------+-------------+-------------+
| Petrol Trade ???D | Trade | - | - |
+------------------------------------------+-------------------------+-------------+-------------+
| BPI EAD | Trade with fuels and | - | - |
| | rent of property | | |
+------------------------------------------+-------------------------+-------------+-------------+
| Petrol Card Service EOOD | Trade with fuels with | - | - |
| | fleet cards | | |
+------------------------------------------+-------------------------+-------------+-------------+
| ?rans Operator ?D | Trade, intermediation | - | - |
| (former name ?ranslotto | and representation | | |
| ?D) | | | |
+------------------------------------------+-------------------------+-------------+-------------+
| Vratzata EOOD | Recreation services | - | - |
+------------------------------------------+-------------------------+-------------+-------------+
In 2007, The Group sold seven of its subsidiaries (see also note 15). The
subsidiaries are entirely transferred to the Ultimate controlling party, except
for Eurocapital Bulgaria AD, where the Group retains an effective share of
36.92%. In the present consolidated financial statements, the Group's share in
Eurocapital Bulgaria AD is presented as a participation in associated company.
During the current year the Group established a new subsidiary - Elit Petrol
EAD. The subsidiary, incorporated with scope of activity real estate advisory
and intermediation services, was established in November 2008 and is 100% owned
by the Parent company.
39. Disclosure of related parties and transactions
The related parties, which the Parent company controls and has significant
influence on, are disclosed in notes 19 and 38. The Parent company is controlled
by Petrol Holding AD.
The following transactions with related parties have been performed during the
current and prior reporting period:
+---------------------------------+---------------------------------------------+
| Related party | |
+---------------------------------+---------------------------------------------+
| | |
+---------------------------------+---------------------------------------------+
| Petrol Holding AD | Ultimate controlling party |
+---------------------------------+---------------------------------------------+
| Varna Business Services OOD | Associate until the end of October 2007 |
+---------------------------------+---------------------------------------------+
| Izvor Bottling Company AD | Subsidiary of Petrol Holding AD |
+---------------------------------+---------------------------------------------+
| Air Lazur - General Aviation | Subsidiary of Petrol Holding AD |
| EOOD | |
+---------------------------------+---------------------------------------------+
| Interhotel Bulgaria Burgas EOOD | 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 |
+---------------------------------+---------------------------------------------+
| PSFC Chernomoretz ?D | Subsidiary of Petrol Holding AD |
+---------------------------------+---------------------------------------------+
| Transat AD | Subsidiary of Transhold Bulgaria Holding AD |
+---------------------------------+---------------------------------------------+
| Trans Telecom ?OOD | Subsidiary of Transhold Bulgaria Holding AD |
+---------------------------------+---------------------------------------------+
| Transcard ?D | Subsidiary of Transhold Bulgaria Holding AD |
+---------------------------------+---------------------------------------------+
| Transcard Financial Services | Subsidiary of Transcard 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;
* transportation services;
* delivery of materials;
* maintenance and repairs;
* legal advices;
* telecommunication services;
* other.
39. Disclosure of related parties and transactions (continued)
The volume of the transactions performed with related parties for 2008 and 2007
are as follows:
+--------------------------+----------------------------+----------------------------+----------------------------+----------------------------+
| Related parties | December | December | December | December |
| | 31, | 31, | 31, | 31, |
| | 2008 | 2007 | 2008 | 2007 |
+--------------------------+----------------------------+----------------------------+----------------------------+----------------------------+
| | BGN'000 | BGN'000 | BGN'000 | BGN'000 |
+--------------------------+----------------------------+----------------------------+----------------------------+----------------------------+
| | Sale of | Sale of | Purchase | Purchase |
| | goods, | goods, | of goods, | of goods, |
| | non-current | non-current | non-current | non-current |
| | assets and | assets and | assets and | assets and |
| | services | services | services | services |
+--------------------------+----------------------------+----------------------------+----------------------------+----------------------------+
| | | | | |
+--------------------------+----------------------------+----------------------------+----------------------------+----------------------------+
| Controlling company | 390 | 674 | 3,979 | 3,528 |
+--------------------------+----------------------------+----------------------------+----------------------------+----------------------------+
| Companies under common | 3,729 | 4,234 | 179,797 | 17,712 |
| control | | | | |
+--------------------------+----------------------------+----------------------------+----------------------------+----------------------------+
| Associates | 20 | - | 458 | - |
+--------------------------+----------------------------+----------------------------+----------------------------+----------------------------+
| | | | | |
+--------------------------+----------------------------+----------------------------+----------------------------+----------------------------+
| Total | 4,139 | 4,908 | 184,234 | 21,240 |
+--------------------------+----------------------------+----------------------------+----------------------------+----------------------------+
+---------------------------+--------------+------------+----------------------------+----------------------------+
| Related | December 31, | December | December | December |
| parties | | 31, | 31, | 31, |
| | 2008 | 2007 | 2008 | 2007 |
+---------------------------+--------------+------------+----------------------------+----------------------------+
| | BGN'000 | BGN'000 | BGN'000 | BGN'000 |
+---------------------------+--------------+------------+----------------------------+----------------------------+
| | Finance | Finance | Finance | Finance |
| | income | income | cost | cost |
+---------------------------+--------------+------------+----------------------------+----------------------------+
| | | | | |
+---------------------------+--------------+------------+----------------------------+----------------------------+
| Controlling company | 4,512 | 2,147 | 845 | 246 |
