RNS Number : 7263L
Petrol AD
13 January 2016
PETROL AD
INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD
ENDING ON MARCH 31, 2015
CONSOLIDATED INTERIM STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For the period ending on March 31
Note
2015 BGN'000
2014 BGN'000
Revenue from sales
6
155,734
224,764
Other income
7
251
547
Cost of goods sold
(142,829)
(209,581)
Materials and consumables
8
(1,225)
(2,149)
Hired services
9
(5,278)
(4,118)
Personnel expenses
10
(5,485)
(8,238)
Depreciation and amortization expenses
15, 16
(2,181)
(2,955)
Other expenses
11
(587)
(783)
Finance income
12
808
1,223
Finance costs
12
(43,217)
(9,030)
Loss before tax
(44,009)
(10,320)
Income tax for the period
13
(2,276)
(360)
Loss for the period
(46,285)
(10,680)
Total comprehensive income for the period
(46,285)
(10,680)
Loss for:
Owners of the Parent Company
(46,285)
(10,682)
Non-controlling interest
-
2
Loss for the period
(46,285)
(10,680)
Total comprehensive income for:
Owners of the Parent Company
(46,285)
(10,682)
Non-controlling interest
-
2
Total comprehensive income for the period
(46,285)
(10,680)
Basic net earnings (loss) per share (BGN)
24
(0.42)
(0.10)
These interim consolidated financial statements were approved on behalf of Petrol AD by:
Georgi Tatarski
Milko Dimitrov
Rostislava Markova
Executive Director
Executive Director
Chief Accountant
May 4, 2015
The notes on pages 9 to 51 are an integral part of these interim consolidated financial statements
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
For the period ending on
Note
March 31, 2015 BGN'000
December 31, 2014 BGN'000
Non-current assets
Property, plant and equipment
14
138,506
150,424
Investment in subsidiaries
15
-
2,817
Financial assets available for sale
17
28,500
28,500
Goodwill
18
2,000
2,000
Deferred tax assets
13
3,222
5,395
Total non-current assets
172,228
189,136
Current assets
Inventories
20
21,939
51,864
Loans granted
19
35,110
34,445
Trade and other receivables
21
73,225
114,927
Refundable income taxes
22
536
446
Financial assets available for sale
17
482
428
Cash and cash equivalents
23
6,729
6,965
Total current assets
138,021
209,075
Total assets
310,249
398,211
Equity
Share capital
24
109,250
108,835
General reserves
18,864
18,864
Accumulated loss
(301,863)
(255,994)
Total equity belonging to the owners of the Parent-Company
(173,749)
(128,295)
Non-controlling interest
30
-
-
Total equity
(173,749)
(128,295)
Non-current liabilities
Loans and borrowings
25
118,467
137,256
Trade and other payables
27
6,342
6,342
Obligation for defined benefit retirement compensations
26
497
497
Total non-current liabilities
125,306
144,095
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (continued)
Note
March 31, 2015 BGN'000
December 31, 2014 BGN'000
Current liabilities
Trade and other payables
27
121,656
170,953
Loans and borrowings
25
237,036
211,458
Total current liabilities
358,692
382,411
Total liabilities
483,998
526,506
Total equity and liabilities
310,249
398,211
These interim consolidated financial statements were approved on behalf of Petrol AD by:
Georgi Tatarski
Milko Dimitrov
Rostislava Markova
Executive Director
Executive Director
Chief Accountant
May 4, 2015
The notes on pages 9 to 51 are an integral part of these interim consolidated financial statements
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Capital belonging to the owners of the Parent Company
Non- control. interest
Total equity
Registered capital BGN'000
General Reserves BGN'000
Retained earnings
Total
Balance on January 1, 2014
63,486
18,864
(167,651)
(85,301)
57
(85,244)
Comprehensive income for the period
Loss for the period
-
-
(10,682)
(10,682)
2
(10,680)
Total comprehensive income for the period
-
-
(10,682)
(10,682)
2
(10,680)
Transactions with shareholders, recorded directly in equity
Shares sold
45,349
-
86,184
131,533
-
131,533
Subsidiary to non-controlling interest
-
-
-
-
2
2
Total transactions with shareholders
45,349
-
86,184
131,533
2
131,535
Balance on March 31, 2014
108,835
18,864
(92,149)
35,550
61
35,611
Comprehensive income for the period
Loss for the period
-
-
(163,845)
(163,845)
(4)
(163,849)
Other comprehensive income
-
-
(28)
(28)
-
(28)
Total comprehensive income for the period
-
-
(163,873)
(163,873)
(4)
(163,877)
Transactions with shareholders, recorded directly in equity
Acquisition of subsidiaries
-
-
28
28
-
28
Sale of subsidiary to non-controlling interest
-
-
-
-
(57)
(57)
Total transactions with shareholders
-
-
28
28
(57)
(29)
Balance on December 31, 2014
108,835
18,864
(255,994)
(128,295)
-
(128,295)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY(continued)
Total comprehensive income for the period
Loss for the period
-
-
(46,285)
(46,285)
-
(46,285)
Total comprehensive income
-
-
(46,285)
(46,285)
-
(46,285)
Transactions with shareholders, recorded directly in equity
Shares sold
415
-
416
831
-
831
Total transactions with shareholders
415
-
416
831
-
831
Balance on March 31, 2015
109,250
18,864
(301,863)
(173,749)
-
(173,749)
These interim consolidated financial statements were approved on behalf of Petrol AD by:
Georgi Tatarski
Milko Dimitrov
Rostislava Markova
Executive Director
Executive Director
Chief Accountant
May 4, 2015
The notes on pages 9 to 51 are integral part of these interim consolidated in financial statements
CONSOLIDATED STATEMENT OF CASH FLOWS
For the 3 month, period ending on March 31
2015 BGN'000
2014 BGN'000
Cash flows from operating activities
Net loss before taxes
(44,009)
(10,320)
Corrections for:
Depreciation of property, plant and equipment and intangible assets
2,181
2,955
Interest expenses and bank commissions
4,978
7,495
Shortages and wastage of surplus assets
173
17
Accruals for unused leave and retirement
219
241
Loss(gain) on liquidation of assets
(70)
1
Profit from sale of assets
(42)
(35)
Derecognition of liabilities
(11)
(19)
Loss from sale of subsidiary
2,388
-
(34,193)
335
Amendment of trade payables
(71,121)
(145,144)
Amendment of inventories
29,752
42,933
Amendment of trade and other receivables
41,743
(7,619)
Cash flows generated from operating activities
(33,819)
(109,495)
Paid interest, bank charges and commissions
(3,701)
(10,556)
Paid corporate tax
(90)
(178)
Net cash used in operating activities
(37,610)
(120,229)
CONSOLIDATED STATEMENT OF CASH FLOWS
For the 3 month period ending on March 31 (continued)
2015 BGN'000
2014 BGN'000
Cash flows from investing activities
Payment for acquisition of property, plant and equipment
(28)
(2,777)
Proceeds from sale of property, plant and equipment
2,912
21
Payments for granted loans
-
(5,627)
Interest on loans and deposits
-
6,049
Net cash flows investing activities
2,884
(2,334)
Cash flows from financing activities
Received borrowing and loans
-
40,664
Paid loans and credits
(1,772)
(53,154)
Payments under leaseback contracts
(78)
(179)
Payments on interest on leaseback contracts
(121)
(424)
Payments under finance leases
(11)
(173)
Interest payments on finance leases
(2)
(10)
Proceeds from the sale of own shares
831
131,533
Net cash flows from financing activities
(1,153)
118,257
Net decrease in cash for the period
(35,879)
(4,306)
Cash at the beginning of the period
6,515
11,507
Effect of foreign exchange rate changes
35,043
312
Cash at the end of the period (see also note 23)
5,679
7,513
These interim consolidated financial statements were approved on behalf of Petrol AD by:
Georgi Tatarski
Milko Dimitrov
Rostislava Markova
Executive Director
Executive Director
Chief Accountant
May 4, 2015
The notes on pages 9 to 51 are integral part of these interim consolidated financial statements
NOTES
TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR
THE PERIOD, ENDING ON MARCH 31, 2015
1. Legal status and main activity
Petrol AD (the Parent company) was registered in Bulgaria in 1990. The Company is registered with the Commercial Register at the Bulgarian Registry Agency with ID code 831496285. The address of registration of the Parent company is 12 Targovska Street, Lovech Hotel, Lovech. As at the end of the reporting period the shareholders of the Parent company are legal entities, the State - through the Ministry of Economics and Energy, and individual shareholders (see also note 24).
The main activity of Petrol AD and its subsidiaries (the Group) is retail trade with petroleum products and non-petroleum goods, transportation and maintenance services. The Parent company is one of the oldest commercial companies in Republic of Bulgaria and operates the largest petrol station network in the country.
These interim consolidated financial statements were approved for issue by the Management Board of the Company on May 4, 2015.
2. Basis of preparation of the financial statements and accounting principles
2.1. General
These financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS), as adopted by the European Union (EU) as of January 1st, 2015.
These interim consolidated financial statements have been prepared under the historical cost convention except for provisions and obligations for retirement benefits, which are measured by the present value of the expected future payments.
2.2. Application of new and revised IFRS
2.2.1. Standards and interpretations, which apply for the current period
The group has adopted the following new standards and amendments to the standards, including any consequential changes in other standards - date of initial application on or after January 1, 2015:
Annual improvements to IFRS 2011-2013-IFRS 3, IFRS 13, IAS 40 - effective from July 1, 2014. These improvements introduce partial changes and revisions in the standards, mainly in order to remove existing inconsistencies or ambiguities in the rules and requirements of individual standards as well as to introduce more precise terminology. Major changes are aimed at the following operations: a) the right of a company changing for the first time to IFRS to apply standards that are not yet applied, if the standards allow for early application (IFRS 1); b) clarification of the right not to apply IFRS 3 to account for the formation of joint agreements in the financial statements of collaborative agreements; c) clarification of the scope of contracts that are within the scope of the exception for a group of financial assets and liabilities by netting positions against market and credit risk (IFRS 13); d) specify treatment of a transaction that meets both criteria of IFRS 3 and thus applies to investment properties under IAS 40, where a separate administration of both standards should be (IAS 40).
