PETROLIA SE - ANNUAL REPORT 2023
ANNUAL REPORT 23
PETROLIA SE
20
23
ANNUAL REPORT 2023 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 80
CORPORATE GOVERNANCE REPORT 87
4
RESPONSIBILITY
STATE
MENT
04
ANNUAL REPORT 2023 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 2023
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 2023, confirm that, to the best of
our knowledge:
(a) the annual consolidated and separate
financial statements that are presented on
pages 12 to 78:
•
(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, 26th of April 2024
Berge Gerdt Larsen
Chair 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 2023 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 ("PNO"), an independent
E&P company on the Norwegian Continental
Shelf ("NCS"). The company is registered on
NOTC. PNO has various licence shares, has
made one commercial discovery, has some
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 one landrig, drills and per-
forms workover on land wells as a drilling
contractor with this rig 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, Utilisation
and Storage (CCUS) activities.
The subsurface competence of PNO may
be used for CO2 Storage Wells on the NCS.
ANALYSIS OF THE FINANCIAL STATEMENTS
Petrolia SE presents its financial information
in USD.
Financial information, Group
Total revenue amounted to USD 54.2 million for
the fiscal year 2023 (2022: USD 55.5 million),
mainly related to the Energy Service segment.
Operating profit for the Group in 2023
amounted to USD 5.4 million, after deduc-
tion of depreciation of USD 6.8 million and
impairment of fixed assets of USD 0.4 mil-
lion. Operating profit for the Group in 2022
amounted to USD 5.6 million, after deduction
of depreciation of USD 6.6 million and im-
pairment of fixed assets of USD 0.5 million.
Profit after tax for the Group amounted to
USD 1.8 million in 2023 (2022: loss of USD
0.7 million).
As at 31 December 2023, the total assets
of the Group amounted to USD 66.9 million.
Total assets of the Group amounted to USD
63.9 million as at 31 December 2022.
Total equity of the Group amounted to USD
41.1 million as at 31 December 2023, including
a minority interest of USD 2.6 million.
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.
As at 31 December 2023, 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 11.0
million in 2023 (2022: USD 7.3 million). Cash
flows from investments was USD -6.2 mil-
lion in 2023 (2022: USD -1.4 million). Cash
flows from financing activities in 2023 was
USD -5.8 million (2022: USD -10.3 million)
mainly related to interests, lease interests
and instalments.
Total cash position including restricted cash
at 31 December 2023 was USD 10.8 million
(2022: USD 11.9 million).
Financial information, Parent
Total revenues amounting to USD 158 thou-
sand for 2023 (2022: USD 270 thousand),
related mainly to management (USD 114
thousand) and consultancy (USD 44 thou-
sand) fees for the rendering of services to
the Group by the Norwegian branch.
Operating loss for the parent company
amounted to USD 784 million (2022: USD
1.4 million).
Loss after tax for the parent amounted to USD
12.7 million (2022: loss of USD 7.6 million).
As at 31 December 2023, the total assets
of the Parent amounted to USD 34.8 million
of which investments in subsidiaries were
USD 26.1 million, loan assets was USD 5.9
million, cash at bank was USD 1.7 million,
investment in associates was nil and USD
0.8 million in trade and other receivables.
Total equity of the Parent amounted to USD
30.0 million as at 31 December 2023 (2022:
USD 42.7 million).
As at 31 December 2023, 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 1.3
million in 2023 (2022: USD 3.0 million). Cash
flows from investing were USD -1.6 million
(2022: 2.1 million). Cash flows from financing
were USD -44 thousand (2022: USD -5.0
million).
Total cash position including restricted cash
at 31 December 2023 was USD 1.8 million
(2022: USD 2.1 million).
FINANCIAL AND LIQUIDITY RISK
The Group’s long-term financing is mainly
financial lease of equipment totalling USD
6.2 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 parent financial state-
ments 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
MANAGEMENT REPORT
ANNUAL REPORT 2023 PETROLIA SE
08
MANAGEMENT REPORT
forecasts have been made based on past
experiences and detailed knowledge of the
local markets.
The Group’s management expects a good
environment for the Energy Service segment
in 2024 and remains confident in the Group’s
ability to continue 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 five employees, three men
and two women.
In total, the Group had 198 highly competent
employees worldwide as at 31 December
2023. 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 2023.
Petrolia’s Board of Directors consisted of 4
men as at 31 December 2023.
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 2023 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 2023 and as at 23 April
2024, 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 2023.
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 2023.
In March 2023, 100,000 own shares were
purchased for a total of NOK 411,276 (NOK
4.11 per share) by Petrolia Invest AS, a
100% owned subsidiary.
BOARD OF DIRECTORS
The members of the Company’s Board of
Directors as at 31 December 2023 and at the
date of this report are Berge Gerdt Larsen,
Sjur Storaas, George Hadjineophytou and
Polycarpos Protopapas.
The General Meeting on 31 May 2023
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.
ANNUAL REPORT 2023 PETROLIA SE
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.
09
MANAGEMENT REPORT
Limassol, 26th of April 2024
Berge Gerdt Larsen
Chair of the Board
Polycarpos Protopapas
Board member
Managing director
Sjur Storaas
Board member
Sølve Nilsen
Finance manager
George Hadjineophytou
Board member
10
ANNUAL REPORT 2023 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 2023. This report relates to the period
1 January 2023 to 31 December 2023 and
should be read as part of the Company's
Annual Report for 2023. During 2023, 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 2023,
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 2023.
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.
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 wher-
ever possible. We respect internationally
recognised human rights and we set our
commitments in our human rights policy and
our Code of Conduct. All of our initiatives
during 2023 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 2023 PETROLIA SE
11
FINANCIAL
STATEMENTS
GROUP
12
ANNUAL REPORT 2023 PETROLIA SE
FINANCIAL STATEMENTS
Petrolia SE – Group
CONSOLIDATED INCOME STATEMENT
for the year ended 31 December 2023
(Amounts in USD 1,000)
Note 2023 2022
Revenue from contracts with customers 5 54,199 55,504
Wages cost 6 -14,043 -14,288
Other operating expenses 7 -27,533 -28,518
Operating result before depreciation and impairments 12,623 12,698
Depreciation 11 -6,822 -6,568
Net impairment of fixed assets 11 -427 -532
Operating result 5,374 5,598
Result from associated companies 12 -1,476 -1,944
Interest income 8 510 606
Financial income 8 8 13
Interest expenses 8 -956 -1,001
Financial expenses 8 -544 -2,272
Result before income taxes 2,916 1,000
Income tax 9 -1,143 -1,711
Result for the year 1,773 -711
Attributable to:
Equity holders of the parent 2,008 -1,569
Non-controlling interests -235 858
1,773 -711
Attributable to the equity holders (USD per share)
Earnings/(loss) per share (Basic and diluted, from continuing operations) 10 0.03 -0.03
FINANCIAL STATEMENTS / GROUP
13
ANNUAL REPORT 2023 PETROLIA SE
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2023
(Amounts in USD 1,000) Note 2023 2022
Result for the year 1,773 -711
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 505 -49
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
0 482
Total comprehensive income/(loss) for the year, net of tax 2,278 -278
Attributable to:
Equity holders of the parent 2,472 -1,075
Non-controlling interests -194 797
Total comprehensive income/(loss) for the year 2,278 -278
FINANCIAL STATEMENTS / GROUP
14
ANNUAL REPORT 2023 PETROLIA SE
ASSETS (Amounts in USD 1,000) Note 2023 2022
Non-current assets
Goodwill 28 249 249
Right of use assets 11 15,491 15,168
Land and buildings 11 2,292 1,758
Energy Service and other equipment 11 12,005 11,421
Land rigs 11 1,418 1,579
Investment in associated companies 12 0 547
Other financial assets 13 1,004 1,004
Restricted cash 16 3 3
Total non-current assets 32,462 31,729
Current assets
Inventory 26 1,683 1,965
Trade receivables 14 14,934 10,950
Other current receivables 14 1,039 2,826
Other financial assets 13 5,920 4,362
Financial assets at fair value through profit or loss 15 36 163
Free cash 16 10,595 11,627
Restricted cash 16 209 237
Total current assets 34,416 32,130
TOTAL ASSETS 66,878 63,859
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 December 2023
FINANCIAL STATEMENTS / GROUP
15
ANNUAL REPORT 2023 PETROLIA SE
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 December 2023
EQUITY AND LIABILITIES (Amounts in USD 1,000)
Note 2023 2022
Equity
Share capital 17 5,913 5,913
Own shares 17 -39 0
Share premium 12,222 12,222
Other reserves 20,338 18,255
Equity attributable to equity holders of the parent 38,434 36,390
Non-controlling interests 2,619 2,624
Total equity 41,053 39,014
Liabilities
Non-current liabilities
Lease liabilities 19 8,622 9,830
Bank loan 21 463 225
Deferred tax liabilities 9 564 215
Other non-current liabilities 234 273
9,883 10,543
Current liabilities
Lease liabilities 19 5,573 4,989
Trade payables 20 4,017 3,381
Other payables 20 5,824 4,840
Bank loan and overdraft 21 199 121
Income tax payable 329 971
15,942 14,302
Total liabilities 25,825 24,845
TOTAL EQUITY AND LIABILITIES 66,878 63,859
Limassol, 26th of April 2024
Berge Gerdt Larsen
Chair 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 2023 PETROLIA SE
Attributable to equity holders of the parent
(Amounts in USD 1,000)
Share
capital
Own
shares
Share
premium
Reorgan-
isation
reserve
Retained
earnings
Fair value
reserve
of
financial
assets at
FVOCI
Currency
transla-
tion
Subtotal Non-
con-
trolling
interests
Total
equity
Equity 1 January 2022 5,913 0 12,222 -15,075 32,958 0 1,423 37,441 1,851 39,292
(Loss)/profit for the year 0 0 0 0 -1,569 0 0 -1,569 858 -711
Other comprehensive income
Gain on equity instruments
designated at fair value
through other comprehensive
income
0 0 0 0 0 482 0 482 0 482
Exchange differences
on translation of foreign
operations
0 0 0 0 0 0 36 36 -85 -49
Total comprehensive (loss)/
income
0 0 0 0 -1,569 482 36 -1,051 773 -278
Equity 31 December 2022 5,913 0 12,222 -15,075 31,389 482 1,459 36,390 2,624 39,014
Profit/(loss) for the year 0 0 0 0 2,008 0 0 2,008 -235 1,773
Other comprehensive income
Exchange differences
on translation of foreign
operations
0 0 0 0 0 0 464 464 41 505
Total comprehensive income/
(loss)
0 0 0 0 2,008 0 464 2,472 -194 2,278
Acquisition of own shares
(Note 17)
0 -39 0 0 0 0 0 -39 0 -39
Acquisition of non-controlling
interests (Note 28)
0 0 0 0 -389 0 0 -389 189 -200
Equity 31 December 2023 5,913 -39 12,222 -15,075 33,008 482 1,923 38,434 2,619 41,053
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2023
FINANCIAL STATEMENTS / GROUP
17
ANNUAL REPORT 2023 PETROLIA SE
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2023
FINANCIAL STATEMENTS / GROUP
(Amounts in USD 1,000) Note 2023 2022
Operating activities
Profit before taxes 2,916 1,000
Reversal of expected credit losses 7 -278 -211
Profit on disposal of property, plant and equipment 11 -745 -1
Depreciation of property, plant and equipment and right of use assets 11 6,822 6,568
Impairment of property, plant, equipment 11 427 532
Interest income 8 -510 -606
Change in financial assets at fair value through profit or loss 8 16 -2
Interest expense on lease liabilities 8 932 835
Interest expense on bonds 8 0 153
Other interest expenses 8 24 13
Change in inventory 282 -32
Change in trade receivables -3,984 -514
Change in other current receivables 1,689 -248
Change in trade payables 636 -1,973
Change in other payables 984 -1,044
Change in other non-current liabilities -39 163
Result from investment in associated companies 12 1,476 1,944
Income tax paid -1,123 -546
Other, incl unrealised foreign currency gain 1,502 1,299
Net cash generated from operating activities 11,027 7,330
Investing activities
Purchase of fixed assets 11 -4,536 -2,495
Disposal of equipment 601 528
Dividends 6 0
Repayment of loans granted 13 934 1,507
Loan granted 13 -2,934 0
Investment in associates 12 -930 -1,503
Proceeds from sale of shares 15 111 0
Interest received 510 606
Net cash used in investing activities -6,238 -1,357
Financing activities
Release/(increase) of restricted cash 28 -15
Leasing instalments (capital) 23 -5,193 -4,393
Interest paid on bond loans (net) 8 0 -277
Other interest paid 8 -24 -13
Interest paid on lease liabilities 19 -932 -835
Bond loan, repaid 0 -4,620
Bank loan, drawn down 23 435 0
Bank loan, repaid 23 -135 -101
Net cash used in financing activities -5,821 -10,254
Net cash flow of the period -1,032 -4,281
Free cash and cash equivalents at the beginning of the period 16 11,627 15,908
Free cash and cash equivalents balance at 31 December 16 10,595 11,627
18
ANNUAL REPORT 2023 PETROLIA SE
2.1 BASIS OF PREPARATION
The consolidated financial statements of
Petrolia SE have been prepared in compli-
ance with International Financial Reporting
Standards (IFRSs) as endorsed by the EU and
the requirements of the Cyprus Companies
Law, Cap.113.
The consolidated financial statements have
been prepared under the historical cost
convention with the following modification:
Financial assets recognised at fair value
through profit or loss and financial assets
at fair value through other comprehensive
income.
The preparation of financial statements in
conformity with IFRS requires the use of
certain critical accounting estimates. It also
requires management to exercise its judge-
ment in the process of applying the Group’s
accounting policies. The areas involving a
higher degree of judgement or complexity,
or areas where assumptions and estimates
are significant to the consolidated financial
statements are discussed in note 3 below.
The consolidated financial statements are
presented in United States Dollars (USD)
and all values are rounded to the nearest
thousand (USD 1,000), except when other-
wise indicated.
The accounting year follows the calendar year.
FAIR VALUE MEASUREMENT
Fair value is the price that would be received
from the sale of an asset or paid to transfer
a liability in an orderly transaction between
market participants at the measurement date.
The fair value measurement is based on the
presumption that the transaction whereby
an asset is sold, or a liability is transferred
takes place either in the principal market for
the asset or liability or in the absence of a
principal market, in the most advantageous
market for the asset or liability.
The principal or the most advantageous
market must be accessible by the Group.
The fair value of an asset or a liability is
measured using the assumptions that market
participants would use when pricing the asset
or liability, assuming that market participants
act in their economic best interest. A fair
value measurement of a non-financial asset
takes into account a market participant's
ability to generate economic benefits by using
the asset in its highest and best use or by
NOTE 1 GENERAL INFORMATION
NOTES - GROUP
to the consolidated financial statements
Petrolia SE (the "Company") is a European
public limited company organised under the
laws of Cyprus. The Company's registered
office is at 205 Christodoulou Chatzipavlou
Street, Loulloupis Court, 4th floor, office 401,
3036 Limassol, Cyprus. The Company also has
a Norwegian branch with registered office at
Haakon VIIs gate 1 (2. etg.), Oslo, Norway.
The main activity of the Group is the sale
and rental of energy service equipment to
the global energy industry.
The annual financial statements were adopt-
ed by the Board of Directors on the 26th of
April 2024 and will be passed to the Annual
General Meeting for approval.
Petrolia SE was established on the 26th of
October 2012 as a result of the merger be-
tween Petrolia ASA (established on the 13th
of March 1997) and Petrolia E&P Holdings
Plc. The consolidated financial statements for
the financial year 2023 comprise the Company
and its subsidiaries and the Group’s share
of associated companies. The Company is
listed on the Oslo Stock Exchange with
ticker "PSE" and ISIN "CY 010 263 0916".
The table below presents general ESEF data.
NOTE 2 MATERIAL ACCOUNTING POLICIES
Domicile of entity Limassol Principal place of business Cyprus
Legal form of entity European public limited company
Description of nature of entity's
operations and principal activities
The main activity of the Group
is the sale and rental of
energy service equipment to
the global energy industry
Country of incorporation Cyprus Name of parent entity Petrolia SE
Address of entity's registered
office
205 Christodoulou Chatzipavlou
Street, Loulloupis Court
Name of ultimate parent of group
Petrolia SE
FINANCIAL STATEMENTS / GROUP / NOTES
19
ANNUAL REPORT 2023 PETROLIA SE
selling it to another market participant that
would use the asset in its highest and best
use. The Group uses valuation techniques
that are appropriate in the circumstances
and for which sufficient data are available
to measure fair value, maximising the use of
relevant observable inputs and minimising the
use of unobservable inputs. All assets and
liabilities for which fair value is measured
or disclosed in the consolidated financial
statements are categorised within the fair
value hierarchy, described in note 18.
GOING CONCERN
Management has conducted a review of the
going concern assumption considering all
relevant information available up to the date
the consolidated and parent financial state-
ments 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
experiences and detailed knowledge of the
local markets.
The Group’s management expects a good
environment for the Energy Service segment
in 2024 and remains confident in the Group’s
ability to continue 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.
2.2 BASIS OF CONSOLIDATION
The consolidated financial statements com-
prise the financial statements of the Company
and its subsidiaries as at 31 December 2023.
Control is achieved when the Group is ex-
posed, or has rights, to variable returns from
its involvement with the investee and has
the ability to affect those returns through
its power over the investee. Specifically, the
Group controls an investee if, and only if, the
Group has:
•
power over the investee (i.e., existing
rights that give it the current ability
to direct the relevant activities of the
investee)
•
exposure, or rights, to variable returns
from its involvement with the investee
• ability to use its power over the investee
to affect its returns
Generally, there is a presumption that a
majority of voting rights results in control.
To support this presumption and when the
Group has less than a majority of the voting
or similar rights of an investee, the Group
considers all relevant facts and circumstances
in assessing whether it has power over an
investee, including:
• the contractual arrangement(s) with the
other vote holders of the investee
•
rights arising from other contractual
arrangements
•
the Group’s voting rights and potential
voting rights
The Group re-assesses whether or not it
controls an investee if facts and circum-
stances indicate that there are changes to
one or more of the three elements of control.
Consolidation of a subsidiary begins when the
Group obtains control over the subsidiary
and ceases when the Group loses control
of the subsidiary. Assets, liabilities, income
and expenses of a subsidiary acquired or
disposed of during the year are included in
the consolidated financial statements from the
date the Group gains control until the date
the Group ceases to control the subsidiary.
Profit or loss and each component of other
comprehensive income (OCI) are attributed
to the equity holders of the parent of the
Group and to the non-controlling interests,
even if this results in the non-controlling
interests having a deficit balance. When nec-
essary, adjustments are made to the financial
statements of subsidiaries to bring their
accounting policies in line with the Group’s
accounting policies. All intra-group assets
and liabilities, equity, income, expenses and
cash flows relating to transactions between
members of the Group are eliminated, in full,
on consolidation.
A change in the ownership interest of a sub-
sidiary, without a loss of control, is accounted
for as an equity transaction.
If the Group loses control over a subsidiary,
it de-recognises the related assets (including
goodwill), liabilities, non-controlling interest
and other components of equity, while any
resultant gain or loss is recognised in profit
or loss. Any investment retained is recognised
at fair value.
2.3 MATERIAL ACCOUNTING POLICIES
The material accounting policies applied in the
preparation of these consolidated financial
statements are set out below. These policies
have been consistently applied to all the
years presented, unless otherwise stated.
BUSINESS COMBINATIONS AND GOODWILL
a) Business combinations and goodwill
Business combinations are accounted for
using the acquisition method. The cost of an
acquisition is measured as the aggregate of
the consideration transferred measured at
acquisition date fair value and the amount of
any non-controlling interest in the acquiree.
For each business combination, the Group
elects whether to measure the non-controlling
interest in the acquiree at fair value or at
the proportionate share of the acquiree’s
identifiable net assets. Acquisition-related
costs are expensed as incurred and included
in administrative expenses.
Goodwill is initially measured at cost, being the
excess of the aggregate of the consideration
transferred and the amount recognised for
non-controlling interest over the net identifi-
able assets acquired and liabilities assumed.
If the fair value of the net assets acquired
is in excess of the aggregate consideration
transferred, the gain is recognised in profit
or loss.
After initial recognition, goodwill is measured
at cost less any accumulated impairment
losses.
b) Investment in associates
The group holds an interest in an associate,
Petrolia NOCO AS. The financial statements
of the associate are prepared for the same
FINANCIAL STATEMENTS / GROUP / NOTES
20
ANNUAL REPORT 2023 PETROLIA SE
reporting period as the Group. The accounting
policies of the company are aligned with those
of the Group. Therefore, no adjustments are
made when measuring and recognising the
Group’s share of the profit or loss of the
investees after the date of acquisition. The
aggregate of the Group’s share of profit or
loss of an associate is shown on the face
of the statement of profit or loss outside
operating profit and represents profit or
loss after tax and non-controlling interests
in the subsidiaries of the associate. Goodwill
relating to the associate or joint venture
is included in the carrying amount of the
investment and is not tested for impairment
separately. Thus, reversals of impairments
may effectively include reversal of goodwill
impairments.
If an entity’s share of losses of an associate
equals or exceeds its interest in the associate,
the entity discontinues recognising its share
of further losses. The interest in an associate
is the carrying amount of the investment in the
associate determined using the equity method
together with any long-term interests that,
in substance, form part of the entity’s net
investment in the associate or joint venture.
Impairments and reversals are presented
within ‘Share of profit of an associate and a
joint venture’ in the statement of profit or loss.
FOREIGN CURRENCY TRANSLATION
Functional and presentation currency
Items included in the financial statements of
each of the Group’s entities are measured
using the currency of the primary economic
environment in which the entity operates
(‘the functional currency’). The consolidated
financial statements are presented in USD.
The functional and presentation currency of
the parent company is USD.
Converting from a functional currency other
than USD will normally result in conversion
differences in the consolidated financial
statements.
Transactions and balances
Foreign currency transactions are trans
-
lated into the functional currency using the
exchange rates prevailing at the dates of
the transactions or valuation where items
are remeasured. 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 curren-
cies are recognised in the income statement
under financial income / financial expenses.
Non-monetary items that are measured in terms
of historical cost in a foreign currency are
translated using the exchange rates at the dates
of the initial transactions. Non-monetary items
measured at fair value in a foreign currency
are translated using the exchange rates at the
date when the fair value is determined. The gain
or loss arising on translation of non-monetary
items measured at fair value is treated in line
with the recognition of the gain or loss on the
change in fair value of the item (i.e., translation
differences on items whose fair value gain
or loss is recognised in OCI or profit or loss
are also recognised in OCI or profit or loss,
respectively).
Group companies
The results and financial position of all the
Group entities that have a functional currency
different from the presentation currency are
translated into the presentation currency
as follows:
•
assets and liabilities in each statement of
financial position presented are translated
at the closing rate;
•
income and expenses in each income
statement are translated at the average
exchange rates for the period;
•
all resulting exchange differences are
recognised in the statement of compre-
hensive income and as a separate item of
equity (recycled to income statement upon
disposal of the underlying investments).
Currency translation differences on net in-
vestment in foreign operations and financial
instruments designated as hedges of such
investments are recorded as part of the com-
prehensive income and as a separate item in
equity. Goodwill and fair value adjustments
arising on the acquisition of a foreign entity
are treated as assets and liabilities of the for-
eign entity and translated at the closing rate.
REVENUE FROM CONTRACTS WITH CUSTOMERS
Rental of equipment – Service transferred
over time:
The primary business function of the Group
is the rental of equipment for upstream ex-
ploration & production activity, as such, the
primary source of revenue is based on rental
of equipment. The performance obligation
is satisfied over time as the customer si-
multaneously receives and consumes the
benefits provided by the Group. This perfor-
mance obligation has two alternative payment
options. The rental projects that continue
throughout the month (more than 30 days)
are invoiced in bulk at the end of each month,
whereas the projects that terminate prior
to the months end are invoiced ad hoc as
the customer has confirmed the final rental
day. The payment terms vary depending on
the individual contract with customers, but
due dates normally range from 30 to 90 days
from the invoice date.
On projects where the Group does not own
the required equipment, there are contracts
with customers to acquire, on their behalf, the
required equipment from external suppliers.
The Group is acting as principal in these
arrangements.
Services – Service transferred over time:
Service and repairs:
All equipment returned from rental assign-
ments are subject to inspection where it is
determined whether service and/or repair
is required. This performance obligation is
satisfied upon completion of service and
payment is generally due 30 to 90 days upon
completion and acceptance by the customer.
Hire of personnel:
Personnel services comprise casing & tubing
running, drilling and make & brake servic-
es. These services have fixed daily rates in
accordance with individual contracts. The
performance obligation is satisfied over time,
as the customer simultaneously receives
and consumes the benefits provided. This
performance obligation has two alternative
payment options. The projects that continue
throughout the month (more than 30 days)
are invoiced in bulk at the end of each month,
whereas the projects that terminate prior to
the month's end are invoiced ad hoc upon
completion of service. The payment terms
FINANCIAL STATEMENTS / GROUP / NOTES
21
ANNUAL REPORT 2023 PETROLIA SE
vary, depending on individual contract with
customers but due dates normally range from
30 to 90 days from the invoice date.
