PETROLIA SE - ANNUAL REPORT 2022
ANNUAL REPORT 22
PETROLIA SE
20
22
ANNUAL REPORT 2022 PETROLIA SE
CONTENT
STATEMENT OF DIRECTORS AND RESPONSIBILITY STATEMENT 05
MANAGEMENT REPORT 07
CORPORATE SOCIAL RESPONSIBILITY 10
FINANCIAL STATEMENTS – GROUP
Consolidated Income Statement 12
Consolidated Statement of Comprehensive Income 13
Consolidated Statement of Financial Position – Assets 14
Consolidated Statement of Financial Position – Equity and Liabilities 15
Consolidated Statement of Changes in Equity 16
Consolidated Statement of Cash Flows 17
Notes to the consolidated financial statements 18
FINANCIAL STATEMENTS – PARENT COMPANY
Statement of profit or loss and other Comprehensive Income 55
Statement of Financial Position 56
Statement of Changes in Equity 57
Statement of Cash Flows 58
Notes to the financial statements 59
AUDITOR’S REPORT 78
CORPORATE GOVERNANCE REPORT 85
4
RESPONSIBILITY
STATE
MENT
04
ANNUAL REPORT 2022 PETROLIA SE
05
STATE
MENT
RESPONSIBILITY STATEMENT
STATEMENT OF THE MEMBERS OF THE
BOARD OF DIRECTORS AND OTHER
RESPONSIBLE PERSONS OF PETROLIA
SE FOR THE FINANCIAL STATEMENTS
IN THE ANNUAL REPORT FOR THE YEAR
ENDING 31 DECEMBER 2022
In accordance with Article 9, sections (3)
(c) and (7) of the Cyprus Transparency
Requirements (Securities for Trading on
Regulated Market) Law of 2007 (“Law”),
we, the members of the Board of Directors
and the other responsible persons for the
consolidated and separate financial state
-
ments of Petrolia SE for the year ended 31
December 2022, confirm that, to the best of
our knowledge:
(a) the annual consolidated and separate
financial statements that are presented on
pages 12 to 76:
•
(i) were prepared in accordance with
the International Financial Reporting
Standards as adopted by the European
Union, and in accordance with the pro-
visions of Article 9, section (4), of the
Law; and
•
(ii) give a true and fair view of the assets
and liabilities, the financial position and
the profit or losses of Petrolia SE and
the undertakings included in the consol-
idated accounts taken as a whole; and
(b) the Management Report gives a fair review
of the developments and performance of
the business and the financial position of
Petrolia SE and the undertakings included in
the consolidated accounts taken as a whole
together with a description of the principal
risks and uncertainties that they are facing.
RESPONSIBILITY
STATEMENT
Limassol, 27th of April 2023
Berge Gerdt Larsen
Chairman of the Board
Polycarpos Protopapas
Board member
Managing director
Sjur Storaas
Board member
Sølve Nilsen
Finance manager
George Hadjineophytou
Board member
6
MANAGEMENT
06
REPORT
ANNUAL REPORT 2022 PETROLIA SE
07
MANAGEMENT REPORT
INTRODUCTION AND STRATEGY
Petrolia SE Group, which comprises Petrolia
SE (“Petrolia” or the "Company”) and its
subsidiaries (together referred to as the
“Group”) has two business divisions: Energy
and Energy Service. Petrolia SE is listed on
the Oslo Stock Exchange under the ticker
code PSE.
Energy division
The Energy division focuses primarily on
exploration for and production of oil and gas,
and recently on green energy like Hydrogen
and Ammonia production.
Petrolia is the largest shareholder (49.9%)
of Petrolia NOCO AS, an independent E&P
company on the Norwegian Continental Shelf
(NCS). The company is registered on NOTC
(PNO). PNO has various licence shares, has
made one commercial discovery, has some
small production and is also qualified as a
Licence Operator.
Energy Service division
The Energy Service division has since 2007
primarily focused on well services for oil
and gas drilling, mainly through the global
Independent Oil Tools AS Group (IOT). Well
services are also provided for thermo and
salt drilling.
The Group owns two landrigs, of which one
is operational, and drills and performs work-
over on land wells as a drilling contractor
with these rigs and hired in rigs whenever
drilling contracts are secured.
Through CO2 Management AS, the division
is involved with managing CO2 reduction
projects as well Carbon Capture, Utilization
and Storage (CCUS) activities.
The subsurface competence of PNO may be
used for CO2 Storage Wells on NCS.
ANALYSIS OF THE FINANCIAL STATEMENTS
Petrolia SE presents its financial information
in USD.
Financial information, Group
Total revenue amounted to USD 55.5 million
for the fiscal year 2022 (2021: USD 51.0
million), mainly related to the Energy Service
segment.
Operating profit for the Group in 2022
amounted to USD 5.6 million, after deduc-
tion of depreciation of USD 6.6 million and
impairment of fixed assets of USD 0.5 mil-
lion. Operating profit for the Group in 2021
amounted to USD 4.8 million, after deduction
of depreciation of USD 7.6 million and im-
pairment of fixed assets of USD 0.9 million.
Loss after tax for the Group amounted to USD
0.7 million in 2022 (2021: USD 1.2 million).
As at 31 December 2022, the total assets
of the Group amounted to USD 63.9 million.
Total assets of the Group amounted to USD
69.3 million as at 31 December 2021.
Total equity of the Group amounted to USD
39.0 million as at 31 December 2022, including
a minority interest of USD 2.6 million.
Total equity of the Group amounted to USD
39.3 million as at 31 December 2021, including
a minority interest of USD 1.9 million.
As at 31 December 2022, the total number
of shares outstanding in Petrolia SE was
59,133,786 with par value USD 0.10 each.
Cash flows from operations was USD 7.3
million in 2022 (2021: USD 10.3 million).
Cash flows from investments was USD -1.4
million in 2022 (2021: USD -5.7 million). Cash
flows from financing activities in 2022 was
USD -10.3 million (2021: USD -4.6 million)
mainly related to bond loan repayment and
interests and lease interest and instalments.
Total cash position at 31 December 2022 was
USD 11.9 million (2021: USD 16.1 million).
Financial information, Parent
Total revenues amounting to USD 270 thou-
sand for 2022 (2021: USD 134 thousand),
related mainly to management (USD 9 thou-
sand) and consultancy (USD 261 thousand)
fees for the rendering of services to the
Group by the branch.
Operating loss for the parent company
amounted to USD 1.4 million (2021: USD
1.3 million).
Loss after tax for the parent amounted to USD
7.6 million (2021: profit of USD 2.1 million).
As at 31 December 2022, the total assets of
the Parent amounted to USD 45.6 million of
which investments in subsidiaries were USD
37.9 million, loan assets was USD 4.4 million,
cash at bank was USD 2.1 million, investment
in associates was USD 0.1 million and USD
1.0 million in trade and other receivables.
Total equity of the Parent amounted to USD
42.7 million as at 31 December 2022 (2021:
USD 46.1 million).
As at 31 December 2022, the total number
of shares outstanding in Petrolia SE was
59,133,786, with par value USD 0.10 each.
Cash flows from operations were USD 3.0
million in 2022 (2021: USD 8.5 million). Cash
flows from investing were USD 2.1 million
(2021: -6.4 million). Cash flows from financ-
ing were USD -5.0 million (2021: USD -0.3
million).
Total cash position at 31 December 2022
was USD 2.1 million (2021: USD 2.0 million).
FINANCIAL AND LIQUIDITY RISK
The Group’s long-term financing is mainly
financial lease of equipment totalling USD
6.8 million.
Additional information on liquidity risk is pre-
sented in Note 23.
GOING CONCERN
Management has conducted a review of the
going concern assumption considering all
relevant information available up to the date
the consolidated and separate parent financial
statements were issued, taking into account
all available information about the future, for
at least 12 months from the reporting date.
The forecast cash flows from the Energy
Service division provide sufficient cash flows
and the Group expects to be in a position to
serve its working capital needs and other
obligations as and when they fall due. These
forecasts have been made based on past
MANAGEMENT REPORT
ANNUAL REPORT 2022 PETROLIA SE
08
MANAGEMENT REPORT
experiences and detailed knowledge of the
local markets.
The Group’s management expects a good
environment for the Energy Service segment
in 2023 and remains confident in the Group’s
ability to adapt cost levels to the activity and
to maintain sufficient financial resources to
enable it to continue as a going concern for
the foreseeable future.
Following its review, management confirms
that the requirements of the going concern
assumption are met and that these financial
statements have been prepared on that basis.
WORKING ENVIRONMENT AND PERSONNEL
Petrolia SE has four employees, two men
and two women.
In total, the Group had 259 highly competent
employees worldwide as at 31 December
2022. The Group is an equal opportunity
employer and will not tolerate discrimination.
Recruitment, promotion and reward are based
entirely on merit.
There have not been any serious accidents
reported in the Group in 2022.
Petrolia’s Board of Directors consisted of 4
men as at 31 December 2022.
ENVIRONMENT REPORTING
The Group’s objective is that all of its activ-
ities are carried out without risk to people
or damage to the surroundings. The Group’s
activities during 2022 did not cause any pol-
lution of the environment and have conformed
with the demands of the prevailing authorities
in its worldwide operations.
CORPORATE GOVERNANCE STATEMENT
The Board believes it is important that the
Group is run and managed on sound principles
of Corporate Governance. Reference is made
to the section on Corporate Governance in
this report.
As Petrolia is listed on the Oslo Stock
Exchange, it follows the Norwegian Code of
Practice for Corporate Governance of 14
October 2021.
Significant shareholders are present-
ed in note 17 to the consolidated financial
statements.
As at 31 December 2022 and as at 24 April
2023, the directors who held shares in the
Company are shown in note 17.
