ROMPETROL WELL SERVICES S.A.
ANNUAL REPORT OF THE BOARD OF DIRECTORS for the 2023 financial year
Page 1 of 34
ANNUAL REPORT
OF THE BOARD OF DIRECTORS
FOR THE 2023 FINANCIAL YEAR
drawn up in accordance with Law no. 24/2017 regarding issuers of financial instruments and
market operations and FSA Regulation no. 5/2018 regarding issuers of financial instruments
and market operations
Company
ROMPETROL WELL SERVICES S.A.
Headoffice: Ploiesti - str. Clopotei nr. 2 bis
Phone no.: 0244/544321, 0244/544101
Fax: 0244/522913
Fiscal Identification Code: RO 1346607
No. in the Trade Register: J29/110/05.03.1991
Transaction market: BUCHAREST STOCK EXCHANGE
The subscribed and paid-up capital: 27.819.090 lei
The main characteristics of securities issued by the company
No. of shares: 278.190.900
Nominal value (lei/share): 0,10 lei
Grade and type of securities: “A” nominative
ROMPETROL WELL SERVICES S.A.
ANNUAL REPORT OF THE BOARD OF DIRECTORS for the 2023 financial year
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Content
1.
Analysis of the
company’s
activity
…
…...
…………………………………….………....
3
2. The tangible assets of the company ……………….………………………….………...
13
3.
The market of securities issued by the company
..……
…………
……….……..……...
1
3
4. Management of the company …………………………………………………….……… 16
5.
The financial
-
accounting situation
…
..
…………………………………………….……...
1
9
6.
Corporate governance
……
…..
…………………………………………………….…….
21
7. Annexes..……………………………………………………….……………………………
32
ROMPETROL WELL SERVICES S.A.
ANNUAL REPORT OF THE BOARD OF DIRECTORS for the 2023 financial year
Page 3 of 34
1. Analysis of the company’s activity
Rompetrol Well Services S.A. ("RWS") is one of the most important companies in the specific
market segment in Romania, offering a wide range of specialized services for oil and natural gas
wells including cementing, stimulations, nitrogen services, tubular running operations and rentals
of equipment and tools.
In 2023, the upstream market continued to see low investment and work levels from customers.
Purchase prices for the goods and services contracted by the company, for the performance of
current activities, continued their upward trend, and delivery times recorded fluctuations, as a
result of the regional context.
Rompetrol Well Services (RWS) managed to secure its leading position in the specific market
segment through the diversity and flexibility demonstrated in offering specialized services aligned
to the requirements of each individual client. RWS provides a wide range of services for oil and
natural gas wells (cementation, stimulation, well casing operations, etc.).
-RON
2021
2022
2023
Operational income, out of which: 45.961.135
53.228.897
73.487.511
Rendered services 44.185.085
52.295.150
72.067.998
Operational expenses, out of which: (46.227.637)
(53.825.976)
(62.682.833)
Depreciation and Amortization (3.996.830)
(4.895.557)
(5.921.961)
Adjustments on provisions, net (545.161)
717.751
(47.250)
Net financial income 2.040.690
3.474.405
3.050.169
EBIT 1.774.188
2.877.328
13.854.847
Net result 1.629.634
2.449.517
11.767.863
Availability in the cash-pooling system 55.022.238
46.117.041
50.730.823
Payroll – Number of employees 149
133
135
ROMPETROL WELL SERVICES S.A.
ANNUAL REPORT OF THE BOARD OF DIRECTORS for the 2023 financial year
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1.1. a) Description of the core activity of the company
Having over 70 years of experience, Rompetrol Well Services SA is a competitive, solid and
reliable partner, offering a wide range of services in the oil and gas industry.
The object of the Company's activity consists in: provision of services for oil and gas wells, rental
of well tools and equipment and other services. The services offered: cementing, stimulations,
tubular running services, that are performed in the oil fields in Romania and abroad.
b) Specifying the date of establishment of the company
Company Rompetrol Well Services S.A. was established in 1951 and in the more than 70 years
of activity, although it operated with different structures and under different names, the main
profile was the execution of special operations at oil and gas wells in Romania.
Government Decision no. 1213 of November 1990 decided that the Company should become a
joint-stock company, according to Law no. 15/1990, under the name of PETROS S.A., the name
under which it operated until September 2001, when it changed its name to ROMPETROL WELL
SERVICES S.A.
c) Description of any significant merger or reorganization of the company, its subsidiaries
or controlled companies, during the financial year
During 2023 and 2022, respectively, there were no mergers or reorganizations of the company.
d) Description of acquisitions and/or disposals of assets
The Company's purchases were mainly represented by equipment necessary for the current
activity. Thus, the equipment modernization program continued in 2023, focusing on updating
technologies for cementing and well stimulation services. The company has not disposed of
assets with significant accounting value.
e) Description of the main results of the evaluation of the company's activity.
1.1.1. Elements of general assessment:
a) profit:
At the end of 2023, Rompetrol Well Services records a positive result (profit) of 11,767,863 lei,
380% higher than the level of profit recorded in the previous year.
ROMPETROL WELL SERVICES S.A.
ANNUAL REPORT OF THE BOARD OF DIRECTORS for the 2023 financial year
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b) turnover:
In 2023, the turnover was 72,563,673 lei, 38% higher than the one recorded at the end of 2022,
respectively 14% higher than the budgeted one. The impact was generated by an increase
recorded in the area of secondary cementing services, as well as by an alignment of tariffs with
current market conditions.
c) export:
In 2023, the Company provided services in Denmark, based on specific contract. The turnover
obtained from these activities was in the amount of 404,263 RON.
d) costs:
In 2023, the operating expenses adjusted with elements of the nature of provisions were in the
amount of 62,635,583 lei, 15% higher than those registered in the previous year, their evolution
being influenced both by the direct costs related to the basic activity (cement, additives,
equipment maintenance and repairs).
e) own market share %;
In Romania, the company holds market shares up to 70% for different types of special services
provided.
f) liquidity (available in the account, etc.).
From the point of view of liquidity, the Company maintained the ability to cover current liabilities
from current assets, the current liquidity indicator reaching a level of 4.85 on December 31, 2023.
1.1.2. Evaluation of the technical level of the company
Description of the main rendered services
The main works performed by the company ROMPETROL WELL SERVICES are the following:
• Cementing and pumping services of various kinds:
casing cementing, primary cementing, secondary cementing (plug cementing and squeeze
cementing), well kills, circulations, milling and replacement of fluids, interventions in damaged
wells, various pumping, etc.
• Stimulation services:
acid pumping, transport of fluids (acid solutions, emulsions and enzymes, etc.), water shut-off.
• Special operations with liquid nitrogen:
lift-off operation, foam acidizing, pressure integrity testing;
• Operations with mechanical tongs for well casing;
• Rental of tools and equipment for various drilling-extraction works;
• Analyzes in our own laboratory for cements and well fluids;
• Preparation of cement slurry according to the recipes;
Operations with cement retainers.
ROMPETROL WELL SERVICES S.A.
ANNUAL REPORT OF THE BOARD OF DIRECTORS for the 2023 financial year
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a) the main markets for each product or service and the distribution methods
The company ROMPETROL WELL SERVICES has maintained its position on the domestic
market, being constantly concerned with improving the quality of the services provided. Having
production capacities throughout the country as well as a qualified and well-trained workforce in
the field of providing special services to oil and gas wells, ROMPETROL WELL SERVICES
promptly provides the services required by their beneficiaries, regardless of the location.
The main markets for Rompetrol Well Services are in Central and Eastern Europe.
b) the share of each category of products or services in the revenues and in the total
turnover of the company for the last three years;
The share of each category of services in the turnover for the years 2021, 2022, 2023 is presented
as follows:
Type of service
2021 2022 2023
Actual value
(RON)
% Actual value
(RON)
% Actual value
(RON)
%
1 2 3 4 5 6 7
Cementing-Pumping
services
24.543.531
55.0% 34.845.343
66.0% 57.540.957
79.3%
Stimulation services 14.872.756
33.3% 13.930.332
26.4% 10.661.775
14.7%
Nitrogen services 2.305.249
5.2% 1.533.679
2.9% 2.537.335
3.5%
Casing Running services 563.528
1.3% 704.998
1.3% 742.348
1.0%
Tools Rental services 38.831
0.1% 130.603
0.2% 75.642
0.1%
Other services 2.273.261
5.1% 1.623.091
3.1% 1.005.617
1.4%
TOTAL 44.597.157
100% 52.768.046
100% 72.563.673
100%
c) the new products considered for which a substantial volume of assets will be affected
in the future financial year as well as the stage of development of these products.
The equipment modernization program of recent years focused on updating technologies for
cementing and well stimulation services, respectively tubular running and acidizing services. The
high-pressure pumping equipment is in accordance with the current safety requirements of the
industry. The company continues to implement effective cementing and well stimulation
technologies, meeting the operational requirements of customers.
1.1.3. Evaluation of the technical-material supply activity (indigenous sources, import
sources)
Information on security of supply sources, prices of raw materials and stock sizes of raw materials
and supplies.
The main types of materials needed to carry out the activity are: class G cement and specific
additives, fuels and lubricants, auto spare parts and technological equipment, secured on the
basis of firm contracts concluded annually, which ensures stability and safety of the company's
operation in optimal conditions. The levels of stocks of raw materials and spare parts vary
ROMPETROL WELL SERVICES S.A.
ANNUAL REPORT OF THE BOARD OF DIRECTORS for the 2023 financial year
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depending on the volume of activity expected for the next period. The purchase prices are the
prices applied on the market.
1.1.4. Evaluation of the selling activity
a) Description of sequential sales evolution on the domestic and/or foreign market and
medium- and long-term sales prospects;
The evolution of revenues is presented in the following table:
-
RON
202
1
202
2
202
3
Sales by activities, out of which:
44
.
597
.
157
52.768.046
72.563.673
Income from services provided 44.450.951
52.295.150
72.067.998
Income from sale of goods
146
.
206
472.896
495.67
5
Despite the constantly changing market conditions, the Company has managed to secure its
leading position on the specific market segment through diversity and flexibility in offering
specialized services tailored for each individual client. From an operational point of view, the
Company implemented measures to ensure the availability of labor in order to fulfill all orders.
From a commercial point of view, the Company participated in all publicly announced tenders in
order to ensure the activity for the next period.
It is estimated that during the year 2024 the Company will register a level of sales similar to 2023.
As before, the Company's flexibility in terms of the type of services provided, together with a
strong financial position, including cash availability, will allow it to maintain a high level of activity.
b) Description of the competitive situation in the field of activity of the company, of the
market share of the products or services of the commercial company and of the main
competitors;
In the conditions of an increasingly competitive environment and a cautious level of activity in the
oil and gas industry, the Company managed to maintain the market share for most of the services
provided in Romania, while at the same time increasing the complexity of the services provided.
The company has a market share up to 70% of the specific services market.
The main competitors of the Company in terms of primary cementing activity are: Schlumberger,
Halliburton, Baker Hughes.
c) description of any significant dependence of the company on a single customer or on a
group of customers whose loss would have a negative impact on the company's revenues.
It can be stated that ROMPETROL WELL SERVICES depends on the position of OMV - PETROM
BUCUREŞTI S.A., a customer that represents over 65% of the company's sales. To reduce this
risk of dependence, the company aims to increase the share of special well services provided to
other E&P players on the local market and expand the activity on the foreign market.
ROMPETROL WELL SERVICES S.A.
ANNUAL REPORT OF THE BOARD OF DIRECTORS for the 2023 financial year
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1.1.5. Evaluation of aspects related to the company's employees/staff
a) Specifying the number and level of training of the company's employees as well as the
degree of unionization of the workforce;
The company carried out training of employees, mainly through internal training programs, to
ensure obtaining the maximum benefits from the exploitation of existing equipment, the
continuous raising of the level of competence of employees and to create a safe work
environment.
The staff structure as of December 31, 2023 is as follows:
Total number of staff, of which: 145
-
high education
63
- with secondary education 10
-
skilled workers
72
The degree of labor unionization is 90.34%.
b) Description of the relations between the manager and the employees, as well as any
conflicting elements that characterize these relations.
The relations between the manager and employees are based on collaboration and are carried
out on the basis of the "Collective Labor Agreement", existing at the company level, without
identifying conflicting elements.
c) Assessment of issues related to the impact of the issuer's core activity on the health
and safety of workers
The QHSE (Quality, Health, Safety, and Environment) management system of Rompetrol Well
Services reflects the provisions of a comprehensive set of current legal requirements, based on
detailed internal procedures and risk assessments. All company employees are covered by the
current QHSE management system.
To enhance the company's health and safety performance, specific measures were implemented
during the 2023 reporting period:
Quarterly meetings of the Health and Safety Committee
Safety audits, BBS (Behavior-Based Safety) audits, and the annual Safety Audit plan
involving management
Internal audit plan for 2023
Investigation of incidents according to Romanian legislation
Job Safety Analysis (JSA) and risk assessment for all operations
Mandatory training, professional training through the Annual Training Plan
As part of its QHSE management system, the company provides awareness campaigns for road
safety, GPS monitoring of the fleet, and defensive driving programs to ensure transportation
safety (indicators are reported in weekly management meetings).
ROMPETROL WELL SERVICES S.A.
ANNUAL REPORT OF THE BOARD OF DIRECTORS for the 2023 financial year
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Risk assessments are conducted in accordance with Romanian legislation and undergo periodic
review and updates whenever there is a process change or new risks are identified. The risk
register is updated quarterly, and employees are encouraged to report risks during regular training
sessions, either directly or anonymously through the SSM mailbox in each unit. In case of
incidents, the company applies the QHSE responsibility policy, which involves a "stop work"
practice without blaming any employees.
Health and safety training is regularly provided in compliance with current legislation:
Training on legal requirements (monthly)
Professional training matrices
Other professional training for skill development (forklift drivers, professional drivers,
IWCF, Bosiet, etc.) included in the Annual Training Plan
Road safety training
HSE hazards of products and risk control for employees and contractors are communicated
through training on safety data sheets. Furthermore, to monitor, track, evaluate, and manage
product-related incidents, the company uses procedures, simulations, and training such as:
Policy on hazardous substances;
Communication of chemical hazards;
Handling of chemical products;
Storage and disposal of chemical substances;
Chemical exposure.
All training expenses are covered by the company. Communications and audits are also extended
to contractors, along with communications on various HSE topics.
With 236,867 hours worked in 2023, Rompetrol Well Services did not record any loss time injuries
or workplace accidents.
1.1.6. Evaluation of aspects related to the impact of the issuer's core activity on the
environment
The synthetic description of the impact of the issuer's core activities on the environment as well
as any existing or anticipated litigation regarding the violation of environmental protection
legislation.
The company's activities, both at the headquarters in Ploiești and at all branches and workplaces
nationwide, strictly adhere to current environmental legislation, thus avoiding any potential
litigation resulting from non-compliance with current laws.
The company conducts periodic checks to ensure compliance with environmental requirements
according to the environmental permits for its workplaces nationwide to avoid penalties or fines
that could be imposed for not meeting obligations in this field. Additionally, the company has
observed an increasing focus from suppliers and customers on environmental aspects, prompting
a commitment to identifying sustainable solutions to reduce ecological footprints.
ROMPETROL WELL SERVICES S.A.
ANNUAL REPORT OF THE BOARD OF DIRECTORS for the 2023 financial year
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Ensuring compliance with current environmental regulations is a complex process through which
the company conducts a detailed assessment of activities impacting the environment, both for on-
site technological processes and documentation, identifying any non-conformities and proposing
solutions for compliance, prevention, or reduction of environmental impact.
In July 2023, an audit of the Integrated Management System (environment, quality, safety, and
health at work) was carried out by DNV Business Assurance, confirming Rompetrol Well Services
S.A.'s full compliance with ISO 9001:2015, ISO 14001:2015, and ISO 45001:2018 standards. The
company conducts annual internal audits of environmental, quality, and health and safety
management at all its bases, as well as inspections at client locations. In 2023, the company
underwent a QHSE (Environment, Emergency Situations, Health and Safety at Work) audit by
the KMG Group, achieving a score of 90.5% (a 2.15% increase from 2022), corresponding to the
rating "Excellent."
In December 2023, Rompetrol Well Services S.A. revised his Environmental Permit No. PH-66
for the Ploiești headquarters. Annual endorsements for environmental permits were also obtained
for the company's other workplaces.
Rompetrol Well Services has set several environmental objectives, including:
Monitoring and reporting environmental indicators required for the Sustainability Report
Eliminating all types of waste identified within the company through authorized firms
Optimizing electricity and gas consumption by using LED lamps and new low-consumption
heating systems
Reducing paper consumption through electronic archiving
Periodic monitoring of waste collection areas and safe storage
Training personnel working for and on behalf of the organization in environmental
protection
Preventing any accidental pollution
Continuing the process of renewing the fleet with new-generation vehicles equipped with
Euro 6 engines, contributing to the reduction of emissions into the atmosphere
Training all staff on waste sorting, reducing specific consumption, and particularly
implementing the company's environmental policy and objectives
The management of ROMPETROL WELL SERVICES ensures the necessary resources and
framework for implementing established environmental objectives, actively involving itself in all
projects aimed at continuous improvement of environmental protection through the services
provided.
According to Law No. 105/2006 and Emergency Ordinance No. 196/2005 regarding obligations
to the Environmental Fund, Rompetrol Well Services S.A. pays monthly fees for pollutant
emissions into the atmosphere from fixed sources and an annual fee for packaging introduced
into the market, following declarations of obligations to the Environmental Fund.
ROMPETROL WELL SERVICES S.A.
ANNUAL REPORT OF THE BOARD OF DIRECTORS for the 2023 financial year
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1.1.7. Evaluation of the research and development activity
Specifying the expenses in the financial year as well as those anticipated in the next financial year
for the research and development activity.
In 2023, the Company did not record research and development expenses.
1.1.8. Evaluation of the company's activity regarding risk management
Description of the company's exposure to price, credit, liquidity and cash flow risk. Description of
the company's policies and objectives regarding risk management.
The activity carried out by the Company implies its exposure to the following risks:
- price risk: the Company has a flexible pricing policy, which allows it to react and adapt to any
price fluctuations that may appear in the market;
- credit risk: the Company's activity is financed from its own sources, but the impact of commercial
credit could not be completely eliminated. The company manages customer credit in a procedural,
flexible manner, through the contracting strategy established as an essential risk distribution
mechanism. The Company's management constantly monitors receivables and their collection;
- interest rate risk: the company has not contracted bank loans, thus not being influenced by
interest rate volatility. For the availabilities placed in the cash pooling system, the interest income
is variable in relation to the ROBOR evolution;
- liquidity risk: until now the liquidity risk has been estimated as low, as the Company has managed
to achieve a stable balance between the maturity of receivables generated by sales and the
enforceability of debts for operational and investment activity.
- the risk of exchange rate variations: most of the Company's revenues are reported in RON and
EUR. The gap between the registration of amounts in foreign currency and their settlement cannot
generate significant patrimonial effects as a result of the exchange rate variation.
More details regarding risks faced by the Company are presented in the Financial Statements for
the year 2023, in Note 23.
1.1.9. Elements of perspective regarding the company's activity
a) Presentation and analysis of trends, elements, events or uncertainty factors that affect
or could affect the liquidity of the commercial company compared to the same period of
the previous year.
The activity carried out by the Company did not cause dysfunctional cash flows, being
compensated by the efficiency of the management of existing liquidity. Commitments to suppliers
were paid rhythmically. The registered arrears do not present the risk of significant penalties. As
of December 31, 2023, the Company is not involved in litigation regarding the payment of
outstanding debts. The company ensured permanent efficiency in honoring contracts throughout
the country.
The prospects of expanding service activities on foreign markets, however, require rational
decisions in the careful use of liquidity when concluding new contracts.
ROMPETROL WELL SERVICES S.A.
ANNUAL REPORT OF THE BOARD OF DIRECTORS for the 2023 financial year
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The main objectives for 2024
Continuation of offering high quality services in all the main activities carried out by the Company.
Taking into account the current market context, the Company is analyzing the possibility of
expansion on the service market in the Middle East region, as well as the expansion of the activity
in Central and Western Europe. In this sense, the Company continued discussions with possible
local partners, including considering the opening of an operational base in the area.
b) Presentation and analysis of the effects of capital expenditures, current or anticipated,
on the financial situation of the company compared to the same period last year.
The operation of the Company's activity was financed from its own sources, without requiring the
contracting of loans from banking institutions or other legal entities.
In the category of debts, there are no outstanding debts of interest or other loans committed from
banking institutions, but only the effect of the application of the new leasing standard.
The permanent trend for the constructive and functional improvement of the drilling installations,
imposed by the need to obtain a technical-economic efficiency of the extraction wells, led to the
need to make investments in order to be able to respond to the market requirements.
A share of 79% of the increase recorded in tangible assets, in the amount of 2.2 million RON, is
represented by the purchase and/or modernization of the installations and equipment used in the
operations carried out at the drilling wells and other ancillary operations, as well as laboratory
equipment.
Approximately 21% of the total investments made by the Company in 2023 concerned works
carried out in order to rehabilitate and modernize operational bases and replace IT equipment.
The company secured its own financial resources for the full implementation of the investment
budget for 2023.
c) Presentation and analysis of events, transactions, economic changes that significantly
affect the income from the core activity.
Despite the constantly changing market conditions, the Company has managed to secure its
leading position in the specific market segment through diversity and flexibility in offering
specialized services tailored for each individual client. It provides a wide range of services for oil
and natural gas wells (cementing, stimulation, well casing operations, etc.).
During the past year, Rompetrol Well Services carried out a number of 95 primary cementing
operations, 319 secondary cementing operations and 389 stimulation operations, a total number
higher than the one recorded in the previous year. Thus, the volume of operations performed for
the company's clients increased by 18% compared to the level of 2022.
ROMPETROL WELL SERVICES S.A.
ANNUAL REPORT OF THE BOARD OF DIRECTORS for the 2023 financial year
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2. The tangible assets of the company
2.1. Specifying the location and characteristics of the main production capacities owned
by the commercial company.
The patrimonial assets of tangible type allow a flexible organization in the territory to promptly
fulfill the orders of the beneficiaries.
The place of service provision is identified at the beneficiaries, not in the organizational perimeter
of the Company, the use of the production capacities being dependent on the orders received
from the beneficiaries.
The location of the land and buildings on the geographical area is identified in the following
localities: Ploiesti (Prahova County), Campina (Prahova County), Razvad (Dâmboviţa County),
Leordeni (Arges County), Mihaesti – Stuparei (Valcea County), Potcoava (Olt County), Craiova
(Dolj County), Tg. Carbunesti (Gorj County), Slobozia - Conachi (Galati County), Ianca (Braila
County), Timişoara (Timis County), Medias (Sibiu County), Moinesti (Bacau County), Videle
(Teleorman County).
The main production capacities are represented by: cementing aggregates, containers, tanks,
cementing laboratory equipment and other types of vans and drilling tools.
2.2. Description and analysis of the degree of wear and tear of the Company's assets.
Working outdoors at wells, traveling on hard-to-reach roads and using corrosive materials implies
a high degree of wear and tear, compensated by the investments of recent years. The automotive
specifics of the production capacities imply, the recognition of some maintenance costs resulting
from the adaptation and implementation of the imperative normative acts specific to European
integration and environmental protection issues: ADR transport licenses, rovignetes,
tachographs, environmental taxes, taxes for first registration, local taxes, etc.
2.3. Specifying the potential issues related to the right of ownership of the tangible assets
of the company.
For all tangible assets, the right of ownership is recognized, according to the documents held
and the regulations in force.
3. The market of securities issued by the company "ROMPETROL WELL SERVICES" S.A.
3.1. Specifying the markets in Romania and other countries where the securities issued by
the company are traded.
Securities issued by ROMPETROL WELL SERVICES S.A. are admitted to the rate of the
Bucharest Stock Exchange by decision no. 133/ 26.03.1998 and are traded on this market in the
STANDARD category in the sector of securities issued by Romanian legal entities, from
18.06.1998, under the symbol PTR. The securities issued by the company are category A -
registered shares.
As of 31.12.2023 the share capital is 27,819,090 lei, equivalent to 278,190,900 shares with a
nominal value of 0.10 lei/share and is distributed among the holders as follows:
1. KMG INTERNATIONAL N.V. Netherlands 20.311.015 lei (73,0111 %)
2. KJK BALKAN HOLDING S.a.r.l Luxembourg 2.970.995 lei (10,6797 %)
3. Other shareholders (4512 shareholders) 4.537.080 lei (16,3092 %)
ROMPETROL WELL SERVICES S.A.
ANNUAL REPORT OF THE BOARD OF DIRECTORS for the 2023 financial year
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Shareholder structure
3.2. Description of the company's policy regarding dividends. Specifying the dividends
due/paid/accumulated in the last 3 years and, if applicable, the reasons for the eventual
reduction of dividends during the last 3 years.
The decision to declare and pay dividends is taken during the Ordinary Annual General Meeting
of Shareholders upon the recommendation of the Board of Directors. The recommendations
regarding the amount of the dividend and the method of payment are adopted during the meeting
of the Board of Directors to propose the distribution of the profit based on the year-end results.
The policy provides a differentiated approach to determining the volume of dividends with regard
to the Company, depending on:
The nature and profitability of the commercial activity carried out by the Company and its
capital needs;
Anticipated equity capital needs for the fulfillment of activity plans and investment projects;
The effective volume of dividends will take into account the financing needs with equity capital
for:
Financing capital investments in existing assets;
Financing of investment projects regarding the part that requires the allocation of own
funds according to the agreed project financing structure;
Debt repayment;
Other relevant factors influencing the company's cash flows.
The Board of Directors prepares proposals regarding the effective volume of dividends distributed
for the reporting period.
The dividend distribution rate, subject to the other provisions of this Policy, is set at a minimum of
30%, as long as there are sufficient cash availability, calculated as follows:
Cash balance N + Net cash pooling balance N + Cash from operations N +1 + Cash from
investments N + 1 + Financial costs N + 1 + Mandatory loan repayments N + 1
KMG
International
NV (NL),
73.01%
KJK Balkan
Holding
S.a.r.l, (Lux)
10.68%
4512
shareholders
with holdings
below 3%
each; 16,31%
ROMPETROL WELL SERVICES S.A.
ANNUAL REPORT OF THE BOARD OF DIRECTORS for the 2023 financial year
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where N is represented by the year for which the distribution is made, while N+1 represents the
following year. For N+1, the calculation is prepared based on the budget.
Dividends are distributed to the Company's shareholders in proportion to their holdings in the
Company.
The final decision will be taken by the appropriate corporate bodies of the Company.
The value of the dividends is identified when the decision to declare and pay the Dividends is
taken.
The GMS decision regarding the declaration and payment of dividends reflects the following:
- dividend value per share;
- the registration date and the corresponding ex date, which identify the shareholders entitled to
the dividend;
- dividend payment date;
- any other legal requirements mentioned in the legal provisions in force.
