PETROGAS GLOBAL. Annual Report 2014

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2 PETROGAS GLOBAL Annual Report 2014

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4 PETROGAS GLOBAL Annual Report PETROGAS GLOBAL Annual Report Chairman s Review 9 The Applegreen Story 15 Directors Report and Financial Statements

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6 PETROGAS GLOBAL Annual Report Chairman s Review Chairman s Review It was a refreshing change to be able to concentrate on growing our business We now have great momentum in our business and we look forward to continuing to work with you all and hopefully we will all enjoy a successful journey together.

7 Chairman s Review 6 After many years of battling against recessionary headwinds the storm abated in 2014 and we were able to fully exploit the skills and expertise of our talented staff. Robert C Etchingham Chairman

8 PETROGAS GLOBAL Annual Report Chairman s Review It was a year in which revenue for the Group grew by c. 18% compared to 2013 which resulted in a 20% increase in adjusted EBITDA. This was delivered through the upgrade and rebrand of 18 sites and in particular the addition of 31 new locations for the group across Ireland and the UK as well as 2 sites in a new market for the group in 2014, Long Island in the United States. The upgrade programme comprised 10 in the Republic of Ireland and 8 in the United Kingdom. This involved the rebranding of the facility as Applegreen, significant upgrade to the internal facility and in particular the enhancement of the food offer. 17 new Subways units were added as part of this programme. The expansion in the UK and Irish estate was made up by the following: Two new Motorway Service Areas (MSA) - the first opened in June on the M11 in Wicklow and the second in October on the M7 in Birdhill, Tipperary. Each of these were greenfield developments on property acquired by the Group. Two smaller service areas which had a significant food offer were developed and opened in Lemybrien, Co. Waterford in August and Swords in November. Seven Petrol Filling stations ( PFS ) were also added in the Republic of Ireland as well as twelve new sites in the UK We commenced a dealer programme during the year whereby we sell fuel under our brand at sites owned by third parties and at the end of 2014 there were 8 dealer sites in operation. A key feature of our development has been the development of the food offer within our business both through the development of partnerships with international food brands and the development of our own acafe and Bakewell offers. At the end of 2014 in addition to our own brand food offer, which is present in the majority of our sites, we also had 12 Burger Kings, 8 Costa Coffees and 32 Subways in operation. Apart from the dealer project referred to above we also launched a commercial fuel card, LowFuelCard, which was well received by the market. As referred to above a further new initiative was the establishment of a small presence in Long Island, United States. This provides the group with a potential platform for expansion, in the medium term, in the north east of the United States. Since the year end we have continued to develop and grow the business. In April we opened the first MSA in Northern Ireland on the M2 North of Belfast on one of four sites we acquired on the region s motorway network. We have also developed two smaller service areas in the west of Ireland and added 10 other locations across Ireland, the UK and the U.S. We have also further developed our food business with the addition of 14 branded units across the estate. This included two new food offerings following the conclusion of franchise agreements with Chopstix and Greggs. Two Chopstix and four Greggs units were opened since year end. As a business, we are fortunate to be operating at a time of unprecedented change in the forecourt industry. There are many and varied opportunities for our team to exploit and we commenced a major 'ramp up' of our activities during 2014, with a record capital investment programme. The Board continues to consider the appropriate levels of investment for future years and our options for funding them. This will be the major theme for us in 2015, as we are committed to continuing to grow our earnings. Finally on behalf of the Board I would like to thank the able and committed group of employees, licensees, consultants and suppliers who have made the Applegreen business such a success over the years. We now have great momentum in our business and we look forward to continuing to work with you all and hopefully we will all enjoy a successful journey together.

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10 PETROGAS GLOBAL Annual Report The Applegreen Story The Applegreen Story As a business, we are fortunate to be operating at a time of unprecedented change There are many and varied opportunities for our team to exploit and we commenced a major 'ramp up' of our activities during 2014, with a record capital investment programme.

11 The Applegreen Story 10 A key feature of our development has been the development of the food offer within our business.

12 PETROGAS GLOBAL Annual Report The Applegreen Story Strong historic sales Turnover 'm (LHS) Revenue CAGR: 15.0% Site Growth in numbers from CAGR: 20.2% , ,6 937, Rep. of Ireland PFS 54 UK PFS 18 Service Areas 8 DEALER 2 USA Rep. of Ireland PFS 42 UK PFS 14 Service Areas EBITDA growth 'm (RHS) 25 CAGR: 16.6% Rep. of Ireland PFS 23 UK PFS 13 Service Areas Revenue by geography 29% 0,40% 71% UK USA IRELAND Rep. of Ireland PFS UK PFS Service Areas Rep. of Ireland PFS UK PFS Service Areas Rep. of Ireland PFS 11 UK PFS Service Areas 64

13 The Applegreen Story 12 The Applegreen Story Stations 64 Stations Distribution Centre opens 75 Stations Open 6 Motorway Service Areas (MSA) Outsource transaction processing to EXL in India 24 Stations Open first forecourt in UK Petrogas launches the Applegreen brand Sausage Rolls sold Total weight 64 Tones, Same weight as 10.5 Elephants. The volume of coffee sold was 1,049,644 Litres, Enough coffee to fill 583 fire trucks.

14 PETROGAS GLOBAL Annual Report The Applegreen Story Stations Stations Fuel card and dealer offering launched Opened 2 sites in the USA 81 Stations 95 Stations 157,000 loyalty card holders Complete refinance of business Acquire 4 MSA sites in NI Launch loyalty card programme If you place our whopper buns sold edge to edge they would be taller than the Trump Tower in Also our fries tonnage sold is the equivalent weight of 2 Boeing 757 Aircrafts. The number of cookies sold in 2014 was Placed side by side they would be twice the height of Mount Everest.

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16 PETROGAS GLOBAL Annual Report Directors Report and Financial Statements Directors Report & Financial Statements

17 Directors Report and Financial Statements 16 Contents Directors Report / 17 Statement of Directors Responsibilities / 21 Independent Auditors Report to the Members of Petrogas Global Limited / 22 Consolidated Income Statement / 25 Consolidated Statement of Comprehensive Income / 26 Consolidated Statement of Financial Position / 27 Company Statement of Financial Position / 28 Consolidated Statement of Changes in Equity / 29 Company Statement of Changes in Equity / 30 Consolidated Statement of Cash Flows / 31 Company Statement of Cash Flows / 32 Notes to the Consolidated Financial Statements / 33 Directors and Other Information / 89

18 PETROGAS GLOBAL Annual Report Directors Report and Financial Statements Directors Report The directors present their annual report together with the audited group financial statements of Petrogas Global Limited for the year ended 31 December Principal activities and review of the business The principal activity of the group is the operation of service stations throughout Ireland, the UK and the USA under the Applegreen brand. The details of the company s subsidiaries and substantial undertakings are disclosed in Note 28. There has been no change in the principal activities of the subsidiary companies during the financial year. The highlights of the group s financial statements include: Revenue 937, , ,718 Profit for the year 12,279 14,650 6,853 Gross assets 176, , ,740 Equity 17,655 3,329 (11,368) The growth in turnover of 18 % (2013: 12%) arose due to the expansion of the estate in Ireland and more particularly in the UK. During the year the company continued to open new trading sites including new motorway service areas on the M11 in Wicklow and the M7 at Birdhill. Works continued on two further motorway service areas on the M1 and M2 in Northern Ireland, one of which opened in March A major project to replace our existing site IT software continues and is expected to be fully completed in The group commenced trading in the USA on 9 April 2014 from two sites in Long Island. Performance to date has been encouraging. The group launched two new business streams during the year a commercial fuel card business and a dealer operated network. Both streams have performed well during the year. Results and dividends The directors do not recommend the payment of a dividend (2013: nil; 2012 nil). Current trading The group continues to trade profitably.

19 Directors Report and Financial Statements 18 Directors Report (Continued) Events since the year end and future developments Since the year end, the group has opened four new sites in Ireland, two in the USA and one in the UK. In March 2015, the group entered into new banking arrangements with its senior lenders. These new agreements extend the maturity of the group s debt and make additional facilities available to the group. The group has entered into franchise arrangements with two new food offerings, Chopstix and Greggs, with the first sales taking place inmarch 2015 and April 2015 respectively. Principal risks and uncertainties The group s general business activities may be affected by risks associated with all companies in the fuel distribution and retail sector. The group has identified the following risks specific to its business: The group operates in a highly competitive market, with competitors drawn from local and large scale multi-national corporations. To mitigate this risk, we focus on delivering superior service at a competitive cost to our customers. To facilitate this at a profitable level, we aim to have the best economies of scale in the industry with central purchasing and distribution. In the event of another economic decline the group may experience decreased customer demand. The group expands the business through a strategy of service station and site acquisitions and lease arrangements. The group s growth may be hindered should it be unable to find attractive acquisitions or source the required financial facilities in the current banking environment. The storage and dispensing of hydrocarbon fuels can give rise to environmental damage and the cost of any clean-up can be considerable. The group has procedures in place to mitigate these risks, including fuel stock management and reconciliations. Severe weather conditions can impact average traffic volumes which would directly impact on the demand for the group s products. The group operates in a highly regulated and legally stringent environment. Changes in environmental, health and safety, or governmental laws or regulations could result in significant additional costs to the group. Changes in the stability of financial institutions may lead to higher costs to be borne by the group. An increase in the costs associated with the group s debt or an increase in financing costs could hinder the group s growth. The financial crisis has heightened the need for effective capital management and the risk of insufficient liquidity can undermine an entity s ability to develop and manage a robust business model. The group manages the risk of insufficient liquidity by liaising with its bankers regularly to ensure the availability of sufficient liquidity to allow the group to manage its growth aspirations effectively. The group currently operates in Pound Sterling and US Dollars as well as Euro. Any changes in the foreign exchange rate relative to the Euro could impact the group adversely.

20 PETROGAS GLOBAL Annual Report Directors Report and Financial Statements Directors Report (Continued) The directors take such actions as they deem appropriate to minimise the group s exposure to identified risks. The group s financial risks are set out in note 24 to the financial statements. Directors The present members of the board of the company and those who held office during the year are: Robert Etchingham Joseph Barrett Michael O Loughlin Eugene Moore (appointed 11 February 2014) Paul Lynch (appointed 19 August 2014) Martin Southgate (appointed 11 February 2014) Brian Geraghty (appointed 19 August 2014) In accordance with the articles of association of the company, the directors are not required to retire by rotation. Interests of the directors/secretary in the group Details of the directors and secretary s shareholdings, interests and transactions with the group are provided in note 28 to the financial statements. Political donations No political donations were made during the current or prior year. Books of account The measures taken by the directors to ensure compliance with the requirements of Section 202, Companies Act 1990, regarding proper books of account are the implementation of necessary policies and procedures for recording transactions, the employment of competent accounting personnel with appropriate expertise and the provision of adequate resources to the finance function. The books of account are maintained at the company s head office, Block 17, Joyce Way, Parkwest, Dublin 12, and at various subsidiary offices. Auditors PricewaterhouseCoopers Chartered Accountants were appointed as auditors to the group during In Accordance with Section 160(2) of The Companies Acts 1963 to 2013, PricewaterhouseCoopers will continue in office. On behalf of the directors 30 April 2015 Paul Lynch Joseph Barrett

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22 PETROGAS GLOBAL Annual Report Directors Report and Financial Statements Statement of Directors Responsibilities The directors are responsible for preparing the Directors Report and the financial statements inaccordance with applicable Irish law. Under that law, the directors have elected to prepare the financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. Company law requires the directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the company and of the group, and of the profit or loss of the group for that year. In preparing these financial statements, the directors are required to: select suitable accounting policies and then apply them consistently; comprising the Companies Acts 1963 to 2013, and the European Communities (Companies: Group Accounts) regulations The directors are also responsible for safeguarding the assets of the company and the group and hence for taking responsible steps for the prevention and detection of fraud and other irregularities. The directors are responsible for the maintenance and integrity of the corporate and financial information included on the company and group s website. Legislation in Ireland governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. make judgements and estimates that are reasonable and prudent; prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. The directors confirm that they have complied with the above requirements in preparing the financial statements. On behalf of the directors 30 April 2015 The directors are responsible for keeping proper books of account that disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and Irish statute law Paul Lynch Joseph Barrett

