RNS Number : 5542J
Petrol AD
16 December 2015
PETROL AD
SEPARATE FINANCIAL STATEMENTS FOR THE PERIOD ENDING ON SEPTEMBER, 30 2015
CONTENTS:
Separate financial statements
for the period ending on September 30, 2015........................................... page 3
Notes to the separate financial statements.......................................... page 8
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For the period ending on September 30
Note
30 September 2015 BGN'000
30 September 2014 BGN'000
Revenue from sales
5
498,567
558,797
Other income
6
401
713
Cost of goods sold
7
(447,808)
(507,323)
Materials and consumables
8
(2,646)
(2,830)
Hired services
9
(24,479)
(23,731)
Personnel expenses
10
(13,496)
(13,397)
Depreciation and amortisation expenses
15,16
(1,628)
(2,143)
Impairment losses
12
(96,766)
-
Other expenses
11
(977)
(1,347)
Finance income
13
51,131
4,807
Finance costs
13
(4,984)
(17,693)
Loss before tax
(42,685)
(4,147)
Income tax for the period
14
9,258
7
Loss for the period
(33,427)
(4,140)
Total comprehensive income for the period
(33,427)
(4,140)
Basic net loss per share (BGN)
25
(0.31)
(0.04)
These financial statements were approved on behalf of Petrol AD by:
Georgi Tatarski
Milko Dimitrov
Rostislava Markova
Executive Director
Executive Director
Chief Accountant
15 October 2015
(The notes on pages 8 to 38 are an integral part of these financial statements)
STATEMENT OF FINANCIAL POSITION
Note
30 September 2015 BGN'000
31 December 2014 BGN'000
Non-current assets
Property, plant and equipment
15
23,895
25,181
Intangible assets
16
122
310
Investments in subsidiaries
17
6,740
139,526
Financial assets available for sale
18
5
-
Loans granted
20
-
22,609
Deferred tax assets
14
37,159
27,679
Total non-current assets
67,921
215,305
Current assets
Inventories
19
19,355
20,712
Loans granted
20
7,427
11,437
Trade and other receivables
21
43,939
53,377
Refundable income taxes
22
277
499
Cash and cash equivalents
23
5,764
6,543
Total current assets
76,762
92,568
Total assets
144,683
307,873
STATEMENT OF FINANCIAL POSITION (continued)
Note
30 September 2015 BGN'000
31 December 2014 BGN'000
Equity
Share capital
24
109,250
109,250
General reserves
18,696
18,696
Retained earnings
(44,197)
(10,770)
Total equity
83,749
117,176
Non-current liabilities
Loans and borrowings
26
37,003
117,222
Obligation for defined benefit retirement compensations
27
383
383
Total non-current liabilities
37,386
117,605
Current liabilities
Trade and other payables
28
21,480
70,254
Loans and borrowings
26
2,068
2,838
Total current liabilities
23,548
73,092
Total liabilities
60,934
190,697
Total equity and liabilities
144,683
307,873
These financial statements were approved on behalf of Petrol AD by:
Georgi Tatarski
Milko Dimitrov
Rostislava Markova
Executive Director
Executive Director
Chief Accountant
15 October 2015
(The notes on pages 8 to 38 are an integral part of these financial statements)
STATEMENT OF CHANGES IN EQUITY
Registered capital
General reserves
Retained earnings
Total
BGN' 000
BGN' 000
BGN' 000
BGN' 000
Balance at January 1, 2014
109,250
18,696
247,309
375,255
Comprehensive income for the period
Loss for the period
-
-
(4,140)
(4,140)
Total comprehensive income for the period
-
-
(4,140)
(4,140)
Balance at 30 September 2014
109,250
18,696
243,169
371,115
Comprehensive income for the period
Loss for the period
-
-
(253,927)
(253,927)
Other comprehensive income
(12)
(12)
Total Comprehensive income for the period
-
-
(253,939)
(253,939)
Balance at December 31, 2014
109,250
18,696
(10,770)
117,176
Comprehensive income for the period
Loss for the period
-
-
(33,427)
(33,427)
Total comprehensive income for the period
-
-
(33,427)
(33,427)
Balance at 30 September 2015
109,250
18,696
(44,197)
83,749
These financial statements were approved on behalf of Petrol AD by:
Georgi Tatarski
Milko Dimitrov
Rostislava Markova
Executive Director
Executive Director
Chief Accountant
15 October 2015
(The notes on pages 8 to 38 are an integral part of these financial statements)
STATEMENT OF CASH FLOWS
For the period ending on September 30
30 September 2015 BGN'000
30 September 2014 BGN'000
Cash flows from operating activities
Receipts from customers
654,031
695,898
Payments to suppliers
(653,622)
(660,036)
VAT paid to the budget
(6,227)
(3,898)
Payments related to personnel
(12,380)
(12,602)
Cash flows from operating activities
(18,198)
19,362
Net cash flows from operating activities
(18,198)
19,362
Cash flows from investing activities
Payments for acquisition of property, plant and equipment
(102)
(3,380)
Proceeds from sale of property, plant and equipment
600
9
Payments for acquisition of subsidiaries
(920)
-
Dividends received
617
-
Interest-bearing loans granted
(372)
(1,357)
Proceeds from repaid loans
17,197
1,842
Interest received
5,439
419
Proceeds on cessions
500
-
Net cash flows investing activities
22,959
(2,467)
Cash flows from financing activities
Loans and borrowings repaid
(5,551)
(6,590)
Interests and commissions paid
(3,246)
(7,343)
Net cash flows from financing activities
(8,797)
(13,933)
Net increase(decrease) in cash for the period
(4,036)
2,962
Cash at the beginning of the period
6,093
10,755
Effect of foreign exchange rate changes
1
4
Cash at the end of the period (see also note 23)
2,058
13,721
These financial statements were approved on behalf of Petrol AD by:
Georgi Tatarski
Milko Dimitrov
Rostislava Markova
Executive Director
Executive Director
Chief Accountant
15 October 2015
(The notes on pages 8 to 38 are an integral part of these financial statements)
Notes
to the Separate Financial Statements for the
period, ending on September 30, 2015
1. Legal status and main activity
Petrol AD (the 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 Company is 12 Targovska Street, Lovech Hotel, Lovech. As at the end of the reporting period the shareholders of the Company are legal entities, the State - through the Ministry of Economics and Energy, and individual shareholders (see also note 24).