2.2.2. New standards and interpretations, not yet adopted
Standards, and interpretations and, already issued by the International Accounting Standards Board (IASB), not yet endorsed for adoption by the European Commission
Management believes that it is appropriate to disclose that the following new or revised standards, new interpretations and amendments to current standards, which are already issued by the International Accounting Standards Board (IASB), are not yet endorsed for adoption by the European Commission, and therefore are not taken into account in preparing these financial statements. The actual effective dates for them will depend on the endorsement decision by the EC.
IFRS 9 Financial Instruments - effective from January 1, 2018 will be applied retrospectively, earlier application is permitted.
IFRS 14 Regulatory deferral accounts - in force for the first year of preparation of financial statements beginning on or after January 1, 2016, with earlier application permitted.
IFRS 15 Revenue from contracts with customers - - effective from January 1, 2017 will be applied retrospectively, earlier application is permitted.
Amendments to IAS 1 Disclosure Initiative - effective from January 1, 2016. Earlier application is permitted.
Changes in IFRS 10 and IAS 28: Sale or contribution of assets between the investor and its associate or joint venture - effective from January 1, 2016, will be applied prospectively, with earlier application permitted.
Amendments to IAS 27 - Equity method in the separate financial statements - effective from January 1, 2016 will be applied retrospectively, earlier application is permitted
Amendments to IAS 16 and IAS 41 - Fruit bearing plants - effective from January 1, 2016, with earlier application permitted.
Amendments to IAS 16 and IAS 38 - Explanation of methods allowed for depreciation - effective from January 1, 2016, with earlier application permitted.
Amendments to IFRS 11 - Accounting for interests in joint activities - effective from January 1, 2016, will be applied prospectively, with earlier application permitted.
Amendments to IAS 19 - Defined benefit plans: Contributions of employees - effective from July 1, 2014, will be applied retrospectively, earlier application is permitted. The changes were approved by the European Commission after the reporting date.
Annual Improvements to IFRS 2010-2012 period - IFRS 2, IFRS 3, IFRS 8, IFRS 13, IAS 24 - effective from July 1, 2014, earlier application is permitted. The changes were approved by the European Commission after the reporting date.
Annual Improvements to IFRSs 2012-2014 period - IFRS 5, IFRS 7, IAS 9, IAS 34 - effective from July 1, 2016, with earlier application permitted.
IFRS 11 Joint Arrangements (Amendments) - Accounting for investments in joint venture amendment is effective for annual periods beginning on or after January 1, 2016. Reporting guidelines of a stake acquiring are added, which is a business under the IFRS. The amendment has not yet been adopted by the EU. No change is expected to have an effect on future financial statements on the Group.
Management does not expect these standards to have a significant impact on these financial statements in the period of their initial adoption.
2.3. Functional and presentation currency of the separate financial statements
Functional currency is the currency of the primary economic environment, in which the Company operates and primarily generates and disburses cash. It reflects the main transactions, events and conditions considered significant for the Group.
These interim consolidated financial statements are presented in BGN, which is the Company's functional currency. All amounts represented have been rounded to the nearest thousands, except when otherwise indicated.
2.4. Foreign currency
Transactions in foreign currency are initially recorded at amounts denominated in BGN at the official exchange rate of the Bulgarian National Bank as of the date of the transaction. Foreign exchange rate differences arising from settlement of foreign exchange positions or from reporting these positions at rates different from those of the initial recording, are reported in profit and loss for the respective period.
Since January 1, 1999 the Bulgarian Lev has been fixed against the Euro at rate BGN 1.95583 for 1 Euro.
The monetary positions denominated in foreign currency as at March 31, 2015 and as at December 31, 2014 are stated in the present separate financial statements at the closing exchange rate of the Bulgarian National Bank. The closing exchange rates of the BGN against USD as at the end of current and prior reporting periods are as follows:
31 March 2015:
1 USD = 1.81785 BGN
31 December 2014:
1 USD = 1.60841 BGN
2.5. Accounting assumptions and estimates
The application of IFRS requires that the Management makes certain reasonable assumptions and accounting estimates in the preparation of these financial statements, in order to determine the value of some assets, liabilities, revenue and expenses. These estimates and assumptions are based on the best estimate of the Management, taking into consideration the historical experience and analysis of all factors impacting the circumstances as of the date of preparation of the financial statements. The actual results could differ from the estimates presented in these separate financial statements.
Information about the uncertainties of assumptions and estimates, that have a significant risk of resulting in a material adjustments within the next financial year are included in the following notes:
Note 13 - recoverability of unrecognized deferred tax assets;
Note 18 - assessment of recoverable value of recorded goodwill arising in business combination
2.6. Consolidation basis
2.6.1 Business combinations
Group recognizes business combinations using the purchase method for the transfer of control to the Group (see note 2.6.3.). The remuneration transferred in the acquisition is generally measured at fair value as well as the acquired identifiable net assets. Arising goodwill is tested annually for impairment (see note 3.5.2.).
A gain from bargain purchase is immediately recognized in profit or loss. Transaction costs are recognized as expenses in the event, except those that are related to the issuance of debt or equity securities (see note 3.4).
The transferred remuneration does not include amounts related to the settlement of pre-existing relationships. Such amounts generally are recognized in profit or loss.
2.6.1. Business combinations (continued)
Payable contingent remuneration is measured at fair value at the date of acquisition. If the contingent remuneration is classified as equity, then it is not remeasured and its settlement is accounted in equity. Otherwise the following changes in fair value of contingent remuneration are recognized in profit or loss. When required remuneration payments based on shared should be replaced for the remuneration of employees of the acquired entity and relate to past services. Then all, or part of the amount of substitute remuneration is included in the assessment of the remuneration transferred to the business combination. This determination is based on the market value of replacement wages, compared to a market-based value of the remuneration of which acquired party and the extent to which replacement fees apply to previous services.
2.6.2. Non- controlling interest
Non-controlling interest is the equity in a subsidiary not attributable, directly or indirectly referring to the Parent company. Non-controlling interest is presented in the consolidated statement of financial position within equity, separately from the equity of owners of the Parent company.
Non-controlling interest is measured at the proportionate share of the identifiable net assets at the date of acquisition.
Changes in the Group's interest in a subsidiary do not result in loss of control are accounted for in equity.
2.6.3 Subsidiaries
Subsidiary is a company which is controlled by the Parent company. Control is the power to govern the financial and operating policy of a subsidiary in order to benefit from it. The financial statements of subsidiaries include in the consolidated financial statements from the date that control commences until the date control ceases.
2.6.4. Loss of control
Upon loss of control, the Group derecognizes the assets and liabilities of the subsidiary, non-controlling interest and other components of equity that are related to the company. The gain or loss resulting from the loss of control is recognized in profit or loss for the period. If the Group retains share in the former subsidiary, this share is measure at fair value at the date of loss of control. Consequently, this investment is accounted for using the equity method or as a financial asset available for sale on the maintenance level of influence.
2.6.5. Transactions eliminated on consolidation
Intra-group balances and transactions as well as any unrealized income and expenses arising from intra-group transaction are eliminated. Unrealized gains from transaction with associated and joint ventures are eliminated against the investment to the extent of the Group's share in the company. Unrealized losses are eliminated in the same way as unrealized gains, but only if there is no evidence of impairment.
2.6.6. Associates
An associate is an entity over which the Group has a significant influence. Significant influence is the right to participate in decisions related to the financial and operating policies of an investee, but not over those policies.
Investments in associates are presented in the statement of financial position under the equity method. Initial investment is recognized at cost, which includes transaction costs. After initial recognition, the consolidated financial statements include the Group's share of profits and losses and other comprehensive income of investment in companies accounted for using the equity until the date of termination.
When the Group's share in the losses exceeds the value of the investment accounted for using the equity, this amount is reduced to zero and further losses are not recognized unless the Group has incurred obligations or has made payments on behalf of that enterprise.
2.6.7. Goodwill
Goodwill arising on acquisition of subsidiaries is recognized initially at cost with less accumulated impairment losses (see note 2.6.1.).
2.7. Application of the principle of going concern
These interim consolidated financial statements have been prepared on a going concern basis. In assessing whether the going concern assumption is appropriate, the Management has taken into account all available information about the future, which is at least, but is not limited to, twelve months from the end of the reporting period. This assumes that the Group will be able to repay regularly its bond liabilities, trade payables, loans and interest due in accordance with the contractual agreements.
As at the end of each reporting period, the Group's management reviews useful lives and the depreciation/amortization method of property, plant, equipment and intangible assets. In case the Management identifies differences between expectations and previous approximate estimates, the relevant adjustments are made.
3. Definition and valuation of the statement of financial position and the statement of comprehensive income items
3.1. Property, plant and equipment and intangible assets
Property, plant and equipment and intangible assets are measured initially at acquisition cost. When significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate assets.
After initial recognition property, plant and equipment and intangible assets are carried at cost less depreciation and amortization and any impairment losses (see also note 3.5.2.).
3.1. Property, plant and equipment and intangible assets (continued)
Subsequent costs including replacement of asset's components are capitalized in the cost of the asset, only when it is probable that future economic benefits associated with the expenditure will flow to the Group. The carrying values of the replaced items are derecognized in accordance with the requirements of IAS 16 Property, Plant and Equipment. All other subsequent costs are expensed in the period when incurred.
Gains or losses on disposal of property, plant and equipment (determined as a difference between the proceeds from disposal with the carrying value of the asset) are recognized net within other income/ expenses in profit or loss for the period.
When the use of a property, plant and equipment changes from owner-occupied to investment property, the property is reclassified as investment property.
Depreciation and amortization are recognized over the estimated useful lives applying the straight-line method. Depreciation and amortization are recognized in profit or loss of the current period. Land, assets under construction and fully depreciated assets are not depreciated/ amortized.
The estimated useful lives for the current and comparative periods are as follows
Administrative and commercial buildings
25 years
Machinery, plant and equipment
2-25 years
Vehicles
4-10 years
Office equipment
7 years
Intangible assets
2-7 years
Depreciation/amortization commences from the beginning of the month following the month when the asset is available for use, and ceases at the earlier of the date when the asset is classified as held for sale in accordance with IFRS 5 Non-Current Assets Held for Sale and Discontinued Operations and the date of its derecognition.
