REG - Petrol AD - 3rd Quarter Results
05/12/2024 12:45
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RNS Number : 0001P Petrol AD 05 December 2024
PETROL AD
Legal Entity Identifier (LEI): 4851003SBNLWFQX4XS80
05 December 2024
Petrol AD ("74JJ"), announces the publication of its
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
OF PETROL GROUP
AND CONDENSED EXPLANATORY NOTES TO THE INTERIM CONSOLIDATED FINANCIAL
STATEMENTS FOR THE PERIOD ENDED SEPTEMBER 30, 2024
(This document is a translation of the original Bulgarian document,
in case of divergence the Bulgarian original shall prevail)
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
For the period ended September 30
2024 2023
BGN'000 BGN'000
Continuing operations
Revenue 386,138 436,341
Other income 2,360 665
Cost of goods sold (335,241) (392,118)
Materials and consumables (2,730) (3,441)
Hired services (15,388) (15,424)
Employee benefits (17,674) (18,033)
Depreciation and amortisation (5,994) (9,701)
Reintegration of (Impairment) losses 1,306 (53)
Other expenses (1,626) (859)
Finance income 7,405 1,822
Finance costs (14,951) (4,448)
Profit (loss) before tax 3,605 (5,249)
Tax income (expense) (710) 130
Profit (loss) for the period 2,895 (5,119)
Total comprehensive income for the period 2,895 (5,119)
Profit (loss) attributable to:
Owners of the Parent company 2,895 (5,119)
Non-controlling interest - -
Profit (loss) for the period 2,895 (5,119)
Total comprehensive income attributable to:
Owners of the Parent company 2,895 (5,119)
Non-controlling interest - -
Total comprehensive income for the period 2,895 (5,119)
Profit (loss) per share (BGN) 0.11 (0.19)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Sept. 30 Dec. 31
2024 2023
BGN'000 BGN'000
Non-current assets
Property, plant and equipment and intangible assets 114,631 118,627
Investment properties 1,515 1,552
Right-of-use asset 7,307 9,363
Goodwill 6,514 6,514
Deferred tax assets 2,427 2,593
Trade loans granted 68,957 34,334
Other long-term receivables 54,475 54,475
Total non-current assets 255,826 227,458
Current assets
Inventories 13,076 15,971
Loans granted 51,874 53,698
Trade and other receivables 30,783 28,202
Cash and cash equivalents 2,534 3,388
Total current assets 98,267 101,259
Total assets 354,093 328,717
Equity
Registered capital 109,250 109,250
Reserves 45,508 45,845
Accumulated loss (128,973) (132,205)
Total equity attributable to the owners of the Parent company 25,785 22,890
Non-controlling interests 38 38
Total equity 25,823 22,928
Non-current liabilities
Loans and borrowings 234,147 212,554
Liabilities under lease agreements 5,788 7,005
Deferred tax liabilities 1,171 1,069
Trade and other payables - 262
Employee defined benefit obligations 691 691
Total non-current liabilities 241,797 221,581
Current liabilities
Trade and other payables 58,366 68,291
Loans and borrowings 24,381 11,696
Liabilities under lease agreements 2,147 2,955
Income tax liability 1,579 1,266
Total current liabilities 86,473 84,208
Total liabilities 328,270 305,789
Total equity and liabilities 354,093 328,717
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Equity attributable to the owners of the Parent company Non-controlling interests Total equity
Registered capital General reserves Reval. Accumulated profit Total
reserve (loss)
BGN'000 BGN'000 BGN'000 BGN'000 BGN'000 BGN'000 BGN'000
Balance at January 1, 2023 109,250 18,864 28,551 (136,645) 20,020 38 20,058
Changes in equity for 2023
Comprehensive income for the period
Profit for the year - - - 2,645 2,645 - 2,645
Remeasurement on defined benefits obligations - - - 225 225 - 225
Total other comprehensive income - - - 225 225 - 225
- - - 2,870 2,870 - 2,870
Total comprehensive income
Transfer of revaluation reserve of assets to the accumulated profit, net of - - (1,570) 1,570 - - -
taxes
109,250 18,864 26,981 (132,205) 22,890 38 22,928
Balance at December 31, 2023
Changes in equity for the period ended September 30, 2024
Comprehensive income for the period
Profit for the period - - - 2,895 2,895 - 2,895
Total comprehensive income - - - 2,895 2,895 - 2,895
Transfer of revaluation reserve of assets to the accumulated profit, net of - - (337) 337 - - -
taxes
Balance at September 30, 2024 109,250 18,864 26,644 (128,973) 25,785 38 25,823
CONSOLIDATED STATEMENT OF CASH FLOWS
For the period ended September 30
2024 2023
BGN'000 BGN'000
Cash flows from operating activities
Profit / (loss) for the year 2,895 (5,119)
Adjustments for:
Tax (income) / expense 710 (130)
Depreciation/amortization of property, plant and equipment, intangible assets 5,994 9,701
and right-of-use assets
Interest expense and bank commissions, net 7,552 3,317
Shortages and normal loss, net of excess assets (28) 74
Provisions for unused paid leave and retirement benefits 562 547
Impairment (Reversal) of assets (1,306) 53
Receivables written-off 337 -
Profit from sale of subsidiaries (27) -
Profit on sale of assets (1,901) (237)
14,788 8,206
( ) ( ) ( ) ( )
Change in trade payables (6,895) (6,515)
Change in inventories 2,582 8,481
Change in trade receivables (1,692) (3,740)
Cash flows from operating activities 8,783 6,432
Interest, bank fees and commissions paid (10,446) (2,780)
Income tax paid (150) (22)
Net cash from operating activities (1,813) 3,630
Cash flows from investing activities
Payments for purchase of property, plant and equipment (488) (198)
Proceeds from disposal of property, plant and equipment 3,184 1,760
Payments for loans granted, net (35,531) (53,827)
Interest received on loans and deposits 248 50
Payments to acquire investments in subsidiaries and other investments, net of - (50,431)
cash acquired
Proceeds from cession agreements 8,468 -
Net cash flows used in investing activities (24,119) (102,646)
Cash flows from financing activities
Proceeds from loans and borrowings 39,103 106,898
Repayment of loans and borrowings (7,200) (1,850)
Paid dividends (5,044) -
Payments under lease agreements (1,830) (12,049)
Net cash flows from financing activities 25,029 92,999
Net increase (decrease) in cash flows during the year (903) (6,017)
Cash and cash equivalents at the beginning of the year 3,347 8,732
Effect of movements in exchange rates (24) 691
Cash and cash equivalents at the end of the period 2,420 3,406
I. General Information
Petrol AD (the Parent company) was registered in Bulgaria in 1990 and entered
in the Commercial Register to the Registry Agency with UIC 831496285. The
headquarter address of the Parent company is 12 Tyrgovska Str., Hotel Lovetch
in Lovetch city. As at the end of the reporting period shareholders are legal
entities, the country - through the Ministry of Economy and Industry and
individuals.