There are no restrictions in voting rights
or special control rights in relation to the
shares of the Company.
Any amendment or addition to the Articles
of Association of the Company is only valid if
approved by a special resolution at a share-
holders’ meeting.
The rules governing the composition of the
Board of Directors, appointment and re-
placement of its members and holding of
Company’s shares are set out in Section 8 of
the Corporate Governance Report for 2022.
The powers of the Board of Directors and
its Audit and Remuneration Committees are
also set out in the Corporate Governance
Report in section 9.
The Company, through internal controls im-
plemented by management and supervised by
the Audit Committee, implemented effective
procedures for the composition and prepa-
ration of financial statements and periodic
information, as provided by the Laws and
Regulations of listed companies. In addition
to the above, the main features of these pro-
cedures, are as follows:
•
The financial statements of the Group
companies and the consolidated financial
statements are prepared with the respon-
sibility of the Chief Financial Officer and
reviewed by the Audit Committee.
•
The periodic announcements of the Company
and the detailed explanatory notes are
prepared by the Chief Financial Officer and
reviewed by the Audit Committee.
•
The financial statements and the periodic
announcements are approved by the Board
of Directors prior to their publication.
EXISTENCE OF BRANCHES
To facilitate its operations, the Company has
established a branch in Norway.
CHANGES IN SHARE CAPITAL
There have been no changes to the share
capital during 2022.
BOARD OF DIRECTORS
The members of the Company’s Board of
Directors as at 31 December 2022 and at the
date of this report are Berge Gerdt Larsen,
Sjur Storaas, George Hadjineophytou and
Polycarpos Protopapas.
The General Meeting on 31 May 2022
re-elected Mr Berge Gerdt Larsen, Mr Sjur
Storaas, Mr George Hadjineophytou and
Mr Polycarpos Protopapas as directors of
the Board.
In accordance with the Company’s Articles of
Association, all Directors who are presently
members of the Board will continue in office
until the next Annual General Meeting and
are eligible for re-election.
The Directors’ interests in shares of the
Company is disclosed in note 17 of the
financial statements.
INDEPENDENT AUDITOR
The independent auditors of the Company,
Ernst & Young Cyprus Limited, have expressed
their willingness to continue in office. A res-
olution proposing the firm’s re-appointment
and authorising the Directors to set the remu-
neration for audit services will be proposed at
the Annual General Meeting of the Company.
EVENTS AFTER THE REPORTING PERIOD
Please refer to note 29.
ANNUAL REPORT 2022 PETROLIA SE
09
MANAGEMENT REPORT
Limassol, 27th of April 2023
Berge Gerdt Larsen
Chairman of the Board
Polycarpos Protopapas
Board member
Managing director
Sjur Storaas
Board member
Sølve Nilsen
Finance manager
George Hadjineophytou
Board member
10
ANNUAL REPORT 2022 PETROLIA SE
THE BOARD OF DIRECTORS'
REPORT ON CORPORATE SOCIAL
RESPONSIBILITY
In this report, we disclose information relating
to our CORPORATE SOCIAL RESPONSIBILITY
(‘CSR’) policy and performance of this policy
in 2022. This report relates to the period
1 January 2022 to 31 December 2022 and
should be read as part of the Company's
Annual Report for 2022. During 2022, the
Group had operational activities in Norway,
The Netherlands, the UK, Romania, Australia,
New Zealand, Iraq, Malaysia, Papua New
Guinea and UAE, therefore the majority of
the information in this CSR report relates to
the Group’s operations in these countries.
Our approach to CSR focuses on the way in
which we conduct relationships with all of
our stakeholders and the wider impact that
we can have on society and the environment.
In this context, we continuously address the
following key aspects of our business:
HEALTH & SAFETY
The safety of our employees, contractors,
partners and all of our stakeholders is of
utmost importance to the Group. We aim to
employ high Health & Safety standards to our
operations. All our employees and contractors
have the responsibility and the authority to
stop any unsafe work. Our contracts include
health and safety requirements consistent
with our code of conduct. Our main objec-
tive is that all of our activities are carried
out without risk to people or damage to the
environment and our safety and operational
risk team works together to achieve this
objective. Incidents and near misses are
required to be reported and investigated.
We are pleased to report that during 2022,
no incident of pollution to the environment
was reported and the Group conformed with
the safety and environmental demands of
the prevailing authorities in its worldwide
operations. We continued to have an excel
-
lent health and safety record with no major
injuries or fatalities in 2022.
ENVIRONMENT & SUSTAINABILITY
We recognise the potential to damage the
environment through our operations and
our responsibility to implement effective
management to safeguard the environment
by minimising such an impact and we have
capable people to manage such risks at every
stage. CO2 emissions from our activities
receive the greatest attention. We are com-
mitted to making a positive contribution to
global sustainability and to protect the en-
vironment. We aim to operate to the highest
international social, environmental and safety
standards within the industry and believe that
it is important to make a positive contribution
to all of the geographical areas where we
operate. Climate change and the transition
to a lower carbon economy has been iden-
tified as a possible risk and an opportunity
but presently does not affect our accounts.
Our subsidiary, CO2 Management AS aims to
mitigate this risk by taking steps to reduce
the Group’s carbon footprint and in addi-
tion, makes investments aimed at reducing
CO2 emissions, including Carbon Capture
& Storage (CCS) and Hydrogen Production
technologies in Norway.
EMPLOYEES
Our ability to create sustainable shareholder
value is linked to our ability to recruit, moti-
vate and retain highly competent employees.
People continue to be our most important
asset. The Group is an equal opportunities
employer and will not tolerate discrimination
in recruitment, advancement and remuner-
ation in the workplace. We have a shared
commitment with employees to create a safe
working environment where there is respect
for others and we are responsive to employee
needs. Employees are encouraged to speak up
if they have any concerns through our Whistle
Blowing Policy. Recruitment, promotion and
reward are entirely based on merit. We believe
in shared prosperity and wherever possible,
we employ nationals of our host countries.
COMMUNITY AND HUMAN RIGHTS
Our continuous presence in a number of dif-
ferent territories brings challenges, which we
meet through the application of our existing
approach and policies. We aim to have a pos-
itive and enduring impact on the communities
in which we operate and contribute to their
development. We invest in our relationships
with the local communities and ensure that all
of our activities are conducted with absolute
respect to these communities. We contribute
to these communities by employing local staff
and cooperating with local suppliers. We re-
spect internationally recognised human rights
and we set our commitments in our human
rights policy and our Code of Conduct. All
of our initiatives during 2022 were focused
on health and social involvement across our
operating regions.
BUSINESS CONDUCT
CSR encompasses the Company’s manage-
ment of relationships with shareholders,
employees, contractors, partners and the
local communities where we work, together
with the impact it has on society and the
environment. In this respect, we have a re-
sponsibility to ensure that we deliver our
business objectives in a way that benefits
all of our stakeholders. In recognition of
this responsibility, we have robust policies
and systems in place, which are continuously
reviewed. We aim for the highest standards of
business conduct across all of our worldwide
operations. Our CSR policy aims to ensure
a responsible and transparent performance
of our business in all of the areas in which
we operate. It reflects our commitment to
generate and sustain long-term value growth
for the Company, whilst creating long last-
ing legacies in local communities. Operating
to high international social, environmental
and safety standards and maintaining high
standards of corporate governance is a key
requirement of our policy. Our Code of Conduct
ensures that we compete fairly and explicitly
prohibits engaging in any form of bribery or
corruption whilst our Integrity Due Diligence
procedures ensure that we select our busi-
ness partners carefully and do not expose
the Group to any reputational risk with zero
tolerance for unethical business practices.
We also prohibit the use of funds to support
political parties.
CORPORATE GOVERNANCE
We continue to operate with high stand-
ards of corporate governance, which helps
us deliver our strategic objectives. We are
committed to protecting the interests of all
of our stakeholders through complete and
absolute compliance with the relevant legal
and regulatory environments and through
the effective management of risk.
Every effort has been made to ensure that in-
formation contained in this report is accurate.