3.2 Investment property
Investment property is property held by the Group to earn rentals or for capital appreciation (or both - including properties under construction, which will be held for the same purpose). Investment properties are measured at cost, which is decreased with the accumulated depreciation as well as any impairment losses that occur (see note 3.5.2). Gain or loss on sale of investment property (the difference between the net disposal proceeds and the carrying value of the property) is recognized in profit or loss. Depreciation is charged to profit or loss on the basis of their useful lives, using the straight-line method. The estimated useful life for investment properties is as follows:
Administrative and commercial buildings 25 years
Plant and equipment 2, 3 and 25 years
Office furniture 7 years
At the end of each reporting period, the management of the Group reviews the useful life and depreciation method of investment properties. If it is established that the difference between expectation and previous estimates exist, then accordingly appropriate changes are made.
3.3. Inventories
Inventories are stated at the lower of cost and net realizable value. Cost comprises purchase price, transportation costs, customs duties, excise duties and other similar costs. Net realizable value represents the estimated selling price less estimated selling expenses.
Upon consumption, inventories are valued using the following methods:
Fuel retail Weighted average cost
Fuel wholesale First in, first out price
Materials and other goods Weighted average cost
3.4. Financial instruments
The Group classifies non-derivative financial assets into the loans and receivables category: loans and receivables, derivative financial liabilities as other financial liabilities.
3.4.1. Non-derivative financial assets and financial liabilities - recognition and derecognition
The Group initially recognises loans and receivables and debt securities issued on the date that they are originated. All other financial assets and financial liabilities are initially recognised on the trade date.
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred, or it neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control over the transferred asset. Any interest in such derecognised financial assets that is created or retained by the Group is recognised as a separate asset or liability.
The Group derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire.
Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.
3.4.2. Non-derivative financial assets - measurement
Granted loans and receivables
These assets are initially recognised at fair value plus any directly attributable transaction costs. Subsequent to initial recognition they are measured at amortised cost using the effective interest method less any impairment loss. Current receivables are not amortised.
Cash
In the statement of cash flows, cash comprises cash in hand, cash at banks and cash in transit. Cash in transit comprises cash collected from petrol stations as at the end of the reporting period but actually received in the bank accounts of the Group in the beginning of the next reporting period.
3.4.3 Financial assets available for sale
Financial assets available for sale are non-derivative financial instruments that are not classified in the foregoing categories. According to the intentions and capabilities of the management for realizing these assets in the long run or within one year, in the statement of financial position in the company - these are referred to as long-term or short-term investments.
Regular purchases and sales of financial assets available for sale are recognized on the trade date - the date of transaction at which the Company commits to purchase or sell the asset. After the initial recognition, financial assets available for sale are measured at fair value at the date or preparation of the financial statement and any difference to this value (different from the impairment loss) is recognized in other comprehensive income. In subsequent sale or impairment of financial assets available for sale, the accumulated differences from changes in fair value are recognized in profit or loss.
The fair value of financial assets for which there is a market price in an active market is determined based on stock quotes valid at the end of the reporting period. Financial assets for which there is no market price and whose fair value cannot be reliably measured is recognized at cost, which is decreased at impairment losses (see note 3.5).
3.4.4. Non-derivative financial liabilities - measurement
Non-derivative financial liabilities are initially recognised at fair value less any directly attributable transaction costs. Subsequent to initial recognition, these liabilities are measured at amortised cost using the effective interest method.
3.5. Impairment
3.5.1. Non-derivative financial assets
Financial assets, not classified as at fair value through profit or loss, are assessed at each reporting date to determine whether there is an objective evidence of impairment. Objective evidence that financial assets are impaired includes:
default or delinquency by a debtor;
restructuring of an amount due to the Company on terms that the Company would not consider otherwise;
indications that a debtor or issuer will enter bankruptcy;
adverse changes in the payment status of borrowers or issuers;
the disappearance of an active market for a security;
observable data indicating that there is measurable decrease in expected cash flows from a group of financial assets.
3.5.1. Non-derivative financial assets (continued)
Financial assets carried at amortised cost
The Group considers evidence of impairment for financial assets measured at amortised cost (loans and receivables and held-to-maturity investments in securities) at both a specific asset and collective level. All individually significant assets are assessed for specific impairment. Those found not to be specifically impaired are then collectively assessed for any impairment that has been incurred but not yet identified. Assets that are not individually significant are collectively assessed for impairment. Collective assessment is carried out by grouping together assets with similar risk characteristics.
In assessing collective impairment the Group uses historical trends of the probability of default, the timing of recoveries and the amount of loss incurred, adjusted for management's judgement as to whether current economic and credit conditions are such that the actual losses are likely to be greater or less than suggested by historical trends.
An impairment loss is calculated as the difference between an asset's carrying value and the present value of the estimated future cash flows discounted at the asset's original effective interest rate. Losses are recognised in profit or loss and reflected in an allowance account. When the Group considers that there are no realistic prospects of recovery of the asset, the relevant amounts are written off. If the amount of impairment loss subsequently decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, then the previously recognised impairment loss is reversed through profit or loss.
3.5.2. Non-financial assets
The carrying values of the Group's non-financial assets (other than inventories and deferred tax assets) are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset's recoverable amount is estimated. Intangible assets that have indefinite useful lives or that are not yet available for use are tested annually for impairment. An impairment loss is recognised if the carrying value of an asset or its related cash-generating unit (CGU) exceeds its recoverable amount.
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. For impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs.
An impairment loss is reversed only to the extent that the asset's carrying value does not exceed the carrying value that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
3.6 Registered capital and treasury shares
The registered share capital of the Parent Company is presented at historical cost at the date of registration. It also includes the capital of the special purpose entities, presented at historical cost at the date of registration.
When the end of the reporting period the Group has outstanding treasury share - shares of the parent company, acquired by the parent company or other companies within the Group - their nominal value is presents as a reduction of share capital, and the difference above or below par value - in retained earnings in accordance with IAS 32 Financial Instruments: Presented
3.7. Deferred income and deferred expenses
Deferred income and deferred expenses in the statement of financial position comprises revenue and expenses prepaid in the current period but relating to future periods, such as guarantees, insurance, subscriptions, rent, etc.
3.8. Employment benefits
Defined benefit plans
In accordance with the Labour Code, the Group has an obligation to pay retirement benefits to its employees upon retirement, based on the length of service, age and labour category. Since these benefits qualify for defined benefits plan in accordance with IAS 19 Employee benefits, in accordance with the requirements of this standard the Group recognises the present amount of the benefits as a liability.
The Group's obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in the current and prior periods and that amount is discounted.
The calculation is performed annually by a qualified actuary using the projected unit credit method. The Group determines the net interest expense on the net defined benefit liability for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the net defined benefit liability.
The projected unit credit method presents a liability that may arise in future, based on a number of assumptions. From this point of view, the method is sensitive to assumptions of values of main parameters, on which the obligation and the due amount are dependent. The main assumptions on which the amount of the obligation is dependent are based on demographic, financial and other assumptions.
Remeasurements arising from defined benefit plans comprise actuarial gains and losses and are recognised in OCI. Net interest expense and other expenses related to defined benefit plans are recognised in profit or loss as personnel expenses.
Short-term employee benefits
Short-term employee benefit obligations are expensed as the related service is provided. A liability is recognised for the amount expected to be paid if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.
3.9. Income tax
Income tax expense comprises current and deferred tax. It is recognised in profit or loss except to the extent that it relates to a business combination, or items recognised directly in equity or in other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable or receivable in respect of previous years.
Deferred tax is recognised in respect of temporary differences between the carrying values of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for:
temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss;
temporary differences related to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future; and
taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.
In accordance with the tax legislation enforceable for the years ended 2015 and 2014 the tax rate applied in calculation of the tax payables of the Group is 10%. For the calculation of the deferred tax assets and liabilities as at March 31, 2015 and December 31, 2014 a tax rate of 10% has been used.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority.
A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
In determining the amount of current and deferred tax the Group takes into account the impact of uncertain tax positions and whether additional taxes and interest may be due. This assessment relies on estimates and assumptions and may involve a series of judgments about future events. New information may become available that causes the Group to change its judgment regarding the adequacy of existing tax liabilities; such changes to tax liabilities will impact tax expense in the period that such a determination is made.
3.10. Revenue and expenses recognition
3.10.1. Revenue from sales of goods, services and other income
Revenue is recognised when significant risks and rewards of ownership have been transferred to the customer, recovery of the remuneration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably.
Revenue is recognised at the fair value of the remuneration received or receivable net of any granted discounts and including the gross economic benefits received by or due to the Group. The amounts gathered on behalf of third parties such as sales taxes (value added tax) are excluded from revenue. Revenue generated from sale of fuel is reported at its gross amount with the excise due, which is considered an integral part of the price of the goods.
When the result of a transaction for services rendering can be estimated reliably, revenue is recognised by reference to the stage of completion of the transaction at the end of the reporting period. When the outcome of a transaction cannot be reliably estimated, the revenue is recognised to the extent that the expenses recognised are recoverable.
Rental income from investment properties is recognized on a straight-line basis over the term of the lease. Lease incentives are recognized as an integral part of the total rental income over the period of the lease. Rental income from other properties are recognizes as other income.
Gain (loss) on disposal of property, plant and equipment, and intangible assets and materials are presented as other income (expenses).
When economic benefits are expected to arise in several financial periods and their relation to revenue can only be generally or indirectly estimated, expenses are recognised in profit or loss based on procedures for systematic and rational distribution.
In exchange of assets, revenue (expense) are reported as a result of the exchange transaction to the amount of the difference between the fair value of the received asset and the carrying value of the exchanged asset.
3.10.2 Finance income and finance costs
Finance income comprises interest income, gains on transactions with own bonds, profits from foreign exchange differences and others. Finance costs comprise interest expense, losses from foreign exchange differences, bank charges, commissions and other finance costs.