The main activity of Petrol AD and its subsidiaries (the Group) is related
with trading of petrol products, non-oil products, merchandise and services.
These explanatory notes are prepared according to the requirements of Art.
100o1, par.5 of the Public Offering of Securities Act (POSA) and Appendix 4 to
the Ordinance No 2 of November 09, 2021 for initial and subsequent disclosure
of information during public offering of securities and admission of
securities to trading on a regulated market by the public companies and other
issuers of securities, and represent information about important events
occurred during the third quarter of 2024. The explanatory notes reflect their
influence on the results in the statements for the third quarter of 2024 and
describe of the main risks and uncertainties, which stay ahead of the Petrol
Group for the rest of the financial year and comprise information for
transactions with related parties and/or interested parties, as well as
information for emerging significant receivables and/or payables during the
same period.
II. Information on important events, occurred in the third
quarter of 2024 and cumulatively from the beginning of the financial year to
the end of the current quarter
General
These interim consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRS) as adopted
by the Commission of the European Union (EU).
These interim consolidated financial statements have been prepared under the
historical cost convention, except for provisions, assets and liabilities
under IFRS 16 reported at the present value of expected future payments,
property, plant and equipment recognized as a result of business combination
and carried at fair value. When compiling it, the same accounting policy and
calculation methods applied in the last annual financial statement have been
followed.
Property, plant, equipment, intangible assets and non-current assets held for
sale
The initial revalued (to fair) value of property, plant and equipment and
intangible assets has been initially determined by an independent appraiser's
through market valuation prepared and applied in the accounting policy as of 1
January 2020. Based on the NSI Consumer Price Index in December 2022 compared
to the same month in 2021, which shows an annual inflation rate of 16.9%,
Management has made a judgement that there could be a material variance in the
fair values of the assets and has assigned new market valuations as at
December 31, 2022. In these interim consolidated financial statements,
property, plant and equipment and intangible fixed assets are presented at the
valuations prepared by an independent valuer as at December 31, 2022, which
used the intermediate comparisons method, capitalised rental income and
property value methods to determine fair value.
As at September 30, 2024 the Group has property, plant, equipment and
intangible assets with total carrying amount of BGN 114,631 thousand.
Property, plant and equipment with a carrying amount of BGN 100,756 thousand
are mortgaged or pledged as collaterals under bank loans, granted to the Group
and to unrelated parties, under credit limit agreements for issuance of bank
guarantees.
Investment property
The investment properties of the Group, representing a land and a building
with a carrying amount of BGN 1,515 thousand, were acquired in December 2016
through a business combination. The Group measures the fair value of
investment property for disclosure purposes using an appraisal of an
independent appraiser done using the methods of market comparison, rental
income capitalization and the method of depreciated replacement cost. As at
September 30, 2024 the fair value of the investment properties is BGN 2,358
thousand. The investment properties serving to secure liabilities under a
revolving credit line agreement.
Leases
The consolidated statement of financial position as at September 30, 2024
presents the following items and amounts related to lease agreements:
Consolidated statement of financial position September
30, 2024
BGN'000
Right-of-use assets, incl.: 7,307
Properties (lands and buildings) 6,958
Transport vehicles 332
Machinery, plants and equipment 17
Liabilities under leases, incl.: (7,935)
Current liabilities (2,147)
Non-current liabilities (5,788)
Depreciation costs of right-of-use assets, incl.: 1,990
Properties (lands and buildings) 1,655
Transport vehicles 329
Machinery, plants and equipment 6
Interest for right-of-use assets on lease agreements 380
Total 2,370
As a result of the amendments entered into in 2022 to the operating lease
agreements for the retail outlets, which extended the term of the agreements
to the end of 2027 in order to secure the Group's operations in the long term
and provided for a significant termination penalty in respect of each retail
outlet, these agreements ceased to meet the criteria for exceptions under the
standard and assets and liabilities under lease agreements were recognised in
accordance with the requirements of IFRS 16. In 2023, the Group has acquired
control of many the companies from which it has leased retail premises under
long-term leases in 2022, resulting in a significant reduction in assets,
lease liabilities as well as depreciation and interest expenses.
The Group has leased various assets: lands, petrol stations, small offices and
buildings, transport vehicles, copying machines. The agreements are usually
for 3 to 10 years but may include extension options.
Long-term Deposits in Banks
In September 2023, the Group provided cash to a commercial bank under the Debt
Product Agreement against interest tied to the Bank's Base Interest Rate (BIR)
plus a margin of 2.9093 points for a period of ten years until August 15,
2033. The amounts deposited total BGN 55,000 thousand. The Parent company has
entered into agreements for the blocking of these funds to secure the
performance of a credit line granted to the Parent company by the same bank,
with the same term. As at September 30, 2024, an impairment charge of BGN 525
thousand has been made on the cash provided in accordance with the policy for
the recognition of expected credit losses on financial assets and its carrying
amount is BGN 54,475 thousand.