23 Directors Report and Financial Statements 22 Independent Auditors Report to the Members of Petrogas Global Limited We have audited the financial statements of Petrogas Global Limited for the year ended 31 December 2014 which comprise the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Financial Position, the Company Statement of Financial Position, the Consolidated Statement of Changes in Equity, the Company Statement of Changes in Equity, the Consolidated Statement of Cash Flows, the Company Statement of Cash Flows and the related notes. The financial reporting framework that has been applied in their preparation is Irish law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Acts 1963 to Respective responsibilities of directors and auditors As explained more fully in the Directors Responsibilities Statement set out on page 6, the directors are responsible for the preparation of the financial statements giving a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with Irish law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board s Ethical Standards for Auditors. This report, including the opinions, has been prepared for and only for the company s members as a body in accordance with Section 193 of the Companies Act, 1990 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. Scope of the audit of the financial statements An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the group s and the parent company s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and nonfinancial information in the Directors Report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report. Opinion on financial statements In our opinion: the group financial statements give a true and fair view, in accordance with IFRSs as adopted by the European Union, of the state of the group s affairs as at 31 December 2014 and of its profit and cash flows for the year then ended; the parent company financial statements give a true and fair view, in accordance with IFRSs as adopted by the European Union as applied in accordance with the provisions of the Companies Acts 1963 to 2013, of the state of the parent company s affairs as at 31 December 2014 and cash flows for the year then ended; and the financial statements have been properly prepared in accordance with the requirements of the Companies Acts 1963 to Matters on which we are required to report by the Companies Acts 1963 to 2013 We have obtained all the information and explanations which we consider necessary for the purposes of our audit. In our opinion proper books of account have been kept by the parent company. The Company Statement of Financial Position is in agreement with the books of account. In our opinion the information given in the Directors Report is consistent with the financial statements. The net assets of the parent company, as stated in the Company Statement of Financial Position, are more than half of the amount of its called-up share capital and, in our opinion, on that basis there did not exist at 31 December 2014 a financial situation which under Section 40 (1) of the Companies (Amendment) Act, 1983 would require the convening of an

24 PETROGAS GLOBAL Annual Report Directors Report and Financial Statements Independent Auditors Report to the Members of Petrogas Global Limited (Continued) extraordinary general meeting of the parent company. Matters on which we are required to report by exception We have nothing to report in respect of the provisions in the Companies Acts 1963 to 2013 which require us to report to you if, in our opinion, the disclosures of directors remuneration and transactions specified by law are not made. Kevin Egan for and on behalf of PricewaterhouseCoopers Chartered Accountants and Statutory Audit Firm Dublin 30 April 2015

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26 PETROGAS GLOBAL Annual Report Directors Report and Financial Statements Consolidated Income Statement Year ended 31 December 2014 Year to 31 December Year to 31 December Year to 31 December Notes Revenue 937, , ,718 Cost of Sales (840,740) (718,511) (639,509) Gross assets 96,582 76,112 69,209 Selling and distribution costs (63,903) (50,240) (45,672) Administrative expenses (16,238) (10,761) (11,738) Other income Finance costs 11 (2,885) 75 (5,028) Finance income Share of loss of associates - - (441) Profit before income tax 14,947 16,213 7,278 Income tax expense 12 (2,668) (1,563) (425) Profit for the year 12,279 14,650 6,853 Earnings per share from continuing operations attributable to the owners of the parent company during the year Earnings per share Basic 20.47c 24.42c 11.42c Earnings per share Diluted 20.42c 24.42c 11.42c Non-GAAP measure: Reconciliation of Profit before income tax to Earnings before tax, interest, depreciation and amortisation (EBITDA), net foreign exchange loss/(gain), share based payments and other non-recurring gains and losses (Adjusted EBITDA) Profit before income tax 14,947 16,213 7,278 Depreciation 9 5,604 4,080 3,687 Amortisation Net impairment charge ,266 Net finance cost/(income) 11 2,468 (432) 4,600 EBITDA 23,428 19,950 16,907 Net foreign exchange loss/(gain) 9 (205) 601 (140) Share based payments Profit on disposal of assets 9 (2,872) (1,621) (507) Share of loss of associates Other non-recurring losses 9 2, Adjusted EBITDA 22,776 18,930 16,701 On behalf of the directors 30 April 2015 Paul Lynch Joseph Barrett

27 Directors Report and Financial Statements 26 Consolidated Statement of Comprehensive Income Year ended 31 December 2014 Year to 31 December Year to 31 December Year to 31 December Profit for the year 12,279 14,650 6,853 Other comprehensive (expense)/income Items that may be reclassified to profit or loss Currency translation differences on foreign operations (159) 47 (79) Other comprehensive (expense)/income for the year, net of tax (159) 47 (79) Total comprehensive income for the year 12,120 14,697 6,774 On behalf of the directors 30 April 2015 Paul Lynch Joseph Barrett

28 PETROGAS GLOBAL Annual Report Directors Report and Financial Statements Consolidated Statement of Financial Position As at 31 December 2014 Notes Jan Assets Non-current assets Intangible assets Property, plant and equipment ,525 89,473 89,190 87,255 Investment in associates Trade and other receivables Deferred income tax asset 12 2,877 2,877 2,673 2, ,387 92,967 92,349 91,235 Current assets Inventories 18 19,158 16,355 13,854 12,548 Trade and other receivables 19 8,333 7,325 5,311 4,316 Cash and cash equivalents 20 13,781 15,273 23,226 18,245 41,272 38,953 42,391 35,109 Total assets 176, , , ,344 Equity and Liabilities Equity attributable to owners of the parent Issued share capital Share premium 26 67,574 65,700 66,300 66,300 Merger reserve 26 (65,537) (65,537) (65,537) (65,537) Exchange variance reserve 26 (191) (32) (79) - Share based payment reserve Retained earnings 26 14,877 2,598 (12,052) (17,900) Total Equity 17,655 3,329 (11,368) (17,137) Non-current liabilities Trade and other payables 22 1,892 1, Borrowings 21 39,595 41,841 2,777 77,052 Deferred income tax liabilities 12 4,086 3,998 3,692 3,688 45,573 46,868 7,055 81,344 Current liabilities Trade and other payables 22 89,099 75,161 54,216 47,542 Borrowings 21 21,213 4,481 83,615 14,305 Current income tax liabilities 1,411 1, Provisions for other liabilities and charges 23 1, ,431 81, ,053 62,137 Total Liabilities 159, , , ,481 Total Equity and Liabilities 176, , , ,344 On behalf of the directors 30 April 2015 Paul Lynch Joseph Barrett

29 Directors Report and Financial Statements 28 Company Statement of Financial Position As at 31 December 2014 Notes Jan Assets Non-current assets Financial assets , ,110 66,300 66,300 Deferred income tax assets , ,121 66,300 66,300 Current assets Trade and other receivables 19 1,959 4,048 1,005-1,959 4,048 1,005 - Total assets 124, ,169 67,305 66,300 Equity and Liabilities Issued share capital Share premium 26 67,574 65,700 66,300 66,300 Retained earnings (85) - - Share based payment reserve Total Equity 69,210 66,215 66,300 66,300 Non-current liabilities Borrowings 21 35,997 38, ,997 38, Current liabilities Trade and other payables ,767 1,005 - Borrowings 21 18,829 2, Current income tax liabilities ,193 6,379 1,005 - Total Liabilities 55,190 44,954 1,005 - Total Equity and Liabilities 124, ,169 67,305 66,300 On behalf of the directors 30 April 2015 Paul Lynch Joseph Barrett

30 PETROGAS GLOBAL Annual Report Directors Report and Financial Statements Consolidated Statement of Changes in Equity Year ended 31 December 2014 Issued capital Share premium Merger reserve Foreign currency translation reserve Share based payment reserve Retained earnings Total 000 As at 1 January ,300 (65,537) - - (17,900) (17,137) Profit for the year ,853 6,853 Other comprehensive income (79) - - (79) Redemption of ordinary share capital (note 25) (1,005) (1,005) At 31 December ,300 (65,537) 79) - (12,052) (11,368) Profit for the year ,650 14,650 Other comprehensive income Issue of ordinary share capital (note 25) 600 (600) At 31 December ,700 (65,537) (32) - 2,598 3,329 Profit for the year ,279 12,279 Other comprehensive income (159) - - (159) Issue of redeemable ordinary share capital (note 25) - 1, ,874 Share options granted (note 29) At 31 December ,574 (65,537) (191) ,877 17,655 On behalf of the directors 30 April 2015 Paul Lynch Joseph Barrett

31 Directors Report and Financial Statements 30 Company Statement of Changes in Equity As at 31 December 2014 Issued capital Share premium Share based payment reserve Retained earnings Total As at 1 January , ,300 Profit for the year At 31 December , ,300 Profit for the year (85) (85) Issue of ordinary share capital (note 25) 600 (600) At 31 December ,700 - (85) 66,215 Profit for the year Issue of redeemable ordinary share capital (note 25) - 1, ,874 Share options granted (note 29) At 31 December , ,210 On behalf of the directors 30 April 2015 Paul Lynch Joseph Barrett

32 PETROGAS GLOBAL Annual Report Directors Report and Financial Statements Consolidated Statement of Cash Flows Year ended 31 December 2014 Notes Cash flows from operating activities Profit before taxation 14,947 16,213 7,278 Adjustments for: Depreciation and amortisation 5,720 4,169 3,763 Share of losses of associates Finance income 11 (417) (357) (428) Finance costs 11 2,885 (75) 5,028 Impairment of non current assets ,266 Share based payment expense Exchange (gains)/ losses on operating activities 9 (205) 601 (140) Profit on the sale of property, plant and equipment 9 (2,872) (1,621) (507) 20,683 18,930 16,701 (Increase)/Decrease in trade and other receivables (2,965) (1,806) 713 Increase in inventories (2,423) (2,445) (1,207) Increase in trade payables 12,512 21,028 3,170 Increase/(Decrease) in provisions 1,207 (826) 320 Cash generated from operations 29,014 34,881 19,697 Income taxes paid (2,847) (549) (27) Net cash from operating activities 26,167 34,332 19,670 Cash flows from investing activities Purchase of property, plant and equipment (40,912) (10,701) (4,434) Purchase of intangibles (488) (134) (9) Proceeds from sale of equipment 3,538 11,073 3 Interest received Net cash used in investing activities (37,461) 968 (4,350) Cash flows from financing activities Proceeds from long-term borrowings 15,000 47,214 - Proceeds from finance leases Repayment of borrowings (3,571) (84,191) (4,681) Payment of finance lease liabilities (1,628) (845) (637) Interest paid (2,348) (4,655) (3,814) Net cash used in financing activities 7,756 (42,477) (9,132) Net (decrease)/increase in cash and cash equivalents (3,538) (7,177) 6,188 Cash and cash equivalents at beginning of year 15,273 23,226 16,816 Exchange gains/ (losses) on operating activities 531 (776) 222 Cash and cash equivalents at end of year 20 12,266 15,273 23,226 On behalf of the directors 30 April 2015 Paul Lynch Joseph Barrett

33 Directors Report and Financial Statements 32 Company Statement of Cash Flows Year ended 31 December 2014 Notes Cash flows from operating activities Loss before taxation 801 (96) Adjustments for: Finance income (77) - Finance costs 2, Gain on forgiveness of debt by subsidiary undertaking (3,255) - Cash generated from operations (3) - Increase in trade and other receivables - (1,300) Income taxes paid (325) - Net cash from operating activities (328) (1,300) Cash flows from investing activities Increase in investment in subsidiary (15,000) (40,809) Loans advanced/repaid from subsidiary undertakings 4,156 - Net cash used in investing activities (10,844) (40,809) Cash flows from financing activities Proceeds from long-term borrowings 15,000 42,109 Payment of long-term borrowings (2,402) - Interest paid (1,827) - Net cash used in financing activities 10,771 42,109 Net decrease in cash and cash equivalents (401) - Cash and cash equivalents at beginning of year - - Cash and cash equivalents at end of year 20 (401) - The company did not hold any cash and cash equivalents throughout On behalf of the directors 30 April 2015 Paul Lynch Joseph Barrett

34 PETROGAS GLOBAL Annual Report Directors Report and Financial Statements Notes to the Consolidated Financial Statements 1. Statement of compliance The consolidated financial statements of Petrogas Global Limited have been prepared in accordance with International Financial Reporting Standards (IFRS) and their interpretations approved by the International Accounting Standards Board (IASB) as adopted by the European Union (EU) and those parts of the Companies Acts, 1963 to 2013 applicable to companies reporting under IFRS. IFRS as adopted by the EU differ in certain respects from IFRS as issued by the IASB. Both the company and the group financial statements have been prepared in accordance with IFRS as adopted by the EU and references to IFRS hereafter should be construed as references to IFRS as adopted by the EU. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the group s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note 3. In presenting the parent company financial statements together with the group financial statements, the company has availed of the exemption in Section 148(8) of the Companies Act 1963 not to present its individual Income Statement and related notes that form part of the approved Company financial statements. The Company has also availed of the exemption from filing its individual Income Statement with the Registrar of Companies as permitted by Section 7(1A) of the Companies (Amendment) Act The Company s result for the financial year, determined in accordance with IFRS, is a profit for the year of 789,000 (2013: (85,000), 2012: nil). 2. Basis of accounting For all periods up to and including 31 December 2013 the group prepared its financial statements in accordance with applicable Irish law and Generally Accepted Accounting Practice in Ireland including the accounting standards issued by the Financial Reporting Council and published by The Institute of Chartered Accountants in Ireland. These are the group s first consolidated financial statements prepared in accordance with IFRS. The accounting policies set out in note 2.2 have been applied in preparing the financial statements for the year ended 31 December 2014, the comparative information presented in these financial statements for the years ended 31 December 2013 and 31 December 2012 and in the preparation of the opening IFRS Statement of Financial Position at 1 January 2012 (the group s date of transition). In preparing its opening IFRS Statement of Financial Position, the group has adjusted the amounts reported previously in financial statements prepared with Irish GAAP. An explanation of how the transition from Irish GAAP to IFRS has affected the group s financial position, financial performance and cash flows is set out in note 5.