+---------------------------+--------------+------------+----------------------------+----------------------------+
| Companies under common | 2,022 | 76 | - | - |
| control | | | | |
+---------------------------+--------------+------------+----------------------------+----------------------------+
| Associates | 851 | 1,149 | - | - |
+---------------------------+--------------+------------+----------------------------+----------------------------+
| | | | | |
+---------------------------+--------------+------------+----------------------------+----------------------------+
| Total | 7,385 | 3,372 | 845 | 246 |
+---------------------------+--------------+------------+----------------------------+----------------------------+
As of December 31, 2008 and 2007 the unsettled balances with related parties are
as follows:
+--------------------------+----------------------------+----------------------------+----------------------------+----------------------------+
| Related parties | December | December | December | December |
| | 31, | 31, | 31, | 31, |
| | 2008 | 2007 | 2008 | 2007 |
+--------------------------+----------------------------+----------------------------+----------------------------+----------------------------+
| | BGN'000 | BGN'000 | BGN'000 | BGN'000 |
+--------------------------+----------------------------+----------------------------+----------------------------+----------------------------+
| | Receivables | Receivables | Payables | Payables |
+--------------------------+----------------------------+----------------------------+----------------------------+----------------------------+
| | | | | |
+--------------------------+----------------------------+----------------------------+----------------------------+----------------------------+
| Controlling company, | 37,801 | 56,435 | 6,336 | 804 |
| including: | | | | |
+--------------------------+----------------------------+----------------------------+----------------------------+----------------------------+
| Interest-bearing loans | 28,922 | 36,810 | - | - |
| -non-current portion | | | | |
+--------------------------+----------------------------+----------------------------+----------------------------+----------------------------+
| Interest-bearing loans - | 7,888 | 15,846 | 4,604 | - |
| current portion | | | | |
+--------------------------+----------------------------+----------------------------+----------------------------+----------------------------+
| Companies under common | 2,309 | 28,605 | 21,088 | 2,246 |
| control, including: | | | | |
+--------------------------+----------------------------+----------------------------+----------------------------+----------------------------+
| Interest-bearing loans - | 50 | 24,831 | - | - |
| current portion | | | | |
+--------------------------+----------------------------+----------------------------+----------------------------+----------------------------+
| Associates | 26 | - | 73 | - |
+--------------------------+----------------------------+----------------------------+----------------------------+----------------------------+
| | | | | |
+--------------------------+----------------------------+----------------------------+----------------------------+----------------------------+
| Total | 40,136 | 85,040 | 27,497 | 3,050 |
+--------------------------+----------------------------+----------------------------+----------------------------+----------------------------+
The total amount of management remuneration of the members of the Board of
Directors and of the Supervisory Board, included in the employee benefits
expenses amount to BGN 1,075 thousand and BGN 1,010 thousand for 2008 and 2007,
respectively.
40. Segment reporting
The Group has identified the following business segments, based on the
organizational structure and the activities affected:
* Wholesale of fuels- wholesale of oil products and storage services in own
storage facilities of the Group;
* Retail of fuels - retail trade of oil and other products in network of own fuel
stations of the Group;
* Other activities - Transportation of oils with own and hired vehicles,
maintenance and repairs of fuel stations and accompanied facilities for trade
and services, rental income and other activities.
40. Segment reporting (continued)
+---------------------------+-----------+----------+------------+--------------+--------------+
| |
+---------------------------+
| December 31, 2008 | Wholesale | Retail | Other | Eliminations | Consolidated |
| | of fuels | of fuels | activities | | |
+---------------------------+-----------+----------+------------+--------------+--------------+
| | BGN'000 | BGN'000 | BGN'000 | BGN'000 | BGN'000 |
+---------------------------+-----------+----------+------------+--------------+--------------+
| December 31, 2008 | Wholesale | Retail | Other | Eliminations | Consolidated |
| | of fuels | of fuels | activities | | |
+---------------------------+-----------+----------+------------+--------------+--------------+
| | BGN'000 | BGN'000 | BGN'000 | BGN'000 | BGN'000 |
+---------------------------+-----------+----------+------------+--------------+--------------+
| | | | | | |
+---------------------------+-----------+----------+------------+--------------+--------------+
| Income | | | | | |
+---------------------------+-----------+----------+------------+--------------+--------------+
| | | | | | |
+---------------------------+-----------+----------+------------+--------------+--------------+
| External sales | 815,202 | 939,036 | 6,774 | - | 1,761,012 |
+---------------------------+-----------+----------+------------+--------------+--------------+
| Inter-segment sales | 291,223 | 3,692 | 16,636 | (311,551) | - |
+---------------------------+-----------+----------+------------+--------------+--------------+
| Total revenue | 1,106,425 | 942,728 | 23,410 | (311,551) | 1,761,012 |
+---------------------------+-----------+----------+------------+--------------+--------------+
| | | | | | |
+---------------------------+-----------+----------+------------+--------------+--------------+
| Segment operating profit | 174,253 | 218,314 | (334) | - | 392,233 |
| (loss) | | | | | |
+---------------------------+-----------+----------+------------+--------------+--------------+
| | | | | | |
+---------------------------+-----------+----------+------------+--------------+--------------+
| Share of net profits of | - | - | - | - | 851 |
| associates | | | | | |
+---------------------------+-----------+----------+------------+--------------+--------------+
| Foreign exchange rate | - | - | - | - | (2,356) |
| losses, net | | | | | |
+---------------------------+-----------+----------+------------+--------------+--------------+
| Loss on sale of financial | - | - | - | - | (126,240) |
| assets and dealing with | | | | | |
| derivatives | | | | | |
+---------------------------+-----------+----------+------------+--------------+--------------+