Loans Granted
As at 30 September, 2024 the Group reports receivables on short-term trade
loans, net of impairment at the total amount of BGN 120,831 thousand,
including BGN 51,874 thousand short-term receivables. The loans are granted to
unrelated parties with the following interest rates and maturity:
Debtor - Local Legal Entity Net Receivables as at Sept. 30,2024 Principal Interest Accrued impairment Annual interest Maturity
BGN'000 BGN'000
%
BGN'000 BGN'000
Company 23,886 23,870 16 - 6.70% 31.dec.25
Company 20,471 19,500 999 (28) 6.70% Principal-31.dec.28
Interest - currently
Company 15,695 14,800 895 - 7.20% 31.dec.28
Company 9,716 9,580 687 (551) 7.00% 31.dec.24
Company 8,278 7,786 558 (66) 7.00% 31.dec.24
Company 6,926 6,925 1 - 6.70% 31.dec.25
Company 6,215 5,829 412 (26) 7.00% 31.dec.24
Company 6,078 5,793 1,748 (1,463) 6.70% 31.dec.24
Company 4,886 3,555 1,908 (577) 5.00% Principal -31.dec.25
Interest - currently
Company 3,806 3,582 257 (33) 7.00% 31.dec.24
Company 3,706 3,000 1,193 (487) 5.00% 31.dec.24
Company 3,194 3,208 217 (231) 7.00% 31.dec.24
Company 2,419 2,360 59 - 5.00% 31.dec.24
Company 2,058 1,935 134 (11) 7.00% 31.dec.24
Company 1013 986 66 (39) 7.00% 31.dec.24
Company 781 729 52 - 7.20% 31.dec.24
Company 690 591 127 (28) 6.70% 31.dec.19
Company 515 489 33 (7) 7.00% 31.dec.24
Company 422 313 109 - 7.00% 07.aug.25
Company 72 65 7 - 6.70% 31.dec.24
Company 4 121 18 (135) 5.00% 31.dec.24
Company - 5,190 (5,190) 0.00% 28.oct.15
Company - 2,210 (2,210) 9.50% 28.oct.15
Company - 1,500 133 (1,633) 8.75% 17.jul.15
Company - 44 - (44) 9.50% 21.jan.17
Company - 12 1 (13) 8.50% 26.aug.15
Company - 429 (429) 6.70% 31.dec.19
Company - 1,258 474 (1,732) 6.70% 31.dec.24
Company - 22 6 (28) 6.70% 31.dec.24
120,831 125,253 10,539 (14,961)
Cash and cash equivalents
As at September 30, 2024 the Group reported cash amounted to BGN 2,534
thousand as BGN 114 thousand are blocked as collateral under enforcement
cases.
In the notes under Art.15 par.1 of Ordinance No2 and the Public Offering of
Securities Act (POSA), as cash equivalents of BGN 1,322 thousand, is presented
the cash collected from the trade sites as at the end of the reporting period
and registered in the Group's bank accounts at the beginning of the next
reporting period.
Registered capital
The Group's registered capital is presented at its nominal value. The
registered capital of the Group represents the registered capital of the
Parent company Petrol AD.
As at the end of the reporting period shareholders in the Parent company are
as follows:
Shareholder Sept. 30,
2024
Alfa Capital AD 28.85 %
Storage Invest EOOD 26.77 %
Perfeto Consulting EOOD 16.43 %
Trans Express Oil EOOD 9.82 %
Petrol Bulgaria AD 7.05 %
Gryphon Power AD 5.39 %
The Ministry of Energy of the Republic of Bulgaria 0.65 %
Other minority shareholders 5.04 %
100.00 %
The Management of the Parent company has undertaken series of measures related
to optimization of its capital adequacy. At several General Meetings of
Shareholders (GMS) held in the period of 2016 - 2017 a decision for
reverse-split procedure for merging 4 old shares with a nominal value of BGN 1
into 1 new share with a nominal value of BGN 4 and consequent decrease of the
capital of the Parent company in order to cover losses by decreasing the
nominal value of the shares from BGN 4 to BGN 1, was voted. In March 2018,
following a decision of the Lovech Regional Court, which repealed the refusal
of the Commercial Register to register the decision voted on EGMS for merging
4 old shares with a nominal value of BGN 1 into 1 new share with a nominal
value of BGN 4, the applied change was registered in CR resulting in
registered capital of the Parent company of BGN 109 249 612, distributed in
27 312 403 shares with a nominal value of BGN 4 each. The change in the
capital structure of the Parent company was registered also in Central
Depositary AD. The submitted on April 2018 application for registration of the
voted on EGMS decision for the second stage of the procedure of the Parent
company's capital to be decreased by decreasing the nominal value of the
shares from BGN 4 to BGN 1 in order to cover losses, was refused by the
Commercial Register.
At the EGMS of Petrol AD held on November 8, 2018 the decision to decrease the
capital of the Parent company in order to cover losses by decreasing the
nominal value of the shares from BGN 4 to BGN 1 was voted again. A refusal of
the application for registration of the decision in CR was enacted, which was
appealed by the Parent company within the legal term. Minority shareholders
disputed the decision of the EGMS and additionally to the refusal, the
application proceedings was postponed until the pronouncing of the Lovech
Regional Court on the court proceedings, initiated on minority shareholders
request. In March 2019 Lovech Regional Court enacted a decision, which
indicates CR to register the decrease of the capital after a resumption of the
registration proceedings after the pronouncing on the legal proceedings
initiated by the minority shareholders.
In February 2019 was held a new EGMS, where the decision for reduction of
capital was voted again and a decision for substitution of the deceased member
of Supervisory Board Ivan Voynovski with Rumen Konstantinov was taken. A
refusal on the application for registration of these circumstances in the file
of the Parent company was enacted, which was appealed by the Parent company
within the statutory term. In addition to the refusal, the registration
proceedings ceased on request of minority shareholders until the Regional
Court - Lovech rules on.
In May 2019 the Lovech Regional Court enacted a decision, which repealed the
enacted refusal and turn back the case to the Registry Agency for registration
of the application after a resumption of the ceased registration proceedings.
At present, the court proceedings requesting a cancellation of the decisions
taken on EGMS in February 2019 are pending.
At the EGMS of Petrol AD convened on March 29, 2023, a decision was again
voted to reduce the capital of the Parent company to cover losses by reducing
the nominal value of the shares from BGN 4 to BGN 1.
Current income tax liabilities and tax audits
As at September 30, 2024 the Group has current corporate tax liabilities of
BGN 1,579 thousand.