ANNUAL REPORT 2022 PETROLIA SE
11
FINANCIAL
STATEMENTS
GROUP
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ANNUAL REPORT 2022 PETROLIA SE
FINANCIAL STATEMENTS
Petrolia SE – Group
CONSOLIDATED INCOME STATEMENT
for the year ended 31 December 2022
(Amounts in USD 1,000)
Note 2022 2021
Revenue from contracts with customers 5 55,504 50,976
Wages cost 6 -14,288 -13,520
Other operating expenses 7 -28,518 -24,118
Operating result before depreciation and impairments 12,698 13,338
Depreciation 11 -6,568 -7,640
Net impairment of fixed assets 11 -532 -934
Operating result 5,598 4,764
Result from associated companies 12 -1,944 -3,636
Interest income 8 606 472
Financial income 8 13 55
Interest expenses 8 -1,001 -1,009
Financial expenses 8 -2,272 -937
Result before income taxes 1,000 -291
Income tax 9 -1,711 -879
Result for the year -711 -1,170
Attributable to:
Equity holders of the parent -1,569 -1,193
Non-controlling interests 858 23
-711 -1,170
Attributable to the equity holders (USD per share)
Earnings per share (Basic and diluted, from continuing operations) 10 -0.03 0.02
FINANCIAL STATEMENTS / GROUP
13
ANNUAL REPORT 2022 PETROLIA SE
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2022
(Amounts in USD 1,000) Note 2022 2021
Result for the year -711 -1,170
Other comprehensive income:
Other comprehensive income to be reclassified to profit or loss in subsequent periods
(net of tax):
Exchange differences on translation of foreign operations -49 -392
Other comprehensive income that will not be reclassified to profit or loss in subse-
quent periods (net of tax):
Gain on equity instruments designated at fair value through other comprehensive
income
Total comprehensive loss for the year, net of tax -278 -1,562
Attributable to:
Equity holders of the parent -1,075 -1,866
Non-controlling interests 797 304
Total comprehensive loss for the year -278 -1,562
FINANCIAL STATEMENTS / GROUP
14
ANNUAL REPORT 2022 PETROLIA SE
ASSETS (Amounts in USD 1,000) Note 2022 2021
Non-current assets
Goodwill 28 249 249
Right of use assets 11 15,168 13,152
Land and buildings 11 1,758 1,820
Energy Service and other equipment 11 11,421 12,820
Land rigs 11 1,579 1,741
Investment in associated companies 12 547 1,087
Other financial assets 13 1,004 7,001
Deferred tax assets 9 0 169
Restricted cash 16 3 3
Total non-current assets 31,729 38,042
Current assets
Inventory 26 1,965 1,933
Trade receivables 14 10,950 10,225
Other current receivables 14 2,826 2,803
Other financial assets 13 4,362 0
Financial assets at fair value through profit or loss 15 163 162
Free cash 16 11,627 15,908
Restricted cash 16 237 222
Total current assets 32,130 31,253
TOTAL ASSETS 63,859 69,295
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 December 2022
FINANCIAL STATEMENTS / GROUP
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ANNUAL REPORT 2022 PETROLIA SE
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 December 2022
EQUITY AND LIABILITIES (Amounts in USD 1,000)
Note 2022 2021
Equity
Share capital 17 5,913 5,913
Share premium 12,222 12,222
Other reserves 18,255 19,306
Equity attributable to equity holders of the parent 36,390 37,441
Non-controlling interests 2,624 1,851
Total equity 39,014 39,292
Liabilities
Non-current liabilities
Lease liabilities 19 9,830 9,404
Bank loan 21 225 304
Deferred tax liabilities 9 215 0
Other non-current liabilities 273 110
Current liabilities
Bond loans 18 0 4,620
Lease liabilities 19 4,989 3,653
Trade payables 20 3,381 5,354
Other payables 20 4,840 5,884
Bank loan and overdraft 21 121 106
Income tax payable 971 568
Total liabilities 24,845 30,003
TOTAL EQUITY AND LIABILITIES 63,859 69,295
Limassol, 27th of April 2023
Berge Gerdt Larsen
Chairman of the Board
Polycarpos Protopapas
Board member
Managing director
Sjur Storaas
Board member
Sølve Nilsen
Finance manager
George Hadjineophytou
Board member
FINANCIAL STATEMENTS / GROUP
16
ANNUAL REPORT 2022 PETROLIA SE
Attributable to equity holders of the parent
(Amounts in USD 1,000)
Share
capital
Share pre-
mium
Reorganisa-
tion reserve
Retained
earnings
Currency
translation
Subtotal Non-
controlling
interests
Total equity
Equity 1 January 2021 5,913 12,222 -15,075 34,151 2,096 39,307 1,547 40,854
(Loss)/profit for the year 0 0 0 -1,193 0 -1,193 23 -1,170
Other comprehensive income
Exchange differences on trans-
lation of foreign operations
Total comprehensive (loss)/
income
Equity 31 December 2021 5,913 12,222 -15,075 32,958 1,423 37,441 1,851 39,292
(Loss)/profit for the year 0 0 0 -1,569 0 -1,569 858 -711
Other comprehensive income
Gain on equity instruments
designated at fair value through
other comprehensive income
Exchange differences on trans-
lation of foreign operations
Total comprehensive (loss)/
income
Equity 31 December 2022 5,913 12,222 -15,075 31,871 1,459 36,390 2,624 39,014
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2022
FINANCIAL STATEMENTS / GROUP
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ANNUAL REPORT 2022 PETROLIA SE
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2022
FINANCIAL STATEMENTS / GROUP
(Amounts in USD 1,000) Note 2022 2021
Operating activities
Profit/(loss) before taxes 1,000 -291
(Reversal)/allowance of expected credit losses 7 -211 924
(Profit)/loss on disposal of property, plant and equipment -1 42
Depreciation of property, plant and equipment and right of use assets 11 6,568 7,640
Impairment of property, plant, equipment 11 532 934
Interest income 8 -606 -472
Change in financial assets at fair value through profit or loss 8 -2 -52
Interest expense on lease liabilities 8 835 709
Interest expense on bonds 8 153 277
Other interest expenses 8 13 23
Change in inventory -32 -63
Change in trade receivables -514 -824
Change in other current receivables -248 -338
Change in trade payables -1,973 -1,807
Change in other payables -1,044 2,517
Change in other non-current liabilities 163 -1,207
Result from investment in associated companies 12 1,944 3,636
Income tax paid -546 -493
Other, incl unrealised foreign currency gain/(loss) 1,299 -853
Net cash generated from operating activities 7,330 10,302
Investing activities
Purchase of fixed assets 11 -2,495 -3,475
Disposal of equipment 528 204
Repayment of loans granted 13 1,507 8,271
Loan granted 13 0 -8,414
Investment in associates 12 -1,503 -2,456
Acquisition of a subsidiary, net of cash acquired 28 0 -350
Interest received 606 472
Net cash used in investing activities -1,357 -5,748
Financing activities
(Increase)/release of restricted cash -15 4
Leasing instalments (capital) 23 -4,393 -3,552
Interest paid on bond loans (net) 8 -277 -277
Other interest paid 8 -13 -23
Interest paid on lease liabilities 19 -835 -709
Bond loan, repaid 18 -4,620 0
Bank loan, repaid 23 -101 -31
Net cash used in financing activities -10,254 -4,588
Net cash flow of the period -4,281 -34
Free cash and cash equivalents at the beginning of the period 16 15,908 15,942
Free cash and cash equivalents balance at 31 December 16 11,627 15,908
18
ANNUAL REPORT 2022 PETROLIA SE
NOTES - GROUP
to the consolidated financial statements
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ANNUAL REPORT 2022 PETROLIA SE
FINANCIAL STATEMENTS / GROUP / NOTES
40
ANNUAL REPORT 2022 PETROLIA SE
FINANCIAL STATEMENTS / GROUP / NOTES
41
ANNUAL REPORT 2022 PETROLIA SE
No ECL was recognized on the cash balances (Refer to note 23)
FINANCIAL STATEMENTS / GROUP / NOTES
42
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FINANCIAL STATEMENTS / GROUP / NOTES
43
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FINANCIAL STATEMENTS / GROUP / NOTES
44
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FINANCIAL STATEMENTS / GROUP / NOTES
45
ANNUAL REPORT 2022 PETROLIA SE
For the contracts with options to extend, if the
options are assumed to be exercised for the
lease term to be until the end of 2027, then
the lease liability would have increased by
USD 8 million with a corresponding increase
in Right of use asset as well.
FINANCIAL STATEMENTS / GROUP / NOTES
46
ANNUAL REPORT 2022 PETROLIA SE
FINANCIAL STATEMENTS / GROUP / NOTES
47
ANNUAL REPORT 2022 PETROLIA SE
FINANCIAL STATEMENTS / GROUP / NOTES
48
ANNUAL REPORT 2022 PETROLIA SE
FINANCIAL STATEMENTS / GROUP / NOTES
49
ANNUAL REPORT 2022 PETROLIA SE
FINANCIAL STATEMENTS / GROUP / NOTES
50
ANNUAL REPORT 2022 PETROLIA SE
FINANCIAL STATEMENTS / GROUP / NOTES
51
ANNUAL REPORT 2022 PETROLIA SE
FINANCIAL STATEMENTS / GROUP / NOTES
52
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FINANCIAL STATEMENTS / GROUP / NOTES
53
ANNUAL REPORT 2022 PETROLIA SE
FINANCIAL STATEMENTS / GROUP / NOTES
ANNUAL REPORT 2022 PETROLIA SE
54
FINANCIAL
STATEMENTS
PARENT
55
ANNUAL REPORT 2022 PETROLIA SE
PETROLIA SE
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
31 December 2022
2022
2021
Note
USD 000
USD 000
Revenue from contracts with customers
7
270
134
Administration expenses
(1.656)
(1.396)
Operating loss
8
(1.386)
(1.262)
Finance income
10
581
250
Finance costs
10
(1.054)
(558)
Impairment/(reversal of impairment) on investments in subsidiary
companies - net
13
(5.662)
3.902
Impairment charge on investments in associates
14
(147)
(389)
Reversal of expected credit loss on receivables from related parties
24.4
-
100
(Loss)/profit before tax
(7.668)
2.043
Tax
11
51
-
Net (loss)/profit for the year
(7.617)
2.043
Total comprehensive (loss)/income for the year
(7.617)
2.043
FINANCIAL STATEMENTS
Petrolia SE - Parent Company - 31 December 2022
FINANCIAL STATEMENTS / PARENT
56
ANNUAL REPORT 2022 PETROLIA SE
FINANCIAL STATEMENTS / PARENT
Polycarpos Protopapas
Board member
Managing director
Sjur Storaas
Board member
Sølve Nilsen
Finance manager
George Hadjineophytou
Board member
PETROLIA SE
STATEMENT OF FINANCIAL POSITION
31 December 2022
2022
2021
Note
USD 000
USD 000
ASSETS
Non-current assets
Property, plant and equipment
12
1
-
Right-of-use assets
18
68
129
Investments in subsidiaries
13
37.920
44.058
Investments in associates
14
124
271
Restricted cash
17
55
36
Loans receivable from associate
15
-
6.595
38.168
51.089
Current assets
Trade and other receivables
16
988
526
Loans receivable from associate
15
4.362
-
Cash at bank
19
2.052
1.929
7.402
2.455
Total assets
45.570
53.544
EQUITY AND LIABILITIES
Equity
Share capital
20
5.913
5.913
Share premium
12.222
12.222
Merger reserve
67.093
67.093
Accumulated losses
(42.483)
(39.170)
Total equity
42.745
46.058
Non-current liabilities
Lease liabilities
18
-
69
-
69
Current liabilities
Trade and other payables
22
2.703
2.611
Borrowings
21
-
4.744
Lease liabilities
18
68
62
Current tax liabilities
23
54
-
2.825
7.417
Total liabilities
2.825
7.486
Total equity and liabilities
45.570
53.544
On 27 April 2023 the Board of Directors of Petrolia SE authorised these financial statements for issue.