35 Directors Report and Financial Statements 34 The consolidated financial statements have been prepared on a historical cost basis. The consolidated financial statements are presented in Euro ( ) and all values are rounded to the nearest thousand ( 000), except where otherwise stated. 2.1 Basis of consolidation The consolidated financial statements comprise the financial statements of the group and its subsidiaries as at 31 December Subsidiaries are consolidated from the date of acquisition, being the date on which the group obtains control, and continue to be consolidated until the date when such control ceases. The group controls an entity when the group is exposed to, or has rights to, variable returns from its involvement with the entity, and has the ability to affect those returns through its control over the entity. Subsidiaries are accounted for using the acquisition method as at the acquisition date i.e. when control is transferred to the group. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company using consistent accounting policies. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred by the former owners of the acquiree and the equity interests issued by the group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The group recognises any non-controlling interest in the acquiree on an acquisition-byacquisition basis, either at fair value or at the non-controlling interest s proportionate share of the recognised amounts of the acquiree s identifiable net assets. Acquisition-related costs are expensed as incurred. All intra-group balances, transactions, unrealised gains and losses resulting from intragroup transactions and dividends are eliminated in full. Associates are all entities over which the group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee, but is not control or joint control, generally accompanying a shareholding of 20-50% of the voting rights. Investments in associates are accounted for using the equity method of accounting. Under the equity method, the investment is initially recognised at cost and the carrying amount increased or decreased to recognise the investor s share of the profit or loss of the investee after the date of acquisition. 2.2 Significant accounting policies The following are significant accounting policies applied by the group in preparing its consolidated financial statements: Associates The group s share of post-acquisition profit or loss is recognised in the Income Statement, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income with a corresponding adjustment to the carrying amount of the investment. When the group s share of losses in an associate equals or exceeds its equity interest in the associate and any other long term interests, the group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.

36 PETROGAS GLOBAL Annual Report Directors Report and Financial Statements The group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the amount adjacent to share of profit / (loss) of associates in the Income Statement. Profits and losses resulting from upstream and downstream transactions between the group and its associates are recognised in the group s financial statements only to the extent of unrelated investors interests in the associates. Unrealised losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the group. Investment in associates is shown separately on the group Statement of Financial Position. Turnover Turnover from the sale of goods in the course of ordinary activities is measured at the fair value of consideration received or receivable, excluding value added tax and net of returns, trade discounts and including duty on goods to external customers. Revenue is recognised when the significant risks and rewards of ownership have been transferred to the customer, it is probable that economic benefits will flow to the group, the associated costs can be measured reliably, there is no continuing managerial involvement with the goods, and the amount of revenue can be measured reliably. If it is probable that discounts will be granted and the amount can be measured reliably, then the discount is recognised as a reduction of revenue as the sales are recognised. Retail sales The group s revenue is earned from fuel, shop and restaurant sales throughout its network of service stations in Ireland, the UK and the USA. Sales of goods are recognised when the group sells a product to the customer. Retail sales are usually in cash or by credit card. Due to the nature of the products sold, the group does not experience material levels of returns. Gross versus net presentation When deciding the most appropriate basis for presenting revenue or costs of revenue, both the legal form and substance of the agreement between the group and its business partners are reviewed to determine each party s respective role in the transaction. Where the group s role in a transaction is that of principal, revenue is recognised on a gross basis. This requires revenue to comprise the gross value of the transaction billed to the customer, after trade discounts, with any related expenditure charged as an operating cost. Where the group s role in a transaction is that of an agent, revenue is recognised on a net basis with revenue representing the margin earned. Customer loyalty programmes The group operates a customer loyalty programme whereby points are awarded on the sale of goods. Revenue is recorded at the amount of the consideration received or receivable less the fair value of the points awarded. The fair value of the points awarded is deducted from the consideration received on the initial purchase and carried forward as a liability until the points are redeemed. Interest income Interest income is recognised using the effective interest rate method when it is probable that income will flow to the group. When a loan or receivable is impaired, the group reduces the carrying amount to its recoverable amount, being the estimated future cash

37 Directors Report and Financial Statements 36 flow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income. Interest income on impaired loans and receivables is recognised using the original effective interest rate. Segmental information Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decisionmaker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the board of directors that makes strategic decisions. Going concern The group s forecasts and projections, taking account of reasonably possible changes in trading performance, show that the group expects to operate within the level of its current banking facilities. The directors are confident that the group has adequate resources to continue in operational existence for the foreseeable future. The group therefore continues to adopt the going concern basis in preparing its consolidated financial statements. Foreign currencies Items included in the financial statements of each of the group s entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The consolidated financial statements are presented in Euro ( ), which is the group s presentation currency. Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Income Statement. Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the Income Statement within finance costs. All other foreign exchange gains and losses are presented in the Income Statement within administrative expenses. The results and financial position of all the group entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows: (a) assets and liabilities for each Statement of Financial Position presented are translated at the closing rate at the date of that Statement of Financial Position; (b) income and expenses for each Income Statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and (c) all resulting exchange differences are recognised in other comprehensive income. Property, plant & equipment Property, plant and equipment is stated at cost, less accumulated depreciation and accumulated impairment losses. The initial cost of an asset comprises its purchase price or construction cost plus any costs directly attributable to bringing the asset into the location and condition necessary for it to be capable of operating in a manner intended by management.

38 PETROGAS GLOBAL Annual Report Directors Report and Financial Statements Subsequent costs are included in the asset s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably. Freehold property Leasehold improvements Plant and equipment Fixtures & fittings Motor vehicles Computer hardware and software Over 50 years Over the term of the lease 20 years 10 years 5 years 5 years Freehold land is not depreciated. Property, plant and equipment is depreciated on a straight-line basis over its expected useful life. The typical useful lives of the group s property, plant and equipment are: The expected useful lives of property, plant and equipment are reviewed and adjusted, if appropriate, at each financial year end. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from its use. Any gain or loss arising on de-recognition of the asset is recorded in the Income Statement in the period the asset is derecognised. An asset s carrying amount is written down immediately to its recoverable amount if the asset s carrying amount is greater than its estimated recoverable amount. Assets under construction Capitalisation of costs in respect of constructing an asset commences when it is probable that future economic benefits associated with the asset will flow to the group and the costs are directly attributable to the related asset and required to bring the asset into working condition. The cost of self-constructed assets includes: the cost of materials and labour; any other costs directly attributable to bringing the assets to a working condition for their intended use; an estimate of the costs associated with the removal of the asset or restoration of the site when the group has an obligation. Assets under construction are not depreciated. Intangible assets Intangible assets include i) franchise licences for the operation of franchised operations throughout the group s retail network and ii) wine and off licence fees in respect of those retail stores that sell alcohol.

39 Directors Report and Financial Statements 38 Franchises Licences 5-25 years 10 years Intangible assets acquired are initially capitalised at cost and amortised using the straight-line basis over their useful lives as follows; Impairment of non-financial assets Impairment of non-financial assets The carrying amounts of the group s property, plant and equipment, and intangible assets are reviewed at each reporting date to determine whether there is any indication of impairment. If events or changes in circumstances indicate that the carrying value of property, plant and equipment, or intangible assets may not be recoverable, the group carries out an impairment test. When testing for impairment assets are grouped together into the smallest group of assets that is largely independent of the group s other cash generating streams. The recoverable amount in respect of the cash generating units (CGUs) is the higher of its fair value less cost of disposal and the value in use. Value in use is determined by discounting to present value the estimated future cash flows expected to be derived from the CGU. The discount rate used is the company s weighted average cost of capital reflecting current market assessments of the time value of money and the risks specific to the CGU. To the extent that the carrying amount exceeds the recoverable amount, the asset is impaired and is written down. Any impairment loss arising is recognised in the Consolidated Income Statement. Prior impairments of non-financial assets (other than goodwill) are reviewed for possible reversal at each reporting date. Financial assets Classification The group classifies its financial assets in the following categories: at fair value through profit or loss, loans and receivables, and available for sale. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period. These are classified as non-current assets. The group s loans and receivables comprise trade and other receivables and cash and cash equivalents in the Statement of Financial Position. Loans and receivables are initially recognised at fair value and subsequently at amortised cost using the effective interest rate method less any impairment losses. Investments in subsidiaries Interests in subsidiary undertakings are measured at cost less provisions for impairment in value on the company Statement of Financial Position. The company carries out an impairment test if events or changes in circumstances indicate that the carrying value of the investment in a subsidiary may not be recoverable. The recoverable amount is determined by comparing the carrying value of the investment in the subsidiary against

40 PETROGAS GLOBAL Annual Report Directors Report and Financial Statements the higher of its fair value less costs to dispose and its value in use. The value in use is determined by discounting estimated future cash flows expected to be derived from the financial asset, to net present value. Impairment of financial assets The group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a loss event) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. Evidence of impairment may include indications that a debtor or a group of debtors are experiencing significant financial difficulty, default or delinquency in interest or principal payments, indicating that they will enter bankruptcy or other financial reorganisation. For loans and receivables, the amount of the loss is measured as the difference between the asset s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in the Consolidated Income Statement. If a loan or heldto-maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor s credit rating), the reversal of the previously recognised impairment loss is recognised in the Consolidated Income Statement. Inventory Inventories are stated at the lower of cost and net realisable value. Cost is determined using the first-in, first-out (FIFO) method. Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses. Costs of inventories include the transfer from equity of any gains/losses on qualifying cash flow hedges for purchases of raw materials. Cash and cash equivalents In the consolidated statement of cash flows, cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less and bank overdrafts. In the Consolidated Statement of Financial Position, bank overdrafts are shown within borrowings in current liabilities. Trade payables Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non current liabilities. Trade payables are initially recorded at fair value and subsequently amortised cost using the effective interest rate method.

41 Directors Report and Financial Statements 40 Provisions A provision is defined as a liability of uncertain timing or amount. Provisions are recognised when the group has a present legal or constructive obligation as a result of a past event, a reliable estimate of that obligation can be made and it is probable that an outflow of economic benefits will be required to settle the obligation. Where the effect of the time value of money is material, provisions are discounted to present value, using a pre tax discount rate that reflects current market assessments of the time value of money and the risks specific to the liability. The amortisation of any discount is recognised as a finance cost in the Income Statement. The amount of a provision is reviewed each year and amended as appropriate. Defined contribution plan The group operates a defined contribution plan. A defined contribution plan is a postemployment benefit plan under which an entity pays fixed contributions into a separate entity. The group has no further payment obligations once the contributions have been paid. Obligations for contributions to defined contribution plans are recognised as an employee benefit expense in the Income Statement in the periods during which the related services are received. Prepaid expenses are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available. Borrowings Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost using the effective interest rate method. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the Income Statement over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. General and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. All other borrowing costs are recognised in finance costs in the period in which they are incurred. Share based payments The group launched an equity-settled, share-based compensation plan in December 2014, under which the entity receives services from employees as consideration for equity instruments (options) of the group. The fair value of the employee services received in exchange for the grant of the options is recognised as an expense. The total amount to be expensed is determined by reference to the fair value of the options granted: including any market performance conditions excluding the impact of any service and non-market performance vesting conditions and including the impact of any non-vesting conditions.