For the financial year ended on December 31, 2021, EGMS from 27.04.2022 approved the
distribution as dividends of the net profit in the amount of 1,629,634 lei, as a dividend, respectively
0.005857970 gross lei/share and at the same time approved the change in the destination of the
reserves constituted by the company's net profit obtained in previous years in the amount of
15,977,937 RON and the distribution of this amount as dividends to shareholders, respectively
0.057435153 RON gross/share, as well as the change in the destination of the amount of
29,935,254 RON from other reserves and the distribution of this amount as dividends to
shareholders, respectively 0.107606877 RON gross/action. Thus, for the year 2021, the total
value of the dividend was 0.1709 lei gross/share.
For the financial year ended on December 31, 2022, EGMS from 26.04.2023 approved the
distribution as dividends of the net profit in the amount of 2,449,517 lei, as a dividend, respectively
0.008805 gross lei/share.
For the financial year ended on December 31, 2023, EGMS from 25(26).04.2024 is to decide on
the way to distribute the profit. The proposal of the Board of Directors is to distribute the net profit
as dividends in the amount of 11,767,863 RON, respectively 0.042301 gross lei/share.
Until December 31, 2023, the Company paid the following dividends:
- 94% of the gross dividend approved for the 2020 financial year;
- 93% of the gross dividend approved for the 2021 financial year;
- 93% of the gross dividend approved for the 2022 financial year
3.3. Description of any activities of the company to purchase its own shares.
The company did not carry out activities for the purchase of its own shares.
3.4. If the company has subsidiaries, specifying the number and nominal value of the
shares issued by the parent company held by the subsidiaries.
Not applicable.
3.5. If the company has issued bonds and/or other debt securities, the presentation of how
the commercial company pays its obligations to the holders of such securities.
Not applicable.
ROMPETROL WELL SERVICES S.A.
ANNUAL REPORT OF THE BOARD OF DIRECTORS for the 2023 financial year
Page 16 of 34
4. Management of ROMPETROL WELL SERVICES S.A.
According to the Articles of Association, the Company is managed by a Board of Directors
composed of 5 members, appointed by the Ordinary General Meeting, who may also be
shareholders of the company, natural or legal persons, of Romanian or foreign citizenship,
respectively nationality.
At the beginning of 2023, the Board of Directors had the following members: Yedil Utekov, Stefan
Georgian Florea, Vasile Gabriel Manole, Olga Turcanu, Eugeniu Moby Henke, elected by the
General Meeting of Shareholder on 27.04.2022 for a 4-year term starting with 30.04.2022.
Through the Decision of the Board of Directors no. 1 from 02.05.2022, Yedil Utekov was elected
as the Chairman of the Board of Directors starting on 30.04.2022.
Through the Decision of the Board of Administration no. 1 from 02.05.2022 starting from
30.04.2022 Georgian Stefan Florea was appointed General Manager and Roxana Luiza Moise
was appointed Financial Manager, for a mandate equal to that of the administrators who
appointed them.
On 20.03.2023, Mr. Yedil Utekov resigned from the mandates of President and member of the
Board of Directors and member of the Audit Committee starting on 01.05.2023 (last day of
mandate being 30.04.2023).
In the General Meeting of Shareholders dated 26.04.2023, Mr. Batyrzhan Tergeussizov was
elected a member of the Company's Board of Directors for a term that begins on 01.05.2023 and
expires on 30.04.2026 (the date of the expiration of the mandate of the other members of the
Board of Administration).
Through the Decision of the Board of Administration no. 1 of 02.05.2023, Mr. Batyrzhan
Tergeussizov was elected President of the Board of Directors starting from 01.05.2023.
Thus, as of the end of 2023, the composition of the Board of Directors is as follows:
Batyrzhan Tergeussizov – the Chairman of the Board of Directors
Georgian Stefan Florea – Member / General Manager
Olga Turcanu – Member
Vasile Gabriel Manole – Member
Eugeniu – Moby Henke – Member
4.1. Presentation of the list of company administrators and the following information for
each administrator:
a) CV (name, surname, age, qualification, professional experience, position and length of
service;
• Yedil Utekov - Kazakh citizen, born in 1976
Chairman of the Board of Directors for the period 30.04.2022 - 30.04.2023.
Term of office: 30.04.2022 – 30.04.2023.
Yedil Utekov graduated from the Faculty of Chemical Engineering of Natural Resources and
Hydrocarbons from the Astrakhan State Technical University in Russia and started his career in
the oil and gas industry in 2001 as a process operator at the Akasaraisky Gas Processing Plant
from Russia, following that between September 2001 and June 2002 he became an operator for
ROMPETROL WELL SERVICES S.A.
ANNUAL REPORT OF THE BOARD OF DIRECTORS for the 2023 financial year
Page 17 of 34
ZAO Intergaz Central Asia, Kazakhstan. Later, starting from June 2002, his career growth started
from the position of engineer at the Atyrau Refinery and went to Manager for Ecology, Health and
Safety Technology. Between April 2005 and April 2010, he worked at Agip KCO, in Atyrau,
Kazakhstan, the last position he held within this company was that of Group Coordinator for
Technical Control and Inspection, between August 2008 and April 2010.
He has solid professional experience in the oil and gas industry, holding management positions
in various fields, working in various companies such as: Atyrau Refinery, Agip KCO and
KazMunayGas.
• Batyrzhan Tergeussizov - Kazakh citizen, born in 1984
Chairman of the Board of Directors for the period 01.05.2023 - 31.12.2023.
Term of office: starting with 01.05.2023 until 30.04.2026.
Mr. Batyrzhan Tergeussizov has graduated from Almaty University of Power Engineering and
Telecommunication, Electrical Engineering faculty and holds a master’s degree in Business
Administration (MBA) from Maastricht School of Management / Almaty Management University.
Before joining the Group, Mr. Tergeussizov held the position of General Manager of Linde Gas
Kazakhstan TOO for more than seven years and had successfully managed the entity’s business
activities in Kazakhstan and Central Asia. Before this position, Mr. Batyrzhan Tergeussizov had
several management roles within Siemens TOO, such as Country Division Lead - Energy Service
Division, Business Unit Lead - Services for Oil & Gas and Industrial Application, and Head of
Service Group.
• Georgian Stefan Florea- Romanian citizen, born in 1982
Member of the Board of Directors during the period 30.04.2022 – 31.12.2023
Term of office: 4 years starting on 30.04.2022
He graduated from the Ploiesti University of Oil and Gas. Mr. Florea holds a Master's degree in
reservoir engineering obtained at the Ploiesti University of Petroleum and Gas.
Georgian Stefan Florea has been with Rompetrol Well Services since 2007, successfully fulfilling
his duties in such roles as - initially at the operational level, holding the positions of petroleum
engineer DST division, field engineer at the cementing division, petroleum engineer technical
department, representative of Rompetrol Well Services & Rompetrol SA in Kurdistan, Sales
Coordinator and up to management level, Deputy General Manager of Rompetrol Well Services
since March 2018.
Olga Turcanu - Romanian citizen, born in 1979
Member of the Board of Directors between 30.04.2022 - 31.12.2023.
Term of office: 4 years starting on 30.04.2022.
Olga Turcanu studied international economic relations and economic law at the Academy of
Economic Sciences of Moldova having the bachelor and master levels. In 2013, Olga Turcanu
was accepted as a Member of the Association of Chartered Certified Accountants (ACCA), and
starting from 2018 she has the status of an Fellow ACCA.
She gained professional experience in tax consultancy, financial audit in the oil and gas industry,
economic analysis, budgeting, business planning, taxation, investment project analysis, corporate
finance.
She worked in various companies such as: PriceWaterhouseCoopers, Mechel Trade House,
Bluehouse Capital Group, Rominserv.
• Vasile Gabriel Manole - Romanian citizen, born in 1980
Member of the Board of Directors between 30.04.2022 – 31.12.2023.
Term of office: 4 years starting on 30.04.2022.
ROMPETROL WELL SERVICES S.A.
ANNUAL REPORT OF THE BOARD OF DIRECTORS for the 2023 financial year
Page 18 of 34
Mr. Vasile Gabriel Manole graduated from the Faculty of Economic Sciences, Transilvania
University Brasov, majoring in Finance, Banks, Insurance. He also holds a diploma of in-depth
postgraduate studies - strategies and financial accounting techniques - at Transilvania University
Brasov.
He joined the KMG International Group in 2005, occupying managerial positions in the financial
area in several entities within the KMG International Group, including the position of economic
director of Rompetrol Rafinare SA between November 2010 - May 2013 and 2016 - 2018.
Vasile Gabriel Manole holds the position of Financial Manager of Rominserv SRL and his main
duties are the representation of the company and the financial management of the company. Also,
Vasile Gabriel Manole holds the position of the Chairman of the Investment Initiation committee
within the Kazakh-Romanian Energy Investment Fund, an entity within the KMG International
Group.
• Eugeniu – Moby Henke - Romanian citizen, born in 1973;
Member of the Board of Directors in the period 30.04.2022- 31.12.2023.
Term of office: 4 years starting on 30.04.2022.
He is a lawyer, a graduate of the Faculty of Law of the University of Bucharest (1992-1996) and
has a Master’s degree in Administrative Sciences (1997-1999) from the National School of
Political and Administrative Studies in Bucharest.
He has professional experience in the following fields:
- consultancy for public and private companies (organizations), government agencies and
individuals;
- development and elaboration of corporate systems, legal analysis of transactions, projects;
- protection of clients' rights in the general courts of jurisdiction at all levels
- elaboration, negotiation and legal support in the execution of contracts, agreements and other
legal documents;
- experience as Director of the legal department of the KMG International Group, in the teams for
a series of projects (commercial, legislative, etc.);
b) any agreement, understanding or family relationship between the respective Administrator and
another person due to which the respective person was appointed as Administrator;
To the knowledge of the administrators, there was no agreement, understanding or family
connection between the administrators of the Company and another person due to which they
were appointed administrators.
c) the Administrator's participation in the Company's capital;
According to the Register of shareholders of the company, consolidated on 31.12.2023, issued
by the Central Depository, none of the Administrators participates in the share capital of the
Company.
d) the list of people affiliated with the company.
None of the members of the Company's Board of Directors is affiliated with Rompetrol Well
Services S.A. in the sense of ASF Regulation no. 5/2018.
ROMPETROL WELL SERVICES S.A.
ANNUAL REPORT OF THE BOARD OF DIRECTORS for the 2023 financial year
Page 19 of 34
4.2. Presentation of the list of members of the company's executive management.
For each, the presentation of the following information:
a) the term for which the person is part of the Executive Management;
During 2023, the management of the Company was delegated to the following Managers:
Role Name and surname Period
General Manager FLOREA GEORGIAN STEFAN 01.01.2023 - 31.12.2023
Financial Manager MOISE LUIZA ROXANA 01.01.2023 - 31.12.2023
b) any agreement, understanding or family relationship between that person and another person
due to which that person was appointed as a member of the Executive Management;
We are not aware of any cases of agreements, agreements or family ties between the members
of the executive management and other persons due to which they were appointed to the position.
c) the respective person's participation in the capital of the commercial company.
According to the Register of shareholders of the company, consolidated on 31.12.2023, issued
by the Central Depository, no member of the Executive Management participates in the share
capital of the Company.
4.3. For all persons presented in 4.1. and 4.2. specify any disputes or administrative
procedures in which they have been involved, in the last 5 years, related to their activity at
the issuer, as well as those regarding the capacity of the respective person to fulfill their
duties within the issuer.
None of the people in the management of the Company has been involved in litigation or
administrative procedures in the last 5 years.
5. The financial-accounting situation
Presentation of an analysis of the current economic-financial situation compared to the last 3
years, with reference at least to:
a) balance sheet elements: assets that represent at least 10% of total assets; cash and others
liquid assets; reinvested profits; total current assets; total current liabilities;
Starting with the year ended on December 31, 2012, the individual financial statements of the
Company were drawn up in accordance with the provisions of the Order of the Minister of Public
Finance no. 1286/2012 for the approval of the accounting regulations in accordance with the
International Financial Reporting Standards applicable to companies whose securities are
admitted to trading on a regulated market, Order of the Minister of Public Finance no. 2844/2016
with all subsequent amendments and additions.
For the purpose of preparing these financial statements, in accordance with Romanian legislative
requirements, the functional currency of the company is considered to be the Romanian leu
(RON).
ROMPETROL WELL SERVICES S.A.
ANNUAL REPORT OF THE BOARD OF DIRECTORS for the 2023 financial year
Page 20 of 34
Summary of the patrimonial elements:
- RON
202
1
202
2
202
3
Total Assets, out of which:
153
.
439
.
577
123.254.400
125.397.777
Fixed assets
39
.
255
.
033
51.247.292
49.138.507
Current assets 114.184.544
72.007.108
76.259.270
Total Liabilities, out of which:
153
.
439
.
577
123.254.400
125.397.777
Share capital, out of which: 28.557.446
28.557.446
28.557.446
Paid
-
up subscribed capital
27
.
819
.
090
27.819.090
27.819.090
Legal reserves 5.563.818
5.563.818
5.563.818
Other equity
10
3.068.569
56.
728
.
487
55.515.450
Current result 1.629.634
2.449.517
11.767.863
Debts due under one year
12
.
531
.
044
19.095.17
2
15.722.168
Debts due above one year
2.089.065
10.859.960
8.271.032
b) profit and loss account
Summary of income and expenditure elements:
-
RON
202
1
202
2
202
3
Total income, out of which:
48
.
700
.
607
57.879.281
77.369.727
Operational income 45.961.136
53.228.897
73.487.511
Financial income
2
.
739
.
471
4.650.384
3.882.216
Total expenditure
46
.
926
.
418
55.001.95
4
63.514.880
Operational expenditures, out of which:
46.227.637
53.825.975
62.682.833
-
expendable supply
11
.
406
.
887
15.250.181
19.654.780
- staff expenses 16.573.739
19.427.316
21.212.561
-
assets depreciation expenses
3
.
996
.
830
4.895.557
5.921.961
- other expenses 14.250.811
14.252.922
15.893.531
Financial
expenses
698
.
781
1.175.979
832.047
Gross result
-
profit
1
.
774
.
18
8
2.877.32
8
13.854.847
Current and deferred profit tax
144
.
554
427
.
811
2.086.984
Net result
-
profit
1
.
629
.
63
4
2.
449
.
517
11.767.863
Summary of the achievement of budget indicators:
- RON
Achieved –
previous year
202
3
Budget
provisions
Achieved
Total income,
out
of which:
57,879,281
67,416,065
77.369.727
Operational income 53,228,897
64,358,549
73.487.511
Financial income
4,650,384
3,057,516
3.882.216
Total expenditure, out of which:
55,001,954
57,218,065
63.514.880
Operational expenditures 53,825,975
56,900,828
62.682.833
Financial expenditures
1,175,979
317,237
832.047
Gross profit
2,877,32
8
10,198,001
13.854.847
Current and deferred
profit tax
427
,
811
1,369,196
2.086.984
Net profit
2,
449
,
517
8,828,805
11.767.863
ROMPETROL WELL SERVICES S.A.
ANNUAL REPORT OF THE BOARD OF DIRECTORS for the 2023 financial year
Page 21 of 34
c) cash flow: all the changes in the level of cash in the framework of the basic activity, investments
and financial activity, the level of cash at the beginning and at the end of the period.
Treasury cash flow situation, synthesis - indirect method
- RON
202
1
202
2
202
3
Net result before taxation and extraordinary items
1.774.189 2.877.328 13.854.847
Operational profit before changes in working capital
2.987.443 3.350.624 15.707.518
Net cash from operational activities
3.951.124 37.284.325 7.642.050
Net cash from investing activities
27.765.571 9.524.158 (1.554.398)
Net cash from financing activities
(31.640.781) (46.543.997) (5.930.827)
Net variation in cash and cash equivalents
74.975 263.829 157.075
Unrealized exchange rate differences
1.139 657 (251)
Cash and cash equivalents at the beginning of the financial year
151.117 227.231 491.717
Cash and cash equivalents at the end of the financial year
227.231 491.717 648.542
In 2023, both the performance of contracts with customers and suppliers was managed in
conditions of financial balance, as well as the provision of all liquidity for the full and timely
payment of salary rights, budget debts and dividends. All investment projects were financed from
own sources, except for the two twin pump cementing units, that were acquired through a finance
lease. In addition to the cash highlighted at the end of the financial year, the availability from the
main account, from the cash-pooling system, in the amount of 50,730,823 RON, can be used
without restrictions.
Name of the indicator
20
2
1
202
2
202
3
Current liquidity indicator 9,11
3,77
4,85
The speed of rotation of debits
-
customers
1
20
102
86
The speed of rotation of fixed assets
1,
14
1,03
1,48
The indicator of the degree of indebtedness 0.4%
12.1%
8.7%
The debt level indicator includes only the effect of lease contracts.
6. Corporate Governance
ROMPETROL WELL SERVICES S.A. is a company listed on the Bucharest Stock Exchange -
main segment, Standard share category, under the symbol << PTR >>, since 18.06.1998,
according to the decision of the Quota Registration Commission no. 133/26 March 1998.
The company complies with the current legislation applicable to companies and the capital
market: Law no. 31 /1990 of commercial companies - with subsequent amendments, Law no.
82/1991 of accounting - with subsequent amendments, Law no. 297 /2004 on the capital market
- with subsequent amendments, Law no. 24/2017 regarding issuers of financial instruments and
market operations, FSA Regulation no. 5/2018 regarding issuers of financial instruments and
market operations.
ROMPETROL WELL SERVICES S.A.
ANNUAL REPORT OF THE BOARD OF DIRECTORS for the 2023 financial year
Page 22 of 34
The Company's management adopted voluntarily, self-imposed part of the provisions of the
Corporate Governance Code of the Bucharest Stock Exchange (CGC-BVB).
The Corporate Governance Code of the Bucharest Stock Exchange is a set of principles and
recommendations for companies whose shares are admitted to trading on the regulated market
in order to create an internationally attractive capital market in Romania, based on the best
practices, of transparency and trust. The Code encourages companies to build a strong
relationship with their shareholders and other stakeholders, to communicate effectively and
transparently and to be open to all potential investors.
The objective of the Corporate Governance Code of the Bucharest Stock Exchange is to increase
trust in listed companies by promoting improved corporate governance standards in these
companies.
Good corporate governance is a powerful tool for strengthening market competitiveness.
The central elements of this Code are investors' access to information and the protection of
shareholders' rights. Each listed company must follow the provisions of the Code. The role of
good governance is to facilitate effective entrepreneurial leadership, which can ensure the long-
term success of the company.
Details of compliance Rompetrol Well Services S.A. with the new Corporate Governance Code is
presented in Annex no. 1.
In accordance with the Articles of Association, Rompetrol Well Services S.A. is administered
in a unitary system, so that the administration rests with a board of directors composed of 5
members, elected by the ordinary general meeting of shareholders, for a 4-year term.
The Board of Directors has full powers to take any administrative and management decisions
other than those that the law expressly gives to the General Meeting of Shareholders.
By way of exception, the Board of Directors will exercise the powers of the General Meeting of
Shareholders provided for by art. 113 letter b, c and f of law 31/1990, republished.
The decisions of the Board of Directors are valid if they are taken by the majority of the members
present. In case of equality of votes, the Chairman has the decisive vote.
The duties and powers of the Board of Directors and of the Chairman of the Board of Directors
The Board of Directors has the powers established by Law no. 31/1990 updated, the Articles of
Incorporation, as well as other duties established by the general meetings of shareholders in its
charge, respectively, mainly, the following:
a) establishes the main directions of activity and development of the Company;
b) appoints and dismisses the Managers of the Company and supervises their activity;
c) prepares the annual activity report;
d) implements the decisions of the general meetings;
e) with the exception of legal acts for the adoption/conclusion of which is necessary,
according to the mandatory provisions of the law, the approval of the general meeting of
shareholders, approves the adoption/conclusion on behalf of the Company of legal acts whose
object has a value between 500,001 – 10,000,000 USD; approval is required if it is a single
commercial transaction carried out through one and/or several separate contracts if the
cumulative value of these contracts exceeds the respective amount;
f) approves the organizational structure of the company;
ROMPETROL WELL SERVICES S.A.
ANNUAL REPORT OF THE BOARD OF DIRECTORS for the 2023 financial year
Page 23 of 34
g) designates and/or revokes the persons who act as representatives of the Company in
relations with the banks, with the right of first signature, respectively with the right of second
signature; the joint signature rules shall apply accordingly to the making of any payment made for
and on behalf of the Company;
h) approves the conditions for contracting any type of loans from a bank and/or financial
institution, as well as from any other legal entity;
i) approves the interim financial statements of the company, drawn up according to the law;
j) approves the company's marketing strategy and investment plan, as well as the annual
budget (investment expenses and operational expenses), upon the joint proposal formulated by
the General Manager and the Financial Manager;
k) submits the application for the opening of the company's insolvency procedure, according
to law no. 85/2014 regarding the insolvency procedure;
During 2023 the Board of Directors had the following composition:
• Yedil UTEKOV - Chairman during 01.01.2023 – 30.04.2023
• Batyrzhan TERGEUSSIZOV - Chairman during 01.05.2023 – 31.12.2023
• Eugeniu Moby HENKE - Member during 01.01.2023 – 31.12.2023;
• Georgian Stefan FLOREA - Member during 01.01.2023 – 31.12.2023;
• Olga TURCANU - Member during 01.01.2023 – 31.12.2023;
• Vasile Gabriel MANOLE - Member during 01.01.2023 – 31.12.2023
6.1. Information about the members of the Board of Directors
The CVs of the members of the Board of Directors of Rompetrol Well Services SA are available
on the company's website at https://rompetrolwellservices.kmginternational.com/en/investor-
relations/corporate-governance/board-of-directors. Additional information can be found in section
4.1 of this report.
According to the criteria for evaluating the independence of the non-executive members of the
Board of Directors, on 31.12.2023, none of the Administrators meets the independence criteria
provided by the principles and recommendations of the Code.
During 2023, a number of 14 meetings of the Board of Directors took place and 23 decisions were
adopted, the participation of Administrators in these meetings being as follows: Yedil Utekov – 5
meetings, Batyrzhan Tergeussizov – 8 meetings, Eugeniu-Moby Henke - 14 meetings, Olga
Turcanu – 14 meetings, Georgian Stefan Florea – 14 meetings, Vasile Gabriel Manole - 14
meetings.
The President chaired 13 of the meetings of the Board of Directors, and 1 was chaired by the
General Director as a member of the Board of Directors. Decisions were adopted, taking into
account legal provisions, regulations, constitutive acts and incident internal procedures. The
decisions were taken with the "for" vote of the majority of those present, according to the
provisions of the Articles of Association.
For the financial year ended on December 31, 2023, in accordance with the legal provisions, the
administrators' remuneration was approved by the Ordinary General Meeting of Shareholders on
26.04.2023.
The information regarding the expenses with the remuneration of Administrators and Managers
are presented in the annual financial statements, respectively in the Remuneration Report.
ROMPETROL WELL SERVICES S.A.
ANNUAL REPORT OF THE BOARD OF DIRECTORS for the 2023 financial year
Page 24 of 34
The company has a Financial Auditor who carried out his activity in accordance with the applicable
legal provisions and the contracts concluded in this regard. Since 2008, the financial auditor is
"Ernst & Young Assurance Services SRL". The financial auditor audited the annual financial
statements.
The general meeting of shareholders dated 27.04.2022 appointed the audit firm Ernst & Young
Assurance Services SRL as financial auditor for the financial years 2022 and 2023, the duration
of the audit contract being 2 (two) years, starting from the date of the GMS.
Information regarding other commitments and relatively permanent professional
obligations of the members of the Board of Directors
Name Company Job position Period
Yedil Utekov Rompetrol Rafinare SA
*
Chairman BoD 01.05.2018-30.04.2023
Rominserv S.R.L.* Member BoD 15.09.2020-30.04.2023
Rompetrol Energy S.A. * Chairman BoD 01.10.2020 – 30.04.2023
Batyrzhan
Tergeussizov
Rompetrol Rafinare SA
*
Chairman BoD 01.05.2023-31.12.2023
Rompetrol Rafinare SA * Membru of
Strategy
Committee
03.05.2023-30.04.2026
Rompetrol Downstream
SRL*
Member BoD 08.05.2023-09.09.2024
Rominserv SRL*
Chairman BoD 01.02.2023 – 01.02.2027
Rompetrol Energy SA*
Chairman BoD 01.03.2023 – 31.01.2026
Rompetrol Georgia* Member BoD 11.05.2023 - indefinite
Olga Turcanu KMG Rompetrol SRL* Financial
Manager
07.07.2019 - indefinite
Vasile Gabriel
Manole
Rominserv SRL* Financial
Manager
01.07.2019 – indefinite
Rompetrol Renewable SRL* Financial
Manager
01.02.2023-28.10.2026
Oilfield Exploration Business
Solutions (former Rompetrol
SA)*
Financial
Manager
01.06.2013 - indefinite
Fondul de Investitii in
Energie Kazah-Roman SA
Member
Commitee of
initiating
investments
17.01.2023 – 17.01.2027
* Company member of KMG International Group
ROMPETROL WELL SERVICES S.A.
ANNUAL REPORT OF THE BOARD OF DIRECTORS for the 2023 financial year
Page 25 of 34
Advisory Committees
In its activity, the Board of Directors is supported by an Advisory Committee, namely the Audit
Committee, which task is to carry out analyzes and to develop recommendations for the Board
of Directors, in specific areas, having the obligation to periodically submit activity reports to the
members to the Board of Directors.
The Audit Advisory Committee composition was approved by Decision no. 2 of the Board of
Directors from May 2, 2023.
The general meeting of shareholders dated 27.04.2022 approved the appointment of Dan
Alexandru Iancu, Financial Auditor registered with the chamber of financial auditors in Romania,
as an independent member of the Audit Committee, for a mandate equal to that of the Board of
Directors.
The detailed presentation of the duties and responsibilities of the Advisory Committee can be
found in the Organization and Operation Regulation approved by the Board of Directors,
regulation published on the Company's website rompetrolwellservices.kmginternational.com,
section "Investor Relations - Corporate Governance - Corporate Governance Documents".
The Audit Committee fulfills the legal duties provided in art. 65 of Law no. 162/2017 which mainly
consist in monitoring the process of financial reporting, internal audit, risk management within the
Company and ensuring compliance, as well as in the supervision of the statutory audit activity of
the annual financial statements and in the management of the relationship with the external
auditor.
During 2023 the Audit Committee had the following composition:
Dan Alexandru Iancu - Chairman during 01.01.2023-31.12.2023
Yedil Utekov - Member during 01.01.2023 - 30.04.2023
Batyrzhan Tergeussizov - Member during 01.05.2023 - 31.12.2023
Olga Turcanu - Member during 01.01.2023 – 31.12.2023
Information on the meetings of the Audit Committee during 2023
In 2023, there were 7 meetings of the Audit Committee and 7 decisions were adopted, the actual
participation in these meetings being as follows: Dan Alexandru Iancu - 7 meetings, Olga Turcanu
- 6 meetings, Yedil Utekov - 1 meeting and Batyrzhan Tergeussizov – 4 meetings.