The main activity of the Company is retail trade with petroleum products and non-petroleum goods and services.
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).
The financial statements have been prepared on a historical cost basis, except for the defined benefit obligation recognised at present value of the expected future payments. These are separate financial statements, the preparation of which is required by the accounting and tax legislation of the Republic of Bulgaria.
Petrol AD is going to prepare consolidated financial statements, in which it will consolidate the financial position of its subsidiaries as at September 30, 2015 , their financial results and cash flows for the period ended that date (see note 17).
2.2. Application of new and revised IFRS
2.2.1. 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.
2.2.2. New standards and interpretation, not yet adopted
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 IFRSs 2012-2014 period - IFRS 5, IFRS 7, IAS 9, IAS 34 - effective from July 1, 2016, with earlier application permitted.
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 Company.
These separate 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 1.95583 BGN for 1 Euro.
The monetary positions denominated in foreign currency as at September 30, 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:
30 September 2015:
1 USD = 1.74581 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.
Assumptions made by Management when applying IFRS regarding fair value estimates with a material effect on the financial statements or the accounting estimates, which may lead to significant adjustments in future periods, are disclosed in Note 4.
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 17 - regarding the estimate of investments in subsidiaries
2.6. 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.
In the preparation of these separate financial statements investment in subsidiaries are accounted at acquisition cost less possible impairment losses. Earlier, the Company also accounted the investments at cost applying the exception for subsequent measurement of financial assets held for sale for investments in equity instruments for which there is no quoted price on the active market and which cannot be measured reliably. For this reason, the change will not have an effect on the separate financial statements of the Company.
2.7. Going concern assumption
As at the date of issue of these financial statements the Management has made an assessment of the applicability of the going concern concept for the Company. While making this assumption, all available information for the near future was taken into account, which is not necessarily restricted to twelve months from the end of the reporting period. This suggests that the Company will be able to repay regularly its bond liabilities, trade payables, loans and interest due in accordance with the contractual agreements.
The Management of the Company confirms its understanding and the validity of the assumption that these separate financial statements have been prepared under the going concern assumption.
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 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 amortisation and any impairment losses (see also note 3.4.2.).
Subsequent costs including replacement of asset's components are capitalised in the cost of the asset, only when it is probable that future economic benefits associated with the expenditure will flow to the Company. The carrying amounts of the replaced items are derecognised 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 amount of the asset) are recognised 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 amortisation are recognised over the estimated useful lives applying the straight-line method. Depreciation and amortisation are recognised in profit or loss of the current period. Land, assets under construction and fully depreciated assets are not depreciated/ amortised.
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
2-5 years
Depreciation/amortisation 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.
As of the end of the reporting period, the Company's management reviews the useful life and the depreciation method of property, plant and equipment and intangible assets. If any difference between expectations and previous accounting estimates exists, then relevant changes are made.
3.2. Inventories
Inventories are stated at the lower of cost and net realisable value. Cost comprises purchase price, transportation costs, customs duties, excise duties and other similar costs. Net realisable value represents the estimated selling price less estimated selling expenses.
Upon consumption, the cost of inventories is calculated using the weighted average cost method.
3.3. Financial instruments
The Company classifies non-derivative financial assets into the loans and receivables category.
The Company classifies non-derivative financial liabilities into the other financial liabilities category
3.3.1. Non-derivative financial assets and financial liabilities - recognition and derecognition
The Company 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 Company 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 Company is recognised as a separate asset or liability.
The Company 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 Company 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.
3.3.2. Non-derivative financial assets - measurement
Loans granted 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 Company in the beginning of the next reporting period.
3.3.3. 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.
3.4. Impairment
3.4.1. 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.
For an investment in an equity instrument, objective evidence of impairment includes a significant or prolonged decline in its fair value below its cost.
Financial assets carried at amortised cost
The Company 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.
3.4.1. Non-derivative financial assets (continued)
In assessing collective impairment the Company 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 amount 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 Company 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.
3.4.2. Non-financial assets
The carrying amounts of the Company'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 amount 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 amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
3.5. Registered capital
The registered capital of the Company is presented at historical cost as of the date of its registration.
3.6. 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.
3.7. Employment benefits
Defined contribution plans
The Government of the Republic of Bulgaria is responsible for providing pensions under a defined benefit pension plan. Costs related to payment of contributions under these schemes are recognised in the profit or loss in the period they are incurred.
Defined benefit plans
In accordance with the Labour Code, the Company 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 Company recognises the present amount of the benefits as a liability.
The Company'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 Company 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.