42 PETROGAS GLOBAL Annual Report Directors Report and Financial Statements Leases Assets held by the group under leases which transfer to the group substantially all of the risks and rewards of ownership are classified as finance leases. On initial recognition, assets held under finance leases are included in property, plant and equipment, at the lower of fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is depreciated over the shorter of the lease term or its useful life and otherwise accounted for in accordance with the accounting policy applicable to that asset. Each lease payment is allocated between the liability and finance charges. The corresponding rental obligations, net of finance charges, are included in current or non current liabilities as appropriate. The interest element of the finance cost is charged to the Income Statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the Income Statement on a straight-line basis over the period of the lease. Sale and leaseback A sale and leaseback transaction is one where the group sells an asset and immediately reacquires the use of the asset by entering into a lease with the buyer. The accounting treatment of the sale and leaseback depends upon the substance of the transaction (by applying the lease classification principles described above) and whether or not the sale was made at the asset s fair value. For sale and finance leasebacks, any profit from the sale is deferred and amortised over the lease term. For sale and operating leasebacks, when the assets are sold at fair value, the profit or loss from the sale is recognised immediately in the Income Statement. Taxation The income tax charge represents both the income tax payable, based on profit for the year and deferred income tax. The tax expense for the period comprises current and deferred tax. Tax is recognised in the Income Statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the Statement of Financial Position date in the countries where the company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. Deferred income tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. No deferred tax is recognised if the temporary difference arises from goodwill or 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.

43 Directors Report and Financial Statements 42 Deferred income tax is recognised in respect of taxable temporary differences associated with investments in associates and interests in joint ventures, except where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred income tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences can be utilised. The carrying amount of deferred income tax assets is reviewed at each Statement of Financial Position date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all, or part of, the deferred income tax asset to be utilised. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted at the Statement of Financial Position date. Provision for a corporation tax surcharge assessable on undistributed investment income (in accordance with Section 440, Taxes Consolidation Act 1997) is provided after the time limit of 18 months has elapsed within which a dividend can be paid to avoid such surcharge. Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis. Share capital Ordinary shares and redeemable ordinary shares that rank pari passu with ordinary shares, carry no preferential dividend right. Redeemable ordinary shares are redeemable only at the option of the issuer and are classified as equity. 3. Significant accounting judgements and estimates Key assumptions concerning the future, and other key sources of estimation uncertainty, at the Statement of Financial Position date, have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year. The main assumptions and sources of judgement and estimation uncertainty are outlined below: Impairment of non financial assets The carrying amounts of the group s property, plant and equipment, and intangible assets are reviewed at each reporting date to determine whether there is any indication of impairment in accordance with the accounting policy set out in section 2.2 of these financial statements. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations which require the use of estimates. Note 15 details the assumptions used together with an analysis of the sensitivity to changes in key assumptions. Assets under construction The group incurs significant levels of development expenditure on an ongoing basis in respect of the construction of new retail sites and the refurbishment of existing retail sites. Capitalisation of costs directly attributable to the asset commences when the group has probable future economic benefits associated with the utilisation of the asset. The determination of the point at which probable future economic benefits associated with the development spend will flow to the group requires management judgement and

44 PETROGAS GLOBAL Annual Report Directors Report and Financial Statements is subject to matters such as planning approval, revisions to planning approval and in the case of publically funded developments, preferred bidder status. Costs incurred in the period before the group determines it has access to the probable future economic benefits that will flow from the asset are expensed in the profit and loss account. Taxes The calculation of the group s total tax charge necessarily involves a degree of estimation and judgement in respect of certain items, where the tax treatment cannot be finally determined until resolution has been reached with the relevant tax authority. The final resolution of some of these items may give rise to material Income Statement and/or cash flow variances. Assumptions are also made around the assets which qualify for capital allowances and the level of disallowable expenses and this affects the income tax calculation. Provisions may be made for uncertain exposures or recoveries, which can have an impact on both deferred and current tax. Assumptions are also made around the tax net book value of assets to which capital allowances apply, the level of capital allowances, the extent of rollover gains, indexation thereon and the tax base into which they have been rolled. Business combinations For sites acquired by the group it is necessary to determine whether the substance of the transaction reflects the acquisition of a leasehold/freehold interest in a property or whether it may constitute the acquisition of a business. In the latter case, the transaction may give rise to goodwill in the group financial statements as well as other identifiable assets and liabilities acquired as part of the acquisition. Management consider the contract terms and the nature of each site acquired to appropriately conclude whether the sites acquired represent a business combinations or a leasehold/freehold interest in land and buildings. Management reviewed the nature of leasehold acquisitions made in 2014 and concluded they were not business combinations. Agency versus principal relationships The group evaluates its revenue streams to ensure the most appropriate basis for presenting revenue or costs of revenue is selected. The determination of whether the group is acting as agent or principal requires management judgement and is subject to matters such as the substance of the trading relationship with the counterparty, the legal form and the nature of the risks transferred to the counterparty. The group has considered these requirements and has concluded that it is agent on the sale of lottery related products, phone cards and other similar business streams. Lease classification The group enter into a significant number of property leases as part of its expansion strategy and the determination of the appropriate lease classification between finance and operating is considered a key judgment. The determination of whether lease interests represent finance or operating leases requires management judgement and is subject to matters such as contract terms, duration of the lease, nature of the interest/assets leased, the conditions upon which the lease can be exited and the nature of the risks and rewards passed to the group on lease inception. 4. Standards issued but not yet effective The standards and interpretations that are issued but not yet effective up to the date of issuance of the group s financial statements are disclosed below. The group intends to adopt these standards, if applicable, when they become effective.

45 Directors Report and Financial Statements 44 IFRS 9 Financial Instruments IFRS 9 Financial Instruments reflects the final phase of the IASB s work on the replacement of IAS 39 Financial Instruments: Recognition and Measurement and applies to the classification and measurement of financial assets and liabilities as defined in IAS 39, impairment, and the application of hedge accounting. IFRS 9 is effective from 1 January 2018 and is awaiting EU endorsement. The group is currently assessing the impact of IFRS 9. IFRS 15 Revenue from contracts with customers IFRS 15 Revenue from Contracts with Customers will replace IAS 18 Revenue, IAS 11 Construction Contracts and related interpretations. The new standard is applicable from 1 January 2017 and is subject to EU endorsement. IFRS 15 provides a new five step model to be applied to revenue arising from contracts with customers. The principles in IFRS 15 provide a more structured approach to measuring and recognising revenue and may impact the timing and amount of revenue recognised from contracts with customers. The group is currently assessing the impact of IFRS 15. There are no other IFRS or IFRIC interpretations that are effective subsequent to the 2014 financial year-end that would have a material impact on the results or financial position of the group. 5. First time adoption of IFRS For financial reporting periods up to and including 31 December 2013 the group prepared its financial statements in accordance with applicable Irish law and Generally Accepted Accounting Practice in Ireland including the accounting standards issued by the Financial Reporting Council and published by The Institute of Chartered Accountants in Ireland (Irish GAAP). The financial statements for the year ended 31 December 2014 are the first prepared in accordance with IFRS as adopted by the EU. The group has adopted 1 January 2012 as the date of transition to IFRS. The accounting policies set out in note 2.2 have been applied in preparing the financial statements for the year ended 31 December 2014, the comparative information presented in these financial statements for the years ended 31 December 2013 and 31 December 2012 and in the preparation of the opening Statement of Financial Position at 1 January 2012 (the group s date of transition). In preparing its opening Statement of Financial Position, the group has adjusted the amounts reported previously in the financial statements prepared under Irish GAAP. An explanation of how the transition from Irish GAAP to IFRS (as adopted by the EU) has affected the group s financial position, financial performance and cash flows is set out in the following tables and notes. Exemptions applied Optional exemptions IFRS 1 First-time Adoption of International Financial Reporting Standards ( IFRS 1 ) allows first time adopters certain exemptions from the retrospective application of certain requirements under IFRS. The group has applied the following exemptions: The group has elected not to retrospectively apply IFRS 3 Business Combinations to business combinations that occurred before the transition date. Such business combinations have not been restated. Any goodwill arising on such business combinations before the Transition Date has not been adjusted from the carrying value previously reported under Irish GAAP. The group has availed of the exemptions in IFRS 1, whereby the deemed cost of certain items of Property, plant and equipment have been calculated as their fair values as at the transition date.

46 PETROGAS GLOBAL Annual Report Directors Report and Financial Statements Cumulative currency translation differences for all foreign operations have been set to zero as at the transition date. The group has applied the transitional provisions in IAS 23 Borrowing Costs and has capitalised borrowing costs relating to all qualifying assets after the date of transition. Mandatory exemptions Set out below are the applicable mandatory exceptions in IFRS 1 applied in the conversion from Irish GAAP to IFRS. Estimates - IFRS estimates as at 1 January 2012 are consistent with the estimates as at the same date made in conformity with Irish GAAP. The other compulsory exemptions in IFRS 1 as noted below have not been applied as these are not relevant to the group: Derecognition of financial assets and financial liabilities Non-controlling interests Hedge accounting Reconciliation of Results Equity Equity Total Comprehensive Income Notes 1 Jan Dec Dec 2013 Per GAAP 27,300 44,434 11,047 Consolidation of subsidiaries a 1,624 (626) (31) Property, plant and equipment b (42,669) (37,755) 2,861 Deferred tax c (521) (649) (102) Share of losses of associates d (1,072) (941) 252 Operating lease incentives e (251) (701) (74) Capitalised borrowing costs f Variance on translation of foreign Subs g Provisions h (636) (530) 42 De-recognition of non-financial assets i (912) Per IFRS (17,137) 3,329 14,697 Reconciliations IFRS 1 requires an entity to reconcile equity, comprehensive income and cash flows for prior periods. The following tables represent the reconciliations from Irish GAAP to IFRS for the respective periods noted for equity and total comprehensive income. a.) Consolidation of subsidiaries Under Irish GAAP, the results of Yerba Limited and Petrogas Retail Limited, subsidiaries of the group were excluded from consolidation. The results of both these entities have been included in the consolidated results at the date of transition to IFRS as they were and are controlled by Petrogas Global Limited. This also resulted in changes to the Consolidated Statement of Cash Flows.

47 Directors Report and Financial Statements 46 b.) Property, plant and equipment The group has recorded the following adjustments in respect of Property, plant and equipment on transition to IFRS. Equity Equity Total Comprehensive Income Notes 1 Jan Dec Dec 2013 Restatement to historic cost i (42,746) (40,637) 1,504 Fair value as deemed cost ii 8,685 8,689 - Impairment of property, plant and equipment iii (8,608) (7,801) 311 Adjustment to depreciation charge arising from adjustments i-iii - 1,994 1,046 Total (42,669) (37,755) 2,861 i) Restatement to historic cost Under Irish GAAP, the group measured property, plant and equipment under a policy of valuation. Upon transition to IFRS, the group adopted a cost policy for the measurement of Property, plant and equipment. The adjustment to equity represents the reduction in the value of Property, plant and equipment from a revaluation model to historical cost. Cumulative net revaluations gains of 42.7 million recorded in equity under Irish GAAP at 1 January 2012 have been reversed. The impact on comprehensive income for the year ended 31 December 2013 of 1.5m relates to increased profits on disposal of assets resulting from decreased carrying values immediately prior to disposal. ii) Fair value as deemed cost Management applied the fair value as deemed cost exemption to land and buildings in respect of eight service stations at the date of transition. This resulted in a cumulative valuation uplift of 8.7m to the group s carrying value of Property, plant and equipment at 1 January iii) Impairment of property, plant and equipment The group assessed each CGU for the existence of impairment indicators at the date of transition and at each subsequent year end in accordance with the provisions of IAS 36 Impairment of Assets. The recoverable amounts of the CGUs were estimated based on value-in-use calculations as these were determined to be higher than fair value less costs to disposal. These calculations use cash flow projections based on financial budgets approved by management for a one-year period. Cash flows beyond the one-year period are extrapolated using the estimated growth rates stated below. The growth rate does not exceed the long-term average growth rate for the retail sites. The following are key assumptions used in the value-in-use calculation; Discount rate - Ireland: 10.1% Discount rate - UK: 9.1% Growth rate: 2% As a result of the foregoing assessment management recorded impairment charges of 5m in respect of retail sites in Ireland and 3.6m in respect of retail sites in the UK at 1 January 2012.