Sales of goods – Goods transferred at a point
in time:
Procurement services:
There are contracts with customers to
acquire, on their behalf, goods from ex-
ternal suppliers. The Group is acting
as principal in these arrangements be-
cause it typically controls the goods
before transferring them to the custom-
er. The performance obligation is satisfied
upon receipt of the goods by the customer
and payment is generally due 30 to 90 days
upon that date.
Sales of equipment:
When the group sells equipment directly to
customer the performance obligation is sat-
isfied at delivery and payment is generally
due 30-90 days upon this date.
INTEREST INCOME
Interest income is recognised using the
effective interest method. When a loan or
receivable is impaired, the Group reduces the
carrying amount to its recoverable amount.
The recoverable amount is the estimated
future cash flow discounted at the original
effective interest rate. Interest income on
impaired loans is recognised using the original
effective interest rate.
TAXES
The tax expense for the period comprises
current and deferred tax. Tax is recognised
in the income statement, except to the extent
that it relates to items recognised in other
comprehensive income or directly in equity.
In this case, the tax is also recognised in
other comprehensive income or directly in
equity, respectively.
Current income tax
The current income tax charge is calculated
on the basis of the tax laws enacted or sub-
stantively enacted at the balance sheet date
in the countries where the Company’s subsid-
iaries and associates operate and generate
taxable income. Management periodically
evaluates positions taken in tax returns with
respect to situations in which applicable tax
regulation is subject to interpretation. It
establishes provisions, where appropriate,
on the basis of amounts expected to be paid
to the tax authorities.
Deferred income tax
Deferred income tax is recognised, using the
liability method, on temporary differences
arising between the tax bases of assets and
liabilities and their carrying amounts in the
consolidated financial statements. However,
the deferred income tax is not accounted
for if it arises from initial recognition of an
asset or liability in a transaction other than a
business combination that at the time of the
transaction affects neither accounting nor
taxable profit or loss. Deferred income tax
is determined using tax rates (and laws) that
have been enacted or substantially enacted
at the balance sheet date and are expected
to apply when the related deferred income
tax asset is realised, or the deferred income
tax liability is settled.
Deferred income tax assets are recognised
only to the extent that it is probable that future
taxable profit will be available against which
the temporary differences can be utilised.
Deferred income tax is provided on tempo-
rary differences arising on investments in
subsidiaries and associates, except where
the timing of the reversal of the temporary
difference is controlled by the Group and it
is probable that the temporary difference
will not reverse in the foreseeable future.
Deferred income tax assets and liabilities are
offset when there is a legally enforceable right
to offset current tax assets against current
tax liabilities and when the deferred income
tax assets and liabilities relate to income
tax levied by the same taxation authority on
either the taxable entity or different taxable
entities where there is an intention to settle
the balances on a net basis.
Sales tax
Expenses and assets are recognised net of
the amount of sales tax, except:
•
when the sales tax incurred on a purchase
of assets or services is not recoverable
from the taxation authority, in which case
the sales tax is recognised as part of the
cost of acquisition of the asset or as part
of the expense item, as applicable,
•
when receivables and payables are stated
with the amount of sales tax included.
The net amount of sales tax recoverable from,
or payable to, the taxation authority is includ-
ed as part of receivables or payables in the
statement of financial position.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated
at historical cost less depreciation and
impairment.
Depreciation on property, plant and equipment
is calculated using the straight-line method
to allocate their cost to their residual values
over their estimated useful lives.
The assets’ residual values and useful lives
are reviewed and adjusted if appropriate, at
each reporting date. In particular, the Group
considers the impact of health, safety and
environmental legislation in its assessment of
expected useful lives and estimated residual
values. Furthermore, the Group considers
climate-related matters, including physical
and transition risks. Specifically, the Group
determines whether climate-related legis-
lation and regulations might impact either
the useful life or residual values, e.g., by
banning or restricting the use of the Group’s
fossil fuel-driven machinery and equipment
or imposing additional energy efficiency re-
quirements on the Group’s buildings and
office properties. No changes were made
after these evaluations.
An asset’s carrying amount is written down
immediately to its recoverable amount if the
asset’s carrying amount is greater than its
estimated recoverable amount.
Gains on sales of equipment lost in hole or
damaged by customers are determined by
comparing the proceeds with the carrying
amount and are recognised net within ‘other
revenue’ in the income statement.
All other gains and losses are recognised
as profit/loss on disposal of property, plant
and equipment included in other operating
expenses.
FINANCIAL STATEMENTS / GROUP / NOTES
22
ANNUAL REPORT 2023 PETROLIA SE
LEASES
The determination of whether an arrange-
ment is, or contains, a lease is based on
the substance of the arrangement at the
inception date. The arrangement is assessed
for whether fulfilment of the arrangement is
dependent on the use of a specific asset or
assets or the arrangement conveys a right
to use the asset or assets, even if that right
is not explicitly specified in an arrangement.
Group as a lessee
The Group applies a single recognition and
measurement approach for all leases, except
for short-term leases and leases of low-value
assets. The Group recognises lease liabilities
to make lease payments and right-of-use
assets representing the right to use the un-
derlying assets.
i) Right-of-use assets
The Group 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 estimated
useful lives of the assets, as follows:
•
Energy service and other equipment, 7
years
• Land and buildings, 1 to 10 years
If ownership of the leased asset transfers
to the Group at the end of the lease term or
the cost reflects the exercise of a purchase
option, depreciation is calculated using the
estimated useful life of the asset.
The right-of-use assets are also subject to
impairment. Refer to the accounting policies in
section Impairment of non-financial assets.
ii) Lease liabilities
At the commencement date of the lease, the
Group recognises lease liabilities measured
at the present value of lease payments to be
made over the lease term. In calculating the
present value of lease payments, the Group
uses its incremental borrowing rate at the
lease commencement date because the in-
terest 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 remeas-
ured if there is a modification, a change in the
lease term, a change in the lease payments
(e.g., changes to future payments resulting
from a change in an index or rate used to
determine such lease payments) or a change
in the assessment of an option to purchase
the underlying asset.
iii) Short-term leases and leases of low-value
assets
The Group applies the short-term lease rec-
ognition exemption to its short-term leases of
machinery and equipment (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 lease of low value assets recognition
exemption to leases of office equipment that
are considered to be low value. Lease pay-
ments on short-term leases and leases of
low value assets are recognised as expense
on a straight-line basis over the lease term.
Group as a lessor
Leases in which the Group does not transfer
substantially all the risks and benefits of
ownership of an asset are classified as op-
erating leases. Initial direct costs incurred in
negotiating an operating lease are added to
the carrying amount of the leased asset and
recognised over the lease term on the same
basis as rental income. Contingent rents are
recognised as revenue in the period in which
they are earned. The Group also gets into
sub-lease agreements for its ROU assets.
These sub-leases are short term and treated
as operating leases.
FINANCIAL INSTRUMENTS – INITIAL RECOG-
NITION AND SUBSEQUENT MEASUREMENT
A financial instrument is any contract that
gives rise to a financial asset of one entity
and a financial liability or equity instrument
of another entity.
i) Financial assets
Financial assets are classified, at initial
recognition, as subsequently measured at
amortised cost, fair value through OCI and
fair value through the income statement. The
classification of financial assets at initial
recognition depends on the financial asset’s
contractual cash flow characteristics and the
Group’s business model for managing them.
With the exception of trade receivables that
do not contain a significant financing com-
ponent or for which the Group has applied
the practical expedient, the Group initially
measures a financial asset at its fair value
plus, in the case of a financial asset not at
fair value through the income statement,
transaction costs. Trade receivables that do
not contain a significant financing component
are measured at the transaction price de-
termined under IFRS 15.
Financial assets at amortised cost (debt
instruments)
This category is the most relevant to the
Group. The Group measures financial assets
at amortised cost if both of the following
conditions are met:
•
the financial asset is held within a business
model with 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 princi-
pal and interest on the principal amount
outstanding.
Financial assets at amortised cost are subse-
quently measured using the effective interest
rate (EIR) method and are subject to im-
pairment. Gains and losses are recognised
in the income statement when the asset is
de-recognised, modified or impaired.
The Group’s financial assets at amortised
cost includes trade receivables, cash at bank
and loan to an associate.
Financial assets designated at fair value through
OCI (equity instruments)
Upon initial recognition, the Group can elect
to classify irrevocably its equity investments
as equity instruments designated at fair value
through OCI when they meet the definition of
equity under IAS 32 Financial Instruments
FINANCIAL STATEMENTS / GROUP / NOTES
23
ANNUAL REPORT 2023 PETROLIA SE
Presentation and are not held for trading.
The classification is determined on an in-
strument-by- instrument basis.
Gains and losses on these financial assets
are never recycled to the income statement.
Dividends are recognised as other income
in the income statement when the right of
payment has been established, except when
the Group benefits from such proceeds as a
recovery of part of the cost of the financial
asset, in which case, such gains are record-
ed in OCI. Equity instruments designated at
fair value through OCI are not subject to
impairment assessment.
The Group's equity instruments designated at
fair value through OCI are shown in note 13.
Impairment of financial assets
Further disclosures relating to impairment
of financial assets are also provided in the
following notes:
•
Critical accounting judgements, estimates
and assumptions (Note 3);
• Financial risk management, Credit risk
(Note 23).
The Group recognises an allowance for
expected credit losses (ECLs) for all debt
instruments not held at fair value through
the income statement. ECLs are based on
the difference between the contractual cash
flows due in accordance with the contract
and all the cash flows that the Group 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 con-
tractual 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 ex-
pected over the remaining life of the exposure,
irrespective of the timing of the default (a
lifetime ECL).
For trade receivables, the Group applies
a simplified approach in calculating ECLs.
Therefore, the Group does not track changes
in credit risk, but instead recognises a loss
allowance based on lifetime ECLs at each
reporting date. The Group has established
a provision matrix that is based on its his-
torical credit loss experience, adjusted for
forward-looking factors specific to the debt-
ors and the economic environment as well
as adjusted for individual ECL assessments
against particular customers.
The Group considers a financial asset in
default when contractual payments are 90
days past due. However, in certain cases, the
Group may also consider a financial asset
to be in default when internal or external
information indicates that the Group is un-
likely to receive the outstanding contractual
amounts in full before taking into account
any credit enhancements held by the Group.
A financial asset is written off when there is
no reasonable expectation of recovering the
contractual cash flows.
ii) Financial liabilities
All financial liabilities are recognised ini-
tially at fair value and, in the case of loans
and borrowings and payables, net of directly
attributable transaction costs.
Financial liabilities at amortised cost
This is the category most relevant to the
Group. Interest-bearing loans are initially
measured at fair value and are subsequently
measured at amortised cost using the EIR
method. Gains and losses are recognised in
the income statement when the liabilities are
de-recognised as well as through the EIR
amortisation process.
Amortised cost is calculated by taking into
account any discount or premium on acqui-
sition and fees or costs that are an integral
part of the EIR. The EIR amortisation is in-
cluded as finance costs in the statement of
the income statement.
This category mainly applies to trade and
other payables and bank loan. For more in-
formation, refer to Note 20 and 21.
INVENTORIES
Inventories are valued at the lower of cost
and net realisable value. Costs incurred in
bringing each product to its present location
and condition are accounted for as follows:
•
raw materials: purchase cost on a first
in, first out basis.
•
finished goods and work in progress:
cost of direct materials and labour and a
proportion of manufacturing overheads
based on the normal operating capacity
but excluding borrowing costs.
Net realisable value is the estimated selling
price in the ordinary course of business,
less estimated costs of completion and the
estimated costs necessary to make the sale.
IMPAIRMENT OF NON-FINANCIAL ASSETS
Assets that have an indefinite useful life are
not subject to amortisation and are tested
annually for impairment. 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 units). Non-financial
assets, other than goodwill that suffered im-
pairment, are reviewed for possible reversal
of the impairment at each reporting date.
CASH AND SHORT TERM DEPOSITS
Cash and cash equivalents in the statement
of financial position comprise cash at banks
and at hand and short term deposits with
an original maturity of three months or less
but exclude any restricted cash which is not
available for use by the Group.
For the purpose of the consolidated statement
of cash flows, cash and cash equivalents con-
sist of cash and cash equivalents, as defined
above, net of outstanding bank overdrafts.
SHARE CAPITAL AND PREMIUM
Ordinary shares and share premium are
classified as equity.
Incremental costs directly attributable to the
issue of new shares or options are shown
FINANCIAL STATEMENTS / GROUP / NOTES
24
ANNUAL REPORT 2023 PETROLIA SE
in equity as a deduction, net of tax, from the
proceeds.
PROVISIONS
The Group recognises provisions when it 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 the amount has
been reliably estimated.
Contingent liabilities and allocations are
reassessed at each balance sheet date and
the size of the recognised provision reflects
best estimate of the obligation.
SEGMENT REPORTING
Operating segments are reported in a manner
consistent with the internal reporting provided
to the management. The Company’s manage-
ment, who are responsible for allocating
resources and assessing performance of the
operating segments, has been identified as
General Managers and the Board of Directors.
CASH FLOW STATEMENT
The cash flow statement has been prepared
by the indirect method. The indirect method
involves reporting gross cash flow from in-
vestment and financing activities, while the
accounting result is reconciled against net
cash flow from operational activities. Cash
and cash equivalents comprise bank deposits
and other current, liquid investments which
immediately and at insignificant exchange
rate risk can be converted into known cash
amounts and with due dates of less than
three months from purchase date.
EARNINGS PER SHARE
Earnings per share are calculated by dividing
the result of the Group attributable to the
shareholders of the parent with the weighted
average number of ordinary shares of the
period.
EVENTS AFTER THE REPORTING DATE
New information about the position of the
Group existing at the reporting date regarding
the accounting period have been taken into
account in the financial statements according
to standard estimation principles. Events after
the reporting date are referred to in note 29.
CLIMATE-RELATED MATTERS
The Group considers climate-related matters
in estimates and assumptions, where appro-
priate. This assessment includes a wide range
of possible impacts on the group due to both
physical and transition risks. Even though
the Group believes its business model and
products will still be viable after the transition
to a low-carbon economy, climate-related
matters increase the uncertainty in estimates
and assumptions underpinning several items
in the financial statements. Even though cli-
mate-related risks might not currently have a
significant impact on measurement, the Group
is closely monitoring relevant changes and
developments, such as new climate-related
legislation. The items and considerations that
are most directly impacted by climate-related
matters are:
•
Useful life of property, plant and equip-
ment. When reviewing the residual values
and expected useful lives of assets, the
Group considers climate-related matters,
such as climate-related legislation and
regulations that may restrict the use
of assets or require significant capital
expenditures of non-financial assets.
Refer to the accounting policies in sec-
tion Property, Plant and Equipment.
•
Impairment of non-financial assets. The
value-in-use may be impacted in sev-
eral different ways by transition risk
in particular, such as climate-related
legislation and regulations and changes
in demand for the Group’s products.
Even though the Group has concluded
that no single climate-related assump-
tion is a key assumption for the 2023
test of impairment, the Group consid
-
ered expectations for increased costs
of emissions and cost increases due
to stricter recycling requirements in
the cash-flow forecasts in assessing
value-in-use amounts. Refer to note 11
for further information.
2.4 ADOPTION OF NEW AND REVISED
INTERNATIONAL FINANCIAL REPORTING
STANDARDS
Amendments to IFRSs and the new
Interpretations that are mandatorily ef-
fective for the current period
The accounting policies adopted are consist-
ent with those of the previous financial year
except for the following IFRS amendments
which have been adopted by the Group/
Company as of 1 January 2023:
• Definition of Accounting Estimates -
Amendments to IAS 8
The amendments to IAS 8 clarify the distinc-
tion between changes in accounting estimates,
changes in accounting policies and the correc-
tion of errors. They also clarify how entities
use measurement techniques and inputs to
develop accounting estimates.
The amendments had no impact on the Group’s
consolidated financial statements.
•
Disclosure of Accounting Policies -
Amendments to IAS 1 and IFRS Practice
Statement 2
The amendments to IAS 1 and IFRS Practice
Statement 2 Making Materiality Judgements
provide guidance and examples to help entities
apply materiality judgements to account-
ing policy disclosures. The amendments aim
to help entities provide accounting policy
disclosures that are more useful by replac-
ing the requirement for entities to disclose
their ‘significant’ accounting policies with
a requirement to disclose their ‘material’
accounting policies and adding guidance on
how entities apply the concept of materiality
in making decisions about accounting policy
disclosures.
The amendments have had an impact on the
Group’s disclosures of accounting policies,
but not on the measurement, recognition
or presentation of any items in the Group’s
financial statements.
• IFRS 17 Insurance Contracts
IFRS 17 Insurance Contracts is a com-
prehensive new accounting standard for
insurance contracts covering recognition
and measurement, presentation and disclo-
sure. IFRS 17 replaces IFRS 4 Insurance
Contracts. IFRS 17 applies to all types of
insurance contracts (i.e., life, non-life, direct
insurance and re-insurance), regardless
of the type of entities that issue them as
well as to certain guarantees and financial
instruments with discretionary participation
features; a few scope exceptions will apply.
The overall objective of IFRS 17 is to pro-
vide a comprehensive accounting model for
insurance contracts that is more useful and
FINANCIAL STATEMENTS / GROUP / NOTES
25
ANNUAL REPORT 2023 PETROLIA SE
consistent for insurers, covering all relevant
accounting aspects. IFRS 17 is based on a
general model, supplemented by:
• A specific adaptation for contracts with
direct participation features (the variable
fee approach)
• A simplified approach (the premium allo-
cation approach) mainly for short-duration
contracts.
The new standard had no impact on the
Group’s consolidated financial statements.
•
Deferred Tax related to Assets and
Liabilities arising from a Single
Transaction – Amendments to IAS 12
The amendments to IAS 12 Income Tax narrow
the scope of the initial recognition exception,
so that it no longer applies to transactions
that give rise to equal taxable and deductible
temporary differences such as leases and
decommissioning liabilities.
The amendments had no impact on the Group’s
consolidated financial statements.
•
International Tax Reform—Pillar Two
Model Rules – Amendments to IAS 12
The amendments to IAS 12 have been intro-
duced in response to the OECD’s BEPS Pillar
Two rules and include:
• A mandatory temporary exception to the
recognition and disclosure of deferred taxes
arising from the jurisdictional implementation
of the Pillar Two model rules; and
• Disclosure requirements for affected entities
to help users of the financial statements.
The amendments had no impact on the Group’s
consolidated financial statements.
New and revised IFRS in issue but not yet
effective
The following Standards and Interpretations
which are relevant to the Group’s operations
are in issue but not yet effective. The Group
does not intend to adopt any standard, in-
terpretation or amendment that has been
issued but is not yet effective before their
effective date.
Management anticipates that the adoption of
all other Standards and Interpretations in
future periods will have no significant impact
on the results and financial position presented
in these consolidated financial statements,
apart from IFRS 18 as disclosed below.
(i) Issued by the IASB and adopted by the
European Union
•
IAS 1 Presentation of Financial
Statements: Classification of Liabilities as
Current or Non-current (Amendments)
The amendments are effective for annual
reporting periods beginning on or after
January 1, 2024, with earlier application
permitted, and will need to be applied ret-
rospectively in accordance with IAS 8. The
objective of the amendments is to clarify the
principles in IAS 1 for the classification of
liabilities as either current or non-current.
The amendments clarify the meaning of a
right to defer settlement, the requirement for
this right to exist at the end of the reporting
period, that management intent does not
affect current or non-current classification,
that options by the counterparty that could
result in settlement by the transfer of the
entity’s own equity instruments do not affect
current or non-current classification. Also,
the amendments specify that only covenants
with which an entity must comply on or before
the reporting date will affect a liability’s clas-
sification. Additional disclosures are also
required for non-current liabilities arising
from loan arrangements that are subject to
covenants to be complied with within twelve
months after the reporting period.
•
IFRS 16 Leases: Lease Liability in a Sale
and Leaseback (amendments)
The amendments are effective for annual re-
porting periods beginning on or after January
1, 2024, with earlier application permitted.
The amendments are intended to improve
the requirements that a seller-lessee uses in
measuring the lease liability arising in a sale
and leaseback transaction in IFRS 16, while
it does not change the accounting for leases
unrelated to sale and leaseback transactions.
In particular, the seller-lessee determines
‘lease payments’ or ‘revised lease payments’
in such a way that the seller-lessee would not
recognise any amount of the gain or loss that
relates to the right of use it retains. Applying
these requirements does not prevent the
seller-lessee from recognising, in profit or
loss, any gain or loss relating to the partial
or full termination of a lease. A seller-lessee
applies the amendment retrospectively in
accordance with IAS 8 to sale and leaseback
transactions entered into after the date of
initial application, being the beginning of the
annual reporting period in which an entity
first applied IFRS 16.
(ii) Issued by the IASB but not yet adopted by
the European Union
•
IAS 7 Statement of Cash Flows and
IFRS 7 Financial Instruments Disclosure
- Supplier Finance Arrangements
(Amendments)
The amendments are effective for annual re-
porting periods beginning on or after January
1, 2024, with earlier application permitted.
The amendments supplement requirements
already in IFRS and require an entity to dis-
close the terms and conditions of supplier
finance arrangements. Additionally, entities
are required to disclose at the beginning
and end of reporting period the carrying
amounts of supplier finance arrangement
financial liabilities and the line items in which
those liabilities are presented as well as the
carrying amounts of financial liabilities and
line items, for which the finance providers
have already settled the corresponding trade
payables. Entities should also disclose the
type and effect of non-cash changes in the
carrying amounts of supplier finance arrange-
ment financial liabilities, which prevent the
carrying amounts of the financial liabilities
from being comparable. Furthermore, the
amendments require an entity to disclose at
the beginning and end of the reporting period
the range of payment due dates for financial
liabilities owed to the finance providers and
for comparable trade payables that are not
part of those arrangements.
•
IAS 21 The Effects of Changes in Foreign
Exchange Rates: Lack of Exchangeability
(Amendments)
The amendments are effective for annual re-
porting periods beginning on or after January
1, 2025, with earlier application permitted.
The amendments specify how an entity should
assess whether a currency is exchangeable
and how it should determine a spot exchange
rate when exchangeability is lacking. A cur-
rency is considered to be exchangeable into
another currency when an entity is able to
obtain the other currency within a time frame
that allows for a normal administrative delay
and through a market or exchange mecha-
nism in which an exchange transaction would
FINANCIAL STATEMENTS / GROUP / NOTES
26
ANNUAL REPORT 2023 PETROLIA SE
create enforceable rights and obligations. If
a currency is not exchangeable into another
currency, an entity is required to estimate
the spot exchange rate at the measurement
date. An entity’s objective in estimating the
spot exchange rate is to reflect the rate at
which an orderly exchange transaction would
take place at the measurement date between
market participants under prevailing economic
conditions. The amendments note that an
entity can use an observable exchange rate
without adjustment or another estimation
technique.
•
Amendment in IFRS 10 Consolidated
Financial Statements and IAS 28
Investments in Associates and Joint
Ventures: Sale or Contribution of Assets
between an Investor and its Associate
or Joint Venture
The amendments address an acknowledged
inconsistency between the requirements in
IFRS 10 and those in IAS 28, in dealing with
the sale or contribution of assets between an
investor and its associate or joint venture.
The main consequence of the amendments is
that a full gain or loss is recognized when a
transaction involves a business (whether it
is housed in a subsidiary or not). A partial
gain or loss is recognized when a transac-
tion involves assets that do not constitute a
business, even if these assets are housed
in a subsidiary. In December 2015 the IASB
postponed the effective date of this amend-
ment indefinitely pending the outcome of its
research project on the equity method of
accounting.
•
IFRS 18 – Presentation and Disclosure
in Financial Statements
On 9 April 2024, the IASB issued the
IFRS 18 – Presentation and Disclosure in
Financial Statements which replaces IAS 1 –
Presentation of Financial Statements. IFRS 18
is the result of the IASB’s Primary Financial
Statements project and it becomes effective
for annual reporting periods beginning on
or after January 1, 2027. Management will
analyse the requirements of the new standard
and assess its impact upon becoming effective.
FINANCIAL STATEMENTS / GROUP / NOTES
27
ANNUAL REPORT 2023 PETROLIA SE
NOTE 3 CRITICAL ACCOUNTING JUDGEMENTS,
ESTIMATES AND ASSUMPTIONS
Estimates and judgements are continually
evaluated and are based on historical experi-
ence and other factors, including expectations
of future events that are believed to be rea-
sonable under the circumstances.
The Group makes estimates and assumptions
concerning the future. The resulting account-
ing estimates will, by definition, seldom equal
the related actual results. The estimates and
assumptions that have a significant risk of
causing a material adjustment to the carry-
ing amounts of assets and liabilities within
the next financial year are addressed below.
i) Impairment of property, plant and equipment
Refer also to note 11.
The Group tests whether the drilling equip-
ment, land rigs and land and buildings have
suffered any impairment whenever events or
changes in circumstances indicate that the
carrying amount may not be recoverable. An
impairment loss is recognised for 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 costs of disposal and value in use.