Berge Gerdt Larsen
Chairman of the Board
57
ANNUAL REPORT 2022 PETROLIA SE
PETROLIA SE
STATEMENT OF FINANCIAL POSITION
31 December 2022
2022
2021
Note
USD 000
USD 000
ASSETS
Non-current assets
Property, plant and equipment
12
1
-
Right-of-use assets
18
68
129
Investments in subsidiaries
13
37.920
44.058
Investments in associates
14
124
271
Restricted cash
17
55
36
Loans receivable from associate
15
-
6.595
38.168
51.089
Current assets
Trade and other receivables
16
988
526
Loans receivable from associate
15
4.362
-
Cash at bank
19
2.052
1.929
7.402
2.455
Total assets
45.570
53.544
EQUITY AND LIABILITIES
Equity
Share capital
20
5.913
5.913
Share premium
12.222
12.222
Merger reserve
67.093
67.093
Accumulated losses
(42.483)
(39.170)
Total equity
42.745
46.058
Non-current liabilities
Lease liabilities
18
-
69
-
69
Current liabilities
Trade and other payables
22
2.703
2.611
Borrowings
21
-
4.744
Lease liabilities
18
68
62
Current tax liabilities
23
54
-
2.825
7.417
Total liabilities
2.825
7.486
Total equity and liabilities
45.570
53.544
On 27 April 2023 the Board of Directors of Petrolia SE authorised these financial statements for issue.
PETROLIA SE
STATEMENT OF CHANGES IN EQUITY
31 December 2022
Share
capital
Share
premium
Merger
reserve
Accumulated
losses
Total
USD 000
USD 000
USD 000
USD 000
USD 000
Balance at 1 January 2021
5.913
12.222
67.093
(45.024)
40.204
Comprehensive income
Profit for the year / Total
comprehensive income for the year
-
-
-
2.043
2.043
5.913
12.222
67.093
(42.981)
42.247
Transactions with owners
Effect of tax contributions with Group
subsidiaries in Norway
-
-
-
3.811
3.811
Balance at 31 December 2021/ 1
January 2022
5.913
12.222
67.093
(39.170)
46.058
Comprehensive income
Loss for the year / Total
comprehensive loss for the year
-
-
-
(7.617)
(7.617)
5.913
12.222
67.093
(46.787)
38.441
Transactions with owners
Effect of tax contributions with Group
subsidiaries in Norway
-
-
-
4.304
4.304
Balance at 31 December 2022
5.913
12.222
67.093
(42.483)
42.745
FINANCIAL STATEMENTS / PARENT
58
ANNUAL REPORT 2022 PETROLIA SE
PETROLIA SE
STATEMENT OF CASH FLOWS
31 December 2022
2022
2021
Note
USD 000
USD 000
CASH FLOWS FROM OPERATING ACTIVITIES
(Loss)/profit before tax
(7.668)
2.043
Adjustments for:
Depreciation of right-of-use assets
18
60
61
Net exchange loss
772
269
Impairment charge - investments in associates
14
147
389
Impairment/(reversal of impairment) - investments in subsidiaries-net
13
5.662
(3.902)
Reversal of expected credit loss on receivables from related parties
16
-
(100)
Interest income
10
(581)
(250)
Interest expense
10
158
285
(1.450)
(1.205)
Changes in working capital:
(Increase)/decrease in trade and other receivables
(461)
7.523
Increase in trade and other payables
4.870
2.215
2.959
8.533
Tax refunded
51
-
Net cash generated from operating activities
3.010
8.533
CASH FLOWS FROM INVESTING ACTIVITIES
Payment for purchase of property, plant and equipment
12
(1)
-
Loans granted
15
-
(8.226)
Loans repayments received
15
1.506
1.784
Interest received
15
592
89
Net cash generated from/(used in) investing activities
2.097
(6.353)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments of leases liabilities
18
(68)
(59)
(Increase)/decrease in restricted cash
(19)
7
Bond loan, repaid
(4.620)
-
Interest paid on bond loan
(277)
(285)
Net cash used in financing activities
(4.984)
(337)
Net increase in cash and cash equivalents
123
1.843
Cash and cash equivalents at beginning of the year
1.929
86
Cash and cash equivalents at end of the year
19
2.052
1.929
FINANCIAL STATEMENTS / PARENT
PETROLIA SE
NOTES TO THE FINANCIAL STATEMENTS
31 December 2022
1. Incorporation and principal activities
Country of incorporation
Petrolia SE (the ''Company'') was incorporated in Cyprus on 9 August 2011 as a limited liability company under the
Cyprus Companies Law, Cap. 113. Its registered office is at Christodoulou Chatzipavlou 205, Louloupis court, 4th
Floor, Office 401, 3036, Limassol, Cyprus.
Change of Company name
On 17 November 2011, the Company changed its name from Petrolia E&P Holdings Limited to Petrolia E&P Holdings
Plc. Following a shareholders’ plan to re-domicile to Cyprus that was approved on 30 December 2011, Petrolia ASA
merged (“cross-border merger”) with Petrolia E&P Holdings Plc (“surviving entity”) and the latter was at the same
time converted into a European public company limited by shares (“Societas Europaea” or “SE”) in accordance with
Article 2 no. 1 of the European Council Regulation no. 2157/2001 (the “SE Regulation”) and Section 5 of the
Norwegian Act on European Companies of 1 April 2005 (the “SE Act”).
Following the completion of the cross-border merger on 26 October 2012 and the creation of Petrolia E&P Holdings
SE, the Company on 28 January 2013 changed its name to Petrolia SE.
The Company’s shares are listed on the Oslo Stock Exchange (Ticker: “PSE”). On 21 September 2018, the Company
changed its ticker name from ''PDR'' to ''PSE''.
Principal activities
The principal activities of the Company, which are unchanged from prior year, are the financing of group companies
and the holding of investments in subsidiaries and associates engaged in two business segments: Energy and Energy
Service. The core activities of the Company include the holding in a subsidiary company, which is a well-established
international oil service company. The Company has established a branch (Petrolia NUF) in Norway in order to
facilitate its operations.
Environment and sustainability
The Company recognises the potential to damage the environment through its operations and its responsibility to
implement effective management to safeguard the environment by minimising such an impact and has capable
people to manage such risks at every stage. CO2 emissions from its activities receive the greatest attention. The
Company is committed to making a positive contribution to global sustainability and to protect the environment. The
Company aims to operate to the highest international social, environmental and safety standards within the industry
and believes that it is important to make a positive contribution to all of the geographical areas where it operates.
Climate change and the transition to a lower carbon economy has been identified as a possible risk and an
opportunity, but presently does not affect the Company's accounts.
The Company's objective is that all of its activities are carried out without risk to people or damage to the
surroundings. The Company’s activities during 2022 did not cause any pollution of the environment and have
conformed with the demands of the prevailing authorities in its worldwide operations.
2. Basis of preparation
These parent company financial statements have been prepared in accordance with International Financial Reporting
Standards (IFRSs) as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap.113.
The financial statements have been prepared under the historical cost convention. The notes to the consolidated
financial statements provide additional information to the parent company financial statements. The accounting
policies applied to the Group accounts have also been applied to the parent company, Petrolia SE. The parent
company financial statements should be read in conjunction with the consolidated financial statements. Investments
in subsidiaries and associates are carried at cost less impairment in these separate financial statements. In case of
impairment, the investment is written down to its recoverable amount. The Company’s functional currency is US
dollars (USD) and the financial statements are presented in USD, rounded to the nearest thousand.
59
ANNUAL REPORT 2022 PETROLIA SE
PETROLIA SE
NOTES TO THE FINANCIAL STATEMENTS
31 December 2022
1. Incorporation and principal activities
Country of incorporation
Petrolia SE (the ''Company'') was incorporated in Cyprus on 9 August 2011 as a limited liability company under the
Cyprus Companies Law, Cap. 113. Its registered office is at Christodoulou Chatzipavlou 205, Louloupis court, 4th
Floor, Office 401, 3036, Limassol, Cyprus.
Change of Company name
On 17 November 2011, the Company changed its name from Petrolia E&P Holdings Limited to Petrolia E&P Holdings
Plc. Following a shareholders’ plan to re
-domicile to Cyprus that was approved on 30 December 2011, Petroli
a ASA
merged (“cross
-
border merger”) with Petrolia E&P Holdings Plc (“surviving entity”) and the latter was at the same
time converted into a European public company limited by shares (“Societas Europaea” or “SE”) in accordance with
Article 2 no. 1 of the European Council Regulation no. 2157/2001 (the “SE Regulation”) and Section 5 of the
Norwegian Act on European Companies of 1 April 2005 (the “SE Act”).
Following the completion of the cross
-border merger on 26 October 2012 and the creation of Petrolia E
&P Holdings
SE, the Company on 28 January 2013 changed its name to Petrolia SE.
The Company’s shares are listed on the Oslo Stock Exchange (Ticker: “PSE”). On 21 September 2018, the Company
changed its ticker name from ''PDR'' to ''PSE''.
Principal activities
The principal activities of the Company, which are unchanged from prior year, are the financing of group companies
and the holding of investments in subsidiaries and associates engaged in two business segments: Energy and Energy
Service. The core ac
tivities of the Company include the holding in a subsidiary company, which is a well-
established
international oil service company. The Company has established a branch (Petrolia NUF) in Norway in order to
facilitate its operations.
