Annual Report • Dec 31, 2010
Annual Report
Open in ViewerOpens in native device viewer
INDEPENDENT AUDITOR'S REPORT AND
FINANCIAL STATEMENTS AS OF DECEMBER 31, 2010
| ANNUAL REPORT ON THE ACTIVITY | |
|---|---|
| INDEPENDENT AUDITOR'S REPORT | |
| FINANCIAL STATEMENTS AS OF DECEMBER 31, 2010 | |
| NOTES TO THE FINANCIAL STATEMENTS |
| Financial highlights | 2010 | 2009 restated 1 |
2008 restated 1 |
|---|---|---|---|
| Net income (BGN'000), including: | 1,083,733 | 885,308 | 1,042,016 |
| Light fuel | 1,058,296 | 859,128 | 813,824 |
| Heavy fuel | 9,386 | 12,565 | 27,813 |
| Aviation fuel | 70 | 3,109 | 44,437 |
| Lubricants and other goods | 610 | 753 | 1,645 |
| Gross margin of goods sold (BGN'000) | 19,171 | 25,515 | 51,193 |
| EBITDA (BGN'000) 2 | 10,978 | 11,954 | 178,462 |
| EBIT $(BGN'000)^3$ | 9,413 | 10,395 | 176,576 |
| Profit (loss) for the year (BGN'000) | 22,916 | (203, 396) | 206,363 |
| Assets (BGN'000) | 607,195 | 499,929 | 650,031 |
| Debt (BGN'000) | 350,352 | 316,282 | 305,349 |
| Equity (BGN'000) | 61,572 | 38,656 | 242,052 |
| Working capital (BGN'000) 4 | (100, 876) | 262,472 | 476,676 |
| Working capital (BGN'000) calculated in case of equity increase 5 |
99,124 | 262,472 | 476,676 |
| Capital expenditure (BGN'000) | 4,275 | 2,563 | 3,692 |
| Financial ratios | 2010 | 2009 restated 1 |
2008 restated 1 |
|---|---|---|---|
| $ROE$ $(\%)^6$ | 45.73 | (144.92) | 148.60 |
| ROACE $(\%)^7$ | 2.18 | 2.14 | 47.64 |
| ROA (%) 8 | 1.70 | 1.81 | 35.28 |
| Debt to Assets ratio $(\%)$ | 57.70 | 63.27 | 46.97 |
<sup>1 In conjunction with change in accounting policy (see note 26 from the financial statements)
<sup>2 EBITDA - earnings before interest, tax, depreciation and amortization
$3$ EBIT - earnings before interest and tax
<sup>4 Working capital is the difference between the current assets and the current liabilities
<sup>5 On held in November, 2010 General meeting of the Shareholders of Petrol AD a decision was taken for providing an in-kind contribution in the equity of Naftex Petrol EOOD, as subject of the contribution is part of rece 200,000 thousand.
$\frac{6}{6}$ ROE (return on equity) is calculated as a ratio between profit (loss) for the year and the average equity
$7$ ROACE (return on average capital employed) is calculated by dividing EBIT by the averaged value of the invested capital. The latter is the difference between the total amount of the assets and the current liabil Group).
<sup>8 ROA (Return on assets) is calculated by dividing EBIT by the averaged assets value
| Equity to Assets ratio $(\%)$ | 10.14 | 7.73 | 37.24 |
|---|---|---|---|
| Current ratio (coefficient) 9 | 0.81 | 2.68 | 5.45 |
| Current ratio (coefficient) calculated in case of equity increase 5 |
1.29 | 2.68 | 5.45 |
| Accounts receivable collection period (in days) 10 | 8 | 16 | 12 |
| Operating data | 2010 | 2009 | 2008 |
| Market share (%) | 20 | 20 | 14 |
| Total number of own fuel storage facilities | 35 | 34 | 34 |
| Fuel storage facilities operating during the period | 14 | 14 | 14 |
| Number of clients | 788 | 2,283 | 1,788 |
| Number of personnel | 285 | 284 | 280 |
$9$ Current ratio is the ratio between the current assets and the current liabilities
$10$ Accounts receivable collection period is the ratio between the trade receivables and the income multiplied by 365 days
Dear Ladies and Gentlemen,
Naftex Petrol EOOD (the Company) is a company concerned with wholesale trade and storage of petroleum products, which has 35 own fuel storage facilities located throughout the country. The Company operates 12 fuel storage facilities (11 of its own and one owned by Petrol AD) for distribution of petroleum products, 2 of the facilities are leased out and the remaining facilities belong to the group of the so-called "reserve" storage facilities.
The Company is a licensed warehouse holder under the Excise Duties and Tax Warehouses Act (EDTWA) and as of December 31, 2010 holds licenses for 4 fuel storage facilities, which provide opportunity for temporary suspension of excise duty taxation. The decrease in the number of licensed tax warehouses is due to the sufficient investments needed to conform with the requirements of the Ordinance 3 for the specific requirements and control, performed by the customs authority over the measuring devices of excisable goods. At the end of 2010 the Company holds licenses under the Mandatory Stocks of Crude Oil and Petroleum Products Act (MSCOPPA) for tanks with total capacity of 174,000 $\text{m}^3$ , situated in 7 of the operating fuel storage facilities, allowing storage of fuels under the same law.
The Company relies on uncompromising quality of the fuels offered, guaranteed by 4 laboratories, through which strict control and quality analysis of fuel and petroleum products are carried out.
In 2010 Naftex Petrol EOOD meeting the requirements of Ordinance 3 for the specific requirements and control, performed by the customs authority over the measuring devices of excisable goods constructed in the tax warehouses Ruse, Pleven, Burgas and Varna automated measuring and gauging systems, which through integrated communication system to transfer data electronically to the Custom's information system.
The Company has commenced reconstructing of part of Plovdiv fuel storage facility - tanks repairs, installation of internal floating roofs, gauging system, pumping stations, rail trestle, which part will be separated in a detached licensed tax warehouse under EDTWA intended for storage of fuels under MSCOPPA in implementation of the strategy for development of this kind of activity.
In 2010 scheduled tank repairs were carried out at Kaspichan and Pleven fuel storage facilities. Internal floating roofs were fitted and a coat was laid on the repaired tanks in compliance with the Ordinance No 16 on the control of volatile organic compound emissions resulting from the storage, loading and unloading, and transportation of gasoline.
I would like to thank our clients for the confidence they have in us. I would like to thank my colleagues for the shared values and efforts in achieving the common goal of lasting growth. The Company's team has fulfilled its plans and participates in the projects implementation clearly aware that the best guarantee for the success of Naftex Petrol EOOD is the mutual trust between our partners and us.
Yordan Georgiev Manager $\prod F$ May 5, 2011
The Company was registered in 1999 in Sofia. Later on the Company's headquarter was moved to Varna according to Court Decision No. 427/2001 of Varna District Court. The Company's register office is at 22 A, Bratva Miladinovi Str., Varna. As from April 6, 2005 Petrol AD is a sole owner of the Company's capital.
Naftex Petrol EOOD is a company from the business group of Petrol Holding AD. The Company is a well-established market leader since 2001, specialized in fuel and petroleum products import, storage and wholesale. The Company operates 12 fuel storage facilities, situated all over the country, through which it directly sells fuel and petroleum products. Apart from distribution, the Company provides complex services such as fuel storage, tanker handling and laboratory analyses. For its customers' convenience, the Company offers electronic ordering and information, transportation of products to the customer's warehouse; there is a possibility for deferred payment and cash payment at the fuel storage facilities directly prior to dispatch.
The main lines of business of Naftex Petrol EOOD could be summarized as follows:
Additional services for the customers' complex servicing are:
Company's mission is to achieve a sustained growth in cooperation with customers, acting with responsibility to customers, partners, employees and the society as a whole.
The Management of Naftex Petrol EOOD relies on:
Naftex Petrol EOOD has one of the widest distribution networks for wholesale of fuels in the country - 12 fuel storage facilities operate actively and 2 fuel storage facilities are leased out. The Company operates 4 quality control laboratories as the laboratory at Varna fuel storage facility holds accreditation.
The operating fuel storage facilities have a potential to secure large volumes of sales and have been selected by the following criteria:
At the end of 2010 the Company has registered tanks for storage of diesel fuel, gasoline and heating oil with total capacity of $170,000 \text{ m}^3$ . According to the requirements of MSCOPPA, tank capacities at Ruse, Kaspichan, Pleven, Stara Zagora, Varna, Burgas and Plovdiv fuel storage facilities were registered, allowing storage of fuels under the same law.
The registered capacities under MSCOPPA in cubic meters by types of fuel in 2010 are presented in the following table:
| Industrial | |||||
|---|---|---|---|---|---|
| Fuel storage facility | Gasoline | gas oil | Diesel fuel | Heating oil | Total |
| Burgas | 10,000 | $\overline{\phantom{a}}$ | 15,000 | 25,000 | |
| Varna | 10,000 | $\tilde{\phantom{a}}$ | 25,000 | $\blacksquare$ | 35,000 |
| Ruse | 1,000 | 2,000 | 21,000 | $\blacksquare$ | 24,000 |
| Kaspichan | 7,000 | 12,000 | $\blacksquare$ | 19,000 | |
| Pleven | 25,000 | 2,000 | 20,000 | $\rightarrow$ | 47,000 |
| Plovdiv | 5,000 | $\bullet$ | 10,000 | 15,000 | |
| Stara Zagora | 2,000 | 2,000 | 5,000 | 9,000 | |
| Total | 60.000 | 4,000 | 105,000 | 5,000 | 174,000 |
In the beginning of 2011 new capacities in Plovdiv fuel storage facility were registered $-40,000 \text{ m}^3$ of gasoline and 100,000 m3 of diesel fuel. As of the date of issuance of the annual report the Company has total registered capacity of 314,000 m3 under MSCOPPA.
Naftex Petrol EOOD is a licensed warehouse holder under the EDTWA and as of December 31, 2010 holds licenses for 4 fuel storage facilities in Varna, Burgas, Pleven and Ruse, which provide opportunity for temporary suspension of excise duty taxation. After the licensing of the Plovdiv fuel storage facility, the Company is going to terminate the licenses for Ruse and Pleven fuel storage facilities.
Naftex Petrol EOOD is ISO 9001:2000 certified as in 2010 is ISO 9001:2008 recertified.
Organizational and management structure of the Company are shown on the following diagram:
The economic crisis and the rising fuel prices are among the main reasons leading to drop in the fuel consumption in 2009 and 2010 in the country. With the economic recovery in short and medium term plan the consumption is expected to resume its upward trend typical of the years preceding the crisis. In longer term plan the consumption in the country is expected to continue following its upward trend. One of the major leading factors is the potential growth of the motor car fleet in the country and South-East Europe as a whole, since in this region the number of cars per thousand people is twice lesser compared to West-European countries.
With relation to product mix, during the last couple of years the fuel market in Bulgaria witnessed a shift of consumption from all types of gasoline to diesel oil and LPG. The extended diesel oil consumption is accounted for by modern diesel-engines entering the market, as well as the increasing use of diesel in transport industry. The relative share of the diesel fuel is above 50% from the total fuel consumption in the country.
Being dependent on the crude oil and petroleum products quotations on the international markets, fuel prices are characterized by high dynamics and volatility. After 2008, which was marked with a significant increase of the prices in the first eight months and with a dramatic slump in the last months, in 2009 and 2010 an upward tendency in prices has been seen. The fuel wholesale prices are significantly influenced by the pricing of Lukoil Neftochim Burgas AD, as a sole producer in the country.
Key participants in the Bulgarian wholesale market are Naftex Petrol EOOD, Rompetrol Bulgaria AD, OMV Bulgaria EOOD and Lukoil Bulgaria EOOD - the exclusive distributor of the products of Lukoil Neftochim Burgas AD. In the last few years the share of realized imported fuels tends to increase and for 2010 it is about 40%.
Regulations regarding excise legislation and environmental protection require significant capital investments which together with the requirements of the MSCOPPA, they put serious barriers against the entry of new participants on the wholesale market. These requirements also impede small and medium sized market participants to import fuels.