Borrowing costs, which may be directly attributable to the acquisition, construction or production of a qualifying asset prior to its being ready for its intended use or sale, and necessarily takes extended period of time, are capitalized in part of the cost of the asset. All other finance income and costs are recognized in profit or loss for all instruments, measured at amortized cost using the effective interest rate method.
Income for equity interests is recognised when the Group is entitled to receive the income.
Foreign currency gains and losses are reported on a net basis.
3.11. Leases
3.11.1. Determining whether an arrangement contains a lease
In case of agreement, the Group determines whether it is or it contains a lease. Upon occurrence or after reassessing the agreement that contains a lease, the Group separates payments and other remunerations required by that agreement, such a lease and those for other elements on the basis of their relative fair values. If the Group concludes that for a finance lease it is impossible to separate the payments, then an asset and a liability are recognized at an amount equal to the fair value of the underlying asset. Subsequently the liability is reduced as payments are made and is therefore recognised as an imputed finance charge on the liability, while using the differential interest rate of the Group.
3.11.2 Leased assets
Leases under which the Group assumes substantially all the risks and rewards of an ownership are classified as finance leases. Upon initial recognition the leased assets are stated at the lower of fair value and the present value of the minimum lease payments. After initial recognition, the asset is accounted for and in accordance with the accounting policy applicable to that asset.
Other than these leases are operating leases and there are not recognized in the consolidated statement of the Group's financial position.
3.11.3. Finance lease
Payments made under operating leases are recognized in profit or loss on a straight line basis over the period of the lease. Lease incentives received are recognized as an integral part of the total lease payments over the period of the contract.
Minimum lease payments under finance leases are apportioned between finance charges and reduction of the outstanding obligations. Finance costs are allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remainder of the debt.
3.11.4 Operating lease
Costs incurred for assets leased under operating lease contracts are recognised in profit or loss under the straight-line method over the contract term. Lease incentives received is recognised as a reduction of the lease expenses on a straight-line basis for the term of the lease contract.
Revenue realised from assets under operating lease contracts is recognised in profit or loss on a straight-line basis for the contract term. Initial costs directly related to agreement conclusion are capitalized in the cost of the asset and are recognised as expenses on a straight-line basis for the operating lease contract term.
3.11.5 Sale and leaseback
A sale and leaseback transaction involves the sale of an asset and leasing back the same asset. The accounting treatment of a sale and leaseback transaction depends upon the type of lease and the nature of transaction.
If the leaseback is a finance lease, the transaction is a means of providing finance to the lessee, with the asset as a security. If under the terms of the lease there are no changes of the rights to use the asset from the seller /lessee before and after the transaction, it is beyond the scope of IAS 17 Leases and essentially constitutes funding/. In this case, the proceeds received from the transaction are presented as liabilities on loans and credits in the statement of financial position of the lessee and direct transaction costs are deferred for the period of the lease.
3.12. Segment Reporting
The information on operating segments in these interim consolidated financial statements is presented in a manner analogous to operational reports provided by the Group's management, based on which decision are taken in respect of the resources to be allocated to the segment and the assessment of its results.
4. Determination of fair values
Certain Group's accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities.
The Group has an established control framework with respect to the measurement of fair values. This includes a valuation team that has overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values.
The significant unobservable inputs and valuation adjustments are reviewed regularly. If third party information, such as broker quotes or pricing services is used to measure fair values, then the valuation team assesses the evidence obtained from third parties to support the conclusion that such valuations meet the requirements of IFRS, including the level in the fair value hierarchy in which such valuations should be classified.
Significant unobservable inputs and adjustments to estimates are reviewed regularly. If information from third parties such as quotes from brokers or similar services, are used to estimate the fair values, then evidence obtained from third parties to support the conclusion that such assessments meet the requirements of IFRS is evaluated, including the level in the hierarchy fair values in which such assessments should be classified.
Significant valuation issues are reported to the Management of the Group.
4. Determination of fair values (continued)
When measuring the fair value of an asset or liability, the Group uses market observable data as far as possible. Fair values are categorized into different level in a fair value hierarchy based on the inputs in the valuation techniques as follows.
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
If the inputs used to measure the fair value of an asset or liability might be categorised in different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.
The Group recognises transfers between levels of the fair value hierarchy at end of the reporting period during which the change has occurred.
5. Segment Reporting
Based on the operational reporting to the management of the Group serving also as a basis for strategy decisions, the Group has identified the following operating segments:
Wholesale of fuels - wholesale in the country of petroleum products storage facilities owned by the Group; bunker fuel outside the country;
Fuel retail - retail sale of oil and other products in the chain gas stations owned by the Group; servicing of fuel stations and commercial objects and services;
Other activities - transport fuel its own and leased vehicles; rental income and other activities.
Segment information provided to the Management of the Group for the period ending March 31, 2015 and March 31, 2014 is as follows:
March 31 2015
Wholesale of fuels
Fuel retail
All other segments
Total for the Group
BGN'000
BGN'000
BGN'000
BGN'000
Total revenues of the segment
51,370
104,893
7,925
164,188
Revenues from intra-group sales
2,385
416
5,402
8,203
Revenues from external customers
48,985
104,477
2,523
155,985
Adjusted EBITDA
(1,449)
1,918
112
581
Depreciation
714
1,117
350
2,181
5. Segment Reporting (continued)
March 31 2014
Wholesale of fuels
Fuel retail
All other segments
Total for the Group
BGN'000
BGN'000
BGN'000
BGN'000
Total revenues of the segment
195,725
124,928
2,885
323,538
Revenues from intra-group sales
90,174
6,227
1,826
98,227
Revenues from external customers
105,551
118,701
1,059
225,311
Adjusted EBITDA
(6,154)
6,233
363
442
Depreciation
732
1,998
225
2,955
Policies for the revenue recognition from intra-group sales and sales to external customers for the purpose of reporting by segments - do not differ from these that are adopted by the Group - accounting policies for revenue recognition in the consolidated statement of profit or loss and other comprehensive income. The Group's management evaluated performance of the segments based on the adjusted indicator EBITDA[1]. The calculation of the adjusted EBITDA does not take into account the effect of depreciation of assets. Reconciliation between adjusted EBITDA and loss before tax is presented in the following table:
March 31 2015 BGN'000
March 31 2014 BGN'000
Adjusted EBITDA of the reportable segments
469
79
Adjusted EBITDA of all other segments
112
363
Depreciation
(2,181)
(2,955)
Financial expenses
(42,409)
(7,807)
Loss before taxes
(44,009)
(10,320)
6.Revenue from sales
March 31 2015 BGN'000
March 31 2014 BGN'000
Goods
153,462
222,482
Services
2,272
2,282
155,734
224,764
7. Other income
March 31 2015 BGN'000
March 31 2014 BGN'000
Profit from liquidation of property, plant and equipment:
70
-
Income from sales
1,020
-
Carrying value
(950)
-
Assets surplus
54
259
Gain from sale of property, plant and equipment
49
35
Income from sales
4,002
49
Carrying value
(3,953)
(14)
Benefits from insurers
17
23
Derecognition of liabilities
11
19
Fines and penalties
3
40
Other
47
171
251
547
8. Materials and consumables
March 31 2015 BGN'000
March 31 2014 BGN'000
Electricity and heating
728
766
Spare parts
156
139
Fuels and lubricants
124
848
Office supplies
112
144
Promotional materials
48
8
water
21
31
Work clothes
10
116
Assets of low value
-
25
other
26
72
1,225
2,149
9.Hired services
March 31 2015 BGN'000
March 31 2014 BGN'000
Fees and commissions
1,797
1,224
Rents from related parties
1,253
626
Security
546
47
Consulting and training
339
169
Transport costs
261
308
Software Licenses
193
202
Repair and maintenance
174
423
Inkaso
174
208
Communications
142
177
Rents from related parties
114
-
Insurance
108
388
Advertising
101
66
State and municipal fees and costs of litigation
-
151
Other
76
129
5,278
4,118
10. Employee expenses
March 31 2015 BGN'000
March 31 2014 BGN'000
Wages and salaries
4,617
6,770
Social security contributions
868
1,468
5,485
8,238
11. Other expenses
March 31 2015 BGN'000
March 31 2014 BGN'000
Scrapped expenses and written off assets
227
275
Representative costs and sponsorship
158
158
Local taxes and expenditures
70
233
Business trips
49
74
Fines and penalties
30
20
Costs of insurance benefits
22
-
Loss on liquidation of investment properties, including
7
-
Sales revenues
(2,800)
-
Carrying value
2,807
-
Loss from sale of property, plant and equipment, including
-
1
Sales revenues
-
-
Carrying value
-
1
Other
24
22
587
783
12. Finance income and costs
March 31 2015 BGN'000
March 31 2014 BGN'000
Finance income
Interest income, including
808
1,223
Interest income on loans granted
664
1,111
Interest income on trade receivables
144
104
Other interest income
-
8
808
1,223
Finance costs
Interest expenses, including
(5,627)
(8,071)
Interest on bank loans
(825)
(3,971)
Interest on trade loans
(3,811)
(2,291)
Interest on bonds
(788)
(785)
Interest on leaseback
(197)
(529)
Interest on trade and other payables
(4)
(424)
Budget interest
-
(61)
Interest on financial leases
(2)
(10)
Loss from sale of subsidiary, including:
(2,388)
-
Sales revenues
2,991
-
Carrying value of the Group's share of net assets of subsidiary
(5,379)
-
Negative exchange rates
(35,043)
(312)
Bank charges, commissions and other financial charges
(159)
(647)
(43,217)
(9,030)
Finance costs, net
(42,409)
(7,807)
13. Taxation
13.1. Tax expenses
Tax expense recognized in profit or loss includes the amount of current and deferred income tax expenses in accordance with IAS 12 Income taxes
March 31 2015 BGN'000
March 31 2014 BGN'000
Current tax benefit (expense)
103
343
Change in deferred tax, including
2,173
17
Temporary differences arising during the period
2,272
36
Temporary differences recognized during the period
(99)
(19)
Total tax expense
2,276
360
13.2. Effective tax rate
Reconciliation between accounting profit and tax expense and calculation of the effective tax rate as of March 31, 2015 and year 2014 is presented in the table below:
March 31 2015 BGN'000
March 31 2014 BGN'000
Accounting loss for the year
(44,009)
(10,320)
Applicable tax rate
10%
10%
Tax expense (benefit) at the applicable tax rate
(4,401)
(1,032)
Tax effect of permanent differences
876
6
Tax effect of recognized tax during the current year But nor recognized in prior periods
3
(18)
Tax effect of unrecognized in the current year tax asset arising in the current period
3,151
1,383
Tax effect of consolidation adjustments
2,647
21
Tax expense
2,276
360
Effective tax rate
-
-
Until the expiration of five years from the end of the year, when declarations are supposed to be submitted, the tax periods may be subject to examination by tax authorities. As a consequence of such checks, additional tax liabilities or penalties might be imposed according to the interpretation of the tax legislation. The management of the Group is not aware of any circumstances that could rise to additional material liabilities in this area.