Environment and sustainability
The Company recognises the potential to damage the environment through its operations and its responsibility to
implement effective management to safeguard the environment by minimising such an impact and has capable
people to manage such risks at
every stage. CO2 emissions from its activities receive the greatest attention. The
Company is committed to making a positive contribution to global sustainability and to protect the environment. The
Company aims to operate to the highest international social, environmental and safety standards within the industry
and believes that it is important to make a positive contribution to all of the geographical areas where it operates.
Climate change and the transition to a lower carbon economy has been identifie
d as a possible risk and an
opportunity, but presently does not affect the Company's accounts.
The Company's objective is that all of its activities are carried out without risk to people or damage to the
surroundings. The Company’s activities during 2022 did not cause any pollution of the environment and have
conformed with the demands of the prevailing authorities in its worldwide operations.
2. Basis of preparation
These parent company financial statements have been prepared in accordance with International Financial Reporting
Standards (IFRSs) as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap.113.
The financial statements have been prepared under the historical cost convention. The notes to the consolidated
financial statements provide additional information to the parent company financial statements. The accounting
policies applied to the Group accounts have also been applied to the parent company, Petrolia SE. The parent
company financial statements should be read
in conjunction with the consolidated financial statements. Investments
in subsidiaries and associates are carried at cost less impairment in these separate financial statements. In case of
impairment, the investment is written down to its recoverable amount. The Company’s functional currency is US
dollars (USD) and the financial statements are presented in USD, rounded to the nearest thousand.
FINANCIAL STATEMENTS / PARENT
60
ANNUAL REPORT 2022 PETROLIA SE
PETROLIA SE
NOTES TO THE FINANCIAL STATEMENTS
31 December 2022
3. Adoption of new or revised standards and interpretations
During the current year the Company adopted all the new and revised International Financial Reporting Standards
(IFRS) that are relevant to its operations and are effective for accounting periods beginning on 1 January 2022. This
adoption did not have a material effect on the accounting policies of the Company.
4. Significant accounting policies
The principal accounting policies adopted in the preparation of these financial statements are set out below. These
policies have been consistently applied to all years presented in these financial statements unless otherwise stated.
Subsidiary companies
Investments in subsidiary companies are stated at cost less provision for impairment in value, which is recognised as
an expense in the period in which the impairment is identified.
Associates
Associates are all entities over which the Company has significant influence but not control, generally accompanying
a shareholding of between 20% and 50% of the voting rights. Investments in associated undertakings are stated at
cost less provision for impairment in value, which is recognised as an expense in the period in which the impairment
is identified.
Significant influence is the power to participate in the financial and operating policy decisions of the investee without
the power to control or jointly control those policies.
Impairment of non-financial assets
Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment.
These assets include Investments in subsidiaries and associates which are the main assets of the Company. Assets
that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. An impairment loss is recognised at the amount by which the
asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair
value, less selling costs and value in use. For the purposes of assessing impairment, assets are grouped at the
lowest levels for which there are separately identifiable cash flows (cash generating uni
ts). Non-
financial assets,
other than goodwill that suffered impairment, are reviewed for possible reversal of the impairment at each reporting
date.
Revenue
Recognition and measurement
Revenue shall be recognised in such a way to depict the transfer of services to customers and reflect the
consideration that the entity expects to be entitled to in exchange for transferring those services to the
customer,
the transaction price. The Company includes in the transaction price an amount of variable consideration as a result
of rebates/discounts only to the extent that it is highly probable that a significant reversal in the amount of
cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is
subsequently resolved.
Revenue from contracts with customers (in writing, orally or in accordance with other customary business practices)
is recognised when control of the services are transferred to the customer at an amount that reflects the
consideration to which the Company expects to be entitled in exchange for those services.
The Company bases its estimates on historical results, taking into consideration the type of customer, the type of
transaction and the specifics of each arrangement. In evaluating whether collectability of an amount of consideration
is probable, the Company considers only the customer's ability and intention to pay that amount of consideration
when it is due.
Estimates of revenues, costs or extent of progress toward completion are revised if circumstances change. Any
resulting increases or decreases in estimates are reflected in the statement of profit or loss and other comprehensive
income in the period in which the circumstances that give rise to the revision become known by Management.
FINANCIAL STATEMENTS / PARENT
61
ANNUAL REPORT 2022 PETROLIA SE
PETROLIA SE
NOTES TO THE FINANCIAL STATEMENTS
31 December 2022
4. Significant accounting policies (continued)
Identification of performance obligations
The Company assesses whether contracts that involve the provision of a range of services contain one or more
performance obligations (that is, distinct promises to provide a service) and allocates the transaction price to each
performance obligation identified
on the basis of its stand-
alone selling price. A service that is promised to a
customer is distinct if the customer can benefit from the service, either on its own or together with other resources
that are readily available to the customer (that is the service is capable of being distinct) and the Company's promise
to transfer the service to the customer is separately identifiable from other promises in the contract (that is, the
service is distinct within the context of the contract).
• Management and consultancy fees
Revenue from rendering of services is recognised over time while the Company satisfies its performance
obligation by transferring control over the promised service to the customer in the accounting period in
which the services are rendered
. For fixed price contracts, revenue is recognised based on the actual service
provided to the end of the reporting period as a proportion of the total services to be provided because the
customer receives and uses the benefits simultaneously. This is dete
rmined based on the annual or monthly
fee under contract and the period for which the Company has provided services to subsidiaries, group
subsidiaries and associate company.
Dividend income
Dividends are received from investments in subsidiaries and associates. Dividends are recognised as dividend income
in profit or loss when the right to receive payment is established.
Employee benefits
The Company and its employees contribute to the Government Social Insurance Fund based on employees' salaries.
The Company's contributions are expensed as incurred and are included in staff costs. The Company has no legal or
constructive obligations to pay further contributions if the scheme does not hold sufficient assets to pay all
employees benefits relating to employee service in the current and prior periods.
Finance income
Interest income is recognised on a time-proportion basis using the effective interest rate method.
Finance costs
Interest expense and other borrowing costs are charged to profit or loss as incurred.
Foreign currency translation
(1)
Functional and presentation currency
Items included in the Company's financial statements are measured using the currency of the primary
economic environment in which the entity operates ('the functional currency'). The financial statements are
presented in United States Dollars (USD 000), which is the Company's functional and presentation currency.
(2)
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing
at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation at year
-
end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in profit or loss.
Tax
Current tax liabilities and assets are measured at the amount expected to be paid to or recovered from the taxation
authorities, using the tax rates and laws that have been enacted, or substantively enacted, by the reporting date.
FINANCIAL STATEMENTS / PARENT
62
ANNUAL REPORT 2022 PETROLIA SE
PETROLIA SE
NOTES TO THE FINANCIAL STATEMENTS
31 December 2022
4. Significant accounting policies (continued)
Leasing
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract
conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
Company as lessee
The Company applies a single recognition and measurement approach for all leases, except for short term leases
and leases of low value assets. The Company
recognises lease liabilities to make lease payments and right of use
assets representing the right to use the underlying assets.
Right of use assets
The Company recognises right of use assets at the commencement date of the lease (i.e. the date the underlying
asset is available for use). Right of use assets are measured at cost, less any accumulated depreciation and
impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right of use assets includes
the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the
commencement date less any lease incentives received.
Right of use assets are depreciated on a straight
-line basis over the shorter of the lease term and the est
imated
useful lives of the assets, in accordance with the depreciation accounting policy on property, plant and equipment.
The estimated useful lives of buildings is 33 years from the date of construction. If ownership of the leased asset
transfers to the Company at the end of the lease term or the cost reflects the exercise of a purchase obligation or a
purchase option, depreciation is calculated using the estimated useful life of the asset. The right of use assets are
also subject to impairment testing in the same manner as other non-financial assets.
Lease liabilities
At the commencement date of the lease, the Company recognises lease liabilities measured at the present value of
lease payments to be made over the lease term i.e the non
-
cancellable period of the lease including reasonably
certain to exercise extension or termination options. The lease payments include fixed payments (including in
substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or
a rate, and amounts expected to be paid under residual value guarantees. The lease payments also
include the
exercise price of a purchase option, reasonably certain to be exercised by the Company, and payments of penalties
for terminating a lease, if the lease term reflects the Company exercising the option to terminate. The variable lease
payments that do not depend on an index or a rate are recognised as expense in the period on which the event or
condition that triggers the payment occurs.
In calculating the present value of lease payments, the Company uses the incremental borrowing rate at the lease
commencement date if the interest rate implicit in the lease is not readily determinable. After the commencement
date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease
payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a
change in the lease term, a change in the in substance fixed lease payments or a change in the assessment to
purchase the underlying asset.
Short term leases and leases of low value assets
The Company applies the short
-
term lease recognition exemption (i.e. those leases that have a lease term of 12
months or less from the commencement date and do not contain a purchase option). It also applies the low value
lease recognition exemption in respect of miscellaneous assets. Lease payments on short term and low value leases
are recognised as expense on a straight-line basis over the lease term.
The Company does not act as a lessor in any transaction.
FINANCIAL STATEMENTS / PARENT
63
ANNUAL REPORT 2022 PETROLIA SE
PETROLIA SE
NOTES TO THE FINANCIAL STATEMENTS
31 December 2022
4. Significant accounting policies (continued)
Financial instruments
Financial assets and financial liabilities are recognised in the Company's statement of financial position when the
Company has become a party to the contractual provisions of the instrument.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly
attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and
financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial
assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the
acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in
profit or loss.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial instrument and of
allocating the interest over the relevant period. The effective interest rate ("EIR") is the rate that exactly discounts
estimated future cash flows through the expected life of the financial instrument, or, where appropriate, a shorter
period to its net carrying amount.