In 2010 Ordinance 3 for the specific requirements and control, performed by the customs authority over the measuring devices of excisable goods came into force. The ordinance obligates the licensed warehouse holders under EDTWA to provide in its tax warehouses measuring and control devices, which to transfer data electronically to the automated accounting systems of the warehouse keepers and to the information system of the Customs Agency. In compliance with the Ordinance the warehouse keepers must install automated measuring and gauging systems, which through integrated communication system for monitoring and control, to transfer data from them electronically to the information system of Customs Agency.
Since January 1, 2007 when Bulgaria joined to the EU, the requirements on the quality of the offered petroleum products and the ecological standards have been considerably heightened. According to the Ordinance on Requirements for the Liquid Fuel Quality, the Conditions, the Procedure and the Method of Control over Liquid Fuels as from January 1, 2009 the diesel motor fuel and the motor gasoline must be with a maximum sulphur content of 10 mg/kg $(10$ ppm). Additional requirements are imposed under the Renewable and Alternative Energy Sources and Biofuel Act, as from 1 March, 2010 blending of the liquid fuels of crude oil origin consumed in the transportation sector with biofuel must commence by stages.
The revenue of Naftex Petrol EOOD is generated from sales of goods and rendering of services. The Company forms its revenue mainly by the following lines of business:
In 2010 the revenue from sales of the Company is at the amount of BGN 1,081,078 thousand compared to BGN 884,400 thousand in 2009, showing 22% increase. The major part of the sales revenue in 2010 is formed from sales of goods. Its amount is BGN 1,068,362 thousand compared to BGN 875,555 thousand in 2009, as its relative share retain within 99%. The revenue from sales of goods consists almost entirely from sales of fuels (99%).
In 2010 the revenue from sales of fuels increased compared to the previous year amounting to BGN 1.067.752 thousand. For comparison, in 2009 its amount was BGN 874,802 thousand. The increase is 22% and it is mainly due to the raise in the fuel average selling prices.
The sales revenue by major types of fuels is presented in the following table:
| Fuel type | Unit | 2010 | 2009 | 2008 |
|---|---|---|---|---|
| Light fuel | thousand litres | 712,171 | 678,444 | 502,823 |
| Aviation fuel | ton | 35 | 3,491 | 26,811 |
| Heavy fuel | ton | 11,838 | 21,230 | 37,535 |
| LPG | ton | $\overline{\phantom{a}}$ | $\overline{ }$ | 1,661 |
El Light fuel Aviation fuel 图 Heavy fuel ■LPG
In 2010 the volumes of light fuels sold continued their upward trend from the previous years, but considerably slowly as the increase in 2010 compared to 2009 is 5%. For comparison in 2009 against 2008 the increase is 35%. The drop in the sales of aviation fuel (jet) and heavy fuels is a result of termination of both the aircraft refuelling and vessels bunkering activities. In 2009 Naftex Petrol EOOD suspended the sales of LPG.
The sales revenue of light fuels grew by 23% reaching BGN 1,058,295 thousand compared to BGN 859,128 thousand in 2009. The main reason was an increase in the average selling prices in 2010 compared to 2009 - by 15% of gasoline and by 19% of diesel fuel. The increase is due to the higher average selling prices on the international markets. The pricing policy of Lukoil Neftochim Bourgas AD is traditionally bound to pricing of the sector and also affects selling prices.
Annual report on the activity 2010
In 2010 an increase in the sales of diesel fuel and a decrease in the sales of gasoline are seen. The relative share of the sales revenue of diesel fuel in the total sales revenue of light fuels is 70% against 65% in 2009. The rest 30% are distributed between the sales of gasoline and gas oil in the same proportion of 95% and 5% respectively.
Until June 2009 the main fuel supplier had been Lukoil Bulgaria EOOD. With the contract expiration, Naftex Petrol EOOD changed its logistic scheme. The supplies are provided predominantly by import under contracts with suppliers from Greece, Romania, Turkey, Israel and Italy as well as Bulgarian importers, part of the business group of Petrol Holding AD. The import is carried out through the ports of Varna and Burgas.
Due to termination of the aircraft and vessels refuelling activities, the Company did not import aviation fuel and heavy fuel in 2009 and 2010.
Bulk and packaged lubricants are sold from the fuels storage facilities, as the realized quantities of bulk lubricants are residual from preceding years. The supplies of bulk lubricants were terminated by reason of the high requirements of the customs and excise legislation. As a result of this, as well as the terminated realization from Pleven and Burgas fuel storage facilities, the revenue from the sale of lubricants decreased by 19% compared to 2009. Direct sales of packaged goods are carried out to correct payers franchisees of Petrol AD and other final clients. The revenue from rendering of services related to storage and dispatch of packaged products remained at the level of the previous vear.
Structure of the revenue from sale of of bulk and packaged lubricants and other goods and related services
The gross margin of goods sold decreased from 2.91% in 2009 to 1.79% in 2010.
In 2010 the trend for increase in revenue from rendering of services continued. The rise of 44% - from BGN 8.845 thousand in 2009 to BGN 12,716 thousand in 2010, is due to higher revenue from storage under MSCOPPA and tankers handling. The realized growth is consistent with the adopted strategy for development of storage activities as one of the main lines of business of Naftex Petrol EOOD.
The operating expenses of the Company in 2010 are at the amount of BGN 25,129 thousand and remain close to the same in 2009. As a result of change in the Company's accounting policy, since the beginning of the year, penalties related to delayed payments are accounted for as interest costs. The restated operating expenses in 2009 are at the amount of BGN 24,873 thousand. The increase in the operating expenses by 1% in 2010 compared to 2009 is due to the rise in the materials expenses and the hired services expenses.
In 2010 the material expenses grew up by 20% from BGN 589 thousand in 2009 to BGN 708 thousand as a result of the higher expenses on spare parts, electricity, advertising materials, heating fuel preheating in conjunction with rendered service of storage and dispatch of heating fuel owned by a counterparty. The expenses on office consumable, work cloth and water reported a decrease.
The expenses on hired services in 2010 rose by 1% compared to 2009, and a change in their structure was seen. During the year the taxes and commissions expenses went down by 44% mainly as a result of the terminated aircraft refueling activity. The reported decline in expenses related to software licenses and communications is 13% and 43% respectively. An increase of 42% was seen in connection with the repairs and maintenance of fuel storage facilities. Security and rent costs related to the headquarters of the Company also grow.
In 2010 there was no significant change in the number and the payment to the personnel, as a result of which the employee benefits expenses remained close to their amount in 2009.
In 2010 the other expenses decreased by 4% from BGN 3,008 thousand to BGN 2,885 thousand. As a result of the investments made in internal floating roofs, hydrocarbon vapour recovery units and video surveillance systems at the fuel storage facilities during the last few years, the fuel wastage and losses showed stable downward tendency. The decrease in 2010 is by 4% to BGN 2,131 thousand compared to BGN 2,217 in 2009.
The Company reports an operating profit before interest, taxes, depreciation and amortization (EBITDA) at the amount of BGN 10,978 thousand.
The main ratios, describing the financial position of Naftex Petrol EOOD are presented in the Selected performance indicators section.
Company's major capital requirements consist of general working capital needs and service of indebtedness. The Company's sources of liquidity include cash balances, short-term and long-term borrowings and optimization of the average inventory turnover period, receivables collection and payables payment period.
As of December 31, 2010 the Company's working capital is negative at the amount of BGN 100,876 thousand. The reason is the reclassification in the financial statements from long-term to short-term of interest-bearing loan from Petrol AD with maturity in 2011 at the amount of BGN 304,989 thousand. For comparison as of December 31, 2009 the working capital is at the amount of BGN 262,472 thousand.
On held in November 2010 extraordinary General Meeting of the Shareholders of Petrol AD a decision was taken for providing an in-kind contribution in the equity of Naftex Petrol EOOD. Subject of the contribution is part of a receivable under loan agreement at the amount of BGN 200,000 thousand. As of the date of the report the increase is entered into the Trade Register.
The decrease in the working capital is due to the higher amount of the trade and other receivables. A rising is seen in payables to suppliers (by BGN 10,735 thousand), related parties payables (by BGN 19.514 thousand), tax payables (by BGN 4,052 thousand) and advances received (by BGN 15,735 thousand).
In 2010 the Company's assets rose by BGN 21,537 thousand, as a result of an increase in fair value of the short-term financial assets (by BGN 44.314 thousand), inventories (by BGN 14.241 thousand) and recoverable taxes (by BGN 104 thousand) and the decrease in interest-bearing loans granted (by BGN 18,845 thousand), trade and other receivables (by BGN 14,048 thousand) and cash and cash equivalents (by BGN 4,229 thousand).
Liquidity, solvency, inventory turnover period and receivables collection period are important measures of the Company's financial stability. The current liquidity in 2010 decreased to 0.81 compared to 2.68 for 2009 as a result of the increase in the current liabilities mentioned above. In 2010 the Company reduced its accounts receivable collection period by half from 16 to 8 days. The inventories turnover in 2010 is 10 days.
The Company's debt in 2010 went up by BGN 34,070 thousand due to the increase in the interestbearing loans to related parties and the sale and leaseback agreement concluded for one of the reserve fuel storage facilities. As a result of the increase of the Company' assets by BGN 107,266 thousand Debt to Assets ratio went down to 57.70% compared to 63.27% for 2009.
The Equity to Assets ratio improved from 7.73% for 2009 to 10.14% for 2010 due to the realized profit from the Company.
The Company's policy is to ensure equal opportunities under equal other conditions, for the selection and career growth in professional and qualification aspects of the best workers and employees. The senior staff at each management level is responsible for the training and development of the personnel of the respective structural units. The Company encourages and supports workers and employees who show interest and initiative for self-training and education. Proposals are made and the annual budget for the necessary training courses in the next year is worked out on yearly basis. The training courses conducted in 2010 amount to BGN 11 thousand and are predominantly related to the implementation of new technologies at the fuel storage facilities.
A human resources management system was introduced and currently operates in the Company. The system, being a combination of rules and procedures on the work process performance, contributes to the progress of the Company's business as clearly defines and distinguishes the responsibilities of the different management levels. The system prescribes annual appraisal of the work performance carried out by the direct manager, which includes assessment of results, professional competency, work quality, use and maintenance of the Company's resources, as well as personal qualities.
The number of the personnel as of December 31, 2010 is 285, as the average number of the personnel for 2010 is 270, from which 94 woman. The average age of the personnel of the Company is 46.5 years. The structure of the personnel by education: 30.13% with higher education; 65.06% with secondary and secondary special education; 2.72% with college education; 2.05% with primary education.
In 2010 the level of the average monthly salary of the Company is BGN 976, as it remained close to 2009 - BGN 947.
One of the main operational risks for the Company arises from the long-standing practice of using only the prices of the manufacturer Lukoil Neftochim Burgas AD for the purposes of fuel pricing. The Company's management strives to cease this long-standing practice and to impose daily pricing on the local wholesale market, reflecting the actual fuel supply and demand. Binding selling prices with the international market and achieving fast turnover of traded goods is a condition for realization of positive financial operating results.
Other market risks, to which the Company is exposed to, are emerging competitors, increase in the number of fuel importers, fluctuations of oil prices on the international market, etc. The Company holds a steady competitive position due to the fact that it possesses one of the largest networks for distribution of petroleum products in the country consisting of strategically located fuel storage facilities and the potential for significant investments. These advantages, as well as the recognition of Naftex Petrol EOOD as one of the largest fuel importers, are the basis for the Company's stable position in the sector.
Financial risks which the Company is exposed to, are discussed in detail in Note 24 to the financial statements as of December 31, 2010.
The events after the date of preparation of the annual financial statements are described in Note 28.
Naftex Petrol EOOD will continue to develop its activities in two main lines of business - wholesale and storage of fuels.
In wholesale, the efforts will be focused on expanding Company's market presence by achieving a continuous growth in volume of sales by increasing the volume of fuels sold to existing and new customers. The goal is, by providing high quality fuels and building relationships with customers based on mutual trust, Naftex Petrol EOOD to become a preferred supplier for the wholesalers and retailers operating on the territory of Bulgaria. Fuels will be mainly imported ensured by the strategic location of some fuel storage facilities operated by the Company (mainly in Burgas and Varna), as well as good communication and established trade relationship with distinguished international suppliers.