13.3. Recognized deferred tax assets and liabilities
Deferred tax assets and liabilities are recognizes in the following positions/items/:
Asset (liability) at January 1 2014
Recognized in profit and loss
Asset (liability) at December 31 2014
Recognized in profit and loss
Asset (liability) at March 31, 2015
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
Property, plant and equipment
(2,295)
1,558
(737)
75
(662)
Impairment of assets
1,515
2,561
4,076
(2,222)
1,854
Tax loss
60
1,164
1,224
(41)
1,183
Measurement of assets
12
(12)
-
-
-
Provision for unused leave and other provisions
177
(97)
80
15
95
Excess interest expense by CITA
5
46
51
-
51
Other temporary differences incl.unpaid income individuals
724
(23)
701
-
701
198
5,197
5,395
(2,173)
3,222
14. Property, plant and equipment
Land BGN'000
Building BGN'000
Plant and equipment BGN'000.
Vehicles BGN'000.
Other assets BGN'000.
Assets Under construc. BGN'000.
Intan. assets BGN'000.
Total BGN'000.
Balance on January 1, 2014
46,869
66,180
159,769
15,922
17,099
2,726
5,483
314,048
Additions
68
41
227
109
61
3755
5
4,266
Transfers
-
-
504
-
-
(504)
-
-
Disposals
-
-
(72)
(176)
(58)
(1)
(11)
(318)
Balance on March 31, 2014
46,937
66,221
160,428
15,855
17,102
5,976
5,477
317,996
Additions
16,777
166
966
64
195
3,250
56
21,474
Transfers
-
1,124
4,916
-
353
(6,393)
-
-
Disposals
(5,302)
(6,362)
(6,502)
(315)
(497)
(224)
(73)
(19,275)
Disposals due to loss of control over subsidiaries
(4,185)
(10,617)
(64)
(1,146)
(188)
(11)
-
(16,211)
Disposals from sale of subsidiaries
-
-
(9)
-
(6)
-
(2)
(17)
Balance on December 31, 2014
54,227
50,532
159,735
14,458
16,959
2,598
5,458
303,967
Additions
-
-
58
10
20
31
-
119
Disposals
(95)
(519)
(4,756)
(355)
(195)
(490)
(274)
(6,684)
Disposals from sale of subsidiaries
(1,361)
(2,108)
(5,321)
-
(1,223)
-
(44)
(10,057)
Balance on March 31, 2015
52,771
47,905
149,716
14,113
15,561
2,139
5,140
287,345
Accumulated depreciation
Balance on January 1, 2014
-
28,028
91,026
14,202
12,065
-
4,680
150,001
Charged
-
545
1,758
233
309
-
80
2,925
Disposals for the period
-
-
(71)
(176)
(54)
-
(11)
(312)
31 2014
-
28,53
92,713
14,259
12,320
-
4,749
152,614
Charged
-
1,530
5,090
623
830
-
248
8,321
Disposals for the period
-
(1,477)
(1,948)
(151)
(473)
-
(65)
(4,114)
Disposals due to loss of control over subsidiaries
-
(1,904)
(18)
(1,202)
(140)
-
-
(3,264)
Disposals from sale of subsidiaries
-
-
(7)
-
(5)
-
(2)
(14)
Transfers
-
-
(2)
-
2
-
-
-
Balance on December 31, 2014
-
26,722
95,828
13,529
12,534
-
4,930
153,543
Charged
-
352
1,448
60
233
-
78
2,171
Disposals for the period
-
(250)
(1,356)
(351)
(106)
-
(151)
(2,214)
Disposals from sale of subsidiaries
-
(865)
(2,837)
-
(915)
-
(44)
(4,661)
Balance on March 31, 2015
-
25,959
93,083
13,238
11,746
-
4,813
148,839
Carrying Carrying value January 1, 2014 201
46,869
38,152
68,743
1,720
5,034
2,726
803
164,047
Carrying value atMarch 31,2014
46,937
37,648
67,715
1,596
4,782
5,976
728
165,382
Carrying Carrying value atDec. 31, 2014
54,227
23,810
63,907
929
4,425
2,598
528
150,424
Carrying Carrying value March 31, 2015
52,771
21,946
56,633
875
3,815
2,139
327
138,506
14. Property, plant and equipment (continued)
Vehicles carrying an amount of BGN 84,000 (2014: BGN 124,000) are acquired under finance leases.
In 2014 the Group lost control over two of its subsidiaries. As a result, property, plant and equipment as well as intangible assets was with a carrying value of BGN 12,947 thousand- and were removed from the consolidated statements of the Group (see note 30).
As of March 31st, 2015 - property, plant and equipment with carrying value of BGN 41,831 thousand serve as collateral for bank loans and commercial group and unrelated parties, as well as securing trade payables to non-related parties (see note 27).
15. Investment Property
March 31 2015 BGN'000
December 31 2014 BGN'000
Cost
Balance at the beginning of the period
5,273
23,227
Additions
-
23
Disposals due to loss of control over subsidiaries
-
(17,935)
Disposals
(5,273)
(42)
Balance at the end of the period
-
5,273
Accumulated depreciation
Balance at the beginning of the period
2,456
2,609
Depreciation for the period
10
162
Disposals due to loss of control over subsidiaries
-
(274)
Disposals
(2,466)
(41)
Balance at the end of the period
-
2,456
Carrying value at the beginning of the period
2,817
20,618
Carrying value at the end of the period
-
2,817
In 2014, due to loss of control over two of its subsidiaries, the Group has removed them from the consolidated financial statements of theirs with a carrying value of BGN 17,661 thousand (see note 30).
In the first quarter of 2015 the Group's investment properties with a carrying value of BGN 2,807 thousand were sold (see note 11) and the Group does not account for investment properties on March 31, 2015.
16. Investments in other Companies
As of March 31, 2015 and December 31, 2014 the Group holds 6.92 % of the capital share of Capital 3000 AD. Capital investment in 3000 AD was fully impaired in prior reporting periods.
17. Financial assets available for sale
In 2014, the Group lost control over two of its subsidiaries. As a result, assets and liabilities of subsidiaries and other components of equity related companies were written off. The loss resulting from the loss of control amounted to BGN 15,490 thousand and is recognized in profit or loss for the period. In statements, investments in these companies are presented as non-current financial assets available for sale and are measured at fair value at the date of loss of control.
18. Goodwill
March 31 2015 BGN'000
December 31 2014 BGN'000
Cost
21,540
21,540
Impairment loss
(19,540)
(19,540)
2,000
2,000
In August 2014, the Group acquired one share in the capital of Elit Petrol AD. As a result, goodwill was recognized amounting for BGN 1,965 thousand (see also note 29).
In view of the reduced volume of business of Naftex Petrol EOOD, the Group has concluded that carrying value of goodwill exceeds its recoverable amount. As a result it is recognized an impairment loss on goodwill accounting to BGN 18,297 thousand.
Goodwill arising from the acquisition of Naftex Security EAD amounted to BGN 1,243 thousand and is fully impaired at the date of acquisition.
Goodwill on March 31, 2015 and December 31, 2014 is with a carrying value of BGN 2,000 thousand has occurred at the time of acquisition of the following subsidiaries: BPI EAD and Elit Petrol AD.
19. Granted loans
March 31 2015 BGN'000
December 31 2014 BGN'000
Long-term loans
Loans granted to third parties, including:
-
-
Initial value
21,034
21,034
Allowance for impairment
(21,034)
(21,034)
-
-
Short-term loans
Loans granted to third parties, including
35,106
34,441
Initial value
50,054
49,389
Allowance for impairment
(14,948)
(14,948)
Loans granted for related parties
4
4
35,110
34,445
35,110
34,445
19. Granted loans (continued)
In 2014 the Group lend a loan to an unrelated party for a value of 30,420 thousand EU maturing in 2015 and interest rate of 8%.
In January 2014 and under art. 311, Paragraph 1 of the Commercial Code and contract for real stake controlled by November 2013, a company was carried out selling its share in three of its subsidiaries as a result of unmet notarial invitation. The shares were sold to a licensed investment intermediary to a total cost of BGN 29,850 thousand.
The shares were sold by the firm of the Company for an unrelated person who paid the purchase price after getting a bank loan. The Company has guaranteed bank credit to be received from the second buyer in the transaction by the first pledge of cash with the amount of BGN 30,520 thousand. In May 2014, due to expiry of the loan agreement, the bank is cashing officially outstanding principal and interest on the loan amounted to BGN 30,511 thousand. To sum, the company has a trade receivable arising from contract for real pledge of shares concluded between the second buyer and the Company.
On February 17, 2014 the Company concluded a loan agreement with the second buyer in transaction. The loan is for an amount up to 200 thousand for interest on the bank loan. The term of the loan is up to February 5th, 2015 and the agreed interest rate is 9%. The loan is secured by a pledge of shares of subsidiaries of the borrower. With the release of the subsidiary of the Group, the loan was written off, due to the loss of control, respectively.
In 2014 the Company has accrued impairment of receivables from the controlling company until November 2013 in loans and interest due thereon in the amount of BGN 32,063 thousand, due to open insolvency proceedings and the difficult collection of receivables.