6.2. Executive Management
The management prerogatives of the Company are delegated by the shareholders through the
Articles of Associations to the General Manager and the Financial Manager.
In 2023, the Executive Management of the Company was carried out by the following
Managers:
• Stefan Georgian FLOREA – General Manager during 01.01.2023 - 31.12.2023;
• Luiza Roxana MOISE - Financial Manager during 01.01.2023 – 31.12.2023.
ROMPETROL WELL SERVICES S.A.
ANNUAL REPORT OF THE BOARD OF DIRECTORS for the 2023 financial year
Page 26 of 34
The term of office for the General Manager and the Financial Manager ends on January 30,
2026.
6.3. Shareholders’ liabilities
ROMPETROL WELL SERVICES S.A. ensures a fair treatment of all shareholders, including
minority and foreign shareholders, in accordance with the legal provisions and the Articles of
Association of the Company.
The company makes every effort to facilitate the participation of shareholders in the work of
general meetings of shareholders (GMS). ROMPETROL WELL SERVICES shareholders have
the opportunity to participate in the GMS directly, through a representative on the basis of a
special power of attorney, or they can vote by mail (by sending the voting form by mail by any
form of courier or by e-mail with an extended electronic signature incorporated according to Law
no. 455/2001 on electronic signature).
According to article 11 of the Articles of Association, in conjunction with the applicable legal
provisions, the Ordinary General Meeting meets at least once a year, within the mandatory term
provided by law, and has the following main duties:
a) to discuss, approve or modify the annual financial statements, based on the reports
presented by the board of directors and the financial auditor, and to fix the dividend;
b) to elect and revoke the Company's administrators;
c) appoint and fix the minimum duration of the financial audit contract, as well as revoke the
financial auditor;
d) to establish for each year in progress the remuneration due to Administrators;
e) to express the opinion on the management activity of the Administrators;
f) to analyze the activity of the Board of Directors and to decide on the prosecution of the
Administrators for the damages caused to the Company, also designating the person entrusted
to carry it out;
g) to establish the income and expenditure budget and, if necessary, the activity program for
the next financial year;
h) to decide on the pledging, renting or liquidation of one or more units of the Company;
i) to approve the maximum limits of the remuneration of persons occupying/exercising
management positions according to the provisions of the law;
The Extraordinary General Meeting has the following duties:
a) changing the legal form of the Company;
b) moving the headquarters of the Company;
c) changing the object of activity of the Company;
d) the establishment or dissolution of secondary offices: branches, agencies, representative
offices or other such units without legal personality, if the Articles of Association does not provide
otherwise;
e) extending the duration of the Company;
f) increasing the social capital;
g) reducing the social capital or reuniting it by issuing new shares;
h) merger with other companies or division of the Company;
i) early dissolution of the Company;
j) conversion of shares from one category to another;
k) conversion of one category of bonds into another category or into shares;
l) issue of bonds;
m) approval of the adoption/conclusion on behalf of the Company of legal documents whose
object has a value greater than USD 10,000,000;
ROMPETROL WELL SERVICES S.A.
ANNUAL REPORT OF THE BOARD OF DIRECTORS for the 2023 financial year
Page 27 of 34
n) any other amendment to the Articles of Association or any other decision for which the
approval of the Extraordinary General Meeting is required.
The Extraordinary General Meeting delegates to the Board of Directors the fulfillment of the
powers provided for in letters b) and c) of the above paragraph.
The Extraordinary General Meeting can delegate to the Board of Directors the increase of the
share capital in accordance with the provisions of Law no. 24/2017.
Conducting the General Meeting of Shareholders
The General Meeting of Shareholders is convened by the Administrators whenever necessary,
by publishing an announcement in the Official Gazette of Romania, Part IV, and in one of the local
or national newspapers of wide circulation in the locality where it is located company
headquarters. The summons will include: the place, date and time of the meeting, the agenda
with the explicit mention of all the issues that will be the subject of the meeting's debates, a clear
and precise description of the procedures that must be followed by the shareholders in order to
be able to participate and vote in the general meeting and any other mentions provided by the
legislation specific to the capital market.
When the agenda includes proposals for amending the constitutive act, the convocation will have
to include the full text of the proposals.
When the election of Administrators is included in the agenda, the summons will have to include
the mention that the list of the names, the place of residence and the professional qualifications
of the persons proposed for the position of administrator is available to the shareholders and can
be consulted and completed by them.
The General Meeting can be held at the Company's headquarters or in other places determined
by the Administrators by convener. The shareholders can be represented in the General Meeting
by persons who do not have the status of a shareholder of the Company.
The General Meeting is chaired by the Chairman of the Board of Directors or a person appointed
by him, who designates, from among the members of the general meeting or among the
company's shareholders, one to three Secretaries, plus a Technical Secretary from among the
employees. They will draw up the shareholders' attendance list, verifying the following:
- the identity documents of the persons who present themselves at the General Meeting as
shareholders or their proxies;
- special/general power of attorney presented by shareholders' proxies;
- voting forms by mail.
The Secretary of the meeting also verifies the fulfillment of the legal conditions regarding the
presence of the quorum of the shareholders for the validity of the General Meetings.
If the ordinary or extraordinary general meeting cannot work due to the failure to fulfill the legal
conditions for attendance, the meeting that will meet at a second convocation can deliberate on
the items on the agenda of the first meeting, regardless of the quorum met, taking decisions with
the majority the votes cast.
After the presentation of the materials related to the agenda, the issues subject to the
shareholders' debate are put to a vote by the Chairman of the meeting.
The decisions of the general meeting are taken by open vote, except in cases where the general
meeting decides that the vote should be secret or the law requires secret voting.
Each share gives the right to one vote during the General Meetings. The person who represents
several shareholders on the basis of special powers of attorney expresses the votes of the
ROMPETROL WELL SERVICES S.A.
ANNUAL REPORT OF THE BOARD OF DIRECTORS for the 2023 financial year
Page 28 of 34
persons represented by totaling the number of votes "for", "against" and "abstentions" without
compensating them (e.g. "on item x on the agenda I represent " a" votes "for", "b" votes "against"
and "c" "abstentions"). The votes expressed in this way are validated or, as the case may be,
invalidated, based on the third copy of the special proxies, by the Secretary of the general
meeting. The votes registered in the special power of attorney are exercised only in the manner
desired by the shareholder.
The Secretary or Secretaries of the meeting, based on the free vote expressed by the
shareholders, will draw up the minutes of the general assembly meeting.
Decisions adopted by the general meetings of shareholders during 2023:
Ordinary General Meeting of ROMPETROL WELL SERVICES S.A. Shareholders of April 26,
2023 decided the following:
approves of the annual individual financial accounts having as closing day the day of
December 31,2022, prepared according to the International Financial Reporting Standards,
based on the Report of administrators and the Report of financial auditor of the Company.
approves of the allocation of the profits, determined according to the law, as well as the
distribution of dividends for 2022 financial year, respective 0.008805 lei gross value/share;
rejects of the change of the destination of the reserves constituted from the net profit of the
company obtained in the previous years (retained earnings) in the amount of RON
12,854,939.98955, and the distribution of this amount as dividends to shareholders,
respectively RON 0.0462091 gross / share;
rejects of the change of the destination amount of RON 25,831,972.40130 from other reserves
and the distribution of this amount as dividends to shareholders, respectively RON 0.0928570
gross / share;
approves the Income and Expediture Budget and the Investment plan for 2023;
approves the monthly gross remuneration of the members of the Board of Directors for the
financial year 2023, and the general limit of the additional remuneration of the Board of
Directors members to whom specific positions within the Board of Directors, as follows:
- a monthly gross remuneration of 2.564 USD for the Chairman of the Board of Directors;
- a monthly gross remuneration of 1.709 USD for the Members of the Board of Directors;
- a monthly net remuneration of 2.000 RON for the Chairman of the Audit Committee;
- a monthly net remuneration of 1.000 RON for the Members of the Audit Committee.
approves of the Remuneration Report for the Company's management structure, for 2022,
submitted to the consultative vote of the OGMS;
approves of the discharge of liability of the Company directors for their activity carried out
during the financial year 2022, based on the presented reports;
approves the termination of Mr. Yedil Utekov’s mandate as a member of the Board of Directors
following his request starting with the 01st of May 2023 ( last day in office being April 30,
2023);
approves the election of Mr. Batyrzhan Tergeussizov as a member of the Board of Directors
of the Company for a mandate starting with 01.05.2023 and will expire on 30.04.2026 (the
date of expiry of the mandate of the current members of the Board of Directors);
approves 22.06.2023 as Registration Date, according to art. 87 (1) of the Law no. 24/2017;
approves 21.06.2023 as Ex Date, according art. 2 para. 2 letter l from Regulation no. 5/2018;
approves 12.07.2023 as Payment Date, according art. 87 para. 2 of the Law no. 24/2017;
ROMPETROL WELL SERVICES S.A.
ANNUAL REPORT OF THE BOARD OF DIRECTORS for the 2023 financial year
Page 29 of 34
approves empowering Mr. Stefan Georgian Florea, General Manager and member of the
Board of Directors, to conclude and/or sign for on behalf of the Company and/or of its
shareholders the resolutions which are to be adopted within this OGMS and to carry out any
and all requisite proceedings for such adopted resolutions to be registered, rendered
enforceable, against third parties and published, the said proxy being entitled to subdelegate
third parties to act for such purpose.
Ordinary General Meeting of ROMPETROL WELL SERVICES S.A. Shareholders of July 20,
2023 decided the following:
rejects to hold the directors of the company liable for the damages in the estimated amount
of 3,769,106 lei caused by them to the company through the conclusion by Rompetrol Well
Services - S.A. of the contracts regarding the dedicated services of management assistance
and specialized technical consultancy and the designation of the shareholder KJK Balkan
Holding S.à.r.l. for the commencement of the legal action against de liable directors of the
company.
rejects the instruction to the management of Rompetrol Well Services - S.A. and to its
employees with responsibilities related to the company's control and accounting to calculate
the amounts paid by the company to KMG Rompetrol - S.R.L., as a result of the company's
conclusion of the contracts regarding the dedicated services of management assistance and
specialized technical consultancy, in order to calculate the damages caused to the company
by concluding and performing the mentioned contracts;
rejects the election of the directors of the company for a mandate of 2 years, which begins on
the date of election of the directors and which ends at the end of the term of the 2 years from
the date of their election, in order to replace the directors against whom the liability action for
damages is initiated.
rejects the remuneration of the newly elected administrators, which will have a value equal to
the value previously approved by the general meeting of shareholders of the company
approves the following dates:
(i) 09.08.2023 as Registration Date, according art. 87 para. (1) from Law no. 24/2017
(ii) 08.08.2023 as Ex Date, according art. 2 para. 2 letter. 1 from Regulation no. 5/2018.
approves empowering Mr. Stefan Georgian Florea, General Manager and member of the
Board of Directors, to conclude and/or sign for on behalf of the Company and/or of its
shareholders the resolutions which are to be adopted within this OGMS and to carry out any
and all requisite proceedings for such adopted resolutions to be registered, rendered
enforceable, against third parties and published, the said proxy being entitled to subdelegate
third parties to act for such purpose.
Shareholders' right to dividends
In the event that the General Meeting of Shareholders approves the distribution of dividends from
the net profit made by the Company, all shareholders registered in the shareholders' register on
the date of registration decided by the General Meeting, which also approves the amount of
dividends and the date on which they are paid, are entitled to receive dividends.
ROMPETROL WELL SERVICES S.A.
ANNUAL REPORT OF THE BOARD OF DIRECTORS for the 2023 financial year
Page 30 of 34
6.4. Transparency, communication, financial reporting
Rompetrol Well Services S.A. pays great importance to transparency in communication.
Considering that public trust is essential for the operation of the company, the Company makes
its communication policy an explicit and reciprocal commitment between the company and its
interlocutors.
The company intends to ensure a continuous and periodic reporting in an objective and integral
manner, which includes all important aspects of the company's activity, the financial situation, the
applied accounting policies, the recorded performances.
During 2023, reports and press releases related to the financial results, the convocation and
decision of the GMS, periodic reporting (monthly, quarterly, half-yearly, annual), etc., were
prepared. The information that was the subject of the mandatory reports - the current and periodic
reports were communicated to the market operator, the Bucharest Stock Exchange, the Financial
Supervisory Authority and were available by posting on the Company's website,
rompetrolwellservices.kmginternational.com in the Investor Relations Section.
In order to ensure equal access to information for investors, the reports and communications
addressed to market participants are posted on the Company's website after they have been
posted on the website of the market operator, the Bucharest Stock Exchange.
In accordance with the legal provisions, the financial and accounting statements and those
regarding the operations of Rompetrol Well Services S.A. are audited by Ernst & Young
Assurance Services SRL, independent financial auditor, appointed by the general meeting of
shareholders on 27.04.2022 for a period of 2 years.
Contact for Investor Relations
The annual, half-year and quarterly reports are available in electronic format, on the Company's
website, https://rompetrolwellservices.kmginternational.com/en/investor-relations/financial-
results-and-reports and in written form, upon request, at Company headquarters, in Ploiesti,
Clopoţei str. no. 2 bis, Prahova county. Requests can also be made electronically, by e-mail to:
investor.relations.rws@rompetrol.com.
Internal Control and Risk Management Systems in relation to financial reporting procedures
The Company has continuously adapted the internal control mechanism as a set of procedures
and work methods with the aim of preventing facts contrary to the economic interests of the
Company and the regulated framework for carrying out the activity, identifying deficiencies and
establishing the necessary measures to restore the framework regulated. It mainly concerns
financial relationships, phenomena and processes, with the aim of ensuring a good functioning of
the economic activity. Also, the aspects of opportunity, necessity and efficiency of the operations
carried out by the Company are analyzed. In terms of financial reporting procedures, both internal
and external reporting procedures are developed at the level of the Company. The procedures
are reviewed periodically by the functional departments of the Company. Financial reporting
systems are based on principles, rules and legal regulations in force.
6.5. Social responsibility
KMG International is an important investor in the Romanian economy and, at the same time, a
responsible corporate citizen. All companies within the Group have a holistic approach to
sustainability, which is why efforts to improve the quality of life of local communities cover all
aspects, from environmental protection or social involvement, to health and well-being, culture
and education, the development of professional and leadership.
ROMPETROL WELL SERVICES S.A.
ANNUAL REPORT OF THE BOARD OF DIRECTORS for the 2023 financial year
Page 31 of 34
Social responsibility and sustainability are basic principles that guide us in strategic development
and operational management. We are committed to becoming one of the most sustainable
operators on the national and regional energy market, being at the same time actively involved in
the life of the communities on which we operate.
Rompetrol Well Services S.A., a member company of the KMG International Group, considers
social responsibility and sustainability as fundamental components in the development of
business strategy and operations. The company's commitment to sustainability, environment,
economic progress and social equity is firmly integrated into its operations, with the aim of making
a concrete contribution to the United Nations Sustainable Development Goals (SDGs) included
in the 2030 Agenda for Sustainable Development of United Nations.
Sustainability
Our organization is dedicated to conducting operations in a manner that emphasizes
environmental stewardship and the preservation of natural resources such as air, soil, and
water. Our decision-making process is guided by a commitment to adhere to industry-leading
standards.
In terms of disclosing ESG performance, Rompetrol Well Services has shown its dedication to
transparency in environmental, social, and governance (ESG) matters by releasing
sustainability information. The disclosed indicators encompass a range of critical sustainability
areas, including greenhouse gas emissions, occupational health and safety, environmental
impact, waste management, water usage, energy consumption, fair labor practices, and
community engagement. To uphold data precision and reliability, the company adhered to the
Global Reporting Initiative (GRI) sustainability reporting standards. Stakeholders can view the
comprehensive set of sustainability performance data on the company's webpage:
https://rompetrolwellservices.kmginternational.com/en/sustainability/sustainability-approach
In 2023 RWS obtained a rating from Sustainalytics, as a Low Risk company, positioned in the
top 5% of all companies in the energy services industry.
Involvement in the communities
Over the years, Rompetrol Well Services S.A. has developed strong partnerships with
representatives from academia and civil society, aiming to strengthen the social responsibility
projects developed for the communities in which we operate. Through dialogue with various
stakeholders, including NGOs, local authorities and communities, government or actors from
academia and civil society, we believe we can identify the right opportunities for sustainable
development.
In 2023, Rompetrol Well Services, in partnership with the Blejoi Commune City Hall, set up a
learning space in the schoolyard, reading rooms, and donated books, textbooks, and chessboards
for study. Through the "Chess in School" project, chess lessons were organized both physically
and online, visits and open hours were held, chess competitions for children from the counties of
Constanța, Prahova, as well as nationally and internationally. The company supported the
development of a chess manual for the first, second, and third years of study, which were printed
and distributed to children both in urban and rural areas nationwide.
ROMPETROL WELL SERVICES S.A.
ANNUAL REPORT OF THE BOARD OF DIRECTORS for the 2023 financial year
Page 32 of 34
In the fall of 2023, over 400 people, including Rompetrol employees and their families, participated
in the tenth edition of the Rompetrol Run and Care event, which took place on Saturday,
September 23rd in IOR Park in Bucharest, to support the M.A.M.E. Association and their mission.
The approximately 3000 kilometers covered are converted into liters of fuel, which will be donated
by Rompetrol to support the M.A.M.E. Association, an organization that has been providing
support, counseling, and psycho-socio-medical recovery for sick children and those with limited
material resources and their families since 2009.
In partnership with the Humanitarian Organization "CONCORDIA," Rompetrol Well Services
continued to support the activities of children in foster care in Prahova County and young people
in social housing or enrolled in vocational training courses.
Education is an important pillar for our social responsibility strategy. We collaborated with
universities and high schools with a technical profile from all over the country (e.g. Petrol-Gaze
University in Ploiesti, Lazar Edeleanu Highschool), which supported us in our various educational
investment projects.
2023 marked the 23nd anniversary of our traditional career-ready internship program, where we
have been training future industry professionals for the past 22 years. Trainees enrolled in the
program were given introductory sessions through theoretical modules aimed at helping to better
understand the oil and gas industry, the fundamentals of an upstream activity and its economic
implications, followed by on-site training provided of mentors on the Rompetrol Well Services
platform. The trainees assigned to Rompetrol Well Services received, at the end of the two-month
program, two certifications: one as a graduate of the Rompetrol "Career Ready" program and one
as a graduate of the personal development program, carried out together with partners from the
Leaders Foundation.
We actively contribute to the development of the communities in which we operate by using local
suppliers, employing local labor and, at the same time, implementing relevant social responsibility
projects. Our engagement is based on consulting relevant stakeholders so that we can identify
projects with the greatest added value for our communities.
7. Annexes
a) the constitutive documents of the company, if they were modified in the reporting year;
Not applicable.
b) documents of resignation/dismissal, if there were such situations among members of the
management, executive management, censors;
On 20.03.2023, Mr. Yedil Utekov requested to take note of his resignation from the mandates of
President and member of the Board of Directors and member of the Audit Committee, starting
from 01.05.2023 (last day of mandate being 30.04. 2023).
c) the list of the commercial company's branches and the subsidiaries;
Rompetrol Well Services S.A. does not have branches nor subsidiaries.
ROMPETROL WELL SERVICES S.A.
ANNUAL REPORT OF THE BOARD OF DIRECTORS for the 2023 financial year
Page 33 of 34
d) list of affiliates of the company
1
Rompetrol Well Services S.A..is part of KMG International Group
2
. KMG International NV is 100%
owned by National Company "KazMunayGas" JSC.
The parent companies of Rompetrol Well Services S.A. (shareholders of National Company
“KazMunayGas” JSC) are the national company JSC Sovereign Investment Fund of Kazakhstan
"Samruk-Kazyna" (67.42%), the National Bank of the Republic of Kazakhstan (9.58%) and
Ministry of Finance of the Republic of Kazakhstan (20%) - being companies based in Kazakhstan,
wholly owned by the State of Kazakhstan and listed shareholders (3%).
The affiliated parties are indicated below:
1. Companies with the headquarter in Romania
- Oilfield Exploration Business Solutions S.A.
- Rompetrol Downstream S.R.L.
- Rompetrol Rafinare S.A.
- Rompetrol Logistics S.R.L.
- Rominserv S.R.L.
- Rom Oil S.A.
- Global Security Sistem S.A.
- Midia Green Energy S.A.
3
- Rompetrol Petrochemicals S.R.L.
- Rompetrol Quality Control S.R.L.
- Rompetrol Financial Group S.R.L.
- Rompetrol Gas S.R.L.
- Midia Marine Terminal S.R.L.
- KMG Rompetrol S.R.L.
- Byron Shipping S.R.L.
- Rompetrol Energy S.A.
- KMG ROMPETROL DEVELOPMENT S.R.L.
- Fondul de Investitii in Energie Kazah-Roman S.A.
- KMG Rompetrol Services Center SRL
4
- Rompetrol Renewables S.R.L.
5
2. Companies with the headquarters abroad
- KMG International N.V.
6
- Byron Shipping LTD
- Intreprinderea Mixtă “Rompetrol Moldova” S.A.
- Rompetrol Georgia LTD
- Rompetrol France SAS
- Dyneff SAS
1
At this point are listed all the companies within the KMG International Group
2
Named Rompetrol Group until March 2014
3
Named Uzina Termoelectrică Midia S.A. until December 2022
4
Previously named Rompetrol Exploration & Production S.R.L.
5
Named Rompetrol Drilling S.R.L. until 28.10.2022
6
Named The Rompetrol Group N.V. until March 2014
ROMPETROL WELL SERVICES S.A.
ANNUAL REPORT OF THE BOARD OF DIRECTORS for the 2023 financial year
Page 34 of 34
- TRG PETROL TICARET ANONIM ŞIRKETI
- Rompetrol Bulgaria JSC
- KazMunayGaz Trading A.G.
- DPPLN SAS (Depot Petrolier de Port-la-Nouvelle SAS)
- Dyneff Retail SAS
- DYNEFF ESPAGNE SL;
- DYNEFF GAS STATIONS NETWORK SL;
- DYNEFF Trading SL;
- EPPLN SAS;
- NATGAS France SAS;
- BIO ADVANCED ENERGY SAS;
- DP FOS SA;
- SPR SA;
- ANEO SAS;
- BOISSONNADE COMBUSTIBLES SAS;
- “Paul ORRIOLS” COMBUSTIBLES DE CERDAGNE SAS;
- ETS ROSSIGNOL SAS;
- PLANTIER SAS;
- ORCEYRE SAS;
- AUBAC SAS;
- TPDT SARL;
- ABC CARBURANTSALLO BEZIAT CARBURANTS SAS;
- GERAUD-TAMPIER SAS;
- DAVID RECOULES SAS;
- ALEGRI SAS.
- BENON JV
- Neel Fraisse SAS
- Travaux Forestiers Zaplotny SAS;
- Bois Energie des Territoires D’auvergne SAS;
- France Habitat ENR SAS;
- Global'ethic Delta
Note: there are also established 7 branches and representative offices and joint ventures of the
KMG International Group
Batyrzhan TERGEUSSIZOV
CHAIRMAN OF THE BOARD OF DIRECTORS
Georgian Stefan FLOREA
GENERAL MANAGER
Luiza Roxana MOISE
FINANCIAL MANAGER
ROMPETROL WELL SERVICES
StradaClopotei, nr. 2 bis,
Ploiesti, JudetulPrahova,
ROMANIA
phone:
+(40) 244 54 43 21
+(40) 244 54 42 65
email: office.rws@rompetrol.com
www.petros.ro
www.rompetrol.com
1
Appendix no.1
Status of compliance of the BSE Corporate Governance Code
as of December 31
th
, 2023
Corporate Governance Code
Compliance
Not
compliant or
partial
compliant
Reason for the non-compliance
A.1. All companies should have internal regulation of the Board which
includes terms of reference/responsibilities for Board and key management
functions of the company, applying, among others, the General Principles of
Section A.
YES
A.2. Provisions for the management of conflict of interest should be included
in Board regulation. In any event, members of the Board should notify the
Board of any conflicts of interest which have arisen or may arise, and should
refrain from taking part in the discussion (including by not being present
where this does not render the meeting non-quorate) and from voting on the
adoption of a resolution on the issue which gives rise to such conflict of
interest.
YES
A.3. The Board of Directors or the Supervisory Board should have at least
five members.
YES
A.4. The majority of the members of the Board of Directors should be non-
executive. At least one member of the Board of Directors or Supervisory
Board should be independent, in the case of Standard Tier companies. Not
less than two non-executive members of the Board of Directors or
Supervisory Board should be independent, in the case of Premium Tier
Companies. Each member of the Board of Directors or Supervisory Board,
as the case may be, should submit a declaration that he/she is independent at
the moment of his/her nomination for election or re-election as well as when
any change in his/her status arises, by demonstrating the ground on which
he/she is considered independent in character and judgement in practice.
Partial
compliance
The majority of the members of the Board are non-
executive members. Currently there are no
independent directors.
A.5. A Board member’s other relatively permanent professional
commitments and engagements, including executive and nonexecutive
Board positions in companies and not
-
for
-
profit institutions, should be
YES
ROMPETROL WELL SERVICES
StradaClopotei, nr. 2 bis,
Ploiesti, JudetulPrahova,
ROMANIA
phone:
+(40) 244 54 43 21
+(40) 244 54 42 65
email: office.rws@rompetrol.com
www.petros.ro
www.rompetrol.com
2
disclosed to shareholders and to potential investors before appointment and
during his/her mandate.
A.6. Any member of the Board should submit to the Board, information on
any relationship with a shareholder who holds directly or indirectly, shares
representing more than 5% of all voting rights. This obligation concerns any
kind of relationship which may affect the position of the member on issues
decided by the Board.
YES
A.7. The company should appoint a Board secretary responsible for
supporting the work of the Board.
YES
A.8. The corporate governance statement should inform on whether an
evaluation of the Board has taken place under the leadership of the chairman
or the nomination committee and, if it has, summarize key action points and
changes resulting from it. The company should have a policy/guidance
regarding the evaluation of the Board containing the purpose, criteria and
frequency of the evaluation process.
NOT The company is in process of developing a policy /
guidance concerning the Board’s evaluation,
including the purpose, criteria and frequency of the
evaluation process.
A.9. The corporate governance statement should contain information on the
number of meetings of the Board and the committees during the past year,
attendance by directors (in person and in absentia) and a report of the Board
and committees on their activities.
YES
A.10. The corporate governance statement should contain information on the
precise number of the independent members of the Board of Directors or of
the Supervisory Board
YES
A.11. The Board of Premium Tier companies should set up a nomination
committee formed of nonexecutives, which will lead the process for Board
appointments and make recommendations to the Board. The majority of the
members of the nomination committee should
be
independent.
N/A The company is included in the Standard Category.
B.1. The Board should set up an audit committee, and at least one member
should be an independent non-executive. The majority of members,
including the chairman, should have proven an adequate qualification
relevant to the functions and responsibilities of the committee. At least one
member of the audit committee should have proven and adequate auditing or
accounting experience. In the case of Premium Tier companies, the audit
committee should be composed of at least three members and the majority of
the audit committee should be independent.