3.8. 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 amounts 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 Company is 10%. For the calculation of the deferred tax assets and liabilities as at September 30, 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 Company 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 Company 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.
3.9. Revenue and expenses recognition
3.9.1. 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 consideration 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 consideration received or receivable net of any granted discounts and including the gross economic benefits received by or due to the Company. 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.
Gain (loss) from the sale 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 amount of the exchanged asset.
3.9.2. Finance income and finance costs
Finance income comprises interest income, income from dividends, foreign currency gains, etc.
Finance costs comprise interest expense on borrowings, foreign currency losses, bank fees, commissions and other finance costs.
Borrowing costs, which may be directly attributable to the acquisition, construction or production of an asset before it is ready for the intended use or sale shall be capitalised in the cost of the asset.
All other finance income and costs are accrued through profit or loss for all instruments measured at amortised cost using the effective interest rate method.
3.9.2. Finance income and finance costs (continued)
Due to the lack of guidance and clarification in the adopted IFRS as at the reporting date, that specifically address the accounting treatment of transactions related to in-kind contribution in the equity of subsidiaries, the Management decided to account the result from in-kind contribution transactions as finance expense or income.
Income for equity interests is recognised when the Company is entitled to receive the income.
Foreign currency gains and losses are reported on a net basis.
3.10. Leases
3.10.1. 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.
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.
3.10.2. Lease payments
Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease.
3.11. Government grants
The Company recognizes government (incl.: EU fund grants) grants initially as deferred income at fair value when there is reasonable assurance that they will be received and the Company will comply with the conditions associated with the grant. Grants that compensate the Company for expenses incurred are recognised in profit or loss as other income on a systematic basis in the same periods in which the expenses are recognised. Grants that compensate the Company for an asset are recognized in profit or loss as other income on a systematic basis in the course of the useful life of the asset.
4. Determination of fair values
Certain Company's accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities.
The Company 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.
4. Determination of fair values (continued)
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 valuation issues are reported to the Management of the Company.
When measuring the fair value of an asset or liability, the Company uses market observable data as far as possible. Fair values are categorised 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 Company recognises transfers between levels of the fair value hierarchy at end of the reporting period during which the change has occurred.
5. Revenue from sales
30 September 2015 BGN'000
30 September 2014 BGN'000
Sales of goods
495,615
556,480
Sales of services
2,952
2,317
498,567
558,797
Revenue from sales of goods comprises:
30 September 2015 BGN'000
30 September 2014 BGN'000
Fuels
469,842
533,938
Lubricants and other goods
25,773
22,542
495,615
556,480
6. Other income
30 September 2015 BGN'000
30 September 2014 BGN'000
Gain from sales of property, plant and equipment, including:
143
29
Income from sales
606
36
Carrying amount
(463)
(7)
Fees and penalties
72
41
Surplus assets
14
125
Insurance claims
11
24
Gain from sales of materials, including:
2
9
Income from sales
2
13
Carrying amount
-
(4)
Government grants
-
131
Payables written-off
-
37
Other
159
317
401
713
Revenue from government grants is received under the Operational Programme 'Development of Human Resources'.
7. Cost of goods sold
30 September 2015 BGN'000
30 September 2014 BGN'000
Fuels
426,365
488,706
Lubricants and other goods
21,443
18,617
447,808
507,323
8. Materials and consumables
30 September 2015 BGN'000
30 September 2014 BGN'000
Electricity and heating
1,567
1,387
Fuels and lubricants
335
411
Office consumables
260
369
Spare parts
118
168
Working clothing
109
271
Water supply
89
83
Advertising materials
73
24
Other
95
117
2,646
2,830
9. Hired services
30 September 2015 BGN'000
30 September 2014 BGN'000
Rent
14,533
13,846
Commissions
4,419
4,493
Consulting and training
1,102
941
Security expenses
907
284
Maintenance and repairs
899
893
Cash collection expenses
553
653
Communications
521
491
Advertising costs
449
407
State and municipal fees
274
168
Commodity control
171
421
Software licenses
157
324
Insurance expense
154
226
Transportation
109
63
Other
231
521
24,479
23,731
Rental costs include BGN 12,888 thousands (2014: BGN 12,042 thousand) rent of petrol stations, under operating lease agreements.
10. Personnel expenses
30 September 2015 BGN'000
30 September 2014 BGN'000
Wages and salaries
11,324
11,154
Social security contributions and benefits
2,172
2,243
13,496
13,397
11. Other expenses
30 September 2015 BGN'000
30 September 2014 BGN'000
Penalties and indemnities
426
164
Entertainment expenses and sponsorship
194
388
Local taxes and taxes on expenses
188
324
Expenses for insurance claims
59
25
Business trips
52
55
Scrap, shortages and written off assets
39
329
Other
19
62
977
1,347
12. Impairment losses
30 September 2015 BGN'000
30 September 2014 BGN'000
Impairment loss on investment in subsidiaries
110,915
-
Reversed impairment loss on interest-bearing loans granted
(14,149)
-
96,766
-
For the period ending on September 30, 2015 in connection with Naftex Petrol EOOD's cessation of business activity and insolvency proceedings, Petrol AD has fully impaired its investment in that subsidiary and recognised impairment loss of BGN 40.000 thousand (see also note 17)
As at September 30, 2015, Management has performed analysis of Elite Petrol AD's investment value. During the reporting period due to foreclosure imposed on assets controlled by Elit Petrol's subsidiaries, Company fully impaired its investment in Elit Petrol AD, which resulted in impairment losses of BGN 70,915 thousand.