| Interests on loans | - | - | - | - | (12,978) |
| received and granted and | | | | | |
| other finance income and | | | | | |
| costs, net | | | | | |
+---------------------------+-----------+----------+------------+--------------+--------------+
| Tax expense | - | - | - | - | (25,327) |
+---------------------------+-----------+----------+------------+--------------+--------------+
| | | | | | |
+---------------------------+-----------+----------+------------+--------------+--------------+
| Net profit of the Group | - | - | - | - | 226,183 |
+---------------------------+-----------+----------+------------+--------------+--------------+
| | | | | | |
+---------------------------+-----------+----------+------------+--------------+--------------+
| Total minority interest | - | - | - | - | (38) |
+---------------------------+-----------+----------+------------+--------------+--------------+
| Owned by the Group | - | - | - | - | 226,221 |
+---------------------------+-----------+----------+------------+--------------+--------------+
| | | | | | |
+---------------------------+-----------+----------+------------+--------------+--------------+
| Segment assets | 142,261 | 216,285 | 14,716 | - | 373,262 |
+---------------------------+-----------+----------+------------+--------------+--------------+
| | | | | | |
+---------------------------+-----------+----------+------------+--------------+--------------+
| Investments in associates | - | - | 15,776 | - | 15,776 |
+---------------------------+-----------+----------+------------+--------------+--------------+
| | | | | | |
+---------------------------+-----------+----------+------------+--------------+--------------+
| Segment liabilities | 100,693 | 239,554 | 9,774 | - | 350,021 |
+---------------------------+-----------+----------+------------+--------------+--------------+
| | | | | | |
+---------------------------+-----------+----------+------------+--------------+--------------+
| Depreciation and | 2,581 | 12,692 | 5,352 | - | 20,625 |
| amortization | | | | | |
+---------------------------+-----------+----------+------------+--------------+--------------+
| | | | | | |
+---------------------------+-----------+----------+------------+--------------+--------------+
| Capital expenditure | 10,324 | 23,185 | 5,248 | - | 38,757 |
+---------------------------+-----------+----------+------------+--------------+--------------+
| | | | | | |
+---------------------------+-----------+----------+------------+--------------+--------------+
| Impairment of segment | 2,741 | - | - | - | 2,741 |
| assets | | | | | |
+---------------------------+-----------+----------+------------+--------------+--------------+
40. Segment reporting (continued)
+---------------------------+-----------+----------+------------+--------------+--------------+
| |
+---------------------------+
| December 31, 2007 | Wholesale | Retail | Other | Eliminations | Consolidated |
| | of fuels | of fuels | activities | | |
+---------------------------+-----------+----------+------------+--------------+--------------+
| | BGN'000 | BGN'000 | BGN'000 | BGN'000 | BGN'000 |
+---------------------------+-----------+----------+------------+--------------+--------------+
| December 31, 2007 | Wholesale | Retail | Other | Eliminations | Consolidated |
| | of fuels | of fuels | activities | | |
+---------------------------+-----------+----------+------------+--------------+--------------+
| | BGN'000 | BGN'000 | BGN'000 | BGN'000 | BGN'000 |
+---------------------------+-----------+----------+------------+--------------+--------------+
| | | | | | |
+---------------------------+-----------+----------+------------+--------------+--------------+
| Income | | | | | |
+---------------------------+-----------+----------+------------+--------------+--------------+
| | | | | | |
+---------------------------+-----------+----------+------------+--------------+--------------+
| External sales | 602,340 | 777,000 | 11,984 | - | 1,391,324 |
+---------------------------+-----------+----------+------------+--------------+--------------+
| Inter-group sales | 74,341 | 3,389 | 15,054 | (92,784) | - |
+---------------------------+-----------+----------+------------+--------------+--------------+
| Total revenue | 676,681 | 780,389 | 27,038 | (92,784) | 1,391,324 |
+---------------------------+-----------+----------+------------+--------------+--------------+
| | | | | | |
+---------------------------+-----------+----------+------------+--------------+--------------+
| Segment operating profit | 16,692 | 1,833 | 3,829 | - | 22,354 |
+---------------------------+-----------+----------+------------+--------------+--------------+
| | | | | | |
+---------------------------+-----------+----------+------------+--------------+--------------+
| Share of net profits of | - | - | - | - | 1,149 |
| associates | | | | | |
+---------------------------+-----------+----------+------------+--------------+--------------+
| Foreign exchange rate | - | - | - | - | (407) |
| losses, net | | | | | |
+---------------------------+-----------+----------+------------+--------------+--------------+
| Loss on sale of financial | - | - | - | - | (40,089) |
| assets and dealing with | | | | | |
| derivatives | | | | | |
+---------------------------+-----------+----------+------------+--------------+--------------+
| Gain on sale of | - | - | - | - | 2,146 |
| subsidiaries and | | | | | |
| associates | | | | | |
+---------------------------+-----------+----------+------------+--------------+--------------+
| Interests on loans | - | - | - | - | (20,295) |
| received and granted and | | | | | |
| other finance income and | | | | | |
| costs, net | | | | | |
+---------------------------+-----------+----------+------------+--------------+--------------+
| Tax income | - | - | - | - | 2,248 |
+---------------------------+-----------+----------+------------+--------------+--------------+
| | | | | | |
+---------------------------+-----------+----------+------------+--------------+--------------+
| Net loss of the Group | - | - | - | - | (32,894) |
+---------------------------+-----------+----------+------------+--------------+--------------+
| | | | | | |
+---------------------------+-----------+----------+------------+--------------+--------------+
| Total minority interest | - | - | - | - | (12) |
+---------------------------+-----------+----------+------------+--------------+--------------+
| Owned by the Group | - | - | - | - | (32,882) |
+---------------------------+-----------+----------+------------+--------------+--------------+
| | | | | | |
+---------------------------+-----------+----------+------------+--------------+--------------+
| Segment assets | 306,335 | 318,910 | 16,955 | - | 642,200 |
+---------------------------+-----------+----------+------------+--------------+--------------+
| | | | | | |