Loans and borrowings and factoring liabilities
As at September 30, 2024 the Group has total liabilities under received bank,
debenture and trade loans of BGN 258,528 thousand, including BGN 24,381
thousand current liabilities.
Bank loans
In July 2023, the Parent company entered into an agreement with a commercial
bank for a revolving line of credit in the amount of BGN 220,000 thousand to
be used for purposes including, but not limited to, investment purposes,
working capital, issuance of bank guarantees and opening letters of credit.
The funds may be drawn down and repaid repeatedly until August 15, 2033 and
the repayment period for all obligations arising from the credit line is until
September 15, 2033. The annual interest payable on the amount drawn down
consists of the Base Interest Rate (BLPA) for the leva applied by the Bank
plus a surcharge of 3.21 percentage points, but not less than 5.9%. The credit
line is secured by a specific pledge of the commercial enterprise of Petrol
AD, subsidiaries Kremikovtzi Oil Ltd, Shumen Storage Ltd, Office Estate Ltd,
Crystal Asset Properties Ltd, Crystal Asset Trade Ltd, Crystal Asset Bulgaria
Ltd, Prima Asset Bulgaria Ltd, Prima Asset Trade Ltd, Prima Consult Properties
Ltd, Prima Land Property Ltd. and unrelated parties, suretyship by an
unrelated party, contractual mortgages on real estate of co-borrowers,
including unrelated parties, suretyship and financial security over accounts
receivable with the bank and cash deposited by the borrower under a debt
product agreement.
The funds under the revolving credit line with a total credit limit of BGN
220,000 thousand are provided in tranches further approved by the Bank and
further terms agreed by annexes between the parties.
In July 2023, due to the revolving credit line agreement with a total credit
limit of BGN 220,000 thousand, an annex agreed to grant tranche 1 in the
amount of BGN 90,000 thousand as an investment loan for the purchase of assets
and company shares with a drawdown period until October 30, 2023. The interest
rate and the final repayment term do not differ from those agreed in the main
contract. The funds under this tranche have been drawn down and as of
September 30, 2024, the principal liability amounts to BGN 80,250 thousand and
interest of BGN 256 thousand.
In July 2023, due to the revolving credit line agreement with a total limit of
BGN 220,000 thousand, an annex agreed to grant tranche No. 2 in the amount of
BGN 30,000 thousand for working capital, funds for refinancing obligations
under an existing revolving credit line granted by the same bank and funds for
payment of bank guarantees and letters of credit. The drawdown period is until
August 14, 2033. The interest rate and repayment deadline do not differ from
those agreed in the main contract. In November 2023, the funds under tranche
No. 2 were drawn down and the Group has a principal obligation of BGN 24,621
thousand and interest for BGN 5 thousand as at September 30, 2024.
In July 2023, due to the revolving line agreement with a total limit of BGN
220,000 thousand, an annex agrees to disburse tranche No. 3 in the amount of
BGN 55,000 thousand as working capital in the form of an overdraft. The period
for multiple drawdown and utilization of the amount under this tranche is up
to August 14, 2033. The interest rate and repayment deadline do not differ
from those agreed in the main contract. As at September 30, 2024, the Group
has a principal obligation of BGN 54,992 thousand and interest for BGN 2,806
thousand under this tranche.
In July 2023, due to the revolving line agreement with a total limit of BGN
220,000 thousand, an annex agreed to grant tranche No. 4 in the amount of BGN
45,000 thousand as a revolving working capital loan. The drawdown and
utilisation of the amount under this tranche shall be up to August 14, 2033.
The interest rate and the final repayment term do not differ from those agreed
in the main agreement. As at September 30, 2024 the Group has a liability
under this tranche for the principal amount of BGN 45,000 thousand and
interest for BGN 1,081 thousand.
In November 2023, the Group signed a bank loan agreement in the amount of BGN
3,000 thousand intended to finance Group's working capital, at an annual
interest rate of BIRA per BGN of the creditor bank, increased by a margin of
2.61 points, but not less than 5.9% on an annual basis. The repayment plan is
for 5 (five) years with equal monthly installments on principal, the deadline
for repayment is November 25, 2028. The loan is secured by mortgages of fixed
tangible assets owned by the Parent company and a subsidiary co-debtor under
the contract, pledge of plant and equipment machinery, subrogation to the
obligation of a subsidiary, as well as financial collateral by providing a
pledge under the Personal Income Tax Act on the receivables on the accounts
opened by the parent company and the co-debtor in the creditor bank. As at
September 30, 2024, the Group's principal obligation amounted to BGN 2,500
thousand and interest for BGN 3 thousand.
Debenture loans
In October 2006, the Parent company issued 2,000 registered transferable bonds
with fixed annual interest rate of 8.375 per cent and emission value of 99.507
per cent of the nominal, which is determined at EUR 50,000 per bond. The
purpose of the bond issue is to provide funds for working capital, investment
projects financing and restructuring of previous Group's debt. The principal
was due in one payment at the maturity date and the interest was paid once per
year. At the general meetings of the bondholders conducted in October and
December 2011, it was decided to extend the term of the issue until January
26, 2017. On December 23, 2016, a procedure for extension of the bond issue to
2022 and reduction of the interest rate in the range from 5.5 per cent to 8
per cent was successfully completed.
In September 2020, the Parent company successfully completed a procedure for
renegotiation of the terms of the debenture loan. The maturity of the
principal of the debenture loan is deferred until January 2027, and the agreed
interest rate is reduced to 4.24 per cent per year, as the periodicity of the
due interest (coupon) payments is every six months - in January and in July of
each year until the maturity of the loan.
As at the date of preparation of these financial statements the nominal value
of the debenture loan is EUR 18,659 thousand.
The liabilities under the debenture loan are disclosed in the statement of
financial position at amortised cost. The annual effective interest rate after
the term extension of the bond issue is 4.51 per cent. (incl. 4.24 per cent
annual coupon rate).
Trade Loans Received
In January 2023, the Parent company obtained a short-term loan from an
unrelated party trading company with a credit limit of BGN 2,000 thousand and
interest at 5% on the amount drawn down. The loan has an outstanding principal
amount. The liability as at September 30, 2024 amounts to BGN 2 thousand for
interest.
The trade loans payable from related parties are disclosed in the related
party note in this notification.