Management has made an analysis of the granted loans, so their fair values could be determined as well as the corresponding levels in the hierarchy of fair values. The Group's management believes that the values on which its loans are presented in the consolidated statement of financial position are reasonably approximate of their fair value at March 31, 2015 and December 31, 2014, categorized in Level 3.
20. Inventories
March 31 2015 BGN'000
December 31 2014 BGN'000
Goods, including:
19,712
49,595
Petrol products
14,500
28,156
Other goods
5,212
21,439
Materials
2,227
2,269
21,939
51,864
Until March 31, 2015 petrol products at the amount of 12,278 thousand BGN (December 31, 2014 - 38,982 thousand BGN) serve as collateral for trade payables and utilized by the Group bank loans (see note 25).
21. Trade and other receivables
March 31 2015 BGN'000
December 31 2014 BGN'000
Receivables from clients, including
59,164
91,247
Initial value
68,235
100,318
Allowance for impairment
(9,071)
(9,071)
Cession
7,098
18,788
Guarantees for participation in tender procedures
1,394
1,477
Advances granted
1,051
1,245
Initial value
2,100
2,294
Allowance for impairment
(1,049)
(1,049)
Deferred expenses
373
415
Litigations and writs
334
305
Initial value
634
605
Allowance for impairment
(300)
(300)
Receivables from related parties
232
148
Tax refunds, including
19
30
VAT
5
4
Other taxes
14
26
Other
3,560
1,272
Initial value
4,982
2,694
Allowance for impairment
(1,422)
(1,422)
73,225
114,927
Receivables from related parties are disclosed in note 31.
Management performed an analysis of the trade receivables in order to determine their fair values and their level in the fair value hierarchy. The Management considers that the carrying values of the trade and other receivables in the statement of financial position are reasonable approximations of their fair value as at March 31, 2015 and December 31, 2014 within Level 3 category.
The Group is of the opinion that unimpaired overdue receivables are collectible based on historical information about payments, guarantees received and a detailed analysis of the credit risk and collaterals of its customers.
As at March 31, 2015 trade receivables from customers amounting to BGN 23,973 thousand (December 31, 2014 - BGN 50,810 thousand) serve as collateral for bank loans utilized by the Group (see note 25).
22. Current income tax
The excess of corporate taxes paid during the current and prior periods above tax payables as at March 31, 2015 and December 31, 2014 is at the amount of BGN 536 thousand and BGN 446 thousand respectively, and is presented in the statement of financial position as refundable income tax.
Deferred income taxes are formed as follows:
March 31 2015 BGN'000
December 31 2014 BGN'000
A refundable income tax at the beginning of the period
446
353
Calculated income tax
-
1,073
Paid corporate tax
(90)
(980)
A refundable income tax at the end of the period
536
446
23. Cash and cash equivalents
March 31 2015 BGN'000
December 31 2014 BGN'000
Cash at banks
3,686
3,260
Cash in transit
1,897
3,167
Cash on hand
96
88
Cash and cash equivalents in Statement of Cash Flows
5,679
6,515
Blocked cash amount
1,050
450
Cash and cash equivalents in the Statement of Financial Position
6,729
6,965
Cash in transit comprises cash, collected from retail outlets at the end of the reporting period, but deposited in bank account of the Group at the beginning of the next reporting period.
As for the blocked cash amounts until March 31,2015 is presented cash amounting to BGN 1,050 thousand (December 31, 2014 - BGN 450 thousand) under a contract for a bank loan, which serves the issuance of bank guarantees in respect of participation contests of PPL.
As at March 31, 2015 cash in the amount of BGN 211 thousand (December 31, 2014 - BGN 20 thousand) serve as collateral under-utilized bank loans (see note 25).
24. Registered capital
The registered capital is presented at its nominal value in accordance with the court decision for registration. It represents the registered capital of the parent company Petrol AD, reduced by the Group's own shares till March 31, 2015 and December 31, 2014.
Shareholders in the parent company at March 31, 2015 and December 31, 2014 are as follows:
Shareholder
March 31 2015
December 31 2014
Alfa Capital AD
28.85%
28.85%
Julinor EOOD
23.11%
23.11%
Correct Pharm EOOD
18.31%
18.31%
Perfeto consulting EOOD
16.43 %
-
VIP Properties EOOD
2.26%
18.31%
Corporate Commercial Bank AD
5.51%
5.51%
The Ministry of Economy and Energy of the Republic of Bulgaria
0.65%
0.65%
Naftex Petrol EOOD
-
0.34%
Varna Storage EOOD
-
0.04%
Other minority shareholders
4.88%
4.88%
100.00%
100.00%
In January 2014, Naftex Petrol EOOD sells 45,349,000 shares of Petrol AD on a regulated stock market, representing 41.51% of the capital. Main buyers are Julinor EOOD (25,244,585 shares) and VIP Properties EOOD (20,000,000 shares).
The registered capital of the Group is presented net of the Group's own shares as of December 31, 2014 and 2013 respectively, as follows:
Shareholder
March 31 2015 Shares
December 31 2014 Shares
Registered capital of the Parent Company
109,249,612
109,249,612
Owned shares, pursuant to shareholders and Reference from the Central Depository AD
-
(415,561)
109,249,612
108,834,051
Capital of the Parent Company (number of shares) in these financial statements
109,249,612
108,834,051
Capital of the Parent Company (number of shares) in these financial statements (BGN thousand)
109,250
108,835
Capital of the Group Statement of changes in equity
109,250
108,835
24. Registered capital (continued)
Loss per share
Loss per share is calculated by dividing the net loss by the weighted average number of ordinary shares outstanding during the reporting period. The Parent company has not issued any potential ordinary shares.
March 31 2015
March 31 2014
Weighted average number of shares
109,250
108,835
Loss in BGN thousand
(46,285)
(10,680)
Loss per share (BGN)
(0.42)
(0.10)
The weighted average number of outstanding shares during the period March 31, 2015 and December 31, 2014 is as follows:
March 31 2015
December 31 2014
Number of shares at the beginning of the period
108,834
63,486
Effect of sold (redeemed) own shares
416
45,348
Weighted average of number of shares
109,250
108,834
25.Loans and borrowings
March 31 2015 BGN'000
December 31 2014 BGN'000
Long-term liabilities
Loans from financial institutions
-
1,239
Commercial loans from related parties
71,741
89,124
Bonds
36,107
36,073
Leaseback
10,619
10,752
Financial leasing
-
68
118,467
137,256
Short-term liabilities
Loans from financial institutions
123,656
109,917
Commercial loans from related parties
111,495
97,550
Bonds
536
2,838
Leaseback
1,228
1,089
Financial leasing
121
64
237,036
211,458
355,503
348,714
In October 2014 an agreement was signed to take on foreign debt and subrogation between the Group and an unrelated party to refinance part of the loan totaling for USD 25.512 thousand. The maturity is in November 2018 and has contractual interest rate of 8.5%. The effective interest rate on borrowings was 9.57%. At March 31, 2015 the amount of the loan at amortized cost in the original currency is USD 21.771 thousand. (2014: USD 25,700 thousand). In favor of the creditor third pledge of commercial enterprise is established.
25. Loans and borrowings (continued)
At the date of this consolidated financial statement an invitation is received for the announcement of the early collection where the loan is presented as short-termed.
In the month of December 2014 under a cession agreement a loan obligation from a subsidiary to an associated person has been transferred to an unrelated person. To the date of the transfer an obligation to the Group occurs on a commercial loan to an unrelated party for the amount of BGN 24,153 thousand. The loan conditions remain unchanged.
In 2013, a long-term commercial loan was signed for the amount of USD 60,000 thousand with a repayment period up to November 2019 and agreed rate of 9%. The loan is secured by cash and cash equivalents in bank accounts, mortgage and pledge of property, plant and equipment and guarantee in favor of the creditor.
In 2013 a short -term commercial loan was utilized from an unrelated party in the amount of USD 16,200 thousand (BGN 32,197 thousand). With final maturity in October 2014 and agreed rate of 8.5%. The loan is secured by a mortgage of land and buildings, pledge of machinery and equipment, trade receivables from unrelated parties and cash in bank accounts as well as guarantee in favor of the creditor.
As of March 31, 2015 the Group has an obligation under commercial loan for BGN 1,742 thousand from an unrelated party that is a controlling company until November 2013. The agreed interest rate is quarterly SOFIBOR plus a margin.
25.1 Bonds
In October 2016, the Parent company issued 2,000 registered, transferable bonds with a fixed annual interest of 8.375 % and the issue price of 99.507% of the face value, which is set at EUR 50,000 bond.The bond loan has a term of five years and maturity in October 2011. Once the principal is due at maturity. On held in October and the month of December 2011 General Meetings of bondholders decided to extend the issue until January 26, 2017.
The issue is secured by Group's receivables on loans granted to the controlling up to November 2013 and the subsidiary, as well as a corporate guarantee, which is issued by the mentioned subsidiary. Interest is paid once a year. The annual effective rate after extension of the issue is 8.6%. The purpose of the issue is to provide funds for working capital, financing of investment projects and restructuring of the Group's previous debt.
In 2013 the Group bought back bonds with a total nominal value of EUR 2,555 thousand. Euros. At the date of these financial statements the nominal value of the bond issue is EUR 18.659 thousand.
The obligations under the debenture loans are presented in the statement of financial position at amortized cost.
The fair value of the bond issue at March 31, 2015 is BGN 36,494 thousand (December 31, 2014: BGN 36,494 thousand) calculated at an interest rate of 9.12% (2014: 9.12%).
25.2 Leaseback
In previous period, the Group conducted several contracts for the sale of real estate in which the seller agreed upon the obligation to reacquire the property under finance leases. That scheme, also known as leaseback, in fact represents the attraction of financing secured by the leased assets. Proceeds from leaseback transactions are accounted as liabilities on borrowings (see note 3.11.5).
Nominal Interest Rate
Maturity
March 31 2015 BGN'000
December 31 2014 BGN'000
Office building in Sofia
1m Euribor + 2.25% (min 5.25%)
04.2023
8,155
8,231
Oil facility in Svilengrad
+ 1.75%
12.2020
3,692
3,610
11,847
11,841
The effective interest rate on interest-bearing loans received under leaseback contracts is in the range of 5.68% - 8.08%.