The Company's will continue to develop the storage of fuel. A prerequisite for that development remains the undeniable competitive advantage of the Company, deriving from the large storage capacity and the legal requirements imposed by MSCOPPA.
In order to achieve the above mentioned goals, the Management intends to continue investments in modernization, replacement and reconstruction of machinery and equipment located at the fuel storage facilities. Budgeted investments will result not only in adherence to the environmental requirements but also to reduction of technological losses from equipment operation.
In the field of human resources management, the priority will remain focused on development of professional skills. It will be achieved through implementation of planned staff training.
aran Per
Deloitte Audit OOD UIC 121145199 103, Al. Stambolijski Blvd. 1303 Sofia Bulgaria
Делойт Ogum ООД EVK 121145199 бул."Ал.Стамболийски" 103 София 1303 България
Tel: +359 (2) 80 23 300 Fax: +359 (2) 80 23 350 www.deloitte.bg
Ten: +359 (2) 80 23 300 Факс: +359 (2) 80 23 350
This document is a translation of the original in Bulgarian text, in case of divergence the Bulgarian text is prevailing.
To the Owner of Naftex Petrol EOOD
Делойт се отнася ким едно или повече дружества - членове на Делойт Туш Томацу Лимитид, частно дружество с ограничена отговорност (private company limited by диагалнее), регистрирано в Обединеното кралство, както и към мрежата от дружества - иленове, всехо от които в юридически самостоятелно и независило лице.
За детайма информация относно правната структура на Делойт Туш Тома
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/bg/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms
Defoitte Andit
Deloitte Audit OOD
Sylvia Peneva Managing Director Registered Auditor
Sofia May 9, 2011
| Note | December 31, 2010 BGN'000 |
December 31, 2009 BCN'000 restated |
|
|---|---|---|---|
| Revenue | 4 | 1,081,078 | 884,400 |
| Other income | 5 | 2,655 | 908 |
| Cost of goods sold | (1,049,191) | (850,040) | |
| Materials and consumables | 6 | (708) | (589) |
| Hired services | 7 | (15, 446) | (15, 338) |
| Employee benefits expenses | 8 | (4, 537) | (4, 579) |
| Depreciation and amortisation expenses | 13 | (1, 565) | (1, 559) |
| Impairment of assets | 9 | 12 | 200 |
| Other expenses | 10 | (2,885) | (3,008) |
| Finance income | 11 | 49,617 | 2,104 |
| Finance costs | $_{II}$ | (38, 389) | (217,771) |
| Profit (loss) before taxation | 20,641 | (205, 272) | |
| Income tax benefit | 12 | 2,275 | 1,876 |
| Profit (loss) for the year | 22,916 | (203,396) | |
| Total comprehensive income for the year | 22,916 | (203,396) |
These financial statements have been approved on behalf of Naftex Petrol EOOD by:
| Note December 31, 2010 BGN'000 |
December 31, 2009 BGN'000 restated |
January 1, 2009 BGN'000 restated |
||
|---|---|---|---|---|
| Non-current assets | ||||
| Property, plant, equipment and intangible | 13 | |||
| assets | 46,918 | 44,217 | 43,591 | |
| Investments in subsidiaries | 14 | 46,404 | ||
| Investments in associates | 14 | 22,094 | 22,094 | |
| Interest-bearing loans granted | 16 | 34,902 | ||
| Compulsory stock | 15 | 34,939 | 13,398 | 442 |
| Deferred tax assets | 12 | 3,739 | 1,464 | |
| Total non-current assets | 166,902 | 81,173 | 66,127 | |
| Current assets | ||||
| Inventories | 15 | 35,195 | 20,954 | 21,127 |
| Interest-bearing loans granted | 16 | 9,239 | 28,084 | |
| Trade and other receivables | 17 | 27,128 | 41,176 | 37,744 |
| Short-term financial assets | 18 | 363,645 | 319,331 | 503,520 |
| Recoverable income tax | 19 | 104 | 6,000 | |
| Cash | 20 | 4,982 | 9,211 | 15,513 |
| Total current assets | 440,293 | 418,756 | 583,904 | |
| Total assets | 607,195 | 499,929 | 650,031 | |
| Equity | ||||
| Share capital | 21 | 62,757 | 62,757 | 62,757 |
| Retained earnings | (1,185) | (24, 101) | 179,295 | |
| Total equity | 61,572 | 38,656 | 242,052 | |
| Non-current liabilities | ||||
| Interest-bearing loans | 22 | 4,454 | 304,989 | 299,781 |
| Deferred tax liabilities | 970 | |||
| Total non-current liabilities | 4,454 | 304,989 | 300,751 |
$\pm$ $\bullet$
| Note | December 31. 2010 BGN'000 |
December 31, 2009 BGN'000 restated |
January 1, 2009 BGN'000 restated |
|
|---|---|---|---|---|
| Current liabilities | ||||
| Trade and other payables | 23 | 195,271 | 144,877 | 101.455 |
| Interest-bearing loans | 22 | 345,898 | 11,293 | 5,568 |
| Income tax payable | 19 | 114 | ||
| Derivative liabilities | 205 | |||
| Total current liabilities | 541,169 | 156,284 | 107,228 | |
| Total liabilities | 545,623 | 461,273 | 407,979 | |
| Total equity and liabilities | 607,195 | 499,929 | 650,031 |
| Share capital |
Retained earnings |
Total | |
|---|---|---|---|
| BGN'000 | BGN'000 | BGN'000 | |
| Balance as of January 1, 2009 | 62,757 | 179,295 | 242,052 |
| Loss for the year | (203, 396) | (203, 396) | |
| Balance as of December 31, 2009 | 62,757 | (24, 101) | 38,656 |
| Profit for the year | 22,916 | 22,916 | |
| Balance as of December 31, 2010 | 62,757 | (1,185) | 61,572 |
| REAL DETAIL | ||
|---|---|---|
| Q | ||
| ে $\Omega$ Ø, ۵ A |
||
| Yordan Georgiev | Vesselinka Zlateva | |
| Managing Director | Chief Accountant ETRO' |
|
| May 5, 2011 | ||
| enele | ||
| Sylvia Peneva | ||
| Registered auditor | ||
| May 9, 2011 | COLLUMBING AND ORKTOPCKO TIPERIALISTS София ₽ |
|
| Per. Nº033 | ||
| Henour OANT DOP | ||
$\hat{\xi}$
| December 31, 2010 BGN'000 |
December 31, 2009 BGN'000 restated |
|
|---|---|---|
| Cash flows from operating activities | ||
| Proceeds from customers Payments to suppliers VAT and excise duty refunded from the state budget VAT and excise duty paid to the state budget Payments to employees |
1,156,269 (709, 841) 65 (431, 499) (4,236) |
1,020,339 (620, 662) 2,822 (351, 222) (4,521) |
| Cash generated from operations | 10,758 | 46,756 |
| Income tax paid | (218) | (18) |
| Net cash generated by operating activities | 10,540 | 46,738 |
| Cash flows from investing activities | ||
| Payments for financial assets held for trading Proceeds from sale of financial assets held for trading Payments for purchase of property, plant and equipment Proceeds from sale of property, plant and equipment Interest-bearing loans granted, net Interest received Cash flows from dealing with derivatives, net Dividends received |
(3,917) 37 (35, 843) 985 (121) 260 |
(181) 861 (2, 224) 315 (28, 084) 935 (1,180) 766 |
| Net cash used in investing activities | (38, 599) | (28, 792) |
| December 31, 2010 BGN'000 |
December 31, 2009 BGN'000 restated |
|
|---|---|---|
| Cash flows from financing activities | ||
| Proceeds from borrowings Repayment of borrowings Interest and commissions paid |
29,277 (5,364) |
19,863 (4,604) (25, 881) |
| Net cash from (used in) financing activities | 23,913 | (10,622) |
| Net (decrease) increase of cash for the year | (4, 146) | 7.324 |
| Cash at the beginning of the year | 9.117 | 2,364 |
| Foreign exchange rate losses | (138) | (571) |
| Cash at the end of the year (see note 20) | 4,833 | 9,117 |
These financial statements have been approved on behalf of Naftex Petrol EOOD by:
NOTES TO THE FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2010
Naftex Petrol EOOD (the Company) is registered in 1999 in Sofia. According to the court decision from 2001 the Company's headquarters was relocated to Varna with registered address 22A Bratya Miladinovi Street. Effective from April 6, 2005 the sole owner of the Company is Petrol AD (see also Note 21).
The main activities of the Company relate to storage and wholesale of petrol products.
These financial statements are prepared in accordance with International Financial Reporting Standards (IFRS), issued by the International Accounting Standards Board (IASB) and the interpretations, issued by the International Financial Reporting Interpretations Committee (IFRIC), as approved by the European Union (the EU) and applicable in the Republic of Bulgaria.
These financial statements have been prepared on the historical cost basis.
The following amendments to the existing standards issued by the International Accounting Standards Board and adopted by the EU are effective for reporting periods beginning on or after 1 January 2010:
The adoption of the above amendments has not led to any changes in the Company's accounting policies.
The Company has elected not to adopt these standards, revisions and interpretations in advance of their effective dates. The Company anticipates that the adoption of these standards, revisions and interpretations will have no material impact on the financial statements of the Company in the period of initial application.
At present, IFRS as adopted by the EU do not significantly differ from regulations adopted by the International Accounting Standards Board (IASB) except from the following standards, amendments to the existing standards and interpretations, which were not endorsed for use as of the date of authorisation of these financial statements:
The Company anticipates that the adoption of these standards, amendments to the existing standards and interpretations will have no material impact on the financial statements of the Company in the period of initial application.
At the same time, hedge accounting regarding the portfolio of financial assets and liabilities, whose principles have not been adopted by the EU, is still unregulated.
According to the entity's estimates, application of hedge accounting for the portfolio of financial assets or liabilities pursuant to IAS 39: Financial Instruments: Recognition and Measurement, would not significantly impact the financial statements, if applied as at the balance sheet date.
Functional currency is the currency of the primary economic environment in which the entity operates and in which it primarily generates and expends cash. An entity's functional currency reflects the underlying transactions, events and conditions that are relevant to it.
The Company keeps its records and prepares its financial statements in the national currency of the Republic of Bulgaria - the Bulgarian Lev, which is adopted by the Company as its functional currency.
These financial statements are presented in thousand Bulgarian Levs.
Transactions in foreign currency are initially recorded at the official rate of exchange of the Bulgarian National Bank (BNB) as of the date of the transaction. The foreign exchange rate differences, arising upon the settlement of these monetary positions or at restatement of these positions at rates, different from those when initially recorded, are reported in profit or loss for the period in which they arise.
The monetary positions denominated in foreign currency as of December 31, 2010 and 2009 are stated in these financial statements at the closing exchange rate of BNB. The closing exchange rates of BGN against USD as of the respective reporting periods are as follows:
| December 31, 2010: | $1$ USD = BGN 1.47276 |
|---|---|
| December 31, 2009: | $1$ USD = BGN 1.36409 |
The preparation of the financial statements in accordance with IFRS requires Management to make certain accounting estimates and reasonable assumptions that affect some of the reported amounts of assets, liabilities, revenues and expenses. These estimates and assumptions are based on the best estimate of Management, taking into account historical experience and analysis of all factors of significance in the circumstances as of the date of the financial statements. The actual results could differ from those estimates, presented in these financial statements.
A subsidiary is an enterprise that is controlled by the Parent company. Control is the power to govern the financial and operating policies of the subsidiary so as to obtain benefits from its activities.
An associate is an enterprise over which the Parent company is in a position to exercise significant influence, but is neither subsidiary, nor joint venture. Significant influence is the right of participation in, but not control over, the financial and operating policy decisions of the investee.
The Company changes its accounting policy only when the change is required by specific standard or interpretation or results in the financial statements providing reliable and more relevant information about the effects of transactions, other events or conditions on the entity's financial position, financial performance or cash flows. The change in accounting policy resulting from the initial application of a new standard or interpretation is accounted for in accordance with the transitional and concluding provisions in that standard or interpretation. In the absence of such provisions or the changes are made voluntarily, they are applied retrospectively, as the opening balance of each affected component of equity and the other comparative amounts are adjusted as if the new accounting policy had always been applied. When applies a new accounting policy retrospectively, the Company presents in the financial statements supplementary statement of financial position as of the beginning of the earliest comparative period.