Factoring
In August 2024, an addendum to an agreement dated March 10, 2021 for the
purchase of receivables under commercial invoices (standard factoring) with a
commercial bank agreed an aggregate advance limit of up to BGN 6,000 thousand
at an annual interest rate of BLPA per BGN applied by the factor, increased by
a mark-up of 1.01 percentage points but not less than 4.5% per annum on the
amount of the advance granted. The agreement is secured by a pledge of
receivables in the Group's bank accounts opened with the Bank, As at September
30, 2024, no receivables or payables have been assigned in relation to the
funding received under this factoring agreement.
Operating lease agreements
The Group is lessee under operating lease agreements. As at September 30, 2024
the recognised rental expenses in the statement of profit or loss and other
comprehensive income, include expense at the amount of BGN 342 thousand for
renting of fuel stations under operating lease, which fall within the
exceptions of IFRS 16 and which agreements include clause stipulating that
both parties have the right to cease the agreement for each separate fuel
station or as a whole with an immaterial penalty.
Subsidiaries
The Parent company (the Controlling company) is Petrol AD. The subsidiaries
included in the consolidation, over which the Group has control as at
September 30, 2024 are as follows:
Subsidiary Main activity Ownership interest
Sept.30, 2024
Varna Storage Ltd. Trade with petrol and petroleum products 100 per cent
Petrol Finance Ltd. Financial and accounting services 100 per cent
Elit Petrol -Lovech JSC Trade with petrol and petroleum products 100 per cent
Lozen Asset JSC Acquisition, management and exploitation of property 100 per cent
Petrol Properties Ltd. Trading movable and immovable property 100 per cent
Kremikovtsi Oil Ltd. Processing, import, export and trading with petroleum products 100 per cent
Shumen Storage Ltd. Processing, import, export and trading with petroleum products 100 per cent
Office Estate Ltd. Ownership and management of real estates 100 per cent
Svilengrad Oil Ltd. Processing, import, export and trading with petroleum products 100 per cent
Varna 2130 Ltd. Trade with petrol and petroleum products 100 per cent
Bulgaria Cargo Rail Ltd. Export and transport of petrol and petroleum products 100 per cent
Crystal Assets Trade Ltd. Lease of real estate and equipment 100 per cent
Crystal Asset Property Ltd. Lease of real estate and equipment 100 per cent
Crystal Assets Bulgaria Ltd. Lease of real estate and equipment 100 per cent
Prima Assets Bulgaria Ltd. Lease of real estate and equipment 100 per cent
Prima Assets Trade Ltd. Lease of real estate and equipment 100 per cent
Prima Consult Property Ltd. Lease of real estate and equipment 100 per cent
Prima Lend Property Ltd. Lease of real estate and equipment 100 per cent
Petrol Oil Recycling Ltd. Management, collection and recycling of wastes of petrol products 100 per cent
Sandanski Storage Ltd. Rental of real estate and equipment, acquisition, management, operation and 100 per cent
disposal of real estate
Petrol Investment JSC Acquisition, management and exploitation of property 99,98 per cent
Petrol Finances Ltd. Financial and accounting services 99 per cent
Petrol Technologies Ltd. IT services and consultancy 98,80 per cent
Petrol Technology Ltd. IT services and consultancy 98,80 per cent
In May 2024, by means of a contract for sale and purchase of company shares,
the Parent company transferred to a third party 50 company shares, each with a
nominal value of BGN 1,000, representing 100% of the capital of Petrol Export
Ltd., for a sale price of BGN 50 thousand. At the date of the transaction the
consolidated net assets amounted to BGN 23 thousand and the result of the sale
was a gain of BGN 27 thousand.
In July 2024, a subsidiary company - Sandanski Storage Ltd. was established
and entered in the Commercial Register by way of an in-kind contribution. The
capital of the company is divided into 223 070 shares, each of which has a
nominal value of BGN 10.
Contingent liabilities, including information for newly arising significant
liabilities for the reporting period
As at September 30, 2024 the Group has contingent liabilities, including
issued mortgages and pledges of property, plant and equipment and non-current
assets held for sale, which serve as a collateral for bank loans granted to
the Group and unrelated parties and credit limits for issuance of bank
guarantees with total carrying amount of BGN 100,756 thousand, including in
favour of First Investment Bank AD BGN 95,438 thousand, Investbank AD - BGN
3,270 thousand and DSK AD - BGN 2,048 thousand.
Pursuant to an agreement from October 17, 2018 and its annexes, the Group is a
joint debtor and a guarantor on a promissory note for the amount of BGN 47,667
thousand in favour of Investbank AD under a credit facility on unrelated party
- supplier, including, including limit for overdraft and limit for stand-by
credit for issuance of bank guarantees in favour of Customs Agency. The total
amount of the utilized funds and issued bank guarantees of all borrower's
exposures to the Bank shall not exceed BGN 44,000 thousand. In relation to
this credit agreement, the Group has established a special pledge on its cash
in the bank account opened in Investbank AD with total amount of BGN 165
thousand as at September 30, 2024 and a special pledge on receivables from
contractors for BGN 4,000 thousand average monthly turnover.
Pursuant to an agreement from June 17, 2021 the Group is a joint debtor in
favour of Investbank AD under credit line for bank guarantees for BGN 600
thousand, received by an unrelated party - supplier.
The Group bears a joint obligation according to an debt agreement from January
13, 2017 on an obligation of a subsidiary until March 2018 - Elit Petrol AD
for BGN 2,346 thousand as at September 30, 2024.
Under a bank agreement for revolving credit line from 2023, with a total limit
of BGN 220,000 thousand and sublimit of BGN 30,000 thousand for refinancing
liabilities, including for issuance of bank guarantees and letter of credit,
bank guarantees were issued for a total amount of BGN 5,066 thousand as at
September 30, 2024, including BGN 3,750 thousand in favor of third parties -
Group's suppliers, BGN 500 thousand in favour of Ministry of Economy to its
registration under the Law on the Administrative Regulation of Economic
Activities Related to Oil and Petroleum Products and BGN 816 thousand to
secure own liabilities related to contracts under the Public Procurement Act.