YES
B.2. The audit committee should be chaired by an independent nonexecutive
member.
YES
ROMPETROL WELL SERVICES
StradaClopotei, nr. 2 bis,
Ploiesti, JudetulPrahova,
ROMANIA
phone:
+(40) 244 54 43 21
+(40) 244 54 42 65
email: office.rws@rompetrol.com
www.petros.ro
www.rompetrol.com
3
B.3. Among its responsibilities, the audit committee should undertake an
annual assessment of the system of internal control.
Partial
compliance
See comments presented at B.6.
B.4. The assessment should consider the effectiveness and scope of the
internal audit function, the adequacy of risk management and internal control
reports to the audit committee of the Board, management’s responsiveness
and effectiveness in dealing with identified internal control failings or
weaknesses and their submission of relevant reports to the Board.
Partial
compliance
See comments presented at B.6.
B.5. The audit committee should review conflicts of interests in transactions
of the company and its subsidiaries with related parties.
Partial
compliance
The Regulation of the Audit Committee approved
contains provisions in relation to this obligation.
The Regulation of the Audit Committee will be
revised to include provisions on the evaluation of
conflict of interest in connection with the
Company’s transactions with the affiliated parties.
B.6. The audit committee should evaluate the efficiency of the internal
control system and risk management system.
Partial
compliance
The responsibility to monitor the efficiency of
internal control systems, internal audit and risk
management of the company is stipulated in the
Regulation of the Audit Committee. Audit
Committee evaluates on a continuous bases
components of the internal c
ontrol system.
B.7.
The audit committee should monitor the application of statutory and
generally accepted standards of internal auditing. The audit committee
should receive and evaluate the reports of the internal audit team.
YES
B.8. Whenever the Code mentions reviews or analysis to be exercised by the
Audit Committee, these should be followed by periodical (at least annual),
or ad
-
hoc reports to be submitted to the Board afterwards.
YES
B.9. No shareholder may be given undue preference over other shareholders
with regard to transactions and agreements made by the company with
shareholders and their related parties.
YES
B.10. The Board should adopt a policy ensuring that any transaction of the
company with any of the companies with which it has close relations, that is
equal to or more than 5% of the net assets of the company (as stated in the
latest financial report), should be approved by the Board following an
obligatory opinion of the Board’s audit committee, and fairly disclosed to the
shareholders and potential investors, to the extent that such transactions fall
under the category of events subject to disclosure requirements.
Partial
compliance
According to the Articles of Incorporation art. 15
alin. 1 letter k, all transactions that respect the
mentioned criteria are approved by the Board and
are included in current reports according art. 108
Law 24/2017 (R)
ROMPETROL WELL SERVICES
StradaClopotei, nr. 2 bis,
Ploiesti, JudetulPrahova,
ROMANIA
phone:
+(40) 244 54 43 21
+(40) 244 54 42 65
email: office.rws@rompetrol.com
www.petros.ro
www.rompetrol.com
4
B.11. The internal audits should be carried out by a separate structural
division (internal audit department) within the company or by retaining an
independent third
-
party
entity.
YES
B.12. To ensure the fulfillment of the core functions of the internal audit
department, it should report functionally to the Board via the audit
committee. For administrative purposes and in the scope related to the
obligations of the management to monitor and mitigate risks, it should report
directly to the chief executive officer.
YES
C.1. The company should publish a remuneration policy on its website and
include in its annual report a remuneration statement on the implementation
of this policy during the annual period under review. Any essential change
of the remuneration policy should be published on the corporate website in a
timely fashion.
YES
D.1. The company should have an Investor Relations function - indicated, by
person (s) responsible or an organizational unit, to the general public. In
addition to information required by legal provisions, the company should
include on its corporate website a dedicated Investor Relations section, both
in Romanian and English, with all relevant information of interest for
investors, including:
YES
D.1.1. Principal corporate regulations: the articles of association,
general shareholders’ meeting procedures;
YES
D.1.2. Professional CVs of the members of its governing bodies, a
Board member’s other professional commitments, including
executive and nonexecutive Board positions in companies and not-
for-profit institutions;
YES
D.1.3. Current reports and periodic reports (quarterly, semi-annual
and annual reports) – at least as provided at item D.8 – including
current reports with detailed information related to non-compliance
with the present Code
YES
D.1.4. Information related to general meetings of shareholders: the
agenda and supporting materials; the procedure approved for the
election of Board members; the rationale for the proposal of
candidates for the election to the Board, together with their
professional CVs; shareholders’ questions related to the agenda and
the company’s answers, including the decisions taken
;
YES
ROMPETROL WELL SERVICES
StradaClopotei, nr. 2 bis,
Ploiesti, JudetulPrahova,
ROMANIA
phone:
+(40) 244 54 43 21
+(40) 244 54 42 65
email: office.rws@rompetrol.com
www.petros.ro
www.rompetrol.com
5
D.1.5. Information on corporate events, such as payment of
dividends and other distributions to shareholders, or other events
leading to the acquisition or limitation of rights of a shareholder,
including the deadlines and principles applied to such operations.
Such information should be published within a timeframe that
enables investors to make investment decisions
;
YES
D.1.6. The name and contact data of a person who should be able to
provide knowledgeable information on request;
YES
D.1.7. Corporate presentations (e.g. IR presentations, quarterly
results presentations, etc.), financial statements (quarterly,
semiannual, annual), auditor reports and annual reports.
YES
D.2. A company should have an annual cash distribution or dividend policy,
proposed by the CEO or the Management Board and adopted by the Board,
as a set of directions the company intends to follow regarding the distribution
of net profit. The annual cash distribution or dividend policy principles
should be published on the corporate website
.
YES
D.3. A company should have adopted a policy with respect to forecasts,
whether they are distributed or not. Forecasts means the quantified
conclusions of studies aimed at determining the total impact of a list of
factors related to a future period (so called assumptions): by nature such a
task is based upon a high level of uncertainty, with results sometimes
significantly differing from forecasts initially presented. The policy should
provide for the frequency, period envisaged, and content of forecasts.
Forecasts, if published, may only be part of annual, semi-annual or quarterly
reports.
The forecast policy should be published on the corporate website
.
NOT The requirement will be implemented.
D.4. The rules of general meetings of shareholders should not restrict the
participation of shareholders in general meetings and the exercising of their
rights. Amendments of the rules should take effect, at the earliest, as of the
next general meeting of shareholders.
YES
D.5. The external auditors should attend the shareholders’ meetings when
their reports are presented there.
YES
D.6. The Board should present to the annual general meeting of shareholders
a brief assessment of the internal controls and significant risk management
system, as well as opinions on issues subject to resolution at the general
meeting.
YES
ROMPETROL WELL SERVICES
StradaClopotei, nr. 2 bis,
Ploiesti, JudetulPrahova,
ROMANIA
phone:
+(40) 244 54 43 21
+(40) 244 54 42 65
email: office.rws@rompetrol.com
www.petros.ro
www.rompetrol.com
6
D.7. Any professional, consultant, expert or financial analyst may participate
in the shareholders’ meeting upon prior invitation from the Chairman of the
Board. Accredited journalists may also participate in the general meeting of
shareholders, unless the Cha
irman of the Board decides otherwise.
YES
D.8. The quarterly and semi-annual financial reports should include
information in both Romanian and English regarding the key drivers
influencing the change in sales, operating profit, net profit and other relevant
financial indicators, both on quarter
-
on
-
qua
rter and year
-
on
-
year
terms.
YES
D.9. A company should organize at least two meetings /conference calls with
analysts and investors each year. The information presented on these
occasions should be published in the IR section of the company website at
the time of the meetings/conference calls.
Partial
Compliance
The regular reports prepared by the company to
disclose its financial items are complete, highly
transparent and relevant in terms of information
necessary for making investment decisions. The
organization of such events will be established
depending on the requests from investors.
D.10. If a company supports various forms of artistic and cultural expression,
sport activities, educational or scientific activities, and considers the
resulting impact on the innovativeness and competitiveness of the company
part of its business mission and development strategy, it should publish the
policy guiding its activity in this area.
YES
CHAIRMAN OF THE BOARD OF DIRECTORS,
Mr. Batyrzhan Tergeussizov
GENERAL MANAGER,
Mr. Georgian Stefan Florea
FINANCE MANAGER,
Mrs. Luiza Roxana Moise
S.C. Rompetrol Well Services S.A.
# 2 bis Clopotei Street, 100189, Ploiesti, Prahova County, ROMANIA
phone: + (40) 244 544321; fax.: + (40) 244 522913; email:
office.rws@rompetrol.com; www.rompetrol.com
Company with Management System Certified by DNV GL Trade Registry No:J 29/110/1991 IBAN RO34BACX0000000030551310
ISO 9001;2015 ISO 14001;2015 OHSAS 45001;2018 Fiscal Identification No;RO1346607 UNICREDIT BANK - PLOIESTI
AFFIDAVIT
The undersigned, Batyrzhan Tergeussizov, in capacity of Chairman of the Board, Georgian
Stefan Florea, in capacity of General Manager
and Roxana Luiza Moise in capacity of Finance
Manager, in consideration of the provision of art. 65 of Law no.24/2017 regarding issuers of
financial instruments an market operations and of the provision republished of Regulation no.
5/2018 regarding on issuers of financial instruments and market operations,hereby declare that, to
the best of our knowledge, the annual financial statements on December 31, 2023 prepared in
compliance with the applicable accounting standards offer an accurate and true image of the assets,
liabilities, financial standing, profit and loss account of the Company and, the Report of the Board
of Directors comprise a correct analysis of the Company
’
s development and performance, as well
as a description of the main risks and uncertainties specific to the performed activity.
Chairman of the Board of Directors,
Batyrzhan Tergeussizov
General Manager
Georgian Stefan Florea
Finance Manager,
Roxana Luiza Moise
Ernst & Young Assurance Services SRL
Bucharest Tower Center Building, 21
st
Floor
15-17 Ion Mihalache Blvd., District 1
011171 Bucharest, Romania
Tel: +40 21 402 4000
Fax: +40 21 310 7193
office@ro.ey.com
ey.com
INDEPENDENT AUDITOR’S REPORT
To the Shareholders of Rompetrol Well Services S.A.
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of Rompetrol Well Services S.A. (the Company) with
official head office in Ploiesti, Clopotei Street, No. 2 bis, identified by sole fiscal registration
number RO1346607, which comprise the statement of financial position as at December 31,
2023, and the income statement, statement of comprehensive income, statement of changes in
equity and statement of cash flows for the year then ended, and notes to the financial statements,
including a summary of material accounting policy.
In our opinion, the accompanying financial statements give a true and fair view of the financial
position of the Company as at December 31, 2023, and of its financial performance and its cash
flows for the year then ended in accordance with the Order of the Minister of Public Finance
no. 2844/2016, approving the accounting regulations compliant with the International Financial
Reporting Standards, with all subsequent modifications and clarifications.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs), Regulation
(EU) No. 537/2014 of the European Parliament and of the Council of 16 April 2014 (“Regulation
(EU) No. 537/2014“) and Law 162/2017 („Law 162/2017”). Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Statements section of our report. We are independent of the Company in accordance with the
International Code of Ethics for Professional Accountants (including International Independence
Standards) as issued by the International Ethics Standards Board for Accountants (IESBA Code)
together with the ethical requirements that are relevant to the audit of the financial statements in
Romania, including Regulation (EU) No. 537/2014 and Law 162/2017 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
Key audit matters are those matters that, in our professional judgment, were of most significance
in our audit of the financial statements of the current period. These matters were addressed in the
context of our audit of the financial statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters.
2
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
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 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 financial statements.
Description of each key audit matter and our procedures performed to address the matter
Key Audit Matter
How our audit addressed the key audit matter
Fair value measurement of equity instruments designated at fair value through other
comprehensive income (FVOCI)
Disclosures on Fair value measurement for investment in equity instruments are included in Note
1.2 h), 1.3 (iii) and Note 11 respectively.
Investments in equity instruments are
presented under financial assets having a fair
value of RON 8,966 thousand as at 31
December 2023.
We considered this matter to be significant in
our audit due to the magnitude of the amounts
involved, the high level of subjectivity in respect
of assumptions underlying the fair value
assessment and the significant judgements and
estimates that need to be made by
management over the determination of the fair
value of financial assets not quoted in an active
market.
The Company has participations below 10% in
Rompetrol Rafinare S.A. (a listed entity) and
Rompetrol Logistics S.R.L. (a non-listed entity),
as presented in Note 11. Both investments are
measured at fair value through other
comprehensive income.
The fair value of investment held in Rompetrol
Rafinare S.A. was measured based on quoted
prices in active markets.
The investment held in Rompetrol Logistic
S.R.L. is measured at fair value of RON 7,120
thousand as at 31 December 2023,
representing Level 3 hierarchy for which quoted
prices in an active market are unavailable and
whose value is determined by internal valuation
techniques that generally use non-observable
data. Applied internal valuation techniques can
be subjective in nature, involving various
complex assumptions and estimates.
We audited management’s assessment of the
fair value of financial assets not quoted in an
active market, having a fair value of RON 7,120
thousand as of 31 December 2023. Specifically,
our work included, but was not limited to the
following procedures:
• We analysed the key assumptions used for
the future discounted cash flows and in the
valuation report prepared by an external
expert, by analysing their consistency with
the industry - specific economic
environment, relevant available market
information and the business plans used;
• We evaluated if the valuation assessment
included all factors that influence the fair
value of investment at the end of the
reporting period and its compliance with
International Financial Reporting
Standards requirements;
• We involved our valuation specialists to
assist us in evaluating specific assumptions
applied (i.e. the discount rate,
marketability discount, minority discount)
and modelling techniques used by the
Company for the valuation assessment of
the financial asset;
• We checked the mathematical accuracy of
management’s exercise for determining
the fair value.
3
As of 31 December 2023, the Company used
in the fair value measurement information
from discounted cash-flows for Rompetrol
Logistic S.R.L. and information from a
valuation report prepared by an external
expert for Rompetrol Logistic S.R.L. ownership
in Rompetrol Gas S.R.L., which was further
adjusted to reflect the specific situation of the
company as minority shareholder. The
measurement involved significant judgement
and estimates.
For these reasons, we have considered this as a
key audit matter.
Furthermore, we assessed the adequacy of the
Company’s disclosures about fair value
measurement of equity investments.
Key Audit Matter
How our audit addressed the key audit matter
Assessment for impairment of property, plant and equipment and right of use assets
Disclosures on property, plant and equipment and right of use assets, including impairment, are
presented in Note 1.2 e) and i), 1.3 (ii), Note 8 and Note 18 respectively.
Property, plant and equipment of RON 21,371
thousand (out of which advances and tangible
assets in progress of RON 404 thousand) and
right of use assets of RON 11,746 thousand are
significant to our audit because of the
magnitude of the balance sheet position as at
31 December 2023. Also, we considered this
matter to be one of most significance in the
audit due the high level of subjectivity in
respect of assumptions underlying impairment
analysis and significant judgements and
estimates made by the management.
In the current year, local industry of oilfield
services has recorded a slight resumption and a
higher level of secondary type of operations
(e.g. cementing for abandoned wells) in the
upstream segment was performed. This aspect
had a significant positive effect on the
Company’s results recorded. However, the
upstream segment continued to record low
investment and work levels from customers in
the area of new well’s projects, taking into
account the overall evolution of oil and gas
industry over the past few years, the volatility
of the crude oil price, current macroeconomic
and geopolitical context and market
environment (which have an impact on
evolution of interest rates, payroll costs,
general increase of prices etc.) that have led to
ongoing uncertainties in the market. These
aspects might impact the Company’s
We audited management’s assessment of the
triggers for potential impairment as well as the
related impairment test performed.
Specifically, our work included, but was not
limited to the following procedures:
• We analyzed the key assumptions used for
the future cash flows, by analysing their
consistency with the industry-specific
economic environment, relevant available
market information and the business plans
of the Company, as well as the sensitivity
analysis of the recoverable amounts to
changes in the significant assumptions;
• We evaluated if the impairment
assessment included all assets for which
impairment indicators existed at the end of
the reporting period;
• We assessed the historical accuracy of
management’s budgets and forecasts by
comparing them to actual performance
and to prior years;
• We involved our valuation specialists to
assist us in evaluating the discount rate
applied and methodologies / models used
by the Company for the impairment
assessment of property, plant and
equipment and rights of use assets;
• We checked the mathematical accuracy of
management’s cash flow model for
determining the value-in-use and its
4
performance and therefore impairment
indicators were identified.
Under the International Financial Reporting
Standards, an entity is required to assess
whether triggers for potential impairment or
reversal of impairment previously recorded
exist. The assessment of whether there is an
indication that an asset may be impaired, or an
impairment may be reversed requires
significant judgement, as it involves
consideration of various sources of
information, including factors related to the
economic environment and industry specific
factors.
As at 31 December 2023, the management has
performed a triggering events analysis followed
by an impairment assessment in respect of the
Company’s property, plant and equipment and
rights of use assets. It resulted that no
impairment adjustment is required in addition
to the impairment of RON 509 thousand
already recognised in prior years.
The impairment assessment process is complex,
requires significant management judgments
and is based on assumptions that are affected
by expected future market conditions.
For this reason, we have considered this as a
key audit matter.
conformity with the requirements of the
International Financial Reporting
Standards.
Furthermore, we assessed the adequacy of the
Company’s disclosures about Impairment
testing of property, plant and equipment and
rights of use assets.
Other information
The other information comprises the Administrators’ Report as well as Remuneration Report, but
does not include the financial statements and our auditors’ report thereon. Management is
responsible for the other information.
Our audit opinion on the 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 financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent
with the 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.
5
Responsibilities of Management and Those Charged with Governance for the Financial
Statements
Management is responsible for the preparation and fair presentation of the financial statements in
accordance with the Order of the Minister of Public Finance no. 2844/2016 approving the
accounting regulations compliant with the International Financial Reporting Standards, with all
subsequent modifications and clarifications, and for such internal control as management
determines is necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, management 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 management either intends to liquidate
the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company's financial reporting
process.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an
auditors’ 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 financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the 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 our 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 Company's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by management.
6
• Conclude on the appropriateness of management's 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 Company's ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditors’ report to the related disclosures in the 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 auditors’ 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 financial statements, including
the disclosures, and whether the financial statements represent the underlying transactions
and events in a manner that achieves fair presentation.
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 financial statements of the current
period and are therefore the key audit matters.
Report on Other Legal and Regulatory Requirements
Reporting on Information Other than the Financial Statements and Our Auditors’ Report
Thereon
In addition to our reporting responsibilities according to ISAs described in section “Other
information”, with respect to the Administrators’ Report and Remuneration Report, we have read
these reports and report that:
a) in the Administrators’ Report we have not identified information which is not consistent, in all
material respects, with the information presented in the accompanying financial statements
as at December 31, 2023;
b) the Administrators’ Report identified above includes, in all material respects, the required
information according to the provisions of the Ministry of Public Finance Order
no. 2844/2016 approving the accounting regulations compliant with the International
Financial Reporting Standards, with all subsequent modifications and clarifications, Annex 1
articles 15 – 19;
c) based on our knowledge and understanding concerning the entity and its environment gained
during our audit of the financial statements as at December 31, 2023, we have not identified
information included in the Administrators’ Report that contains a material misstatement of
fact.
d) the Remuneration Report identified above includes, in all material respects, the required
information according to the provisions of article 107 (1) and (2) from Law 24/2017 on
issuers of financial instruments and market operations.
7
Other requirements on content of auditor’s report in compliance with Regulation (EU)
No. 537/2014 of the European Parliament and of the Council
Appointment and Approval of Auditor
We were appointed as auditors of the Company by the General Meeting of Shareholders on 27
April 2023 to audit the financial statements for the financial year end December 31, 2023. Total
uninterrupted engagement period, including previous renewals (extension of the period for which
we were originally appointed) and reappointments for the statutory auditor, has lasted for 16
years, covering the financial periods end December 31, 2008 till December 31, 2023.
Consistency with Additional Report to the Audit Committee
Our audit opinion on the financial statements expressed herein is consistent with the additional
report to the Audit Committee of the Company, which we issued on 20 March 2024.
Provision of Non-audit Services
No prohibited non-audit services referred to in Article 5(1) of Regulation (EU) No. 537/2014 of
the European Parliament and of the Council were provided by us to the Company and we remain
independent from the Company in conducting the audit.
In addition to statutory audit services and services disclosed in the annual report and in the
financial statements, no other services which were provided by us to the Company, and its
controlled undertakings.
Report on the compliance of the electronic format of the financial statements, included in the
annual separate report with the requirements of the ESEF Regulation
We have performed a reasonable assurance engagement on the compliance of the financial
statements presented in XHTML format of Rompetrol Well Services S.A. (the Company) for the
year ended 31 December 2023, with the requirements of the Commission Delegated Regulation
(EU) 2019 /815 of 17 December 2018 supplementing Directive 2004/109/EC of the European
Parliament and of the Council with regard to regulatory technical standards on the specification of
a single electronic reporting format (the “ESEF Regulation).
These procedures refer to testing the format and whether the electronic format of the financial
statements (XHTML) corresponds to the audited financial statements and expressing an opinion
on the compliance of the electronic format of the financial statements of the Company for the
year ended 31 December 2023 with the requirements of the ESEF Regulation. In accordance with
these requirements, the electronic format of the financial statements, included in the annual
report should be presented in XHTML format.
8
Responsibilities of the Management and Those Charged with Governance
The Management of the Company is responsible for the compliance with the requirements of the
ESEF Regulation in the preparation of the electronic format of the financial statements in XHTML
format and for ensuring consistency between the electronic format of the financial statements
(XHTML) and the audited financial statements.
The responsibility of the Management also includes the design, implementation and maintenance
of such internal control as determined is necessary to enable the preparation of the financial
statements in ESEF format that are free from any material non-compliance with the ESEF
Regulation.
Those charged with governance are responsible for overseeing the financial reporting process for
the preparation of financial statements, including the application of the ESEF Regulation.
Auditor’s Responsibility
Our responsibility is to express an opinion providing reasonable assurance on the compliance of
the electronic format of the financial statements with the requirements of the ESEF Regulation.
We have performed a reasonable assurance engagement in accordance with ISAE 3000 (revised)
Assurance Engagements Other Than Audits or Reviews of Historical Financial Information (ISAE
3000 (revised)). This standard requires that we comply with ethical requirements, plan and
perform our engagement to obtain reasonable assurance about whether the electronic format of
the financial statements of the Company is prepared, in all material respects, in accordance ESEF
regulation. The nature, timing, and extent of the procedures selected depend on our judgment,
including an assessment of the risk of material non-compliance with the requirements of the ESEF
Regulation, whether due to fraud or error.
Reasonable assurance is a high level of assurance, but it is not guaranteed that the assurance
engagement conducted in accordance with ISAE 3000 (revised) will always detect material non-
compliance with the requirements when it exists.
Our Independence and Quality Management
We apply International Standard on Quality Management 1, Quality Management for Firms that
Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services
Engagements, which requires that we design, implement and operate a system of quality
management, including policies or procedures regarding compliance with ethical requirements,
professional standards and applicable legal and regulatory requirements.
We have maintained our independence and confirm that we have met the ethical and
independence requirements of the International Ethics Standards Board for Accountants’
International Code of Ethics for Professional Accountants (including International Independence
Standards) (IESBA Code).
9
Summary of procedures performed
The objective of the procedures that we have planned and performed was to obtain reasonable
assurance that the electronic format of the financial statements is prepared, in all material
respects, in accordance with the requirements of ESEF Regulation. When conducting our
assessment of the compliance with the requirements of the ESEF Regulation of the electronic
reporting format (XHTML) of the financial statements of the Company, we have maintained
professional skepticism and applied professional judgement. We have also:
• obtained an understanding of the internal control and the processes related to the
application of the ESEF Regulation in respect of the financial statements of the Company,
including the preparation of the financial statements of the Company in XHTML format
• tested the validity of the applied XHTML format
• checked whether the electronic format of the financial statements (XHTML) corresponds
to the audited financial statements
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Opinion on the compliance of the electronic format of the financial statements with the
requirements of the ESEF Regulation
Based on the procedures performed, our opinion is that the electronic format of the financial
statements is prepared, in all material respects, in accordance with the requirements of ESEF
Regulation.
On behalf of,
Ernst & Young Assurance Services SRL
15-17, Ion Mihalache Blvd., floor 21, Bucharest, Romania
Registered in the electronic Public Register under No. FA77
Name of the Auditor/ Partner: Carmen Spiridon Bucharest, Romania
Registered in the electronic Public Register under No. AF4838 25 March 2024
ROMPETROL WELL SERVICES SA
STANDALONE
FINANCIAL
STATEMENTS
Prepared in accordance with
Order of Minister of Public Finance no. 2844/2016
31 December 2023
ROMPETROL WELL SERVICES SA
Stand-alone Financial Statements
Prepared in accordance with
Order of the Minister of Public Finance no. 2844/2016
31 December 2023
Contents Page
Statement of profit or loss and other comprehensive income 3
Statement of the financial position 4
Statement of changes in equity 5 - 6
Statement of cash flow 7
Notes to the standalone financial statements 8 - 54
ROMPETROL WELL SERVICES SA
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For the year ended as at 31 December 2023
(all amounts expressed in Lei (“RON”), unless otherwise specified)
Explanatory notes from 1 to 25 are part of these financial statements.
3
PROFIT / (LOSS) BEFORE TAX 13,854,847
2,877,328
Income tax expense
6
(2,
086
,
984
)
(427,811)
PROFIT / (LOSS) FOR THE YEAR
1
1
,
767
,
863
2,449,517
Earnings per
share
7
0.0
4
23
0.0088
Other comprehensive income that will not be reclassified to profit or
loss in subsequent periods (net of tax):
(1,213,037)
(426,892)
Actuarial gain / (losses) relating to retirement benefits (173,572)
(427,313)
Remeasurement of fair value of equity instruments measured at fair value
through other comprehensive income
(1,039,466)
421
TOTAL COMPREHENSIVE INCOME FOR THE YEAR, net of tax 10,554,826
2,022,625
The Financial Statements from page 1 to page 54 were approved by the Board of Directors in
20 March 2024 and are signed in his name by:
Administrator,
Prepared by
,
FLOREA Georgian Stefan MOISE Luiza-Roxana
Finance Manager
Signature Signature
Notes
202
3
2022
Revenue
72,563,673
52,768,046
Revenues from contracts with customers
2
72,067,998
52,295,150
Rental revenues
2.1
495,675
472,896
Other operating income 3.1
923,838
460,851
OPERATING INCOME
–
TOTAL
73,487,511
53,228,897
Expenses with consumables
(19,654,780)
(15,250,181)
Power and water expenses
(585,961)
(586,223)
Merchandise expenses (17,280)
(21,974)
Payroll costs, out of which:
5
(21,212,561)
(19,427,316)
-
Salaries
(20,295,367)
(18,527,453)
-
Social security contributions
(671,446)
(537,587)
Fixed assets’ value adjustments, of which 8,9,10,18
(5,921,961)
(4,895,557)
-
Depreciation and amortization
(5,921,961)
(4,895,557)
-
Impairment of property, plant and equipment
-
-
Allowance for inventories
13
65,803
88,003
Allowance for expected credit losses 14 (113,053)
629,748
Expenses with third
-
party services
3.2
(14,296,89
2
)
(13,482,470)
Taxes, duties and similar expenses
(702,188)
(697,127)
Other operating expenses
3.3
(243,960)
(182,878)
OPERATING EXPENSES – TOTAL (62,682,833)
(53,825,975)
OPERATING PROFIT / (LOSS)
1
0
,
804
,
678
(597,078)
Interest income
3,839,711
3,849,094
-
of which, revenues from related
parties
3,825,036
3,843,126
Other financial income
42,505
801,290
FINANCIAL INCOME - TOTAL 4.1
3,882,216
4,650,384
Finance costs
(832,047)
(1,175,979)
FINANCE COSTS
-
TOTAL
4.2
(832,047)
(1,175,979)
FINANCIAL
PROFIT / (LOSS)
3,050,169
3,474,405
ROMPETROL WELL SERVICES SA
STATEMENT OF FINANCIAL POSITION
For the year ended as at 31 December 2023
(all amounts expressed in Lei (“RON”), unless otherwise specified)
Explanatory notes from 1 to 25 are part of these financial statements.