Property, plant and equipment and intangible assets are initially carried at acquisition cost, including the purchase price, import duties and non-refundable taxes, as well as any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. After initial recognition, property, plant and equipment and intangible assets are stated at cost less accumulated depreciation/amortisation and impairment loss, if any (see also note $3.2$ ).
When property, plant and equipment include significant items having various useful lives, such items are reported as separate assets.
Subsequent costs, including costs for replacement of components of property, plant and equipment are capitalised in the amount of the asset, if they satisfy the recognition principle. The carrying amount of the replaced item is derecognised in accordance with the requirements of IAS 16 Property, Plant and Equipment, All other subsequent costs are recognised as expenses for the period as incurred.
Depreciation and amortisation are charged over the estimated useful lives, using the straight-line method. Depreciation and amortisation is recognised in profit or loss for the current period.
As of the end of each reporting period the Company's Management review the useful life and the depreciation method of the property, plant, equipment and intangible assets. In case of differences between the expectations and the previous estimates, the changes are made in accordance with IAS 8 Accounting policies, changes in accounting estimates and errors
The assets' estimated useful lives are as follows:
| Useful life | 2010 | 2009 |
|---|---|---|
| Administrative and trade buildings | 25 years | 25 years |
| Machinery, plant and equipment | 2-25 years | $2-25$ years |
| Vehicles | $4-10$ years | 4-10 years |
| Office equipment | 4-6 years | $4-6$ r years |
| Intangible assets | 2-7 years | 2-7 years |
Depreciation of an asset begins in the month following the month in which it is available for use and ceases at the earlier of the date that 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 that the asset is derecognised.
Land, assets under construction and fully depreciated assets are not depreciated.
As of the end of the reporting period, the Company's management estimates if there are indications for impairment of property, plant and equipment, intangible assets and investment property. If such indication exists, the recoverable amount of the asset is estimated. Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit, to which the asset belongs.
The recoverable amount is the higher of the asset's fair value less costs to sell the asset and its value in use. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash generating unit) is reduced to its recoverable amount. Impairment loss is recognised immediately in profit or loss, unless the asset is carried at revalued amount. In this case the impairment loss is treated as a decrease in the revaluation reserve.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.
Inventories are stated at lower of cost and net realisable value. Cost comprises purchase price, transportation, customs duties and other similar costs. Net realisable value represents the estimated selling price less all estimated costs to be incurred in selling.
Upon consumption, the cost of inventories is calculated using the following methods:
| Fuels | $-$ First-in, first-out (FIFO) |
|---|---|
| Aviation fuel | - Specific identification price of each delivery |
| Materials | - Weighted average cost |
A financial instrument is a contract that gives rise to both a financial asset of one enterprise and a financial liability or equity instrument of another enterprise.
Financial assets/liabilities are recognised in the statement of financial position only when the Company becomes a party to the contractual provisions of the instrument. Financial assets are removed from the statement of financial position after the contractual rights for receiving cash flows expired or the asset is transferred and the transfer meets the derecognition requirements under IAS 39 Financial Instruments: Recognition and Measurement. Financial liability is removed from the statement of financial position when, and only when, it is extinguished - that is when the obligation specified in the contract is discharged, cancelled, or expires.
On initial recognition financial assets/liabilities are measured at fair value. Transaction costs, which are directly attributable to the acquisition or issue of the financial assets/liabilities are included in their value, except when the financial assets/liabilities are measured at fair value through profit or loss.
For the purposes of subsequent measurement, in accordance with IAS 39 Financial Instruments: Recognition and Measurement, the Company classifies the financial assets and financial liabilities into the following categories: financial assets or financial liabilities at fair value through profit and loss; held-to-maturity investments; loans and receivables; financial assets available for sale and financial liabilities at amortised cost. Classification under each category depends on the purpose and term of the respective contract. The Company does not apply this classification of assets and liabilities for the purposes of their presentation in the statement of financial position. Data about the respective categories of financial instruments is included in note 24.
A financial asset or liability is classified as held for trading when it is acquired mainly for the purpose of selling or being bought back in the near future or is a derivative instrument, for example, option of futures contracts concluded on international stock exchange markets and shares traded on Bulgarian Stock Exchange.
After its initial recognition financial assets at fair value through profit and loss are measured at fair value as of the date of the preparation of the financial statements and every difference up to this amount is recognised in profit or loss in the period in which it arises.
Loans and receivables are non-derivative financial assets with fixed or determinable terms for settlement, which are not quoted on an active market. The assets from this category are presented in the statement of financial position as receivables on interest loans, trade and other receivables and cash.
After initial recognition, trade receivables and receivables on interest bearing loans are measured at amortised cost by using the effective interest rate method, less impairment loss, if any. Current receivables are not subject to amortisation. Impairment loss is accrued if any objective evidence exists, such as material financial difficulties of the borrower, probability the borrower to be entered into liquidation and other (see note 3.4.4).
For the purposes of the statement of cash flows preparation, cash comprise cash in hand and cash at banks, with the exception of restricted cash, which the Company has no right to use or dispose of.
Financial assets available for sale are non-derivative financial instruments, which are not classified in the previous categories. According to the intention and ability of the Management to realise them in long term or within one year, they are presented in the statement of financial position as long-term or short-term investments and include investments in subsidiaries, investments in associates and minority interests.
In accordance with IAS 27 Consolidated and separated financial statements and IAS 28 Investments in associates, the Company has adopted to report the investments in subsidiaries and associates applying IAS 39 Financial instruments: recognition and measurement.
The regular purchases and sales of financial assets, available for sale are recognised at the trade date the transaction date at which the Company engages to buy or sale the asset. After initial recognition the financial assets, available for sale are measured at fair value as of the date of the financial statements preparation, as any difference is recognised in other comprehensive income. In case of subsequent sale or impairment of financial assets, available for sale, the accumulated differences from fair value adjustments are recognised in profit or loss.
The fair value of financial assets available for sale, which are quoted on an active market, are measured at the stock exchange price as of the date of the financial statements. Financial assets for which there is no stock exchange price on an active market and the fair value of which cannot be reliably measured after their initial recognition are reported at cost less impairment losses, if any (see also note 3.4.4).
As of the end of the reporting period the management of the Company assessed whether there is any objective indication of impairment of all financial assets with the exception of financial assets carried at fair value through profit and loss. A financial asset is considered impaired only when there is objective evidence that the estimated future cash flows have decreased as a result of one or more events that have occurred after the initial recognition of the asset.
When such indications exist for assets carried at cost, the impairment loss is measured as the difference between the carrying amount and the present value of the estimated future cash flows discounted at the current market interest rate for similar assets.
When a decline in the fair value of a financial asset available for sale has been recognised in other comprehensive income and there is objective evidence that the asset is impaired, the cumulative loss, calculated as a difference between the acquisition cost and the current fair value, that had been recognised in other comprehensive income shall be reclassified from equity to profit or loss, even if the financial asset is not written off. Impairment losses recognised for equity instruments available for sale cannot be reversed in profit or loss.
Impairment loss on held-to-maturity investments, loans and receivables carried at amortised cost is measured as the difference between the asset's carrying amount and the present value of the estimated future cash flows discounted at the financial asset's original effective interest rate. Impairment losses are immediately recognised in profit or loss. It is recovered if a subsequent increase of the recoverable amount could be objectively tied to the occurrence of an event after the date on which the impairment loss was recognised.
After initial recognition the Company measures all financial liabilities at amortised cost with the exception of financial liabilities measured at fair value through profit and loss, financial liabilities originating when the transfer of an asset does not meet the conditions for being written-off; agreements for financial guarantees, engagements for granting loans at an interest rate that is lower than the market interest rate. These liabilities are presented in the statement of financial position of the Company as trade and other liabilities and interest-bearing loans.
Trade and other payables are incurred as a result of purchases of goods and services. Current liabilities are not amortised.
Interest-bearing loans are initially recorded at fair value, determined from the cash proceeds less transaction costs. After initial recognition, interest bearing loans are measured at amortised cost, as any difference between the initial cost and maturity cost is recognised in profit or loss over the loan period, using the effective interest method. If no transaction costs have been incurred in negotiating an interest bearing loan, the loan is not subject to amortisation. The same applies to bank overdrafts, where the borrower is entitled to multiple utilisations or repayments of the borrowed funds within a predetermined overdraft limit.
Finance costs, including direct issue costs, are accounted for on an accrual basis using the effective interest method, except for transaction costs on bank overdrafts, which are recognised in profit or loss on a straight line basis over the overdraft period.
The effective interest rate method is a method of calculating the amortised cost of financial asset or liability and of allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or, when appropriate for a shorter period, to the net carrying amount of the financial asset or liability. When calculating the effective interest rate the Company measures the cash flows and takes into consideration all contractual provisions of the financial instrument, excluding eventual future loan impairment losses. The calculation includes fees, transaction costs, premiums or discounts, paid or received by the parties to the contract, which are an integral part of the effective interest rate.
Interest bearing loans are classified as current when they are expected to be settled within a twelve month period after the reporting period.
The share capital of the Company is presented at historical cost at the date of its registration.
As deferred income and expenses in the statement of financial position are presented income and expenses prepaid in the current, but related to succeeding reporting periods - guarantees, insurances, subscriptions and etc.
Income tax expense comprises current income tax and deferred tax.
The current income tax is based on taxable profit for the year by applying the effective tax rate according to the tax legislation as of the date of the financial statements. Deferred tax is the income tax expected to be payable (recoverable) on taxable (deductible) temporary differences. Temporary differences are the differences between the carrying amount of an asset and a liability in the statements of financial position, and the corresponding tax basis. Deferred tax is calculated using the balance sheet liability method. Deferred tax liabilities are recognised for all taxable temporary differences, whereas deferred tax assets are recognised for deductible temporary differences, only to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilised.
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised, based on the information that the Company is provided for as of the date of the issuance of the financial statements. Deferred tax is recognised as an expense or income in profit or loss, except when they relate to items that are recognised outside profit or loss. either in other comprehensive income or directly in equity. In this case the tax is also recognised outside profit or loss either in other comprehensive income or directly in equity.
Deferred tax assets and liabilities are reported on a net basis when they are subject to a unified tax regime.
In accordance with the tax legislation enforceable for the years ended 2010 and 2009, the tax rates applied for the calculation of current tax liabilities of the Company is 10%. For the calculation of the deferred tax assets and liabilities as of December 31, 2010 and 2009, the Company has used a tax rate of 10%.
Revenues and expenses are accounted for on an accrual basis, regardless of cash receipts and payments. They are reported in compliance with the matching concept.
Revenue is recognised at the fair value of the consideration received or expected to be received, less any discounts allowed and includes the economic benefits received by or due to the Company. The amounts gathered on behalf of third parties as tax on sales, such as the value added tax, are excluded from the income. Revenue generated from sale of fuel is reported in its gross amount with the due excise, which is regarded as integral part of the product's price.
Revenue from sales of goods is recognised when:
When the outcome of a transaction involving rendering of services can be estimated reliably, revenue is recognised by the reference of the stage of completion of the transaction at the reporting date. When the outcome of a transaction cannot be estimated reliably revenue is recognised only to the extent of the expenses recognised that are recoverable.
Gain or loss from sales of property, plant, equipment, intangible assets and materials is reported as other income or other expense.
When economic benefits are expected to arise during few reporting periods and their relation with the revenue can be determined generally or indirectly, expenses are recognised in profit or loss on the basis of procedures for systematic and rational distribution.
Profit or loss arising from the exchange of assets is stated at the difference between the fair value of the asset received and the carrying amount of the asset exchanged.
Fees and commissions are recognised on accruals basis, after performance of the service.
Borrowing costs that may be directly attributed to the acquisition, construction or production of an asset, when it takes significant time before it is ready for use or sale, should be capitalised as part of the asset's cost. All other finance income and finance costs are accrued through profit or loss measured at amortised cost by using the effective interest rate method.