+---------------------------+-----------+----------+------------+--------------+--------------+
| Investments in associates | - | - | 14,925 | - | 14,925 |
+---------------------------+-----------+----------+------------+--------------+--------------+
| | | | | | |
+---------------------------+-----------+----------+------------+--------------+--------------+
| Segment liabilities | 186,660 | 361,239 | 6,924 | - | 554,823 |
+---------------------------+-----------+----------+------------+--------------+--------------+
| | | | | | |
+---------------------------+-----------+----------+------------+--------------+--------------+
| Depreciation and | 2,741 | 10,470 | 4,390 | - | 17,601 |
| amortization | | | | | |
+---------------------------+-----------+----------+------------+--------------+--------------+
| | | | | | |
+---------------------------+-----------+----------+------------+--------------+--------------+
| Capital expenditure | 4,966 | 34,408 | 4,412 | - | 43,786 |
+---------------------------+-----------+----------+------------+--------------+--------------+
| | | | | | |
+---------------------------+-----------+----------+------------+--------------+--------------+
| Impairment of segment | 2,113 | 4,722 | 15 | - | 6,850 |
| assets | | | | | |
+---------------------------+-----------+----------+------------+--------------+--------------+
41. Financial instruments and risk management
The carrying amounts of assets and liabilities as of December 31, 2008 and 2007
by categories in accordance with IAS 39 Financial instruments: Recognition and
Measurement are presented in the following tables:
Financial assets
+----------------------------+------+--------------+--------------+--------------+
| December |Note | At fair | Loans | Total |
| 31, | | value | granted and | |
| 2008 | | through | receivables | |
| BGN'000 | | profit or | | |
| | | loss | | |
+----------------------------+------+--------------+--------------+--------------+
| | | | | |
+----------------------------+------+--------------+--------------+--------------+
| Interest-bearing loans | 21 | - | 36,981 | 36,981 |
| granted | | | | |
+----------------------------+------+--------------+--------------+--------------+
| Trade and other | 24 | - | 73,588 | 73,588 |
| receivables, net | | | | |
+----------------------------+------+--------------+--------------+--------------+
| Cash and cash equivalents | 26 | - | 23,318 | 23,318 |
+----------------------------+------+--------------+--------------+--------------+
| | | | | |
+----------------------------+------+--------------+--------------+--------------+
| Total | | - | 133,887 | 133,887 |
+----------------------------+------+--------------+--------------+--------------+
+----------------------------+------+--------------+--------------+--------------+
| December |Note | At fair | Loans | Total |
| 31, | | value | granted and | |
| 2007 | | through | receivables | |
| BGN'000 | | profit or | | |
| | | loss | | |
+----------------------------+------+--------------+--------------+--------------+
| | | | | |
+----------------------------+------+--------------+--------------+--------------+
| Interest-bearing loans | 21 | - | 77,502 | 77,502 |
| granted | | | | |
+----------------------------+------+--------------+--------------+--------------+
| Trade and other | 24 | - | 98,249 | 98,249 |
| receivables, net | | | | |
+----------------------------+------+--------------+--------------+--------------+
| Derivative financial | 25 | 808 | - | 808 |
| assets | | | | |
+----------------------------+------+--------------+--------------+--------------+
| Cash and cash equivalents | 26 | - | 67,537 | 67,537 |
+----------------------------+------+--------------+--------------+--------------+
| | | | | |
+----------------------------+------+--------------+--------------+--------------+
| Total | | 808 | 243,288 | 244,096 |
+----------------------------+------+--------------+--------------+--------------+
Financial liabilities
+----------------------------+------+--------------+--------------+--------------+
| December |Note | At fair | At amortized | Total |
| 31, | | value | cost | |
| 2008 | | through | | |
| BGN'000 | | profit or | | |
| | | loss | | |
+----------------------------+------+--------------+--------------+--------------+
| | | | | |
+----------------------------+------+--------------+--------------+--------------+
| ?rade and other payables | 28 | - | 81,520 | 81,520 |
+----------------------------+------+--------------+--------------+--------------+
| Interest-bearing loans | 29 | - | 204,196 | 204,196 |
+----------------------------+------+--------------+--------------+--------------+
| Finance lease liabilities | 30 | - | 7,873 | 7,873 |
+----------------------------+------+--------------+--------------+--------------+
| Derivative liabilities | 31 | 205 | - | 205 |
+----------------------------+------+--------------+--------------+--------------+
| | | | | |
+----------------------------+------+--------------+--------------+--------------+
| Total | | 205 | 293,589 | 293,794 |
+----------------------------+------+--------------+--------------+--------------+
+----------------------------+------+--------------+--------------+--------------+
| December |Note | At fair | At amortized | Total |
| 31, | | value | cost | |
| 2007 | | through | | |
| BGN'000 | | profit or | | |
| | | loss | | |
+----------------------------+------+--------------+--------------+--------------+
| | | | | |
+----------------------------+------+--------------+--------------+--------------+
| ?rade and other payables | 28 | - | 210,077 | 210,077 |
+----------------------------+------+--------------+--------------+--------------+
| Interest-bearing loans | 29 | - | 269,728 | 269,728 |
+----------------------------+------+--------------+--------------+--------------+
| Finance lease liabilities | 30 | - | 5,455 | 5,455 |
+----------------------------+------+--------------+--------------+--------------+
| Derivative liabilities | 31 | 3,957 | - | 3,957 |
+----------------------------+------+--------------+--------------+--------------+
| | | | | |
+----------------------------+------+--------------+--------------+--------------+
| Total | | 3,957 | 485,260 | 489,217 |
+----------------------------+------+--------------+--------------+--------------+
41. Financial instruments and risk management (continued)
The Group's use of financial instruments exposes it to market, credit and
liquidity risk. The present note presents information about risk management
goals, policies and processes, as well as capital management. The Controlling
Company's Board of Directors sets strategic guidelines for financial risk
management, as the operative implementation of the adopted policies and the
realization of risk management processes are carried out by the Cash flows
department and Global markets department of Petrol Holding AD.