As at the date of approval of these financial statements for issuance, for the period ended September 30, 2015, the Company was able to collect receivables impaired in prior periods representing loans granted to related parties, resulting in recovered impairment losses of BGN 14,149 thousand (see also note 20).
13. Finance income and costs
30 September 2015 BGN'000
30 September 2014 BGN'000
Finance income
Interest income, including
1,700
4,807
Interest income on loans granted
1,457
4,485
Interest income on trade receivables
243
311
Other interest income
-
11
Foreign exchange gains, net
1
-
Gain on disposal of investments in subsidiaries
34,245
-
Income from share capital investments
15,185
-
51,131
4,807
Finance costs
Interest costs, including:
(4,789)
(10,281)
Interest expenses on trade loans
(2,078)
(5,834)
Interest expenses on debenture loans
(2,403)
(2,393)
Interest expenses on trade and other payables
(308)
(2,054)
Negative exchange differences, net
-
(7,378)
Bank fees, commissions and other finance costs
(195)
(34)
(4,984)
(17,693)
Finance income, net
46,147
(12,886)
13. Finance income and costs (continued)
During the period ending on September 30, 2015 the Company disposed of five of its investments, which resulted in a gain of BGN 34,245 thousand. (See also note 17).
14. Taxation
14.1. Tax expenses
Tax expense recognised in profit or loss includes the amount of current and deferred income tax expenses in accordance with IAS 12 Income taxes
30 September 2015 BGN'000
30 September 2014 BGN'000
Current tax benefit (expense)
222
-
Change in deferred tax, including
(9,480)
(7)
Temporary differences arising during the period
(11,130)
34
Temporary differences recognised during the period
1,650
(41)
Total tax expense (benefit)
(9,258)
(7)
14.2. Effective tax rate
Reconciliation between accounting profit and tax expense and calculation of the effective tax rate as of September 30, 2015 and year 2014 is presented in the table below:
30 September 2015 BGN'000
30 September 2014 BGN'000
Accounting loss for the year
(42,685)
(4,147)
Applicable tax rate
10%
10%
Tax expense (benefit) at the applicable tax rate
(4,269)
(415)
Tax effect of:
Permanent differences
(1,497)
65
Tax asset in the current year, arisen in previous periods
(3,492)
343
Tax expense (income)
(9,258)
(7)
Effective tax rate
-
-
The respective tax periods of the Company may be subject to inspection by the tax authorities until the expiration of 5 years from the end of the year in which a declaration was submitted, or should have been submitted. Consequently additional taxes or penalties may be imposed in accordance with the interpretation of the tax legislation. The Company's management is not aware of any circumstances which may give rise to a contingent additional liability in this respect.
14.2. Effective tax rate (continued)
The last tax audit of the Company commenced in December 2014 and encompasses social security's and personal income tax for the period December 2008 till December 2013, corporate income tax and value added tax for year 2013. The latest tax inspection dates from August, 2015and encompasses review of company's corporate income tax for year 2014 and value added tax as at June, 2015.
As at the date of approval of these financial statements the tax audit, neither inspection nor tax audit has been finalised.
14.3. Recognised deferred tax assets and liabilities
The Company has recognised deferred tax assets and liabilities and respective movement attributable to the following positions:
Asset (liability) as at January 2014
Recognised in profit and loss
Asset (liability) as at December, 31 2014
Recognised in profit and loss
Asset (liability) as at 30 September 2015
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
Property, plant and equipment
(598)
(111)
(709)
12
(697)
Impairment of assets
1,246
27,082
28,328
9,455
37,783
Provisions for unused paid leave and other provisions
97
(37)
60
13
73
Other temporary differences, including unpaid benefits to individuals
19
(19)
-
-
-
764
26,915
27,679
9,480
37,159
15. Property, plant and equipment
Land BGN'000
Buildings BGN'000
Plant and equipment BGN'000
Vehicles BGN'000
Other BGN'000
Assets under constr. BGN'000
Total BGN'000
Cost
Balance at 01 January 2014
9,935
12,191
27,351
841
6,555
1,786
58,659
Additions
68
52
579
1
110
2,704
3,514
Transfers
-
689
2,691
-
287
(3,667)
-
Disposals
(2,239)
(4,360)
(7,031)
(151)
(1,748)
(1)
(15,530)
Balance at 31 December 2014
7,764
8,572
23,590
691
5,204
822
46,643
Additions
-
-
143
-
24
450
617
Disposals
(95)
(420)
(833)
-
(40)
(70)
(1,458)
Balance at 30 September 2015
7,669
8,152
22,900
691
5,188
1,202
45,802
Accumulated depreciation
Balance at 01 January 2014
-
5,035
15,076
780
4,717
-
25,608
Additions
-
470
1,595
17
465
-
2,547
Transfers
-
-
(2)
-
2
-
-
Disposals in the period
-
(1,481)
(3,646)
(151)
(1,415)
-
(6,693)
Balance at 31 December 2014
-
4,024
13,023
646
3,769
-
21,462
Accumulated
-
232
972
7
271
-
1,482
Disposals
-
(212)
(787)
-
(38)
-
(1,037)
Balance at 30 September 2015
-
4,044
13,208
653
4,002
-
21,907
Carrying amount at 1 January 2014
9,935
7,156
12,275
61
1,838
1,786
33,051
Carrying amount at 31 December 2014
7,764
4,548
10,567
45
1,435
822
25,181
Carrying amount at 30 September 2015
7,669
4,108
9,692
38
1,186
1,202
23,895
Property, plant and equipment with carrying amount of BGN 9,343 thousand (2014: BGN 7,079 thousand) were mortgaged as collateral under bank loans granted to the Controlling company until November 2013 and to subsidiaries and third not related parties. BGN 9.343 thousand also comprises PPP given as a security in favour of NRA in relation to a tax inspection report (see also notes 29 and 30).