(i) Financial assets
Initial recognition and measurement
The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow
characteristics and the Company’s business model for managing them. With the exception of trade receivables that
do not contain a significant financing component or for which the Company has applied the practical expedient, the
Company initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value
through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component are
measured at the transaction price determined under IFRS 15.
The Company’s business model for managing financial assets refers to how it manages its financial assets in order to
generate cash flows. The business model determines whether cash flows will result from collecting contractual cash
flows, selling the financial assets, or both.
In order for a financial asset to be classified and measured at amortised cost or fair value through
OCI, it needs to
give rise to cash flows that are ‘solely payments of principal and interest (SPPI)’ on the principal amount
outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level.
Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or
convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the
Company commits to purchase or sell the asset.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
• Financial assets at amortised cost (debt instruments)
• Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt instruments)
•
Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon
derecognition (equity instruments)
• Financial assets at fair value through profit or loss
Financial assets at amortised cost (debt instruments)
This category is the most relevant to the Company. The Company measures financial assets at amortised cost if both
of the following conditions are met:
FINANCIAL STATEMENTS / PARENT
64
ANNUAL REPORT 2022 PETROLIA SE
PETROLIA SE
NOTES TO THE FINANCIAL STATEMENTS
31 December 2022
4. Significant accounting policies (continued)
Financial assets (continued)
Financial assets at amortised cost (debt instruments) (continued)
•
The financial asset is held within a business model wi
th the objective to hold financial assets in order to collect
contractual cash flows
And
•
The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments
of principal and interest on the principal amount outstanding
Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are
subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or
impaired.
The
Company’s financial assets at amortised cost includes trade and other receivables, cash at bank and loans
receivable.
Financial assets - Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a Company of similar financial assets) is
primarily derecognised (i.e., removed from the Company’s consolidated statement of financial position) when:
• The rights to receive cash flows from the asset have expired or
•
The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to
pay the received cash flows in full without material delay to a third party under a ‘pass-
through’ arrangement
and either (a) the Company has transf
erred substantially all the risks and rewards of the asset, or (b) the
Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has
transferred control of the asset
Financial assets - Impairment - credit loss allowance for ECL
The Company recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair
value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance
with the contract and all the cash flows that the Company expects to receive, discounted at an approximation of the
original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or
other credit enhancements that are integral to the contractual terms.
ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit
risk since initial recognition, ECLs are provided for credit losses that result from default events
that are possible
within the next 12
-months (a 12-
month ECL). For those credit exposures for which there has been a significant
increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the
remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).
The Company applies the simplified approach for trade and other receivables and general approach for bank
deposits in relation to the calculation of ECLs. In particular for trade and other receivables that are due within twelve
months, the 12 month ECLs are the same as the lifetime ECLs. By using the simplified approach, the Company does
not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting
date. In relation to trade and other receivables, in order to measure the expected credit losses, the Company
measured the historical loss rates based on the payment profiles of revenue, the historical loss rates are adjusted to
reflect forward looking factors specific to the receivables and the economic environment affecting the ability of the
customers to settle the receivables.
FINANCIAL STATEMENTS / PARENT
65
ANNUAL REPORT 2022 PETROLIA SE
PETROLIA SE
NOTES TO THE FINANCIAL STATEMENTS
31 December 2022
4. Significant accounting policies (continued)
Financial assets (continued)
Financial assets - Impairment - credit loss allowance for ECL (continued)
In relation to the loans due from related parties and amounts receivable from related parties, management has
completed some high level analysis, which considers both historical and forward looking qualitative and quantitative
information, to determine if a related party loan and balance is low credit risk at 31 December 2022. Management
has considered the financial performance and financial position as well as the remaining term of the loans, and
whether the related parties will have sufficient cash throughout that period to meet all of their working capital and
other obligations, including repayment of the related party balances. Management does not expect that there will be
adverse changes in economic and business conditions during that period. Consequently, management has
determined that the loans and amounts receivable from related parties, are low credit risk, falls within ‘stage 1’ of
IFRS 9’s impairment model, and 12 month expected credit losses can be calculated.
The Company considers a financial asset in default when contractual payments are 90 days past due. However, in
certain cases, the Company may also consider a financial asset to be in default when internal or external information
indicates that the Company is unlikely to receive the outstanding contractual amounts in full before taking into
account any credit enhancements held by the Company. A financial asset is written off when there is no reasonable
expectation of recovering the contractual cash flows.
Cash and cash equivalents
For the purpose of the statement of cash flows, cash and cash equivalents comprise cash at bank. Cash and cash
equivalents are carried at amortised cost because: (i) they are held for collection of contractual cash flows and those
cash flows represent SPPI, and (ii) they are not designated at FVTPL.
(ii) Financial liabilities - measurement categories
Financial liabilities are initially recognised at fair value and classified as subsequently measured at amortised cost,
except for (i) financial liabilities at FVTPL: this classification is applied to derivatives, financial liabilities held for
trading (e.g., short positions in securities), contingent consideration recognised by an acquirer in a business
combination and other financial liabilities designated as such at initial recognition and (ii) financial guarantee
contracts and loan commitments.
The Company’s financial liabilities include trade and other payables and borrowings.
The Company has not designated any financial liability as at fair value through profit or loss.
Provisions
Provisions are recognised when the Company has a present legal or constructive obligation as a result of past
events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of
the amount can be made. Where the Company expects a provision to be reimbursed, for example under an
insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is
virtually certain.
Non-current liabilities
Non-current liabilities represent amounts that are due more than twelve months from the reporting date.
Borrowings
Borrowings are recorded initially at the proceeds received, net of transaction costs incurred. Borrowings are
subsequently stated at amortised cost. Any difference between the proceeds (net of transaction costs) and the
redemption value is recognised in profit or loss over the period of the borrowings using the effective interest
method.
Trade payables
Trade payables are initially measured at fair value and are subsequently measured at amortised cost, using the
effective interest rate method.
FINANCIAL STATEMENTS / PARENT
66
ANNUAL REPORT 2022 PETROLIA SE
PETROLIA SE
NOTES TO THE FINANCIAL STATEMENTS
31 December 2022
4. Significant accounting policies (continued)
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When
an existing financial liability is replaced by another from the same lender on substantially different terms, or the
terms of an existing liability are substantially modified, such an exchange or modification is treated as the
derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying
amounts is recognised in the statement of profit or loss.
(iii) Offsetting financial instruments
Financial assets and financial liabilities are offset and the net amount reported in the consolidated statement of
financial position if there is a currently enforceable legal right to offset the recognised amounts and there is an
intention to settle on a net basis, to realise the asset and settle the liability simultaneously.
Share capital
Ordinary shares are classified as equity. The difference between the fair value of the consideration received by the
Company and the nominal value of the share capital being issued is taken to the share premium account.
5. New accounting pronouncements
At the date of approval of these financial statements, standards and interpretations were issued by the International
Accounting Standards Board which were not yet effective. Some of them were adopted by the European Union and
others not yet. The Board of Directors expects that the adoption of these accounting standards in future periods will
not have a material effect on the financial statements of the Company.
6. Critical accounting estimates and judgments
The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting
estimates and requires Management to exercise its judgment in the process of applying the Company's accounting
policies. It also requires the use of assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Although these estimates are based on Management's best
knowledge of current events and actions, actual results may ultimately differ from those estimates.
Estimates and judgments are continually evaluated and are based on historical experience and other factors,
including expectations of future events that are believed to be reasonable under the circumstances.
The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts
of assets and liabilities within the next financial year are discussed below:
• Impairment of investments in subsidiaries and associates
The Company periodically evaluates the recoverability of investments in subsidiaries/associates whenever
indicators of impairment are present. Indicators of impairment include such items as declines in revenues,
earnings or cash flows or material adver
se changes in the economic or political stability of a particular
country, which may indicate that the carrying amount of an asset is not recoverable. If facts and
circumstances indicate that investment in subsidiaries/associates may be impaired, the estim
ated future
discounted cash flows associated with these would be compared to their carrying amounts to determine if
a write-down to fair value is necessary.
FINANCIAL STATEMENTS / PARENT
67
ANNUAL REPORT 2022 PETROLIA SE
PETROLIA SE
NOTES TO THE FINANCIAL STATEMENTS
31 December 2022
6. Critical accounting estimates and judgments (continued)
• Impairment of financial assets - allowance for credit losses on loan receivables and amounts
receivable from related parties
The loss
allowances for financial assets are based on assumptions about risk of default and expected loss
rates. In relation to the loans and amounts due from related parties, in order to calculate the ECL, the
Company applied the 12 month ECL model and the general
approach. In determining the recoverability of
the loans and amounts due from related parties, the Company considered the historic repayments made in
conjunction with the parties’ financial position at year end and their ability to make future repayments
based
on their current and expected future trading activities.
7. Revenue from contracts with customers
The Company derives its revenue from contracts with customers for the transfer of services over time as follows:
Disaggregation of revenue
2022
2021
USD 000
USD 000
Management fees (Note 24.2)
9
9
Consultancy fees (Note 24.3)
261
125
270
134
8. Operating loss
2022
2021
USD 000
USD 000
Operating loss is stated after charging the following items:
Depreciation of right-of-use assets (Note 18)
60
61
Directors' remuneration (Note 24.1)
114
92
Staff costs (Note 9)
759
589
Auditors' remuneration - current year
194
163
Auditors’ remuneration for other non-audit services
4
3
Auditors' remuneration - prior years under-provision
26
3
Legal and professional
6
3
9. Staff costs
2022
2021
USD 000
USD 000
Wages
649
537
Social security costs
110
52
759
589
The average number of employees during the year was 4 (2021: 4).