The value in use calculations are based on
discounted cash flow models. The cash flows
are based on present levels and adjusted for
expected growth or decline. The recoverable
amount is sensitive to the discount rate used
for the discounted cash flow model as well
as the expected future cash inflows and the
growth rate used for extrapolation purposes.
ii) Provision for expected credit losses of
trade receivables
The Group uses a provision matrix at each
location it operates to calculate ECLs for trade
receivables. The provision rates are based
on days past due for groupings of various
customer segments that have similar loss
patterns.
The provision matrix is initially based on the
Group’s historical observed default rates.
The Group will calibrate the matrix to adjust
the historical credit loss experience with
forward-looking information. For instance,
if the oil prices are expected to decrease
over the next year, which can lead to an
increased number of defaults in the energy
service sector, the historical default rates
are adjusted. At every reporting date, the
historical observed default rates are updated
and changes in the forward-looking estimates
are analysed.
As the number of customers at each location
is small, in addition to the collective ECL as-
sessment using the portfolio matrix approach
as adjusted by forward looking information,
the Group also performs individual ECL as-
sessments against the biggest customers
with significant long outstanding balances.
The individual assessments are taking into
account various information known locally
for each customer, such as history of credit
losses, financial performance, settlement
arrangements agreed, etc. The information
about the ECLs on the Group’s trade receiv-
ables is disclosed in Note 14.
iii) Determining the lease term of contracts
with renewal options when the Group acts
as a lessee
The Group determines the lease term as the
non-cancellable term of the lease, together
with any periods covered by an option to
extend the lease if it is reasonably certain
to be exercised, or any periods covered by
an option to terminate the lease, if it is rea-
sonably certain not to be exercised.
The Group has the option, under some of
its leases to lease the assets for additional
periods. The Group applies judgement in
evaluating whether it is reasonably certain
to exercise the option to renew. All relevant
factors including economic incentive fac-
tors, are considered to exercise the renewal.
Local teams are responsible for managing
their leases and, accordingly, lease terms
are negotiated on an individual basis and
contain a wide range of different terms and
conditions. Extension and termination options
are included, when possible, to provide local
management with greater flexibility to align its
need for access to equipment and warehouses
with the fulfilment of customer contracts
and office rentals. The individual terms and
conditions used vary across the Group.
The majority of extension and termination
options held are exercisable only by Lessee
and not by the respective lessors. In cases in
which Lessee is not reasonably certain to use
an optional extended lease term, payments
associated with the optional period are not
included within lease liabilities. In almost
all of the cases, the local teams assumes
that the options to extend a lease will not be
exercised, as on initial recognition it is not
reasonable certain what will be the market
conditions when the Group will need to decide
whether to exercise an option to extend the
lease. After the commencement date, the
Group reassesses the lease term, at each
reporting date, if there is a significant event
or change in circumstances that is within its
control and affects its ability to exercise (or
not to exercise) the option to renew.
During 2023, the financial effect of revising
lease terms to reflect the effect of exercising
extension and termination options was an
increase in recognised lease liabilities of USD
1.7 million (2022: USD 1.5 million).
FINANCIAL STATEMENTS / GROUP / NOTES
28
ANNUAL REPORT 2023 PETROLIA SE
NOTE 4 ORGANISATION
Summary of the companies of the Group:
As at 31.12.2023 the following companies are presented in the consolidated financial statements:
Company Business office , activity, objective % owned 2023 % owned 2022
Subsidiaries (fully consolidated)
Petrolia AS Norway. Energy Service. 100 100
Petrolia Invest AS Norway. Investment company. 100 100
Petrolia Rigs AS Norway. Investment company. 100 100
Oil Tools Supplier AS Norway. Energy Service. 100 100
Independent Oil Tools AS Norway. Energy Service. 100 100
Independent Tool Pool AS Norway. Energy Service. 100 100
IOT Energy Services Australia PTY Ltd
(formerly IOT Group Australia Pty Ltd)
Australia. Energy Service. 100 100
Independent Oil Tools BV Netherlands. Energy Service. 100 100
Independent Oil Tools Dosco BV Netherlands. Energy Service. 70 70
Independent Oil Tools Srl Romania. Energy Service. 100 100
IOT Energy Services New Zealand Limited
(formerly IOT Group Limited)
New Zealand. Energy Service. 100 100
Venture Drilling AS Norway. Energy Service. 100 100
Independent Tool Pool DMCC Jebel Ali Free Zone (Dubai). Energy
Service.
100 100
Petrolia Tool Pool AS Norway. Energy Service. 100 100
Petrolia Rigs II AS Norway. Energy Service. 100 100
Catch Holding BV (Note 28) Netherlands. Energy Service. 100 90
Catch Fishing Services BV (Note 28) Netherlands. Energy Service. 100 90
IO&R Ltd Dubai. Energy Service 100 100
Independent Oil Tools International (Cyprus) Ltd Cyprus. Energy Service. 100 100
Independent Oil Tools Iraq for General Trading Co. Ltd Iraq. Energy Service. 61 61
Tubulars Energy Services (M) Sdn Bhd Malaysia. Energy Service. 100 100
IOT Energy Services Limited UK. Energy Service. 90 90
CO2 Management AS Norway. Energy Service. 100 100
Hydrogen & CCS AS Norway. Energy Service. 100 100
Ammonia Energy Solutions AS Norway. Energy Service 100 100
Associated companies (equity method) (refer to note 12)
Petrolia Noco AS Norway. Exploring for oil and gas on
the Norwegian Continental Shelf.
49.90 49.90
FINANCIAL STATEMENTS / GROUP / NOTES
29
ANNUAL REPORT 2023 PETROLIA SE
The Group has two strategic segments: Energy and Energy Service (including land rigs).
Energy activities are presently carried out through an investment in an associate company. Operating activities are carried out from one segment:
Energy Service. Energy Service activities are described in the accounting policy "Revenue from contracts".
NOTE 5 SEGMENT INFORMATION
Non-current tangible assets include Land and
buildings, Energy Service and other equipment
and Land rigs.
Revenue
The major part of the Group's revenues derive
from short term rental of drilling equipment
such as drill pipes and test tubing. There are
no material contract asset balances.
Geographic allocation
Geographic allocation is primarily based on
where the Group companies are domiciled.
Some asset owning subsidiaries are allocated
as tool pools, because they only rent their
equipment to companies in the Group.
Major customers
The end customers are energy companies,
drilling contractors or energy service
companies. No single customer represents
a significant part of total revenues.
Petrolia Noco AS (Note 12)
The associate company, Petrolia Noco AS,
operates in the Energy segment. The interest
income from the Energy segment is shown
in note 8 and the share of result in note 12.
THE GROUP’S ENERGY SERVICE SEGMENT OPERATES IN THE FOLLOWING MAIN GEOGRAPHICAL AREAS:
2023 Revenue from Energy Service segment
(amounts in USD 1,000)
Rental of equipment Services Sales of equipment
and consumables
Total
Norway 10,158 3,379 1,350 14,887
Europe outside Norway 8,413 3,666 9,104 21,183
Asia and Australia 9,860 6,711 1,558 18,129
Total 28,431 13,756 12,012 54,199
Result for the year from energy service segment 3,249
2022 Revenue from Energy Service segment
(amounts in USD 1,000)
Rental of equipment Services Sales of equipment
and consumables
Total
Norway 7,838 4,195 408 12,441
Europe outside Norway 4,227 5,442 8,206 17,875
Asia and Australia 14,207 7,896 3,085 25,188
Total 26,272 17,533 11,699 55,504
Result for the year from energy service segment 1,233
Non-current tangible assets (amounts in USD 1,000)
2023 2022
Norway 2,331 2,600
Europe outside Norway 7,075 4,637
Asia and Australia 4,608 5,550
Tool pools 1,701 1,971
Total 15,715 14,758
FINANCIAL STATEMENTS / GROUP / NOTES
30
ANNUAL REPORT 2023 PETROLIA SE
(amounts in USD 1,000)
2023 2022
Wages and salaries 11,704 11,970
Social security 1,017 894
Pension costs 751 700
Other contributions 571 724
Total 14,043 14,288
The Group had 198 employees as at the end of 2023 (2022: 259 employees).
Average number of employees was 229 in 2023 (2022: 244).
Remuneration and benefits General Manager and Finance Manager (amounts in USD 1,000)
2023 2022
Polycarpos Protopapas (27 November 2019 -), Managing Director, Cyprus 57 61
Sølve Nilsen (1 October 2010 -), General manager of the Branch, Norway 178 176
Total 235 237
The following fee has been paid to the members of the board (amounts in USD 1,000) :
2023 2022
Berge Gerdt Larsen- Chair of the board, Remuneration committee (re-elected on 31 May 2023) 0 0
George Hadjineophytou - Board member, Audit & Remuneration committees (re-elected on 31 May
2023)
49 55
Sjur Storaas - Board member, Audit & Remuneration committees (re-elected on 31 May 2023) 47 55
Polycarpos Protopapas - Board member (re-elected on 31 May 2023) 0 0
Total 96 110
NOTE 6 WAGES COST
FINANCIAL STATEMENTS / GROUP / NOTES
31
ANNUAL REPORT 2023 PETROLIA SE
NOTE 7 SPECIFICATION OF OTHER OPERATING EXPENSES
The amounts are exclusive of value added tax.
Other operating expenses comprise the following main items
(amounts in USD 1,000) :
2023 2022
Fees to external advisors, lawyers, auditors 1,193 1,242
Cost of goods sold 20,859 22,480
Allowance of expected credit losses (Note 14) -278 -211
Expenses relating to short-term leases 9 60
Expenses relating to leases of low value 3 1
Profit on disposal of property, plant and equipment -745 -1
Other operating expenses 6,492 4,947
Total other operating expenses 27,533 28,518
AUDITORS FEE
Recognised fee for auditors of the group and its subsidiaries (amounts in USD 1,000) :
2023 2022
Statutory audit 445 440
Tax services 132 120
Other non-audit services 38 36
Total auditors' fee 615 596
The total fees charged by the statutory audit firm for the statutory audit of the Parent's separate and consolidated annual financial statements
for the year ended 31 December 2023 amounted to USD 156,357 (2022: USD 143,991). The total fees charged by the statutory audit firm
for the year ended 31 December 2023 for tax advisory services amounted to USD 12,060 (2022: 3,040) and for other non audit services and
prior years amounted to USD 7,591 (2022: nil). The statutory audit firm fees disclosed exclude irrevocable VAT.
FINANCIAL STATEMENTS / GROUP / NOTES
32
ANNUAL REPORT 2023 PETROLIA SE
NOTE 8 SPECIFICATION OF FINANCIAL ITEMS
(amounts in USD 1,000) 2023 2022
Interest income
Interest income from current bank deposits 145 46
Interest income from associate (refer to note 13) 365 560
510 606
Financial income
Dividend income 6 11
Financial guarantee income 2 0
Profit on shares at fair value through profit and loss (refer to note 15) 0 2
8 13
Interest expenses
Interest expense on bonds 0 -153
Other interest expense -24 -13
Interest expense on lease liabilities (refer to note 19) -932 -835
-956 -1,001
Financial expenses
Foreign exchange loss - net -214 -2,209
Loss on shares at fair value through profit and loss (refer to note 15) -16 0
Other financial expenses -64 -63
Allowance of expected credit losses on other financial assets -250 0
-544 -2,272
Net finance cost -982 -2,654
FINANCIAL STATEMENTS / GROUP / NOTES
33
ANNUAL REPORT 2023 PETROLIA SE
NOTE 9 INCOME TAX
Temporary differences regarding non-cur-
rent assets are primarily caused by 1) for
property, plant and equipment; different
depreciation and gains/losses profiles be-
tween accounts and tax filings and 2) some
unrealised currency gains or losses are
included in the accounts but not in the tax
filings. Temporary differences regarding
current assets are primarily regarding
impairments of receivables.
For the Norwegian companies, the tax
obligation is nominated and calculated in NOK,
and then converted to USD. The tax rate is 22%.
The Group has deductible temporary differ-
ences, for its Norwegian subsidiaries, related
to non-current assets of USD 12.8 million
(2022: USD 13.0 million) with a tax value of
USD 2.8 million (2022: USD 2.9 million) that
are not carried as deferred tax assets since it
is uncertain that these can be utilised.
USD 52 thousand is carried as a liability
regarding temporary differences on plant
and equipment and on exchange differences
in Malaysia where a tax rate of 24% has
been applied.
The tax on the Group's results before tax differs from the theoretical amount that would arise
using the applicable tax rates as follows: (amounts in USD 1,000)
2023 2022
Result before tax charges 2,916 1,000
Tax calculated at domestic tax rates applicable to profits in respective countries
(12.5% for parent company)
-794 -1,328
Change in deferred tax -349 -383
Tax on result -1,143 -1,711
Change in deferred tax is nil from tax losses (2022: USD -213 thousand) and USD -349 thousand from temporary differences (2022: USD
-169 thousand). In Cyprus there is a time limit of 5 years for the use of carry-forward tax losses. There is no time limit for the use of car-
ry-forward tax losses in Norway.
Calculation of deferred tax asset (amounts in USD
1,000)
Consolidated statement of financial position Consolidated statement of profit or loss
2023 2022 2023 2022
Non-current assets 8,420 6,668 378 267
Current assets -5,825 -5,690 -30 -73
Net temporary differences 2,595 978 349 169
Carry forward loss 0 0 0 213
Basis for deferred tax liability 2,595 978
Deferred tax expense/(benefit) 349 383
Deferred tax liability at nominal tax rates 564 215
Carried tax asset 0 0
Carried tax liability 564 215
FINANCIAL STATEMENTS / GROUP / NOTES
34
ANNUAL REPORT 2023 PETROLIA SE
(amounts in USD 1,000, with the exception of shares and earnings per share) 2023 2022
Result attributable to the equity holders of the parent
Weighted average number of shares
2,008
59,054,060
-1,569
59,133,786
Number of shares at period end 59,133,786 59,133,786
Basic earnings per average number of shares
From continuing operations 0.03 -0.03
Basic earnings/(loss) per share (USD per share) 0.03 -0.03
NOTE 10 EARNINGS PER SHARE
The Company has no outstanding or
authorised stock options, or warrants. As
at 31 December 2023, a subsidiary of the
Company held 100,000 treasury shares.
The weighted average number of shares takes
into account the weighted average effect of
changes in treasury shares during the year.
FINANCIAL STATEMENTS / GROUP / NOTES
35
ANNUAL REPORT 2023 PETROLIA SE
NOTE 11 PROPERTY, PLANT AND EQUIPMENT
Impairment of property, plant and equipment
In 2022, equipment, land and buildings at
each location was tested for impairment as
one cash generating unit and was impaired
by USD 0.5 million based on value in use cal
-
culations. The main inputs and assumptions
used by management in performing the value
in use calculations as of 31 December 2022
are the Group's budgets discounted from
10.7% to 16.9% depending on the location.
As at 31 December 2023, Group assessed
whether indications of impairment exist relat-
ed to equipment, land rigs, land and buildings
at each location considering internal and
external factors. The Group identified im-
pairment triggers for land rigs and a plant
located in Iraq due to the adverse events
in relation to the geopolitical situation in
Middle East. For the land rigs carried at USD
1.4 million no impairment was made due to
value being close to scrap value already. For
the plant, the recoverable amount USD 0.7
million has been determined based on value
in use calculation using a discounting rate
of 14.7% on cash flow projections, and re-
sulted in impairment recognition of USD 250
thousand. An increase in discounting rate
of 1% would result in additional impairment
of USD 274 thousand.
The calculation of value in use is most sen-
sitive to the following assumptions:
-Turnover projections
-Operating expenses projections
-Capital expenditure projections
-Discount rates
Turnover, operating expenses and capital
expenditure are based on present market
conditions and assuming that they will per-
sist through 2024 and then improve from
2025. A decrease in projected revenue and
associated direct cost of 10% would result
in full impairment.
For equipment located in Israel, the Group
determined recoverable amount to USD nil
and recognised an impairment of USD 177
thousand due to the overall situation con-
nected to the Israel-Hamas conflict.
No impairment indications were identified for
property, plant and equipment other locations.
Energy Service and other equipment include
fixed assets for own use of USD 2.4 million
(2022: USD 2.0 million).
In 2023, the Group had a profit from disposal
(amounts in USD 1,000) Energy
Service
and other
equipment
Land and
buildings
Land rigs Total
Accounting year 2022
Book value 01.01.22 12,820 1,820 1,741 16,381
Currency differences -580 -48 -1 -629
Additions 2,497 13 0 2,510
Disposals -4,543 0 0 -4,543
Depreciation for the year -2,932 -234 -161 -3,327
Impairment charge -532 0 0 -532
Accumulated cost of assets reclas-
sified from RoU
1,082 0 0 1,082
Accumulated depreciation of assets
reclassified from RoU
-458 207 0 -251
Accumulated depreciation of assets
disposed
4,067 0 0 4,067
Book value 31.12.22 11,421 1,758 1,579 14,758
Per 31 December 2022
Acquisition cost 295,347 3,497 14,270 313,114
Accumulated impairment -27,969 -669 -7,656 -36,294
Accumulated depreciation -255,957 -1,070 -5,035 -262,062
Book value 31.12.22 11,421 1,758 1,579 14,758
Accounting year 2023
Book value 01.01.23 11,421 1,758 1,579 14,758
Currency differences -63 22 0 -41
Additions 3,655 942 0 4,597
Disposals -3,721 0 0 -3,721
Depreciation for the year -2,921 -180 -161 -3,262
Impairment charge -177 -250 0 -427
Accumulated cost of assets reclas-
sified from RoU
622 0 0 622
Accumulated depreciation of assets
reclassified from RoU
-363 0 0 -363
Accumulated depreciation of assets
disposed
3,521 0 0 3,521
Accumulated impairment of assets
disposed
31 0 0 31
Book value 31.12.23 12,005 2,292 1,418 15,715
Per 31 December 2023
Acquisition cost 295,840 4,461 14,270 314.571
Accumulated impairment -28,115 -919 -7,656 -36,690
Accumulated depreciation -255,720 -1,250 -5,196 -262,166
Book value 31.12.23 12,005 2,292 1,418 15,715
Depreciation period 5-12 years 33 years* 12 years
Residual value 0 0 0
*) Land is not depreciated
FINANCIAL STATEMENTS / GROUP / NOTES
36
ANNUAL REPORT 2023 PETROLIA SE
As at 31 December 2023, management carried
out an assessment of whether there is any
indication that right of use assets may have
suffered an impairment loss in accordance
with the Group’s policy and concluded that
there is no such indication.
Energy Service and other equipment primarily
include rental equipment. Land and buildings
represent storage facilities and offices.
In 2023 lease modifications were added
with USD 1.7 million (2022: USD 1.5 mil-
lion) connected to lease extensions of land
and buildings.
(amounts in USD 1,000) Energy Ser-
vice and other
equipment
Land and
buildings
Total
Book value 01.01.22 5,658 7,494 13,152
Additions 5,052 400 5,452
Modifications 13 1,475 1,488
Disposal of cost -127 0 -127
Disposal of depreciation 38 0 38
Depreciation of the year -1,219 -2,022 -3,241
Accumulated cost of assets reclassified to
property, plant and equipment
-610 -472 -1,082
Accumulated depreciation of assets reclas-
sified to property, plant and equipment
251 0 251
Translation differences -519 -244 -763
Book value 31.12.22 8,537 6,631 15,168
Per 31 December 2022
Acquisition cost 16,439 14,440 30,879
Accumulated impairment -18 0 -18
Accumulated depreciation -7,884 -7,809 -15,693
Book value 31.12.22 8,537 6,631 15,168
Additions 2,858 273 3,131
Modifications 0 1,675 1,675
Disposal of cost -519 -166 -685
Disposal of depreciation 114 147 261
Depreciation of the year -1,637 -1,923 -3,560
Accumulated cost of assets reclassified to
property, plant and equipment
-622 0 -622
Accumulated depreciation of assets reclas-
sified to property, plant and equipment
363 0 363
Translation differences 0 -240 -240
Book value 31.12.23 9,094 6,397 15,491
Per 31 December 2023
Acquisition cost 18,156 15,982 34,138
Accumulated impairment -18 0 -18
Accumulated depreciation -9,044 -9,585 -18,629
Book value 31.12.23 9,094 6,397 15,491
Refer also to note 19.
RIGHT OF USE ASSETS
Set out below are the carrying amounts of right-of-use assets recognised and the movements during the period:
of assets of USD 745 thousand (2022: profit
of USD 1 thousand). The amount is included
under other operating income. Proceeds
from the disposals were USD 601 thousand
(2022: USD 528 thousand).
In 2023, the Group transferred accumulated
cost price of USD 622 thousand (2022: USD
1,082 thousand ) and accumulated depreci-
ation of USD 363 thousand (2022: USD 251
thousand ) from Right of Use assets to owned
Property, Plant and Equipment.
CLIMATE RELATED MATTERS
The Group constantly monitors climate-related
risks, including physical risks and transi-
tion risks, when measuring the recoverable
amount. While the Group does not believe
its operations are currently significantly
exposed to physical risk, the value-in-use
may be impacted in different ways by transi-
tion risk, such as climate-related legislation,
climate-related regulations and changes in
demand for the Group’s products. The Group
has concluded that no single climate-relat
-
ed assumption is a key assumption for the
2023 impairment testing. Increased costs
in most value chains will be passed on by
increased sales prices and thus result in
general inflation.
FINANCIAL STATEMENTS / GROUP / NOTES
37
ANNUAL REPORT 2023 PETROLIA SE
NOTE 12 ASSOCIATED COMPANIES
The Group's interest in associated entities
is accounted for using the equity method.
PETROLIA NOCO AS
The company is an oil company exploring the
Norwegian Continental Shelf for oil and gas
and its shares are registered with ticker
“PNO” on the NOTC (www.notc.no), a market
place for unlisted shares. The company holds
interests in 10 licences, two of which as an
operator. Exploration activities are capital
intensive, especially in the short term when
drilling wells. The tax value of the expenses
are refunded with 71.8% in the following
tax year and an additional 6.2% will reduce
payable taxes on any profits from sale of
hydrocarbons. Thus in the long run, 22% of
losses has to be funded by equity. Petrolia
participate in capital issues to maintain its
49.9% ownership and has been the primary
source of equity and debt funding since PNO
was incorporated in 2011. Following a private
placement in PNO in 2015 directed towards
the largest shareholders of the Group, the
Group’s largest shareholders are now as-
sisting in the funding of PNO, as are external
lenders. In 2023 Petrolia AS subscribed for
4,985,000 new shares in Petrolia NOCO AS
at NOK 2.00 per share. In 2022 Petrolia
AS subscribed for 7,484,959 new shares in
Petrolia NOCO AS at NOK 2.00 per share.
In December 2023 PNO completed the acqui-
sition of the Brage asset which in the second
half of 2023 produced an average of 2,390
barrels of oil equivalent per day net to PNO.
The share of loss for the year of the associate
was restricted to USD1,476 since the book
value of the investment was reduced to zero.
Petrolia Noco AS
(amounts in USD 1,000)
Book value per 31.12.2021 1,087
Share issue 1,503
Translation difference -99
Share of result of the year -1,944
Book value per 31.12.2022 547
Share issue 930
Translation difference -1
Share of result of the year -1,476
Book value per 31.12.2023 0
KEY NUMBERS FROM THE ACCOUNTS
Company Incorpo-
rated in
Current
assets
Non-cur-
rent assets
Total
assets
Current
liabilities
Non-cur-
rent
liabilities
Total
liabilities
Revenue Loss Shareholding
Petrolia Noco
AS
Bergen,
Norway
2023 20,639 86,844 107,483 21,114 86,721 107,835 964 -3,379 49.90%
2022 17,133 15,491 32,624 12,084 19,445 31,528 3,468 -3,897 49.90%
The associated company had no contingent liabilities as at 31 December 2023 or 2022.
Petrolia Noco AS presently plans to drill one exploration well in 2024.
FINANCIAL STATEMENTS / GROUP / NOTES
38
ANNUAL REPORT 2023 PETROLIA SE
SECURED LOANS TO PETROLIA NOCO AS
(ASSOCIATE)
The loans are denominated in NOK and car-
ried an annual interest of 10% in 2022.
In December 2023 a new loan of NOK 30
million was granted. This new loan carries
an interest of 13.2%. The loans mature in
December 2024.
There is no history of credit losses relat-
ed to the loans. The management assessed
that there is very little risk regarding their
recoverability and that the related expected
credit losses for both loans amount to USD
ZEG POWER AS
(FAIR VALUE THROUGH OCI INVESTMENT)
ZEG delivers solutions for clean hydrogen
production from gas, through its novel ZEG
ICC™ Technology with integrated carbon
capture.
The Group owns 1.3% of the shares and the
investment is carried at fair value through
OCI (level 2). During the year the Group rec-
ognised no fair value gain or loss (2022:fair
value gain of USD 482 thousand).