At the end of year 2008 and beginning of 2009, as a result of the Global
financial crisis, a decrease in economic development of Bulgarian economy is
perceived, which affects a wide range of industrial sectors. This leads to a
noticeable aggravate of cash flows, decline in income and consequently to
substantial worsening of the economic environment in which the Group operates.
In addition, the Group is exposed to significantly higher price, market, credit,
liquidity, interest, operative and other risks. As a result, uncertainty for
ability of clients to pay their liabilities in compliance with contracted terms
increases. In this way, scale of impairment losses on granted interest-bearing
loans, receivables on sales, financial assets held for sale, other financial
instruments and the value of other accounting estimates in subsequent periods
could substantially vary compared to these determined and recorded in this
consolidated financial statement. The management of the Group applies all
necessary procedures to control these risks.
Market risk
Market risk is the risk of changes of fair value of financial instruments or
their future cash flows due to fluctuations in market prices and could reveal
itself as exchange rate, interest or other price risk. In view of the character
of the activity, the Group is mainly exposed to commodity price risk , interest
rate risk and foreign currency risk.
Price risk
The Group is exposed to risk of frequent and sharp changes in the prices of
fuels and other tradable goods. In order to decrease the sensitivity of the
Group to the volatility of fuel prices, management constantly updates the
selling prices on a daily basis and in accordance with the geographical region
and the selling prices of the main competitors.
The Group has a comparatively high turnover of its inventory - for approximately
10 days, whole fuel, gas and lubricants change, which limits the price risk.
41. Financial instruments and risk management (continued)
Foreign currency risk
The Group performs transactions in currency different than its functional
currency and therefore it is exposed to foreign currency risk related to
possible foreign currency fluctuations. Such risk arises mainly from the
fluctuations in the exchange rate of USD, because the Group performs purchases
and sales transactions, and has liabilities on received interest-bearing loans
and derivative instruments denominated in USD. The transactions, denominated in
EUR, do not expose the Group to a foreign currency risk, as the Bulgarian Lev
has been fixed to the EUR since January 1, 1999.
The financial assets and liabilities, denominated in USD are presented in the
following table:
+-----------------------------------------+------------+------------+------------+------------+
| | December 31, 2008 | December 31, 2007 |
+-----------------------------------------+-------------------------+-------------------------+
| | | | | |
+-----------------------------------------+------------+------------+------------+------------+
| | Original | BGN'000 | Original | BGN'000 |
| | currency | | currency | |
| | '000 | | '000 | |
+-----------------------------------------+------------+------------+------------+------------+
| | | | | |
+-----------------------------------------+------------+------------+------------+------------+
| Trade and other | 2,689 | 3,731 | 9,937 | 13,228 |
| receivables | | | | |
+-----------------------------------------+------------+------------+------------+------------+
| Cash and cash equivalents | 402 | 557 | 4,683 | 6,234 |
+-----------------------------------------+------------+------------+------------+------------+
| Derivative financial | - | - | 607 | 808 |
| assets | | | | |
+-----------------------------------------+------------+------------+------------+------------+
| | | | | |
+-----------------------------------------+------------+------------+------------+------------+
| Total | 3,091 | 4,288 | 15,227 | 20,270 |
| financial | | | | |
| assets | | | | |
+-----------------------------------------+------------+------------+------------+------------+
| | | | | |
+-----------------------------------------+------------+------------+------------+------------+
| Trade and other payables | (550) | (762) | (12,262) | (16,323) |
+-----------------------------------------+------------+------------+------------+------------+
| Interest-bearing loans | - | - | (1,934) | (2,575) |
+-----------------------------------------+------------+------------+------------+------------+
| Derivative financial | (148) | (205) | (2,973) | (3,957) |
| liabilities | | | | |
+-----------------------------------------+------------+------------+------------+------------+
| | | | | |
+-----------------------------------------+------------+------------+------------+------------+
| Total | (698) | (967) | (17,169) | (22,855) |
| financial | | | | |
| liabilities | | | | |
+-----------------------------------------+------------+------------+------------+------------+
41. Financial instruments and risk management (continued)
The sensitivity analysis of the foreign currency risk is calculated on a 12%
difference in the exchange rate of the USD to BGN. The management believes that
this is a reasonably possible difference, calculated on the basis of the
statistical data for the dynamics of the fluctuations in the currency rate for
the past year, on basis of the daily deviation, calculated for 250 days. If the
exchange rate of the USD to BGN as of December 31, 2008 was 12% lower/higher, on
the condition that all other risk variables were constant, the net profit for
the period would decrease/increase by BGN 43 thousand.