FINANCIAL STATEMENTS / PARENT
68
ANNUAL REPORT 2022 PETROLIA SE
PETROLIA SE
NOTES TO THE FINANCIAL STATEMENTS
31 December 2022
10. Finance income/(costs)
2022
2021
USD 000
USD 000
Loan interest income (Note 15)
560
249
Other interest income
21
1
Finance income
581
250
Net foreign exchange losses
(892)
(269)
Interest expense on lease liabilities (Note 18)
(4)
(8)
Interest expense on borrowings
(154)
(277)
Sundry finance expenses
(4)
(4)
Finance costs
(1.054)
(558)
Net finance costs
(473)
(308)
11. Tax
2022
2021
USD 000
USD 000
Corporation tax (of the branch)
(51)
-
Credit for the year
(51)
-
The tax on the Company's results before tax differs from theoretical amount that would arise using the applicable tax
rates as follows:
2022
2021
USD 000
USD 000
(Loss)/profit before tax
(7.668)
2.043
Tax calculated at the applicable tax rates
(959)
256
Tax effect of expenses not deductible for tax purposes
848
74
Tax effect of allowances and income not subject to tax
-
(497)
Tax effect of tax loss for the year
111
57
Tax effect of group contribution (branch)
(51)
110
Tax refund
(51)
-
The Company is resident in Cyprus for tax purposes.
Interest income is subject to Income Tax at the standard rate of 12,5% if the interest is considered to be generated
in the ordinary carrying on of a business or closely connected to it. If the interest income is neither generated in the
ordinary carrying on of a business nor closely connected to it, it is subject to Defence Tax at a rate of 30%. The
interest income of the Company is considered to be generated in the ordinary carrying of the business.
Dividends received from a non
-resident (foreign) compa
ny are exempt from Defence Tax if the dividend paying
company derives more than 50% of its income directly or indirectly from activities which do not lead to investment
income or the foreign tax burden on the profit to be distributed as dividend has not been substantially lower than
the Cypriot tax rate at the level of the dividend paying company.
FINANCIAL STATEMENTS / PARENT
69
ANNUAL REPORT 2022 PETROLIA SE
PETROLIA SE
NOTES TO THE FINANCIAL STATEMENTS
31 December 2022
11. Tax (continued)
Companies, which do not distribute 70% of their profits after tax, as defined by the Special Contribution for the
Defence of the Republic Law, within two years after the end of the relevant tax year, will be deemed to have
distributed this amount as dividend on the 31 of December of the second year. The amount of the deemed dividend
distribution is reduced by any actual dividend already distributed by 31 December of the second year for the year
the profits relate. The Company pays special defence contribution on behalf of the shareholders over the amount of
the deemed dividend distribution at a rate of 17% (applicable since 2014) when the entitled shareholders are natural
persons tax residents of Cyprus and have their domicile in Cyprus. In addition, the Company pays on behalf of the
shareholders General Healthcare System (GHS) contribution at a rate of 2,65%, when the entitled shareholders are
natural persons tax residents of Cyprus, regardless of their domicile.
The Company’s Branch in Norway (the “Branch”) is subject to income tax at the rate of 22% (2021: 22%) on the tax
profits realized in Norway. The Branch under current legislation may carry forward the balance of tax losses
indefinitely in the future. The Company in Cyprus is subject to income tax at the rate of 12,5% (2021: 12,5%) on
the tax
profits realized in Cyprus. The Company's tax losses in Cyprus amounts to USD 1.963 thousand
and can be
carried forward for 5 years. No deferred tax asset has been recognised as it is not expected that future taxable
profits will be available to be utilised.
12. Property, plant and equipment
Plant and
machinery
USD 000
Cost
Balance at 1 January 2022
-
Additions
1
Balance at 31 December 2022
1
Depreciation
Balance at 1 January 2022
-
Charge for the year
-
Balance at 31 December 2022
-
Net book amount
Balance at 31 December 2022
1
Balance at 31 December 2021
-
During the year, the Company through its branch, has acquired a new laptop at a cost of NOK 21 (USD 1).
FINANCIAL STATEMENTS / PARENT
70
ANNUAL REPORT 2022 PETROLIA SE
PETROLIA SE
NOTES TO THE FINANCIAL STATEMENTS
31 December 2022
13. Investments in subsidiaries
2022
2021
USD 000
USD 000
Balance at 1 January
44.058
40.156
(Impairment)/Reversal of impairment - net
(5.662)
3.902
Effect of group contribution
(476)
-
Balance at 31 December
37.920
44.058
The details of the subsidiaries are as follows:
Name
Country of
incorporation
Principal
activities
2022
Holding
%
2021
Holding
%
2022
USD 000
2021
USD 000
Petrolia AS (1)
Norway
Holding company
of IOT Group
- oil
service
100
100
37.183
43.577
Petrolia Tool Pool AS
Norway
Holding company
100
100
17
17
Venture Drilling AS (2)
Norway
Oil Service
100
100
-
199
Independent Oil Tools International
(Cyprus) Ltd (3)
Cyprus
Holding company
100
100
720
265
37.920
44.058
The Company performs an impairment assessment of its subsidiaries when there are indicators for impairment or
reversal of impairment in accordance with the relevant accounting standard.
(1) During 2022, an impairment of USD 6.393 thousand was recognized (2021: reversal of impairment USD 3.984
thousand). The accumulated impairment as at 31 December 2022 is USD 87.627 thousand (2021: USD 81.234
thousand). Petrolia AS is the holding company of the oil service sub-group.
Management notes that following the uncertainty of oil prices due to covid
-
19 and the effects of the conflict in
Ukraine, Russia and/or Belarus, the market conditions are now less favourable. In addition, the internal reporting
indicates that the economic performance of the oil service sub
-
group is slightly down compared to prior years and
net assets of the investee are lower compared to the investment’s carrying amount. All the above, are indicators of
impairment and therefore the Company compared the carrying amount with the estimated recoverable amount. The
impairment was estimated by using the discounted cash flow model for a period of 5 years with an exit price. The
discounted cash flow calculations included the following main inputs and assumptions:
• Capital expenditure based on historic averages
• Exit price using an EV/EBITDA multiple of 5,9 based on publicly industry available information
• Discount rate of 10,7%
The following sensitivity analysis has been performed by management as at the year-end:
•
A decrease in projected EBITDA rates
of 10% would result in USD 9.790 thousand total impairment whereas an
increase in projected EBITDA rates of 5% would result in USD 4.695 thousand impairment,
• A decrease of the EV/EBITDA multiple to 4,9 would result in USD 10.193 thousand total impairment and
• An increase in the discount rate of 1% would result in USD 8.807 thousand total impairment.
FINANCIAL STATEMENTS / PARENT
71
ANNUAL REPORT 2022 PETROLIA SE
PETROLIA SE
NOTES TO THE FINANCIAL STATEMENTS
31 December 2022
13. Investments in subsidiaries (continued)
(2) During 2022, a group contribution of USD 476 thousand has reduced the cost of the investment in Venture
Drilling AS. As a result, a reversal of impairment of USD 277 thousand was recognized in order to
keep the value of
the investment at nil. The accumulated impairment as at 31 December 2022 is USD 47.733 thousand (2021: USD
48.010 thousand). Venture Drilling AS is the holding company of the land rigs owned by the Group. Management has
based its impairment assessment on the net assets and financial performance of the investee and concluded that
there are indicators for reversal of impairment based on the financial performance of the investee.
(3) As at 31 December 2022, reversal of impairment of USD 455
thousand (2021: impairment of USD 82 thousand)
was recognised. The accumulated impairment as at 31 December 2022 is USD 12.879 thousand (2021: USD 13.334
thousand). Independent Oil Tools International (Cyprus) Ltd is a holding company, and management has based its
impairment assessment on the net assets of the investee which considered to be a closed approximation of its fair
value less cost to disposal. The internal reporting of Independent Oil Tools International (Cyprus) indicates that the
economic performance of the investee has been improved in 2022 and will be further improved compared to prior
years and the net assets of the investee is higher compared to the investment’s carrying amount. All the above, are
indicators of reversal of impairment and therefore the Company compared the investment’s carrying amount with
the recoverable amount.
Total impairment for the year amounted to USD 5.662 thousand (2021: USD 3.902 thousand). Total accumulated
impairment as at 31 December 2022 amounted to USD 168.289 thousand (2021: USD 162.627 thousand).
14. Investments in associate
The details of the investment are as follows:
2022
2021
USD 000
USD 000
Balance at 1 January
271
660
Impairment charge
(147)
(389)
Balance at 31 December
124
271
The details of the investment are as follows:
Name
Country of
incorporation
Principal
activities
2022
Holding
%
2021
Holding
%
2022
USD 000
2021
USD 000
Petrolia Noco
AS
Norway
Oil & Gas
11,27
12,44
124
271
124
271
During 2021, the investment in Petrolia Noco AS has increased its capital by the issuance of additional share capital.
The associate has completed a private placement issue where 11.700.000 have been issued at a price of NOK 3,70
per share.
Petrolia SE has
not participated in the purchase of additional shares therefore Petrolia SE shareholding
decreased from 13,53% to 12,44%. However, it has exercised significant influence through participating in the
financial and operating policy decisions of the investee
(Petrolia Noco AS) through its common director Berge Gerdt
Larsen and Sjur Storaas who remain on the board of directors of both companies, the Parent (Petrolia SE) and
associate (Petrolia Noco AS).
FINANCIAL STATEMENTS / PARENT
72
ANNUAL REPORT 2022 PETROLIA SE
PETROLIA SE
NOTES TO THE FINANCIAL STATEMENTS
31 December 2022
14. Investments in associate (continued)
During 2022, the investment in Petrolia Noco AS has increased its capital by the issuance of additional share capital.