NOTE 13 OTHER FINANCIAL ASSETS
Secured loans to Petrolia NOCO AS Shares Total
(amounts in USD 1,000) 10% (3rd pri) 13.2% (2nd pri) Total Loan Zeg Power AS
Book value per 31.12.2021 6,602 0 6,602 399 7,001
Interest income 560 0 560 3 563
Interest received -594 0 -594 0 -594
Addition 0 0 0 120 120
Fair value change 0 0 0 482 482
Repayment -1,507 0 -1,507 0 -1,507
Translation difference -699 0 -699 0 -699
Book value per 31.12.2022 4,362 0 4,362 1,004 5,366
Interest income 355 10 365 0 365
Interest received -393 0 -393 0 -393
Addition 0 2,934 2,934 0 2,934
Expected credit loss -250 0 -250 0 -250
Repayment -934 0 -934 0 -934
Translation difference -179 15 -164 0 -164
Book value per 31.12.2023 2,961 2,959 5,920 1,004 6,924
250,000, which are not considered significant.
The assets of the company normally consist
primarily of tax receivable and working capital
in licenses. To the extent exploration costs are
carried, in line with accounting principles, a
tax liability of 78% is also carried reducing
the net to 22%. For discoveries there will
normally be values that are not carried. The
shareholders of the associate company are
also supportive by contributing additional
equity when needed to support the explora-
tion programme of the associate, including
meeting its financial obligations.
FINANCIAL STATEMENTS / GROUP / NOTES
39
ANNUAL REPORT 2023 PETROLIA SE
Movement of accumulated expected credit losses on trade receivables
(amounts in USD 1,000) 2023 2022
Opening balance 9,482 13,313
Reversal for the year -278 -211
Written off -2,466 -3,620
Closing balance 6,738 9,482
Ageing of trade receivables as at 31 December
2022
Not due 1-30 days 31-60 days 61-90 days 90+ days Tot al
Trade receivables 6,624 2,778 468 325 10,237 20,432
Total, gross 6,624 2,778 468 325 10,237 20,432
Expected credit loss rate 1.33% 2.41% 5.77% 3.08% 11.41% 2.79%
Expected credit loss (simplified approach)* 88 67 27 10 122 314
Expected credit loss (individually assessed) 0 0 0 0 9,168 9,168
Total, net 6,536 2,711 441 315 947 10,950
(amounts in USD 1,000) 2023 2022
Trade receivables 14,934 10,950
Other current receivables 1,039 2,826
Total 15,973 13,776
Ageing of trade receivables as at 31 December
2023
Not due 1-30 days 31-60 days 61-90 days 90+ days Tot al
Trade receivables 7,462 3,299 1,100 463 9,349 21,672
Total, gross 7,462 3,299 1,100 463 9,349 21,672
Expected credit loss rate 0.29% 0.48% 0.60% 5.47% 8.76% 2.14%
Expected credit loss (simplified approach)* 21 16 7 25 257 326
Expected credit loss (individually assessed) 0 0 0 0 6,412 6,412
Total, net 7,440 3,283 1,094 438 2,680 14,934
NOTE 14 TRADE AND OTHER CURRENT RECEIVABLES
* ) Provision matrix
* ) Provision matrix
FINANCIAL STATEMENTS / GROUP / NOTES
40
ANNUAL REPORT 2023 PETROLIA SE
During 2023 and 2022 Petrolia Invest AS has invested liquid reserves in shares listed on the Oslo Stock Exchange. The table below presents details
for shares in DNO International ASA, ticker DNO. The change of fair value amounting to a loss of USD 16 thousand (2022: profit of USD 1 thousand)
is shown in note 8. This includes gain on sale of USD16,5 that was realized in 2023 when 100,000 DNO shares were sold for a total of NOK 1,156,337
(USD 111,455).
NOTE 15 FINANCIAL ASSETS AT FAIR VALUE
THROUGH PROFIT OR LOSS
(amounts in USD 1,000) 2023 2022
DNO, shares 36,254 136,254
DNO, total shares 975,000,000 975,432,746
DNO, % owned 0.004% 0.01%
DNO, market value (NOK 10.07 / USD 0.990) (NOK 11.810 / USD 1.198) 36 163
Fair Value / Carried value (Level 1) 36 163
NOTE 16 CASH AND CASH EQUIVALENTS
(amounts in USD 1,000) 2023 2022
Bank deposits 10,807 11,867
Hereof deposits restricted
Other 3 3
Sum non-current 3 3
Other 14 14
Employees’ tax deduction 195 223
Sum current 209 237
Total restricted cash 212 240
Free cash 10,595 11,627
Cash and bank deposits per currency (amounts in USD 1,000)
Cash and bank deposits in NOK 2,880 4,602
Cash and bank deposits in USD 2,101 2,788
Cash and bank deposits in AED 13 1
Cash and bank deposits in GBP 366 238
Cash and bank deposits in EUR 1,702 2,533
Cash and bank deposits in NZD 177 224
Cash and bank deposits in RON 1,309 1,249
Cash and bank deposits in MYR 60 121
Cash and bank deposits in AUD 308 67
Cash and bank deposits in PGK 453 44
Cash and bank deposits in IQD 1,490 0
Expected credit loss -52 0
Total 10,807 11,867
Restricted cash -212 -240
Total as per cash flow statement 10,595 11,627
Refer to Note 23 for information on the ECL related to cash at bank.
FINANCIAL STATEMENTS / GROUP / NOTES
41
ANNUAL REPORT 2023 PETROLIA SE
Shareholders 31 December 2023 Shares Shareholding
1 INDEPENDENT OIL & RESOURCES PLC
1)
27 182 571 45,97 %
2 LARSEN OIL & GAS AS
1)
12 410 177 20,99 %
3 TIME CRITICAL PETROLEUM RESOURCES
1)
3 789 897 6,41 %
4 NOCO (UK) Ltd
1)
3 709 888 6,27 %
5 INCREASED OIL RECOVERY AS
1)
3 446 624 5,83 %
6 TROMMESTAD, OLE 897 479 1,52 %
7 TOKALA AS 598 025 1,01 %
8 ELEKTROLAND NORGE AS 250 713 0,42 %
9 Ø. H. HOLDING AS 224 370 0,38 %
10 NILSEN, SØLVE 202 971 0,34 %
11 OLSEN, ROLF ARILD 200 007 0,34 %
12 SPECTER INVEST AS 170 000 0,29 %
13 WEMUNDSTAD, JOHAN 170 000 0,29 %
14 TOSKA, KETIL 150 000 0,25 %
15 REPPEN, JON CHARLES 145 823 0,25 %
16 U-TURN VENTURES AS 142 160 0,24 %
17 NORDNET LIVSFORSIKRING AS 132 385 0,22 %
18 ØSTFOLD ANLEGGSGARTNER AS 116 880 0,20 %
19 ØRNES AS 115 000 0,19 %
20 MOLY AS 100 966 0,17 %
Others 4 877 850 8,25 %
Total number of shares before treasury shares 59 033 786 99,83 %
Treasury shares 100 000 0,17 %
Total number of shares 59 133 786 100,00 %
CHANGES TO SHARE CAPITAL
There have been no changes to the share
capital in 2023 or 2022.
In March 2023, 100,000 own shares were
purchased for a total of NOK 411,276 (NOK
4.11 per share) by Petrolia Invest AS, a
100% owned subsidiary.
LIST OF THE MAJOR SHAREHOLDERS
Petrolia SE had a total of 2,773 shareholders
as at 31 December 2023. The tables below
shows the Company’s 20 largest sharehold-
ers as at 31 December 2023 and as at 23
April 2024 according to the VPS (shares with
nominal value USD 0.10):
NOTE 17 SHARE CAPITAL
Share capital of Petrolia SE
(amounts in USD 1,000)
Authorised
shares
Issued
shares
Nominal value Book value
2023
Book value
2022
Shares 272,358,670 59,133,786 USD 0.10 USD 5,913 USD 5,913
FINANCIAL STATEMENTS / GROUP / NOTES
42
ANNUAL REPORT 2023 PETROLIA SE
Name Shares Shares
Members of the board and management as at: 31 December 2023 23 April 2024
Berge Gerdt Larsen, Chair of the Board
1)
3,789,897 3,789,897
Sølve Nilsen, General manager (Norway) 202,971 202,971
Total 3,992,868 3,992,868
1) Berge Gerdt Larsen owns 44.95% of Increased Oil Recovery AS and his son owns the remaining 55.05%. Larsen Oil & Gas AS is a
100% owned subsidiary of Increased Oil Recovery AS. Together the two companies hold 26.82% of the shares. Increased Oil Recovery AS
is a 49.73% shareholder in Independent Oil & Resources Plc, which holds 45.97% of the shares in Petrolia SE. Berge Gerdt Larsen also
controls Time Critical Petroleum Resources AS which holds 6.41% of the shares in Petrolia SE and 21.02% in shares in Independent Oil &
Resources Plc. Independent Oil & Resources Plc is a 38.75% indirect shareholder in NOCO (UK) Ltd. Increased Oil Recovery AS indirectly
owns 38.42% in NOCO (UK) Ltd.
SHARES OWNED BY MEMBERS OF THE BOARD AND OTHER PRIMARY INSIDERS
The table below shows shareholding of members of the board and key management and other related parties (shares with nominal value
USD 0.10)
Shareholders 23 April 2024 Shares Shareholding
1 INDEPENDENT OIL & RESOURCES PLC
1)
27 182 571 45,97 %
2 LARSEN OIL & GAS AS
1)
12 410 177 20,99 %
3 TIME CRITICAL PETROLEUM RESOURCES AS
1)
3 789 897 6,41 %
4 NOCO (UK) Ltd
1)
3 709 888 6,27 %
5 INCREASED OIL RECOVERY AS
1)
3 446 624 5,83 %
6 TROMMESTAD, OLE 857 598 1,45 %
7 TOKALA AS 598 025 1,01 %
8 ELEKTROLAND NORGE AS 250 713 0,42 %
9 U-TURN VENTURES AS 204 345 0,35 %
10 OLSEN, ROLF ARILD 203 007 0,34 %
11 NILSEN, SØLVE 202 971 0,34 %
12 Ø. H. HOLDING AS 193 365 0,33 %
13 SPECTER INVEST AS 170 000 0,29 %
14 NORDNET LIVSFORSIKRING AS 151 442 0,26 %
15 TOSKA, KETIL 150 000 0,25 %
16 REPPEN, JON CHARLES 145 823 0,25 %
17 ØRNES AS 136 220 0,23 %
18 WEMUNDSTAD 135 000 0,23 %
19 VESTFOLD ØKONOMI AS 124 683 0,21 %
20 ØSTFOLD ANLEGGSGARTNER AS 118 880 0,20 %
Others 4 852 557 8,20 %
Total number of shares before treasury shares 59 033 786 99,83 %
Treasury shares 100 000 0,17 %
Total number of shares 59 133 786 100,00 %
FINANCIAL STATEMENTS / GROUP / NOTES
43
ANNUAL REPORT 2023 PETROLIA SE
NOTE 18 FAIR VALUE
FAIR VALUE
Except financial assets at fair value through
profit or loss and financial assets through
OCI, all financial instruments are measured
at amortised cost. Fair values of loans receiv-
able are based on management's estimates
by reference to loans with similar character-
istics. The carrying amount of loan receivable
approximates its fair value. The carrying value
of cash and cash equivalents approximate the
fair value owing to the fact that these instru-
ments have short maturity. Correspondingly,
the carrying value of the trade receivables
and trade payables approximate the fair value
as they are established at normal terms and
doubtful receivables are impaired by recording
impairment loss. The carrying value of financial
leases approximate their fair value as they
made with third parties and carried interest
at floating rates.
FAIR VALUE HIERARCHY
The Group uses the following hierarchy for
determining and disclosing the fair value of
financial instruments by valuation technique:
•
Level 1: Quoted (unadjusted) prices in
active markets for identical assets or
liabilities.
•
2: Other techniques for which all inputs
which have a significant effect on the re-
corded fair value are observable, either
directly or indirectly.
•
Level 3: Techniques which use inputs which
have a significant effect on the recorded
fair value that are not based on observable
market data.
For assets and liabilities that are recognised
in the consolidated financial statements on a
recurring basis, the Group determines wheth-
er transfers have occurred between levels in
the hierarchy by re-assessing categorisation
(based on the lowest level input that is sig-
nificant to the fair value measurement as a
whole) at the end of each reporting period.
The Group uses fair value through profit
and loss only on listed shares. Fair value
is determined by the quoted (unadjusted)
prices in the market (Level 1). The carry-
ing amount as at 31 December 2023 was
USD 36 thousand. The fair value of finan-
cial asset through OCI was determined by
the prices of recent transactions with 3rd
parties (level 2).
FINANCIAL STATEMENTS / GROUP / NOTES
44
ANNUAL REPORT 2023 PETROLIA SE
(amounts in USD 1,000) 2023 2022
Lease liability
As at 1 January 14,819 13,057
Additions 3,131 5,452
Modifications 1,675 1,488
Interest 932 835
Translation difference -237 -785
Payments -6,125 -5,228
As at 31 December 14,195 14,819
Current 5,573 4,989
Non-current 8,622 9,830
NOTE 19 LEASES
Set out below are the carrying amounts of lease liabilities and the movements during the period:
GROUP AS LESSEE
The Group has lease contracts in respect of equipment and land & buildings. The leases expire between 1 and 4 years for equipment and
between 1 and 7 years for land & buildings. Various extension options are attached.
Set out below are the carrying amounts of lease liabilities per currency:
(amounts in USD 1,000) 2023 2022
NOK 8,183 10,294
USD 1,204 101
EUR 1,882 964
NZD 281 72
AUD 2,053 2,849
RON 155 83
MYR 86 141
GBP 259 315
IQD 92 0
As at 31 December 14,195 14,819
A carrying amount of USD 6.2 million (2022:
USD 6.8 million) relates to equipment, and
there are no options to extend or terminate.
The lease term varies from 1 to 4 years and
the average incremental borrowing rate used
in the lease calculations is 5% (2022: 5%).
A carrying amount of USD 8.0 million (2022:
USD 8.0 million) relates to rental of offices.
In most of the rental agreements there are
options to extend. The lease term varies from
1 to 7 years and the average incremental
borrowing rate used in the lease calculations
is 5% (2022: 5%).
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 2028,
then the lease liability would have increased
by USD 1.1 million with a corresponding in-
crease in Right of use asset as well.
FINANCIAL STATEMENTS / GROUP / NOTES
45
ANNUAL REPORT 2023 PETROLIA SE
NOTE 20 TRADE AND OTHER PAYABLES
(amounts in USD 1,000) 2023 2022
Trade payables 4,017 3,381
Total trade payables 4,017 3,381
Other payables
Other current liabilities 5,824 4,840
Total other payables 5,824 4,840
Total trade and other payables 9,841 8,221
NOTE 21 BANK LOAN AND OVERDRAFT
Current liabilities
(amounts in USD 1,000)
Interest Maturity Security Effective inter-
est rate
2023 2022
Bank loan GBP 50,000 Fixed 0% first year,
thereafter 2.5%
June 2026 None 1.78% 6 6
Bank loan AUD 680,000 Fixed 3.04% June 2025 Equipment 3.08% 119 115
Bank loan EUR 400,000 Euribor 1M + 2% September
2029
Property, plant, bank 6.05% 74 0
Total 199 121
Non-current liabilities
(amounts in USD 1,000)
Interest Maturity Security Effective inter-
est rate
2023 2022
Bank loan GBP 50,000 Fixed 0% first year,
thereafter 2.5%
June 2026 None 1.78% 41 45
Bank loan AUD 680,000 Fixed 3.04% June 2025 Equipment 3.08% 73 180
Bank loan EUR 400,000 Euribor 1M + 2% September
2029
Property, plant, bank 6.05% 349 0
Total 463 225
The group has one unused overdraft facility
of EUR 350 thousand.
FINANCIAL STATEMENTS / GROUP / NOTES
46
ANNUAL REPORT 2023 PETROLIA SE
CAPITAL STRUCTURE AND EQUITY
For the purpose of the Group's capital man-
agement, capital includes issued capital, share
premium and all the equity reserves attribut-
able to the equity holders of the parent. The
main objectives of the Group when monitoring
capital are to safeguard the Group’s ability
to maintain favourable loan terms from the
lenders in accordance with the Group’s op-
erations. By maintaining a satisfactory debt
ratio and meeting its loan covenants, the
Group is supporting the current operations
and maximising the Group’s value accordingly.
The Group is managing the capital structure
and making necessary adjustments based
on a continuous assessment of the financial
conditions that the enterprise is subject to and
the present short and medium term prospects.
The capital structure is managed through
purchase of treasury shares, reduction of
share capital, issuing new shares or through
dividend policy.
NOTE 22 CAPITAL MANAGEMENT
Financial risk factors and categories of financial
instruments
The Group uses financial instruments
such as bond loans, bank loans and over-
drafts, financial leases and borrowings
from related parties. The purpose of these
financial instruments is to provide capital
for investments necessary for the Group’s
activities. In addition the Group has finan-
cial instruments like trade receivables and
trade payables which are directly connected
to the current operations of the Group.
The Group has no derivative financial in-
struments, neither for hedging nor trading
purposes. Except from the financial assets
at fair value, all the financial assets are
categorised as loans, receivables and cash
and cash equivalent and are measured
at amortised cost. In 2023 and 2022 the
Group has invested in shares listed on the
Oslo Stock Exchange.
Profit and loss effects from financial in-
struments measured at fair value through
profit and loss are disclosed in note 15.
Impairment on financial instruments con-
cerns mainly loans to associated company
and trade receivables and are disclosed
in notes 13 and 14 respectively and under
Credit risk below. The Group’s activities
expose it to a variety of financial risks:
credit risk, interest risk, liquidity risk and
currency risk. The Group’s overall risk
management programme focuses on the
unpredictability of financial markets and
seeks to minimise potential adverse effects
on the Group’s financial performance.
The Group’s management is currently mon-
itoring the risk related to credit, interest
rate, liquidity and foreign exchange. The
Group is subject to a balanced exposure
through income and expenses in USD and
NOK and financing in USD and NOK. The
Group has a fixed rate on the major part of
interest bearing liabilities, which limits the
cash flow interest rate risk. The credit risk
which the Group is exposed to is acceptable.
Credit risk
The Group is primarily exposed to credit risk
related to trade receivables, other receiva-
bles, loans receivable and cash at bank. The
maximum risk exposure is represented by
the carrying value of trade receivables and
other receivables referred to in note 14,
loan receivable shown in note 13 and cash
at bank in note 16.
The Group’s revenues arise from a limited
number of transactions and customers and
therefore credit risk is transparent.
Management has assessed the collectability
of receivables and do not expect losses other
than the expected credit allowance already
provided in line with the accounting policy.
Expected credit loss of USD 250 thousand
NOTE 23 FINANCIAL RISK MANAGEMENT
(amounts in USD 1,000) 2023 2022
Equity of majority 38,434 36,390
Bank loan 662 346
Leases 14,195 14,819
Trade payables 4,017 3,381
Other payables 6,058 5,328
Less free cash -10,595 -11,627
Net debt 14,337 12,247
Equity and net debt 52,771 48,637
Debt ratio 27% 25%
FINANCIAL STATEMENTS / GROUP / NOTES
47
ANNUAL REPORT 2023 PETROLIA SE
Liquidity risk
Liquidity risk is the risk that the Group may
not be able to meet its financial liabilities as
they fall due. The Group’s strategy of handling
liquidity risk is to have sufficient liquidity at
all times to pay any liability on maturity, in
both normal and extraordinary circumstances.
Sensitivity for changes in interest rate level (amounts in USD 1,000) Changes in interest rate
level in basic items
Impact on result
before tax
Impact on
equity
2023 +50 -18 -14
2022 +50 -1 -1
Further information regarding the interest rate conditions of the Group’s financing is given in notes 13, 18, 19 and 21.
was provided for the loan receivable as the
associate is in net liability position but finan-
cially supported by its shareholders to enable
it to continue its exploration and production
activity and ECL was estimated to be insig-
nificant. Refer also to note 14.
The Group does not hold any collateral as
security for its receivables.
The Group assesses, on an individual basis,
its exposure to credit risk arising from other
receivables. Management estimated the im-
pairment loss at 31 December 2023 of other
receivables to be immaterial.
The Group assesses, on an individual basis,
its exposure to credit risk arising from cash
at bank. This assessment takes into account,
ratings from external credit rating institutions.
Management applies the IFRS 9 general ap-
proach. Bank balances were assessed as
performing (Stage 1) and an ECL provision
of USD 52 thousand was made regarding one
bank in Iraq. The ECL on other bank accounts
is considered to be immaterial, as the cash
at bank are held with banks with investment
grade rating.
Financial guarantees
Guarantees which represent irrevocable as-
surances that the Group will make payments
in the event that a counterparty cannot meet
its obligations to third parties, carry the same
credit risk as loans receivable.
At the reporting date, the Group acts as a
joint and several guarantor to the loan of
associate company Petrolia Noco AS. As at 31
December 2023, and at the reporting date,
the outstanding loan balance subject to this
guarantee totalled NOK 75.9 million (USD
7.5 million) and the loan has been properly
served by Petrolia Noco AS with no defaults.
A financial guarantee liability of USD 81 is
included in Other payables in note 20, which
represents the guarantee fee charged less
cumulative amortisation. No expected credit
losses have been recognised as of the re-
porting date in respect of these financial
guarantees provided by the Group, since it
was assessed that the present value of related
expected payments is immaterial.
Until the date of the approval of the financial
statements, no claim has been raised for the
loan guarantee and the Board of Directors
does not expect any claim in the future.
Interest rate risk
The Group is exposed to interest rate risk
through its financing activities (refer to notes
19 and 21). Part of the interest-bearing
liabilities is based on floating rates which
imply that the Group is exposed to changes
in the interest rate level.
The Group’s interest rate risk management
aims at reducing the interest expenses and at
the same time the volatility of future interest
payments is kept within acceptable frames. As
at 31 December 2023 the Group’s bank loans
have fixed interest, while the lease obliga-
tions are subject to floating rates of interest.
Liquidity risk may also arise from the financial
guarantee contracts provided by the Group
to secure credit facilities obtained by the
associate of the Group, as further analysed
in Credit risk above.
The table below states the maturity profile
of the financial liabilities recognised as at
31 December 2023 and 2022.
As at 31st of December 2023 < 1 year 1-5 years > 5 years Total
Trade payables 4,017 0 0 4,017
Leasing (including interest) 6,089 9,266 349 15,704
Bank loan (including interests) 235 513 12 760
Other liabilities 6,058 0 0 6,058
Total 16,399 9,779 361 26,539
FINANCIAL STATEMENTS / GROUP / NOTES
48
ANNUAL REPORT 2023 PETROLIA SE
As at 31st of December 2022 < 1 year 1-5 years > 5 years Total
Trade payables 3,381 0 0 3,381
Leasing (including interest) 5,435 10,692 260 16,387
Bank loan (including interests) 130 239 0 369
Other liabilities 4,840 0 0 4,840
Total 13,786 10,931 260 24,977
Foreign exchange risk
The Group operates internationally and is
exposed to foreign exchange risk arising from
various currency exposures, primarily with
respect to the NOK. Foreign exchange risk
arises from future commercial transactions
and recognised assets and liabilities. Foreign
exchange risk arises when future commercial
transactions or recognised assets or liabilities
are denominated in a currency that is not
the entity’s functional currency. The Group
is exposed to exchange rate fluctuations
connected to the value of NOK relative to
USD due to the fact that the Group has mainly
income and operating expenses in USD while
parts of the financing and some assets are
denominated in NOK.
The Group has certain investments in foreign
operations, whose net assets are exposed to
foreign currency translation risk.
The table below illustrates the Group’s sen-
sitivity related to reasonable changes in the
currency rate between USD and NOK. The
Group's main exposure to NOK is from the
loan receivable amounting to USD 5.9 million
(2022: USD 4.4 million) as shown in note 13,
cash at bank amounting to USD 2.9 million
(2022: USD 4.6 million) and lease liabilities
amounting to USD 8.2 million (2022: USD
10.3 million) as shown in note 19.
Changes in other currencies will not have
material impact on the profit & loss.
Changes in the exchange rate of NOK Impact on result before taxes Impact on equity
2023 5 % 39 30
-10 % -77 -60
2022 5 % 110 85
-10 % -218 -170
2023 1 January 2023 Cash movement Translation
difference
Non-cash
movement
Interest 31 December
2023
Bank loan 346 276 16 0 24 662
Lease liabilities 14,819 -6,125 -237 4,806 932 14,195
Total 15,165 -5,850 -221 4,806 956 14,857
CHANGES IN LIABILITIES ARISING FROM FINANCING ACTIVITIES
2022 1 January 2022 Cash movement Translation
difference
Non-cash
movement
Interest 31 December
2022
Current / Non-current Bond loan 4,620 -4,620 0 0 0 0
Bank loan 304 0 42 0 0 346
Lease liabilities 13,057 -4,393 -785 6,940 0 14,819
Total 17,981 -9,013 -743 6,940 0 15,165
FINANCIAL STATEMENTS / GROUP / NOTES
49
ANNUAL REPORT 2023 PETROLIA SE
LARSEN OIL & GAS AS (LOG AS) AND IN-
CREASED OIL RECOVERY AS (IOR AS) AND
KVER AS
IOR AS is the 100% owner of LOG AS and
Kver AS. Mr. Berge Gerdt Larsen, Chair of
the Board has economic interest of 44.95%
in IOR AS and is the Chair of the board in
IOR AS and LOG AS.