Income from equity interests is recognised when the Company is entitled to receive such income.
Expenses for hired assets under operating lease agreements are reported in profit or loss on a straightline basis for the period of the agreement.
Revenue generated from assets, leased out under operating lease agreements, is recognised in profit or loss on a straight-line basis for the period of the agreement. Initial costs, directly related to the conclusion of the lease agreement, are capitalised in the cost of the asset and are recognised as expense on a straight-line basis for the term of the lease agreement.
A sale and leaseback transaction is related to the sale of an asset and the leasing back of the same asset. The accounting treatment of the sale and leaseback transaction depends on the type of the lease contract and the substance of the transaction.
If the sale and leaseback is a finance lease, the transaction is a mean whereby the lessor provides finance to the lessee with the asset as security. If under the terms and conditions of the finance lease contract there is no change in the right of use of the asset by the seller/lessee before and after the transaction, it is not within the scope of IAS 17 Leases and essentially represents financing. In this case the proceeds received from the transaction are presented as liabilities on interest-bearing loans in the statement of financial position, while the direct costs incurred by the lessee during the transaction are deferred for the period of the lease contract.
| December 31, 2010 BGN'000 |
December 31, 2009 BGN'000 |
|
|---|---|---|
| Goods | 1,068,362 | 875,555 |
| Services | 12,716 | 8,845 |
| 1,081,078 | 884,400 |
| December 31, 2010 BGN'000 |
December 31, 2009 BGN'000 restated |
|
|---|---|---|
| Surplus of assets | 2,053 | 643 |
| Insurance claims | 210 | 39 |
| Gain from disposal of property, plant and equipment, including | 106 | |
| Income from disposal of property, plant and equipment | 111 | |
| Carrying amount | (5) | |
| Gain from sale of property, plant and equipment, including: | 69 | |
| Income from sale | 79 | |
| Carrying amount | (1) | (10) |
| Other | 285 | 157 |
| 2,655 | 908 |
| December 31. 2010 BGN'000 |
December 31, 2009 BGN'000 |
|
|---|---|---|
| Electricity and heating | 490 | 360 |
| Office consumables | 59 | 73 |
| Advertising materials | 45 | 27 |
| Spare parts | 21 | 16 |
| Water | 15 | 18 |
| Fuels and lubricants | 8 | |
| Work clothes | 3 | 25 |
| Other | 68 | 62 |
| 708 | 589 |
| December 31, 2010 BGN'000 |
December 31, 2009 BGN'000 |
|
|---|---|---|
| Transport | 7.313 | 7,132 |
| Security | 1,523 | 1.323 |
| Maintenance and repairs | 1,493 | 1,052 |
| Holding fee | 1,331 | 1,291 |
| Rents | 962 | 802 |
| Consulting and training | 742 | 998 |
| Insurances | 642 | 585 |
| Fees and commissions | 608 | 1,086 |
| Software licenses | 585 | 673 |
| Communications | 150 | 264 |
| Advertising | 18 | 33 |
| Other | 79 | 99 |
| 15,446 | 15,338 |
| December 31, 2010 BGN'000 |
December 31, 2009 BGN'000 |
|
|---|---|---|
| Wages and salaries | 3,361 | 3,315 |
| Social security contributions | 1,176 | 1,264 |
| 4,537 | 4,579 |
| December 31. 2010 BGN'000 |
December 31, 2009 BGN'000 |
|
|---|---|---|
| Impairment of trade and other receivables | 49. | |
| Reversed impairment of inventories | (15) | 249) |
| (12) | (200) |
| December 31, 2010 BGN'000 |
December 31, 2009 BGN'000 restated |
|
|---|---|---|
| Scrap, shortage and assets written-off | 2,131 | 2,217 |
| Penalties and indemnities | 319 | 183 |
| Local taxes and taxes on expenses | 157 | 163 |
| Business trips | 125 | 113 |
| Entertainment expenses and sponsorship | 77 | 177 |
| Loss on sale of property, plant and equipment, including | 133 | |
| Income from sale | (235) | |
| Carrying amount | 368 | |
| Other | 76 | 22 |
| 2,885 | 3,008 |
| December 31, 2010 BGN'000 |
December 31, 2009 BGN'000 restated |
|
|---|---|---|
| Finance income | ||
| Interest income, including: Interest income on loans granted Interest income on trade receivables |
5,043 3,950 984 109 |
1,338 529 571 |
| Other interest income Dividends received |
260 | 238 766 |
| Gain from dealings with financial assets, held for trading, including: Revaluation at fair value, net |
44,314 44,314 |
|
| 49,617 | 2,104 | |
| Finance costs | ||
| Interest costs, including: Interest expenses on bank loans Interest expenses on trade loans Interest expenses on trade and other payables |
(31, 382) (300) (29, 892) (1, 190) |
(30, 812) (319) (29, 441) (1, 052) |
| Loss from dealings with financial assets, held for trading, including: Gain from sales Revaluation at fair value, net |
(183, 509) 41 (183, 550) |
|
| Loss from dealings with derivatives, including: Loss from sales Revaluation at fair value, net |
(121) (121) |
(1,196) (1, 401) 205 |
| Foreign exchange rate loss, net | (4, 532) | (408) |
| Bank fees, commissions and other finance costs | (2,354) | (1, 846) |
| (38, 389) | (217, 771) | |
| Finance income (costs), net | 11,228 | (215, 667) |
Income tax recognised in profit or loss includes the amount of current and deferred income taxes in accordance with the requirements of IAS 12 Income Taxes
| December 31. 2010 BGN'000 |
December 31, 2009 BGN'000 |
|
|---|---|---|
| Current tax expense | 132 | |
| Income tax expense as a result of an audit act | 426 | |
| Change in deferred taxes, including | (2,275) | (2, 434) |
| Temporary differences originated during the year | (3,366) | (2, 919) |
| Temporary difference recognised during the year | 1,091 | 485 |
| Total tax (income) | (2, 275) | (1, 876) |
The reconciliation between accounting loss and tax benefit or tax expense, and the calculation of the effective tax rate as of December 31, 2010 and 2009 are as follows:
| December 31, 2010 BGN'000 |
December 31, 2009 BGN'000 |
|
|---|---|---|
| Accounting profit (loss) Applicable tax rate |
20,641 10% |
(205, 272) 10% |
| Income tax at the applicable tax rate | 2,064 | (20, 527) |
| Effect from revaluation of financial assets, traded on regulated market Tax effect on permanent differences Tax effect on other differences |
(4, 431) 92 |
18,355 178 118 |
| Tax (income) | (2,275) | (1, 876) |
| Effective tax rate |
Tax effect on permanent differences as of December 31, 2010 is calculated on the amount of BGN 43,389 thousand which represents mainly revaluation of financial assets held for trading.
Deferred tax asset reported in the statement of financial position occurs as a result of income taxes accrued on deductable temporary differences, the effect from which is as follows:
دي.
سياسي ڪي س
| December 31, 2010 | December 31, 2009 | ||||
|---|---|---|---|---|---|
| Temporary difference BGN'000 |
Tax effect BGN'000 |
Temporary difference BGN'000 |
Tax effect BGN'000 |
||
| Balance at the beginning of the period | |||||
| Property, plant and equipment Tax loss to be carried forward |
8 | 15 1,981 |
1 198 |
||
| Unused annual paid leave | 257 | 27 | 233 | 24 | |
| Investments in subsidiaries and associates | (16, 869) | (1,687) | (16, 869) | (1,687) | |
| Subsequent measurement of assets | 206 | 20 | |||
| Excess of interest payments | 28,993 | 2,899 | |||
| Impairment of assets | 2,247 | 224 | 4,739 | 474 | |
| Other temporary differences | 9 | 1 | |||
| 14,645 | 1,464 | (9,694) | (970) | ||
| Originated during the period | |||||
| Property, plant and equipment | 69 | 7 | |||
| Tax loss to be carried forward | 33,270 | 3,327 | |||
| Unused annual paid leave | 46 | 5 | 188 | 19 | |
| Excess of interest payments | 28,993 | 2,899 | |||
| Impairment of assets | 3 | ||||
| Other temporary differences, including unpaid personal income |
270 | 27 | 9 | ||
| 33,655 | 3,366 | 29,193 | 2,919 | ||
| Recognised during the year | |||||
| Property, plant and equipment | (7) | (1) | |||
| Tax loss to be carried forward | (1,981) | (198) | |||
| Unused annual paid leave | (127) | (13) | (164) | (16) | |
| Subsequent measurement of financial assets | (206) | (20) | |||
| Excess of interest payments | (10, 232) | (1,023) | |||
| Impairment of assets | (544) | (54) | (2, 495) | (250) | |
| Other temporary differences, including | |||||
| unpaid personal income | (9) | (1) | (1) | ||
| (10, 912) | (1,091) | (4, 854) | (485) | ||
| Balance at the end of the period | |||||
| Property, plant and equipment | 77 | 7 | 8 | ||
| Tax loss to be carried forward | 33,270 | 3,327 | |||
| Unused annual paid leave | 176 | 19 | 257 | 27 | |
| Investments in subsidiaries and associates Subsequent measurement of assets |
(16, 869) | (1,687) | (16, 869) | (1,687) | |
| Excess of interest payments | 18,761 | 1,876 | 28,993 | 2,899 | |
| Impairment of assets | 1,703 | 170 | 2,247 | 224 | |
| Other temporary differences, including | |||||
| unpaid personal income | 270 | 27 | 9 | ||
| 37,388 | 3,739 | 14,645 | 1,464 |
The Company is allowed to carry forward its tax loss at the amount of BGN 33,270 thousand by 2015 and could recognise for tax purposes by 2014 unrecognised interests expenses resulting from application of the thin capitalisation regime. The Management has considered that in the next five years the Company will realise enough profits to utilise the originated loss.
| Land | Buildings Plant and | equipment | Vehicles | Other Assets under assets construction |
Intangible assets |
Total | ||
|---|---|---|---|---|---|---|---|---|
| BGN'000 | BGN'000 | BGN'000 | BGN'000 | BGN'000 | BGN'000 | BGN'000 | BGN'000 | |
| Cost | ||||||||
| Balance at January 1, 2009 |
13,507 | 7,286 | 22,506 | 171 | 510 | 5,085 | 139 | 49,204 |
| Additions | 59 | 2,504 | 2,563 | |||||
| Transfers | 2,142 | $\overline{c}$ | (2, 144) | |||||
| Disposals | (8) | (490) | (19) | (8) | (525) | |||
| Balance at December 31, 2009 |
13,507 | 7,278 | 24,217 | 152 | 512 | 5,437 | 139 | 51,242 |
| Additions | 283 | 292 | 100 | 3 | 3,590 | $\tau$ | 4,275 | |
| Transfers | 794 | 1 | (795) | |||||
| Disposals | (7) | (3) | (1) | (11) | ||||
| Balance at | ||||||||
| December 31, 2010 | 13,790 | 7,563 | 25,108 | 152 | 516 | 8,231 | 146 | 55,506 |
| Accumulated depreciation and amortisation |
||||||||
| Balance at January 1, 2009 |
1,019 | 4,091 | 55 | 373 | 75 | 5,613 | ||
| Charged for the period |
291 | 1,172 | 19 | 56 | 21 | 1,559 | ||
| Disposals for the period |
$\ddot{\phantom{1}}$ | (137) | (10) | (147) | ||||
| Balance at December 31, 2009 |
$\bullet$ | 1,310 | 5,126 | 64 | 429 | 96 | 7,025 | |
| Charged for the period |
293 | 1,199 | 17 | 33 | 23 | 1,565 | ||
| Disposals for the period |
(1) | (1) | - | $\blacksquare$ | (2) | |||
| Balance at December 31, 2010 |
1,602 | 6,324 | 81 | 462 | 119 | 8,588 | ||
| Carrying amount at January 1, 2009 |
13,507 | 6,267 | 18,415 | 116 | 137 | 5,085 | 64 | 43,591 |
| Carrying amount at December 31, 2009 |
13,507 | 5,968 | 19,091 | 88 | 83 | 5,437 | 43 | 44,217 |
| Carrying amount at December 31, 2010 |
13,790 | 5,961 | 18,784 | 71 | 54 | 8,231 | 27 | 46,918 |
As of December 31, 2010 assets under construction do not include advances paid to suppliers in relation to purchase of non-current assets. As of December 31, 2009 the advances paid to suppliers are BGN 308 thousand.