48 PETROGAS GLOBAL Annual Report Directors Report and Financial Statements Management determined cash flow projections based on past performance and their expectations for market development. The weighted average growth rates used are consistent with forecasts included in industry reports. The discount rates used reflect specific risks in relation to sites in Ireland and the UK. A reduction in management s cash flow projections by 10% would increase the impairment by 0.5m at 1 January If management reduced the growth rate by 10%, impairment would increase by 0.1m at 1 January An increase in the discount rate by 10% would increase impairment by 0.1m at 1 January Impairments charges recorded under Irish GAAP have been reversed (2012: 1.7m, 2013: 0.3m). An assessment for impairment indicators was performed at the end of 2012 and 2013 in line with the requirements of IAS 36 - Impairment of Assets resulting in an impairment charge of 1.3m in 2012 (2013: nil). The increase in total comprehensive income for the period represents the reversal of the element of impairments that has been recorded in the GAAP profit and loss account. c.) Deferred tax Deferred tax has been calculated in line with the requirements of IAS 12. The adjustments arising on transition to IFRS relate mainly to temporary differences between the tax base and carrying value of land and buildings arising from transition adjustments explained in note b.) above. d.) Share of loss of associate The group s investment in associates has been restated to comply with the requirements of IAS 28 Associates. This has resulted in the recording of the group s share of the fair value of derivative liabilities held by the associate undertaking that had not been recognised under Irish GAAP. This increased the accumulated share of losses of associates on transition. In 2012, the share of losses of associate equalled the value of the investment (including long term loans) and so the group ceased recognising losses at this point as the group has no legal or constructive obligation to fund ongoing losses in the associate. e.) Operating lease incentives Under Irish GAAP operating lease incentives are recognised as a reduction in the rental expense on a systematic basis over the shorter of the lease term and the date of the next market rent review. Under IFRS the lease incentives are recognised over the lease term resulting in an increase in the deferred rental credit and a reduction in equity on transition to IFRS on the group s Statement of Financial Position. f.) Capitalised borrowing costs IFRS requires that borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are included in the cost of the asset. Borrowing costs were not capitalised under Irish GAAP. g.) Variance on translation of foreign subsidiaries Exchange differences arising from the translation of foreign subsidiaries from their functional currency to the group s presentation currency have been recorded in Other Comprehensive Income. h.) Provisions Under Irish GAAP, the group provided for employee bonuses in the period in which the bonuses were paid. IFRS requires bonuses to be recognised in the period in which the

49 Directors Report and Financial Statements 48 group has a present constructive obligation based on the employees performance in the financial year. i.) De-recognition of assets A number of assets, primarily relating to capitalisation of intangible assets, have been de-recognised on transition to IFRS as these assets do not meet the initial recognition criteria of IAS 36 Intangible assets. 6. Segmental analysis Petrogas Global Limited is a forecourt retail business headquartered in Dublin, Ireland. Operating segments are reported in a manner consistent with internal reporting provided to the chief operating decision maker (CODM). The chief operating decision maker has been identified as the board of executive directors. The Group is organised into two operating segments; Retail Ireland and Retail UK. Retail Ireland - Involves the sale of fuel, food and other groceries within the Republic of Ireland. Retail UK - Involves the sale of fuel, food and other groceries within the United Kingdom. The CODM monitors the operating results of segments separately in order to allocate resources between segments and to assess performance. Information regarding the results of each reportable segment is included within this note. Segment performance measures are revenue, gross profit and profit before tax as included in the internal management reports that are reviewed by the executive directors. These measures are used to monitor performance as management believes that such information is the most relevant in evaluating the results of certain segments relative to other entities that operate within these industries. Assets and liabilities are reviewed by the CODM for the group in its entirety and as such segment information is not provided IRL UK Other Total 000 Revenue Fuel 428, ,948 4, ,979 Food 41,659 4,768-46,427 Other 82,407 28, , , ,642 4, ,322 Gross Profit Fuel 25,137 13, ,635 Food 23,673 1,765-25,438 Other 24,266 8, ,509 73,076 22, ,582

50 PETROGAS GLOBAL Annual Report Directors Report and Financial Statements 2013 IRL UK Total Revenue Fuel 414, , ,010 Food 30,502 2,405 32,907 Other 78,334 20,372 98, , , ,623 Gross Profit Fuel 21,503 8,045 29,548 Food 16, ,787 Other 23,198 5,579 28,777 61,645 14,467 76, Revenue Fuel 419, , ,583 Food 28,625 1,241 29,866 Other 75,262 13,007 88, , , ,718 Gross Profit Fuel 22,297 6,080 28,377 Food 15, ,409 Other 21,027 3,396 24,423 59,257 9,952 69, Earnings per share Year to 31 December Year to 31 December Year to 31 December Basic earnings per share Profit from continuing operations attributable to the owners of the company 12,279 14,650 6,853 Weighted average number of ordinary shares in issue for basic earnings per share 60,000 60,000 60,000 Earnings per share Basic 20.47c 24.42c 11.42c Basic earnings per share is calculated by dividing the profit attributable to equity holders of the company by the weighted average number of ordinary shares in issue during the year.

51 Directors Report and Financial Statements 50 Year to 31 December Year to 31 December Year to 31 December Diluted earnings per share Profit from continuing operations attributable to the owners of the company 12,279 14,650 6,853 Weighted average number of ordinary shares in issue 60,000 60,000 60,000 Adjusted for: Share options Weighted average number of ordinary shares for diluted earnings per share 60,141 60,000 60,000 Earnings per share Diluted 20.42c 24.42c 11.42c Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares arising from share options. For the share options, a calculation is performed to determine the number of shares that could have been acquired at fair value (determined using the implied market value of the company s shares) based on the monetary value of the outstanding share options at the exercise price. Where the number of shares calculated above is less than the number of outstanding options this difference represents dilutive share options and is added to the weighted average number of ordinary shares used for calculating basic earnings per share in order to calculate the weighted average number of ordinary shares for the purpose of the diluted earnings per share. 8. Other operating income Year to 31 December Year to 31 December Year to 31 December Rental income operating lease Commission from operation of automated teller machines Other operating income

52 PETROGAS GLOBAL Annual Report Directors Report and Financial Statements 9. Expenses Profit before tax is stated after charging/ (crediting): Year to 31 December Year to 31 December Year to 31 December Cost of Inventory recognised as expense 831, , ,569 Other external charges 9,559 8,621 7,940 Employee benefits (note 10) 24,722 17,626 14,151 Operating lease payments 10,347 7,060 5,221 Amortisation of intangible assets Depreciation of property, plant and equipment 5,604 4,080 3,687 Auditors remuneration Net foreign exchange loss/(gain) (205) 601 (140) Net impairment charge (note 15) 293-1,266 Profit on disposal of tangible assets (2,872) (1,621) (507) Non recurring charges * 2, Other operating charges 39,598 32,628 33,509 *Non-recurring charges comprise a one off payment made to directors of the group for past service and provision in respect of uncertain tax positions with Revenue authorities (note 23). 920, , ,919 Year to 31 December Year to 31 December Year to 31 December Finance Costs Land and buildings 10,319 7,025 5,221 Motor vehicles Total operating lease payments 10,347 7,060 5,221 Fees paid to the auditor during the period consisted of: Year to 31 December Year to 31 December Year to 31 December Audit of the group financial statements Audit of subsidiaries Other audit related services Total audit and audit related fees Tax compliance and advisory services Other non audit services

53 Directors Report and Financial Statements 52 The group changed auditors during the 2013 financial year from Phelan Prescott to PricewaterhouseCoopers (PwC). The 2014 fee was paid to PwC Dublin only. The 2013 audit fees were paid to PwC Dublin and Phelan Prescott. The 2012 fees were paid to Phelan Prescott. 10. Employee benefits Year to 31 December Year to 31 December Year to 31 December Wages and Salaries 22,255 15,521 13,019 Social security costs 1,932 1,262 1,063 Staff pensions defined contribution scheme Share based payments (note 29) Total employee benefit expense 24,722 17,626 14,151 The group operates defined contribution pension schemes in Ireland and the UK. Total charge analysed between: Year to 31 December Year to 31 December Year to 31 December Selling and distribution expenses 16,843 12,007 8,909 Administrative expenses 7,879 5,619 5,242 24,722 17,626 14,151 The average number of persons (excluding directors) employed directly by the group was: Year to 31 December Year to 31 December Year to 31 December Retail 1, Administration ,

54 PETROGAS GLOBAL Annual Report Directors Report and Financial Statements Director s remuneration is disclosed below: Year to 31 December Year to 31 December Year to 31 December Wages and Salaries 1, Social security costs Pensions defined contribution scheme Share based payments Other Analysed between: 1,865 1, Year to Year to Year to 31 December 31 December 31 December Services as directors Other services 1,830 1, ,865 1, Finance costs/(income) Year to 31 December Year to 31 December Year to 31 December Finance Costs Bank loans and overdrafts 2,223 3,181 4,867 Other loans Variance on translation of foreign borrowings Lease finance charges and hire purchase interest Borrowing costs capitalised (387) (97) - Finance costs before exceptional items 2,885 3,533 5,028 Net debt settlement gain - (3,608) - Finance costs 2,885 (75) 5,028 Finance income Interest income on short-term bank deposits - (28) (101) Interest income on loans to associate (321) (319) (325) Interest income on loans to directors (96) (10) (2) Finance income (417) (357) (428) Net finance cost/(income) 2,468 (432) 4,600

55 Directors Report and Financial Statements 54 Net debt settlement gain The net debt settlement gain of 3.6 million relates to the net gain arising on the settlement of the group s debt obligations during 2013 (net of associated costs). 12. Taxation Year to 31 December Year to 31 December Year to 31 December Current tax Current tax expense - Ireland 1, Current tax expense - Overseas Adjustments in respect of previous periods Total current tax 2,618 1, Deferred tax Origination and reversal of temporary differences (224) Changes in overseas tax rates - (30) 11 Total deferred tax (213) Total tax 2,668 1, The total tax expense can be reconciled to accounting profit as follows: Year to 31 December Year to 31 December Year to 31 December Profit before tax from continuing operations 14,947 16,213 7,278 Income tax at 12.5% (2013: 12.5%, 2012: 12.5%) 1,868 2, Tax effects of eliminated intra-group transactions and non-tax deductible expenses (1,339) (704) (671) Income taxable at higher rates Chargeable gains Trading losses carried forward - (214) 145 Impact of changes in the UK tax rate - (30) 11 Surcharge Adjustments in respect of previous periods Total current tax expense 2,668 1, Factors affecting the tax charge in future years In the UK, the Finance Act 2013 reduced the main rate of corporation tax from 23% to 21% from 01 April 2014 and to 20% from 01 April Deferred tax in respect of temporary differences arising in the UK has been calculated at 31 December 2014 and 31 December 2013 using a rate of 20% and at 31 December 2012 using a rate of 23%. The impact on the tax expense for 2013 arising from this reduction was negligible.