Obligations from granted loans or through leaseback contracts are availed from the controller to the company in November 2013
25.3. Loans from financial institutions
Nominal Interest Rate
Maturity
March 31 2015 BGN'000
December 31 2014 BGN'000
Working capital loan
9%
05.2015
53,383
46,945
Working capital loan
9%
02.2015
37,281
32,785
Working capital loan
9%
06.2015
28,093
24,705
Working capital loan
3m Euribor + 7.6% (min 9%)
05.2015
4,899
4,949
Investment loan
3m Euribor + 3.1% (min 7%)
02.2018
-
1,772
123,656
111,156
The average effective interest rate for the current period on loans from financial institutions is in the range of 8% to 9.6% (2014: 8% to 9.6%).
25.3. Loans from financial institutions (continued)
In 2011 a long syndicated bank loan amounted to USD 80,240 thousand was utilized with a maturity in November 2018 and contractual interest rate of 8.5%.The effective interest rate on bank loans is 9.6 %. In October 2014 an agreement was signed to take on foreign debt and subrogation by an unrelated party to refinance part of the loan totaling for USD 25,512 thousand. The maturity is in November 2018 and has contractual interest rate of 8.5%. The effective interest rate on borrowings was 9.57%. As of December 31, 2014 amount of the loan at amortized cost in the original currency is USD 25,700 thousand. In favor of the creditor a third pledge of commercial enterprise is established. In early November 2014 the remaining principal is repaid on the syndicated bank loan mainly by offsetting reciprocal obligations of the bank. In the month of December 2014 all the interest owed was paid.
In July 2013, a subsidiary entered into a loan agreement from a financial institution with a credit limit of principal up to USD 15,000,000. The loan repayment should start from July 2014, as the company benefited from one-year extend option under certain conditions in the loan agreement (until 2016). The agreed interest rate is at 9% annual interest. In November and December 2014 the loan was repaid through payments and offsetting them against liabilities of the bank.
In February 2014 the Group concludes a bank loan of USD 20,000 thousand. The loan is secured by a pledge of money and bank accounts, trade receivables and inventories.
In April 2014 a subsidiary has entered into a loan agreement for the amount of USD 15,000. The loan is secured by a pledge of cash in bank accounts, trade receivables and inventories.
In February 2015 subsidiary has fully repaid its obligations under an investment credit.
The obligations of the Group's loans from financial institutions are secured by property, plant and equipment, inventories, cash and receivables of the Group as well as warranties and promissory notes.
25.4. Obligations under finance leases
March 31, 2015
December 31, 2014
Future minimum Lease payments
Interest
Present value Of minimum Lease payments
Future Minimum Lease payments
Interest
Present value Of minimum Lease payments
BGN'000
BGN'000
BGN'000.
BGN'000
BGN'000
BGN'000.
Up to a year
130
(9)
121
73
(9)
64
From one-up to- five years
-
-
-
70
(2)
68
130
(9)
121
143
(11)
132
25.4. Obligations under finance leases (continued)
The assets acquired by the Group under finance leases are vehicles.The term of the contracts varies between 3 and 6 years. At the end of 2014 all installments are paid in the financial lease contract with Raiffeisen Leasing Bulgaria OOD signed in 2008 and acquired 12 trucks and trailers for the transport of light fuels and gas. At December 31, 2014 the average effective interest rate on finance lease agreements was 5.33%.
The Group's management believes that the fair value of finance lease liabilities is not materially different from their carrying value.
Obligations under finance leases are secured by promissory notes issued by the Group in favor of lessors, which are due to expire with the term of the contract. Promissory notes issued by the Group's obligations under the lease agreements are availed from the controller to the company in November 2013.
26. Obligations under defined retirement benefit plans
Up to March 31, 2015 and December 31, 2014 the Group recorded liabilities for defined retirement benefit plans for the amount of BGN 497 thousand. The amount of the obligation is determined based on actuarial valuation based on assumptions for mortality, disability, to leaving, wage growth and other.
The present value of the obligation is calculated by applying a discount factor in the range of 3-3.5% and future wage increase between 2% and 4%.
Demographic assumptions are related to the likelihood that people will drop out before retirement for various reasons: withdrawal of state cuts, illness, death, disability and others. These are based on statistical information on the population and are attached to the structure of the staff by gender and age at the time of the assessment.
27.Trade and other payables
March 31 2015 BGN'000
December 31 2014 BGN'000
Non-current liabilities
Obligations under cession agreements
6,342
6,342
6,342
6,342
Current liabilities
Obligations under cession agreements
70,498
54,442
Payables to suppliers
34,410
101,271
Tax payables, including
9,967
9,998
VAT
1,922
3,272
Excise and other taxed
8,045
6,726
Payables to employees and social security
2,500
2,092
Advances received
2,428
1,203
Income for future periods
183
356
Payables to related parties
159
76
Other
1,511
1,515
121,656
170,953
127,998
177,295
27. Trade and other payables (continued)
Payables to related parties are disclosed in note 31.
Obligations under cession agreements include obligations of the Group to unrelated parties under contracts for the transfer of receivables from commercial bank for the amount of BGN 55,651 thousand. There are possible adjustments to be made to obligations cessions regarding subsequent events.
The Group accrued liabilities for unused paid leave of employees in accordance with IAS 19 Employee Benefits. The movement of these charges for the period is as follows:
March 31 2015 BGN'000
December 31 2014 BGN'000
Balance at the beginning of the period
412
688
Accrued during the period
219
222
Utilized during the period
(81)
(496)
Out due to business combinations and other transfers
(59)
(2)
Balance at the end of the period, including
491
412
Leaves
415
336
Social security contributions
76
76
The balance at the end of the period is presented in the consolidated statement of financial position together with the current obligations to staff.
Management has made an analysis of trade payables, to determine their fair values and their corresponding levels in the fair value hierarchy. The Group's management believes that the values at which commercial and other liabilities are presented in the consolidated statement of financial position are reasonably approximate of their fair value at March 31, 2015 and December 31, 2014 categorized in Level 3.
Non-current assets with a carrying value of BGN 1,555 thousand serve as collateral for trade payables.
28. Subsidiaries
The consolidated subsidiaries over which the Group exercised control as of March 31, 2015 and December 31, 2014 are as follows:
Subsidiary
Main activities
Interest as of March 31 2015
Interest as of December 31 2014
Naftex Petrol EOOD
Fuel trade wholesale
100%
100%
Petrol Trans ExpressEOOD
Transport services
100%
100%
Petrol Technika EOOD
Service and Support
100%
100%
Petrol Gas EOOD
Wholesale sale of fuels
100%
100%
Petrol Properties EOOD
Trading movable and immovable property
100%
100%
Elit Petrol AD
Management, leasing and sale of real estate
100%
100%
BPI EAD
Rental property
100%
100%
Naftex Security EAD
Security of individuals and property
100%
100%
Varna Storage EOOD
Trade with oil and oil products
100%
100%
Naftex Petrol Trade EOOD
Processing and marketing of petroleum products
100%
100%
Blitz Aviation AD
Aviation activities
99%
99%
Petrol base Varna EAD
Trade with oil and oil products
100%
100%
Petrol base - PetrolVarna EAD
Trade with oil and oil products
100%
100%
Elit Petrol -Lovech EAD
Sale-supply and trade in oil and oil products
100%
-
Petrol Finances OOD
Financial and accounting services, preparation of financial analysis
Due to loss of control, these companies are excluded from the consolidation:
Petrol Eco Tur Invest EOOD
Consulting and engineering
100%
100%
EuroCapital-Bulgaria AD
Management, leasing, real estate sales and construction activity through subcontractors
100%
100%
28. Subsidiaries (continued)
In December 2013, the Group participated as a co-founder of a new company Blitz Aviation AD, as recording 99% of the registered capital. The Company is registered in the Commercial Register in January 2014.
The name of the registered in 2012 company Petrol Eco Invest EOOD has changed to Petrol Eco Tour Invest EOOD in January 2014.
In August 2014 one of the subsidiaries of the Group acquired 100% of the share capital of Petrol base Varna EAD. The remuneration transferred is BGN 11,291 thousand. As a result of this, property, plant and equipment with a total carrying value of BGN 11,776 thousand were acquired. Overall, the Group recognized a profit of BGN 485 thousand (see note 29).
In August 2014 a new company Petrol base-Petrol Varna EAD was established through a contribution in kind of tangible and intangible assets valued at a total value of BGN 14,831 thousand and the carrying value of BGN 26,422 thousand.
In November 2014, the Group has established a subsidiary called Petrol Zapad EOOD. The following contribution has been made of property, plant, equipment and other tangible and intangible assets belonging to 10 the number of stations rated totaling of BGN 2,992 thousand and the carrying value of BGN 5,402 thousand. In early January 2015, a decision was taken to sell the investment in Petrol Zapad EOOD to an unrelated party. The agreed price was BGN 2,992 thousand, which is repaid on the day of signing the contract of sale.
In January 2015, a new subsidiary has been established called Elit Petrol Lovech EAD, which through monetary contribution of tangible and intangible assets is valued at a total value of BGN 45,768 thousand and the carrying value of BGN 47,703 thousand.
In February 2015, the Company purchased 99% of Petrol Technologies EOOD's capital at a charge in the amount of BGN 495, which was subsequently renamed to Petrol Finance OOD.
29. Acquisition and sale of subsidiaries and non-controlling interest
29.1. Acquisition of subsidiaries
Acquired during the quarter ending on March 31, 2014
Subsidiary
Main activity
Investment up to March 31 2015
Increase during the period
Transferred remuneration
BGN'000
Petrol Finance OOD
Financial and accounting serviced, preparation of financial analysis
99%
99%
1
1
29.1. Acquisition of subsidiaries (continued)
Acquired during 2014
Subsidiary
Main activity
Investments up to December 31 2014
Increase during the period
Transferred remuneration
BGN'000
Petrol base Varna EAD
Trade with oil and oil products
100%
100%
11,291
Elit Petrol AD
Managing, renting and selling real estate
100%
0.01%
1,965
13,256
29.2. Acquired assets and recognized liabilities at the date of acquisition
During the quarter ending on March 31, 2015:
Current assets
Petrol Finance OOD
BGN'000
Cash and cash equivalents
1
Total current assets
1
Total assets
1
Net assets
1
During 2014
Petrol base Varna EAD
BGN'000
Non-current assets
Property, plant and equipment and intangible assets
11,786
Current assets
Inventories
72
Trade and other receivables
1
Cash and cash equivalents
7
Total current assets
80
Total assets
11,866
Non-current liabilities
Loans and borrowings
40
Current liabilities
Trade and other payables
50
Total liabilities
90
Net assets
11,776
At the acquisition date the assets and liabilities are stated at their fair value evaluated by a licensed appraiser. According to the valuation report, the difference between the carrying and fair is identified only for property, plant and equipment.