The Company has an office support agreement
with LOG AS. The annual cost coverage was
NOK 1.3 million (USD 124,416) in 2023. The
annual cost coverage was NOK 1.3 million
(USD 137,229) in 2022.
The Company has an office lease agreement
with Kver AS. Annual office rent is NOK 1.3
million (USD 126,043). In 2023 shared costs
amounted to NOK 1.4 million (USD 132,426).
In 2022 annual office rent was NOK 1.2 million
(USD 130,965) and shared costs were NOK
1.6 million (USD 172,859).
PETROLIA NOCO AS
The Group has granted two loans to Petrolia
NOCO AS (owned 49.9%). The loans are
denominated in NOK and carried an interest
rate of 10% and 13.2% in 2023. The loans
have maturity date on 31 December 2024
(Note 13). The investment in the associated
company is shown in note 12 and the loans
are shown in note 13.
MOUNTWEST PETROLEUM LTD.
The Group has an office lease agreement with
Mountwest Petroleum Ltd. Annual office rent
is GBP 51,700 (USD 71,159). Mr. Berge Gerdt
Larsen, Chair of the Board has indirect eco-
nomic interest in Mountwest Petroleum Ltd.
PETRORESOURCES LTD
The Group has an advisory service agreement
with Petroresources Ltd with a quarterly fee
of EUR 30,000. In 2023 EUR 440,000 has
been invoiced in respect of the said agree-
ment. Mr. Berge Gerdt Larsen, Chair of the
Board, has indirect economic interest in, and
is employed by Petroresources Ltd.
DIRECTOR FEES
Director fees are shown in note 6.
NOTE 24 RELATED PARTIES
FINANCIAL STATEMENTS / GROUP / NOTES
50
ANNUAL REPORT 2023 PETROLIA SE
NOTE 25 MATERIAL PARTLY OWNED SUBSIDIARIES
The summarised financial information of these subsidiaries are provided below. This information is based on amounts before
inter-company eliminations.
Independent Oil Tools
DOSCO BV
The Netherlands
Independent Oil Tools Iraq
for General Trading Co. Ltd
Iraq
2023 2022 2023 2022
Proportion of equity interest held by non-controlling interest 30% 30% 39% 39%
Accumulated balances of material non-controlling interest 2,182 2,057 604 875
Profit/(loss) allocated to material non-controlling interest 81 440 -271 427
Comprehensive income/(loss) allocated to material non-controlling interest 157 359 -271 427
Summarised statement of profit or loss 2023 2022 2023 2022
Revenue 13,942 12,648 8,674 16,711
Cost of sales -9,760 -8,412 -4,644 -9,475
Administrative expenses -3,574 -2,226 -3,550 -4,885
Depreciation -532 -379 -960 -1,002
Finance (cost)/income -40 142 35 11
Profit/(loss) before tax 344 1,772 -695 1,361
Income tax -74 -305 0 -266
Profit/(loss) for the year 270 1,467 -695 1,095
Exchange differences 254 -272 0 0
Total comprehensive income/(loss) 524 1,195 -695 1,095
Attributable to non-controlling interest 157 359 -271 427
Dividends paid to non-controlling interest 0 0 0 0
Summarised statement of financial position 2023 2022 2023 2022
Current assets 4,984 5,625 4,527 4,638
Non-current assets 2,383 1,150 3,314 4,515
Current liabilities 92 -83 6,291 6,909
Non-current liabilities 0 0 0 0
Total equity 7,275 6,858 1,550 2,244
Attributable to:
- Equity holders of parent 5,092 4,801 945 1,369
- Non-controlling interest 2,183 2,057 605 875
FINANCIAL STATEMENTS / GROUP / NOTES
51
ANNUAL REPORT 2023 PETROLIA SE
Finished goods represent Energy Service
equipment held for sale.
NOTE 26 INVENTORIES
(Amounts in USD 1,000)
2023 2022
Spare parts 275 118
Finished goods (at lower of cost and net realisable value) 1,408 1,847
Total inventories 1,683 1,965
NOTE 27 OPERATING ENVIRONMENT OF THE GROUP
The activity of the group is closely correlated to
the oil price and events affecting supply and/or
demand, and thus price, will affect the Group’s
activity level. When oil prices drop to a lower
level, the oil companies reduce their activity
to protect their cash flows. When the prices
increase again, the oil companies first want
to see their cash balances increase before in-
creasing the activity levels again. There are local
variations to how quickly this is implemented.
In Iraq the operational environment is nega-
tively affected by a closed pipeline, uncertainty
regarding the production sharing agreements
between the oil companies and the authorities
and tight restriction on payments in USD. This
resulted in a sharp reduction in the activity in
the second half of 2023. As of the reporting
date the activity remains low.
The group has managed to increase prices
largely in line with inflation and with little debt,
the effects from rising interest rates have
been limited.
FINANCIAL STATEMENTS / GROUP / NOTES
52
ANNUAL REPORT 2023 PETROLIA SE
There have been no significant events after
the balance sheet date.
NOTE 29 EVENTS AFTER THE REPORTING PERIOD
ACQUISITION OF NON-CONTROLLING INTEREST
In March 2023, the remaining 10% of Catch
Holding BV was purchased for EUR 183,960
(USD 200,057). Following the transaction, the
company and its subsidiary are now 100%
owned subsidiaries of the Group.
There were no business combinations in 2022
or 2023.
GOODWILL
Goodwill of USD 249 thousand presented in
the statement of financial position relates
to the purchase of remaining shares in CO2
Management AS in 2021. Goodwill is tested
for impairment by the Group annually or ear-
lier if there is an indication for impairment.
NOTE 28 BUSINESS COMBINATIONS
Catch Holding BV
The Netherlands
USD 1,000
Cash consideration paid to non-controlling shareholders 200
Carrying value of the additional interest -189
Difference recognised in retained earnings 389
For the purposes of annual impairment test-
ing of goodwill, management estimated the
recoverable amount of this cash generating
unit as at 31 December 2023 using value
in use calculations. The main assumptions
used for the calculation are projected reve-
nues, estimated margin percentages and the
discount factor. In the base case scenario,
a discount rate of 10% was used. Stress
testing of the model was also performed by
varying estimated margin percentages and
discount factor, and a reasonable shift of
these assumptions would not result into the
recognition of impairment of goodwill.
FINANCIAL STATEMENTS / GROUP / NOTES
53
ANNUAL REPORT 2023 PETROLIA SE
FINANCIAL STATEMENTS / GROUP / NOTES
ANNUAL REPORT 2023 PETROLIA SE
54
FINANCIAL
STATEMENTS
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
31 December 2023
2023 2022
Note USD 000 USD 000
Revenue from contracts with customers 8 158 270
Dividend income 24.4 500 -
Administration expenses (1.442) (1.656)
Operating loss 9 (784) (1.386)
Finance income 11 446 581
Finance costs 11 (198) (1.054)
Impairment on investments in subsidiary companies - net 14 (7.846) (5.662)
Impairment charge on investments in associates 15 (124) (147)
Expected credit losses on loan receivable
16
(250) -
Loss before tax
(8.756) (7.668)
Tax
12
(5) 51
Net loss for the year
(8.761) (7.617)
Total comprehensive loss for the year
(8.761) (7.617)
The notes on pages 5 to 24 form an integral part of these financial statements.
1
55
ANNUAL REPORT 2023 PETROLIA SE
FINANCIAL STATEMENTS
Petrolia SE - Parent Company - 31 December 2023
FINANCIAL STATEMENTS / PARENT
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
31 December 2023
2023 2022
Note USD 000 USD 000
Revenue from contracts with customers 8 158 270
Dividend income 24.4 500 -
Administration expenses (1.442)
(1.656)
Operating loss 9 (784) (1.386)
Finance income 11 446 581
Finance costs 11 (198) (1.054)
Impairment on investments in subsidiary companies - net 14 (7.846) (5.662)
Impairment charge on investments in associates 15 (124) (147)
Expected credit losses on loan receivable
16
(250)
-
Loss before tax
(8.756) (7.668)
Tax
12
(5)
51
Net loss for the year
(8.761)
(7.617)
Total comprehensive loss for the year
(8.761)
(7.617)
The notes on pages 5 to 24 form an integral part of these financial statements.
1
56
ANNUAL REPORT 2023 PETROLIA SE
FINANCIAL STATEMENTS / PARENT
Polycarpos Protopapas
Board member
Managing director
Sjur Storaas
Board member
Sølve Nilsen
Finance manager
George Hadjineophytou
Board member
STATEMENT OF FINANCIAL POSITION
31 December 2023
2023 2022
Note USD 000 USD 000
ASSETS
Non-current assets
Property, plant and equipment 13 2 1
Right-of-use assets 19 194 68
Investments in subsidiaries 14 30.074 37.920
Investments in associates
15
-
124
30.270 38.113
Current assets
Trade and other receivables
17 842 988
Loans receivable from associate 16 5.920 4.362
Restricted cash 18 31 55
Cash at bank
20
1.733
2.052
8.526 7.457
Total assets 38.796 45.570
EQUITY AND LIABILITIES
Equity
Share capital 21 5.913 5.913
Share premium 12.222 12.222
Merger reserve - 67.093
Distributable reserve 67.093 -
Accumulated losses (51.244)
(42.483)
Total equity
33.984
42.745
Non-current liabilities
Lease liabilities
19
120
-
120 -
Current liabilities
Trade and other payables
22 4.618 2.703
Lease liabilities 19 74 68
Current tax liabilities
23
-
54
4.692 2.825
Total liabilities 4.812 2.825
Total equity and liabilities 38.796 45.570
On 26 April 2024 the Board of Directors of Petrolia SE authorised these financial statements for issue.
Polycarpos Protopapas Sjur Storaas Berge Gerdt Larsen George Hadjineophytou Solve Nilsen
Board Member Board Member Chairman of the Board Board Member Finance Manager
Managing Director
The notes on pages 5 to 24 form an integral part of these financial statements.
2
Berge Gerdt Larsen
Chair of the Board
STATEMENT OF CHANGES IN EQUITY
31 December 2023
Share capital
Share
premium
Merger
reserve
Distributable
reserve
Accumulated
losses Total
Note USD 000 USD 000 USD 000 USD 000 USD 000 USD 000
Balance at 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/ 1 January 2023 5.913 12.222 67.093 - (42.483) 42.745
Comprehensive income
Loss for the year / Total
comprehensive loss for the year
- - - - (8.761) (8.761)
5.913 12.222 67.093 - (51.244) 33.984
Transactions with owners
Transfer between reserves
(1)
- - (67.093) 67.093 - -
Balance at 31 December 2023
5.913 12.222 - 67.093 (51.244) 33.984
1) By a Court Order dated 30/06/2023 sanctioning the shareholder's special resolution dated 31/05/2023 the
Merger reserve of USD 67.093.489,64 was reduced to USD 0, and the said reduction was effected by crediting
the reduction amount of USD 67.093.489,64 to a distributable reserve of the Company. The distributable reserve
shall be available to the Directors of the Company to treat as they deem fit in their absolute discretion.
The notes on pages 5 to 24 form an integral part of these financial statements.
3
57
ANNUAL REPORT 2023 PETROLIA SE
STATEMENT OF FINANCIAL POSITION
31 December 2023
2023 2022
Note USD 000 USD 000
ASSETS
Non-current assets
Property, plant and equipment 13 2 1
Right-of-use assets 19 194 68
Investments in subsidiaries 14 30.074 37.920
Investments in associates
15
- 124
30.270 38.113
Current assets
Trade and other receivables
17 842 988
Loans receivable from associate 16 5.920 4.362
Restricted cash 18 31 55
Cash at bank
20
1.733 2.052
8.526 7.457
Total assets 38.796 45.570
EQUITY AND LIABILITIES
Equity
Share capital 21 5.913 5.913
Share premium 12.222 12.222
Merger reserve - 67.093
Distributable reserve 67.093 -
Accumulated losses (51.244) (42.483)
Total equity
33.984 42.745
Non-current liabilities
Lease liabilities
19
120 -
120 -
Current liabilities
Trade and other payables
22 4.618 2.703
Lease liabilities 19 74 68
Current tax liabilities
23
- 54
4.692 2.825
Total liabilities 4.812 2.825
Total equity and liabilities 38.796 45.570
On 26 April 2024 the Board of Directors of Petrolia SE authorised these financial statements for issue.
Polycarpos Protopapas Sjur Storaas Berge Gerdt Larsen George Hadjineophytou Solve Nilsen
Board Member Board Member Chairman of the Board Board Member Finance Manager
Managing Director
The notes on pages 5 to 24 form an integral part of these financial statements.
2
FINANCIAL STATEMENTS / PARENT
STATEMENT OF CHANGES IN EQUITY
31 December 2023
Share capital
Share
premium
Merger
reserve
Distributable
reserve
Accumulated
losses Total
Note USD 000 USD 000 USD 000 USD 000 USD 000 USD 000
Balance at 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/ 1 January 2023 5.913 12.222 67.093 - (42.483) 42.745
Comprehensive income
Loss for the year / Total
comprehensive loss for the year
-
- - - (8.761) (8.761)
5.913 12.222 67.093 - (51.244) 33.984
Transactions with owners
Transfer between reserves
(1)
-
- (67.093) 67.093 - -
Balance at 31 December 2023
5.913
12.222 - 67.093 (51.244) 33.984
1) By a Court Order dated 30/06/2023 sanctioning the shareholder's special resolution dated 31/05/2023 the
Merger reserve of USD 67.093.489,64 was reduced to USD 0, and the said reduction was effected by crediting
the reduction amount of USD 67.093.489,64 to a distributable reserve of the Company. The distributable reserve
shall be available to the Directors of the Company to treat as they deem fit in their absolute discretion.
The notes on pages 5 to 24 form an integral part of these financial statements.
3
58
ANNUAL REPORT 2023 PETROLIA SE
STATEMENT OF CASH FLOWS
31 December 2023
2023 2022
Note USD 000 USD 000
CASH FLOWS FROM OPERATING ACTIVITIES
Loss before tax (8.756) (7.668)
Adjustments for:
Depreciation of right-of-use assets 19 68 60
Net exchange loss 11 178 772
Impairment charge - investments in associates 15 124 147
Impairment charge - investment in subsidiaries 14 7.846 5.662
Expected credit losses on loan receivable 17 250 -
Dividend income (500) -
Interest income 11 (369) (581)
Interest expense
11
-
158
(1.159) (1.450)
Changes in working capital:
Decrease in trade and other receivables (48) (461)
Increase in trade and other payables 2.109
4.870
902 2.959
Dividends received 500 -
Tax (paid)
/refunded
(59)
51
Net cash generated from operating activities
1.343
3.010
CASH FLOWS FROM INVESTING ACTIVITIES
Payment for purchase of computer hardware 13 (1) (1)
Loans granted 16 (2.934) -
Loans repayments received 16 927 1.506
Interest received
16
390
592
Net cash (used in)/generated from investing activities
(1.618)
2.097
CASH FLOWS FROM FINANCING ACTIVITIES
Payments of leases liabilities 19 (68) (68)
Decrease/(increase) in restricted cash 24 (19)
Bond loan, repaid - (4.620)
Interest paid on bond loan -
(277)
Net cash used in financing activities
(44)
(4.984)
Net (decrease)/increase in cash and cash equivalents (319) 123
Cash and cash equivalents at beginning of the year 2.052 1.929
Cash and cash equivalents at end of the year
20
1.733 2.052
The notes on pages 5 to 24 form an integral part of these financial statements.
4
FINANCIAL STATEMENTS / PARENT
NOTES TO THE FINANCIAL STATEMENTS
31 December 2023
1. Incorporation and principal activities
Country of incorporation and change of name
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.
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 (Petrolia AS), 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 a 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 have conformed with the demands of the prevailing authorities in its
worldwide operations regarding the pollution of the environment.
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.
These parent company financial statements include the stand-alone results and position of the Company including its
Norwegian registered branch, Petrolia NUF.
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 2023.
5
59
ANNUAL REPORT 2023 PETROLIA SE
STATEMENT OF CASH FLOWS
31 December 2023
2023 2022
Note USD 000 USD 000
CASH FLOWS FROM OPERATING ACTIVITIES
Loss before tax (8.756) (7.668)
Adjustments for:
Depreciation of right-of-use assets 19 68 60
Net exchange loss 11 178 772
Impairment charge - investments in associates 15 124 147
Impairment charge - investment in subsidiaries 14 7.846 5.662
Expected credit losses on loan receivable 17 250 -
Dividend income (500) -
Interest income 11 (369) (581)
Interest expense
11
- 158
(1.159) (1.450)
Changes in working capital:
Decrease in trade and other receivables (48) (461)
Increase in trade and other payables 2.109 4.870
902 2.959
Dividends received 500 -
Tax (paid)
/refunded
(59) 51
Net cash generated from operating activities
1.343 3.010
CASH FLOWS FROM INVESTING ACTIVITIES
Payment for purchase of computer hardware 13 (1) (1)
Loans granted 16 (2.934) -
Loans repayments received 16 927 1.506
Interest received
16
390 592
Net cash (used in)/generated from investing activities
(1.618) 2.097
CASH FLOWS FROM FINANCING ACTIVITIES
Payments of leases liabilities 19 (68) (68)
Decrease/(increase) in restricted cash 24 (19)
Bond loan, repaid - (4.620)
Interest paid on bond loan - (277)
Net cash used in financing activities
(44) (4.984)
Net (decrease)/increase in cash and cash equivalents (319) 123
Cash and cash equivalents at beginning of the year 2.052 1.929
Cash and cash equivalents at end of the year
20
1.733 2.052
The notes on pages 5 to 24 form an integral part of these financial statements.
4
NOTES TO THE FINANCIAL STATEMENTS
31 December 2023
1. Incorporation and principal activities
Country of incorporation and change of name
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.
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 (Petrolia AS), 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 a 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 have conformed with the demands of the prevailing authorities in its
worldwide operations regarding the pollution of the environment.
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.
These parent company financial statements include the stand-alone results and position of the Company including its
Norwegian registered branch, Petrolia NUF.
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 2023.
5
FINANCIAL STATEMENTS / PARENT
60
ANNUAL REPORT 2023 PETROLIA SE
FINANCIAL STATEMENTS / PARENT
NOTES TO THE FINANCIAL STATEMENTS
31 December 2023
3. Adoption of new or revised standards and interpretations (continued)
Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS Practice Statement 2
The amendments to IAS 1 and IFRS Practice Statement 2 Making Materiality Judgements provide guidance and
examples to help entities apply materiality judgements to accounting policy disclosures. The amendments aim to help
entities provide accounting policy disclosures that are more useful by replacing the requirement for entities to
disclose their ‘significant’ accounting policies with a requirement to disclose their ‘material’ accounting policies and
adding guidance on how entities apply the concept of materiality in making decisions about accounting policy
disclosures. The amendments have had an impact on the Company’s disclosures of accounting policies, but not on
the measurement, recognition or presentation of any items in the Company’s financial statements.
Definition of Accounting Estimates - Amendments to IAS 8
The amendments to IAS 8 clarify the distinction between changes in accounting estimates, changes in accounting
policies and the correction of errors. They also clarify how entities use measurement techniques and inputs to
develop accounting estimates. The amendments had no impact on the Company’s separate financial statements.
IFRS 17 Insurance Contracts
IFRS 17 Insurance Contracts is a comprehensive new accounting standard for insurance contracts covering
recognition and measurement, presentation and disclosure. IFRS 17 replaces IFRS 4 Insurance Contracts. IFRS 17
applies to all types of insurance contracts (i.e., life, non-life, direct insurance and re-insurance), regardless of the
type of entities that issue them as well as to certain guarantees and financial instruments with discretionary
participation features; a few scope exceptions will apply. The overall objective of IFRS 17 is to provide a
comprehensive accounting model for insurance contracts that is more useful and consistent for insurers, covering all
relevant accounting aspects. IFRS 17 is based on a general model, supplemented by:
- A specific adaptation for contracts with direct participation features (the variable fee approach)
- A simplified approach (the premium allocation approach) mainly for short-duration contracts.
The new standard had no impact on the Company’s separate financial statements.
Deferred Tax related to Assets and Liabilities arising from a Single Transaction – Amendments to IAS
12
The amendments to IAS 12 Income Tax narrow the scope of the initial recognition exception, so that it no longer
applies to transactions that give rise to equal taxable and deductible temporary differences such as leases and
decommissioning liabilities.
The amendments had no impact on the Company’s separate financial statements.
International Tax Reform—Pillar Two Model Rules – Amendments to IAS 12
The amendments to IAS 12 have been introduced in response to the OECD’s BEPS Pillar Two rules and include:
- A mandatory temporary exception to the recognition and disclosure of deferred taxes arising from
the jurisdictional implementation of the Pillar Two model rules; and
- Disclosure requirements for affected entities to help users of the financial statements
The amendments had no impact on the Company’s separate financial statements.
4. Material 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.
6
61
ANNUAL REPORT 2023 PETROLIA SE
FINANCIAL STATEMENTS / PARENT
NOTES TO THE FINANCIAL STATEMENTS
31 December 2023
4. Material accounting policies (continued)
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. 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.
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.
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 units). 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.
Revenue from contracts with customers 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.
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 determined 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.
7
62
ANNUAL REPORT 2023 PETROLIA SE
FINANCIAL STATEMENTS / PARENT
NOTES TO THE FINANCIAL STATEMENTS
31 December 2023
4. Material accounting policies (continued)
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.
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 estimated
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. 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.
8
63
ANNUAL REPORT 2023 PETROLIA SE
NOTES TO THE FINANCIAL STATEMENTS
31 December 2023
4. Material accounting policies (continued)
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.
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 estimated
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. 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.
8
FINANCIAL STATEMENTS / PARENT
NOTES TO THE FINANCIAL STATEMENTS
31 December 2023
4. Material accounting policies (continued)
Leasing (continued)
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 instruments
(i) Financial assets
Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through
OCI and fair value through the income statement.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.
Financial assets at amortised cost (debt instruments)
This category is most relevant to the Company. The Company measures financial assets at amortised cost if both of
the following conditions are met:
- The financial asset is held within a business model with the objective to hold financial assets in order to col-
lect 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 initially measured at fair value and 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 in Stage 1 have their ECL measured at an amount equal to the portion of lifetime ECL that results
from default events possible within the next 12 months or until contractual maturity, if shorter (''12 Months ECL''). If
the Company identifies a significant increase in credit risk (''SICR'') since initial recognition, the asset is transferred to
Stage 2 and its ECL is measured based on ECL on a lifetime basis, that is, up until contractual maturity but
considering expected prepayments, if any (''Lifetime ECL''). Refer to note 6, Credit risk section, for a description of
how the Company determines when a SICR has occurred. If the Company determines that a financial asset is credit-
impaired, the asset is transferred to Stage 3 and its ECL is measured as a Lifetime ECL. The Company's definition of
credit impaired assets and definition of default is explained in note 6, Credit risk section.
9
64
ANNUAL REPORT 2023 PETROLIA SE
FINANCIAL STATEMENTS / PARENT
NOTES TO THE FINANCIAL STATEMENTS
31 December 2023
4. Material accounting policies (continued)
Financial assets (continued)
Financial assets at amortised cost (debt instruments) (continued)
Additionally the Company has decided to use the low credit risk assessment exemption for investment grade financial
assets. Refer to note 6, Credit risk section for a description of how the Company determines low credit risk financial
assets.
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.
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.
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 2023. 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.
Financial guarantee contracts
Financial guarantee contracts are contracts that require the Company to make specified payments to reimburse the
holder of the guarantee for a loss it incurs because a specified debtor fails to make payment when due in accordance
with the terms of debt instrument. Such financial guarantees are given to banks, financial institutions and others on
behalf of customers to secure loans, overdrafts and other banking facilities.
Financial guarantees are recognised as a financial liability at the time the guarantee is issued.
Financial guarantees are initially recognised at their fair value, which is normally evidenced by the amount of fees
received. This amount is amortised on a straight line basis over the life of the guarantee in other income in profit or
loss.
10
65
ANNUAL REPORT 2023 PETROLIA SE
NOTES TO THE FINANCIAL STATEMENTS
31 December 2023
4. Material accounting policies (continued)
Financial assets (continued)
Financial assets at amortised cost (debt instruments) (continued)
Additionally the Company has decided to use the low credit risk assessment exemption for investment grade financial
assets. Refer to note 6, Credit risk section for a description of how the Company determines low credit risk financial
assets.
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.
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.
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 2023. 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.
Financial guarantee contracts
Financial guarantee contracts are contracts that require the Company to make specified payments to reimburse the
holder of the guarantee for a loss it incurs because a specified debtor fails to make payment when due in accordance
with the terms of debt instrument. Such financial guarantees are given to banks, financial institutions and others on
behalf of customers to secure loans, overdrafts and other banking facilities.
Financial guarantees are recognised as a financial liability at the time the guarantee is issued.
Financial guarantees are initially recognised at their fair value, which is normally evidenced by the amount of fees
received. This amount is amortised on a straight line basis over the life of the guarantee in other income in profit or
loss.