Assets under construction include expenses in relation to reconstruction of sites.
16. Intangible assets
Software BGN'000
Licenses BGN'000
Other BGN'000
Total BGN'000
Cost
Balance at 01 January 2014
367
3,116
702
4,185
Additions
-
43
10
53
Disposals
(7)
(111)
-
(118)
Balance at 31 December 2014
360
3,048
712
4,120
Disposals
-
(2,856)
-
(2,856)
Balance at 30 September 2015
360
192
712
1,264
Accumulated depreciation
Balance at 01January 2014
219
2,990
449
3,658
Accumulated
120
43
107
270
Disposals
(7)
(111)
-
(118)
Balance at 31 December 2014
332
2,922
556
3,810
Accumulated
28
37
81
146
Disposals
-
(2,814)
-
(2,814)
Balance at 30 September 2015
360
145
637
1,142
Carrying amount at 1 January 2014
148
126
253
527
Carrying amount at 31 December 2014
28
126
156
310
Carrying amount at 30 September 2015
-
47
75
122
17. Investments in subsidiaries
Subsidiary companies
Activity
30 September 2015
31 December 2014
BGN000
Share (%)
BGN000
Share (%)
BPI EAD
Real estate management and other
5,364
100
5,364
100
Petrol Technologies OOD
IT Services
821
98.8
-
-
Petrol Gas EOOD
Wholesale of fuels
451
100
451
100
Petrol Finances OOD
Financial and accounting services, advisory services
99
99.0
-
-
Petrol Properties EOOD
Real Estate and Moveable Property Trading
5
100
5
100
Naftex Petrol EOOD
Wholesale of fuels
-
100
40,000
100
Elit Petrol AD
Asset Management
-
99.99
70,915
99.99
Petrol Eco Tour Invest EOOD
Consultancy and engineering services
-
-
5
100
Varna Storage EOOD
Trade with petrol and petrol products
-
-
18,749
100
Petrol Trans Express EOOD
Transport services
-
-
996
100
Petrol Technika EOOD
Service and maintenance of petrol stations
-
-
50
100
Petrol Zapad EOOD
Trade with petrol products
-
-
2,991
100
6,740
139,526
In November, 2014 the Company established a 100% subsidiary Petrol Zapad EOOD by a non-monetary equity contribution of property, plant and equipment and other tangible and intangible assets pertaining the 10 fuel stations total valued at BGN 2,992 thousand with carrying amount of BGN 5,402 thousand. As a result from the equity contribution a loss of BGN 2,410 thousand was accumulated. In the beginning of January, 2015 a decision to sell the investment in Petrol Zapad EOOD was met to a third not related party. Selling price agreed comes up to BGN 2,992 thousand and which was paid at the date on signing the agreement.
In February, 2015 the company acquired 99% of the share capital of Petrol Technologies EOOD for BGN 495, which was subsequently renamed to Petrol Finances OOD. In August, 2015 the Company participated in the capital increase subscribing 98.505 new shares for a cash contribution in the amount of BGN 99 thousand.
In March 2015 the Company purchased 100% of the share capital of EuroCapital Bulgaria EAD from a subsidiary for the purchase price of BGN 28,500 thousand. During the same month, the Company sold 100% of the shares in Varna Storage EOOD and EuroCapital Bulgaria EAD to another subsidiary company for a selling price of BGN 80,100 thousand. At the date of signing of contracts for the sale of shares, obligations arising under the transactions aforementioned are fully repaid.
17. Investments in subsidiaries (continued)
In 2014 the Company recognizes loss from impairment of investments in subsidiaries in the amount of BGN 228,311 thousand because of the reduced trading volumes in one of its subsidiaries and its forthcoming restructuring Naftex Petrol EOOD.
For the period ending on September 30, 2015 in connection with the cessation of business activity and the insolvency proceedings initiated in Naftex Petrol EOOD, the Company fully impaired its investment in that subsidiary, recognizing additional impairment loss of BGN 40, 000 thousand.
As at September 30, 2015 Management performed analysis of Elit Petrol AD's investment value, based on which a decision to fully impair that investment, was met. The decision was driven by a foreclosure imposed on assets controlled by Elit Petrol's subsidiaries.
In August 2015 the Company became a shareholder in Petrol Technologies OOD and subscribed for 3,800 new shares, each with par value of BGN 100 in a capital increase for a cash contribution of BGN 380 thousand, representing 99.74% of the share capital the subsidiary. In the same month the Managing Board of the Company met the decision that the Company is to participate in the capital increase of Petrol Technologies Ltd form BGN 381 thousand to BGN 831 thousand and subscribed for further 4,410 new shares for a cash contribution of BGN 441 thousand.
In August, the Company sold 100% of its share in Petrol Trans Express EOOD and in Petrol Technika EOOD to none related parties of the selling price of BGN 2,360 thousand and BGN 80 thousand.
All subsidiaries are domiciled in Bulgaria.
18. Financial assets available for sale
As a result from the loss of control over the subsidiary company Petrol Eco Tur Invest EOOD, the investment cost amounting to BGN 5 thousand in shown in these financial statements as non-current asset available for sale.