29.3. Goodwill arising when acquiring
During the quarter ending on March 31, 2015
Petrol Finance OOD
BGN'000
Transferred remuneration:
1
(-) Fair value of net assets at the date of acquisition
(1)
Gain on acquisition of controlling interest over subsidiary
-
During 2014
Petrol base Varna EAD
BGN'000
Transferred remuneration:
11,291
(-)Fair value of net assets at the date of acquisition
(11,776)
Gain on acquisition of controlling interest over subsidiary
(485)
29.4.Net cash flows from acquiring subsidiaries
The remuneration transferred for the acquisition of Petrol Finance OOD during the quarter ending on March 31, 2015 amounted to BGN 1 thousand and the cash received as a result of the acquisition is BGN 1 thousand. The Group has not recognized cash flows relating to the acquisition shares of Petrol FinanceOOD.
29.5. Acquiring non-controlling interest
In August 2014 the Group acquired one share in the capital of Elit Petrol AD. As a result, goodwill was recognized amounting to BGN 1,965 thousand (see also note. 18)
In December 2013, the Group participated as a co-founder of a new company Blitz Aviation AD with recording 99% of the registered capital. 1% of the registered capital is owned by non-controlling interest. 25% of the subscribed capital has been paid. The Company is registered in the Commercial Register in January 2014 (see note 30). As a result, the Group recognizes the following non-controlling interest:
Fair value of net assets
Non-controllinginterest
Non-controlling interest participation
BGN'000
%
BGN'000
Blitz Aviation AD
250
1%
3
3
29.5. Acquiring non-controlling interest (continued)
The table below summarized the changes in the non-controlling interest in 2015 and 2014:
Financial result for the period
Non-controlling interest
Non-controlling interest
BGN'000
%
BGN'000
Non- controlling interest at January 1, 2014
57
Share of non-controlling interest in total Comprehensive income
Jurex Consult AD
1
20.05%
-
Blitz Aviation AD
(211)
1%
(2)
Effect of the acquisition of non-controlling interest
Blitz Aviation AD
2
Effect from sale of non-controlling interest
Jurex Consult AD
(57)
Non-controlling interest at December 31, 2014
-
Share of non-controlling interest in total Comprehensive income
Blitz Aviation AD
-
1%
-
Petrol Finance OOD
1%
-
Non-controlling interest at March 31, 2015
-
29.6. Sale of shares in subsidiary
In November 2014 the Group sold 100% of its interest in Jurex Consult AD to unrelated party for remuneration of BGN 20 thousand. The date of the net assets transaction of the divested subsidiary amounted to BGN 435 thousand and non-controlling interest - amounting to BGN 57 thousand. As a result of the sale the Group's net loss amounted to BGN 358 thousand.
In January 2015 the Group sold 100% of its interest in Petrol Zapad EOOD to an unrelated party for remuneration amounting to BGN 2,991 thousand. The date of the net assets transaction of the divested subsidiary amounted to BGN 5,379 thousand. As a result of the sale of the Group's net loss amounted to BGN 2,388 thousand (see note 12).
30. Loss of control over subsidiaries
As a result of certain litigation in 2014, the Group lost operational control over two of its subsidiaries. What is more, the assets and liabilities of subsidiaries and other components of equity related companies were written off. The loss resulting from the loss of control amounted to BGN 15,490 thousand and is recognized in profit or loss for 2014.
The impaired assets and liabilities resulting from the loss of control
BGN'000
Non-current assets
Property, plant and equipment and intangible assets
12,947
Investment property
17,661
Other long-term investments
1
30,609
Current assets
Inventories
57
Granted loans
41,238
Trade and other receivables
746
Cash and cash equivalents
424
Total current assets
42,465
Total assets
73,074
Non-current liabilities
Loans and credits
23,366
Deferred tax liabilities
1,544
24,910
Current liabilities
Loans and credits
4
Trade and other payables
4,170
4,174
Total liabilities
29,084
Net assets
43,990
The loss resulting from the loss of control is formed as the difference between the fair value of investments in both companies and the net assets.
BGN'000
Fair value of investment
28,500
Net assets
(43,990)
Loss resulting from loss of control
(15,490)
31. Related parties and transactions
Related parties that the parent company has control over and exercised significant influence are disclosed in Notes 16, 28 and 31.
The Parent company (controlled company) is Petrol AD.
During the reporting period, transactions were carried out with the following related parties:
Related party
EuroCapital-Bulgaria EAD
Other related parties
Petrol Eco Tour Invest EOOD
Other related parties
The transactions relate primarily to:
purchase and sale of property, plant and equipment;
services
The volume of transactions with related parties at March 31, 2015 and December 31, 2014 are as follow:
Related party
2015
2014
2015
2014
BGN'000
BGN'000.
BGN'000.
BGN'000.
Sales
Sales
Purchases
Purchases
Other related parties
13
-
114
-
13
-
114
-
Related party
March 31 2015
December 31 2014
March 31 2015
December 31 2014
BGN'000.
BGN'000.
BGN'000.
BGN'000.
Receivables
Receivables
Payables
Payables
Other related parties, including:
236
152
159
76
Short-term borrowings
4
4
-
-
236
152
159
76
The total amount of accrued salaries of members of the Management and Supervisory Board of Directors of the Parent company including in staff costs, amounted to BGN 309 thousand (March 31, 2014: BGN 223 thousand).
32. Contingent assets and liabilities
32.1. Contingent assets
In 2006 the Group invoiced and recognized income from penalties amounting to BGN 8,196 thousand charged to counterparty default because of the amount of contract for the supply of fuel. As of December 31, 2006 income was reversed as management considers that it met the criteria for recognizing revenue in accordance with IAS 18 Revenue. In this connection, the Group arises receivables amounting to BGN 8,196 thousand, which leads to further litigation.
32.2 Contingent liabilities
As a result of the fuel imports in 2014 the Group incurred a contingent liability for the creation and storage of fuel reserves for a period of one year with effect from May 1, 2015 to April 30, 2016, pursuant to Stocks of Crude Oil and Petroleum Product Act.
At December 31, 2013 the Group has pledged inventories at a bank guarantee issued in favor of the supplier, along with the established in his favor pledges of fuels. In July 2014, the guarantee is claimed and due to the placement of the issuing bank under conservatorship, is not paid. It is criminal to satisfy obligations through the sale of fuel, subject to pledges in favor of the supplier, as outstanding debts at the reporting date amounted for USD 6,992 thousand.
From September 2014, the Parent company is a co-borrower under a standby loan granted to an unrelated party supplier of the Group amounting to BGN 35,000 thousand with a contractual term until June 2020 and 10% interest. The Parent company is also a joint debtor to another credit obtained by the same person in the amount of BGN 10,000 thousand and provided s collateral land and buildings of the 22 petrol stations with a carrying value of BGN 4,011 thousand.
In November 2014, companies from the Group have secured a bank loan to an unrelated party, a creditor of the group, with a pledge of movables with the carrying value of BGN 8,872 thousand.
At March 31, 2015 the Group has recorded contingent liabilities, including mortgages on properties and pledges on machinery and equipment that serve as collateral for bank loans to unrelated parties with a total carrying value of BGN 26,599 thousand. The Parent company has pledged its trademarks as a secured loan to a third party.
To secure its obligations under the contracts in connection with the Public Procurement Law, the Group has set up bank guarantees amounting to the end of the reporting period to BGN 960 thousand.
In connection with the loan received from a third party in 2013, a company of the Group is a founding sponsor and a pledge on future receivables in the amount of USD 50,632 thousand. Since 2013 the companies from the Group are guarantors on loans to unrelated party creditor in the amount of BGN 31,684 thousand with a residual value at March 31, 2015 amounted to BGN 11,155 thousand. A subsidiary has intervened in a debt bank loans to related parties until November 2013, with exposures to March 31, 2015 amounted to EUR 1,500 thousand and EUR 5.092 thousand.
In February 2013 a contract for pledge of vehicles that serves as collateral for a bank loan granted to an unrelated party has been conducted. Up to the date of registration, the pledge vehicles are fully depreciated.
33. Subsequent events
In April a decision has been taken that a subsidiary from the Group should constitute through a contribution of assets (land buildings, machinery and equipment) in petroleum bases its subsidiary named Petrol Sever EOOD.
In April 2015, as a result of the assumed default in February, on the unpaid portion of the debt for syndicated bank contract and acquired by a third party under a contract for the sale of receivables in 2014, the creditor has declared the entire exposure of the subsidiary equivalent to the amount of BGN 41,336 thousand (with long-term portion BGN 25,648 thousand). Prepayment required and started enforcement proceedings against the assets backing the debt.
In April 2015, unrelated party has proceeded to implement with respect to individual assets pledged in favor of commercial enterprise of a company of the Group making the amount of EUR 5,750 thousand arising from a contract of sale of shares in 2014.
In April 2015, a third party has proceeded to implement in regard to the pledged in his favor commercial enterprise of Group's company with receivables amounted to BGN 5,002 thousand, which derives from a liability related to the acquisition of a real estate in 2014.
At the date of issuance of the consolidated financial statements the Parent company and three subsidiaries are in process of tax audit by the National Revenue Agency, and one of the subsidiaries is subject to verification by the State Agency "State Reserve and War-time Stocks".
[1]EBITDA (earningsbeforeinterest, tax, depreciationandamortization)
This information is provided by RNS
The company news service from the London Stock Exchange
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