10
FINANCIAL STATEMENTS / PARENT
NOTES TO THE FINANCIAL STATEMENTS
31 December 2023
4. Material accounting policies (continued)
Financial assets (continued)
Financial guarantee contracts (continued)
Financial guarantees are subsequently measured at the higher of (i) the amount determined in accordance with the
expected credit loss model under IFRS 9 ''Financial Instruments'', and (ii) the amount initially recognised less, where
appropriate, the cumulative amount of income recognised in accordance with the principles of IFRS 15 ''Revenue
from Contracts with customers''.
(ii) Financial liabilities
The Company’s financial liabilities include trade and other payables and borrowings which are initially measured at
fair value and are subsequently measured at amortised cost.
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.
Climate-related matters
The Company considers climate-related matters in estimates and assumptions, mostly related to its investments in
subsidiaries and associates. Even though the Company believes its subsidiaries will not be significantly affected by the
transition to a low-carbon economy, climate-related matters increase the uncertainty in estimates and assumptions
underpinning their valuation. Even though climate-related risks might not currently have a significant impact on
measurement, the Company is closely monitoring relevant changes and developments, such as new climate-related
legislation. Refer also to note 7.
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.
Comparatives
Where necessary, comparative figures have been adjusted to conform to changes in presentation in the current year.
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, apart from IFRS18 that its impact will be
assessed upon becoming effective.
6. Financial risk management
Financial risk factors
The Company is exposed to credit risk, liquidity risk, currency risk and capital risk management arising from the
financial instruments it holds. The risk management policies employed by the Company to manage these risks are
discussed below:
6.1 Credit risk
The Company is primarily exposed to credit risk related to receivables from related parties, loans receivable and cash
at bank. The maximum risk exposure is represented by the carrying value of receivables from related parties referred
to in note 17, loan receivable shown in note 16 and cash at bank in note 20.
11
66
ANNUAL REPORT 2023 PETROLIA SE
FINANCIAL STATEMENTS / PARENT
NOTES TO THE FINANCIAL STATEMENTS
31 December 2023
6. Financial risk management (continued)
6.1 Credit risk (continued)
The Company's revenues arise from a limited number of transactions and customers and therefore credit risk is
transparent.
Management has assessed the collectability of receivables and do not expect losses other than the expected credit
allowance already provided in line with the accounting policy. Expected credit loss of USD 250 thousand was
provided for the loan receivable as the associate is in net liability position but financially supported by its shareholders
to enable it to continue its exploration and production activity and ECL was estimated to be insignificant. Refer also
to note 14.
The Group does not hold any collateral as security for its receivables.
Cash and cash equivalents
The Company assesses, on an individual basis, its exposure to credit risk arising from cash at bank. This assessment
takes into account, ratings from external credit rating institutions.
Bank balances held with banks with investment grade rating are considered as low credit risk.
The gross carrying amounts below represent the Company's maximum exposure to credit risk on these assets as at
31 December 2023 and 31 December 2022:
Company internal credit rating External credit rating 2023 2022
USD 000 USD 000
Svenska Handelsbanken AB A2 1.281 2.046
Bank of Cyprus Public Company Limited Ba2 452
6
Total 1.733 2.052
The Company does not hold any collateral as security for any cash at bank balances.
There were no significant cash at bank balances written off during the year that are subject to enforcement activity.
Guarantees which represent irrevocable assurances that the Company will make payments in the event that a
counterparty cannot meet its obligations to third parties, carry the same credit risk as loans receivable.
At the reporting date, the Company acts as a guarantor joint and several to the loan of associate company Petrolia
Noco AS. As at 31 December 2023, the outstanding loan balance subject to this guarantee totalled NOK 75.9 million
and the loan was properly served by Petrolia Noco AS with no defaults. A financial guarantee liability of USD 81
thousand is included in Other payables in note 20, which represents the guarantee fee charged less cumulative
amortisation. No expected credit losses have been recognised as of the reporting date in respect of these financial
guarantees provided by the Company, since it was assessed that the present value of related expected payments is
immaterial.
Until the date of the approval of the financial statements, no claim has been raised for the loan guarantee and the
Board of Directors does not expect any claim in the future.
6.2 Liquidity risk
Liquidity risk is the risk that arises when the maturity of assets and liabilities does not match. An unmatched position
potentially enhances profitability, but can also increase the risk of losses. The Company has procedures with the
object of minimising such losses such as maintaining sufficient cash and other highly liquid current assets.
The following tables detail the Company's remaining contractual maturity for its financial liabilities. The tables have
been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the
Company can be required to pay. The table includes both interest and principal cash flows.
12
67
ANNUAL REPORT 2023 PETROLIA SE
NOTES TO THE FINANCIAL STATEMENTS
31 December 2023
6. Financial risk management (continued)
6.1 Credit risk (continued)
The Company's revenues arise from a limited number of transactions and customers and therefore credit risk is
transparent.
Management has assessed the collectability of receivables and do not expect losses other than the expected credit
allowance already provided in line with the accounting policy. Expected credit loss of USD 250 thousand was
provided for the loan receivable as the associate is in net liability position but financially supported by its shareholders
to enable it to continue its exploration and production activity and ECL was estimated to be insignificant. Refer also
to note 14.
The Group does not hold any collateral as security for its receivables.
Cash and cash equivalents
The Company assesses, on an individual basis, its exposure to credit risk arising from cash at bank. This assessment
takes into account, ratings from external credit rating institutions.
Bank balances held with banks with investment grade rating are considered as low credit risk.
The gross carrying amounts below represent the Company's maximum exposure to credit risk on these assets as at
31 December 2023 and 31 December 2022:
Company internal credit rating External credit rating 2023 2022
USD 000 USD 000
Svenska Handelsbanken AB A2 1.281 2.046
Bank of Cyprus Public Company Limited Ba2 452 6
Total 1.733 2.052
The Company does not hold any collateral as security for any cash at bank balances.
There were no significant cash at bank balances written off during the year that are subject to enforcement activity.
Guarantees which represent irrevocable assurances that the Company will make payments in the event that a
counterparty cannot meet its obligations to third parties, carry the same credit risk as loans receivable.
At the reporting date, the Company acts as a guarantor joint and several to the loan of associate company Petrolia
Noco AS. As at 31 December 2023, the outstanding loan balance subject to this guarantee totalled NOK 75.9 million
and the loan was properly served by Petrolia Noco AS with no defaults. A financial guarantee liability of USD 81
thousand is included in Other payables in note 20, which represents the guarantee fee charged less cumulative
amortisation. No expected credit losses have been recognised as of the reporting date in respect of these financial
guarantees provided by the Company, since it was assessed that the present value of related expected payments is
immaterial.
Until the date of the approval of the financial statements, no claim has been raised for the loan guarantee and the
Board of Directors does not expect any claim in the future.
6.2 Liquidity risk
Liquidity risk is the risk that arises when the maturity of assets and liabilities does not match. An unmatched position
potentially enhances profitability, but can also increase the risk of losses. The Company has procedures with the
object of minimising such losses such as maintaining sufficient cash and other highly liquid current assets.
The following tables detail the Company's remaining contractual maturity for its financial liabilities. The tables have
been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the
Company can be required to pay. The table includes both interest and principal cash flows.
12
FINANCIAL STATEMENTS / PARENT
NOTES TO THE FINANCIAL STATEMENTS
31 December 2023
6. Financial risk management (continued)
6.2 Liquidity risk (continued)
31 December 2023 Carrying
amounts
Contractual
cash flows
Up to12
months 1-2 years 2-5 years
More than
5 years
USD 000 USD 000 USD 000 USD 000 USD 000 USD 000
Lease liabilities 194 210 70 70 70 -
Trade and other payables
231 231 231 - - -
Payables to related parties 4.186
4.186 4.186 - - -
4.611 4.627 4.487 70 70 -
31 December 2022 Carrying
amounts
Contractual
cash flows
Up to 12
months 1-2 years 2-5 years
More than
5 years
USD 000 USD 000 USD 000 USD 000 USD 000 USD 000
Lease liabilities 67 67 67 - - -
Trade and other payables
166 166 166 - - -
Payables to related parties 2.312
2.312 2.312 - - -
2.545 2.545 2.545 - - -
Liquidity risk may also arise from the financial guarantee contracts provided by the Company to secure credit facilities
obtained by the associate of the Company, as further analysed in Credit risk (section 6.1) above.
6.3 Foreign currency risk
Currency risk is the risk that the value of financial instruments will fluctuate due to changes in foreign exchange
rates. Currency risk arises when future commercial transactions and recognised assets and liabilities are denominated
in a currency that is not the Company's measurement currency. The Company is exposed to foreign exchange risk
arising from various currency exposures primarily with respect to the Norwegian Krone and the Euro. The Company's
Management monitors the exchange rate fluctuations on a continuous basis and acts accordingly.
The carrying amounts of the Company's foreign currency denominated monetary assets and monetary liabilities at
the reporting date are as follows:
Liabilities Assets
2023 2022 2023 2022
USD 000 USD 000 USD 000 USD 000
Norwegian Krone 4.495 2.335 10.621 6.556
Euro 319
146 166 306
4.814 2.481 10.787 6.862
13
68
ANNUAL REPORT 2023 PETROLIA SE
FINANCIAL STATEMENTS / PARENT
NOTES TO THE FINANCIAL STATEMENTS
31 December 2023
6. Financial risk management (continued)
Sensitivity analysis
The following table demonstrates the sensitivity to a reasonably possible change in Euro and Norwegean Krone
currency exchange rate, with all other variables held constant, of the Company's profit before tax and the Company's
equity:
Change in
currency rate
Profit
before tax Equity
USD 000 USD 000
2023
Euro %5 8 8
Euro %(5) (8) (8)
Norwegian Krone %5 (189) (189)
Norwegian Krone %(5)
189 189
2022
Euro %5 8 8
Euro %(5) (8) (8)
Norwegian Krone %5 211 211
Norwegian Krone %(5)
(211) (211)
6.4 Capital risk management
Capital includes equity shares and share premium.
The Company manages its capital to ensure that it will be able to continue as a going concern while maximising the
return to shareholders. The Company's overall strategy remains unchanged from last year.
7. 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 adverse 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 or the fair value of their net assets in subsidiaries/associates may be
impaired, the estimated future discounted cash flows associated with these investments or the fair value of
their net assets would be compared to their carrying amounts to determine if a write-down to fair value is
necessary. The valuation may be impacted in several different ways by transition risk in particular, such as
climate-related legislation and regulations and changes in demand for the subsidiaries' and associates'
products. The Company has concluded that no single climate-related assumption is a key assumption for the
2023 impairment testing.
14
69
ANNUAL REPORT 2023 PETROLIA SE
NOTES TO THE FINANCIAL STATEMENTS
31 December 2023
6. Financial risk management (continued)
Sensitivity analysis
The following table demonstrates the sensitivity to a reasonably possible change in Euro and Norwegean Krone
currency exchange rate, with all other variables held constant, of the Company's profit before tax and the Company's
equity:
Change in
currency rate
Profit
before tax Equity
USD 000 USD 000
2023
Euro %5 8 8
Euro %(5) (8) (8)
Norwegian Krone %5 (189) (189)
Norwegian Krone %(5) 189 189
2022
Euro %5 8 8
Euro %(5) (8) (8)
Norwegian Krone %5 211 211
Norwegian Krone %(5) (211) (211)
6.4 Capital risk management
Capital includes equity shares and share premium.
The Company manages its capital to ensure that it will be able to continue as a going concern while maximising the
return to shareholders. The Company's overall strategy remains unchanged from last year.
7. 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 adverse 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 or the fair value of their net assets in subsidiaries/associates may be
impaired, the estimated future discounted cash flows associated with these investments or the fair value of
their net assets would be compared to their carrying amounts to determine if a write-down to fair value is
necessary. The valuation may be impacted in several different ways by transition risk in particular, such as
climate-related legislation and regulations and changes in demand for the subsidiaries' and associates'
products. The Company has concluded that no single climate-related assumption is a key assumption for the
2023 impairment testing.
14
FINANCIAL STATEMENTS / PARENT
NOTES TO THE FINANCIAL STATEMENTS
31 December 2023
7. 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.
8. 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 2023 2022
USD 000 USD 000
Management fees (Note 24.2) 114 9
Consultancy fees (Note 24.3) 44 261
158 270
9. Operating loss
2023 2022
USD 000 USD 000
Operating loss is stated after charging the following items:
Depreciation of right-of-use assets (Note 19) 68 61
Directors' fees (Note 24.1) 103 114
Staff costs including Directors in their executive capacity (Note 10) 580 759
Auditors' remuneration - current year 187 172
Auditors' remuneration (branch) - current year 22 22
Auditors’ remuneration for tax compliance - current year 15 4
Auditors’ remuneration for other non-audit services 9 -
Auditors' remuneration - prior years 4 26
Legal and professional - 6
10. Staff costs
2023 2022
USD 000 USD 000
Director remuneration (Note 24.1) 235 237
Wages 255 412
Social security costs 90 110
580 759
The average number of employees during the year was 4 (2022: 4).
15
70
ANNUAL REPORT 2023 PETROLIA SE
FINANCIAL STATEMENTS / PARENT
NOTES TO THE FINANCIAL STATEMENTS
31 December 2023
11. Finance income/(costs)
2023 2022
USD 000 USD 000
Loan interest income (Note 16) 369 560
Other interest income 77
21
Finance income 446 581
Net foreign exchange losses (193) (892)
Interest expense on lease liabilities (Note 19) - (4)
Interest expense on borrowings - (154)
Sundry finance expenses (5)
(4)
Finance costs (198) (1.054)
Net finance income/(cost)
248
(473)
12. Tax
2023 2022
USD 000 USD 000
Corporation tax (of the branch) - (51)
Defence contribution 5
-
Charge/(credit) for the year 5 (51)
The tax on the Company's results before tax differs from theoretical amount that would arise using the applicable tax
rates as follows:
2023 2022
USD 000 USD 000
Loss before tax (8.756)
(7.668)
Tax calculated at the applicable tax rates
(1.095) (959)
Effect of different tax rates on foreign earnings 76 108
Tax effect of expenses not deductible for tax purposes
1.102 848
Tax effect of allowances and income not subject to tax
(64) -
Tax effect of tax loss for the year
(19) 3
Defence contribution current year 5 -
Tax effect of group contribution (branch)
- (51)
Tax refund 5 (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) company 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.
16
71
ANNUAL REPORT 2023 PETROLIA SE
NOTES TO THE FINANCIAL STATEMENTS
31 December 2023
11. Finance income/(costs)
2023 2022
USD 000 USD 000
Loan interest income (Note 16) 369 560
Other interest income 77 21
Finance income 446 581
Net foreign exchange losses (193) (892)
Interest expense on lease liabilities (Note 19) - (4)
Interest expense on borrowings - (154)
Sundry finance expenses (5) (4)
Finance costs (198) (1.054)
Net finance income/(cost)
248 (473)
12. Tax
2023 2022
USD 000 USD 000
Corporation tax (of the branch) - (51)
Defence contribution 5 -
Charge/(credit) for the year 5 (51)
The tax on the Company's results before tax differs from theoretical amount that would arise using the applicable tax
rates as follows:
2023 2022
USD 000 USD 000
Loss before tax (8.756) (7.668)
Tax calculated at the applicable tax rates
(1.095) (959)
Effect of different tax rates on foreign earnings 76 108
Tax effect of expenses not deductible for tax purposes
1.102 848
Tax effect of allowances and income not subject to tax
(64) -
Tax effect of tax loss for the year
(19) 3
Defence contribution current year 5 -
Tax effect of group contribution (branch)
- (51)
Tax refund 5 (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) company 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.
16
FINANCIAL STATEMENTS / PARENT
NOTES TO THE FINANCIAL STATEMENTS
31 December 2023
12. 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% (2022: 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% (2022: 12,5%) on the
tax profits realized in Cyprus. The Company's tax losses in Cyprus amounts to USD 1.594 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.
13. Computer hardware
Computer
hardware
USD 000
Cost
Balance at 1 January 2022 -
Additions
1
Balance at 31 December 2022/ 1 January 2023 1
Additions 1
Balance at 31 December 2023
2
Depreciation
Balance at 1 January 2022 -
Charge for the year -
Balance at 31 December 2023
-
Net book amount
Balance at 31 December 2023
2
Balance at 31 December 2022
1
During the year, the Company through its branch, has acquired a new laptop at a cost of NOK 21 (USD 1).
17
72
ANNUAL REPORT 2023 PETROLIA SE
FINANCIAL STATEMENTS / PARENT
NOTES TO THE FINANCIAL STATEMENTS
31 December 2023
14. Investments in subsidiaries
2023 2022
USD 000 USD 000
Balance at 1 January 37.920 44.058
Net impairment (7.846) (5.662)
Effect of group contribution -
(476)
Balance at 31 December 30.074 37.920
The details of the subsidiaries are as follows:
Name Country of
incorporation
Principal
activities
2023
Holding
%
2022
Holding
%
2023
USD 000
2022
USD 000
Petrolia AS (1) Norway Holding company
of IOT Group -
Energy service
100 100 29.337 37.183
Petrolia Tool Pool AS Norway Holding company 100 100 17 17
Venture Drilling AS Norway Energy Service 100 100 - -
Independent Oil Tools International
(Cyprus) Ltd (2)
Cyprus Holding company 100 100 720
720
30.074 37.920
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 2023, an impairment of USD 7.846 thousand was recognized (2022: impairment USD 6.393 thousand).
The accumulated impairment as at 31 December 2023 is USD 95.473 thousand (2022: USD 87.627 thousand).
Petrolia AS is the holding company of the oil service sub-group.
Management notes that the Energy service sub-group was affected by the political changes in Iraq and the conflict in
Gaza. In addition, the net assets of the investee are lower compared to the investment’s carrying amount. 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
- Forecasted EBITDA
- Discount rate of 11,3% (2022: 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 20.047 thousand (2022:USD 9.790 thou-
sand) total impairment whereas an increase in projected EBITDA rates of 5% would result in USD 1.746
thousand (2022: USD 4.695 thousand) impairment,
- An increase in the discount rate of 1% would result in USD 11.509 thousand (2022: USD 8.807 thousand)
total impairment.
(2) As at 31 December 2023, the management has not identified any impairment indicators related to the investment
in Independent Oil Tools International (Cyprus) Ltd. During 2022 a reversal of impairment of USD 455 thousand was
recognised, after comparing the investment’s carrying amount with its recoverable amount, due to reversal of
impairment indicators being present. 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 accumulated impairment as at 31 December 2023 is USD
12.879 thousand (2022: USD 12.879 thousand).
18
NOTES TO THE FINANCIAL STATEMENTS
31 December 2023
14. Investments in subsidiaries (continued)
Total impairment for the year amounted to USD 7.846 thousand (2022: USD 5.662 thousand). Total accumulated
impairment as at 31 December 2023 amounted to USD 176.135 thousand (2022: USD 168.289 thousand).
15. Investments in associate
The details of the investment are as follows:
2023 2022
USD 000 USD 000
Balance at 1 January 124 271
Impairment charge (124) (147)
Balance at 31 December - 124
The details of the investment are as follows:
Name Country of
incorporation
Principal
activities
2023
Holding
%
2022
Holding
%
2023
USD 000
2022
USD 000
Petrolia Noco
AS
Norway Oil & Gas 10,61 11,27 - 124
- 124
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%. During 2023, 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 10.000.000 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 4.985.000 shares were subscribed by Petrolia AS, a 100% subsidiary of Petrolia SE and therefore its shareholding
decreased from 11,27% to 10,61%. 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).
The Company compared the carrying amount of the investment with the recoverable amount and estimated
impairment. The impairment was estimated to USD 124 thousand (2022: USD 147 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 2023 amounted to USD 25.658 thousand (2022: USD25.534 thousand).
Through its subsidiaries the Company controls 49,9% (2022: 49,9%) of the shares of Petrolia NOCO AS.
16. Loan receivable from associate
2023 2022
USD 000 USD 000
Balance at 1 January 4.362 6.595
Loans granted 2.934 -
Principal repayments (927) (1.506)
Interest charged 369 560
Interest repayments incurred for the year (Note 11) (391) (592)
Foreign exchange differences (177) (695)
Expected credit loss (250) -
Balance at 31 December 5.920 4.362
19
73
ANNUAL REPORT 2023 PETROLIA SE
NOTES TO THE FINANCIAL STATEMENTS
31 December 2023
14. Investments in subsidiaries
2023 2022
USD 000 USD 000
Balance at 1 January 37.920 44.058
Net impairment (7.846) (5.662)
Effect of group contribution - (476)
Balance at 31 December 30.074 37.920
The details of the subsidiaries are as follows:
Name Country of
incorporation
Principal
activities
2023
Holding
%
2022
Holding
%
2023
USD 000
2022
USD 000
Petrolia AS (1) Norway Holding company
of IOT Group -
Energy service
100 100 29.337 37.183
Petrolia Tool Pool AS Norway Holding company 100 100 17 17
Venture Drilling AS Norway Energy Service 100 100 - -
Independent Oil Tools International
(Cyprus) Ltd (2)
Cyprus Holding company 100 100 720 720
30.074 37.920
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 2023, an impairment of USD 7.846 thousand was recognized (2022: impairment USD 6.393 thousand).
The accumulated impairment as at 31 December 2023 is USD 95.473 thousand (2022: USD 87.627 thousand).
Petrolia AS is the holding company of the oil service sub-group.
Management notes that the Energy service sub-group was affected by the political changes in Iraq and the conflict in
Gaza. In addition, the net assets of the investee are lower compared to the investment’s carrying amount. 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
- Forecasted EBITDA
- Discount rate of 11,3% (2022: 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 20.047 thousand (2022:USD 9.790 thou-
sand) total impairment whereas an increase in projected EBITDA rates of 5% would result in USD 1.746
thousand (2022: USD 4.695 thousand) impairment,
- An increase in the discount rate of 1% would result in USD 11.509 thousand (2022: USD 8.807 thousand)
total impairment.
(2) As at 31 December 2023, the management has not identified any impairment indicators related to the investment
in Independent Oil Tools International (Cyprus) Ltd. During 2022 a reversal of impairment of USD 455 thousand was
recognised, after comparing the investment’s carrying amount with its recoverable amount, due to reversal of
impairment indicators being present. 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 accumulated impairment as at 31 December 2023 is USD
12.879 thousand (2022: USD 12.879 thousand).
18
FINANCIAL STATEMENTS / PARENT
NOTES TO THE FINANCIAL STATEMENTS
31 December 2023
14. Investments in subsidiaries (continued)
Total impairment for the year amounted to USD 7.846 thousand (2022: USD 5.662 thousand). Total accumulated
impairment as at 31 December 2023 amounted to USD 176.135 thousand (2022: USD 168.289 thousand).
15. Investments in associate
The details of the investment are as follows:
2023 2022
USD 000 USD 000
Balance at 1 January 124 271
Impairment charge (124)
(147)
Balance at 31 December - 124
The details of the investment are as follows:
Name Country of
incorporation
Principal
activities
2023
Holding
%
2022
Holding
%
2023
USD 000
2022
USD 000
Petrolia Noco
AS
Norway Oil & Gas 10,61 11,27 -
124
- 124
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%. During 2023, 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 10.000.000 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 4.985.000 shares were subscribed by Petrolia AS, a 100% subsidiary of Petrolia SE and therefore its shareholding
decreased from 11,27% to 10,61%. 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).
The Company compared the carrying amount of the investment with the recoverable amount and estimated
impairment. The impairment was estimated to USD 124 thousand (2022: USD 147 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 2023 amounted to USD 25.658 thousand (2022: USD25.534 thousand).
Through its subsidiaries the Company controls 49,9% (2022: 49,9%) of the shares of Petrolia NOCO AS.
16. Loan receivable from associate
2023 2022
USD 000 USD 000
Balance at 1 January 4.362 6.595
Loans granted 2.934 -
Principal repayments (927) (1.506)
Interest charged 369 560
Interest repayments incurred for the year (Note 11) (391) (592)
Foreign exchange differences (177) (695)
Expected credit loss (250) -
Balance at 31 December 5.920 4.362
19
74
ANNUAL REPORT 2023 PETROLIA SE
FINANCIAL STATEMENTS / PARENT
NOTES TO THE FINANCIAL STATEMENTS
31 December 2023
16. Loan receivable from associate (continued)
On 14 May 2020, Petrolia Noco AS (borrower) and Independent Oil & Resources Plc (lender and security agent) have
signed a 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 an interest of 10% p.a and is
repayable by 31 December 2024. The interest income for the year related to this loan is NOK 3.714.581 (USD
353.255) (2022: NOK 5.491.540 (USD 560.168)).
On 22 December 2023, according to a signed loan addendum, Petrolia SE and Independent Oil & Resources Plc
mutually agree a new loan of NOK 75.000.000 (Petrolia SE to give NOK 30.000.000 and Independent Oil & Resources
Plc to give NOK 45.000.000) and to become joint and several guarantors to remaining lenders for an additional loan
amount of NOK 75.9 million. During 2023, Petrolia SE through its branch Petrolia NUF (additional lender) has
provided a loan to Petrolia Noco AS amounting to NOK 30.000.000 (USD 2.934.129). The additional loan bears an
interest of 13.2% p.a and is repayable by 31 December 2024. The interest income for the year related to this loan is
NOK 165.000 (USD 16.224).