Land and buildings with carrying amount of BGN 8,438 thousand (2009: BGN 1,990 thousand) have been pledges as collateral on bank loans granted to the Ultimate parent company and other related parties (see also note 22).
| Investments in subsidiaries | Activity | December, 31 2010 | December. 31 2009 | ||
|---|---|---|---|---|---|
| BGN'000 | $%$ of capital |
BGN'000 | $%$ of capital |
||
| Eurocapital Bulgaria AD | Property | ||||
| management | 46,149 | 89.97% | 22.094 | 36.92% | |
| Jurex Consult AD | Legal services | 205 | 79.95% | ||
| Naftex Security EAD | Security | 50 | 100.00% | $\overline{\phantom{0}}$ | |
| 46,404 | 22,094 |
In November 2010 under a frame contract the Company acquires from the Ultimate parent company 80% of the share capital of Jurex Consult AD equals to 1,599 shares at the amount of BGN 205 thousand and 100% of the share capital of Naftex Security EAD equals to 50 shares at the amount of BGN 50 thousand. According to the same contract, further 317,455 shares of Eurocapital Bulgaria AD were acquired at the amount of BGN 24,055 thousand. Thus the Company increased its participation in Eurocapital Bulgaria AD from 36.92% to 89.97% and the investment was reclassified from investments in associates to investments in subsidiaries (see also note 28).
| December 31. 2010 BGN'000 |
December 31, 2009 BGN'000 restated |
January 1, 2009 BGN'000 restated |
|
|---|---|---|---|
| Goods, including | 34,771 | 20,531 | 20,704 |
| Fuels | 34,299 | 19,880 | 19,915 |
| Lubricants and other goods | 472 | 651 | 789 |
| Materials | 424 | 423 | 423 |
| 35,195 | 20,954 | 21.127 |
As of December 31, 2010 impairment loss of the available aviation fuel at the amount of BGN 15 thousand has been reversed due to increase of market prices (see also note 9).
As of December 31, 2010 the Company stores compulsory stock under the Mandatory Stocks of Crude Oil and Petroleum Products Act (MSCOPPA) at the amount of BGN 25,929 thousand and also stock of counterparties under rent contracts at the amount of BGN 9,010 thousand. As of December 31, 2010 these inventories are presented as non-current assets amounting to BGN 34,939 thousand (2009: BGN 13,398 thousand: 2008: BGN 442 thousand).
Available petrol products serve as collateral on bank borrowings utilised by the Company (see also note $22$ ).
| December 31. 2010 BGN'000 |
December 31, 2009 BGN'000 |
|
|---|---|---|
| Non-current liabilities | ||
| Interest-bearing loans to related parties | 34,902 | |
| Current liabilities | ||
| Interest-bearing loans to related parties | 9,239 | 28,084 |
| 44,141 | 28,084 |
The terms of the interest-bearing loans are disclosed in note 25.
| December 31, 2010 BGN'000 |
December 31, 2009 BGN'000 |
|
|---|---|---|
| Receivables from customers, including: | 12,472 | 24,329 |
| Initial cost | 14,191 | 26,427 |
| Allowance for doubtful debts | (1,719) | (2,098) |
| Related party receivables | 11,930 | 14,304 |
| Litigations and writs, including: | 2,585 | 2,459 |
| Initial cost | 2,601 | 2,476 |
| Allowance for doubtful debts | (16) | (17) |
| Recoverable taxes, including: | 5 | 4 |
| Excise duty | 4 | 4 |
| Other taxes | ||
| Deferred expenses | 124 | 66 |
| Other | 12 | 14 |
| 27,128 | 41.176 |
Related party receivables are further disclosed in note 25.
In compliance with the adopted policy, the Company grants credit period to some of its customers after which penalty interest is charged on the outstanding balance for the delay according to the terms of the agreement.
As of December 31, 2010 trade and other receivables include overdue receivables at the amount of BGN 11.258 thousand. Despite of the payments delay, the Company considers that there are no significant changes in the creditworthiness of the customers and the receivables are recoverable. Allowance for doubtful debts at the amount of BGN 379 thousand was written off due to expiry of five years from its originating and the Management has assessed that there is no probability for repayment. In conjunction with overdue receivables at the amount of BGN 995 thousand, the Company entered into court proceedings. In addition, as of the date the financial statements are approved for issuance, 68% of the trade receivables have been recovered.
Ageing analysis of the overdue, but not impaired receivables is presented in the table below:
| December 31, 2010 BGN'000 |
December 31, 2009 BGN'000 |
|
|---|---|---|
| Up to 30 days | 4,378 | 15,223 |
| From 31 to 120 days | 2,732 | 794 |
| From 121 to 210 days | 1,877 | 328 |
| Over 211 days | 2,271 | 1,320 |
| 11,258 | 17,665 |
Company's management believes that the carrying amount of trade and other receivables approximates their fair value as of December 31, 2010 and 2009.
As of December 31, 2010 and 2009 shares of the Parent Company acquired as a result of transactions on the Bulgarian Stock Exchange at the amount of BGN 363,645 thousand and BGN 319,331 thousand, respectively, have been recognised as short-term financial assets. As of the end of the reporting period the shares are revalued at stock price and the effect is reported in the statement of comprehensive income (see also notes 11 and 28).
The excess of the paid corporate income tax during the current period over the current tax liabilities at the amount of BGN 104 thousand is presented in the statement of financial position as recoverable income tax.
The recoverable income tax is formed as follows:
| December 31 2010 BGN'000 |
December 31 2009 BGN'000 |
|
|---|---|---|
| Payable (recoverable) income tax | ||
| at the beginning of the period | 114 | (6,000) |
| Corporate income tax charged | 132 | |
| Corporate income tax paid | (218) | (18) |
| Offset of corporate tax with VAT | 5,574 | |
| Adjusted corporate tax | 426 | |
| Income tax recoverable (payable) at the end of the year | (104) | 114 |
| December 31, 2010 BGN'000 |
December 31, 2009 BGN'000 |
|
|---|---|---|
| Cash at bank accounts Cash on hand |
4,739 94 |
9,015 102 |
| Cash as per the cash flows statement | 4,833 | 9,117 |
| Restricted cash | 149 | 94 |
| Cash as per the statement of financial position | 4,982 | 9.211 |
Restricted cash as of December 31, 2010 comprises cash at the amount of BGN 149 thousand serving as collateral on excise liabilities. As of December 31, 2009 restricted cash at the amount of BGN 94 thousand includes collateral for the excise duty payable and bank guarantees.
The share capital of the Company is presented at nominal value, at the amount of BGN 62,757 thousand, distributed into 6,275,733 shares with a nominal value of BGN 10 each.
As of the date of the accompanying financial statements, the sole owner of the share capital is Petrol AD.
| December 31, 2010 BGN'000 |
December 31, 2009 BGN'000 |
|
|---|---|---|
| Non-current payables | ||
| Sale and leaseback liabilities | 4.454 | |
| Trade loans from related parties | 304,989 | |
| 4,454 | 304,989 | |
| Current payables | ||
| Bank loans | 10,002 | 9,998 |
| Sale and leaseback liabilities | 312 | |
| Trade loans from related parties | 335,584 | 1,295 |
| 345,898 | 11,293 | |
| 350,352 | 316,282 |
The effective interest rate on bank loans for 2010 and 2009 varies between 4% and 10%. Further information about the interest rate risk, the exchange rate risk and the liquidity risk, at which the received interest-bearing loans expose the Company, is presented in note 24.
The Company's loans have been collateralised with pledge of goods, receivables, cash at current account, book entry registered securities of the Parent company, as well as a promissory note (see also notes $15$ ).
In 2010 the Company has signed a leaseback agreement for immovable property with carrying amount of BGN 229 thousand with payback period of 10 years. The amount of BGN 312 thousand, payable in 2011, is presented as a non-current liability.
As of December 31, 2010 the Company has signed an agreement for short-term bank loan - overdraft at the amount of BGN 10,002, as the unutilised (undrawn) amount is BGN 2 thousand. The contractual fixed annual interest rate is 9%. As collateral in favour of the bank, pledge on receivables and a guarantee have been concluded.
Related party payables are disclosed in note 25.
| December 31, 2010 BGN'000 |
December 31, 2009 BGN'000 |
|
|---|---|---|
| Payables to suppliers | 67,999 | 57,264 |
| Related parties payables | 68,926 | 49,412 |
| Tax payables, including: | 40,165 | 36,113 |
| VAT | 13,557 | 12,962 |
| Excise duty and other taxes | 26,608 | 23,151 |
| Advances received | 17,422 | 1,687 |
| Payables to personnel and to social security funds | 548 | 257 |
| Other | 211 | 144 |
| 195,271 | 144,877 |
Related party payables are disclosed in note 25.
Excise duty liabilities at the amount of BGN 26,576 thousand and liabilities to supplier at the amount of BGN 18,549 thousand are collateralised with assets owned by related parties.
The Company accrues provisions for unused paid annual leaves of employees in compliance with IAS 19 Employee Benefits. The movements of these provisions are as follows:
| December 31, 2010 BGN'000 |
December 31, 2009 BGN'000 |
|
|---|---|---|
| Balance at the beginning of the year | 257 | 233 |
| Accrued during the year | 46 | 188 |
| Utilised during the year | (127) | (164) |
| Balance at the end of the year, incl.: | 176 | 257 |
| Annual leaves | 152 | 222 |
| Social security contributions | 24 | 35 |
The balance at the end of the year is presented in the statement of financial position together with the current payables to the personnel.
The Company's management believes that the carrying amount of the Company's current liabilities in the statement of financial position approximates their fair value.
Carrying amounts of assets and liabilities as of December 31, 2010 and 2009 by categories are set in accordance with IAS 39 Financial instruments: Recognition and Measurement and are presented in the following tables:
| December 31, 2010 BGN'000 |
Note | Fair value through profit and loss |
Loans and receivables |
Available for sale |
Total |
|---|---|---|---|---|---|
| Investments in subsidiaries | 14 | 46,404 | 46,404 | ||
| Interest-bearing loans granted, net | 16 | 44,141 | 44,141 | ||
| Trade and other receivables, net | 17 | 26,987 | 26,987 | ||
| Short-term investments | $18\,$ | 363,645 | 363,645 | ||
| Cash | 20 | 4,982 | 4,982 | ||
| 363,645 | 76,110 | 46,404 | 486,159 | ||
| December 31, 2009 BGN'000 |
Note | Fair value through profit and loss |
Loans and receivables |
Available for sale |
Total |
| Investments in associates | 14 | 22,094 | 22,094 | ||
| Interest-bearing loans granted, net | 16 | 28,084 | 28,084 | ||
| Trade and other receivables, net | 17 | 41,090 | 41,090 | ||
| Short-term investments | 18 | 319,331 | 319,331 | ||
| Cash | 20 | 9,211 | 9,211 | ||
| 319,331 | 78,385 | 22,094 | 419,810 | ||
| December 31, 2010 BGN'000 |
Note | Fair value through profit and loss |
At amortised cost |
Total | |
| Trade and other payables | 23 | 136,925 | 136,925 | ||
| Interest-bearing loans | 22 | 350,352 | 350,352 | ||
| 487,277 | 487,27 | ||||
| December 31, 2009 BGN'000 |
Note | Fair value through profit and loss |
At amortised cost |
Total | |
| Trade and other payables | 23 | 106,820 | 106,820 | ||
| Interest-bearing loans | 22 | 316,282 | 316,282 | ||
| 423,102 | 423,102 |
Company's use of financial instruments exposes it to market, credit and liquidity risk. The current note presents information about risk management goals, policies and processes, as well as equity management. The Ultimate parent company's Board of Directors sets strategic guidelines for financial risk management as the operative implementation of the adopted policies and the realisation of risk management processes are carried out by the Cash Flows Department and Global Markets Department of Petrol Holding AD.
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices and it may occur as currency, interest or other price risk. In view of the nature of the business, the Company is exposed to price, currency and interest risk.