19. Inventories
30 September 2015 BGN000
31 December 2014 BGN000
Goods, including:
17,356
18,831
Petrol products
11,099
12,407
Other goods
6,257
6,424
Materials
1,999
1,881
19,355
20,712
20. Loans granted
30 September 2015 BGN'000
31 December 2014 BGN'000
Long-term loans
Loans granted to related parties, including
-
22,609
Initial value
-
38,034
Allowance for impairment
-
(15,425)
Loans granted to third parties, including
-
-
Initial value
21,034
21,034
Allowance for impairment
(21,034)
(21,034)
-
22,609
Short-term loans
Loans granted to related parties, including
6,517
10,627
Initial value
13,299
16,133
Allowance for impairment
(6,782)
(5,506)
Loans granted to third parties, including
910
810
Initial value
6,099
5,999
Allowance for impairment
(5,189)
(5,189)
7,427
11,437
7,427
34,046
Receivables from loans granted to related parties are disclosed in note 29.
In 2014 the company recognised an impairment loss on receivables from the related party that was a controlling entity till November 2013 on loans granted and interest receivable in the amount of BGN 25,382 thousand. Impairment loss was recognised because insolvency proceedings were initiated and difficulties in collecting the receivables were experienced.
In 2014 due to fall in trading volumes an allowance for impairment was made on a loan granted to a subsidiary company coming up to BGN 15,425 thousand, which represented the amount of outstanding liability as at the date of issuance of the individual financial statements of the Company for the year ending 2014. As at the date of these financial statements, the subsidiary managed to partially repay its obligation, thus resulting in a reversed impairment allowance of BGN 13.309 thousand.
For the period ending on September 30, 2015 Company managed to collect BGN 840 thousand from loans granted to other related parties, which were fully impaired in previous periods.
Management performed an analysis of loans granted in order to determine their fair values and their respective level in the fair value hierarchy. Management considers that the carrying amounts of granted loans in the statement of financial position are reasonable approximations of their fair value as at September 30, 2015 and December 31, 2014 within Level 3 category.
21. Trade and other receivables
30 September 2015 BGN'000
31 December 2014 BGN'000
Receivables from clients, including
30,438
23,554
Initial value
36,181
29,297
Allowance for impairment
(5,743)
(5,743)
Cession
4,196
-
Receivables from related parties
3,238
25,828
Initial value
3,305
25,895
Allowance for impairment
(67)
(67)
Advances granted
2,918
1,218
Initial value
3,967
2,267
Allowance for impairment
(1,049)
(1,049)
Guarantees for participation in tender procedures
1,387
1,477
Deferred expenses
331
109
Litigations and writs
144
45
Initial value
444
345
Allowance for impairment
(300)
(300)
Other
1,287
1,146
Initial value
2,709
2,568
Allowance for impairment
(1,422)
(1,422)
43,939
53,377
Receivables from related parties are disclosed in note 29.
In accordance with the adopted policy, the Company grants to its customers a credit period after the expiry of which penalty interest for overdue payment is accrued on the unsettled balance to the amount set in each individual contract.
As at the end of each reporting period the Company performs a detailed review and analysis of overdue trade receivables, as a result of which receivables evaluated as uncollectable are impaired. Other trade receivables usually overdue by more than 360 days are completely impaired, since the historical experience indicates they are not recoverable.
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 September 30, 2015 and December 31, 2014 within Level 3 category.
The Company 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.
22. Current income tax
The excess of corporate taxes paid during the current and prior periods above tax payables as at September 30, 2015 and December 31, 2014 is at the amount of BGN 277 thousand and BGN 499 thousand respectively, and is presented in the statement of financial position as refundable income tax
23. Cash and cash equivalents
30 September 2015 BGN'000
31 December 2014 BGN'000
Cash at banks
-
2,855
Cash in transit
1,987
3,167
Cash on hand
71
71
Cash and cash equivalents in Statement of Cash Flows
2,058
6,093
Blocked cash amount
3,706
450
Cash and cash equivalents in the Statement of Financial Position
5,764
6,543
The amounts presented as blocked cash as at September 30, 2015 in Cash and Cash Equivalents comprise:
BGN 1,050 thousand held at a bank account that is blocked as a bank guarantee under a bank loan agreement to serve as a security for a public tender participation
BGN 1,207 thousand bank guarantees issued in favor of National Revenue Agency with respect to a proceeding of an appeal against a tax audit
BGN 1,449 thousand held in bank accounts, representing restricted cash arising from a disputed in court by the Company creditor's claim against guarantee contract of a subsidiary of the Company (see also note 30)
Cash in transit comprises cash collected from fuel stations as at the end of the reporting period but actually received in the bank accounts of the Company in the beginning of the next reporting period.
24. Registered capital
The registered capital is presented at its nominal value in accordance with the court decision for registration. As at September 30, 2015 and December 31, 2014 the fully paid-in capital to the amount of BGN109,250thousand is distributed in109,249,612 registered shares with a nominal value of BGN 1 each.
24. Registered Capital (continued)
As of the end of the reporting period, the shareholders in the Company are as follows:
Shareholder
30 September 2015
31 December 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%
-
Corporate Commercial Bank AD
5.51%
5.51%
VIP Properties EOOD
2.26%
18.31%
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%
The order of distribution of profits and covering of losses is set out in the Commercial Act and the Articles of Association of the Company. The Company retains at least 1/10 of the profit in fund "Reserves" until it reaches 1/10 of the capital.