As per the addendum, Petrolia Noco AS has paid to Petrolia SE the guarantee fee of NOK 850,000 (USD 83,134). A
financial guarantee liability of USD 81.327 is presented in note 22, which represents the guarantee fee charged less
cumulative amortisation.
The loans are repayable as follows:
2023 2022
USD 000 USD 000
Within one year 5.920
4.362
5.920 4.362
Loans are denominated in NOK.
Refer also to Note 13 to the consolidated financial statements.
The exposure of the Company to credit risk in relation to loans receivable is reported in
note 6 of the financial
statements.
There is no history of credit losses related to the loan. The management assessed that there is very little risk
regarding its recoverability and that the related expected credit losses recognised amounting to USD 250.000 are not
considered significant.
17. Trade and other receivables
2023 2022
USD 000 USD 000
Trade receivables
- 31
Receivables from related parties (Note 24.5) 804 606
Deposits and prepayments 24 44
VAT refundable 14
307
842 988
The fair values of trade and other receivables due within one year approximate to their carrying amounts as
presented above.
The exposure of the Company to credit risk and impairment losses in relation to trade and other receivables is
reported in note 6 of the financial statements.
20
NOTES TO THE FINANCIAL STATEMENTS
31 December 2023
18. Restricted cash
2023 2022
USD 000 USD 000
Bank deposits 31 55
Less non-current portion - -
Current portion 31 55
Refer also to Note 16 to the consolidated financial statements.
19. Leases
The Company has an office rental agreement with a contractual lease term until 31 December 2023, with options to
extend. During the year 2023, the Company has assessed that it was reasonably certain that the extension option will
be exercised for three more years until 31 December 2026. Management exercises judgement in determining
whether it is reasonably certain to continue to use the premises for additional periods after 31 December 2026.
Management has assessed that the extension for additional optional periods is not reasonably certain and therefore
these optional periods were not taken into account 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 74 thousand whereas the addition of two years will result in an increase of USD
120 thousand.
Set out below are the carrying amounts of right of use assets recognised and the movements during the year:
Right of Use Asset:
2023 2022
USD 000 USD 000
Balance at 1 January 68 129
Addition 194 -
Depreciation charge for the year (Note 9) (68) (60)
Exchange differences - (1)
Balance at 31 December 194 68
Set out below are the carrying amounts of lease liabilities and the movements during the year:
Lease liability
2023 2022
USD 000 USD 000
Balance at 1 January 68 131
Addition 194 -
Repayments (68) (68)
Interest expense (Note 11) - 4
Exchange differences - 1
Balance at 31 December 194 68
Less current portion (74) (68)
Non-current portion 120 -
20. Cash at bank
Cash balances are analysed as follows:
2023 2022
USD 000 USD 000
Cash at bank 1.733 2.052
1.733 2.052
21
75
ANNUAL REPORT 2023 PETROLIA SE
NOTES TO THE FINANCIAL STATEMENTS
31 December 2023
16. Loan receivable from associate (continued)
On 14 May 2020, Petrolia Noco AS (borrower) and Independent Oil & Resources Plc (lender and security agent) have
signed a 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 an interest of 10% p.a and is
repayable by 31 December 2024. The interest income for the year related to this loan is NOK 3.714.581 (USD
353.255) (2022: NOK 5.491.540 (USD 560.168)).
On 22 December 2023, according to a signed loan addendum, Petrolia SE and Independent Oil & Resources Plc
mutually agree a new loan of NOK 75.000.000 (Petrolia SE to give NOK 30.000.000 and Independent Oil & Resources
Plc to give NOK 45.000.000) and to become joint and several guarantors to remaining lenders for an additional loan
amount of NOK 75.9 million. During 2023, Petrolia SE through its branch Petrolia NUF (additional lender) has
provided a loan to Petrolia Noco AS amounting to NOK 30.000.000 (USD 2.934.129). The additional loan bears an
interest of 13.2% p.a and is repayable by 31 December 2024. The interest income for the year related to this loan is
NOK 165.000 (USD 16.224).
As per the addendum, Petrolia Noco AS has paid to Petrolia SE the guarantee fee of NOK 850,000 (USD 83,134). A
financial guarantee liability of USD 81.327 is presented in note 22, which represents the guarantee fee charged less
cumulative amortisation.
The loans are repayable as follows:
2023 2022
USD 000 USD 000
Within one year 5.920 4.362
5.920 4.362
Loans are denominated in NOK.
Refer also to Note 13 to the consolidated financial statements.
The exposure of the Company to credit risk in relation to loans receivable is reported in
note 6 of the financial
statements.
There is no history of credit losses related to the loan. The management assessed that there is very little risk
regarding its recoverability and that the related expected credit losses recognised amounting to USD 250.000 are not
considered significant.
17. Trade and other receivables
2023 2022
USD 000 USD 000
Trade receivables
- 31
Receivables from related parties (Note 24.5) 804 606
Deposits and prepayments 24 44
VAT refundable 14 307
842 988
The fair values of trade and other receivables due within one year approximate to their carrying amounts as
presented above.
The exposure of the Company to credit risk and impairment losses in relation to trade and other receivables is
reported in note 6 of the financial statements.
20
FINANCIAL STATEMENTS / PARENT
NOTES TO THE FINANCIAL STATEMENTS
31 December 2023
18. Restricted cash
2023 2022
USD 000 USD 000
Bank deposits 31 55
Less non-current portion - -
Current portion 31 55
Refer also to Note 16 to the consolidated financial statements.
19. Leases
The Company has an office rental agreement with a contractual lease term until 31 December 2023, with options to
extend. During the year 2023, the Company has assessed that it was reasonably certain that the extension option will
be exercised for three more years until 31 December 2026. Management exercises judgement in determining
whether it is reasonably certain to continue to use the premises for additional periods after 31 December 2026.
Management has assessed that the extension for additional optional periods is not reasonably certain and therefore
these optional periods were not taken into account 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 74 thousand whereas the addition of two years will result in an increase of USD
120 thousand.
Set out below are the carrying amounts of right of use assets recognised and the movements during the year:
Right of Use Asset:
2023 2022
USD 000 USD 000
Balance at 1 January 68 129
Addition 194 -
Depreciation charge for the year (Note 9) (68) (60)
Exchange differences -
(1)
Balance at 31 December 194 68
Set out below are the carrying amounts of lease liabilities and the movements during the year:
Lease liability
2023 2022
USD 000 USD 000
Balance at 1 January 68 131
Addition 194 -
Repayments (68) (68)
Interest expense (Note 11) - 4
Exchange differences -
1
Balance at 31 December 194 68
Less current portion (74) (68)
Non-current portion 120 -
20. Cash at bank
Cash balances are analysed as follows:
2023 2022
USD 000 USD 000
Cash at bank 1.733
2.052
1.733 2.052
21
76
ANNUAL REPORT 2023 PETROLIA SE
FINANCIAL STATEMENTS / PARENT
NOTES TO THE FINANCIAL STATEMENTS
31 December 2023
20. Cash at bank (continued)
Cash and cash equivalents by type:
2023 2022
USD 000 USD 000
Norwegian Krone 1.277 2.042
US Dollars 297 5
Euro 159
5
1.733 2.052
The exposure of the Company to credit risk and impairment losses in relation to cash and cash equivalents is
reported in note 6 of the financial statements.
21. Share capital
2023 2023 2022 2022
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 2023 59.133.786 5.913 59.133.786 5.913
Refer also to Note 17 to the consolidated financial statements.
22. Trade and other payables
2023 2022
USD 000 USD 000
Trade payables
150 166
Social insurance and other taxes 81 107
Shareholders' current accounts - credit balances (Note 24.8) 10 10
Financial guarantee (Note 16) 81 -
Accruals 120 118
Payables to own subsidiaries (Note 24.6) 123 134
Payables to related parties (Note 24.6) 4.053
2.168
4.618 2.703
The fair values of trade and other payables due within one year approximate to their carrying amounts as presented
above.
23. Current tax liabilities
2023 2022
USD 000 USD 000
Corporation tax -
54
- 54
24. Related party transactions and balances
The Company is controlled by Berge Gerdt Larsen. For more details refer to Note 17 of the consolidated financial
statements.
22
NOTES TO THE FINANCIAL STATEMENTS
31 December 2023
24. Related party transactions and balances (continued)
The following transactions were carried out with related parties:
24.1 Directors' remuneration (Note 9)
The remuneration of Directors was as follows:
2023 2022
USD 000 USD 000
Directors' remuneration 235 237
Directors' fees 103 114
338 351
24.2 Management fees charged to related parties (Note 8)
2023 2022
Nature of transactions
USD 000 USD 000
Subsidiaries and sub-subsidiaries
Trade
114 9
114 9
24.3 Consultancy fees charged to related parties (Note 8)
2023 2022
Name Nature of transactions
USD 000 USD 000
Petrolia Noco AS
Trade
44 261
44 261
24.4 Dividend income
2023 2022
USD 000 USD 000
Independent Oil Tools International (Cyprus) Ltd 500 -
500 -
24.5 Receivables from related parties (Note 17)
2023 2022
Name
USD 000 USD 000
IO & R Ltd 569 578
Petrolia AS 983 -
Venture Drilling AS - 476
Independent Oil Tools AS 15 122
Petrolia Invest AS 228 228
Catch Holding BV 3 -
Petrolia Tool Pool 398 594
Less: Accumulated expected credit losses (1.392) (1.392)
804 606
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. The accumulated ECL
for the year amounted to USD 1.392 thousand (2022: USD 1.392 thousand).
Movement of Accumulated expected credit losses:
2023 2022
USD 000 USD 000
Balance at 1 January/31 December 1.392 1.392
Balance at 31 December 1.392 1.392
23
77
ANNUAL REPORT 2023 PETROLIA SE
NOTES TO THE FINANCIAL STATEMENTS
31 December 2023
20. Cash at bank (continued)
Cash and cash equivalents by type:
2023 2022
USD 000 USD 000
Norwegian Krone 1.277 2.042
US Dollars 297 5
Euro 159 5
1.733 2.052
The exposure of the Company to credit risk and impairment losses in relation to cash and cash equivalents is
reported in note 6 of the financial statements.
21. Share capital
2023 2023 2022 2022
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 2023 59.133.786 5.913 59.133.786 5.913
Refer also to Note 17 to the consolidated financial statements.
22. Trade and other payables
2023 2022
USD 000 USD 000
Trade payables
150 166
Social insurance and other taxes 81 107
Shareholders' current accounts - credit balances (Note 24.8) 10 10
Financial guarantee (Note 16) 81 -
Accruals 120 118
Payables to own subsidiaries (Note 24.6) 123 134
Payables to related parties (Note 24.6) 4.053 2.168
4.618 2.703
The fair values of trade and other payables due within one year approximate to their carrying amounts as presented
above.
23. Current tax liabilities
2023 2022
USD 000 USD 000
Corporation tax - 54
- 54
24. Related party transactions and balances
The Company is controlled by Berge Gerdt Larsen. For more details refer to Note 17 of the consolidated financial
statements.
22
FINANCIAL STATEMENTS / PARENT
NOTES TO THE FINANCIAL STATEMENTS
31 December 2023
24. Related party transactions and balances (continued)
The following transactions were carried out with related parties:
24.1 Directors' remuneration (Note 9)
The remuneration of Directors was as follows:
2023 2022
USD 000 USD 000
Directors' remuneration 235 237
Directors' fees 103
114
338 351
24.2 Management fees charged to related parties (Note 8)
2023 2022
Nature of transactions
USD 000 USD 000
Subsidiaries and sub-subsidiaries
Trade
114 9
114 9
24.3 Consultancy fees charged to related parties (Note 8)
2023 2022
Name
Nature of transactions
USD 000 USD 000
Petrolia Noco AS
Trade
44 261
44 261
24.4 Dividend income
2023 2022
USD 000 USD 000
Independent Oil Tools International (Cyprus) Ltd 500
-
500 -
24.5 Receivables from related parties (Note 17)
2023 2022
Name
USD 000 USD 000
IO & R Ltd 569 578
Petrolia AS 983 -
Venture Drilling AS - 476
Independent Oil Tools AS 15 122
Petrolia Invest AS 228 228
Catch Holding BV 3 -
Petrolia Tool Pool 398 594
Less: Accumulated expected credit losses (1.392)
(1.392)
804 606
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. The accumulated ECL
for the year amounted to USD 1.392 thousand (2022: USD 1.392 thousand).
Movement of Accumulated expected credit losses:
2023 2022
USD 000 USD 000
Balance at 1 January/31 December 1.392
1.392
Balance at 31 December 1.392 1.392
23
78
ANNUAL REPORT 2023 PETROLIA SE
FINANCIAL STATEMENTS / PARENT
NOTES TO THE FINANCIAL STATEMENTS
31 December 2023
24. Related party transactions and balances (continued)
24.6 Payables to own subsidiaries and related parties (Note 22)
2023 2022
Name
USD 000 USD 000
Independent Oil Tools International (Cyprus) Limited 123 134
Venture Drilling AS 4.053
2.168
4.176 2.302
The payables to related parties are provided interest free, and have no specified repayment date.
24.7 Loans receivable from associate (Note 16)
2023 2022
USD 000 USD 000
Petrolia Noco AS 5.920
4.362
5.920 4.362
For further information refer to note 16.
24.8 Shareholders' current accounts - credit balances (Note 22)
2023 2022
USD 000 USD 000
Berge Gerdt Larsen 10
10
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 2023 and 31 December 2022.
26. Commitments
The Company had no capital or other commitments as at 31 December 2023 and 31 December 2022.
27. Events after the reporting period
There were no material events after the reporting period, which have a bearing on the understanding of the financial
statements.
24
79
ANNUAL REPORT 2023 PETROLIA SE
AUDITOR'S
REPORT
80
ANNUAL REPORT 2023 PETROLIA SE
Ernst & Young Cyprus Ltd is a member firm of Ernst & Young Global Ltd.
Ernst & Young Cyprus Ltd is a limited liability company incorporated in Cyprus with registration number HE 222520. A list of the directors’ names is available at the company’s
registered office, Jean Nouvel Tower, 6 Stasinou Avenue, 1060 Nicosia, Cyprus.
Offices: Nicosia, Limassol.
Ernst & Young Cyprus Ltd
Ernst & Young House
27 Spyrou Kyprianou
4001 Mesa Geitonia
P.O. Box
50123
3601 Limassol, Cyprus
Tel: + 357 25209999
Fax: +
357 25209998
ey.com
Independent Auditor's Report
To the Members of Petrolia SE
Report on the Audit of the Consolidated Financial Statements and the Separate Financial Statements
of Petrolia SE
Opinion
We have audited the accompanying consolidated financial statements of Petrolia SE and its subsidiaries (the ''Group''),
and the separate financial statements of Petrolia SE (the ''Company''), which comprise the consolidated statement of
financial position and the statement of financial position of the Company as at 31 December 2023, and the consolidated
income statement, consolidated statement of comprehensive income, consolidated statement of changes in equity and
consolidated statement of cash flows and the statements of profit or loss and other comprehensive income, changes
in equity and cash flows of the Company for the year then ended, and notes to the consolidated and the separate
financial statements, including material accounting policy information.
In our opinion, the accompanying consolidated financial statements and the separate financial statements give a true
and fair view of the financial position of the Group and the Company as at 31 December 2023, and of their financial
performance and their cash flows for the year then ended in accordance with International Financial Reporting
Standards (IFRSs) as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap. 113.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the consolidated and separate
financial statements section of our report. We remained independent of the Group and the Company throughout the
period of our appointment in accordance with the International Ethics Standards Board for Accountants’ International
Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code) together
with the ethical requirements that are relevant to our audit of the consolidated and separate financial statements in
Cyprus, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA
Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Key Audit Matters incorporating the most significant risks of material misstatements, including assessed
risk of material misstatements due to fraud
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
consolidated and separate financial statements of the current period. These matters were addressed in the context of
our audit of the consolidated and separate financial statements as a whole, and in forming our opinion thereon, and
we do not provide a separate opinion on these matters. For each matter below, our description of how our audit
addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the Consolidated and
Separate Financial Statements section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of material misstatement
of the consolidated and separate financial statements. The results of our audit procedures, including the procedures
performed to address the matters below, provide the basis for our audit opinion on the accompanying consolidated
and separate financial statements.
AUDITORS REPORT
81
ANNUAL REPORT 2023 PETROLIA SE
Recoverability of investment in Petrolia AS, impairment of property, plant and equipment and
recoverability of trade receivables
Recoverability of investment in Petrolia AS (Parent Company only)
The key audit matter
Investment in Petrolia AS represents the 76% of the Company’s total assets and the 98% of the Company’s
investments in subsidiaries. An analysis of the investments in subsidiaries is presented in note 14 to the Company’s
separate financial statements. Petrolia AS is the holding company of the energy service sub-group, which was affected
by the political changes in Iraq and the conflict in Gaza. Due to these events, impairment indications have been
identified related to the carrying value of this investment. Management's assessment of the recoverable amount of
investment in Petrolia AS requires estimation and judgement around assumptions used. Changes to assumptions could
lead to material changes in the estimated recoverable amount, impacting both potential impairment charges and
potential reversals of impairment recorded in prior years.
Due to the significant balance of the investment in Petrolia AS and the estimation uncertainty involved in the
assessment of their recoverable amount, we have considered this area as a key audit matter.
How the matter was addressed in our audit
In this area, among others, we considered management's identification of indicators of impairment or reversal of
impairment. We also assessed the methodology used by management to estimate the recoverable amount of the
investment in Petrolia AS and considered its consistency with International Financial Reporting Standards. We analyzed
the key assumptions used in management's estimates of the recoverable amount of the subsidiary, such as its
profitability and financial position, future cash flows and discount rates and concluded on its recoverability. In doing
so, we involved our internal valuation specialists. We also performed sensitivity analysis by stressing the key
assumptions used in the management’s financial model and we checked the mathematical accuracy in the relevant
calculations. We finally evaluated the relevance of the Company’s disclosures regarding the impairment assessment of
its investment in Petrolia AS and its recoverability.
Impairment of property, plant and equipment (consolidated financial statements only)
The key audit matter
Property, plant and equipment represent 23% of the Group’s total assets. As at 31 December 2023, Group assessed
whether indications of impairment exist considering internal and external factors. Impairment triggers were identified
for property, plant and equipment located in Iraq and Israel due to geopolitical situation in the Middle East. For these
reasons, the Group subjected property, plant and equipment located in Iraq and Israel, to an impairment test. The
latter involves estimating the recoverable amount by calculating assets’ value in use based on discounted cash flow
model.
These impairment tests were significant for our audit, since the recoverable amount estimation process is complex
and highly subjective and is based on various assumptions. The Group provides details on the impairment tests in note
11 to the consolidated financial statements.
How the matter was addressed in our audit
In this area, among others, we considered management's identification of indicators of impairment. We also assessed
the methodology used by management to estimate the recoverable amount property, plant and equipment and
considered its consistency with International Financial Reporting Standards. Our audit procedures also included an
assessment of the assumptions and methods used in the impairment testing of property, plant and equipment at
subsidiary level. In doing so, in certain cases, we involved our internal valuation specialists. Our evaluation was focused
on the principal assumptions used, such as the discount rate, the expected trend in turnover, operating expenses and
capital expenditure and compared them historical data and internal budgets. In addition, we have tested the
mathematical accuracy in the relevant impairment calculations. Further, we assessed the adequacy and completeness
of the Group's disclosures as regards the impairment testing.
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ANNUAL REPORT 2023 PETROLIA SE
Recoverability of trade receivables (consolidated financial statements only)
The key audit matter
Trade receivables represent 22% of the total Group assets and as at 31 December 2023 the accumulated allowance
for expected credit losses (“ECLs”) amounted to US$6.7m. The collectability of trade receivables is a key element of
the Group’s working capital management, which is managed on an ongoing basis by both Group and local
management.
The determination as to whether a trade receivable is collectable involves management judgement. Key judgements
and estimates in respect of the timing and measurement of ECLs include:
- The use of provision matrix to calculate ECLs, determining the provision rates based on days past due;
- The use by management of this information to determine whether an additional loss allowance for ECL is
required for an individual customer balance;
- Adjusting historical credit loss experience with forward-looking information.
We focused on this area because it requires a high level of management judgement and due to the materiality of the
amounts involved. The accounting policy for provisions for ECLs of trade receivables is described in Note 2.3 and
further analyzed in Notes 3, 14 and 23 to the consolidated financial statements.
How the matter was addressed in our audit
We focused on an assessment of the assumptions used to calculate the allowance of credit losses on trade receivables,
notably through detailed analyses of the provision matrix for the collective assessment and the individual customer
balances determined to be assessed individually, evaluating the reasonability of ECL rates and loss patterns, including
forward-looking information. We also performed recalculations of ECLs. In our trade receivable ECLs evaluation, we
also considered the results from other audit procedures such as the testing of a sample of sales transactions to
supporting documents, obtaining trade receivable confirmations, and performing subsequent receipts testing of bank
payments by customers. Furthermore, we assessed the appropriateness and completeness of the presentation and
disclosures of trade receivables and related ECLs in line with the requirements of IFRS 9.
Reporting on other information
The Board of Directors is responsible for the other information. The other information comprises the information
included in the Responsibility Statement, Management Report, the Board of Directors’ report on Corporate Social
Responsibility and the Board of Directors’ report on Corporate Governance, but does not include the consolidated and
separate financial statements and our auditor’s report thereon.
Our opinion on the consolidated and the separate financial statements does not cover the other information and we
do not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated and separate financial statements, our responsibility is to read the
other information identified above and, in doing so, consider whether the other information is materially inconsistent
with the consolidated and separate financial statements or our knowledge obtained in the audit or otherwise appears
to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Board of Directors and those charged with governance for the Consolidated and
Separate Financial Statements
The Board of Directors is responsible for the preparation of consolidated and separate financial statements that give
a true and fair view in accordance with International Financial Reporting Standards as adopted by the European Union
and the requirements of the Cyprus Companies Law, Cap. 113, and for such internal control as the Board of Directors
determines is necessary to enable the preparation of consolidated and separate financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the consolidated and separate financial statements, the Board of Directors is responsible for assessing
the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Group or to
cease operations, or has no realistic alternative but to do so.
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Responsibilities of the Board of Directors and those charged with governance for the Consolidated and
Separate Financial Statements
(continued)
Those charged with governance are responsible for overseeing the Group’s financial reporting process.
Auditor's Responsibilities for the Audit of the Consolidated and Separate Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated and separate financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted
in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud
or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these consolidated and separate financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism
throughout the audit. We also:
- Identify and assess the risks of material misstatement of the consolidated and separate financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a basis for o
ur opinion. The risk of not detecting
a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
- Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of
the Group’s internal control.
- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by the Board of Directors.
- Conclude on the appropriateness of the Board of Directors' use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions
that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a
material uncertainty exists, we are re
quired to draw attention in our auditor's report to the related disclosures
in the consolidated and separate financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor's report.
However, future events or conditions may cause the Company to cease to continue as a going concern.
- Evaluate the overall presentation, structure and content of the consolidated and separate financial
statements, including the disclosures, and whether the consolidated and separate financial statements
represent the underlying transactions and events in a manner that achieves a true and fair view.
- O
btain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Group to express an opinion on the consolidated financial statements. We are responsible
for the direction, supervision and pe
rformance of the Group audit. We remain solely responsible for our audit
opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control that we identify
during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or
safeguards applied.
From the matters communicated with those charged with governance, we determine those matters that were of most
significance in the audit of the consolidated and separate financial statements of the current period and are therefore
the key audit matters.
AUDITORS REPORT
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ANNUAL REPORT 2023 PETROLIA SE
Report on Other Legal and Regulatory Require
ments
Requirements of Article 10(2) of the EU Regulation 537/2014:
1.
Appointment of the Auditor and Period of Engagement
We were first appointed as auditors of the
Company and the
Group on 30 November 2012 by the Board of Directors.
Our appointment has been renewed annually by shareholder resolution representing a total period of uninterrupted
engagement appointment of
12 years. In 2018,
the Company conducted a tendering process and we were
recommended for re
-appointment.
2.
Consistency of the Additional Report to the Audit Committee
We confirm that our audit opinion on the consolidated and separate financial statements expressed in this report is
consistent with the additional report to the Audit Committee of the Company, which we issued on 2
2 April 2024
in
accordance with Article 11 of the EU Regulation 537/2014.
3.
Provision of Non-audit Services
We declare that no prohibited non
-audit services referred to in Article 5 of the EU Regulation 537/2014 and Section
72 of the Auditors Law of 2017 were provided. In addition, there are no non
-audit services which were provided by
us to the Group and which
have not been disclosed in the consolidated and separate financial statements or the
management report
.