Interest rate risk
The Group is exposed to interest rate risk, as part of the trade receivables and
payables, trade loans granted as well as bank loans received are with floating
interest rate, contracted as a base interest rate (EURIBOR, Sofibor) and
increased by a certain margin.
As of the date of these financial statements, the structure of the interest
bearing financial instruments is, as follows:
+-----------------------------------------------+---------------+-------------+
| | December 31 | December 31 |
| | 2008 | |
| | BGN'000 | 2007 |
| | | BGN'000 |
+-----------------------------------------------+---------------+-------------+
| | | |
+-----------------------------------------------+---------------+-------------+
| Instruments with fixed interest rate | | |
+-----------------------------------------------+---------------+-------------+
| | | |
+-----------------------------------------------+---------------+-------------+
| Financial assets | 23,318 | 67,537 |
+-----------------------------------------------+---------------+-------------+
| Financial liabilities | (193,828) | (211,503) |
+-----------------------------------------------+---------------+-------------+
| | | |
+-----------------------------------------------+---------------+-------------+
| Total | (170,510) | (143,966) |
+-----------------------------------------------+---------------+-------------+
| | | |
+-----------------------------------------------+---------------+-------------+
| Interests with floating interest rate | | |
+-----------------------------------------------+---------------+-------------+
| | | |
+-----------------------------------------------+---------------+-------------+
| Financial assets | 46,108 | 124,098 |
+-----------------------------------------------+---------------+-------------+
| Financial liabilities | (18,241) | (63,680) |
+-----------------------------------------------+---------------+-------------+
| | | |
+-----------------------------------------------+---------------+-------------+
| Total | 27,867 | 60,418 |
+-----------------------------------------------+---------------+-------------+
The analysis of the sensitivity to interest rate risk is prepared on the
assumption that interest rate positions, with floating interest rates as of the
balance sheet date, have existed in the same amount during the whole year and
the reasonable possible increase /decrease of the interest rate is by 30 base
points. If the interest rates were higher/lower by 30 base points, on condition
that all other variables were constant, the net profit for the year would be by
BGN 75 thousand lower/higher.
41. Financial instruments and risk management (continued)
Credit risk
Credit risk is the risk for one of the parties on the financial instrument to
fail to perform its obligation and in this way to cause loss for the other.
Financial assets which potentially expose the Group to credit risk are mainly
receivables on sales and granted interest loans.
The maximum exposure to credit risk of the receivables from clients as of
December 31, 2008 and 2007, as per type of clients is, as follows:
+---------------------------------------+----------------------------+----------------------------+
| | December | December |
| | 31 | 31 |
| | 2008 | 2007 |
| | BGN'000 | BGN'000 |
+---------------------------------------+----------------------------+----------------------------+
| | | |
+---------------------------------------+----------------------------+----------------------------+
| Clients of retail sales of fuels | 26,355 | 38,024 |
+---------------------------------------+----------------------------+----------------------------+
| Clients of wholesale of fuels | 37,329 | 43,514 |
+---------------------------------------+----------------------------+----------------------------+
| Other | 266 | 634 |
+---------------------------------------+----------------------------+----------------------------+
| | | |
+---------------------------------------+----------------------------+----------------------------+
| Total | 63,950 | 82,172 |
+---------------------------------------+----------------------------+----------------------------+
The retail sales to clients are mainly settled in cash or by credit cards. The
Group's policy regarding deferred payments is focused on performing sales to
customers with good credit standing. To limit the credit risk, the Group has
adopted a policy of preliminary evaluation of these customers. In compliance
with this policy, clients are estimated by taking into consideration the
information from different sources - client's counterparties, servicing bank,
estimates by rating agency and other factors. The contracts with clients
stipulate certain credit limits, agreed individually with each client, which
cannot be exceeded, and credit periods within the framework of particularly
defined number of days, and after their expiration and in the event of default,
penalty interests are charged.
Around 65% ?f the Group's revenue from wholesales of fuels for the current year
and 59% of the income for the previous year are realized through sales to six
major clients. The receivables from sales to these clients as of December 31,
2008 and 2007 amount to BGN 12,806 thousand and BGN 20,103 thousand,
respectively, which represents 49 % and 53 % of the total net amount of the
receivables from wholesale clients.
The receivables from related parties as of December 31, 2008 and 2007 include
mainly receivables on granted interest-bearing loans and deposits, which are not
secured and cause a significant concentration of credit risk. The management
believes this is manageable risk, as the loans are granted to the Controlling
company and to companies under common control.
Credit risk on cash at bank accounts is minimum, as the Group cooperates only
with banks with high credit rating.
The carrying amount of the financial assets, net of impairment losses, presents
to a maximum extent the credit risk to which the Group is exposed.
