2009 Annual Report - Rompetrol.com

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Summary of Significant Accounting Policies These abbreviated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) effective as of December 31, 2009, as endorsed by the E.U. The consolidated financial statements are prepared under the historical cost convention except for Rompetrol Rafinare S.A and Rompetrol Petrochemicals S.R.L where the property, plant and equipment are stated at revalued amounts being the fair value, less any accumulated depreciation and accumulated impairment loss. The financial statements of the Group are prepared on a going concern basis. The group’s consolidated financial statements are presented in United States Dollar (“US Dollar” or “USD”), which is the Group’s functional currency. The consolidated financial statements comprise the financial statements of the parent company and its subsidiaries as of December 31, 2009. Control is considered to be achieved where the Group (either directly or indirectly), owns more than 50% of the voting rights of the share capital of another enterprise and is able to govern the financial and operating policies of an enterprise so as to obtain benefits from its activities. Minority interests represent the portion of the profit or loss and net assets that is not held by the Group and are presented separately in the consolidated income statement and within equity in the consolidated balance sheet, separately from the parent shareholders’ equity. Acquisitions of businesses are accounted for using the purchase method. The cost of the business combination is measured as the aggregate of the fair values (at the date of exchange) of assets acquired, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree, plus any costs directly attributable to the business combination. The interest of minority shareholders in the acquiree is initially measured at the minority’s proportion of the net fair value of the assets, liabilities and contingent liabilities recognized. Businesses acquired or disposed during the year are included in the consolidated financial statements from the date of acquisition or the date of disposal. The Group’s investments in associates are accounted for using the equity method of accounting. Under the equity method, the investment in an associate is carried in the balance sheet at cost plus post acquisition changes in the Group’s share of net assets of the associate. After application of the equity method, the Group determines whether it is necessary to recognise an additional impairment loss on the Group’s investment in its associates. All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions are eliminated in full. Goodwill is initially measured at cost being the excess of the cost of the business combination over the Group’s share in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities. Goodwill is tested for impairment annually (as at 31 December) and when circumstances indicate that the carrying value may be impaired. Property, plant and equipment are stated at cost, except for the Rompetrol Rafinare S.A and Rompetrol Petrochemicals S.R.L, where the property, plant and equipment are stated at re-valued amounts, being the fair value less any accumulated depreciation and accumulated impairment loss. When assets are sold or retired, their cost and accumulated depreciation are eliminated from the accounts and any gain or loss resulting from their disposal is included in the income statement. Depreciation for property, plant and equipment except land and construction in progress is computed using the straight-line method over the following estimated useful lives, between 3 to 60 years. At each balance sheet date the Group reviews the carrying amounts of its property, plant and equipment and intangible assets to determine whether there is any indication that those assets have suffered impairment. If such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Inventories, including work-in-process are stated at the lower of cost and net realisable value. Net realisable value is the selling price in the ordinary course of business, less the costs of completion, marketing and distribution. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. The following cost formulas were used to determine the cost applicable to different types of inventories: • the weighted average method for purchased crude oil and petroleum products; • the first-in-first-out (FIFO) for supplies and materials. Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. Cash includes cash on hand, cash with banks and checks in course of being cashed. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash within remaining three months or less to maturity from the date of acquisition and that are subject to an insignificant risk of change in value. Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Sales of goods are recognised when delivery has taken place and transfer of significant risks and rewards has been completed. Revenue comprises the fair value of the sale of goods and services, net of value-added tax and any excise duties and other sales taxes, rebates and discounts. 2009 Annual Report 68
Revenue from rendering transportation services and other services is recognised when services are rendered. Payments to defined contribution retirement plans are charged as an expense as they fall due. Payments made to state - managed retirement benefit schemes are dealt with as defined contribution plans where the Group’s obligations under the scheme are equivalent to those arising in a defined contribution retirement plan. Income tax charge consists of current and deferred taxes. The charge for the current tax is based on the results for the period as adjusted for non-deductible and non-taxable items. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, by the reporting date, in the countries where the Group operates and generates taxable income. Deferred tax is provided using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. The Group determinates the classification of its financial assets and liabilities at initial recognition. Financial assets are recognised and derecognised on a trade date where a purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned and are initially measured at cost, including transaction costs. Group’s financial assets include cash and cash equivalents, trade and other receivables, unquoted financial instruments and derivative financial instruments. Financial liabilities include finance lease obligations, interest-bearing bank and shareholders loans, overdrafts and trade and other payables and derivative financial instruments. For each item the accounting policies on recognition and measurement are disclosed in this note. Management believe that the estimated fair values of these instruments approximate their carrying amounts. Financial assets within the scope of IAS 39 are classified as financial assets at fair value through profit or loss, loans and receivables, held to maturity investments, available-for-sale financial assets, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. Financial liabilities within the scope of IAS 39 are classified as financial liabilities at fair value through profit and loss, loans and borrowings, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. 2009 Annual Report 69
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Annual Report 2009 2009 Annual Repo
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Contents Letter from the General Ma
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Letter from the General Manager Dea
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Refining and Petrochemicals The Ref
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Product monitoring and RID/ADR insp
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Rompetrol Rafinare Vega Ploie[ti Re
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to a market share of 14.58%, in a m
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Trading The Trading Business Unit m
Page 17 and 18: Trading Romania operations division
Page 19 and 20: 2009 Annual Report 19
Page 21 and 22: Retail 2009 Annual Report 21
Page 23 and 24: Dyneff 2009 Key Achievements: • D
Page 25 and 26: Rompetrol Logistics 2009 Key Achiev
Page 27 and 28: Rompetrol Bulgaria 2009 Key Achieve
Page 31 and 32: Marketing 2009 Annual Report 31
Page 33 and 34: Researches pointed out that, underg
Page 35 and 36: Upstream 2009 Annual Report 35
Page 37 and 38: Rompetrol Well Services 2009 Key Ac
Page 39 and 40: Rompetrol Drilling and Workover Rom
Page 41 and 42: Services Companies 2009 Annual Repo
Page 43 and 44: Palplast 2009 Key Achievements: •
Page 45 and 46: Rominservices Therm S.A. Mangalia 2
Page 47 and 48: port platform, in terms of specific
Page 49 and 50: Global Security Sistem GLOBAL SECUR
Page 51 and 52: Corporate Social Responsibility 200
Page 53 and 54: and children’s rights legislation
Page 55 and 56: Corporate Governance 2009 Annual Re
Page 57 and 58: Creation of the CAPEX Department Cr
Page 59 and 60: Analysis of the Financial Results 2
Page 61 and 62: The decrease in Net Revenues in 200
Page 63 and 64: Overview To offset prolonged negati
Page 65 and 66: Income Statement (USD ) 2009 2008 C
Page 67: Statement of changes in equity (USD
Page 71 and 72: Emphasis of matter For a better und
Page 75 and 76: ma]iei I}A eghin U MURE{ F`g`ra[ BV
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2009 Annual Report - Rompetrol.com

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