European Single Electronic Format
We have examined the digital files of the European Single Electronic Format (ESEF) of Petrolia SE for the year ended
31 December 2023 comprising the XHTML file which includes the consolidated financial statements for the year then
ended and XBRL files with the marking up carried out by the entity of the consolidated statement of financial position
as at 31 December 2023, and the consolidated statements of profit or loss and other comprehensive income,
changes in equity and cash flows for the year then ended, and all disclosures made in the consolidated financial
statements or made by cross-reference therein to other parts of the annual financial report for the year ended 31
December 2023 that correspond to the elements of Annex II of the EU Delegated Regulation 2019/815 of 17
December 2018 of the European Commission, as amended from time to time (the “ESEF Regulation”) (the “digital
files”).
The Board of Directors of Petrolia SE is responsible for preparing and submitting the consolidated and separate
financial statements for the year ended 31 December 2023 in accordance with the requirements set out in the the
ESEF Regulation.
Our responsibility is to examine the digital files prepared by the Board of Directors of Petrolia SE. According to the
Audit Guidelines issued by the Institute of Certified Public Accountants of Cyprus (the “Audit Guidelines”), we are
required to plan and perform our audit procedures in order to examine whether the content of the consolidated and
separate financial statements included in the digital files corresponds to the consolidated and separate financial
statements we have audited, and whether the format and marking up included in the digital files have been prepared
in all material respects, in accordance with the requirements of the ESEF Regulation.
In our opinion, the digital files examined correspond to the consolidated and separate financial statements, and the
consolidated and separate financial statements included in the digital files are prese
nted and marked-up
in all material
respects, in accordance with the requirements of the ESEF Regulation.
AUDITORS REPORT
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ANNUAL REPORT 2023 PETROLIA SE
Other Legal Requirements
Pursuant to the additional requirements of the Auditors Law of 2017, we report the following:
- In our opinion, based on the work undertaken in the course of our audit, the management report has been
prepared in accordance with the requirements of the Cyprus Companies Law, Cap. 113, and the information
given is consistent with the consolidated and separate financial statements.
- In light of the knowledge and understanding of the Group and its environment obtained in the course of the
audit, we are required to report if we have identified material misstatements in the management report. We
have nothing to report in this respect.
- In our opinion, based on the work undertaken in the course of our audit, the information included in the
corporate governance statement in accordance with the requirements of subparagraphs (iv) and (v) of
paragraph 2(a) of Article 151 of the Cyprus Companies Law, Cap. 113, and which is included as a specific
section of the management report, have been prepared in accordance with the requirements of the Cyprus
Companies Law, Cap, 113, and is consistent with the consolidated and separate financial statements.
- In our opinion, based on the work undertaken in the course of our audit, the corporate governance statement
includes all information referred to in subparagraphs (i), (ii), (iii), (vi) and (vii) of paragraph 2(a) of Article
151 of the Cyprus Companies Law, Cap. 113.
- In light of the knowledge and understanding of the Group and its environment obtained in the course of the
audit, we are required to report if we have identified material misstatements in the corporate governance
statement in relation to the information disclosed for items (iv) and (v) of subparagraph 2(a) of Article 151
of the Cyprus Companies Law, Cap. 113. We have nothing to report in this respect.
Other Matter
This report, including the opinion, has been prepared for and only for the Company’s members as a body in accordance
with Article 10(1) of the EU Regulation 537/2014 and Section 69 of the Auditors Law of 2017 and for no other purpose.
We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to
whose knowledge this report may come to.
The engagement partner on the audit resulting in this independent auditor’s report is Andreas Avraam.
Andreas Avraam
Certified Public Accountant and
Registered Auditor
for and on behalf of
Ernst & Young Cyprus Limited
Certified Public Accountants and Registered Auditors
Limassol
, 26 April 2024
AUDITORS REPORT
ANNUAL REPORT 2023 PETROLIA SE
86
CORPORATE
GOVER
NANCE
87
ANNUAL REPORT 2023 PETROLIA SE
THE BOARD OF DIRECTORS' REPORT
ON CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
The Corporate Governance Policy of Petrolia
SE (“Petrolia” or “the Company”) addresses
the responsibility and interaction between
shareholders, the General Assembly, the
Board of Directors (“the Board”) and the
executive management. The purpose of this
document is to outline the current status
of Petrolia’s Corporate Governance Policy.
As Petrolia is listed on the Oslo Stock
Exchange, it follows the Norwegian Code
of Practice for Corporate Governance of
14 October 2021 (the “Code of Practice”).
Adherence to the Code of Practice is based
on a “comply or explain” principle, whereby
companies will be expected to either comply
with the Code of Practice or explain why
they have chosen an alternative approach.
The Code of Practice is published on www.
nues.no/English.
Below is an account outlining how Petrolia
has implemented the Code of Practice. This
account follows the same structure as the
Code of Practice and covers all sections
thereof. Petrolia complies with the Code of
Practice. Any deviations from the Code of
Practice are discussed under the relevant
sections. In addition to the Code of Practice,
the Norwegian Accounting Act § 3-3 stipu-
lates that companies must provide a report
on their policies and practices for corporate
governance either in the annual report or in
a document referred to in the annual report.
This report is integrated in this Corporate
Governance statement.
The holding company Petrolia SE is domiciled
in Cyprus and adheres to Cypriot law, con-
sequently various associated policies can be
subject to updates and revisions. Any updates
and changes in the Company’s Corporate
Governance Policy will be published on www.
petrolia.eu.
1. IMPLEMENTATION AND REPORTING ON
CORPORATE GOVERNANCE
Petrolia believes that maintaining solid stand-
ards of Corporate Governance will improve the
quality of discussions and work to be carried
out by the corporate bodies. Sound Corporate
Governance practice will strengthen confi
-
dence in the Company among shareholders,
the capital market and other interested par-
ties and thus contribute to value creation for
the shareholders over time.
2. BUSINESS GOALS AND STRATEGY
Petrolia’s business scope is clearly defined
in the Company’s Articles of Association,
as follows: “The purpose of the Company
is to conduct business within the areas of
petroleum, shipping, offshore, transport,
trade, industry and finance and other related
areas and also participate as shareholder or
otherwise in other businesses”.
As of April 2024, the Company is described
as follows in Stock Exchange Notices: Petrolia
SE has two business segments: Energy divi-
sion and Energy Service division and is listed
on Oslo Stock Exchange under the ticker
code PSE. The activity includes investments
in Petrolia NOCO AS, an independent oil &
gas company approved as a licensee and
pre-qualified as an operator on the Norwegian
Continental Shelf, and a group of leading
rental equipment companies for the global
oil industry.
The Company’s core objective is to secure
a competitive return on the invested capital
of the shareholders in the longer term. In
accordance with this purpose, the Board of
Directors and management shall actively de-
velop and control the Company and its assets.
Petrolia is under several obligations provided
for in the relevant Cypriot and Norwegian
laws and the laws of other jurisdictions in
respect of the business operations carried
out by the Company and its subsidiaries. The
Board of Directors has formulated a Code
of Ethics, implemented across the Company,
based on corporate values and corporate
social responsibility principles. The Code of
Ethics summarises the Company’s values and
standards of behaviour in, among others,
human rights, safety, security and the working
environment. In addition, the Company has
implemented a strict policy regarding Health,
Safety, Security and Environment (HSSE).
3. EQUITY AND DIVIDENDS
Petrolia shall have a capital structure at a
level appropriate to the Company’s objective,
strategy and risk profile. Dividend payments
will depend on Petrolia’s earnings, financial
situation and cash flow. The possibility of
further value creation through investments
will also be taken into account.
The Company’s key targets for 2023 were
to improve the Company’s financial position,
to improve the profitability of the Energy
Services division following the improved
market and to develop Petrolia NOCO AS.
Dividends to shareholders may be given on
an ad hoc basis.
Authorisations granted to the Board of
Directors to increase Petrolia’s share cap-
ital or to purchase its own shares shall, as
a general rule be restricted to defined pur-
poses. At each Annual General Meeting, the
shareholders shall have the opportunity to
evaluate and consider the authorisations
granted by the Board. Thus, the authorisa-
tions should be limited in time to no later than
the date of the next Annual General Meeting.
All authorisations not in compliance with
these guidelines should be accounted for in
the Annual Report.
As of 31 December 2023, the Company had
equity of USD 41 million, representing an
equity ratio of 61 per cent.
4. EQUAL TREATMENT OF SHAREHOLDERS
AND TRANSACTIONS WITH CLOSELY
RELATED PARTIES
Petrolia has one class of shares and all shares
are equal in all respects. Each share in the
Company carries one vote. All shares are
freely transferable. No shareholder shall be
treated unequally unless it is in the Company’s
and the shareholders’ common interests.
Any decision to waive the pre-emption rights
of existing shareholders to subscribe for
shares in the event of an increase in Petrolia’s
share capital must be justified, and an ex-
planation shall be appended to the agenda
for the General Meeting.
Any transactions carried out by Petrolia in
its own shares shall be made either through
the stock exchange or, if carried out in any
other way, at prevailing stock exchange prices.
If there is limited liquidity in the Company’s
shares, the Company should consider other
ways to ensure equal treatment of all
shareholders.
At the Annual General Meeting on 31 May
2023 the Board of Directors was granted
authorisations relating to acquiring its own
shares and issuing up to 13,250,000 new
shares (22.4%) waiving pre-emptive rights.
The details of the authorisations are provided
in the minutes to the Annual General Meeting,
88
ANNUAL REPORT 2023 PETROLIA SE
CORPORATE GOVERNANCE
published 31 May 2023 on the Company’s
website www.petrolia.eu.
5. FREELY NEGOTIABLE SHARES
The shares are listed on the Oslo Stock
Exchange and are freely transferable. No
form of restriction on negotiability is included
in the Articles of Association of Petrolia.
6. GENERAL MEETING
Through the General Meeting the share-
holders exercise the highest authority in
Petrolia. General Meetings are convened by
written notice to all shareholders with known
addresses and a minimum of 21 days’ notice.
All shareholders are entitled to submit items
to the agenda, meet, speak and vote at the
General Meetings as is normally outlined in
the summons to the General Meeting and as
required by law.
Summons to general meetings, including
supporting documentation on relevant items
on the agenda, are made available on the
Company’s website no later than 21 days
prior to the General Meeting. The Company’s
Articles of Association stipulate that docu-
ments pertaining to matters to be deliberated
by the General Meeting shall only be made
available on the Company’s website, and not
normally be sent physically by post to the
shareholders unless required by law. In order
to ensure that the General Meeting is an ef-
fective forum for the views of the shareholders
and the Board of Directors, the Board shall
ensure that the information distributed is
sufficiently detailed and comprehensive as
to allow the shareholders to form a view on
all matters to be considered.
The Board of Directors shall take steps to
ensure that as many shareholders as possible
can exercise their rights by participating in
General Meetings in Petrolia, for instance
by setting deadlines for shareholders to give
notice of their intention to attend the meeting
(if any) as close to the date of the meeting
as possible and by giving shareholders who
are not able to attend the option to vote by
proxy. To the extent practicable, the Board
of Directors shall make arrangements for
shareholders voting by proxy to give voting
instructions on each matter to be considered
at the meeting.
As it is a priority for the General Meeting
to be conducted in a sound manner, with all
shareholder votes to be cast, to the extent
possible, on the basis of the same informa-
tion, the Company has thus far not deemed
it advisable to recommend the introduction
of electronic attendance. The Company will
contemplate the introduction of such arrange-
ments on an on-going basis in view of, inter
alia, the security and ease of use offered by
available systems.
The General Meetings shall be organised
in such a way as to facilitate dialogue be-
tween shareholders and the officers of the
Company. Thus, the Board of Directors must
ensure that the members of the Board and
the chairperson of the nomination commit-
tee are present at all General Meetings. In
addition, the Board of Directors shall make
arrangements to ensure an independent
Chair for each General Meeting, for instance
by arranging for the person who opens the
General Meeting to put forward a specific
proposal for a Chair.
The Minutes of the General Meetings will be
made available as soon as practicable on the
announcement system of the Oslo Stock Ex-
change, www.newsweb.no (ticker: PSE), and
on Petrolia’s own web site, www.petrolia.eu.
7. NOMINATION COMMITTEE
In accordance with its Articles, the Company
shall have a Nomination Committee. The com-
mittee shall present to the General Meeting
a proposal, justifying each candidate, for
candidates to be elected as members of the
Board. The committee shall also propose to
the General Meeting the Board members’
remuneration. The Nomination Committee
shall consist of three members who shall be
elected by the General Meeting. The committee
shall be independent of the Board and the
management of the Company. The General
Meeting shall set the committee members’
remuneration. The General Meeting may adopt
instructions for the Nomination Committee.
The costs of the Nomination Committee shall
be covered by the Company.
On 31 May 2023, Rob Arnott, Tove Kate Larsen
and Andros Constantinou were elected as
members of the Nomination Committee.
The work of the Nomination Committee is
regulated through Terms of Reference.
During this period, the Committee has un-
dertaken several key initiatives, including
Board Composition: We have reviewed the
composition of the Board to ensure it reflects
a diverse range of skills, experiences, and
perspectives necessary for effective deci-
sion making. Our aim has been to maintain
a balanced mix of expertise while promoting
diversity and inclusivity. The Committee will be
carrying out a detailed analysis of the skills
and experience for each director, in line with
the draft Director Diversity policy to be ap-
proved by the Board of Director during 2024.
8. BOARD OF DIRECTORS: COMPOSITION
AND INDEPENDENCE
The Articles of Association stipulate that the
Board of Directors shall consist of three to
five directors elected by the General Meeting.
According to the Articles of Association, the
Board of Directors is appointed for one year
by the General Meeting.
The Board of Directors comprised four direc-
tors as at 31 December 2023. The current
composition of the Board of Directors is de-
scribed in note 6 in the Petrolia SE Annual
Report 2023. The Board shall attend to the
common interests of all shareholders, and its
members shall meet the Company’s need for
expertise, capacity and diversity. Attention
should be paid to the fact that the Board
of Directors can function effectively as a
collegiate body. The Board shall consist of
individuals who are willing and able to work
as a team. Each member shall have suffi-
cient time available to devote to his or her
appointment as a director.
The Board of Directors has prepared a Board
Diversity Policy with the purpose to set out
the approach to diversity on the Board of
Directors and Senior Management, which
will be approved during 2024. The Board
will consider all aspects on diversity when
reviewing the composition and balance of
the Board and when conducting the annual
Board effectiveness review. The Board of
Directors expect to progress on the Board
members and senior management diversity
in the near future.
The composition of the Board of Directors
shall ensure that it can operate independently
89
ANNUAL REPORT 2023 PETROLIA SE
CORPORATE GOVERNANCE
of any special interests. Two of the four mem-
bers of the Board are independent of the
Company’s executive management, material
business contacts and main shareholder(s).
The two independent members are George
Hadjineophytou and Sjur Storaas. Polycarpos
Protopapas is the Managing Director of the
Company.
The Petrolia Group cannot, without the ap-
proval of the Board of Directors of Petrolia,
buy consultancy services from a board
member or from companies in which any board
member is an owner, employee or otherwise
has an interest.
Six board meetings were held during 2023,
with a complete attendance among the board
members.
All the directors are encouraged to hold
shares in Petrolia, however not to an extent
that can encourage a short-term approach
that is not in the best interest of Petrolia and
its shareholders. The shareholdings of the
directors as at 31 December 2023 are set
out in Note 17 to the consolidated financial
statements.
9. THE WORK OF THE BOARD OF DIRECTORS
The proceedings and responsibilities of the
Board of Directors have been laid down in
written guidelines adopted by the Board of
Directors. The main responsibilities of the
Board of Directors are to:
• Lead Petrolia’s strategic planning and make
decisions that form the basis for the executive
management to prepare for and implement
investments and structural measures. The
Company’s strategy shall be reviewed on a
regular basis;
• Ensure that all instructions given by the
Board of Directors are complied with;
• Ensure that the Board of Directors are
well informed about the Company’s and the
Group’s financial position;
• Ensure the adequacy of the Company’s
executive management and issue instructions
for its work in which the areas of responsi-
bilities and duties are clearly defined, also
with respect to the relationship between
the executive management and the Board
of Directors;
• Agree on dividend policy;
• Annually evaluate its work, performance,
composition, expertise, and that of the
managing director (the "MD”). The evalu-
ation of the Board’s work should be made
available to the Nomination Committee. The
Board of Directors did not evaluate its own
work in 2023;
• Ensure that a system of direction and in-
ternal control is established and maintained
as to ensure that the Group activities are
conducted in accordance with all rules and
regulation applicable to the Group, Petrolia’s
Articles of Association, its corporate values
and its ethical guidelines, as well as au-
thorisations and instructions approved by
the General Meeting. The internal control
arrangements must address the organisa-
tion and implementation of the Company’s
financial reporting. The Board of Directors
contributes its knowledge and experience
to the Company and has frequent meetings
with the executive management for updates
on the recent developments.
The Chair of the Board of Directors carries
a particular responsibility for ensuring that
the Board of Directors performs its duties in
a satisfactory manner and that the Board is
well organised. The Board of Directors will
elect a Deputy Chair who takes chair in the
event that the Chair of the Board cannot or
should not lead the work of the Board, in-
cluding matters of a material nature in which
the Chair has an active involvement.
The Board of Directors has appointed an Audit
Committee. The committee, which is composed
of Sjur Storaas and George Hadjineophytou,
shall prepare the Board’s follow up of the
financial reporting process, monitor inter-
nal control and risk handling systems and
communicate with the Group’s auditor on a
regular basis in connection with the prepa-
ration of the annual accounts. Furthermore,
the committee shall assess the auditor’s
independence, in particular to which extent
other services to the Group may jeopardise
the independence. The Audit Committee held
regular meetings in 2023 and in 2024 (up
to 26 April 2024) and reviewed all interim
reports prior to publication. The committee
works closely with the auditor.
The Board of Directors has appointed a
Remuneration Committee. The committee
is composed of Sjur Storaas, Berge Gerdt
Larsen and George Hadjineophytou.
The Managing Director is responsible for
the day-to-day management of the Company.
Furthermore, the Managing Director is
responsible for ensuring that the Company’s
accounts are in accordance with all applicable
legislation, and that the assets of the Company
are managed appropriately.
The Managing Director is appointed by the
Board of Directors and reports to the Board
of Directors. His or her powers and respon-
sibilities are defined by detailed instructions
adopted by the Board of Directors.
In the event of any material transactions
between the Company and its shareholders,
directors, members of the executive manage-
ment or close associates of any such parties,
the Board of Directors shall arrange for valu-
ation to be obtained from an independent third
party. The same shall apply to transactions
between companies within the Petrolia Group
where any of the companies involved have
minority shareholders. All such transactions
shall be reported by the Board of Directors
in the Annual Report. The Company has es-
tablished and operates guidelines to ensure
that members of the Board of Directors and
the executive management promptly notify the
Board of Directors if they have any significant
direct or indirect interest in any transaction
entered into by the Company.
A disclosure of any related party transaction
is presented in Note 24 in the Annual Report.
10. RISK MANAGEMENT AND INTERNAL
CONTROL
Risk management is primarily handled locally
in each Group company in accordance with
applicable rules and regulations. Internal
control in the Group is performed through
Group companies reporting to Petrolia on
operational and financial risk factors re-
lated to accounting, operations and HSE.
Key figures and information are reported
on a monthly basis, enabling the Board to
monitor the situation on a continuous basis
throughout the year.
The most important risk factors applicable
to the Group are thoroughly considered in
connection with yearly budgeting. The Audit
Committee reviews interim reports from the
Group companies and reports to the Board.
The annual accounts for all Group companies
are audited by the Group’s external auditor.
The Company’s risk management systems are
described in Note 23 of this Annual Report.
11. REMUNERATION OF THE BOARD OF
90
ANNUAL REPORT 2023 PETROLIA SE
CORPORATE GOVERNANCE
DIRECTORS
The remuneration awarded to the members of
the Board of Directors is determined annually
by the General Meeting, based on the Board’s
responsibility, expertise, time commitment
and the complexity of the operations of the
Group. The Nomination Committee will pro-
pose the remuneration for approval by the
General Meeting.
The remuneration is not linked to the Group’s
performance. No directors have been granted
or will be granted share options, and no di-
rectors participate in the incentive programs
available for the executive management and/
or other employees.
More detailed information about the reward
of individual directors in 2023 is provided in
Note 6 to the consolidated financial state-
ments for the Group.
No members of the Board of Directors (or
companies with which they are associated)
shall take on specific assignments for the
Group, in addition to their appointment as
director unless instructed by the Board. If
such assignments are taken on, they shall be
disclosed to the full Board, and the remuner-
ation shall be approved by the Board. Further,
all remuneration paid to each of the directors
shall be described in the Annual Report. Such
description shall include details of all elements
of the remuneration and benefits of each
member of the Board and any remuneration
paid in addition to normal director’s fees.
Details regarding Polycarpos Protopapas’
remuneration are disclosed in Note 6 to the
consolidated financial statements.
12. REMUNERATION OF EXECUTIVE
MANAGEMENT
The Managing Director’s remuneration shall
be determined by a convened meeting of the
Board of Directors and the Board has adopt-
ed guidelines for the reward of executive
management.
Remuneration for the other members of the
executive management is determined by the
Managing Director and Chair of the Board
in accordance with guidelines provided by
the Board of Directors. The guidelines are
annually communicated to the General Meeting
and included in the Annual Report together
with detailed information on all elements of
the remuneration. The General Meeting shall
be informed of any changes made during
the last year.
The Company has no bonus schemes or in-
centives in place. As of 31 December 2023,
executive management held common shares
in the Company following the rights issue
offered to key employees and the Board of
Directors on 2 September 2011, in addition
to shares and options bought in the market.
Details regarding management remuneration
can be found in Note 6 to the consolidated
financial statements.
13. INFORMATION AND COMMUNICATION
Petrolia will ensure that the shareholders
receive accurate, clear, relevant and timely
information related to all matters of signif-
icance to shareholders. All information is
published in a way ensuring simultaneous
and equal access for all equity shareholders:
• Each year, Petrolia publishes a Financial
Calendar detailing key events.
• Information to shareholders is distributed
through stock exchange notices and/or on
www.petrolia.eu. To the extent required by
law, information is also sent by regular post
to shareholders.
• All information is available in English, and,
when required, Norwegian.
The Board of Directors has adopted guidelines
for the Company’s reporting of financial and
other information that is based on open-
ness, equal treatment of all shareholders
and participants in the securities market,
and restrictions imposed by law. The guide-
lines also include instructions on the internal
treatment of market sensitive information
and insider trading instructions and for the
Company’s contact with shareholders other
than through General Meetings.
To increase the share liquidity, the Company
aims to increase the investor activities going
forward, in addition to attending industry
conferences.
14. TAKE-OVERS
The Company’s objective is to create share-
holder value and the Board of Directors
and the executive management will not seek
to hinder or obstruct takeover bids for the
Company’s shares or activities unless there
are good reasons for this. In the event of any
possible takeover or restructuring situation,
the Board of Directors will take particular
care to protect shareholder value and the
common interests of all shareholders. The
Board of Directors will not exercise man-
dates or pass any resolutions to obstruct the
takeover bid unless approved by the General
Meeting following announcement of the bid. In
a takeover situation, the Board of Directors
will issue a recommendation to the share-
holders and arrange a valuation from an
independent expert.
Any transaction, which is in fact a disposal of
the Company’s activities, should be decided
by a General Meeting.
15. AUDITORS
Petrolia’s auditor is Ernst & Young Cyprus
Limited.
The auditor is elected by the General Meeting
and shall report to the General Meeting.
Excessive non-auditing work assigned to
the auditor may jeopardise his position and
diminish the public confidence in the auditor’s
integrity and independence from Petrolia.
The primary task of the auditor shall be to
perform the audit work required by law and
professional standards with the care, com-
petence and integrity prescribed by law or
said standards. The auditor will submit the
main features of the plan for the audit to the
Board of Directors annually. Further, the
Board of Directors will receive an annual
written confirmation from the auditor that the
requirements of independence and objectivity
have been met. The auditor shall also at least
once a year present to the Board of Directors
a review of the Company’s internal control
procedures, including identified weaknesses
and proposals for improvement.
The auditor will participate in any meetings
of the Board of Directors that deal with the
Annual Accounts. At these meetings, the au-
ditor shall review material changes in the
Company’s accounting principles, comment on
any material estimated accounting figures and
report all material matters on which there has
been disagreement between the auditor and
the executive management of the Company.
At least once a year, the Board of Directors
shall have a meeting with the auditor in which
no member of the Executive Management
91
ANNUAL REPORT 2023 PETROLIA SE
is present. The Audit Committee will adopt
guidelines in respect of the use of the auditor
by the Company’s Executive Management for
services other than audit. Each year, the au-
ditor shall provide the Board with a summary
of all services in addition to audit work which
have been undertaken for the Company.
The Board of Directors must report the re-
muneration paid to the auditor at the Annual
General Meeting, including details of the fee
paid for audit work and any fees paid for
other specific assignments.
CORPORATE GOVERNANCE
92
ANNUAL REPORT 2023 PETROLIA SE
PETROLIA SE - ANNUAL REPORT 2023
Tel: +357 25 725 777 Fax: +357 25 356 500 E-mail: post(@)petrolia.eu
PETROLIA SE: 205 Christodoulou Chatzipavlou Street, Loulloupis Court, 4th floor, office 401, 3036 Limassol, CYPRUS
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