4
Notes
31 December
2023
31 December
2022
Assets
Non
-
current assets
Property, Plant & Equipment
8
21,
371
,
048
24,696,706
Right of use assets 18.1
11,746,246
13,313,521
Investment property
9
414,197
432,799
Intangible assets
10
59,652
60,619
Equity instruments at FVOCI
11
8,966,492
10,204,052
Other financial assets 12
6,580,872
2,539,595
Total non
-
current assets
49,
138
,
507
51,247,292
Current assets
Inventories, net
13
5,442,042
5,951,473
Trade and other receivables 14
18,263,004
16,943,438
Availabilities in cash pooling system
21
50,730,823
46,117,041
Other current assets
15
1,053,746
1,099,439
Collateral cash for guarantee letters
16.1
121,112
1,404,000
Cash and deposits 16
648,543
491,717
Total current assets
76,259,2
70
72,007,108
Total assets
125,
397
,777
123,254,400
Capital and reserves
Capital
Share capital, of which:
28,557,446
28,557,446
Subscribed and paid in share capital
17.1
27,819,090
27,819,090
Share capital adjustments
17.2
738,356
738,356
Legal reserves
5,563,818
5,563,818
Other reserves
24,619,128
25,832,165
Retained earnings
12,854,94
4
12,854,944
Retained earnings IFRS transition
18,041,378
18,041,378
Current result
1
1
,
767
,
863
2,449,517
Total equity
101,404,577
93,299,268
Long-term liabilities
Employee benefits liabilities
19
1,175,961
1,032,717
Deferred tax liabilities 6
844,685
1,088,141
Lease liabilities
18.2
6,172,638
8,645,653
Other liabilities
77,748
93,449
Total long
-
term liabilities
8,
271
,
032
10,859,960
Current liabilities
Trade and other payables
20
12,669,755
16,118,478
Income tax payable 6
419,415
354,898
Lease liabilities
18.2
2,632,998
2,621,796
Total current liabilities
15,722,168
19,095,172
Total liabilities
2
3
,
993
,
200
29,955,132
Total equity and liabilities
12
5
,
397
,
777
123,254,400
The Financial Statements from page 1 to page 54 were approved by the Board of Directors in
20 March 2024 and are signed in his name by:
Administrator,
Prepared by
,
FLOREA Georgian Stefan
MOISE Luiza-Roxana
Finance Manager
Signature Signature
ROMPETROL WELL SERVICES SA
STATEMENT OF CHANGES IN EQUITY
For the year ended as at 31 December 2023
(all amounts expressed in Lei (“RON”), unless otherwise specified)
Explanatory notes from 1 to 25 are part of these financial statements.
5
For the year ended as at 31 December
202
2
Share
capital
Legal
reserves
Other
reserves
Retained
earnings
Retained earnings
IFRS transition
Current
result
Total
equity
Balance at 1 January 202
2
28,557,446
5,563,818
56,194,311
28,832,881
18,041,378
1,629,634
138,819,467
Profit for the year
-
-
-
-
-
2,449,517
2,449,517
Other comprehensive income
-
-
(426,892)
-
-
-
(426,892)
Remeasurement of fair value of financial assets measured at fair value
through other comprehensive income (b)
-
-
421
-
-
-
421
Actuarial gain / (losses) relating to retirement benefits (a)
-
-
(427,313)
-
-
-
(427,313)
Total comprehensive income
-
-
(426,892)
-
-
-
(426,892)
Profit distribution
-
-
-
1,629,634
-
(1,629,634)
-
Dividends
-
-
-
(47,542,825)
-
-
(47,542,825)
Transfer from other reserve to retain earnings (
c
)
-
-
(29,935,254)
29,935,254
-
-
-
Balance at 31 December 202
2
28,557,446
5,563,818
25,832,165
12,854,944
18,041,378
2,449,517
93,299,268
For the year ended as at 31 December 2023
Share
capital
Legal
reserves
Other
reserves
Retained
earnings
Retained earnings
IFRS transition
Current
result
Total
equity
Balance at 1 January 202
3
28,557,446
5,563,818
25,832,165
12,854,944
18,041,378
2,449,517
93,299,268
Profit for the year
-
-
-
-
-
1
1
,
767
,
863
1
1
,
767
,
863
Other comprehensive income
-
-
(
1,213
,
037
)
-
-
-
(
1,213
,
037
)
Remeasurement of fair value of financial assets measured at fair value
through other comprehensive income (b)
-
-
(1,039,466)
-
-
-
(1,039,466)
Actuarial gain / (losses) relating to retirement benefits (a)
-
-
(173,572)
-
-
-
(173,572)
Total comprehensive income
-
-
(
1,213
,
037
)
-
-
-
(
1,213
,
037
)
Profit distribution -
-
-
2,449,517
-
(2,449,517)
-
Dividends
-
-
-
(
2,449,517
)
-
-
(2,449,517)
Balance at 31 December 202
3
28,557,446
5,563,818
2
4
,
619
,1
28
12,854,944
18,041,378
1
1
,
767
,
863
101
,
404
,
576
The Financial Statements from page 1 to page 54 were approved by the Board of Directors in 20 March 2024 and are signed in his name by:
Administrator,
Prepared by,
FLOREA Georgian Stefan
MOISE Luiza-Roxana
Finance Manager
Signature
Signature
ROMPETROL WELL SERVICES SA
STATEMENT OF CHANGES IN EQUITY
For the year ended as at 31 December 2023
(all amounts expressed in Lei (“RON”), unless otherwise specified)
Explanatory notes from 1 to 25 are part of these financial statements.
6
The legal reserve is in amount of RON 5,563,818 (2022: RON 5,563,818).The company constituted the
legal reserve in accordance with the provisions of the Romanian trading companies law, which requires at
least 5% of the annual company’s profit before tax to be transferred to legal reserve until the ending
balance of this reserve reaches 20% of the company’s share capital.
Other reserves represent reserves constituted on the basis of mandatory legislation, respectively
reserves for elements of other comprehensive income as well as other capital reserves:
a) The decrease in other reserves with the amount of RON 173,572 represents the net impact from
remeasurement gain / (loss) of retirement benefits and other similar liabilities related to the
personnel generated by the changes
in assumptions and measurement technique applied.
b) The subsequent valuation of financial assets at fair value, representing investments in equity
instruments and for which the Company elected to present the gain / (loss) in other elements of
comprehensive income according to IFRS 9 Financial instruments, has determined a decrease in
other reserves with RON 1,039,466.
c) The transfer from other reserves to retained earnings in 2022 in the amount of RON 29,935,254
represents the effect of the decision of General Ordinary Meeting of Shareholders from 27 April
2022 to distribute dividends from this category of reserves.
Retained earnings represent reserves constituted through the distribution of prior year profits,
respectively the cover of prior year losses.
Retained Earnings IFRS transition represent the retained earnings constituted on the first adoption of
IAS, less IAS 29, as well as adoption of other mandatory IFRSs.
During the General Ordinary Meeting of the Shareholders from 26 April 2023, it was decided the
distribution of dividends in gross amount of RON 2,449,517.
The Financial Statements from page 1 to page 54 were approved by the Board of Directors in
20 March 2024 and are signed in his name by:
Administrator,
Prepared by,
FLOREA Georgian Stefan MOISE Luiza-Roxana
Finance Manager
Signature Signature
ROMPETROL WELL SERVICES SA
STATEMENT OF CASH FLOW
For the year ended as at 31 December 2023
(all amounts expressed in Lei (“RON”), unless otherwise specified)
Explanatory notes from 1 to 25 are part of these financial statements.
7
Indirect method
Name of item
31 December
202
3
31 December
2022
Note
Cash flows from operating activities:
Net profit before tax
1
3
,
854
,
847
2,877,328
Adjustments for:
Depreciation related to tangible assets and investment properties
8
, 9
4,222,744
3,718,319
Depreciation related to right of use assets
18.1
1,660,944
1,103,906
Amortization related to intangible assets
10
38,273
73,331
Provisions for post
-
employment benefits plans and other provisions
19
(63,389)
(159,995)
Provision for inventory 13 (65,803)
(88,003)
Allowance for trade and other receivables
14
113,
477
(629,748)
Trade receivables and sundry debtors write off
3.3
27,337
175,937
Earnings from debts write
-
off (unclaimed dividends)
3.1
(787,549)
(331,392)
Interest income
4.1
(3,839,711)
(3,849,094)
Interest expense 4.2 700,439
837,206
Loss / (gain) from disposal of property, plant and equipment
(135,461)
(128,979)
Net foreign exchange differences
66,488
(221,691)
Operating profit before working capital changes
15,792,636
3,377,124
(Increase) / Decrease of performance guarantees
(2,578,389)
3,479,280
(
Increase
)
/ Decrease of trade and other receivables
(1,411
,
259)
30,674,403
(Increase)
/
Decrease
of inventories
575
,
234
(987,363)
Increase / (Decrease) of trade and other payables
(1,909,793)
1,946,345
Paid income tax
(
2,034
,
869
)
(397,969)
Payments of interest portion of lease liabilities 18.2 (611,509)
(807,496)
Net cash flow
from operating activities
7,
642
,
051
37,284,325
Cash flows from investing activities:
Purchase of tangible and intangible assets
(929,941)
(3,363,959)
Proceeds from sale of tangible and intangible assets
149,614
133,825
(
Increase
) /
D
ecrease
of cash pooling balance
(4,528,494)
8,962,583
Interest received
3,754,423
3,791,708
Net cash from investing activities
(1,554,398)
9,524,158
Cash flows from financing activities:
Payments of principal
portion of lease liabilities
(2,628,979)
(1,819,968)
Proceeds from sale of financial assets
100
-
Dividends paid to equity holders
(3,301,948)
(44,724,030)
Net cash flows from financing activities
(5,930,827)
(46,543,997)
Net
(decrease) / increase of cash and cash equivalents
157,077
263,829
Net foreign exchange differences
(251)
657
Cash and cash equivalents at the beginning of the financial year
491,717
227,231
Cash and cash equivalents at the end of the
financial year
648,543
491,717
The Financial Statements from page 1 to page 54 were approved by the Board of Directors in
20 March 2024 and are signed in his name by:
Administrator,
Prepared by
,
FLOREA Georgian Stefan MOISE Luiza-Roxana
Finance Manager
Signature Signature
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2023
(all amounts expressed in Lei (“RON”), unless otherwise specified)
8
1. INFORMATION ON THE ENTITY, ACCOUNTING POLICIES
The financial statements of ROMPETROL WELL SERVICES SA for the financial year ended as at
31 December 2023 are approved according to the resolution of the Board of Directors dated
20 March 2024.
Rompetrol Well Services SA (“the Company”) is a stock company, registered office located in Ploiesti,
Clopotei Street, No. 2 bis, Romania. The Company is registered with the Trade Register under the
number J29/110/05.03.1991.
It was turned into a joint-stock company named SC PETROS SA based on the Government Decision no.
1213 of November 1990, under the Law 15/1990, and operated under such name until September 2001
when its name was changed into ROMPETROL WELL SERVICES SA.
The Company is part of the KazMunayGas International Group. The annual consolidated financial
statements are prepared at the level of the parent company, KMG International NV, with the head office
located in Strawinskylaan 1571, Tower Ten, 17th Floor, 1077 XX, Amsterdam, The Netherlands.
The ultimate parent of KazMunayGas International is the National Wealth Fund JSC “Samruk-Kazyna”,
an entity based in Kazakhstan.
The company’s main scope of business mainly consists of: special well operations, rent of special well
tools and devices, other services provision. The Company provides services for both domestic and
foreign markets. Its long history in both the domestic and the foreign oil industry makes it a competitive,
reliable and serious partner for a large range of services:
• Primary and secondary cementing;
• Acidizing and cracking services;
• Sand-Control services (reinforcement and packing);
• Well nitrogen treatment services;
• Well testing services;
• Well lining services;
• Drilling tools and instrumentation rental services.
These annual stand-alone financial statements are public and available on
https://rompetrolwellservices.kmginternational.com/, on Investor Relations section.
1.1. BASIS FOR THE PREPARATION OF THE FINANCIAL STATEMENTS
Starting with 31 December 2012, the financial statements of the Company are prepared in accordance
with the Order no. 1286/2012 of the Ministry of Public Finance, the latest regulation being Order no.
2844/2016 of the Ministry of Public Finance, approving the accounting regulations compliant with the
International Financial Reporting Standards applicable to companies whose securities are admitted to
trading on a regulated market. Such provisions are aligned with the requirements of the International
Financial Reporting Standards adopted by the European Union, except for the provisions of IAS 21 - The
Effects of Changes in Foreign Exchange Rates regarding the functional currency.
In order to prepare these financial statements, pursuant to the Romanian legal requirements, the
functional currency of the Company is deemed to be the Romanian Leu (RON).
The financial statements of the Company are based on the historical cost principle, except for equity
investments measured as fair value through other comprehensive income. The stand-alone financial
statements are presented in RON and all amounts are rounded up in RON unless otherwise specified.
The financial statements of the Company are prepared based on the going concern principle.
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2023
(all amounts expressed in Lei (“RON”), unless otherwise specified)
9
1. INFORMATION ON THE ENTITY, ACCOUNTING POLICIES (continued)
1.2. ACCOUNTING PRINCIPLES, POLICIES AND METHODS
a) The going concern principle
The financial statements of the Company were drawn up based on the principle of continuity of activity.
The management of the company considers that there are no material uncertainties that could raise
significant doubts about this assumption. The management formed a judgment according to which there
is a reasonable expectation that the Company has adequate resources to continue the operational activity
for the foreseeable future and not less than 12 months from the date of approval of financial statements.
The current existing regulations on climate changes does not have a direct impact on the activities of the
Company. However, the Company considered the global requirements to reduce the level of CO2
emissions, and incorporated this requirements in the investments program. Thus, equipment acquired
comply with the latest standards regarding CO2 emissions. The thermal engines used by machines in
daily operations are in accordance with the European legislation regarding emissions.
Despite the constantly changing market conditions, the Company has managed to secure its leading
position in the specific market segment through diversity and flexibility in offering specialized services
tailored for each individual client. It provides a wide range of services for oil and natural gas wells
(cementing, stimulation, well casing operations, etc.). From an operational point of view, during 2023, the
Company carried out a number of 95 primary cementing operations, 319 secondary cementing operations
and 389 stimulation operations, a total number higher than the one recorded in the previous year. Thus,
the volume of operations performed for Company's clients increased by 18% compared to the level of
2022. From a commercial point of view, the Company participated in all publicly announced tenders in
order to ensure the activity for the next period. It is estimated that during the year 2024 the Company will
register a level of sales similar to 2023.
The impact from the change in the macroeconomic environment (i.e. interest rate increase, increased
inflation rate) was considered in the approved business plan which shows a constant level of profitability.
The military conflict between Russia and Ukraine as well as the conflict in Middle East, created the base
for an inherent risk of supply chain disturbances for the Company and a continuous impact on the
European and global economies through financial markets volatility, inflation and exchange rate
depreciation pressure. The Company does not have direct exposure to the impacted areas since its
operations and its main customers activate only on the local market. However, the impact on the general
economic situation may require revisions of certain assumptions and estimates.
Considering all the above as well as next year cash flow projections based on existing and renewed
commercial contracts, the financial statements of the Company were prepared based on the going
concern principle.
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2023
(all amounts expressed in Lei (“RON”), unless otherwise specified)
10
1. INFORMATION ON THE ENTITY, ACCOUNTING POLICIES (continued)
b) Foreign Currency Transactions
Transactions in foreign currencies are initially recorded by the Company at their respective functional
currency spot rate at the date the transaction first qualifies for recognition. Monetary assets and liabilities
denominated in foreign currencies are retranslated at the functional currency spot rate of exchange ruling
at the reporting date.
Differences arising on settlement or translation of monetary items are recognised in profit or loss. Non-
monetary items that are measured in terms of historical cost in a foreign currency are translated using the
exchange rates as 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 resulted from the re-conversion of non-monetary items is treated in line with the
recognition of gain or loss upon the change in fair value (i.e., the exchange rate differences on items
whose fair value gain or loss is recognised in Other elements of global earnings, or the profit or loss are
also recognised in Other elements of global earnings, profit or loss, respectively).
The exchange rates used to translate the balances denominated in foreign currency as at
31 December 2023 were, for RON:
31 December
202
3
31 December
202
2
1 EUR 4.9746
4.9474
1 USD 4.4958
4.6346
c) Financial instruments
A financial instrument is any contract which produces a financial asset for a company and a financial
liability or equity instrument for another entity. The Company’s financial assets include cash and cash
equivalents, trade receivables and other receivables (including loans to related parties) and financial
investments. The Company’s financial liabilities include trade liabilities and other liabilities. The
accounting policies for the recognition and measurement of each item are described in this Note.
Initial and subsequent measurement
Financial assets and liabilities are initially measured at fair value. Transaction costs which are directly
attributable to acquisition or issuance of financial assets and liabilities (other than financial assets and
financial liabilities at fair value through profit or loss) are added at initial recognition or deducted from the
fair value of respective financial asset or liability, if applicable.
Financial assets are classified, at initial recognition, as subsequently measured at amortized cost, fair
value through other comprehensive income (OCI), or fair value through profit or loss.
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 or for which the Company has applied the practical
expedient are measured at the transaction price determined under IFRS 15.
In order for a financial asset to be classified and measured at amortized cost or fair value through OCI, it
needs to give rise to cash flows that are ‘solely payments of principal and interest (SPPI)’ on the principal
amount outstanding.
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2023
(all amounts expressed in Lei (“RON”), unless otherwise specified)
11
1. INFORMATION ON THE ENTITY, ACCOUNTING POLICIES (continued)
The Company’s business model for managing financial assets refers to how it manages its financial
assets in order to generate cash flows. The business model determines whether cash flows will result
from collecting contractual cash flows, selling the financial assets, or both. The company measures
financial assets at amortized cost, except for fair value of equity instruments in relation to investments in
Rompetrol Rafinare SA and Rompetrol Logistics SRL which are measure at fair value through other
comprehensive income.
Purchases or sales of financial assets that require delivery of assets within a time frame established by
regulation or convention in the market place (regular way trades) are recognized on the trade date, i.e.,
the date that the Company commits to purchase or sell the asset.
Financial liabilities are classified as subsequently measured at amortized cost, except for (a) financial
liabilities at fair value through profit or loss, (b) financial liabilities that arise when a transfer of a financial
asset does not qualify for derecognition, (c) financial guarantee contracts, who is subsequently measured
at the higher of the value of the loss adjustment and the amount initially recognized, (d) commitments to
provide a loan at a below-market interest rate which is subsequently measured at the higher of the value
of the loss adjustment and the amount initially recognized, (e) contingent consideration recognized by an
acquirer in a business combination which subsequently is measured at fair value with changes
recognized in profit or loss.
For purposes of subsequent measurement, the company’s specific financial assets and liabilities are
classified in three categories:
• Financial asset measured at amortized cost (Receivables and loans granted); and
• Trade payables and other liabilities;
• Financial assets measured at fair value through other comprehensive income (Financial assets,
Note 1h).
Receivables and loans
This category is the most relevant to the Company. Receivables and loans are non-derivative financial
assets with fixed or determinable payments that are not quoted in an active market. After initial
measurement, such financial assets are subsequently measured at amortized cost using the effective
interest rate (EIR) method, less impairment. Amortized cost is calculated taking into account any discount
or premium on acquisition and any fees or costs that are an integral part of the EIR. The EIR amortization
is included in finance income in the statement of profit or loss. The losses arising from impairment are
recognized in the statement of profit or loss in finance costs for loans and in cost of sales or other
operating expenses for receivables.
Trade payables and other liabilities
Trade payables and other liabilities are subsequently measured at amortized cost, using the effective
interest rate. The effective interest method is a method to calculate the amortized cost of a financial
liability and to allocate interest expenses from the relevant period. The effective interest rate is the rate
that exactly discounts the estimated future cash payments over the expected life of the financial liability
(including all paid or received commissions which are part of the effective interest rate, transaction costs
and other bonuses or discounts) or (if the case) on a shorter period, to the net carrying amount from the
initial recognition.
Derecognition
A financial asset is primarily derecognised when:
• The rights to receive cash flows from the asset have expired;
or
• The Company has transferred its rights to receive cash flows from the asset or has assumed an
obligation to pay the received cash flows in full without material delay to a third party under a
‘pass-through’ arrangement; and either (a) the Company has transferred substantially all the risks
and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all
the risks and rewards of the asset, but has transferred control of the asset.
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2023
(all amounts expressed in Lei (“RON”), unless otherwise specified)
12
1. INFORMATION ON THE ENTITY, ACCOUNTING POLICIES (continued)
When the Company has transferred its rights to receive cash flows from an asset or has entered into a
pass-through arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of
ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the
asset, nor transferred control of the asset, the Company continues to recognise the transferred asset to
the extent of its continuing involvement. In that case, the Company also recognises an associated liability.
The transferred asset and the associated liability are measured on a basis that reflects the rights and
obligations that the Company has retained.
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or
expires. When an existing financial liability is replaced by another from the same lender on substantially
different terms, or the terms of an existing liability are substantially modified, such an exchange or
modification is treated as the derecognition of the original liability and the recognition of a new liability.
The difference in the respective carrying amounts is recognised in the statement of profit or loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the statement of
financial position if there is a currently enforceable legal right to offset the recognised amounts and there
is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
d) Impairment of financial assets
The Company recognizes an allowance for expected credit losses (ECLs) for 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).
For trade receivables and contract assets, the Company applies a simplified approach in calculating
ECLs. Therefore, the Company does not track changes in credit risk, but instead recognizes a loss
allowance based on lifetime ECLs at each reporting date. The Company has established a provision
matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to
the debtors and the economic environment.
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.
e) Property, plant and equipment
Property, plant and equipment are stated at cost less cumulative depreciation and, if the case, less loss
from impairment, in the financial statements of the Company.
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2023
(all amounts expressed in Lei (“RON”), unless otherwise specified)
13
1. INFORMATION ON THE ENTITY, ACCOUNTING POLICIES (continued)
The initial cost of property, plant and equipment comprises its purchase price, including import duties and
non-refundable purchase taxes and any directly attributable costs of bringing the asset to its working
condition and location for its intended use. Expenditures incurred after the assets have been put to
operation, such as repairs and maintenance are charged to the profit and loss statement in the period in
which the costs are incurred. In cases where it can be proved that expenses have increased the future
economic benefits obtained from the use of intangible assets besides the standard evaluation of its
performance, the expenditure is capitalized as additional costs of the property, plant and equipment.
Construction in progress represents plant and properties under construction and is stated at cost, less
any impairment loss. This includes the cost of construction and other direct costs. Depreciation of these
and other assets is registered starting with the date when they are ready to be used for the activity they
are intended for.
Depreciation for property, plant and equipment except land and construction in progress is computed
using the straight-line method over the following estimated useful lives:
Years
Buildings and other constructions 5 -
60
Machinery and other equipment 3 -
27
Vehicles 3 -
15
The useful life and methods of depreciation of intangible assets are revised at each fiscal year end and
adjusted prospectively if the case.
When assets are sold or disposed of, their cost and related accumulated depreciation are removed and
any income or loss resulting from their output is included in the profit or loss account.
f) Investment property
Investment properties are measured initially at cost, including transaction costs. Subsequent to initial
recognition, investment properties are disclosed at their historical cost less the provisions for depreciation
and impairment. Depreciation of investment properties is computed using straight-line method through
their useful life of between 35 and 40 years.
For the purpose of disclosure of fair values are consequently assessed by an accredited external,
independent valuator, by applying a valuation model recommended by the International Valuation
Standards Committee. The revaluation is performed at least every 3 years.
Investment properties are derecognised when either they have been disposed of or when the investment
property is permanently withdrawn from use and no future economic benefit is expected from its disposal.
The difference between the net disposal proceeds and the carrying amount of the asset is recognised in
the income statement in the period of derecognition.
Transfers are made to or from investment property only when there is a change in use. For a transfer
from investment property to owner-occupied property, the deemed cost for subsequent accounting is the
fair value at the date of change of use. If an owner-occupied property becomes an investment property,
the Company accounts for such property in accordance with the policy stated under property, plant and
equipment up to the date of change of use.
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2023
(all amounts expressed in Lei (“RON”), unless otherwise specified)
14
1. INFORMATION ON THE ENTITY, ACCOUNTING POLICIES (continued)
g) Intangible assets
Intangible assets are measured initially at cost. Intangible assets are recognized if it is probable that the
future economic benefits attributable to the asset will flow to the enterprise and the cost of the asset can
be measured reliably. After the initial recognition, intangible assets are measured at cost less the
accumulated amortization and any accumulated impairment losses. Intangible assets are amortized on a
straight-line basis over the best estimate of their useful lives:
• Intangible assets consist mainly of software and licenses and are amortized on a straight-line basis
over 3 to 5 years;
• The carrying amount of each intangible asset is reviewed annually and adjusted for impairment
where it is considered necessary. External and internal costs specifically associated with the
maintenance of already existing computer software programmers are expensed as incurred.
h) Equity instruments at FVOCI
Equity instruments at FVOCI represent strategic long term investments and are recorded at fair value
through other comprehensive income.
Dividends received from entities in which the Company has shares are recognized in profit and loss
account of the year when the right of the Company to collect dividends is established and it is probable
that they will be collected.
The changes in fair value are recognized in other elements of the comprehensive income until the
investment is derecognized or depreciated, moment when the cumulative gain or losses are reclassified
from other comprehensive income in a retained earnings account for the respective period.
Fair value is the price received from selling an assets or the price paid to transfer a liability in a normal
transaction between market participants, at the date of the valuation.