56 PETROGAS GLOBAL Annual Report Directors Report and Financial Statements Deferred income tax: The following is an analysis of the movement in the major categories of deferred tax liabilities/ (assets) recognised by the group for the year ended 31 December 2012: GROUP Property, plant and equipment Tax losses and credits Share based payments Short term temporary and other differences Total At 1 January , ,214 Consolidated Income Statement movement (331) (224) Impact of changes in the UK tax rate Exchange differences and other At 31 December ,019 Analysed as follows: Deferred tax asset (2,673) (2,673) Deferred tax liability 3, , ,019 The following is an analysis of the movement in the major categories of deferred tax liabilities/ (assets) recognised by the group for the year ended 31 December 2013: GROUP Property, plant and equipment Tax losses and credits Share based payments Short term temporary and other differences Total At 1 January ,019 Consolidated Income Statement movement 509 (244) - (125) 140 Impact of changes in the UK tax rate (30) (30) Exchange differences and other (7) - - (1) (8) At 31 December ,283 (244) ,121 Analysed as follows: Deferred tax asset -2,63 (244) - - (2,877) Deferred tax liability 3, ,998 1,283 (244) ,121

57 Directors Report and Financial Statements 56 he following is an analysis of the movement in the major categories of deferred tax liabilities/ (assets) recognised by the group for the year ended 31 December 2014: GROUP Property, plant and equipment Tax losses and credits Share based payments Short term temporary and other differences Total At 1 January ,283 (244) ,121 Consolidated Income Statement movement (23) (85) 50 Exchange differences and other (2) 38 At 31 December ,481 (244) (23) -5 1,209 Analysed as follows: Deferred tax asset (2,610) (244) (23) - (2,877) Deferred tax liability 4, (5) 4,086 1,481 (244) (23) (5) 1,209 The following is an analysis of the movement in the major categories of deferred tax liabilities/ (assets) recognised by the company for the year ended 31 December 2013: COMPANY Property, plant and equipment Tax losses and credits Share based payments Short term temporary and other differences Total At 1 January Consolidated Income Statement movement (11) (11) At 31 December (11) (11) Analysed as follows: Deferred tax asset (11) (11) Deferred tax liability (11) (11)

58 PETROGAS GLOBAL Annual Report Directors Report and Financial Statements The following is an analysis of the movement in the major categories of deferred tax liabilities/ (assets) recognised by the company for the year ended 31 December 2014: COMPANY Property, plant and equipment Tax losses and credits Share based payments Short term temporary and other differences Total At 1 January (11) (11) Consolidated Income Statement movement At 31 December Analysed as follows: Deferred tax asset Deferred tax liability Deferred income tax assets are recognised for tax losses carry-forwards to the extent that the realisation of the related tax benefit through future taxable profits is probable. Within the group there are further available deferred tax assets of 2,269,877 (2013: 2,508,313, 2012: 2,607,671) on impairments of land. The group has only recognised deferred tax assets in relation to impairments up to the value that it offsets the value of recognised deferred tax liabilities on the revaluation of land. 13. Intangible Assets GROUP Franchises Licences Total Cost At 1 January Additions At 31 December Amortisation At 1 January Amortisation charge At 31 December Net Book Value At 31 December At 1 January

59 Directors Report and Financial Statements 58 GROUP Franchises Licences Total Cost At 1 January Additions At 31 December Amortisation At 1 January Amortisation charge At 31 December Net Book Value At 31 December Cost At 1 January Additions Translation Adjustment At 31 December ,464 Amortisation At 1 January Amortisation charge At 31 December Net Book Value At 31 December Intangible asset amortisation is recorded in administrative expenses in the Income Statement.

60 PETROGAS GLOBAL Annual Report Directors Report and Financial Statements 14. Property, plant and equipment GROUP Land and Buildings Plant and equipment Fixtures, fittings and motor vehicles Computer hardware and software Assets under construction Total Cost At 1 January ,252 3,379 23,422 2, ,336 Translation adjustment Additions 6, , ,853 Disposals (2,307) (22) (1,478) (1,009) (392) (5,208) Reclassifications (298) - At 31 December ,477 4,120 23,502 2, ,459 Depreciation/Impairment At 1 January , ,563 1,548-40,081 Translation adjustment Charge for the year , ,687 Disposals (266) (2) (644) (972) - (1,884) Impairment 1, ,266 At 31 December ,771 1,132 12,139 1,227-43,269 Net Book Value 31 December ,706 2,988 11,363 1, ,190 1 January ,225 2,436 12,859 1, ,255 Cost At 1 January ,477 4,120 23,502 2, ,459 Translation adjustment (426) (4) (46) (9) (3) (488) Additions 1, , ,120 14,424 Disposals (9,517) (40) (1,694) (681) (206) (12,138) Reclassifications (19) (786) - At 31 December ,967 5,035 26,527 3,063 5, ,257 Amortisation At 1 January ,771 1,132 12,139 1,227-43,269 Translation adjustment (105) (1) (23) (5) - (134) Charge for the year , ,080 Disposals (656) (19) (1,076) (680) - (2,431) Reclassifications (20) 20 1 (1) - - At 31 December ,809 1,356 13,434 1,185-44,784 Net Book Value 31 December ,158 3,679 13,093 1,878 5,665 89,473

61 Directors Report and Financial Statements 60 GROUP Land and Buildings Plant and equipment Fixtures, fittings and motor vehicles Computer hardware and software Assets under construction Total Cost At 1 January ,967 5,035 26,527 3,063 5, ,257 Translation adjustment 1, ,827 Additions 20,572 2,392 13,547 1,675 9,476 47,662 Disposals (838) (106) (1,975) (485) (166) (3,570) Reclassifications 2,086 4 (262) - (1,828) - At 31 December ,062 7,352 38,045 4,302 13, ,176 Depreciation/Impairment At 1 January ,809 1,356 13,434 1,185-44,784 Translation adjustment Charge for the year 1, , ,604 Disposals (26) (106) (1,861) (485) - (2,478) Reclassifications 9 - (9) Impairment Impairment reversal (376) (376) At 31 December ,460 1,587 15,078 1,526-48,651 Net Book Value 31 December ,706 2,988 11,363 1, ,190 Net Book Value 31 December ,602 5,765 22,967 2,776 13, ,525 Assets under construction as at 31 December 2014 mainly comprise two Motorway Service Areas in Northern Ireland. Assets under construction as at 31 December 2013 and 2012 mainly comprise two Motorway Service Areas in Ireland. Capital expenditure commitments The group has commitments of 4.1million for capital expenditure on property, plant and equipment at the financial year end contracted for but for which no provision has been made. Capitalised Interest Interest capitalised on qualifying assets during the year amounted to 387,163 using an average rate of 3.99% (2013: 96,836, using an average rate of 3.44%). No interest was capitalised in Assets Pledged as Security Freehold land with a carrying amount of 1,580,000 (2013: 2,398,944) has been pledged to secure borrowings for the group. Assets with a carrying value of 618,898 have been pledged as security to the group s leasing providers. The group is not allowed to pledge these assets as security for other borrowings or sell these assets to another entity without the prior consent of the group s lenders.

62 PETROGAS GLOBAL Annual Report Directors Report and Financial Statements GROUP Cost NBV Year ended 31 December 2014 Depreciation charge Plant and equipment Buildings 1,173 1, Fixtures and fittings 3,989 2, Computer hardware ,672 5, GROUP Cost NBV Year ended 31 December 2013 Depreciation charge Plant and equipment Buildings 1,096 1, Fixtures and fittings 2,707 2, Computer hardware ,816 4, GROUP Cost NBV Year ended 31 December 2012 Depreciation charge Plant and equipment Buildings 1,120 1, Fixtures and fittings 2,520 1, Computer hardware ,780 3, The group leases various assets under non-cancellable finance lease agreements. The lease terms are between 3 and 101 years, and ownership of the assets lies within the group. 15. Impairment The group operates a number of service station sites in Ireland, the UK and the USA. The group considers each individual site as a cash generating unit (CGU) for the purpose of impairment assessment in accordance with IAS 36 Impairment of assets and impairment assessments are conducted at this level when indicators of impairment are considered to exist. The recoverable amounts of sites that are assessed for impairment have been determined based on value-in-use methodology or fair value less costs of disposal. An impairment charge of 669,226 (2013: nil; 2012: 1,266,000) was recognised in the Consolidated Income Statement within selling and distribution costs. The impairment charge relates to four service stations (2012: three service stations) in both Ireland and the UK. Impairment indicators were identified when these sites failed to meet profitability expectations. The recoverable amount of these service stations is 2,744,100 (2012: 2,646,343).

63 Directors Report and Financial Statements December December December 2012 Ireland UK Ireland UK Ireland UK Value in use 520 2, ,826 Carrying value (789) (2,611) (2,602) Impairment charge (269) (400) (776) Significant assumptions used in the value in use assessments are summarised below: 31 December December December 2012 Ireland UK Ireland UK Ireland UK Discount rate 9.82% 9.57% 10.1% 9.1% 10.1% 9.1% Long term growth rate 2% 2% 2% 2% 2% 2% Market risk free rate 0.63% 0.55% 0.91% 0.91% 0.91% 0.91% The above assumptions are subject to sensitivity analysis and the impairment review performed is predominantly dependent upon the judgements used in arriving at the future growth rates and the discount rates used in the cash flow projections. The impact on the impairment charge of applying a 10% reduction to the long term growth rate would be to increase the impairment charge by 55,629 (2013: nil; 2012: 43,291) and a 5% increase in the discount rate would be to increase the impairment charge by 242,767 (2013: nil; 2012: 106,804). The impact of a 10% reduction in expected cash flows would be to increase the impairment charge by 346,646 (2013: nil, 2012: 179,605). Fair value less costs of disposal 31 December December December 2012 Ireland UK Ireland UK Ireland UK Fair Value less cost of disposal Carrying value (1,318) Impairment charge (490) The recoverable amount for two of the group s sites (one in Ireland and one in the UK) assessed for impairment in 2014 was based on fair value less costs of disposal. An independent valuation of these sites was performed by valuers to determine the fair value as at 31 December In both cases, the recoverable amount was found to be greater than the carrying value and therefore no impairment was recognised. In 2012, one site in the UK was assessed for impairment on the basis of fair value less costs of disposal. An impairment charge of 490,000 was recognised in respect of this site.

64 PETROGAS GLOBAL Annual Report Directors Report and Financial Statements The fair value measurement of these sites is categorised within level 2 of the fair value hierarchy of IFRS 13 Fair Value Measurement and is based on inputs, other than quoted prices, that are observable for the asset either directly (that is, as prices) or indirectly (that is, derived from prices). Level 2 fair values of sites have been derived using the sales comparison approach. Sales prices of comparable land and buildings in close proximity to the group s sites are adjusted for differences in key attributes such as property size. The most significant input into this valuation approach is price per square foot. Impairment Reversals Management perform a review in respect of sites that had previously been impaired for indicators of improved performance at each reporting period. Performance is deemed to have improved if positive profitability trends are present for a period of three consecutive years. In 2014 one site in Ireland was identified as showing improved performance for which a value in use assessment was performed resulting in the impairment reversal of 375,972 which has been recorded in selling and distribution costs in the Consolidated Income Statement. There were no impairment reversal indicators identified in 2012 and Investments in associates % equity held Principal associate Investment held by Principal activity Country of incorporation January 2012 SuperStop Limited SuperStop Holdings Limited Operation of Motorway Service areas Republic of Ireland 13,547 1,675 9,476 47,662 The group owns Superstop Limited jointly as part of a consortium with Tedcastles Oil Products Limited and Pierse Contracting Limited. The consortium was awarded the public-private partnership contract to design, build, maintain and operate six motorway service areas by the National Roads Authority (NRA) and is treated as an associate in the group financial statements. The associate is a private entity which is not listed on any public exchange and, therefore, there is no published quotation price for the fair value of this investment. The following table provides summarised information on the group s investment in the associated undertaking: Investment in associate unquoted Loan notes held with associates at cost 2,135 2,135 2,135 Share of losses retained by associate At 1 January (2,135) (2,135) (1,694) Share of loss for the year - - (441) At 31 December (2,135) (2,135) (2,135) Total investment in associate - - -

65 Directors Report and Financial Statements 64 The group ceased to recognise its share of losses in Superstop Limited during 2012 as the group s share of losses reached the carrying value of the group s interest in the associate (including long term interests of 2.1 million). The group s share of unrecognised losses amount to 1.15m (2013: 0.14m, 2012: 0.36m). 17. Financial assets Company Investment in subsidiaries unquoted Shares at cost 107,110 66,300 66,300 At 1 January 15, ,110 - Additions - (66,300) - Disposals 122, ,110 66,300 At 31 December Investments in subsidiary undertakings are recorded at cost, which is the fair value of the consideration paid. Equity and voting rights held Principal subsidiary Principal activity Country of incorporation Petrogas Holdings Limited Holding company Republic of Ireland 100% 100% - Petrogas Group Limited Operation of service stations Republic of Ireland % Applegreen Service Operation of Motorway Areas Limited Service areas Republic of Ireland % Applegreen Service Areas NI Limited (Formerly Arkmount Limited) Operation of Motorway Service areas United Kingdom % During 2013 as part of the group reorganisation the company sold its shareholdings in Petrogas Group Limited, Applegreen Service Areas Limited and Applegreen Service Areas NI Limited (Formerly Arkmount Limited), to Petrogas Holdings Limited. The company acquired 100% of the share capital of Petrogas Holdings Limited. 18. Inventories Raw materials and consumables Finished goods 18,542 15,928 13,573 19,158 16,355 13,854 The cost of inventories recognised as an expense and included in cost of sales amounted to 831m (2013: 710m, 2012: 632m).