41. Financial instruments and risk management (continued)
Liquidity risk
Liquidity risk is the risk for the Group to fail to perform its financial
obligations when they become due. The Group's policy is aimed at securing
sufficient liquid funds to be able to meet its obligations when they fall due,
including to be able to face extraordinary or unusual situations. The management
aims at maintaining a balance between the continuity and flexibility of
financial resources by using different sources of finance. The liquidity risk
management includes the maintenance of sufficient cash and cash equivalent
funds, negotiating adequate credit lines, preparation, analyses and updating of
the cash flow forecasts.
The table below presents the agreed maturity of the financial liabilities on the
basis of the earliest date on which the Group can be obligated to repay them.
The table shows the undiscounted cash flows, which include principals and
interest:
+---------------------------+----------+----------+----------+----------+----------+
| December 31, 2008 | Up to 1 | From 1 | From 3 | Over 5 | Total |
| BGN '000 | year | to | to 5 | years | |
| | | 2 years | years | | |
| | | | | | |
+---------------------------+----------+----------+----------+----------+----------+
| | | | | | |
+---------------------------+----------+----------+----------+----------+----------+
| Liabilities under bank | 1,757 | 821 | 2,240 | 2,552 | 7,370 |
| loans | | | | | |
+---------------------------+----------+----------+----------+----------+----------+
| Liabilities under | 19,718 | 18,006 | 209,456 | - | 247,180 |
| debenture loans | | | | | |
+---------------------------+----------+----------+----------+----------+----------+
| Liabilities under trade | 5,072 | - | - | - | 5,072 |
| loans | | | | | |
+---------------------------+----------+----------+----------+----------+----------+
| Trade and other | 81,052 | - | - | - | 81,052 |
| liabilities | | | | | |
+---------------------------+----------+----------+----------+----------+----------+
| Finance lease liabilities | 2,396 | 1,981 | 4,595 | - | 8,972 |
+---------------------------+----------+----------+----------+----------+----------+
| Derivative financial | 205 | - | - | - | 205 |
| liabilities | | | | | |
+---------------------------+----------+----------+----------+----------+----------+
| | | | | | |
+---------------------------+----------+----------+----------+----------+----------+
| Total | 110,200 | 20,808 | 216,291 | 2,552 | 349,851 |
+---------------------------+----------+----------+----------+----------+----------+
+---------------------------+----------+----------+----------+----------+----------+
| December 31, 2007 | Up to 1 | From 1 | From 3 | Over 5 | Total |
| BGN '000 | year | to | to 5 | years | |
| | | 2 years | years | | |
| | | | | | |
+---------------------------+----------+----------+----------+----------+----------+
| | | | | | |
+---------------------------+----------+----------+----------+----------+----------+
| Liabilities under bank | 59,696 | - | - | - | 59,696 |
| loans | | | | | |
+---------------------------+----------+----------+----------+----------+----------+
| Liabilities under | 34,456 | 18,200 | 228,950 | - | 281,606 |
| debenture loans | | | | | |
+---------------------------+----------+----------+----------+----------+----------+
| Finance lease liabilities | 2,445 | 1,520 | 2,262 | - | 6,227 |
+---------------------------+----------+----------+----------+----------+----------+
| Trade and other | 210,933 | - | - | - | 210,933 |
| liabilities | | | | | |
+---------------------------+----------+----------+----------+----------+----------+
| Derivative financial | 3,957 | - | - | - | 3,957 |
| liabilities | | | | | |
+---------------------------+----------+----------+----------+----------+----------+
| | | | | | |
+---------------------------+----------+----------+----------+----------+----------+
| Total | 311,487 | 19,720 | 231,212 | - | 562,419 |
+---------------------------+----------+----------+----------+----------+----------+
41. Financial instruments and risk management (continued)
Equity management
The Group manages its equity and strives to maximize return for the shareholders
by optimizing the ratio between debt and equity. The objective of the management
is to retain the trust of the investors, creditors and the market, and to
guarantee the future development of the Group. The management of the
Group observes the equity structure on the basis of the ratio net debt to
equity. Net debt includes long-term and short-term interest loans from unrelated
parties, as well as current and non-current liabilities under finance lease less
cash. The equity of the Parent company's owners - share capital, reserves and
accumulated profit, as well as the minority interest and the loans received from
the Controlling Company, form the equity and the reserves of the Group.
The maintaining and adjusting of the equity structure is done in close relation
to the changes in the economic environment, as well as in relation to risk
level, which is inherent to the respective projects, in which investments are
made. The basic instruments, which are used for equity structure management,
are: dividend policy, emission or redemption of issued equity and debt
instruments, sale of assets and investments, aiming at minimizing the debt
level, refinancing of debt by issuing instruments with longer maturity, etc..
All decisions for changes in this respect are made taking into consideration the
balance between price and risks, inherent for the different financing sources.