Valuation at fair value implies that the asset is exchanged in a normal transaction for the sale of the asset
or transfer of the debt, between market participants, at the valuation date, under current market
conditions. In a valuation at fair value it is assumed that the transaction of sale of the asset takes place
either:
- on the main market of the asset, or
- in the absence of a main market, on the market most advantageous for the asset.
The valuation at fair value of an asset is based on the assumption that market participants would use
when determining the value of the asset, assuming that market participants act to obtain maximum
economic benefit.
The Company uses valuation techniques appropriate to the circumstances and for which there are
available sufficient data for fair value valuation, using to the maximum the relevant observable input data
and minimizing the unobservable input data used.
The financial assets that are the object of valuation at fair value are classified within the fair value
hierarchy, based on the input data, which is the necessary basis for selecting and using the necessary
approach for its reliable determination. The data entry hierarchy consists of three levels:
(i) Level 1 - prices quotations (unadjusted) on active markets for identical assets and liabilities, to
which the entity has access to at the valuation date;
(ii) Level 2 - entry data, other than the price quotations included in level one, which are observed for
assets or liabilities, either directly or indirectly;
(iii) Level 3 - non-observable entry data for assets or liabilities.
Additional details on structure of financial assets, classified according to IFRS 9 in financial assets valued
at fair value through other comprehensive income, are presented in Note 11.
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2023
(all amounts expressed in Lei (“RON”), unless otherwise specified)
15
1. INFORMATION ON THE ENTITY, ACCOUNTING POLICIES (continued)
i) Impairment of non-financial assets
At each reporting date, the Company reviews the carrying amounts of its property, plant and equipment
and intangible assets to determine whether there is any indication that those assets have undergone an
impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to
determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable
amount of an individual asset, the Company estimates the recoverable amount of the cash-generating
unit to which the respective asset belongs.
The recoverable amount is the higher of fair value less costs to sell and value in use. In order to
determine the recoverable amount of property, plant and equipment, the Company uses value in use, this
being assessed based on estimated future cash flows that are discounted to their present value using a
pre-tax discount rate. The discount rate reflects current market assessments of time value of money and
risks specific to the asset for which the estimates of future cash flows have not been adjusted already.
The current existing legislation on climate changes does not have a direct impact on the activities of the
Company. However, the Company considered the global requirements to reduce the level of CO2
emissions, and incorporate these requirements in the investments programs. Thus, equipment acquired
comply with the latest standards regarding CO2 emissions. The thermal engines used by machines in
daily operations are in accordance with the European legislation regarding emissions.
The company bases its impairment computation on detailed budgets and forecast calculations which
cover a period of 7 years. A long-term growth rate is calculated and applied to the future cash flows
determined based on the company’s budgets and forecasts.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying
amount, the carrying amount of the assets (or cash-generating unit) is reduced to its recoverable amount.
Impairment losses are recognized as an expense immediately, unless the relevant asset is stated at its
revalued amount, in which case the impairment loss is treated as a revaluation decrease.
When an impairment loss is reversed, the carrying amount of the asset (cash-generating unit) is
increased to the revised estimate of its recoverable amount, but so that the increased carrying amount
does not exceed the carrying amount that would have been determined if no impairment loss had been
recognized for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is
recognized as income immediately, unless the relevant asset is carried at a revalued amount, in which
case the reversal of the impairment loss is treated as a revaluation increase.
j) Provisions
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result
of a past event, it is probable that an outflow of resources embodying economic benefits will be required
to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the
Company expects a provision to be reimbursed partially or totally, the reimbursement is recognized as a
separate asset, but only when the reimbursement is certain. The expense related to any provision is
presented in the profit and loss statement net of any reimbursement. If the effect of the time value of
money is material, the provisions are discounted using a current pre-tax rate that reflects, where
appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due
to the passage of time is recognized as interest cost.
Provisions are not recognized for future operating losses.
Provisions are measured at the present value of management’s best estimate of the expenditure required
to settle the present obligation at the reporting date. The discount rate used to determine the present
value reflects current market assessments of the time value of money and the risks specific to the liability.
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2023
(all amounts expressed in Lei (“RON”), unless otherwise specified)
16
1. INFORMATION ON THE ENTITY, ACCOUNTING POLICIES (continued)
k) Leases
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 a 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.
i) 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, as follows:
► Machinery 10 years
► Other equipment 3 – 5 years
ii) 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. The lease payments include fixed
payments (including in-substance fixed payments) less any lease incentives receivable, variable lease
payments that depend on an index or a rate, and amounts expected to be paid under residual value
guarantees. The lease payments also include the exercise price of a purchase option reasonably certain
to be exercised by the Company and payments of penalties for terminating the lease, if the lease term
reflects the Company exercising the option to terminate.
Variable lease payments that do not depend on an index or a rate are recognised as expenses (unless
they are incurred to produce inventories) in the period in which the event or condition that triggers the
payment occurs.
In calculating the present value of lease payments, the Company uses its incremental borrowing rate at
the lease commencement date because 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 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 Company applies the short-term lease recognition 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 equipment that are considered to be low value. Lease payments on short-term
leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease
term.
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2023
(all amounts expressed in Lei (“RON”), unless otherwise specified)
17
1. INFORMATION ON THE ENTITY, ACCOUNTING POLICIES (continued)
Company as lessor
Leases in which the Company does not transfer substantially all the risks and rewards incidental to
ownership of an asset are classified as operating leases. Rental income arising is accounted for on a
straight-line basis over the lease terms and is included in revenue in the statement of profit or loss due to
its operating nature. Initial direct costs incurred in negotiating and arranging 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.
l) Inventories
Inventories are valued at the lower of cost and net realizable value. Net realizable value is the estimated
selling price in the ordinary course of business, less the estimated costs of completion and the estimated
costs necessary to make the sale. Cost comprises the acquisition cost and other costs that have been
incurred in bringing the inventories to their present location and condition and is determined by weighted
average method for all the inventories.
m) Cash and cash equivalents
Cash includes petty cash, cash at banks and cheques in course of being cashed. Cash equivalents are
short-term, highly liquid investments that are readily convertible to known amounts of cash in less than
three months to maturity from the date of acquisition and that are subject to an insignificant risk of
devaluation.
n) Revenue from contracts with customers
Revenue is recognised at the level of consideration to which the Company expects to be entitled in
exchange for transferring goods or services to a customer, excluding amounts collected on behalf of third
parties. The revenue is recognised when the Company satisfies a performance obligation by transferring
a promised good or service (i.e. an asset) to a customer. An asset is transferred when the customer
obtains control of that asset. The Company assesses its revenue arrangements against specific criteria in
order to determine if it is acting as principal or agent. The Company has concluded that it is the principal
in its revenue arrangements because it typically controls the goods or services before transferring them to
the customer.
The Company’s business model establish the identification of performance obligations as the written
requests of clients, which represent the commitment to purchase goods or services, based on the
framework contract.
The Company has framework agreements concluded with customers, services provided/merchandise
sold being made based on purchase order. The Company has assessed, by type of contract, the goods
and/or services promised in each type of contract and has identified the following contracts as separate
performance obligations (POs):
• contracts for well services: specific well operation to a specific defined well.
• Other segments: rental (distinct space and vehicle), ITP services (specific vehicle verification) and
other merchandise (distinct goods).
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2023
(all amounts expressed in Lei (“RON”), unless otherwise specified)
18
1. INFORMATION ON THE ENTITY, ACCOUNTING POLICIES (continued)
The transaction price is the client's promise to pay in cash a fixed amount of the consideration. The
company analyzed the transaction price and concluded that it did not include a significant financing
component or a variable component.
The company has determined for each performance obligation identified at the beginning of the contract
whether it will be fulfilled over time or at a specific time. The company collects commercial receivables
within 30 - 90 days. Revenue is recorded based on job ticket which is approved by the customer at the
end of the well work, this being the moment for the performed obligation.
In case of contracts for well services, the performance obligation is fulfilled when the job ticket is
approved by the customer’s representative, this being the moment of the well work finalization.
In case of contracts concluded for other revenue segments (ie. space rental, ITP services), performance
obligation is fulfilled when the service is provided.
o) Retirement benefit costs
Payments made to state - managed retirement benefit schemes are dealt with as defined contribution
plans where the Company pays fixed contributions into the state-managed fund and has no legal or
constructive obligation to pay further contributions if the fund does not hold sufficient assets to pay all
employee benefits relating to employee service in the current and prior period. The contributions are
charged as an expense in the same period when the employee service was rendered.
Under the provisions of the collective labor agreement, employees are entitled to specified retirement
benefits, payable on retirement, if they are employed with the Company at the date of their retirement.
These amounts are estimated as of the reporting date and the measurement process applied is subject to
uncertainty. The retirement benefit is determined through a measurement technique applied judgments
and estimates such as applicable benefits provided in the agreement, the Company headcount and
specific actuarial estimates such as discount rate, price inflation and key demographic figures like
mortality rates. (Note 19).
The defined benefit liability as of reporting date comprises the estimated present value of the defined
benefit obligation and while the related current year service cost recorded in the profit and loss statement.
All actuarial gains and losses are fully recognized in other comprehensive income in the period in which
they occur. Actuarial gains and losses recognized in other comprehensive income are presented in the
statement of comprehensive income.
The Company has no other liabilities with respect to future pension benefits, health and other costs for its
employees.
p) Taxes
- Current income tax
Current income tax assets and liabilities for the current and prior periods are measured at the amount
expected to be recovered from or paid to the tax authorities. The tax rates and tax laws used to compute
the amount are those that are enacted or substantively enacted, by the reporting date, in the countries
where the Company operates and generates taxable income.
Current income tax relating to items recognized directly in equity is recognized in equity and not in the
profit and loss statement. Management periodically evaluates positions taken in the tax returns with
respect to situations in which applicable tax regulations are subject to interpretation and establishes
provisions where appropriate.
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2023
(all amounts expressed in Lei (“RON”), unless otherwise specified)
19
1. INFORMATION ON THE ENTITY, ACCOUNTING POLICIES (continued)
- Deferred tax
Deferred tax is recorded using the liability method on temporary differences at the reporting date between
the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred tax liabilities are recognized for all taxable temporary differences, except:
► Where the deferred tax liability arises from the initial recognition of an asset or liability in a
transaction that is not a business combination and, at the time of the transaction, affects neither
the accounting profit nor taxable profit or loss.
► The deductible temporary differences associated with investments in subsidiaries and related
parties and interests in joint ventures when the reversal of such temporary differences can be
controlled and likely not to be reversed in the foreseeable future.
Deferred tax assets are recognized for all deductible temporary differences, carry forward of unused
losses and tax credits, to the extent that it is probable that taxable profit will be available against which
the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses
can be utilized except:
► Where the deferred tax asset arises from the initial recognition of an asset or liability in a
transaction that is not a business combination and, at the time of the transaction, affects neither
the accounting profit nor taxable profit or loss.
► In case of deductible temporary differences associated with investments in subsidiaries and
related parties and interests in joint ventures, the deferred tax asset is recognised only when the
temporary differences are likely to be reversed in a foreseeable future and when there can be a
taxable profit for which temporary differences may be used.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced
consequently to the extent that it is no longer probable that sufficient taxable profit will be available to
allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are reassessed
at each reporting date and are recognized to the extent that it has become probable that future taxable
profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year
when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been
enacted or substantively enacted until the end of the reporting period.
Deferred tax relating to items recognized outside the profit and loss statement is recognized outside the
profit or loss account. Deferred tax items are recognized depending on the nature of the underlying
transaction either in other comprehensive income or directly in equity.
Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off
current tax assets against current income tax liabilities and the deferred taxes relate to the same taxable
entity and are collected by the same tax authority.
- Value added tax related to revenue
Revenues, expenses and assets are recognized net of the amount of sales tax except:
► Where the sales tax incurred on a purchase of assets or services is not recoverable from the tax
authority, in which case the sales tax is recognized as part of the acquisition cost of the asset or as
part of the expense item as the case may be.
► Receivables and payables whose taxes are included in their amount.
The net amount of value added tax recoverable from, or payable to, the tax authority is included in the
receivables or payables in the balance sheet.
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2023
(all amounts expressed in Lei (“RON”), unless otherwise specified)
20
1. INFORMATION ON THE ENTITY, ACCOUNTING POLICIES (continued)
q) Dividends
Dividends are recorded in the year in which they are approved by the shareholders.
r) Contingent assets and liabilities
Contingent liabilities are not recognized in the financial statements. They are however disclosed unless
the possibility of an outflow of resources embodying economic benefits is remote.
Contingent assets are not recognized in the financial statements but disclosed when an inflow of
economic benefits is probable.
1.3. SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS
The preparation of the Company’s stand-alone financial statements requires the management to make
judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets
and liabilities, and the disclosure of contingent liabilities, at the balance sheet date. The estimates and
associated assumptions rely on the historical experience and other factors that are considered to be
relevant. However, uncertainty about these assumptions and estimates could result in outcomes that
require an adjustment to the carrying amount of the assets or liabilities in the future periods.
The estimates and assumptions that accounting judgements rely on are subject to constant review.
Revisions to accounting estimates are recognized in the period in which the estimate is revised if such
revision only affects that period or in the period of the revision and future periods if such revision affects
both current and future periods.
The matters presented below are considered to be paramount in understanding the judgments that are
involved in preparing these statements and the uncertainties that could impact the amounts reported in
the results of operations, financial position and cash flows.
(i) Carrying value of trade receivables
The Company use the simplified approach in calculating the expected credit losses for trade receivables
as these do not contain a significant financing component. The Company has applied the practical
expedient to calculate expected credit losses using a provision matrix that is based on its historical credit
loss experience, adjusted for forward-looking factors specific to the debtors and the economic
environment. The Company assesses the requirement for an allowance for impairment in trade and other
receivables 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.
(ii) Impairment of property, plant & equipment and investment properties
The Company analyses at each reporting date if there are indicators of impairment of tangible assets
(including right of use of assets) and investment properties. If any indication exists, or when annual
impairment testing for assets is required, the Company estimates the assets recoverable amount.
In the
current year, local industry of oilfield services has recorded a slight resumption and a high level of
secondary type of operations (e.g. cementing for abandoned wells) in the upstream segment was
performed. This aspect had a significant positive effect on the Company’s results recorded. However, the
upstream segment continued to record low investment and work levels from customers in the area of new
well’s projects, taking into account the overall evolution of oil and gas industry over the past few years,the
volatility of the crude oil price, current macroeconomic and geopolitical context and market environment
(which have an impact on evolution of interest rates, payroll costs, general increase of prices
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2023
(all amounts expressed in Lei (“RON”), unless otherwise specified)
21
1. INFORMATION ON THE ENTITY, ACCOUNTING POLICIES (continued)
etc.) that have led to uncertainties in the market. These aspects might impact the Company’s
performance and therefore impairment indicators were identified by Management for 31 December 2023
and an impairment assessment was performed. Assets are analyzed each time when events or changes
in market or industry indicates the fact that the accounting value of these assets may not be recoverable.
If for these assets allowances for impairment are necessary, the accounting value for these assets is
adjusted to the recoverable amount, which is determined as the highest between fair value less cost to
sale and the value in use (based on discounted future cash flows). The allowances for impairment are
reversed only in the case when the events or circumstances that determined the initial impairment have
changed. The discounted cash flows are determined based on Company’s management estimation as
regards to contracts and future projects concluded at the date of evaluation or estimated to be contracted
in the future, closely linked to market conditions. Other factors that might lead to changes in estimations
could include restructuring plans or changes in legislation.
The recoverable amount is sensitive to the discount rate applied to discounted cash flows, as well as to
the inputs of cash flows and the growth rate estimated for the analyzed period.
The current existing legislation on climate changes does not have a direct impact on the activities of the
Company. However, the Company considered the global requirements to reduce the level of CO2
emissions, and incorporate these requirements in the investments programs. Thus, equipment acquired
comply with the latest standards regarding CO2 emissions. The thermal engines used by machines in
daily operations are in accordance with the European legislation regarding emissions.
At the end of financial year 2023, the Company has performed the impairment test for all its tangible
assets (including right of use of assets) using the discounted cash flow method. The discounted cash flow
method assumes the value of cash-generating units by estimating the present value of the future
expected earnings arising from the use of the cash generating unit, using a discount rate. Estimated cash
flows were determined taking into account the company’s projections regarding the operating profits for
the next seven years, discounted with an estimated economic growth rate of the industry in which the
company operates.
The recoverable amount of the CGU of RON 47.02 million was determined based on the value in use
(VIU) calculation using the cash flow projections from the approved business plan. Business Plan take
into account only the turnover expected to be generated from agreements already signed with main
customers for cementing and acidizing services. Revenues expected to be generated by new services to
be provided were not considered given Management’s conservative approach when preparing the
budgets for the next period. This is also linked to the inherent risk generated by the timing of receiving
work orders from customers. As a result of the analysis, Management did not identifiy the necessity of
increasing the impairment for the CGU.
Significant estimates applied to the determination of the value in use by the Company are:
- Operating profit margin;
- Discount rate.
The estimated operating profit margin is presented below:
202
4
202
5
202
6
202
7
202
8
202
9
20
30
Operating
profit
margin*
10.06%
10.79%
12.17%
12.45%
10.40%
10.36%
10.72%
* as included in the impairment test
Operating profit margins are estimated based on the average historical operational results recorded for
2018 – 2023, further revised to reflect the current appetite for CAPEX investments of the Company’s main
customers.
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2023
(all amounts expressed in Lei (“RON”), unless otherwise specified)
22
1. INFORMATION ON THE ENTITY, ACCOUNTING POLICIES (continued)
The discount rate applied in the model was 11.22% (2022: 14.07%) and reflects the current assessment
of the market risk for Company. The discount rate was estimated based on weighted average cost of
capital for the industry. This rate was corrected in order to reflect the market assessment of certain
industry risks for which future cash flows were not adjusted.
Sensitivity of estimates
The recoverable amount determined based on value of in use would equal the carrying amount of the
property, plant and equipment and right of use of assets if operating profits would decrease by 44.97%
obtaining the following operating profit margin.
202
4
202
5
202
6
202
7
202
8
202
9
20
30
Operating profit
margin* 5.54%
5.94%
6.70%
6.85%
5.72%
5.70%
5.90%
* as per sensitivity analysis assuming no changes in budgeted revenues
The break-even point for the current model is obtained by increasing the discount rate from 11.22% to
25.21%.
(iii) Fair value measurement of financial instruments
When the fair values of financial assets and financial liabilities recorded in the statement of financial
position cannot be measured based on quoted prices in active markets, their fair value is measured using
valuation techniques including the discounted cash flow (DCF) model. The inputs to these models are
taken from observable markets where possible, but where this is not feasible, a degree of judgement is
required in establishing fair values. Judgements include considerations of inputs such as liquidity risk,
credit risk and volatility. Changes in assumptions relating to these factors could affect the reported fair
value of financial instruments.
The fair values of the non-listed equity investments have been estimated using a DCF model. The
valuation requires management to make certain assumptions about the model inputs, including business
plans and forecast cash flows of the investees approved by the KMGI Group, the discount rate, credit risk
and volatility. The probabilities of the various estimates within the range can be reasonably assessed and
are used in management’s estimate of fair value for these non-listed equity investments.
Valuation techniques used to measure fair value shall be applied consistently. However, a change in a
valuation technique or its application (eg a change in its weighting when multiple valuation techniques are
used or a change in an adjustment applied to a valuation technique) is appropriate if the change results in
a measurement that is equally or more representative of fair value in the circumstances. That might be
the case if, for example, any of the following events take place:
(a) new markets develop;
(b) new information becomes available;
(c) information previously used is no longer available;
(d) valuation techniques improve; or
(e) market conditions change.
Set out below is a comparison between the fair value as at 31 December 2023 and as at
31 December 2022:
Fair Value
202
3
202
2
Rompetrol Rafinare SA*
1,
846
,
345
1,747,434
Rompetrol Logistics SRL 7,120,147
8,456,518
*Company listed on Bucharest Stock Exchange under RRC symbol.
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2023
(all amounts expressed in Lei (“RON”), unless otherwise specified)
23
1. INFORMATION ON THE ENTITY, ACCOUNTING POLICIES (continued)
The fair value of the investment in Rompetrol Rafinare SA was determined based on price quotation
available on Bucharest Stock Exchange at the reporting date.
The Company has a minority participation of 6.98% in Rompetrol Logistics, a dormant entity part of KMG
International NV Group. Further, Rompetrol Logistics is the sole shareholder of Rompetrol Gas, the LPG
distribution company of the KMG International NV Group. Rompetrol Gas is a profitable company and
according to the forecasted figures for the following 5 years will continue to be profitable.
At the end of financial year 2023, based on new information available, the Company has performed the
fair value assessment of the investment in Rompetrol Logistics using the discounted cash flow method.
The fair value assessment of the investment in Rompetrol Logistics and further in Rompetrol Gas has
also been determined based on financial budgets approved by senior management of KMGI Group
covering a five-year period. The discount rate applied to cash flow projections for Rompetrol Gas is
11.6% (2022: 12.1%) and 10.94% (2022: 10.62%) for Rompetrol Logistics. Cash flows beyond the 5-year
period are extrapolated using a 0.4% growth rate that is the same as the long-term average growth rate
for the industry. The capitalization rate used for residual values is 10.5% (2022: 8.5%).
The fair value of the investment in Rompetrol Rafinare SA is classified as Level 1, while the investment in
Rompetrol Logistics SRL is classified as Level 3.
Considering that Rompetrol Logistics is a dormant company, fair value assessment of the Company’s
investment is influenced by the operational performance of Rompetrol Gas, that requires the use of
estimates and assumptions such as discount rates, gross margin and operating costs.
The key assumptions used to determine the fair value of the investment are:
• Discount rates;
• Gross margin considered for Rompetrol Gas;
• Operating expense considered for Rompetrol Gas
• New taxes applicable for Rompetrol Gas.
After performing the fair value assessment of the investment in Rompetrol Logistics as of 31 December
2023, the Company considered necessary to record a loss through other comprehensive income
amounting RON 1,122,551, net of tax.
Description of significant unobservable inputs in valuation
The fair values of the non-listed equity investments have been estimated using a DCF model. The
valuation requires management to make certain assumptions about the model inputs, including forecast
cash flows, the discount rate, credit risk and volatility. The probabilities of the various estimates within the
range can be reasonably assessed and are used in management’s estimate of fair value for these non-
listed equity investments.
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2023
(all amounts expressed in Lei (“RON”), unless otherwise specified)
24
1. INFORMATION ON THE ENTITY, ACCOUNTING POLICIES (continued)
Non-listed equity
investment
Valuation
technique
Significant
unobservable
inputs
Range (weighted
average)
Sensitivity of the input to fair value
Rompetrol Logistics
DCF method
Discount rate
10.94
%
(2022:10.62%)
1% increase (decrease) in the WACC would
result in an increase (decrease) in fair value
by
RON
9,179
Rompetrol Logistics
DCF method
Discount for
lack of
marketability
20% (2022: 20%)
5% increase (decrease) in the marketability
discounts would result in a decrease
(increase) in fair value by RON 109,541
Rompetrol Logistics
DCF method
Minority interest
discount rate
15% (2022: 15%)
5% increase (decrease) in the minority interest
discount would result in a decrease (increase)
in fair value by RON
82,156
Rompetrol Gas
DCF method
Discount rate
11.6
%
(2022:12.1%)
1% increase (decrease) in the WACC would
result in a decrease (increase) in fair value by
RON 75,934 - decrease and respectively
RON
77,541
-
in
crease
Rompetrol Gas
DCF method
New taxes*
0%/100%
No (0%) recovery of the tax would result in a
decrease in fair value by RON 1,559
thousand, while full (100%) recovery of the tax
would result in an increase in fair value by
RON 610 thousand
Rompetrol Gas
DCF method
Gross margin
n/a.
5% increase (decrease) in the Gross margin
would result in an increase (decrease) in fair
value by RON
2,373
thousand
Rompetrol Gas
DCF method
Operating
expenses
n/a.
5% increase (decrease) in the Operating
Expenses would result in a decrease
(increase) in fair value by RON 1,906
thousand
* As per Law no 296/2023, the companies in the oil & gas sector with turnover of more than EUR 50
million will have to pay an additional 0.5% turnover tax to the corporate income tax for 2024-2025 and the
maximum value between 1% turnover tax and corporate income tax from 2026 onwards. The impact of
the new revenue tax over the forecast period was considered in the analysis for Rompetrol Gas and the
5-year business plan cash-flows were adjusted considering the current fiscal environment. However,
considering the early stage of the current legislation and the market uncertainty, management assumed in
the fair value assessment that no recovery for the first two years, followed by partial recovery (50% of the
tax) starting 2026 through prices from final clients, while in perpetuity 100% of the new tax would be
recovered through prices from final clients in case of Rompetrol Gas.
Reconciliation of fair value measurement of investments classified as equity instruments
designated at fair value through other comprehensive income (‘OCI’):
Rompetrol
Rafinare SA
Rompetrol
Logistics SRL
Total
1 January 202
3
1,747,434
8,456,518
10,203,952
Remeasurement recognized in OCI 98,911
(1,336,371)
(1,237,459)
31 December 202
3
:
1,
846
,
345
7
,
120
,
147
8
,
966
,
492
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2023
(all amounts expressed in Lei (“RON”), unless otherwise specified)
25
1. INFORMATION ON THE ENTITY, ACCOUNTING POLICIES (continued)
1.4 CHANGES IN ACCOUNTING POLICY AND DISCLOSURES
The accounting policies adopted are consistent with those of the previous financial year except for the
following IFRS and amendments to IFRS which have been adopted by the Company as of 1 January
2023:
• IFRS 17 insurance contracts,
• IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of
Accounting policies (Amendments),
• IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of
Accounting Estimates (Amendments),
• IAS 12 Income taxes: Deferred Tax related to Assets and Liabilities arising from a Single
Transaction (Amendments),
• IAS 12 Income taxes: International Tax Reform - Pillar Two Model Rules (Amendments)
The newly adopted IFRS and amendments to IFRS did not have a material impact on the Company’s
accounting policies and on the financial statements.
• IFRS 17: Insurance Contracts
The standard is effective for annual periods beginning on or after 1 January 2023. This is a
comprehensive new accounting standard for insurance contracts, covering recognition and measurement,
presentation and disclosure. IFRS 17 applies to all types of insurance contracts issued, as well as to
certain guarantees and financial instruments with discretional participation contracts. The Company does
not issue contracts in scope of IFRS 17; therefore its application does not have an impact on the
company’s financial performance, financial position or cash flows.
• IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of
Accounting policies (Amendments)
The Amendments are effective for annual periods beginning on or after January 1, 2023. The
amendments provide guidance on the application of materiality judgements to accounting policy
disclosures. In particular, the amendments to IAS 1 replace the requirement to disclose ‘significant’
accounting policies with a requirement to disclose ‘material’ accounting policies. Also, guidance and
illustrative examples are added in the Practice Statement to assist in the application of the materiality
concept when making judgements about accounting policy disclosures. The Company assessed its
accounting policies disclosure and concluded that the updates included in this standard did not impact the
financial statements of the Company.
• IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of
Accounting Estimates (Amendments)
The amendments become effective for annual reporting periods beginning on or after January 1, 2023
and apply to changes in accounting policies and changes in accounting estimates that occur on or after
the start of that period. The amendments introduce a new definition of accounting estimates, defined as
monetary amounts in financial statements that are subject to measurement uncertainty, if they do not
result from a correction of prior period error. Also, the amendments clarify what changes in accounting
estimates are and how these differ from changes in accounting policies and corrections of errors.
Management has assessed and concluded that the updates included in this standard does not impact the
financial statements of the Company.
• IAS 12 Income taxes: Deferred Tax related to Assets and Liabilities arising from a Single
Transaction (Amendments)
The amendments are effective for annual periods beginning on or after January 1, 2023. The
amendments narrow the scope of and provide further clarity on the initial recognition exception under IAS
12 and specify how companies should account for deferred tax related to assets and liabilities arising
from a single transaction, such as leases and decommissioning obligations. The amendments clarify that
where payments that settle a liability are deductible for tax purposes, it is a matter of judgement, having
considered the applicable tax law, whether such deductions are attributable for tax purposes to the
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2023
(all amounts expressed in Lei (“RON”), unless otherwise specified)
26
1. INFORMATION ON THE ENTITY, ACCOUNTING POLICIES (continued)
liability or to the related asset component. Under the amendments, the initial recognition exception does
not apply to transactions that, on initial recognition, give rise to equal taxable and deductible temporary
differences. It only applies if the recognition of a lease asset and lease liability (or decommissioning
liability and decommissioning asset component) give rise to taxable and deductible temporary differences
that are not equal. Management has assessed and concluded that the updates included in this standard
does not impact the financial statements of the Company.
• IAS 12 Income taxes: International Tax Reform - Pillar Two Model Rules (Amendments)
The amendments are effective immediately upon issuance, but certain disclosure requirements are
effective later. The Organisation for Economic Co-operation and Development’s (OECD) published the
Pillar Two model rules in December 2021 to ensure that large multinational companies would be subject
to a minimum 15% tax rate. On 23 May 2023, the IASB issued International Tax Reform—Pillar Two
Model Rules – Amendments to IAS 12. The amendments introduce a mandatory temporary exception to
the accounting for deferred taxes arising from the jurisdictional implementation of the Pillar Two model
rules and disclosure requirements for affected entities on the potential exposure to Pillar Two income
taxes. The Amendments require, for periods in which Pillar Two legislation is (substantively) enacted but
not yet effective, disclosure of known or reasonably estimable information that helps users of financial
statements understand the entity’s exposure arising from Pillar Two income taxes. To comply with these
requirements, an entity is required to disclose qualitative and quantitative information about its exposure
to Pillar Two income taxes at the end of the reporting period. The disclosure of the current tax expense
related to Pillar Two income taxes and the disclosures in relation to periods before the legislation is
effective are required for annual reporting periods beginning on or after 1 January 2024, but are not
required for any interim period ending on or before 31 December 2023.
The Pillar Two Global anti-Base Erosion rules (GloBE Rules) represent the first substantial overhaul of
the international tax rules in almost a century. The GloBE Rules propose four new taxing mechanisms
under which multinational enterprises (MNEs) would pay a minimum effective tax rate of 15% per
jurisdiction if annual turnover exceeds 750 million euros for two consecutive years.
Pillar Two legislation has been enacted or substantively enacted in certain jurisdictions in which KMG
International NV Group (KMGI Group), major shareholder of Rompetrol Well Services S.A. operates. The
legislation will be effective for the KMGI Group’s financial year beginning 1 January 2024 considering that
Pillar Two is effective for Netherlands and Switzerland starting with 1st of January 2024. These are
jurisdictions in which KMGI Group is established or has subsidiaries incorporated. The Dutch Minimum
Taxation Act 2024 and Swiss BEPS 2.0 Pillar Two provide for a minimum effective tax rate of 15% per
jurisdiction for large international enterprises (annual turnover exceeding 750 million euros).
KMGI Group is in process of assessing the potential exposure arising from Pillar Two legislation, however
the quantitative information to indicate the potential exposure to Pillar Two income taxes is currently not
known or cannot be reasonably estimated. KMGI Group continues to progress on the assessment and
expects to complete the assessment in the first half of financial year 2024.
Given the status of the assessment for the impact at KMGI Group level, Rompetrol Well Services S.A.
has applied the mandatory exception for recognizing and disclosing information about deferred tax assets
and liabilities arising from Pillar Two income taxes as of 31 December 2023.
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2023
(all amounts expressed in Lei (“RON”), unless otherwise specified)
27
1. INFORMATION ON THE ENTITY, ACCOUNTING POLICIES (continued)
1.5 STANDARDS ISSUED BUT NOT YET EFFECTIVE AND NOT EARLY ADOPTED
The Company has not early adopted any of the following standard, interpretation or amendment that have
been issued but are not yet effective. In addition, the Company is in the process of assessing the impact
of all standards, interpretations and amendments issued but not yet effective, on the financial statements.
• 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 retrospectively 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 classification. 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. The amendments are not yet effective, but they have been endorsed
by the European Union.
• IFRS 16 Leases: Lease Liability in a Sale and Leaseback (amendments)
The amendments are effective for annual reporting 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. The amendments are not yet effective, but they have been endorsed 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 reporting periods beginning on or after January 1, 2024, with
earlier application permitted. The amendments supplement requirements already in IFRS and require
an entity to disclose 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 arrangement 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. The amendments have not yet been endorsed by
the EU.
• IAS 21 The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability
(Amendments)
The amendments are effective for annual reporting 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.
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2023
(all amounts expressed in Lei (“RON”), unless otherwise specified)
28
1. INFORMATION ON THE ENTITY, ACCOUNTING POLICIES (continued)
A currency 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 mechanism in which an exchange transaction would 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. The
amendments have not yet been endorsed by the EU.
• 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 transaction 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 amendment
indefinitely pending the outcome of its research project on the equity method of accounting. The
amendments have not yet been endorsed by the EU.
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2023
(all amounts expressed in Lei (“RON”), unless otherwise specified)
29
2. REVENUE FROM CONTRACTS WITH CUSTOMERS
Below there is an analysis of Company’s revenues:
202
3
202
2
Revenue from well services
71,908,951
52,122,555
Revenue from other services
96,728
77,012
Revenue from goods sold
62,318
95,582
Total
72,067,998
52,295,150
202
3
202
2
Europe 404,263
727,488
Export
404,263
727,488
Internal market sales 71,663,735
51,567,662
Total sales
72,067,998
52,295,150
The Company analyzed the criteria for defining an operational segment according to IFRS 8 Operating
segments and concluded that business is organized as single cash generating unit, with one segment,
considering the nature of the services provided, the type of customers and the method used to provide
services. For the purpose of making decisions about resource allocation and performance assessment,
Management analyze and monitors the operating results of the business as a single segment.
2.1 RENTAL REVENUES
Below there is an analysis of Company’s rental revenues:
202
3
20
2
2
Rental revenue from office space
495,675
466,936
Rental revenue from equipment’s
-
5,960
Total
495,675
472,896
The Company obtains revenues from renting office spaces and equipment. The respective contracts have
12 months term.
Contracts concluded for rental of office space and equipment include only fixed leases.
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2023
(all amounts expressed in Lei (“RON”), unless otherwise specified)
30
3. OTHER OPERATING INCOME AND OTHER EXPENSES
3.1. Other operating income
In the table below other operating revenues are being detailed depending on their nature:
202
3
202
2
Other operating income:
- income from debts write-off
787,549
331,392
-
gain from disposal of fixed assets
135,461
128,979
-
earnings from compensations and penalties
828
-
- other revenues -
480
Total
923,838
460,851
Income from the debts write-off in amount of RON 787,549 (2022: RON 331,392) represent mainly the
cancellation of unclaimed dividends obligation, which were within the prescription limit and for which the
Company has taken all legal steps to settle. Debts write-off was made based of the Board of Directors
decision from 20 December 2023.
3.2. Expenses with third-party services
In the table below expenses for third party services are being detailed depending on their nature:
202
3
202
2
Travel expenses 1,754,189
1,001,499
Maintenance and repair expenses 1,684,862
1,298,390
Royalties and rental expenses 1,117,051
980,047
Insurance premiums 795,793
707,060
Postage and telecommunications 14,774
14,372
Bank commissions and similar charges 19,299
16,849
Entertaining, promotion and advertising 73,955
37,923
Goods transportation services 3,558,208
3,963,162
Well services rendered –by subcontractors 360,888
681,622
Outsourced activities services (*) 2,020,722
1,722,809
Dedicated management assistance and specialized technical consulting
services (*)
886,664
1,326,039
Others 1,070,029
783,377
Security services 778,533
694,354
Consultancy and audit 161,926
254,968
Total
14,296,893
13,482,471
The weight of these expenses in the structure of the operating costs is specific to the main activity,
regarding the service delivery at the headquarters of the beneficiaries with auto type equipment and the
flexible adaptability to the current market conditions.
During 2023, the company partially subcontracted services of acidizing, hot oil pumping and nitrogen for a
specific project to a third party. The value of the services performed by this subcontractor in order to fulfill
the contractual obligations assumed by the Company, as a supplier, amounts to RON 360,888 for the
financial year ended (2022: RON 681,622).
Considering the new legal requirement from 2023, to analyse the substance of contracts and distinctly
record services received / consulting services, the Company has revised the presentation of the
highlighted lines (*) also for prior period, by reclassifying between the two lines the amount of RON
246,926.
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2023
(all amounts expressed in Lei (“RON”), unless otherwise specified)
31
3. OTHER OPERATING INCOME AND OTHER EXPENSES (continued)
3.3. Other operating expenses
In the table below other operating expenses are being detailed depending on their nature:
202
3
202
2
Compensations, fines, penalties
4,236
3,470
Amounts or goods granted as sponsorship
212,378
2,584
Write-off trade receivables and sundry debtors
27,337
175,937
Destroyed / improper stocks -
881
Other operating expenses
9
6
Total
243,960
182,878
4. FINANCIAL EXPENSES AND REVENUES
4.1. Financial revenues
202
3
202
2
Interest income, from which:
3,839,712
3,849,094
Income obtained from the entities within the group 3,825,036
3,843,126
Income from exchange rate differences
41,705
798,768
Other financial income
799
2,522
Total financial income
3,882,216
4,650,384
The line “Income obtained from the entities within the group” in amount of RON 3,825,036 (2022:
RON 3,843,126) represents interest revenue from cash-pooling. For more details, including EIR please
refer to Note 21.
4.2. Financial expenses
202
3
202
2
Expenses from exchange rate differences
131,608
338,773
Other financial expenses, out of which
700,439
837,206
Interest expense on the lease liability
611,509
807,496
Total
financial expenses
832,047
1,175,979
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2023
(all amounts expressed in Lei (“RON”), unless otherwise specified)
32
5. PAYROLL COSTS
The expenses with salaries and taxes, recorded during 2023 and 2022 are as follows:
202
3
202
2
Expenses related to salaries and allowances
20,295,367
18,527,453
Other expenses with employees benefits
245,748
362,276
Contributions to special funds
197,148
145,990
Expenses related to the social insurances
474,298
391,597
Total
21,212,561
19,427,316
The increase in salaries costs, with 1.8 million RON compared with previous year, was the result of a
mixed actions taken by the management in order to stimulate the employees and to prevent and minimize
its fluctuation. Approximately 1,3 million RON is the effect of the collective labor negotiation that took
place in July 2022 with trade union, based on which an addendum to the collective labor agreement was
concluded, for the increases in wages and other rights.
The average number of employees increased from 133 at 31 December 2022 to 135 employees at
31 December 2023.
The average number of employees has evolved as follows:
202
3
202
2
Management personnel 2
2
Administrative personnel 16
19
Production personnel 117
112
The Administrators and Managers
During 2023 and 2022, the Company has paid the following remuneration to the members of the Board of
Directors and salaries to the executive directors:
202
3
202
2
The Members of the Board of Directors
462
,
889
237,450
Executive directors 1,205,982
836,548
Total
1,668,871
1,073,998
The presentation of average number of management personnel (executive directors), as well as level of
the remuneration paid to the executive directors, are disclosed according to the principles included in the
Remuneration Policy and Remuneration Report.
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2023
(all amounts expressed in Lei (“RON”), unless otherwise specified)
33
5. PAYROLL COSTS (continued)
As at 31 December 2023, the Company had no obligations with regards to post-employment benefits to
former Board of Directors members and former executive management members.
The amount of remuneration and salaries for key management personnel and Board of Directors for 2023
was of RON 1,668,871 (2022: RON 1,073,998), including short-term benefits and bonuses.
At the end of 2023, the Company had no advance payments to be reimbursed to the members of the
executive management and there were also no guarantees of future obligations taken over by the
company under the name of the Managers or Administrators.
6. INCOME TAX
Main components of income tax expenses for fiscal years ended as of 31 December 2023 and 2022 are:
Statement of profit and loss
202
3
202
2
Current income tax:
Expenses regarding the current income tax 2
,099,386
370,606
Deferred income tax
For the initial registration and continuation of the temporary differences (12,402)
57,205
Expenses regarding the income tax reported in statement of total
comprehensive income
2,086,984
427,811
Reconciliation between the expenses regarding the current income tax and the deferred income tax and
the accounting profit is as follows for fiscal years 2023 and 2022:
Current income tax
202
3
202
2
Accounting profit before tax
1
3
,
854
,
847
2,877,328
At Company’s statutory income tax rate of 16% (2022: 16%) 2,216,776
460,372
Effect of value adjustments from non-taxable incomes (20,432)
(47,860)
Non-deductible expenses for tax computation:
Allowance for trade receivables and inventories (27,992)
(66,980)
Depreciation of tangible assets
14,439
14,271
Other non-deductible expenses
128,974
82,440
Fiscal credit
(212,378)
(71,637)
Expenses
with current income tax at effective rate 16% (2022: 16%)
2,099,386
370,606
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2023
(all amounts expressed in Lei (“RON”), unless otherwise specified)
34
6. INCOME TAX (continued)
Deferred income tax
The deferred income tax refers to the following:
Statement of the financial position
Profit and Loss Statement
Other
Comprehensive Income
31 December
202
3
31 December
202
2
31 December
202
3
31 December
202
2
31 December
2023
31 December
2022
Revaluation of assets (fair value as deemed cost) with reserve transfer
to retained earnings (at transition to IFRS)
(
933
,
673
)
(936,673)
-
-
-
-
Recognition of right of use assets
(142,120)
(142,119)
-
(61,142)
-
-
Recognition of estimates for retirement benefits
188,154
165,235
(
10
,
142
)
(
25,599
)
33
,
061
81,393
Recognition of lease liability
143,693
143,693
-
62,946
-
-
Fair value valuation of financial assets
(390,678)
(588,671)
-
-
197,993
(80)
Recognition of estimate for untaken holiday
122,280
107,628
14
,
652
39,160
-
-
Temporary differences for inventory provisions
54,254
64,783
(1
0
,
528
)
(14,080)
-
-
Temporary differences for expected credit losses
116,405
97,984
18,421
(58,489)
-
-
(Expenses regarding) /income from the deferred tax
12
,
402
(57,205)
231
,
055
81,
313
Assets regarding the deferred tax
624,787
579,324
Liabilities regarding the deferred tax
(1,
469
,
472
)
(1,667,464)
Assets / (Liabilities) regarding the deferred tax, net
(
844
,
685
)
(1,088,141)
The reconciliation of deferred tax payable is as follows:
202
3
202
2
Beginning of balance
1,
088
,
141
1,112,249
Deferred tax expense recognized in profit and loss (12,402)
57,205
Deferred tax expense recognized in other comprehensive income (231,055)
(81,313)
Ending Balance
844
,
685
1,088,141
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2023
(all amounts expressed in Lei (“RON”), unless otherwise specified)
35
7. EARNINGS PER SHARE
The value of earning per share is calculated by dividing the net profit of the year attributable to
shareholders by the weighted average number of shares outstanding during the period.
The following report present the net profit and the number of shares used in computing earnings per
share:
31 December
202
3
31 December
20
2
2
Net result attributable to shareholders
11,767,863
2,449,517
Weighted average number of shares
278,190,900
278,190,900
Basic e
arnings per share (RON / share)
0.0423
0.0088
Diluted earnings per share equal basic earnings per share.
There was no issue or cancellation of shares between the date of the report and the date of the
presentation of the financial statements.
8. PROPERTY, PLANT & EQUIPMENT
Land
Buildings and
special
constructions
Technical
equipment and
machinery and
other tangible
assets
Advances
and
Tangible
assets in
progress
Total
Cost
On 1 January 202
2
5,440,229
8,061,799
85,471,802
3,678,596
102,652,424
Additions
-
4,376
390,214
2,953,672
3,348,262
Disposals -
(27,172)
(1,410,482)
-
(1,437,654)
Transfers
-
8,111
4,365,989
(4,374,100)
-
On 31 December 202
2
5,440,229
8,047,114
88,817,523
2,258,168
104,563,032
Additions
-
-
61,506
831,130
892,636
Disposals
(1,674)
(21,086)
(36,548)
-
(59,308)
Transfers -
398,872
2,286,807
(2,685,679)
-
On 31 December 202
3
5,4
38
,
555
8,424,900
91,129,288
403,619
105,396,360
Depreciation and Impairment
On 1 January 202
2
-
3,420,808
74,178,610
-
77,599,419
Depreciation charge for the year -
318,947
3,380,770
-
3,699,717
Disposals
-
(22,441)
(1,410,369)
-
(1,432,810)
On 31 December 202
2
-
3,717,314
76,149,011
-
79,866,326
Depreciation charge for the year
-
329,968
3,874,173
-
4,204,142
Disposals
-
(8,607)
(36,548)
-
(45,155)
Impairment -
-
-
-
-
On 31 December 202
3
-
4,038,675
79,
986
,
636
-
8
4
,
025
,
312
Net
book
value
On 31 December 202
3
5,4
38
,
555
4,3
86
,
224
1
1
,
142
,
653
403
,
619
2
1
,
371
,
048
On 31 December 2022 5,440,229
4,329,800
12,668,512
2,258,168
24,696,706
On 1 January 2022
5,440,229
4,640,991
11,293,192
3,678,596
25,053,005
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2023
(all amounts expressed in Lei (“RON”), unless otherwise specified)
36
8. PROPERTY, PLANT & EQUIPMENT (continued)
A percentage of 79% from the increase recorded during 2023 for plant and equipment, in amount of
RON 2.2 million, is represented by the acquisition and / or the upgrade of machinery and equipment used
for well services operations and other preliminary operations, as well as laboratory equipment, which
were in progress and completed during the year.
Approximately 21% from total investments conducted by the company in 2023 were related to
rehabilitation and modernization of the operational buildings and replacement of IT equipment.
The Company used own funds in order to finance the budgeted capital expenditure for 2023.
The Company is performing an annual assessment in order to identify potential indicators for impairment
of tangible assets, considering specific characteristics of these assets and taking into account estimates
of future cash flows generated by the respective assets.
The Company performed an impairment test for tangible assets as of 31 December 2023, which aimed to
determine the recoverable amount of the equipment and the production capacities, and concluded that no
impairment adjustment is required in addition to the impairment of RON 509 thousand recognized as of
31 December 2021. The recoverable amount of this equipment was determined based on discounted
cash flows estimated to be generated by the assets (Note 1.3 ii)).
All presented tangible assets are the property of the Company.
As of 31 December 2023 and 31 December 2022, the Company has not pledged assets and interest
rated capitalized.
As of 31 December 2023 total gross book value of property, plant and equipment items that are fully
depreciated is RON 64,184,377 (2022: RON 63,696,881).
9. INVESTMENT PROPERTIES
The company has an apartment block in Campina and two apartments in Timisoara, held with the
exclusive target to obtain income from rents. These are being classified as investment properties.
202
3
202
2
Initial balance on 1 January
432,799
451,402
Depreciation expenses (18,603)
(18,603)
Ending balance on 31 December
4
14
,
197
432,799
202
3
202
2
Income from rents obtained from real estate investments 13,127
12,433
Direct operational expenses (including repairs and maintenance) which
generate income from rents
(37,872)
(37,872)
Net result from investment property recorded at cost
(2
4
,
744
)
(25,439)
At 31 December 2023, the fair values of the properties determined by S.C. FairValue Consulting SRL, a
recognised independent evaluator, were in amount of RON 1,800,627.
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2023
(all amounts expressed in Lei (“RON”), unless otherwise specified)
37
10. INTANGIBLE ASSETS
Patents and
licenses
Total
Costs
On 1 January 202
2
765,916
765,916
Additions 15,697
15,697
Disposals
-
-
Transfers
-
-
On 31 December 2022 781,613
781,613
Additions
37
,
305
37
,
305
Disposals -
-
Transfers
-
-
On 31 December 202
3
818
,
918
818
,
918
Amortisation and impairment
On 1 January 2022 647,663
647,663
Depreciation charge for the year
73,332
73,332
Disposal -
-
On 31 December 2022
720,995
720,995
Depreciation charge for the year
38
,
273
38
,
273
Disposal -
-
On 31 December 202
3
7
59
,
267
7
59
,
267
Net
book value
On 31 December 202
3
59
,6
51
59
,6
51
On 31 December 2022 60,618
60,618
On 1 January 202
2
118,252
118,252
11. EQUITY INSTRUMENTS AT FVOCI
Name of the company
Nature of the
relationship
Year of
investment
Percent
held
on
Fair value
of the investment on
31 January
20
2
2
31 December
202
3
31 December
20
2
2
31 December
202
3
Rompetrol Logistics SRL
Long term
investment
2002/2003/2007
6.98%
6.98%
8,456,518
7
,
120
,
147
Rompetrol Rafinare SA*
Long term
investment
2003/2004
0.05%
0.05%
1,747,434
1,846,345
Rompetrol Drilling SRL
Long term
investment
2014
1%
-
100
-
Total
10,204,052
8
,
966
,
492
*Company listed on Bucharest Stock Exchange under RRC symbol.
For more details regarding equity instruments at FVOCI please refer to Note 1.3) iii) Fair value of financial
instruments.
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2023
(all amounts expressed in Lei (“RON”), unless otherwise specified)
38
12. OTHER FINANCIAL ASSETS
31 December
202
3
31 December
20
2
2
Collateral account for guarantee letters with maturity over one year
5,611,881
1,264,214
Specific account for dividends
941,937
1,255,210
Specific accounts for other guarantee
27,054
20,171
Other financial assets
6,580,872
2,539,595
The presentation of collaterals as non-current assets is made considering the initial maturity of the
collateral accounts in accordance with IAS 7.
The details on the structure of collateral account for guarantee letters with maturity over one year can be
found bellow (see details in Note 22):
Number
Beneficiary
Currency
Amount
equivalent
RON
Start date
Maturity
date
Currency
collateral
deposit
Collateral
deposit
equivalent
RON
LG99007664
*
OMV PETROM S.A.
RON
883,580
18
-
Jan
-
22
31
-
Dec
-
24
RON
883,580
LG99007665
*
OMV PETROM S.A.
RON
2,439,493
18
-
Jan
-
22
31
-
Dec
-
24
RON
2,439,493
LG9000004272
*
OMV PETROM S.A.
RON
82,751
6
-
Jul
-
22
30
-
Jun
-
26
RON
82,751
LG99008693* OMV PETROM S.A. RON
1,157,059
23-Nov-22
13-Dec-24
RON
1,157,059
LG99008060
*
OMV PETROM S.A.
RON
290,700
7
-
Dec
-
22
31
-
Dec
-
24
RON
290,700
LG9000007786
OMV PETROM S.A.
RON
349,242
2
-
Feb
-
23
31
-
Mar
-
28
RON
349,242
LG00888-02-
0938985
OMV PETROM S.A. RON 246,465
28-Apr-23
18-Jun-24
RON
246,465
43840
S.N.G.N. ROMGAZ S.A.
RON
162,591
23
-
Nov
-
23
4
-
Dec
-
26
RON
162,591
Total collateral accounts with maturity over one year as of 31 December 202
3
5
,
611
,
881
* The first five guarantee letters were presented in previous year as short term (see note 16.1). During
2023, the validity of the frame contracts and/or existing addendums was revised, and the respective
maturity and values of these, were updated as such.
No collateral account was closed subsequent to 31 December 2023.
Number
Beneficiary
Currency
Amount
equivalent
RON
Start date
Maturity
date
Currency
collateral
deposit
Collateral
deposit
equivalent
RON
28471 SNGN ROMGAZ SA RON
1,264,214
02-Sep-20
22-Sep-22
RON
1,264,214
Total collateral accounts with maturity over one year as of 31 December 2022
1,264,214
Subsequently to 31 December 2022 the above collateral account was closed.
13. INVENTORIES
31 December
202
3
31 December
202
2
Cement and additives (at cost)
3,461,894
3,866,468
Spare parts equipment (at cost)
1,700,101
1,753,633
Other inventories (at cost)
280,048
331,372
Total inventories, net
5,
442
,
042
5,951,473
The inventories mainly contain cement, additives and spare parts for special equipment. For the items
whose procurement process is relatively long, as well for the items whose consumption is dependent on
fluctuating demand of our customers, it is applied an optimization quantitative procurement, which
explains a variation of inventory value between two acquisitions.
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2023
(all amounts expressed in Lei (“RON”), unless otherwise specified)
39
13. INVENTORIES (continued)
The presented allowance for inventories is related to obsolete and slow moving spare parts and other
inventories.
Allowance for
inventories
On 1 January 202
2
492,894
Additions -
Used during the year (88,003)
On 31 December 202
2
404,891
Additions
1,641
Used during the year (67,444)
On 31 December 202
3
339,089
14. TRADE AND OTHER RECEIVABLES
31 December
202
3
31 December
202
2
Trade receivables
-
third parties
18,614,285
17,897,272
Trade receivables with affiliated entities (Note 21)
31,152
51,930
Allowance for trade receivables – third parties (1,276,054)
(1,153,866)
Allowance for trade receivables – affiliated entities (Note 21) (8,110)
(8,391)
Total trade receivables, net
17,361,272
16,786,945
Other receivables – third parties
1,060,147
318,840
Other receivables with the affiliated entities (Note 21)
154,019
154,019
Other receivables with state budget
53,934
54,943
Allowance for other receivables – third parties (213,790)
(218,730)
Allowance for other receivables – affiliated entities (Note 21) (152,580)
(152,580)
Total other receivables, net
901,729
156,492
Total receivables, net
1
8
,
263
,
002
16,943,438
Other receivables – third parties includes the amount of RON 696,920 representing the counter value of a
good performance guarantee related to an ongoing litigation (details in Note 22).
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2023
(all amounts expressed in Lei (“RON”), unless otherwise specified)
40
14. TRADE AND OTHER RECEIVABLES (continued)
Trade receivables are usually collected within 30 to 90 days.