25. Basic net earnings (loss) per share
Loss per share is calculated on the basis of net profit (loss) attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding during the period.
30 September 2015
30 September 2014
Weighted average number of shares (in thousands)
109,250
109,250
Profit (loss) in thousands of BGN
(33,427)
(4,140)
Earnings (loss) per share in BGN
(0.31)
(0.04)
26. Loans and borrowings
30 September 2015 BGN'000
31 December 2014 BGN'000
Non-current liabilities
Trade loans from related parties
813
81,149
Debenture loans
36,190
36,073
37,003
117,222
Current liabilities
Debenture loans
2,068
2,838
2,068
2,838
39,071
120,060
The loans received from related parties are disclosed in note 29.
26. Loans and borrowings (continued)
In October, 2006 the Company issued 2,000 registered transferable debenture notes with fixed annual interest rate of 8.375% and issue value 99.507% of the face value, which is determined at EUR 50,000 per bond. The principal is due in one payment at the maturity date. At the general meetings of the note holders conducted in the end of year 2011, it was decided to extend the term of the issue until January 26, 2017
The issue is secured by the Company's receivables on granted loans to the Controlling Company until November 2013 and by a corporate guarantee issued by a subsidiary. Interest is paid once a year. The annual effective interest rate after the extension is 8.6%. The purpose of issue is providing of working capital, financing in investment projects and restructuring of a previous Company's debt.
As at the date of the present financial statements the nominal value of the bond liability is EUR 18,659 thousand and the fair value of the bond liability is BGN 36,494 thousand (2014: BGN36,494 thousand) calculated at an interest rate of 9.12%(2014:9.12%).
27. Obligation for defined benefit retirement compensations
During the current reporting period the Company accrued retirement benefits to the amount of BGN 383 thousand. The liability is determined on the basis of an actuarial valuation grounded on assumptions for mortality, disability, employment turnover, salary increases, etc. The present value of the liability is calculated using a discount factor of 3.5% (2014: 3.5%).
Actuarial assumptions
The following are the principal actuarial assumptions at the reporting date:
30 September 2015
31 December 2014
Discount rate at the end of the period
3.5%
3.5%
Future salary increases
4%
4%
Assumptions regarding mortality growth presents the probability employees to live to a certain age giving them right to a pension. It is calculated for each employee separately based on their gender and their current age at the moment of performing the valuation. As at September 30, 2015 and December 31, 2014 a table was used indicating mortality and average longevity of Bulgarian population for the period 2008-2010 of the National Statistical Institute.
The following table presents a sensitivity analysis against the main mortality assumptions as at September 30, 2015 based on a method which extrapolates the effect on the retirement benefit obligations with a reasonable change in the main assumptions as at the end of the reporting period
27. Obligation for defined benefit retirement compensations (continued)
Major assumptions
Change with one point
Effect BGN'000
Discount rate
1%
(26)
Discount rate
-1%
29
Staff turnover, annually
-1
27
Staff turnover, annually
1
(27)
Salary growth
1%
19
Salary drop
-1%
(19)
Mortality (probability for dying by age)
-50%
17
Mortality (probability for dying by age)
50%
(16)
Although the analysis does not take account of the full distribution of cash flows expected under the plan, it does provide an approximation of the sensitivity of the assumptions shown.
28. Trade and other payables
30 September 2015 BGN'000
31 December 2014 BGN'000.
Payables to suppliers
12,764
38,111
Advances received
2,573
883
Payables to personnel and social security funds
1,830
1,346
Payables to related parties
1,549
27,402
Withholding and other tax payables
1,429
1,219
Deferred income
214
329
Other
1,121
964
21,480
70,254
Related party payables are disclosed in note 29.
The Company accrues unused paid leave provision of employees in compliance with IAS 19 Employee Benefits. The movement in the provision for the period is as follows:
:
30 September 2015 BGN'000
31 December 2014 BGN'000
Balance at the beginning of the period
300
343
Accrued during the period
199
165
Utilised during the period
(135)
(208)
Balance at the end of the year, including:
364
300
Paid leaves
309
243
Social security on paid leaves
55
57
28. Trade and other payables (continued)
The balance at the end of the year is presented in the statement of financial position together with current payable to personnel.
Management performed an analysis of trade payables in order to determine their fair values and their level in the fair value hierarchy. Management considers that the carrying amounts of the current payables in the statement of financial position are reasonable approximations of their fair value as at September 30, 2015 and December 31, 2014 within Level 3 category
29. Disclosure of related parties and related parties transactions
Related parties which the Company controls are disclosed in note 17.
During the reporting period transactions with the following related parties have been performed:
Related Party
Naftex Petrol EOOD
Subsidiary
Naftex Security EAD
Subsidiary of Naftex Petrol EOOD
Jurex Consult AD
Subsidiary of Naftex Petrol EOOD till November 2014
EuroCapital Bulgaria AD
Subsidiary of Naftex Petrol EOOD till September 2014. Related party with loss of control from October, 2014
Varna Storage EOOD
Subsidiary of Petrol AD till March 2015 and subsidiary of Elit Petrol AD from March, 2015
Elit Petrol -Lovech EAD
Subsidiary of Elit Petrol AD
Petrol Trans Express EOOD
Subsidiary till July, 2015
Petrol Technika EOOD
Subsidiary till August, 2015
BPI EAD
Subsidiary
Petrol Gas EOOD
Subsidiary
Petrol Properties EOOD
Subsidiary
Elit Petrol AD
Subsidiary
Petrol Eco Tur Invest EOOD
Subsidiary till September 2014, control lost effective October 2014
Petrol Finances OOD
Subsidiary from February, 2015
Petrol-Zapad EOOD
Subsidiary from January, 2015
Petrol Sever EOOD
Subsidiary of Naftex Petrol EOOD
Petrol Technologies OOD
Subsidiary from August, 2015
The performed transactions mainly relate to:
purchase and sale of liquid fuels;
loans grants and receipts;
purchase and sale of property, plant and equipment;
rental fees and other services.