The associate has completed a private placement issue where 15.000.000 shares have been issued at a price of NOK
2,00 per share.
Petrolia SE
has not participated directly in the purchase of additional shares but 7.484.959 shares
were subscribed by Petrolia AS, a 100% subsidiary of Petrolia SE and therefore its shareholding decreased from
12,44% to 11,27%. However, the Company retained significant influence through participating in the financial and
operating policy decisions of the investee (Petrolia Noco AS) through its common director Berge Gerdt Larsen and
Sjur Storaas who remain on the board of directors of both companies, the Parent (Petrolia SE) and associate
(Petrolia Noco AS).
The Company compared the carrying amount of the investment with the recoverable amount and estimated
impairment. The impairment was estimated to USD 147 thousand (2021: USD 389 thousand) by reference to the net
asset of the associate and arose as a result of losses incurred by the associate during the year. The accumulated
impairment as at 31 December 2022 amounted to USD 25.534 thousand (2021: USD 25.387 thousand).
Through its subsidiaries the Company controls 49,9% (2021: 49,9%) of the shares of Petrolia NOCO AS.
15. Loan receivable from associate
2022
2021
USD 000
USD 000
Balance at 1 January
6.595
-
Loans granted
-
8.226
Principal repayments
(1.506)
(1.784)
Interest income (Note 10)
560
249
Interest received
(592)
(89)
Exchange differences
(695)
(7)
Balance at 31 December
4.362
6.595
Less current portion
(4.362)
-
Non
-current portion
-
6.595
On 14 May 2020, Petrolia Noco AS (borrower) and Independent Oil & Resources Plc (lender and security agent) have
signed a new loan agreement. According to the loan agreement, the borrower can enter into any additional loans
with any additional lender by entering into an accession letter, provided that 10 days prior notice is given to the
lender and the security agent. During 2021, Petrolia SE through its branch Petrolia NUF (additional lender) has
provided a loan to Petrolia Noco AS amounting to NOK 71.750.000 (USD 8.225.838). The loan bears interest of 10%
p.a. and is repayable by 10 December 2023. Total interest income for the year amounted to NOK 1.414.452 (USD
248.813). On 15 November 2022, Petrolia Noco AS has repaid the amount of NOK 15.000.000 (USD 1.506.811) to
the Company. Total interest income for the year amounted to NOK 5.491.540 (USD 560.168).
The loan is repayable as follows:
2022
2021
USD 000
USD 000
Within one year
4.362
-
Between one and five years
-
6.595
4.362
6.595
Loan is denominated in NOK.
Refer also to Note 13 to the consolidated financial statements.
FINANCIAL STATEMENTS / PARENT
73
ANNUAL REPORT 2022 PETROLIA SE
PETROLIA SE
NOTES TO THE FINANCIAL STATEMENTS
31 December 2022
16. Trade and other receivables
2022
2021
USD 000
USD 000
Trade receivables
31
5
Receivables from related parties (Note 24.4)
606
131
Deposits and prepayments
44
11
VAT refundable
307
379
988
526
For the amounts receivable from related parties, the Company has applied the 12 month ECL model and the general
approach (Note 24.4) and concluded that there are no significant expected credit losses to be booked (2021:
reversal of the expected credit loss on the receivables related balance of USD 100 thousand).
The fair values of trade and other receivables due within one year approximate to their carrying amounts as
presented above.
17. Restricted cash
2022
2021
USD 000
USD 000
Bank deposits
55
36
Less non-current portion
(55)
(36)
Current portion
-
-
Refer also to Note 16 to the consolidated financial statements.
18. Leases
The Company has an office rental agreement with a lease term until 31 December 2023, with options to extend.
Management exercises judgement in determining whether it is reasonably certain to continue to use the premises for
additional periods. Management has not taken into account any additional optional periods in the lease calculations.
The incremental borrowing rate used in the calculation was 5%. The addition of one more year in the lease
calculations will result in an increase in Right of use asset and
lease liability by USD 59 thousand whereas the
addition of two years will result in an increase of USD 115 thousand.
Set out below are the carrying amounts of right of use assets recognised and the movements during the year:
Right of Use Asset:
2022
2021
USD 000
USD 000
Balance at 1 January
129
187
Depreciation charge for the year (Note 8)
(60)
(61)
Exchange differences
(1)
3
Balance at 31 December
68
129
Set out below are the carrying amounts of lease liabilities and the movements during the year:
FINANCIAL STATEMENTS / PARENT
74
ANNUAL REPORT 2022 PETROLIA SE
PETROLIA SE
NOTES TO THE FINANCIAL STATEMENTS
31 December 2022
18. Leases (continued)
Lease liability
2022
2021
USD 000
USD 000
Balance at 1 January
131
187
Repayments
(68)
(67)
Interest expense (Note 10)
4
8
Exchange differences
1
3
Balance at 31 December
68
131
Less current portion
(68)
(62)
Non
-current portion
-
69
19. Cash at bank
Cash balances are analysed as follows:
2022
2021
USD 000
USD 000
Cash at bank
2.052
1.929
2.052
1.929
20. Share capital
2022
2022
2021
2021
Number of
shares
USD 000
Number of
shares
USD 000
Authorised
Ordinary shares of USD1 each
272.358.670
27.236
272.358.670
27.236
Issued and fully paid
Balance at 1 January
59.133.786
5.913
59.133.786
5.913
Balance at 31 December 2022
59.133.786
5.913
59.133.786
5.913
Refer also to Note 17 to the consolidated financial statements.
21. Borrowings
2022
2021
USD 000
USD 000
Current borrowings
6% callable bond loan - principal and interest due, not yet paid
-
4.744
Total
-
4.744
On 18 July 2022, the 6% callable bond loan along with the interest outstanding, have been fully repaid.
Refer also to Note 18 to the consolidated financial statements.
FINANCIAL STATEMENTS / PARENT
75
ANNUAL REPORT 2022 PETROLIA SE
PETROLIA SE
NOTES TO THE FINANCIAL STATEMENTS
31 December 2022
22. Trade and other payables
2022
2021
USD 000
USD 000
Trade payables
166
56
Social insurance and other taxes
107
86
Shareholders' current accounts - credit balances (Note 24.6)
10
-
Accruals
118
155
Payables to own subsidiaries (Note 24.5)
134
146
Payables to related parties (Note 24.5)
2.168
2.168
2.703
2.611
The fair values of trade and other payables due within one year approximate to their carrying amounts as presented
above.
23. Current tax liabilities
2022
2021
USD 000
USD 000
Corporation tax
54
-
54
-
24. Related party transactions and balances
The following transactions were carried out with related parties:
24.1 Directors' remuneration (Note 8)
The remuneration of Directors was as follows:
2022
2021
USD 000
USD 000
Directors' remuneration
114
92
114
92
24.2 Management fees charged to related parties (Note 7)
2022
2021
Nature of transactions
USD 000
USD 000
Subsidiaries and sub-subsidiaries
Trade
9
9
9
9
24.3 Consultancy fees charged to related parties (Note 7)
2022
2021
Name
Nature of transactions
USD 000
USD 000
Petrolia Noco AS
Trade
261
125
261
125
FINANCIAL STATEMENTS / PARENT
76
ANNUAL REPORT 2022 PETROLIA SE
PETROLIA SE
NOTES TO THE FINANCIAL STATEMENTS
31 December 2022
24. Related party transactions and balances (continued)
24.4 Receivables from related parties (Note 16)
2022
2021
Name
Nature of transactions
USD 000
USD 000
IO & R Ltd
Finance
8
9
Venture Drilling AS
Finance
476
-
Petrolia Invest AS
Finance
122
122
606
131
The receivables from related parties are interest free, and have no specified repayment date.
The accumulated ECL provisions were made in accordance with the relevant accounting policy. Management
concluded that the probability of default is insignificant
and hence there was no expected credit loss recognized. The
accumulated ECL for the year amounted to USD 1.392 thousand (2021: USD 1.392 thousand).
Movement of Accumulated Impairment:
2022
2021
USD 000
USD 000
Balance at 1 January
1.392
1.492
Reversal of impairment for the year
-
(100)
Balance at 31 December
1.392
1.392
24.5 Payables to own subsidiaries and related parties (Note 22)
2022
2021
Name
Nature of transactions
USD 000
USD 000
Independent Oil Tools International (Cyprus)
Ltd
Finance
134
146
Venture Drilling Limited
Finance
2.168
2.168
2.302
2.314
The payables to related parties are provided interest free, and have no specified repayment date.
24.6 Shareholders' current accounts - credit balances (Note 22)
2022
2021
USD 000
USD 000
Berge Larsen
10
-
10
-
The shareholders' current accounts are interest free, and have no specified repayment date.
25. Contingent liabilities
The Company had no contingent liabilities as at 31 December 2022.
26. Commitments
The Company had no capital or other commitments as at 31 December 2022.
27. Events after the reporting period
Refer to Note 29 to the Consolidated financial statements.
There were no other material events after the reporting period, which have a bearing on the understanding of the
financial statements.
FINANCIAL STATEMENTS / PARENT
77
ANNUAL REPORT 2022 PETROLIA SE
AUDITOR'S
REPORT
78
ANNUAL REPORT 2022 PETROLIA SE
AUDITORS REPORT
79
ANNUAL REPORT 2022 PETROLIA SE
AUDITORS REPORT
80
ANNUAL REPORT 2022 PETROLIA SE
AUDITORS REPORT
81
ANNUAL REPORT 2022 PETROLIA SE
AUDITORS REPORT
AUDITORS REPORT
82
ANNUAL REPORT 2022 PETROLIA SE
AUDITORS REPORT
83
ANNUAL REPORT 2022 PETROLIA SE
AUDITORS REPORT