In the table below, there are detailed the movements within the provision for the impairment of trade and
other receivables:
Individually
impaired
Collectively
impaired
Total
On 1 January 202
2
1,321,536
841,868
2,163,404
Charge for the year
49,195
61,387
110,582
Unused amounts, reversed (527,878)
(1,328)
(529,206)
Amounts written-off (211,124)
-
(211,124)
Exchange rate differences -
(89)
(89)
On 31 December 202
2
631,729
901,838
1,533,567
Charge for the year 36
160,074
160,110
Unused amounts, reversed (9,699)
(4,345)
(14,044)
Amounts written-off -
(32,589)
(32,589)
Exchange rate differences -
3,491
3,491
On 31 December 202
3
6
22
,
066
1,028
,
468
1,
650
,
534
The impairment loss for financial assets evaluated at amortized cost are calculated based on three stage
model, using swap for credit risk, internal or external ratings of counterparties and corresponding
probability of default. For all trade receivables, the impairment losses are estimated based on simplified
approach, recognizing anticipated losses for their entire lifetime.
Impairment losses, calculated and recognized, based on the new model required by IFRS 9 for
Company’s trade receivables, is presented as follows:
Total trade receivables
At 31 December
202
3
Current
< 30 days
31 – 60
days
61- 90
days
91 - 180
days
181 -
360
days
> 360 days
Total
Expected credit loss rate (%)
0.38%
8.42%
49.40%
82.12%
82.12%
82.12%
100.00%
Estimated total gross
carrying amount at default
15,338,880
1,921,260
70,387
1,464
18,665
12,929
1,281,851
18,645,436
Expected credit loss
(2,485)
(5,227)
(3,903)
(1,203)
(4,208)
(6,236)
(1,260,903)
(1,284,164)
Total trade receivables
At 31 December 202
2
Current
< 30 days
31 – 60
days
61- 90
days
91 - 180
days
181 -
360
days
> 360 days
Total
Expected credit loss rate (%)
0.63%
1.55%
54.48%
68.13%
58.58%
57.05%
100%
Estimated total gross
carrying amount at default
13,302,769
3,379,500
88,992
1,489
10,765
56,731
1,108,957
17,949,202
Expected credit loss
(11,851)
(6,003)
(337)
(71)
(2,148)
(53,731)
(1,088,116)
(1,162,257)
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2023
(all amounts expressed in Lei (“RON”), unless otherwise specified)
41
15. OTHER CURRENT ASSETS
31 December
202
3
31 December
202
2
Advance expenses for car insurance
375,692
483,275
Advance expenses for vignette
107,505
102,597
Advance expenses for business insurance
456,039
402,207
Advance expenses for authorizations, transportation licenses,
subscriptions, others
114,510
111,360
Other current assets TOTAL
1,053,746
1,099,439
The values represent the payments carried out during the current year, for costs which affect the next
financial year in accordance with the validity period for the insurances, authorizations, licenses,
subscriptions.
16. CASH AND DEPOSITS
31 December
202
3
31 December
202
2
Bank accounts in RON
1,287
701
Bank accounts in foreign currency
3,783
2,930
Short term deposits in RON
557,078
401,720
Short term deposits in foreign currency
56,210
50,167
Petty cash in RON
12,324
15,964
Petty cash in foreign currency
17,860
20,234
Total cash and short term deposits
648,543
491,717
The cash in banks records interests at variable rates, depending on the daily rates of the deposits in
banks. The short term deposits are being constituted for periods of one day and records interests for the
respective rates of the short term deposits.
The service providing contracts concluded with our main customers contain clauses referring to creation
of performance guarantees through a guarantee granting instrument issued under the provisions of the
law, by a bank or insurance company, i.e. Letters of Bank Guarantees.
Collateral deposits were classified depending on the maturity calculated from the starting date of the
deposit. (details in Note 12 and 16.1).
Note 21 presents the details regarding the company’s participation for the year 2023 to the system for
optimization of cash availability between the companies within KazMunayGas International Group, known
as cash pooling concept. The amount available in the principal account on 31 December 2023 was of
RON 50,388,545 (2022: RON 45,860,051), being ready to use without restriction, depending on the
necessity.
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2023
(all amounts expressed in Lei (“RON”), unless otherwise specified)
42
16. CASH AND DEPOSITS (continued)
16.1 COLLATERAL CASH FOR LETTERS OF GUARANTEE
The detail of the collateral deposits as at 31 December 2023 for the Letters of Bank Guarantee with maturity between less than 12 months is enclosed in the table
below:
Number
Beneficiary
Currency
Amount
equivalent
RON
Start Date
Maturity date
Currency
collateral
deposit
Collateral
deposit
equivalent
RON
40140
S.N.G.N. ROMGAZ S.A.
RON
121
,
112
20
-
Jan
-
2
3
31
-
Jan
-
2
4
RON
121
,
112
Total collateral deposits
121
,
112
The collateral deposits as at 31 December 2022 had the following components:
Number
Beneficiary
Currency
Amount
equivalent
RON
Start Date
Maturity date
Currency
collateral
deposit
Collateral
deposit
equivalent
RON
99007664
OMV PETROM S.A.
RON
320,210
18
-
Jan
-
22
14
-
Jan
-
23
RON
320,210
99007665 OMV PETROM S.A. RON
529,196
18-Jan-22
14-Jan-23
RON
529,196
9000004272
OMV PETROM S.A.
RON
216,108
6
-
Jul
-
22
15
-
Jul
-
23
RON
216,108
99008693
OMV
PETROM S.A.
RON
221,670
23
-
Nov
-
22
29
-
Oct
-
23
RON
221,670
99008060
OMV PETROM S.A.
RON
57,821
7
-
Dec
-
22
1
-
Apr
-
23
RON
57,821
34741 S.N.G.N. ROMGAZ S.A. RON
58,994
7-Oct-21
5-Nov-22
RON
58,994
Total collateral deposits
1,404,000
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2023
(all amounts expressed in Lei (“RON”), unless otherwise specified)
43
17. SHARE CAPITAL
17.1. Subscribed share capital
The last modification of the share capital has been in 2008, when the shareholders have decided, after
the general meeting which has taken place on 20 June 2008, to increase the share capital of the
company by the amount of RON 13,909,545, from RON 13,909,545 up to RON 27,819,090, through
issuing, for free, of a number of 139,095,450 new shares with a nominal value of RON 0.10 / share.
The new issued shares have been allocated for the shareholders registered under the Shareholders’
Registry at the date of the registration, approved by the Extraordinary Meeting of the Shareholders,
respectively July 8th 2008, proportional to the amounts held by each of them. The allocation index has
been 1. The issuing of shares has been financed from the reserves of the result carried forward of the
financial year 2007, respectively from the amount allocated to Other reserves.
The finalization of the procedural phases for approval and recognition has been officially signaled through
the repetition of the transacting of the shares, after the increase of the share capital, on
18 September 2008, without undergoing modifications until 31 December 2023.
31 December
202
3
31 December
202
2
Number
Number
Subscribed capital, ordinary shares 278,190,900
278,190,900
RON
RON
Nominal value, ordinary shares 0.1
0.1
RON
RON
Value of the share capital 27,819,090
27,819,090
The share capital of the company is totally paid in on 31 December 2023.
The Company is listed under the Bucharest Stock Exchange under the symbol PTR.
17.2. Adjustments on share capital
According to the IAS 29 provisions, the company has adjusted the costs of its purchased investments
until 31 December 2003 with the purpose of reflecting the accounting impact in the hyperinflation. The
value of the share capital has been increased at 31 December 2012 by RON 166,740,745. This
adjustment had no impact over the carried forward distributable profit of the company. In 2013, the
general ordinary meeting of shareholders on 30 April 2013 approved to cover the brought forward
accounting loss from first application of IAS 29 “Financial Reporting in Hyperinflationary Economies” in
amount of RON 166,002,389, from own capitals, i.e. “adjustment of share capital”. The effect of this
decision for the structure of share capital on 31 December 2023, as well as on 31 December 2022 and is
presented in the table below:
31 December
202
3
31 December
202
2
Share capital, from which:
28,557,446
28,557,446
Paid
-
in share capital
27,819,090
27,819,090
The adjustment of the share capital 738,356
738,356
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2023
(all amounts expressed in Lei (“RON”), unless otherwise specified)
44
18. LEASES
18.1 The right-of-use assets
The statement of the identified assets as of 31 December 2023 is presented in the table below:
Cost
Technical
equipment and
machinery and other
tangible assets
Advances
Total Right
of use
assets
On 1 January 202
2
1,303,897
1,297,120
2,601,017
Additions
12,602,570
-
12,602,570
Remeasurement
11,622
-
11,622
Transfers
1,297,120
(1,297,120)
-
On 31 December 202
2
15,215,209
-
15,215,209
Additions
-
-
-
Remeasurement
93
,6
70
-
93
,6
70
Transfers
-
-
-
On 31 December 202
3
15,
308
,
878
-
15,
308
,
878
Depreciation and impairment
On 1 January 202
2
797,782
-
797,782
Depreciation charge for the year
1,103,906
-
1,103,906
Transfers
-
-
On 31 December 202
2
1,901,688
-
1,901,688
Depreciation charge for the year
1,
660
,
944
-
1,
660
,9
44
Transfers
-
-
On 31 December 2023 3,562,632
-
3,562,632
Net book value
On 31 December 202
3
1
1
,
746
,
246
-
1
1
,
746
,
246
On 31 December 2022 13,313,521
-
13,313,521
On 1 January 202
2
506,116
1,297,120
1,803,236
At the beginning of 2020, the Company signed a financial leasing contract which acquires the right to use
two production equipment (cement pumping units). The financing contract has a period of 5 years,
starting with the date of the goods receipt, the total value of the equipment’s being of EUR 2,680,000
(equivalent of RON 12,061,957), the option to buy the goods being expressed at the moment the contract
was signed. The Company paid in the first half of the year 2020 the advance, as part of the leasing
contract, in amount of RON 1,297,120. The equipment was delivered in the first half of 2022 which
resulted in the recognition of assets under the category rights of use of assets in the amount of RON
12,061,957.
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2023
(all amounts expressed in Lei (“RON”), unless otherwise specified)
45
18. LEASES (continued)
18.2 Lease liability
The accounting value of the lease liability and the movements recorded in this category during financial
year 2023:
202
3
202
2
At 1 January
11,267,449
504,674
Additions during the period -
12,602,570
Remeasurement of lease contract 93,669
11,361
Interest associated to lease liability 611,509
807,496
Lease instalments (3,240,489)
(2,627,463)
Exchange rate difference for liability 73,497
(31,188)
Balance at 31 December
8
,
805
,
636
11,267,449
Current 2,632,998
2,621,796
Non-current 6,172,638
8,645,653
For details regarding undiscounted potential future lease payments, please refer to Note 23.
The following expenses represent amounts recognized in profit and loss account in connection to lease
contracts:
202
3
202
2
Depreciation expense of right of use assets 1,660,944
1,103,906
Interest expense on lease liability
611,509
807,496
Expense relating to short-term leases
73,927
19,942
Variable lease payments
86,461
43,359
Total amounts recognised in profit or loss account
2,432,841
1,974,703
The maturity analysis of lease liabilities is disclosed in Note 23.
19. OTHER POST EMPLOYMENT BENEFITS
202
3
202
2
Balance at 1 January
1,032,717
684,006
Included in profit or loss
Interest expense
88,130
24,516
Service Cost
67,663
240,577
(Gain) / loss on settlement
(219,182)
(425,088)
Included in other comprehensive income
Actuarial loss/(gain)
206,633
508,706
Balance at 31 December
1,175,961
1,032,717
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2023
(all amounts expressed in Lei (“RON”), unless otherwise specified)
46
19. OTHER POST EMPLOYMENT BENEFITS (continued)
The liabilities regarding pensions and other similar obligations have been determined based on the
provisions of the collective labour contract of the Company, which stipulates the payment of a number of
salaries to each employee at retirement, depending on the period of employment. As of 31 December
2023, the amount of the provision for benefits to be granted at retirement is RON 1,175,961. The
computation is based on a actuarial model, prepared by on independent party and took into consideration
mainly the turnover of the employees, the age of the employees, the estimated mortality rate, the
estimated salary costs evolution, discount rates.
Due to micro and macroeconomic trends observed in the oil and gas sector, the estimates applied for the
computation of the retirement benefits have been revised being summarized in the table bellow:
31 December
202
3
31 December
202
2
%
%
The turnover of the personnel in one year 3.7
4.8
The contribution of the company to the gross salary 2.50
2.50
The inflation rate of the salary 4.80
4.00
The nominal discounting rate (the interest rate for governmental bonds) 7.00
8.90
A quantitative sensitivity analysis for significant assumptions as at 31 December is, as shown below:
Impact on defined
benefit obligation
202
3
Impact on defined
benefit obligation
2022
Discount rate assumptions:
1% increase
(87,318)
(67,436)
1% decrease
97,749
74,824
Salary sensitivity assumption:
1% increase
101,147
79,855
1% decrease (91,671)
(72,818)
Longevity sensitivity assumption:
+ 1 year
3,166
1,414
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2023
(all amounts expressed in Lei (“RON”), unless otherwise specified)
47
20. TRADE PAYABLES AND SIMILAR LIABILITIES (CURRENT)
31 December
202
3
31 December
202
2
Trade payables - third parties
3,584,531
5,718,634
Trade payables with affiliated entities
737,670
591,048
Salaries
1,774,011
2,392,381
Dividends to be paid
5,419,839
6,272,271
Other taxes
1,153,704
1,138,147
Other liabilities -
6,000
Total
1
2
,
669
,
755
16,118,481
21. PRESENTATION OF THE AFFILIATED PARTIES
The following tables present information on transactions with companies under common control of
KazMunayGas Group as of 31 December 2023.
Name of the company
Transaction type
Country of
origin
The nature of relationship
KMG International NV
Payments of dividends Holland
Parent Company
Rompetrol Rafinare SA
ITP services Romania
Minority investment of 0.05% of the
Rompetrol Rafinare share capital
Rompetrol Logistics SRL
ITP services, reinvoicement
security services
Romania
Minority investment of 6.98%, of the
Rompetrol Logistics share capital
Oilfield Exploration Business Solutions
SA
ITP services Romania
Company member of KMG International
Group
Rompetrol Downstream SRL
Procurement of fuel, procurement
of rovignete
Romania
Company member of KMG International
Group
KMG Rompetrol SRL
Management and IT services,
cash pooling services
Romania
Company member of KMG International
Group
Rominserv SRL
ITP services Romania
Company member of KMG International
Group
Rompetrol Drilling SRL
Rental of premises Romania
Company's subsidiary, where
Rompetrol Well Services has
1%
KMG Rompetrol Services Center SRL
Services for procurement, legal,
employees, translations and IT,
rental of
premises
Romania
Company member of KMG International
Group
Rompetrol Quality Control SRL
Laboratory test Romania
Company member of KMG International
Group
Global Security Sistem SA
Security services
Romania
Associate of KMG
International Group
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2023
(all amounts expressed in Lei (“RON”), unless otherwise specified)
48
21. PRESENTATION OF THE AFFILIATED PARTIES (continued)
Receivables
31 December
202
3
31 December
202
2
KMG Rompetrol SRL 50,730,823
46,117,041
Rompetrol Logistics SRL 22,966
43,473
KMG Rompetrol Services Center SRL 1,515
1,506
Total
50
,
755
,
304
46,162,020
Liabilities
31 December
202
3
31 December
202
2
KMG Rompetrol SRL 163,208
67,588
Rompetrol Downstream SRL 549,681
319,763
KMG Rompetrol Services Center SRL
23
,
239
200,470
Rompetrol Quality Control SRL 864
-
Global Security Sistem SA 678
3,226
Total
737
,
670
591,048
Sales
202
3
202
2
KMG Rompetrol SRL 3,825,036
3,843,126
Rompetrol Logistics SRL 245,157
218,506
KMG Rompetrol Services Center SRL 7,718
7,696
Oilfield Exploration Business Solutions SA
85
77
Global Security Sistem SA -
77
Rompetrol Rafinare SA 488
232
Rompetrol Drilling SRL 30
362
Rominserv SRL
1
19
108
Total
4,07
8
,
634
4,070,185
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2023
(all amounts expressed in Lei (“RON”), unless otherwise specified)
49
21. PRESENTATION OF THE AFFILIATED PARTIES (continued)
Acquisition of goods and services
202
3
202
2
Rompetrol Downstream SRL 5,360,267
4,837,179
KMG Rompetrol SRL 2,901,536
3,107,244
KMG Rompetrol Services Center SRL 954,900
861,444
Global Security Sistem SA 17,202
21,458
Rompetrol Quality Control SRL 2,541
-
Total
9
,
236
,
446
8,827,325
Starting with 2014, it was implemented an optimization system for the cash availability between the
companies within KazMunayGas International Group, known as cash pooling concept. Cash pooling
system was implemented in relation to cash availability from certain bank accounts of the Company, and
the direct effect will be transposed to the optimization of cash for the company, with impact in the interest
income. According to the cash pooling system, in terms of assets presentation, the amounts available at
the end of the reporting period is reflected in the statement of financial position in the line “Availabilities in
cash pooling system”. During the reporting period, the average balance of master account was
RON 47,476,902, generating interest in amount of RON 3,825,035. The value of these receivables as of
31 December 2023 was of RON 50,730,823
.
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2023
(all amounts expressed in Lei (“RON”), unless otherwise specified)
50
21. PRESENTATION OF THE AFFILIATED PARTIES (continued)
Description
Validity term
Contract
Date
Maturity
Date
Interest rate
Currency
Principal
Interest
receivable
as of
31 December
20
2
2
Balance existing
as of
31 December
20
2
2
Interest
receivable
as of
31 December
202
3
Balance
existing
as of
31 December
202
3
Cash Optimization System
implementation of The KMG
Rompetrol Group companies
(cash pooling)
12 months, with
automatically
extension
15-Sep-14
15-Sep-24
Based on
ROBOR
OVERNIGHT
RON
Depending on the
working capital
needs
256,990
45,860,051
342,278
50,388,545
Total
256,990
45,860,051
342,278
50,388,
5
45
On 17 October 2019, KMG International NV issued a deed guarantee in favor of the Company for an amount up to 30 million USD, in connection with the current
cash pooling contract.
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2023
(all amounts expressed in Lei (“RON”), unless otherwise specified)
51
22. COMMITMENTS AND CONTINGECIES
Guarantees to third parties
The service providing contracts concluded with our main customers contain clauses referring to creation
of performance guarantees through a guarantee granting instrument issued under the provisions of the
law, by a bank or insurance company, i.e. Letters of Bank Guarantees.
The detail of the collateral accounts on 31 December 2023 and 2022 for the Letters of Bank Guarantee is
enclosed in Note 12 and Note 16.1.
Transfer pricing
Fiscal legislation in Romania includes the principle of “market value”, according to which transactions
between affiliated parties must be conducted at market value. Taxpayers which conduct transactions with
affiliated parties must prepare and readily present to Romanian fiscal authorities at their written demand
the transfer price file. The failure to present the transfer price file or the presentation of an incomplete file
may lead to application of penalties for nonconformity; in addition to the content of the transfer price file,
the fiscal authorities might interpret differently the transactions and circumstances than the interpretation
of management and, as a consequence, might impose additional fiscal obligations resulting from
adjustment of transfer prices. The management of the Company is considering that it will not suffer losses
in case of a fiscal control for the verification of transfer prices. However, the impact of possible different
interpretations of the fiscal authorities can’t be estimated.
Litigation
The Company is involved in a litigation file having as object a call for guarantee concerning a provision of
services, the amount of the claims being approximately RON 697,000. The Company lawyer informed the
management about the status of the litigation file, to the effect that based on the information/documents
and the arguments of the parties, currently included in the file before the Court, there are no indications
that could lead to a possible admission of the call for guarantee filed against the Company. For the same
amount, the Company filed a request for its refund, case in which the court ordered the application to be
granted and ordered to refund the amount. The case is under appeal. Therefore, no provision for litigation
was recorded in these financial statements.
23. OBJECTIVES AND POLICIES FOR THE FINANCIAL RISK MANAGEMENT
The risk of the interest rate
Loans received: the company is not involved in any loan contract and therefore not exposed to
risks regarding the movement of the interest rate;
Loan granted: for the loans granted presented in note 21 (Availabilities in cash pooling system),
the income from interest varies, depending on OVERNIGHT ROBOR.
Considering the cash availabilities of the Company which are managed through cash pooling system, the
current increased interest rates have positive impact on the Company’s financial result.
If interest rates would have varied with + / - 1 percent and all other variables would have been constant,
the net result of the Company as of 31 December 2023 would increase / decrease with RON 481,409
(2022: increase / decrease with RON 580,433).
Risk of the exchange rate variations
Most of the transactions of the company are in RON. Depending on the case, the structure of the
amounts available in cash and the short-term deposits are also being adapted. The difference between
the entry of the amounts in foreign currency and their repayment cannot generate, through the variation of
the exchange rate, significant impact in the Company’s financial position.
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2023
(all amounts expressed in Lei (“RON”), unless otherwise specified)
52
23. OBJECTIVES AND POLICIES FOR THE FINANCIAL RISK MANAGEMENT (continued)
Foreign currency sensitivity
The following tables demonstrate the sensitivity towards a possible reasonable change (5%) of the
exchange rate of the USD dollar, EUR, all other variables being maintained constant.
The impact over the profit of the company before taxation is due to the changes in fair value of the assets
and monetary debts. The exposure of the company to the foreign currency modifications for any other
foreign currency is not significant.
Total
5%
5%
RON
USD
EUR
31 December 202
2
Balance
(128,633)
(53,591)
(75,042)
Monetary assets
21,547
3,060
18,487
Monetary liabilities
(150,180)
(56,651)
(93,528)
31 December 202
3
Balance
(63,333)
(1,386)
(61,947)
Monetary assets
31,468
619
30,849
Monetary liabilities
(94,802)
(2,005)
(92,796)
The credit risk
The company treats the crediting of its customers procedural, with flexibility through the stable contracting
strategy as an essential mechanism for the risk repartition. The unfavorable conditions of the current
market environment might impact our existing customers of the company, but the Management
permanently monitors the receivables, collections and potential impairments. Having a constant
customers’ structure ensures a level of overdue receivables which does not vary significantly from one
period to another.
The market risk
The geopolitical context and the uncertainty faced by the region during this period triggered an increase in
the purchase prices for the goods and services contracted by the company for the current activities, but
also a fluctuation in delivery terms. However, Management is constantly looking to align to the current
market condition the service tariffs as well as the type of services rendered.
Taking into consideration the structure and continuance of trade contracts, it can be highlighted as
important clients SC OMV Petrom SA and SNGN Romgaz SA concentrating around 85% of the total
turnover registered for the financial year 2023.
Cyber risk
The progress made toward digitalization certainly brings great benefits, however as the use of new
technologies and their capabilities increases, so do the risks derived from their exposure in cyberspace,
the reliance on the systems deployed and the information generated by the Company. The risks are not
only technical but also business related and may lead to operational disruptions, fraud or theft of sensitive
information.
In 2022, we were subject to an attempt to gain unauthorized access to our computer network and
systems, which did not result in major operational disruptions and have not had a material adverse effect
on us, however this kind of events may occur in the future.
The Company continuously improves cyber security capabilities. and supervise the cyber security activity,
ensuring the protection of the confidentiality, integrity and availability of data. Also, the Company
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2023
(all amounts expressed in Lei (“RON”), unless otherwise specified)
53
23. OBJECTIVES AND POLICIES FOR THE FINANCIAL RISK MANAGEMENT (continued)
continuously educates their employees and partners about cyber security risks and support them to act in
a responsible way.
Impact of sanction risks and conflict in Ukraine
In the context of the military conflict between Russia and Ukraine, started on 24 February 2022, the EU,
USA, UK and other countries imposed various sanctions against Russia, including financing restrictions
on certain Russian banks and state-owned companies as well as personal sanctions against a number of
individuals.
Considering the geopolitical tensions, since February 2022, there has been an increase in financial
markets volatility and exchange rate depreciation pressure.
These events continue to affect the activities in various sectors of the economy, resulting in increases in
European energy prices and increased risk of supply chain disturbances.
The Company does not have direct exposures to related parties and/or key customers or suppliers from
those countries since the Company and its main customers activate only on local market, therefore the
most recently sanctions imposed against Russia do not to have an direct impact on the Company’s
activity.
At this stage Management doesn’t expect that such conflict will have a significant negative impact on the
Company’s operations and on the recoverable value of the Company’s long term assets.
Liquidity risk
The Company monitors its risk of a shortage of funds using a liquidity planning tool.
The Company’s objective is to maintain a balance between continuity of funding and flexibility through the
efficient use of working capital. Approximately 48% of the Company’s debt will mature in less than one
year at 31 December 2023 (2022: 52%) based on the carrying value reflected in the financial statements.
The Company assessed the concentration of risk with respect to chargeability of its debt and concluded it
to be low.
The table below details the profile of the payment terms of the financial liabilities of the Company, based
on undiscounted contractual payments:
Trade payables and similar liabilities
On
demand
Under
3 months
Between 3 and
12 months
Between
1 and 5
years
Over
5 years
Total
Trade payables
-
third parties
42,473
2,914,858
428,638
198,562
-
3,584,531
Trade payables with affiliated entities
316,169
421,501
-
-
-
737,670
Lease liabilities
-
435,840
1,986,325
6,383,472
-
8,805,636
Dividends to be paid
9,107
178,085
2,153,205
3,079,442
-
5,419,839
Other liabilities -
-
-
-
-
-
Total year 202
3
367,748
3,950,284
4,568,168
9,661,476
-
18,547,676
Trade payables and similar liabilities
On
demand
Under
3 months
Between 3 and
12 months
Between
1 and 5
years
Over
5 years
Total
Trade payables
-
third parties
21,245
4,840,398
563,472
293,519
-
5,718,634
Trade payables with affiliated entities
600
590,448
-
-
-
591,048
Lease liabilities
-
438,514
1,963,093
8,865,843
-
11,267,449
Dividends to be paid
3,238,025
-
802,463
2,231,782
-
6,272,271
Other liabilities
5,500
500
-
-
-
6,000
Total year 202
2
3,265,370
5,869,860
3,329,028
11,391,144
-
23,855,402
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2023
(all amounts expressed in Lei (“RON”), unless otherwise specified)
54
24. AUDIT EXPENSES
Costs for audit services with the financial auditor recorded during the financial year ended 31 December
2023 were in amount of RON 99,289 (2022: 88,525 RON).
All paid fees refer to auditing services on individual financial statements prepared by the Company in
accordance with Order of Minister of Public Finance no. 2844/2016.
25. EVENTS SUBSEQUENT TO THE REPORTING PERIOD
On 20 March 2024, the Board of Directors approved the proposal to distribute gross dividends in amount
of RON 11,767,863 RON, respectively 0,042301 / share, proposal on which the General Ordinary
Meeting of the Shareholders that will take place on 25 (26) April 2024 shall decide.
The Financial Statements from page 1 to page 54 were approved by the Board of Directors in
20 March 2024 and are signed in his name by:
Administrator,
Prepared by,
FLOREA Georgian Stefan MOISE Luiza-Roxana
Finance Manager
Signature Signature