The Company is exposed to the risk of frequent changes in the fuel prices. In order to decrease its sensitivity to the changes in the fuel prices, the Company updates daily its selling prices in accordance with the geographical region and the prices of the main competitors.
Investments in equity instruments classified as financial assets, held for trading (at fair value though profit and loss) expose the Company to price risk.
Equity instruments sensitivity analysis to the price risk is calculated only for those of them for which stock quotations exist. The net profit for the current year would have increased/decreased by BGN 40,001 thousand in case that the value of the index SOFIX had increased/decreased by 11 %, and all other variable are constant, due to revaluations of financial assets, reported at fair value through profit or loss.
The Company uses the following hierarchy for presentation of the methods used in measurement of the fair value of the financial instruments:
The Company classifies its current financial assets in Level 1 according to the hierarchy for measurement of financial instruments at fair value.
The Company concludes transaction in currency, other that its functional currency, which exposes it to risk, related to possible fluctuations in exchange rates. Such risk arises mainly from fluctuations in the exchange rate of US dollars (USD) as the Company concludes purchases and has liabilities under received interest-bearing loans, denominated in USD. Transactions, concluded in EURO, do not expose the Company to risk due to the fact that since January 1, 1999 the Bulgarian lev is fixed to this currency.
Financial assets and liabilities, denominated in USD, are presented in the following table:
| December 31, 2010 | December 31, 2009 | ||||
|---|---|---|---|---|---|
| USD'000 | BGN'000 | USD'000 | BGN'000 | ||
| Financial assets | |||||
| Trade and other receivables | 27 | 40 | 289 | 394 | |
| Cash | 847 | 1,247 | 47 | 64 | |
| 874 | 1,287 | 336 | 458 | ||
| Financial liabilities | |||||
| Trade payables | (50, 836) | (74, 869) | (21,062) | (28, 730) | |
| Interest-bearing loans | (11,000) | (16,200) | |||
| (61, 836) | (91,069) | (21, 062) | (28, 730) |
The sensitivity analysis to the currency risk has been estimated with an 11% change of the US dollar to the Bulgarian lev. Management believes that this is a reasonable and plausible change based on a statistical analysis of exchange rate dynamics in the past year, conducted on the basis of daily deviation, calculated for 250 days. If as of December 31, 2010 USD rate had gone up/gone down by 11% towards BGN and all other risk variables held constant, the profit after taxes would have increased/decreased by BGN 8,890 thousand, mainly as a result of exchange rate differences from revaluations of trade payables and loan from related party in USD. The result after taxes for 2010 is more sensible to the change in USD exchange rate than the result for 2009 due to increased exposures of loans and trade payables in USD.
The Company is exposed to interest rate risk since part of its received bank loans bear variable interest rates, contracted at some base interest rate plus an interest rate margin.
The Company performs constant monitoring and analysis of the main interest-bearing expositions by developing different scenarios for optimisation, for example refinancing, renewing existing loans, alternative financing (sale and leaseback agreements of assets) and the Company calculates the impact of the interest rate change within a certain range on the financial result.
As of the date of the accompanying financial statements, the profile of interest-bearing financial instruments is as follows:
| December 31, 2010 BGN'000 |
December 31, 2009 BGN'000 |
|
|---|---|---|
| Fixed interest rate instruments | ||
| Financial assets | 44,141 | 28,084 |
| Financial liabilities | (345, 586) | (306, 284) |
| (301, 445) | (278, 200) | |
| Variable interest rate instruments | ||
| Financial assets | ||
| Financial liabilities | (4,766) | (9,998) |
| (4,766) | (9,998) |
Interest rate risk sensitivity analysis is based on the assumption that the variable interest rate positions as of the reporting date have existed at the same amount during the entire year and the reasonable and plausible increase/decrease of the interest rate is 8 base points. If the interest rates had been higher/lower by 8 base points, and all other variables were constant, the profit after tax for the year would have been BGN 3 thousand lower/ higher. The Company's sensitivity towards the interest rate risk reduces in the current year mainly due to the decrease in the interest-bearing loans, agreed with variable interest rate.
Credit risk is the risk for one of the parties on the financial instrument to fail to perform its obligation and in this way to cause loss for the other. Financial assets which potentially expose the Company to credit risk are mainly receivables on sales and granted interest loans. The Company is mainly exposed to credit risk in case the customers do not meet their payment obligations. The Company's policy in this area is focused on performing sales of goods and services on credit to clients with good credibility and on using adequate collateral to limit the risk of financial losses. The customers' credibility is assessed by taking into consideration their financial position, previous experience and other factors. The Company has set credit limits and monitors their observance on a regular basis.
The Company cooperates with large number of clients - mostly retail and wholesale merchants of fuel. About 83% of the Company's revenue for the current year is generated with six major clients. As of December 31, 2010 the receivables from sales with these customers amount to BGN 7,038 thousand which is 29% from the total net amount of the receivables from customers (including from related parties).
Credit risk on cash at bank account is minimum as the Company works only with banks with high credit rating.
The carrying amount of the financial assets, net of impairment losses, presents to a maximum extent the credit risk to which the Company is exposed.
Liquidity risk is the risk for the Company to fail to settle its financial liabilities when they become due. The policy in this area is focused on ensuring the availability of enough liquid resources to serve the liabilities when they become due including in emergency and unforeseen situations. The goal of management is to maintaining a permanent balance between continuity and flexibility of the financial resources by using different forms of financing. Management of liquidity risk includes maintenance of enough cash, negotiation of adequate credit lines, preparation, analysis and update forecasts of cash flows.
The table below presents the agreed maturity of the financial liabilities on the basis of the earliest date on which the Company can be obligated to repay them. The table shows the undiscounted cash flows which include principals and interests:
| December 31, 2010 BGN'000 |
Fair value | Agreed cash flows |
Up to 1 year |
From 1 to 2 years |
From 3 to 5 years |
Over 5 years |
|---|---|---|---|---|---|---|
| Bank loans | 10,002 | 10,117 | 10,117 | |||
| Sale and leaseback liabilities Trade loans from related |
4,766 | 6,965 | 638 | 697 | 2,089 | 3,541 |
| parties | 335,584 | 155,028 | 155,028 | |||
| Trade and other payables | 136,925 | 134,430 | 134,430 | |||
| 487,277 | 306,540 | 300,213 | 697 | 2,089 | 3,541 | |
| December 31, 2009 | Fair | Agreed | Up to | From 1 | From 3 | Over 5 |
| BGN'000 | value | cash flows | 1 year | to 2 years | to $5$ years |
years |
| Bank loans Trade loans from related |
9,998 | 10,209 | 10,209 | |||
| parties | 306,284 | 366,721 | 37,587 | 329,134 | ||
| Trade and other payables | 99,502 | 99,502 | 99,502 | |||
| 415,784 | 476,432 | 147,298 | 329,134 |
On April 30, 2011 the increase in the Company's equity at the expense of the loan from the Parent company was registered, and in this connection the agreed cash flows up to 1 year related to trade loans from related parties and trade and other payables are reduced with the amount of BGN 197,505 thousand and 2,495 thousand respectively.
The Company manages its equity in such a manner so as to ensure its functioning as a going concern. The objective of the management is to retain the trust of the investors, creditors and the market and to guarantee the future development of the Company.
The equity of the Company as of December 31, 2010 is formed by share capital at the amount of BGN 62,757 and accumulated loss of BGN 1,185 thousand as well as by loan granted by the parent company at the total amount of BGN 304,989 thousand (2009: BGN 304,989 thousand) and a loan at the amount of BGN 30,595 thousand (2009: BGN 1,295 thousand) granted by related parties. As of the same date the liabilities under interest-bearing loans, granted by unrelated parties amount to BGN 14,768 thousand (2009: BGN 9,998 thousand). The Management of the Parent company determines the amount of the necessary equity in proportion to the risk level, which is inherent to the Company's activity.
The ratios of net debt to adjusted equity for 2010 and 2009 are as follows:
| December 31. 2010 BGN'000 |
December 31, 2009 BGN'000 |
|
|---|---|---|
| Debt (total loans and finance lease liabilities) | 350,352 | 316,282 |
| Cash and cash equivalents (see note 20) | (4,982) | (9,211) |
| Net debt | 345,370 | 307,071 |
| Equity | 61,572 | 38,656 |
| Loans received from the Parent company | 304,989 | 304,989 |
| Adjusted equity | 366,561 | 343,645 |
| Debt to equity ratio | 0.94 | 0.89 |
The related parties over which the Company is in a position to exercise significant influence are disclosed in note 14.
Transactions with the following related parties were performed in the reported period:
| ultimate controlling company |
|---|
| parent company |
| company under common control |
| company under common control |
| company under common control |
| subsidiary from November 30, 2010 |
| company under common control |
| subsidiary from November 30, 2010 |
| company under common control |
| company under common control |
| company under common control |
| company under common control |
| company under common control |
| company under common control |
| company under common control |
| company under common control |
| subsidiary from November 30, 2010 |
| company under common control until April 30, 2009 |
| company under common control until September 3, 2009 |
| company under common control |
| company under common control |
| company under common control |
| company under common control |
| company under common control |
| Associate of Petrol Holding AD until May 1, 2009 |
| Associate of Petrol Holding AD |
The transactions performed relate primarily to:
The volume of the transactions performed with related parties in 2010 and 2009 are as follows:
| Related party | December 31, 2010 BGN'000 |
December 31,2009 BGN'000 |
December 31,2010 BGN'000 |
December 31, 2009 BGN'000 |
|---|---|---|---|---|
| Sale of goods and services |
Sale of goods and services |
Purchase of goods and services |
Purchase of goods and services |
|
| Ultimate controlling company | 8 | 3 | 26,255 | 2,251 |
| Parent company | 399,574 | 380,795 | 871 | 644 |
| Subsidiaries | 1,805 | |||
| Companies under common control | 4,454 | 2.332 | 264,182 | 187,104 |
| 404,036 | 383,130 | 293,113 | 189,999 | |
| Related party | December 31, | December 31, | December 31, | December 31, |
| 2010 | 2009 | 2010 | 2009 | |
| BGN'000 | BGN'000 | BGN'000 | BGN'000 | |
| Finance | Finance | Finance | Finance | |
| income | income | cost | cost | |
| Ultimate controlling company | 3,950 | 529 | 16 | |
| Parent company | 698 | 465 | 29,378 | 29,425 |
| Subsidiaries | 260 | |||
| Companies under common control | 34 | 792 | 354 | |
| Key management personnel | 163 | |||
| 4,942 | 1,786 | 29,895 | 29,441 |
As of December 31, 2010 and 2009 the unsettled balances with related parties are as follows:
| Related party | December 31, 2010 BGN'000 Receivables |
December 31. 2009 BGN'000 Receivables |
December 31, 2010 BGN'000 Payables |
December 31, 2009 BGN'000 Payables |
|---|---|---|---|---|
| Ultimate controlling company, incl.: | 43,323 | 28,622 | 384 | 65 |
| Long-term interest-bearing loans | 30,727 | |||
| Short-term interest-bearing loans | 8,935 | 28,084 | ||
| Parent company, incl.: | 3,107 | 12,430 | 314,545 | 312,402 |
| Long-term interest-bearing loans | 304,989 | |||
| Short-term interest-bearing loans | 304,989 | |||
| Subsidiaries | 11 | 225 | ||
| Companies under common control, | ||||
| incl | 9,630 | 1,336 | 74,673 | 41,934 |
| Long-term interest-bearing loans | 4,175 | |||
| Short-term interest-bearing loans | 304 | 16,200 | ||
| Key management personnel, incl.: | 14,683 | 1,295 | ||
| Short-term interest-bearing loans | 14,395 | 1,295 | ||
| 56,071 | 42,388 | 404,510 | 355,696 |
As of December, 2010 the Company has granted to its Ultimate controlling company unsecured interest bearing loan at the amount of BGN 30,727 thousand (2009: BGN 28,084 thousand) with interest rate of 9.5%, maturity in 2012 and maximum allowed amount of BGN 60,000 thousand (2009: BGN 30,000 thousand).