As at September 30, 2024 the contract is secured by a pledge of all
receivables on bank accounts of the Parent company to cover contract
obligations and а mortgages of real estate and pledge of plants and
equipment, as well as assets owned by a subsidiary totaling BGN 1,500
thousand.
In the previous reporting periods companies from the Group have entered into
the debt under two loan agreements of a subsidiary with a bank-creditor (until
December 2015) for USD 15,000 thousand and USD 20,000 thousand, respectively.
In 2015 the bank -creditor acquired court orders for immediate execution and
receiving orders against the subsidiaries - joint debtors. In relation to the
claims filed by the subsidiaries, the competent court has revoked the
immediate enforcement orders and has invalidated the receiving orders. In
October and December 2015 the creditor has filed claims under Art. 422 of
Civil Procedure Code (CPC) against the subsidiaries for the existence of the
receivables under each loan agreement. The court proceedings of the creditor
are still pending.
In December 2016 the first-instance court decreed a decision (the Decision)
which admit for established that the bank has a receivable amounted to USD
15,527 thousand from the subsidiaries - joint debtors, arising from a signed
loan agreement for USD 15,000 thousand. With the same decision the court has
ordered the joint-debtors to pay BGN 411 thousand to the bank - creditor for
legal advisory fees and court dispute expenses and BGN 538 thousand state fee
in favor of the judiciary state for the ordered proceedings and BGN 538
thousand state fee for claim proceedings. In January 2017, the co-debtors
filed in time appeals against the court decision, because of that the decision
did not come into force. As at the date of the preparation of these
consolidated financial statements, the court dispute is pending in the appeal
court. The Group's Management considers that there are grounded chances the
Decision to be entirely repealed.
As at the date of the preparation of these explanatory notes, the filed
proceedings against the subsidiaries - joint debtors for estimation of the
bank receivables due to the loan agreement for USD 20,000 thousand is pending
before the first-instance court. The Management expects favorable decision by
the competent court. In 2018 the Parent company sold its interest in one of
co-debtor subsidiaries and the potential risk for the Group is reduced to
court proceedings against the second subsidiary.
Corporate Commercial bank AD (in insolvency) - a creditor of a subsidiary
(until December 2015) unreasonably claimed in court the responsibility of the
Parent company under a contract of guarantee for liabilities arising from a
contract for a framework credit limit as a result of that the bank accounts of
the Parent company amounting to USD 29,983 thousand were garnished. This claim
was disputed in court by the Group because the liability as guarantor has not
occurred and / or extinguished pursuant to Art. 147, par. 2 of the LOC. At the
time of signing of the guarantee agreement, the deadline of the arrangements
between the lender and subsidiary contractual framework for credit limit was
July 1, 2014. The term of the framework credit limit was extended without the
consent of the customer, therefore the responsibility of the latter has fallen
by six months after initially agreed period, during which the creditor has
brought an action against the principal debtor. The term of Art. 147, par. 1
of the LOC is final and upon its expiration the company's guarantee has been
terminated, so the objection of the Parent company was granted by the court
and imposed liens on bank accounts lifted.
After the writ of execution, pursuant to order proceedings, was canceled on
which were imposed liens on bank accounts of the Parent company, the creditor
has initiated legal claim proceedings under Art. 422 of the CPC to establish
the same claims against the subsidiary (until December 2015) and the guarantor
the Parent company. In these proceedings the objections are repeated, that
liability as guarantor has not occurred and / or extinguished pursuant to Art.
147, par. 2 of the LOC, and therefore the Management expects that the claim of
the creditor against the Parent company will be dismissed permanently by a
court decision on those cases. At present, the case is suspended due to the
existence of a preliminary ruling, which is important for the correct
resolution of the case.
The Group has claimed its receivables from the subsidiary (until December
2015). The claims are included in the list of admitted claims under Art. 686
of the Commercial Companies Code prepared by the insolvency administrator, but
they are disputed by another creditor in the insolvency proceedings. Now, the
pending court proceedings to establish the existence of these claims pursuant
to Art. 694 of the Commercial Companies Code have been concluded with a
decision and the court has accepted the Group's claims up to the amount of BGN
4,794 thousand.
As at September 30, 2024, cash in the Group's bank accounts amounting to BGN
114 thousand is blocked in enforcement proceedings to which the Group is a
party.
As collateral, a promissory note in the amount of BGN 15 thousand has been
issued to the Parent company's counterparty under a deferred fuel purchase
agreement signed in 2023.
Under a revolving credit line agreement signed in 2023 with a total limit of
BGN 220,000 thousand. In July 2023, a pledge of a commercial enterprise was
established as a set of rights and obligations and de facto relations of
Petrol AD, Kremikovtzi Oil Ltd, Shumen Storage Ltd, Office Estate Ltd, Crystal
Asset Property Ltd, Crystal Asset Trade Ltd, Crystal Asset Bulgaria Ltd, Prima
Asset Bulgaria Ltd, Prima Asset Trade Ltd, Prima Consult Property Ltd, Prima
Land Property Ltd As collateral under the same agreement, the Group has
pledged receivables from bank accounts opened with the Bank, including funds
deposited under a debt product agreement with a carrying amount as at
September 30, 2024, net of impairment under IFRS 9, of BGN 54,475 thousand.
Pursuant to the covenants under a bank loan agreement entered into in November
2023, the Group has established a mortgage on property and a pledge of plant
and equipment with a total carrying amount as at September 30, 2024 of BGN
3,030 thousand. The agreement is also secured by a pledge over all of the
Parent company's receivables on bank accounts with a book value as at
September 30, 2024 for BGN 19 thousand.
Pursuant to an agreement dated May 2024, the Parent company is a guarantor
under an overdraft agreement granted to an unrelated party - a commercial
counterparty as at September 30, 2024 with a credit limit of BGN 1,400
thousand. In connection with this credit commitment, it has established a
pledge in favor of the creditor bank over cash receivables on bank accounts
and has mortgages on real estate with a carrying value as at September 30,
2024 of BGN 1,926 thousand.