29. Disclosure of related parties and related parties transactions (continued)
The volume of transactions with related parties as at September 30, 2015 and September 30, 2014 are as follows:
Related party
30 September 2015
30 September 2014
30 September 2015
30 September 2014
BGN'000
BGN'000
BGN'000
BGN'000
Sales of goods and services
Sales of goods and services
Purchase of goods and services
Purchase of goods and services
Subsidiaries
1,383
2,909
8,567
209,394
Subsidiaries of Naftex Petrol EOOD
-
33
-
431
Subsidiaries of Elit Petrol AD
17
-
6,178
-
Other related parties
19
-
22
-
1,419
2,942
14,767
209,825
Related party
30 September 2015
30 September 2014
30 September 2015
30 September 2014
BGN'000
BGN'000
BGN'000
BGN'000
Finance income
Finance income
Finance costs
Finance costs
Subsidiaries
16,487
2,849
2,253
7,801
Subsidiaries of Elit Petrol AD
169
-
130
-
16,656
2,849
2,383
7,801
In March, 2015 the Company bought 100% of EvroCapital Bulgaria EAD share capital through a subsidiary for BGN 28.500 thousand. During the same period, the Company sold 100% of its shares in EvroCapital Bulgaria EAD and in Varna Storage EOOD to a subsidiary for BGN 80.100 thousand. As at the date of the agreements signings for the above two transactions, liabilities incurred there under have been settled in full. (See also note 17)
As at September 30, 2015 and as at December 31, 2014 outstanding balances with related parties are as follows:
Related party
30 September 2015
31 December 2014
30 September 2015
31 December 2014
BGN'000
BGN'000
BGN'000
BGN'000
Receivables
Receivables
Payables
Payables
Subsidiaries, including
6,097
59,054
2,298
108,551
Long-term loans
-
22,609
813
81,149
Short-term loans
4,494
10,627
-
-
Receivables from dividends
142
23,470
-
-
Subsidiaries of Naftex Petrol EOOD
6
10
-
-
Subsidiaries of Elit Petrol AD, incl.:
3,625
-
28
-
Short-term loans
2,023
-
-
-
Other related parties
27
-
36
-
9,755
59,064
2,362
108,551
29. Disclosure of related parties and related parties transactions (continued)
In December 2011 the Company received a long-term loan from a subsidiary in relation with the repurchase of issued bonds at the amount of USD 80,400 thousand, with the Bulgarian leva equivalent of the principal as at December 31, 2014 amounting to BGN 79,784 thousand, at nominal interest rate 9.6% and with maturity date November 25, 2018. In December 2014 the currency of the loan was changed from USD to BGN.
The loans granted and trade receivables from related parties are not secured.
The total amount of key management personnel remuneration of the Company included in the personnel expenses amounts to BGN 950 thousand. (Sept., 2014: BGN 846 thousand).
30. Contingent liabilities
As at September 30, 2015 the Company has contingent liabilities including guaranteed promissory notes amounting to BGN 15 thousand; promissory notes for mortgages on plant, machinery and equipment in relation with bank loans granted to third parties and related parties with a total carrying amount of BGN 8,764 thousand. Pledged property in NRA's favor is with total carrying value of BGN 585 thousand.
The Company is a co-debtor for lease obligations amounting to BGN 3,695 thousand and a guarantor under a loan agreement for amounts up to BGN 35,000 thousand; a guarantor of a stand-by credit to a third party for the issuance of a bank guarantee of BGN 10,000 thousand; a guarantor of a subsidiary for the amount of BGN 29,522 thousand.
The Company has pledged inventory in the amount of BGN 478 and cash equivalents in the amount of BGN 2,257 thousand.
In order to secure its liabilities under the Public Procurement Act the Company has set up a bank guarantee amounting to BGN 1,024 thousand and another one in favor of National Revenue Agency with respect to a proceeding of an appeal against a tax audit act for the amount of BGN 1,962 thousand.
A creditor of a subsidiary has unreasonably claimed in court responsibility of Petrol AD under a guarantee contract for credit limit, which resulted in restriction imposed on the bank accounts of the Parent company up to the amount of USD 29,983 thousand. That claim is disputed in court by Petrol AD, since its responsibility as a guarantor is not occurred or/and is extinguished pursuant to art. 147 paragraph 2 of the Obligations and Contracts Act.
At the time of signing the guarantee agreement, the due term to settle the contractual framework arrangements between the lender and subsidiary was July 1, 2014.
The term of the credit limit agreement was further extended without the consent of the guarantor, so that the latter responsibility has fallen upon the expiration of six months after the originally agreed time limit, within which the creditor has brought an action against the principal debtor.
The term set forth in art. 147, paragraph 1 of Obligations and Contracts Act is final and upon its expiry it represents a terminated guarantee by the Company. Therefore Management believes that its arguments would be upheld in full by the competent court.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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