For a period of one year the Company has granted to the Ultimate controlling company interest bearing loan at the amount of BGN 8,935 thousand secured with financial assets and with 9% interest rate.
The Company has granted long-term loan to related party at the amount of BGN 4,890 thousand with interest rate 8% and maturity in 2021. For the securitisation of the receivable has been established in Company's favour a registered pledge under the Registered pledges Act over assets owned by the borrowing related party. As of December 31, 2010 the utilised amount of the loan is BGN 4,479 thousand, as the amount of 304 thousand is payable in the next reporting period. In January 2011 is utilised the remaining balance at the amount of BGN 411 thousand.
In 2010 the Company reclassified the received interest-bearing loan from the Parent company at the amount of BGN 304,989 thousand from long-term to short-term interest-bearing loan. The maturity of the loan is in October 2011, with maximum allowed amount of BGN 307,500 and contractual annual interest rate 9.5%.
In 2010 the Company has received short term loan of money from a company under common control at the amount of BGN 16,200 thousand, with annual interest rate 10.5%. The maturity of the loan is in 2011 and the maximum allowed amount is up to USD 13,500 thousand. The Company has established in favour of the bank financing the company under common control a pledge of plant and equipment and a mortgage of property.
In 2010 the Company has received a short-term unsecured loan from related individual at the amount of BGN 4,200 thousand with annual interest rate 9% for a period up to one year. The contractual maximum allowed amount of the loan is up to BGN 5,000 thousand.
In 2010 the Company has received a short-term loan of money from related individual at the amount of BGN 8,900 thousand with annual interest rate 9.2% with repayment period until August 8, 2011. The loan has been collateralised by part of the company's financial assets, held for trading.
The Company has entered into an agreement in 2009 for interest-free loan of money at the amount of BGN 1,295 thousand with related individual with maturity in 2011.
The total amount of the remuneration of the key management staff of the Company, included in employee benefits expenses, amounts to BGN 54 thousand (2009: BGN 54 thousand).
The effects of the change in the accounting policy, related to the presentation of some items in the statement of comprehensive income in 2009, are presented in the table below:
| Note | December 31, 2009 BGN'000 audited |
December 31, 2009 BGN'000 reclassifi- cation |
December 31, 2009 BGN'000 restated |
|
|---|---|---|---|---|
| Revenue | 4 | 884,400 | 884,400 | |
| Other income | 5 | 1,479 | (571) | 908 |
| Cost of goods sold | (850,040) | (850,040) | ||
| Materials and consumables | 6 | (589) | (589) | |
| Hired services | $\overline{7}$ | (15, 338) | (15, 338) | |
| Employee benefits expenses | 8 | (4,579) | (4, 579) | |
| Depreciation and amortisation expenses | 13 | (1, 559) | (1, 559) | |
| Impairment of assets | 9 | 200 | 200 | |
| Other expenses | 10 | (4,060) | 1,052 | (3,008) |
| Finance income | 11 | 1,533 | 571 | 2,104 |
| Finance cost | 11 | (216, 719) | (1,052) | (217, 771) |
| (Loss) before taxation | (205, 272) | (205, 272) | ||
| Income tax benefit | 12 | 1,876 | 1,876 | |
| (Loss) for the year | (203, 396) | (203, 396) | ||
| Total comprehensive income for the year |
(203, 396) | (203, 396) |
The effects of the change in the accounting policy, related to the presentation of some items in the statement of financial position in 2009, are presented in the table below:
| December 31, 2009 BGN'000 audited |
December 31, 2009 BGN'000 reclassify- cation |
December 31, 2009 BGN'000 restated |
|
|---|---|---|---|
| Non-current assets | |||
| Property, plant, equipment and intangible assets Investments in associates Compulsory stock Deferred tax assets |
44,217 22,094 1,464 |
13,398 | 44,217 22,094 13,398 1,464 |
| Total non-current assets | 67,775 | 13,398 | 81,173 |
| Current assets | |||
| Inventories Interest-bearing loans granted Trade and other receivables Short-term financial assets Income tax receivable Cash |
34,352 28,084 41,176 319,331 9,211 |
(13, 398) | 20,954 28,084 41,176 319,331 9,211 |
| Total current assets | 432,154 | (13, 398) | 418,756 |
| Total assets | 499,929 | 499,929 | |
| Equity | |||
| Share capital Retained earnings |
62,757 (24, 101) |
62,757 (24, 101) |
|
| Total equity | 38,656 | 38,656 | |
| Non-current liabilities | |||
| Interest-bearing loans | 304,989 | 304,989 | |
| Total non-current liabilities | 304,989 | 304,989 | |
| Current liabilities | |||
| Trade and other payables Interest-bearing loans Income tax payable |
144,877 11,293 114 |
144,877 11,293 114 |
|
| Total current liabilities | 156,284 | 156,284 | |
| Total liabilities | 461,273 | 461,273 | |
| Total equity and liabilities | 499,929 | 499,929 |
The effects of the change in the accounting policy related to the presentation of some items in the statement of financial position as of January 1, 2009 are presented in the table below:
| January 1, 2009 BGN'000 audited |
January 1, 2009 BGN'000 reclassify- cation |
January 1, 2009 BGN'000 restated |
|
|---|---|---|---|
| Non-current assets | |||
| Property, plant, equipment and intangible assets Investments in associates Receivables on interest-bearing loans Compulsory stocks |
43,591 22,094 |
442 | 43,591 22,094 442 |
| Total non-current assets | 65,685 | 442 | 66,127 |
| Current assets | |||
| Inventories Trade and other receivables Short-term financial assets Income tax receivable Cash |
21,569 37,744 503,520 6000 15,513 |
(442) | 21,127 37,744 503,520 6000 15,513 |
| Total current assets | 584,346 | (442) | 583,904 |
| Total assets | 650,031 | 650,031 | |
| Equity | |||
| Share capital Retained earnings |
62,757 179,295 |
62,757 179,295 |
|
| Total equity | 242,052 | 242,052 | |
| Non-current liabilities | |||
| Interest-bearing loans Deferred tax liabilities |
299,781 970 |
299,781 970 |
|
| Total non-current liabilities | 300,751 | 300,751 | |
| Current liabilities | |||
| Trade and other payables Interest-bearing loans Derivative liabilities |
101,455 5,568 205 |
101,455 5,568 205 |
|
| Total current liabilities | 107,228 | 107,228 | |
| Total liabilities | 407,979 | 407,979 | |
| Total equity and liabilities | 650,031 | 650,031 |
The effects of the change in the accounting policy in the presentation of some items in the statement of cash flows in 2009 are presented in the table below:
| December 31, 2009 BGN'000 audited |
December 31, 2009 BGN'000 reclassify- cation |
December 31, 2009 BGN'000 restated |
|
|---|---|---|---|
| Cash flows from operating activities | |||
| Proceeds from customers Payments to suppliers VAT and excise duty refunded from the state |
1,020,738 (620, 662) |
(399) | 1,020,339 (620, 662) |
| budget VAT and excise duty paid to the state budget Payments to employees |
2,822 (351, 815) (4,521) |
593 | 2,822 (351, 222) (4,521) |
| Cash generated from operations | 46,562 | 194 | 46,756 |
| Income tax paid | (18) | (18) | |
| Net cash generated by operating activities | 46,544 | 194 | 46,738 |
| Cash flows from investing activities | |||
| Payments for financial assets held for trading Proceeds from sale of financial assets held for |
(181) | (181) | |
| trading Payments for purchase of property, plant and |
861 | 861 | |
| equipment Proceeds from sale of property, plant and |
(2, 224) | (2, 224) | |
| equipment | 315 | 315 | |
| Interest-bearing loans granted, net Interest received |
(28, 084) 536 |
399 | (28,084) 935 |
| Cash flows used in dealing with derivatives, net | (1,180) | (1,180) | |
| Dividends received | 766 | 766 | |
| Net cash used in investing activities | (29, 191) | 399 | (28, 792) |
| Cash flows from financing activities | |||
| Proceeds from borrowings | 19,863 | 19,863 | |
| Repayment of borrowings | (4,604) | (4,604) | |
| Interest and commissions paid | (25, 288) | (593) | (25, 881) |
| Net cash used in financing activities | (10, 029) | (593) | (10, 622) |
| Net increase of cash for the year | 7,324 | 7,324 | |
| Cash at the beginning of the year | 2,364 | 2,364 | |
| Foreign exchange rate losses | (571) | (571) | |
| Cash at the end of the year (see note 20) | 9,117 | 9,117 |
Financial statements as of December 31, 2010
In the current period the Company has adopted to present the income and expenses on late payment penalties from customers and to suppliers as interest income and expenses in the statement of comprehensive income. The Management believes that this change in the accounting policy will result in better presentation in the financial statements and it is in accordance with the group policy. In order to achieve comparability, the information for the preceding period is reclassified.
In 2010 the Company's Management decided to present in the statement of financial position the inventories stored under the Mandatory Stocks of Crude Oil and Petroleum Products Act (MSCOPPA) as non-current assets, because it is not expected to realise them in Company's operating activity more than twelve months after the date of the financial statements. In order to achieve comparability, the information for the preceding period is reclassified.
In 2006 the Company has recognised income from penalties amounting to BGN 8,196 thousand, calculated to counterparty (the Counterparty) because of a quantitative non-execution of a fuel supply contract. As of December 31, 2006 the income has been reversed, because the management has assessed that the income recognition criteria in accordance with IAS 18 Revenue have not been met. In the view of this fact a contingent asset amounting to BGN 8,196 thousand arises for the Company, because the receivable from the Counterparty was not recognised in these financial statements.
In October 2006 the Company became a guarantee for the parent company on a bond issue, to the amount of EUR 100,000 thousand with maturity in 2011.
Assets with a carrying amount of BGN 8,438 thousand (2009: BGN 1,990 thousand) are mortgaged and serve as collateral for bank loans granted to related party (see also note 13).
As a result from the import of fuels in 2010 the Company is obliged to establish and store fuels under the Mandatory Stocks of Crude Oil and Petroleum Products Act (MSCOPPA). This obligation for the period from May 1, 2011 to April 30, 2012 was determined on March 24, 2011 and is at the amount of 10,304.860 tones gasoline, 6,230.071 tones diesel fuel and 870.449 tones industrial gas oil. On April 30, 2011 the compulsory stocks are provided
The Company is a guarantor in respect of payables to suppliers of a related party amounted to 12.683 thousand.
In 2010 three penalty enactments at the total amount of BGN 3,860 thousand were delivered to the Company, which have been appealed in the court. The Management believes that the probability for cancellation of the imposed penalties is very high due to the fact that two of cases were won at first instance and the third appeal is pending to be considered.
In January 2011 a new subsidiary Naftex Petrol Trade EOOD was established with authorised share capital at the amount of BGN 5 thousand. As of the date of these financial statements the paid-in share capital is at the amount of BGN 10.
In February, 2011 the company paid off trade receivables to related party at the amount of USD 19.140 thousand through assumption of a loan of the related party to a Bulgarian bank. The loan is collateralised with registered pledge of plant and equipment and mortgage of property.
In February 2011 the Company has repaid bank loan at the amount of BGN 10,002 thousand (see also note 22)
In March 2011 the Company issued a letter of credit in favour of a supplier for fuel delivery at the amount of USD 5,500 thousand with maturity date May 31, 2011.
In April 2011 the Company acquired 59.961 shares of the capital of Eurocapital Bulgaria AD for BGN 4,543 thousand and thus the Company became a sole shareholder.
On April 15, 2011 a bank guarantee was issued in favour of a supplier for fuel delivery at the amount of USD 8,600.
At the extraordinary general meeting of the shareholders of the Parent company held in November, 2010 a decision was taken for providing an in-kind contribution in the equity of Naftex Petrol EOOD, as subject of the contribution is part of the receivable under loan agreement – principal and interest at the amount of BGN 200,000 thousand, against which the Parent company acquired 20,000,000 shares with nominal value BGN 10 each. On April 30, 2011 the share increase in the Company's equity was entered into the Trade Register.
As of May 5, 2011 as a result of a decrease in the price of shares traded on the Bulgarian Stock Exchange, the Company remeasured the assets held for trading and recognised a loss at the amount of BGN 54,455 thousand (see also note 11).
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.