In August 2024, an annex to the Agreement of March 10, 2021 for the purchase
of receivables under commercial invoices (standard factoring) with a
commercial bank agreed a total advance limit of up to BGN 6,000 thousand. The
agreement is secured by a pledge of receivables on bank accounts opened with
the bank with a carrying amount as at September 30, 2024 of BGN 75 thousand.
III. Disclosure of transactions with related parties
The Parent company (Controlling company) is Petrol AD. It has a two-tier
management system, which includes a Management Board (MB) and a Supervisory
Board (SB). Below are the names and functions of the members of the
Supervisory and Management Board of Petrol AD.
Supervisory Board
Ivan Voynovski 1 Chairman
Petrol Correct EOOD, represented by Nikolay Gergov Member
Petrol Asset Management EOOD, represented by Armen Nazaryan Member
Management Board
Grisha Ganchev Chairman of the Management Board
Georgy Tatarski Deputy chairman of MB and Executive director
Milko Dimitrov Member of MB and Executive director
Lachezar Gramatikov Member of MB
Kiril Shilegov Member of MB
The total amount of the accrued remunerations of the members of Management and
Supervisory Board of the Parent company, included in the personnel expenses as
at September 30, 2024, amounts to BGN 1,117 thousand and unsettled liabilities
of BGN 71 thousand, including BGN 59 thousand liabilities to personnel and BGN
12 thousand liabilities to legal entities.
Related parties of the Petrol Group are the shareholder with significant
influence in the Parent company, Storage Invest ltd. and its related parties.
Included in purchases from related parties - a shareholder with significant
influence - for the period ending September 30, 2024 are lease costs of
property, plant and equipment amounting to BGN 43 thousand, accounted for as
lease expenses in accordance with the provisions of IFRS 16 in the statement
of profit or loss and other comprehensive income, including depreciation
expense and interest expense. Included in sales to related parties - a
shareholder with significant influence - for the period ending September 30,
2024 is service revenue of BGN 1 thousand.
Related party June 30, June 30,
2024 2024
BGN'000 BGN'000
Receivables Payables
Other related parties 2,220 11,591
Short-term loans - 10,349
Shareholder with a significant influence - 46
2,220 11,637
In September 2024, the Group obtained a short-term loan from a related party
trading company. The loan has a credit limit of BGN 24,000 thousand and bears
interest at 3M EURIBOR plus a 2%-point premium, but not less than 5% on the
drawn amount and has a maturity date of December 31, 2024. The liability at
September 30, 2024 is BGN 10,344 thousand principal and BGN 5 thousand
interest.
IV. Risks and uncertainties ahead of the Group for the rest of the financial
year
Macroeconomic environment
The Petrol Group's activity is influenced by the general economic condition of
the country and in particular the degree of the successful adoption of the
market-oriented economic reforms by the government, changes in the gross
domestic product (GDP) and the purchasing power of the Bulgarian customers. In
the long term the change in the fuels consumption in the country is
commensurate with the GDP. In 2023, the rate of increase in consumer price
inflation starts to slow down, with the consumer price index recording
single-digit annual growth towards the end of the year. During the year, the
central banks of the leading economies, in their efforts to normalize the
rampant inflation, continued to raise key interest rates, but this did not
lead to a significant reversal of the upward trend in prices that began in
2020. The situation in Bulgaria follows the global trend of rising prices, as
at the end of the year, the consumer price index published by the National
Statistical Institute recorded an annual growth of 4.7%, with inflation
reaching double-digit increases by the middle of the year, following the
significant growth in 2022. The main reason for the double-digit inflation
increases in the first half of 2023 are the double-digit increases in the food
and beverage, fuels and other energy, and accommodation and food services
groups, which for the first six months of the year posted average monthly
increases of 18.9% for food and beverage, 14.8% for fuels and other energy,
and 15.8% for restaurants and accommodation. By the end of the year, the
catering sector showed the highest inflation rate of 9.4%, while food,
non-food and service expenditure declined to levels of 5.7%, 3.1% and 4.9%
respectively. The main reasons for the increase in the inflation rate in 2023
remain the anti-crisis recovery and development measures taken in the last
three years by the European Union and the Bulgarian government in particular,
the emerging military conflict in Ukraine in February 2022, as well as the
disruption caused by sanctions and the change, in some cases, of the supply
chains that led to the rise in prices of fuels and other goods and resources
caused by increased demand and limited supply.
The Group's Management monitors the emergence of risks and negative
consequences following the COVID-19 pandemic and the military conflict between
Russia and Ukraine, currently assessing the possible effects on the assets,
liabilities and activities of the Group, striving to comply with contractual
commitments, despite the uncertainties and force-majeure circumstances. In
view of the effects of the pandemic, military conflict and high inflation,
which are challenging economic activity in the country and creating
significant uncertainty about future business developments, there is a real
risk of a decline in sales and losses for the Group.
Despite the shocks caused by COVID-19 and the war in Ukraine, the country's
economy grew in the past reporting period, covering a wide range of industries
and sectors. However, the country currently faces several challenges and
future risks. The ongoing military conflict between Russia and Ukraine is
creating the conditions for a lasting humanitarian crisis, shortages of raw
materials and supplies, rising inflation and geopolitical turmoil that could
extend to Bulgaria. At the same time, commodity prices continue to rise, and
high prices are likely to persist. On the other hand, the pandemic has not
completely subsided and new outbreaks are possible. This leads to the risk of
a slowdown in cash flows and payments, an increase in intercompany
indebtedness, a reduction in earnings and, ultimately, an overall
deterioration in the economic environment in the country in which the Group
operates. The macroeconomic environment in the country, as well as the level
of political stability, has a significant impact on the price, market, credit,
liquidity, interest rate, operational and other risks to which the Group is
exposed.
The Group's operation results are affected by several factors, including
macroeconomic conditions in Bulgaria, competition, variation of gross margins,
fluctuations in crude oil and petroleum product prices, product mix,
relationships with suppliers, legislative changes, and changes in currency
exchange rates, weather conditions and seasonality. In 2024, the Group
continues to suffer negative impacts from commodity price volatility, both
domestically and globally, inflation rates, and geopolitical uncertainty.