66 PETROGAS GLOBAL Annual Report Directors Report and Financial Statements 19. Trade and other receivables GROUP Current Trade receivables 2, Provision for impairment (73) (15) (15) Deposits received from customers (47) - - Net trade receivables 2, Accrued income 1,214 1,920 1,281 Prepayments 2,695 1,286 1,157 Other debtors 1,300 1,187 1,904 Withholding tax receivable Amounts due from licensees Amounts due from related companies (note 28) Amounts due from directors (note 28) 118 1, ,333 7,325 5,311 Trade and other receivables are non interest bearing and are generally on 30 day credit terms. The fair values of current trade and other receivables is equivalent to their carrying value. The carrying amounts of the group s trade and other receivables are denominated in the following currencies: GROUP Euro 6,243 6,253 4,514 UK Pound Sterling 1,960 1, US Dollar ,333 7,325 5,311 The ageing analysis of gross trade receivables is as follows: Amounts falling due within one year: Less than 1 month 1, Greater than 1 month but less than 2 months Greater than 2 months but less than 3 months months or greater Total 2,

67 Directors Report and Financial Statements 66 As of 31 December 2014, trade receivables of 1.2m (2013: 0.5m, 2012: 0.3m) were past due but not impaired. These relate to a number of independent customers for whom there is no recent history of default. The ageing analysis of these trade receivables is as follows: Duration overdue Less than 1 month Greater than 1 month but less than 2 months Greater than 2 months but less than 6 months months or greater Total 1, As of 31 December 2014, trade receivables of 73,000 (2013: 15,000, 2012: 15,000) were impaired. These amounts have been provided in full. The individually impaired receivables mainly relate to customers that are in difficult economic situations. The ageing of these receivables is as follows: Duration overdue Less than 1 month Greater than 1 month but less than 2 months Greater than 2 months but less than 6 months months or greater Total 1, COMPANY Current Withholding tax receivable Amounts due from directors (note 28) 96 1,300 - Amounts owed by group undertakings (note 28) 1,538 2,509 1,005 1,959 4,048 1,005 The fair value of trade and other receivables is equivalent to their carrying values. As of 31 December 2014, 2013 and 2012 all company receivables were fully performing, were not past due and were not impaired. The carrying amounts of the company s receivables are denominated in Euro.

68 PETROGAS GLOBAL Annual Report Directors Report and Financial Statements 20. Cash and cash equivalents Cash and cash equivalents are included in the Consolidated Statement of Financial Position and Consolidated Statement of Cash Flows at fair value and, are analysed as follows: GROUP Cash at bank 2, Cash in transit (73) (15) (15) Cash and cash equivalents (excluding bank overdrafts) 8,333 7,325 5,311 COMPANY Cash at bank Cash and cash equivalents (excluding bank overdrafts) Cash and cash equivalents include the following for the purposes of the statement of cash flows: GROUP Cash and cash equivalents 13,781 15,273 23,226 Bank overdrafts (note 21) (1,515) ,266 15,273 23,226 COMPANY Cash and cash equivalents Bank overdrafts (note 21) (401) - - Non- cash transactions The principal non-cash transactions are the issue of shares as consideration for the acquisition of property, plant and equipment from the directors, as discussed in note 28 and assets acquired by finance lease. (401) - -

69 Directors Report and Financial Statements Borrowings GROUP Current Bank overdrafts 1, Bank loans 18,428 3,469 83,029 Finance leases 1,270 1, ,213 4,481 83,615 Non-Current Bank loans 35,997 38, Finance leases 3,598 3,266 1,872 39,595 41,841 2,777 Total Borrowings 60,808 46,322 86,392 COMPANY Current Bank Overdrafts Bank loans 18,428 2,373-18,829 2,373 - Non-Current Bank loans 35,997 38,575-35,997 38,575 - Total Borrowings 54,826 40,948 -

70 PETROGAS GLOBAL Annual Report Directors Report and Financial Statements The carrying amounts of the group s borrowings are denominated in the following currencies: GROUP Euro 47,378 33,002 78,530 UK Pound Sterling 13,430 13,320 7,862 60,808 46,322 86,392 COMPANY Euro 44,527 30,753 - UK Pound Sterling 10,299 10,195-54,826 40,948 - Maturity profile of bank loans and overdrafts GROUP Within one year 18,428 3,469 83,029 Between one and two years 4,303 3, Between two and five years 31,694 34,883-54,425 42,044 83,934 COMPANY Within one year 18,428 2,373 - Between one and two years 4,303 3,692 - Between two and five years 31,694 34,883-54,425 40,948 - The value of undrawn bank loans at 31 December 2014 was nil (2013: nil, 2012: nil). The carrying amounts and fair value of the current and non-current borrowings equate to their carrying value as the borrowings incur interest charges based on variable rates reflected in the Income Statement using the effective interest rate method and there has been no change in credit or other risk characteristics of the group since the debt was drawn down by the group in December 2013.

71 Directors Report and Financial Statements 70 Bank overdrafts Bank overdrafts are short term financing and are repayable on demand. The group has access to overdraft facilities totalling 5m and 1.7m. Bank Loans in existence at 31 December 2013 & 31 December 2014 Bank Loans Group and company bank borrowings are stated net of unamortised issue costs of 1m (2013: 1.25m). These issue costs were incurred in respect of the new five year senior debt facility entered into in December Additional fees were incurred during 2014 in relation to the drawdown of a second tranche of funding. These costs together with the interest expense are allocated to the Income Statement over the five year term of the facility using the effective interest rate method. As part of the group refinancing that occurred during 2013, new long term loan finance was obtained from Ulster Bank Ireland and Allied Irish Bank Plc. Finance totalling 32m and 8.5m was obtained with all loan facilities due to mature in As part of these loan facilities the group capitalised 1.3m of borrowing costs. All facilities are on floating rate terms based on Euribor for loans denominated in Euro and Libor for loans denominated in Pound Sterling. Bank Loans in existence at 31 December 2012 Bank of Scotland (Ireland) The group held loans in both Euro and Pound Sterling with Bank of Scotland (Ireland) with maturities ranging from The group settled all of these loans with Bank of Scotland (Ireland) during 2013 with no balance remaining outstanding at the end of IBRC The group held loans denominated in Euro and Sterling with Anglo Irish Bank. These loans were transferred to the Irish Bank Resolution Corporation Limited (IBRC). The group successfully repurchased these loans during ACC Bank Plc The group held loans denominated in Euro with ACC Bank Plc. These loans matured and were fully repaid in July Guarantees and security As security for loans advanced by Ulster Bank Ireland and Allied Irish Bank Plc, the following charges have been granted: (i) Debenture or equivalent over all material group subsidiaries (ii) Fixed charge on shares in all material subsidiaries In addition joint and several guarantees of the obligations of the borrower by Petrogas Global Limited and seven other group companies have been granted. During 2013 the group fully discharged its debt with IBRC, ACC Bank Plc, and Bank of Scotland (Ireland) and all related security was released.

72 PETROGAS GLOBAL Annual Report Directors Report and Financial Statements 22. Trade and other payables GROUP Current Trade payables and accruals 84,865 71,176 49,302 Other creditors Value added tax payable ,923 Other taxation and social security Amounts due to licensees 1,719 1,507 1,490 Amounts due to related parties (note 28) Amounts due to directors (note 28) ,099 75,161 54,216 GROUP Non - current Other creditors 1,892 1, ,892 1, The carrying amounts of the group s trade and other payables are denominated in the following currencies: GROUP Current Euro 46,941 47,221 29,397 UK Pound Sterling 40,876 27,838 24,819 US Dollar 1, ,099 75,161 54,216 GROUP Non - current Euro UK Pound Sterling 1, US Dollar ,892 1,

73 Directors Report and Financial Statements 72 COMPANY Current Trade payables and accruals Amounts due to related parties (note 28) Amounts owed to group undertakings (note 28) 227 3,681 1, ,767 1, Provisions Total 000 At 1 January Used during the year (251) Additional provisions 571 At 31 December Used during the year (571) Additional provisions 530 At 31 December Used during the year (530) Additional provisions 1,708 At 31 December ,708 Provisions comprise the group s best estimate to i) settle the obligation relating to ongoing tax matters with the Revenue authorities and ii) employee and management bonuses. 24. Capital and financial risk management The main risks affecting the group s financial instruments are foreign currency risk, interest rate risk, liquidity risk and credit risk. The board reviews and agrees policies for the prudent management of each of these risks as documented below. Interest rate risk The group s exposure to changes in interest rates arises in respect of its floating rate borrowings. The group regularly reviews its loan agreements with a view to fixing a portion of its interest rates once there is any sign of recovery in long term rates. At the financial year end no loan balances were held on fixed interest rates as the floating rate is considered advantageous to the group. Management review the need to engage in hedging activities with respect to interest rate risk on negotiating new financing facilities. Based on the group s net debt position at the year end a movement of 100 basis points in base market interest rates would affect the group s profit before tax by approximately 489,742 (2013: 631,575, 2012: 815,611). Foreign currency risk The group currently purchases goods for resale in foreign currency on a tactical basis where the cost and risk of foreign currency purchasing is materially less than local purchasing and does not have any material foreign exchange transaction risks.

74 PETROGAS GLOBAL Annual Report Directors Report and Financial Statements The group s activities in the UK and USA are conducted primarily in their local currencies. Variances affecting operational activities in this regard are reflected in operating costs or in costs of sales in the Income Statement in the year in which they arise. The principal foreign exchange risk is translation arising from fluctuations in the Euro value of the groups investments in Sterling and US Dollars. The group manages its borrowings where practical and cost effective, to partially hedge the foreign currency assets. Hedging is done using currency borrowings in the same currency as the assets held by the operations using the borrowings. A portion of the company s borrowings are denominated in Pounds Sterling and carried in Euro in the Statement of Financial Position. A movement of 10% in exchange rates would change the carrying value of borrowings by 1,029,913 (2013: 1,019,551, 2012: nil). Credit risk Credit risk arising in the context of the group s operations is not significant with the total bad debt provision at the Statement of Financial Position date amounting to 2.6% of gross trade receivables (2013: 2%, 2012: 2%). Customer credit risk is managed centrally according to established policies, procedures and controls. Customer credit quality is assessed in line with strict credit rating criteria and credit limits established where appropriate. Outstanding customer balances are regularly monitored and a review for indicators of impairment (evidence of financial difficulty of the customer, payment default, breach of contract etc.) is carried out at each reporting date. Significant balances are reviewed individually while smaller balances are grouped and assessed collectively. Receivables balances are in general unsecured and non-interest-bearing. Cash and cash equivalents give rise to credit risk on amounts due from counterparty financial institutions (stemming from their insolvency or a downgrade in their credit ratings). Dealings are restricted to those banks with the relevant combination of geographic presence and investment grade rating. The Group continually monitors the credit ratings of its counterparties and the credit exposure to each counterparty. The maximum exposure arising in the event of default on the part of the counterparty (including insolvency) is the carrying value of the relevant financial instrument. At the Statement of Financial Position date there were no significant concentrations of credit risk. Liquidity risk The group s policy in relation to liquidity and cash flow risk is to ensure sufficient resources are available from cash balances or cash flows so that all obligations can be met when they fall due. To achieve this, the group operates a demand deposit account for excess cash, as it is continuously redeveloping and incurring capital expenditure on service stations, and managing working capital peaks and troughs for trading seasonality and timing of payments. The tables below summarise the maturity profile of the group s financial liabilities at 31 December 2014, 31 December 2013 and 31 December 2012, based on contractual undiscounted payments, including interest:

75 Directors Report and Financial Statements <1 Year 1-2 Years 2-5 Years >5 Years Total Bank Loans and overdrafts 21,621 5,559 33,657-60,837 Finance Leases 1,664 1,510 1,524 14,320 19,018 Trade payables 84, ,865 Other creditors ,204 2,804 Amounts due to licensees 1, ,719 Amounts due to related companies Amounts due to directors ,805 7,241 35,697 15, , <1 Year 1-2 Years 2-5 Years >5 Years Total Bank Loans and overdrafts 4,993 5,102 38,102-48,197 Finance Leases 1,394 1,698 1,286 13,025 17,403 Trade payables 71, ,176 Other creditors ,500 Amounts due to licensees 1, ,507 Amounts due to related companies Amounts due to directors ,426 6,862 39,642 13, , <1 Year 1-2 Years 2-5 Years >5 Years Total Bank Loans and overdrafts 83, ,934 Finance Leases ,447 15,727 Trade payables 49, ,302 Other creditors Amounts due to licensees 1, ,490 Amounts due to related companies Amounts due to directors ,607 1, , ,987