+----------------------------------------------+---------------+---------------+----------------------------+
| | December 31, | December |
| | 2008 | 31, |
| | | 2007 |
+--------------------------------------------------------------+---------------+----------------------------+
| | | |
+----------------------------------------------+---------------+---------------+
| Debt | 207,465 | 275,183 |
+--------------------------------------------------------------+---------------+----------------------------+
| Cash and cash equivalents | (23,318) | (67,537) |
+--------------------------------------------------------------+---------------+----------------------------+
| | | |
+----------------------------------------------+---------------+---------------+
| Net debt | 184,147 | 207,646 |
+--------------------------------------------------------------+---------------+----------------------------+
| | | |
+----------------------------------------------+---------------+---------------+
| Equity | 18,179 | 103,734 |
+--------------------------------------------------------------+---------------+----------------------------+
| | | |
+----------------------------------------------+---------------+---------------+
| Debt -equity ratio | 10.13 | 2.00 |
+----------------------------------------------+---------------+---------------+----------------------------+
42. Contingent receivables and liabilities
42.1Contingent receivables
In the Group's favour were issued bank guarantees at the amount of BGN 2,230
thousand, and promissory notes at the amount of BGN 3,270 thousand, that
together with a registered mortgage at the amount of BGN 1,200 thousand serve as
collateral on receivables from clients on deferred payment.
In 2006, the Group invoiced and recognized income from penalties at the amount
of BGN 8,196 thousand which were accrued to counterparty due to quantitative
non-performance of a contract for fuel supply. As of December 31, 2006 this
recorded income was reversed, as the management estimated that the criteria for
income recognition in compliance with IAS 18 Revenue were not met. In this
relation, a contingent receivable at the amount of BGN 8,196 thousand occurred
for the Group because the receivable from the Counterparty is not recognized in
the financial statements.
42. Contingent receivables and liabilities (continued)
42.2 Contingent liabilities
As of December 31, 2008, the Group has contingent liabilities under: promissory
notes issued under bank loans and finance lease contracts at the amount of BGN
107,900 thousand; promissory notes guaranteed to third parties under agreements
of related parties at the amount of BGN 8,277 thousand; guaranty and issue of
corporate guarantees for securing bank loans of related parties at the amount of
BGN 15,842 thousand; bank guarantees issued in favour of the Bulgarian Customs
Agency for application of regime for deferred payment of excise tax at the
amount of BGN 21,756 thousand; and bank guarantees securing fuel supply at the
amount of BGN 3,495 thousand.
As of December 31, 2008 assets with carrying amount of BGN 68,371 thousand are
mortgaged as collateral under bank and trade loans, granted to the Ultimate
parent company (see also note 17,23 and 24).
43. Environment
In relation to the privatization of the Parent company in 1999, for most of the
Company's sites (petrol depots and stations), reports for valuation of the
influence on the environment are prepared and approved by a council of experts
of the Ministry of Environment and Waters (MoEW). Based on these reports,
Permissions for Exploitation of MoEW are issued. After the privatization, the
Parent company undertook a large-scale investment programme aiming to set its
sites in compliance with the best European practices. Therefore sites are
reconstructed in compliance with Directive 94/63/EC, which has been transferred
to the Bulgarian legislation by means of Regulation No 16 of August 12, 1999
(the Regulation) on the control of volatile organic compound emissions resulting
from the storage, loading or unloading and transportation of petrol, issued
based on Art. 9, para 1 of the Clean Air Act. The reconstruction of the gas
stations is preceded by environmental characteristics for each investment offer.
These characteristics are presented to the Regional Inspections of Environment
and Waters (RIEW) for construction permission.
In 2009, depending on the technological characteristics and by observing the
requirements of the Regulation, 82 petrol stations will be set in compliance
with the respective standards. The approximate estimation of the Management is
that the reconstructions amount in total to BGN 574 thousand.
The actual amount and time for performing of reconstruction may significantly
differ from the above mentioned approximate estimations.
As of the date of these consolidated financial statements, there is no
obligating event under IAS 37 - Provisions, Contingent Liabilities and
Contingent Assets, related to the commitment of the Group to environment
protection, according to the current legislation in Bulgaria, and therefore no
provisions have been accrued.
44. Post balance sheet events
In March 2009, the Group signed an agreement with a counterparty for offsetting
an amount of BGN 6,020 thousand originated in 2006.
1Gross margin is estimated as difference between revenue and cost of goods sold,
the percentage of gross margin is calculated as gross margin is divided to the
revenue.
2 EBITDA - earnings before interest, tax, depreciation and amortization.
3 EBIT - earnings before interest and tax.
4Closing share price as of the end of respective year on Bulgarian Stock
Exchange - Sofia.
5Includes interest-bearing loans and financial lease liabilities.
6Working capital is estimated as difference between current assets and current
liabilities.
7ROE (return on equity) is calculated as ratio between the net financial result
for the period and the average shareholders' equity.
8 ROACE (return on average capital employed) is estimated as ratio between
the EBIT and the average invested capital. The latter presents the difference
between assets and current liabilities to non-related parties (that are not part
of Petrol Holding Group).
9 ROA (Return on assets) presents the ratio between the EBIT and
the average assets.
10 Current ratio -
presents the ratio between current assets and current liabilities.
11 Inventories turnover -
presents the ratio between average stocks and the cost of goods sold,
multiplied by 365 days.
12Accounts receivable collection
period - presents the ratio between trade receivable from non-related parties a
d revenue from non-related parties, multiplied by 365 days.
13Source: Internal corporate information
* 92, 95 and 98 octane unleaded fuel
14 Wholesale volumes for all types of gasoline, diesel and gas oil are measured
in litres
15 Wholesale volumes for jet, LPG, heating oil and other heavy fuels are
measured in tonnes
16 Source: Internal corporate information
17 By a decision of the MB dated 28 February 2007 the Programme had been revised
and amended
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR CKPKBCBKKQAB
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