The Group's future development plans are closely linked to the stated
expectations of changes in the market environment. The management continues to
follow the outlined restructuring program of the Petrol Group's activities,
which has to be changed as a result of the rapidly changing market environment
and the risks and difficulties encountered, with the aim of concentrating
efforts in the direction of optimizing the core business - retail and
wholesale fuel trading, and at the same time developing and expanding the
Group's activities in line with climate changes and new prospects. In order to
improve the financial position, the Management continues to actively analyze
all cost items in search of hidden reserves for their optimization, including
closing or leasing underperforming petrol stations, increasing the number of
self-service petrol stations, or switching to a mixed mode of operation.
In the coming years, the Group's performance will also depend on the ability
to make investments and the successful implementation of new projects. The
Group's investments will be preferably focused to build new petrol stations,
modernize others, provide them with charging stations and increase Petrol AD's
sales and market share, mainly by transforming the petrol stations operated by
the Group into modern full-service and leisure facilities. Following the
acquisition in 2023 of the shares of seven companies owning 190 petrol
stations, Petrol AD will be able to plan its investment programme more easily,
seeking the best realisation of the assets managed by the Group.
There is significant uncertainty about the ability of the customers to repay
their obligations in accordance with the agreed terms. Therefore, the amount
of impairment losses on loans granted, receivables and the amounts of other
accounting estimates, in the subsequent reporting periods could differ
materially from those determined and reported in these explanatory notes. The
Group's management implements the necessary procedures to manage these risks.
Legislature
The Parent company is supervised by several regulatory bodies in the country
and a potential change in the regulatory framework, regulating the Parent
company's activity may have a negative impact on the Group's financial
results. In July 2018 the Government of the Republic of Bulgaria adopted a new
Law for Administrative Regulation of the Economic Activities, Related to
Petrol and Petroleum Products, which aims to provide security and
predictability in trading with petrol and petroleum products and increase the
energy security of the country. Due to its core business, this law will affect
the Group. As at the date of issuance of these financial statements, the
Parent company is entered in the register to the Ordinance on the terms and
conditions for keeping a register of entities carrying out economic activities
related to oil and petroleum products for the wholesale trading activity and
has issued a bank guarantee in favor of the Ministry of Economy at the amount
of BGN 500 thousand. As at the date of issuance of these financial statements,
the registration procedure of the Parent company for retail trading with oil
and petroleum products is finished.
Major commercial partners
Due to the specific of the primary business of Petrol Group, namely retail and
wholesale trading with fuels, the Group's fuels supplies are provided by a
small number of suppliers, as a result of which the Group is at risk of
discontinuation of relationships with key suppliers, which may lead to a
short-term depletion of inventories and trading activity difficulties.
Petrol Group's wholesale and retail trading with fuels, lubricants and other
goods, and storage of fuels is carried out through its own and rented from
third parties petrol stations and storage facilities. There is a risk from a
suspension of the relationships with the lessors and termination of the lease
agreements for the petrol stations and/or storage facilities, which can have a
significant negative impact on Petrol Group as deteriorating of sales,
worsening of the financial results and substantial loss of market share.
In the second half of 2023, Petrol AD acquired seven subsidiaries, owners of
petrol stations, through an investment loan of BGN 90,000 thousand. The Group
operates these outlets through operating lease agreements. The loan agreement
is secured by a pledge of the trading businesses of Crystal Asset Property
Ltd, Crystal Asset Trade Ltd, Crystal Asset Bulgaria Ltd, Prima Asset Bulgaria
Ltd, Prima Asset Trade Ltd, Prima Consult Property Ltd, Prima Land Property
Ltd. The acquired control will help Petrol AD in the long term in the core
business of the Group, but at the same time there is a risk that in the event
of a sustained deterioration in the market conditions due to internal or
external factors and/or a significant loss of market share, it will become
unable to service its credit obligations.
Competition
In the last few years, there has been a tendency for consumers to increasingly
turn to established and well-known brands with a tradition in fuel retail. As
a result, some small retailers were forced to close down or enter into
franchise or dealership agreements with one of the major market participants.
Due to the general decline in economic activity, consumer attitudes and the
introduction of additional regulatory control by the government, the share of
small independent players continues to decline.
The lack of strategic deals and significant investments by large participants
in the retail fuel market has led to a minimal change in the market shares of
companies in the sector;
Price risk
The Group is at risk of frequent and sharp changes in prices of fuels and
non-petroleum goods. Because of that, the future financial results may diverge
significantly from the expectations of the Group's Management. Any future
sharp fluctuations in the price of fuels and non-petroleum goods may lead to a
deterioration of the financial position of the Group.
Market risk
The Group is exposed to the risk of change in currency rate, movement in the
interest rates and the prices of the capital instruments, which may impact the
Group's financial instruments or the value of its investments.
Interest rate risk
Risks arising from the increase in the price of the Group's financing.
Credit risk
The risk of inability of the Group's trade partners to fulfill their
contractual obligations, which may lead to losses for the Group.
Exceptional costs
There is a risk of incurring unforeseeable costs, which to affect negatively
the financial position of the Group.
Political risk
Risks to the Group arising from global and regional political and economic
crises.
Climate conditions and seasonality
Climate conditions and seasonal fluctuations in demand for certain petroleum
products affect the Group's operating results. Gasoline and diesel demand
peaked in the second and third quarters, due to both the summer holiday season
and the increased demand from farmers, who traditionally increase their
consumption during the autumn season.
Liquidity risk
Liquidity risk is the risk that the Group may not be able to meet its
financial obligations when they fall due. The policy is aimed at ensuring
sufficient liquidity with which to serve liabilities when they fall due,
including abnormal and emergency situations.
1 1 Ivan Alipiev Voinovski - died on February 23, 2017. On February 18,
2019, an EGMS of Petrol AD was held, where was voted a replacement of the
deceased Ivan Voynovski. The application for entry in the CR was rejected,
which was appealed by Petrol AD within the statutory term, and the
registration proceedings were suspended at the request of minority
shareholders until the District Court - Lovech rules on proceedings for
annulment of decisions taken. In May 2019, the Lovech District Court ruled
with a decision revoking the refusal and returning the file to the Registry
Agency to make the requested entry after the resumption of the suspended
registration proceedings. At present, the court proceedings on the claims for
annulment of the decisions of EGMS from February 2019 are pending.
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