76 PETROGAS GLOBAL Annual Report Directors Report and Financial Statements Commodity price risk management The group is exposed to commodity cost risk in its oil distribution businesses. Market dynamics are such that these commodity cost price movements are immediately reflected in oil commodity sales prices and, within a short period the resale prices of recycled oil products. However the group s exposure is considered minimal as a natural hedge is in place between the purchase price of the commodity from suppliers and the ultimate resale to customers. The group does not use hedging instruments to manage commodity price risk. Capital management The group s objectives when managing capital are to safeguard the group s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the group may issue new shares or buy back existing shares, increase or reduce debt or sell assets. The group includes borrowings in its measure of capital. The group s borrowings are subject to covenants. The policy for net debt is to ensure a structure of longer term debt funding and cash balances with deposit maturities up to three months. The capital structure of the group, which includes equity and net debt, may be summarised as follows: Total borrowings (note 21) 60,808 46,322 86,392 Less: cash and cash equivalents (note 20) (13,781) (15,273) (23,226) Net debt 47,027 31,049 63,166 Total equity 17,655 3,329 (11,368) Total Capital 64,682 34,378 51,798

77 Directors Report and Financial Statements Share capital Ordinary Redeemable No. No. At 1 January 2012 Fair Value less cost of disposal 99,999, ,990 1, Issued Shares of 0.01 each At 1 January , Allotted Redeemed - - (452) (5) At 31 December , Allotted 59,970, , Redeemed At 31 December ,999, , Allotted Redeemed At 31 December ,999, , During 2014 the company issued 500 redeemable ordinary shares with a nominal value of 0.01 per share to Mountpark Developments Limited for consideration of 1,873,784, increasing share premium by 1,873,779. Mountpark Developments limited is a related party by virtue of common directors. See note 28 for further details During 2013 the company resolved to issue 59,970,652 ordinary shares for no consideration and with a nominal value of 0.01 per share. The share issue has been financed by a reduction in the share premium account of 599,707 (note 26). Redeemable ordinary shares have the same rights as ordinary shares in issue and are redeemable only at the option of the issuer In 2012, the company redeemed 452 redeemable ordinary shares of 0.01 each for 1,005,248 and the redeemed shares were cancelled. The share redemption has been financed by a reduction in the retained earnings of 1,005,243 (note 26).

78 PETROGAS GLOBAL Annual Report Directors Report and Financial Statements 26. Reserves GROUP Share premium Retained earnings Foreign currency translation reserve Share based payment reserve Total At 1 January ,300 (17,900) - - (17,137) Profit for the year - 6, ,853 Redemption of share capital - (1,005) - - (1,005) Foreign exchange translation - - (79) - (79) At 31 December ,300 (12,052) (79) - (11,368) Profit for the year - 14, ,650 Issue of share capital (600) (600) Foreign exchange translation At 31 December ,700 2,598 (32) - 2,729 Profit for the year - 12,279-12,279 Issue of share capital 1, ,874 Share based payment Foreign exchange translation - - (159) - (159) At 31 December ,574 14,877 (191) ,055 Merger Reserve On 1 January 2011, as part of a reorganisation of the group structure the shareholders interests in Petrogas Group Limited (PGL) and Applegreen Service Areas (ASA) Limited were combined in Petrogas Global Limited. Immediately following this arrangement, the former shareholders of PGL and ASA held the same economic interest in Petrogas Global Limited as they held in PGL and ASA immediately prior to its implementation. The group adopted predecessor accounting to reflect this transaction in the group financial statements under Irish GAAP in The effect of the arrangement was to increase share premium by 66.3m and create a merger reserve of (65.5m). This transaction resulted in the combining of businesses under common control. IFRS 3 Business Combinations defines such an arrangement as a business combination in which all of the combining businesses are ultimately controlled by the same party or parties before and after the business combination. Common control transactions of this nature fall outside the scope of IFRS 3 and consequently the directors have adopted the same accounting policy of predecessor accounting under IFRS as was adopted under Irish GAAP and explained above. Consequently no adjustments arise in respect of this transaction on transition to IFRS at 1 January 2012.

79 Directors Report and Financial Statements 78 COMPANY Share premium Retained earnings Share based payment reserve Total 000 At 1 January 2012 and at 31 December , ,300 Loss for the year - (85) - (85) Issue of share capital (600) - - (600) At 31 December ,700 (85) - 65,615 Loss for the year Issue of share capital 1, ,874 Share based payment cost At 31 December , , Commitments and contingencies Operating lease commitments The group leases various buildings and sites for use across the group s retail operations. These leases are non-cancellable operating leases with varying terms, escalation clauses, incentives and renewal rights. Future minimum rentals payable under noncancellable operating leases, on an undiscounted basis, are as follows: Land and buildings Due within one year 11,455 8,291 5,294 Due after one year but not more than five years 45,776 37,556 20,972 Due after five years 135, ,159 61,784 Total operating lease commitments 193, ,006 88,050 Finance lease commitments The group has finance leases and hire purchase contracts for various items of property, plant and equipment. These leases have terms of renewal but no purchase options or escalation clauses. Renewals are at the option of the specific entity holding the lease. The future minimum lease payments, and their associated present values, payable under finance leases and hire purchase contracts are as follows:

80 PETROGAS GLOBAL Annual Report Directors Report and Financial Statements Minimum payments Present value Minimum payments Present value Minimum payments Present value Within one year 1,664 1,270 1,394 1, Between two and five years 3,034 2,146 2,984 2,166 1, More than five years 14,320 1,452 13,025 1,100 13,447 1,120 19,018 4,868 17,403 4,278 15,727 2,458 Amounts allocated to future finance costs (14,150) - (13,125) - (13,269) - Present value of minimum lease payments 4,868 4,868 4,278 4,278 2,458 2,458 Contingent liabilities During the year, the group purchased a new service station under the terms of an overage agreement. This agreement requires that an additional payment be made to the vendor if the value of the service station increases as a result of obtaining certain planning permissions. At the date of signing the financial statements, the group had not attempted to obtain such planning permission and so no obligation to make an additional payment existed. At year end, the group had negotiated the purchase of two properties for a value of 5.1 million. The terms of one of these purchases was finalised and ownership of the property transferred to the group in April The remaining purchase is yet to be finalised. Pursuant to the provisions of Section 17, Companies (Amendment) Act, 1986, the company has guaranteed the liabilities of its wholly owned subsidiary undertakings in the Republic of Ireland (as listed below), for the financial year ended December 31, 2014 and, as a result, such subsidiary undertakings have been exempted from the filing provisions of Section 7, Companies (Amendment) Act, Petrogas Holdings Limited Petrogas Group Limited Applegreen Service Areas Limited Petrogas Brands Limited Applegreen BK Limited Applegreen Cafe Limited Petrogas International Limited Petrogas Facilities Limited

81 Directors Report and Financial Statements Related party disclosures A - Key management personnel Compensation of key management personnel (including directors) is as follows: COMPANY Current Short term employee and director benefits 1, Post employment benefits Share based payments ,865 1, For the purposes of the disclosure requirements of IAS 24, the term key management personnel (i.e. those persons having authority and responsibility for planning, directing and controlling the activities of the company) comprises the Board of Directors which manages the business and affairs of the company, as set out on Page 2. B - Transactions with directors The group is controlled by B&J Limited (incorporated in Malta), which owns 100% of the company s shares. The group s ultimate controlling parties are Joseph Barrett and Robert Etchingham who own 100% of the shares in B&J Limited. Loans with directors Petrogas Global Limited and its subsidiaries have advanced funds to/from Robert Etchingham, Joseph Barrett and Michael O Loughlin. The loans are permitted by the Companies Act Robert Etchingham Joseph Barrett Michael O Loughlin Total 000 Loans (due to)/ owing from directors At 1 January 2012 (75) Monies advanced by group during the year Interest charged Monies repaid by directors during the year (754) (251) - (1,005) At 31 December 2012 (327) (220) Monies advanced by group during the year ,429 Interest charged Monies repaid by directors during the year - - (1) (1) At 31 December ,218 Monies advanced by group during the year Interest charged Monies repaid by directors during the year - (12) - (12) Debt owed by the directors (to related parties) novated to the group ,687 Property purchased from directors (1,552) (1,552) - (3,104) At 31 December

82 PETROGAS GLOBAL Annual Report Directors Report and Financial Statements During 2014, the group acquired two properties from Robert Etchingham and Joseph Barrett in lieu of settlement of director loans owing to Petrogas Global Limited. These properties were previously owned by Darana Limited and Diegoville Limited (companies related by virtue of common directors) and previously leased by the group as part of its retail operations. These properties were transferred by Darana Limited and Diegoville Limited to the directors and subsequently to the group at their fair value of 3.1m in settlement of loans owing by the directors to the group of 1.3m. The resulting 1.7m owed by the group for the transfer of the properties was settled by the novation of related company payables by the directors (owing to Mountpark Developments Limited) to the group. Subsequently the company issued redeemable shares in Petrogas Global Limited to Mountpark Developments Limited (note 26) in settlement of the related party loan payable to Mountpark Development Limited. COMPANY Robert Etchingham Joseph Barrett Michael O Loughlin Total 000 Loans with directors At 1 January Monies advanced by PGL during the year ,300 At 31 December ,300 Transfer of balances between group companies (624) (517) - (1,141) Novation of debt to related parties (15) (124) - (139) Interest charged At 31 December he maximum amount outstanding from directors, during the year was 1.3m, (2013; 1.3m, 2012; nil) which represents 1.96% (2013: 1.96%, 2012: 0%) of the net assets of Petrogas Global Limited for the previous year. Interest outstanding on these loans amounted to 76,500 (2013: nil, 2012: nil). There are no provisions against balances receivable from directors. Directors and secretary and their interests The directors and secretary who held office at 31 December 2014 had the following interests in the shares of the ultimate parent company: B&J Holdings Limited Petrogas Global Limited 2014 & 2013 Number of shares of 1 each 2012 Number of shares of 0.01 each Ordinary Redeemable Ordinary Redeemable Robert Etchingham 71,625 3,375 21, Joseph Barrett 23,875 1,125 7, ,500 4,500 29,

83 Directors Report and Financial Statements 82 The ultimate parent company of the group changed during 2013 (note 31). All shares held by directors in 2013 and 2014 were in B&J Holdings Limited and all were beneficially held. All shares held by the directors in 2012 were in Petrogas Global Limited. The directors and secretary who held office at 31 December 2014 had the following interests in share options of Petrogas Global Limited. Petrogas Global Limited Number of share options 2014 Eugene Moore 1,000,000 Michael O Loughlin 1,000,000 Paul Lynch 1,000,000 3,000,000 C - Associates Petrogas Group Limited owns Superstop Limited jointly as part of a consortium with Tedcastles Oil Products Limited and Pierse Contracting Limited. The consortium was awarded the public-private partnership contract to design, build, maintain and operate six motorway service areas by the National Roads Authority (NRA) and is treated as an associate in the group financial statements. Petrogas Group Limited has unsecured loan notes in Superstop (Holdings) Limited of 2.1m. For details of the group s investment in associated undertakings see Note 16. Other debtors include an amount of 600,494 (2013: 680,310, 2012: 961,978) relating to interest receivable on these loan notes. Included in cost of sales is an amount of 2.9m (2013: 2.8m, 2012: 2.6m) paid to Superstop Limited, a wholly owned subsidiary of Superstop (Holdings) Limited, in respect of the revenue share due by the operator for the Motorway Service Areas. At 31 December 2014 there was a balance of nil (2013: 127,237, 2012: 63,263) due to Superstop Limited in relation to outstanding revenue share. Included in other debtors is an amount of 118,268 (2013: 118,268, 2012: 512,465) advanced to Superstop Limited as per the terms of the operating and maintenance agreement. Selling and distribution costs include a credit of 175,762 (2013: 946,267, 2012: nil) receivable from Superstop Limited for maintenance work carried out by the group at the motorway service areas. Trade debtors include a receivable of 216,187 (2013: nil, 2012: nil) in relation to these works. D - Other related parties Group The group conducted transactions and held balances with certain related parties during the year. Details of these related parties are disclosed below.

84 PETROGAS GLOBAL Annual Report Directors Report and Financial Statements Related Party Nature of Relationship Mountpark Developments Limited Mountpark Trading Limited Darana Limited Diegoville Limited BJ Management Limited Acute Enterprises Limited Common directors Subsidiary of Mountpark Developments Limited Subsidiary of Mountpark Developments Limited Subsidiary of Mountpark Developments Limited Common directors Common directors RELATED PARTY Balance owing (to)/from 1-Jan-12 Rent incurred during the year Expenses paid on behalf of related party Sale of inventory to related party Remittances/ advances to/ (from) related party Balance owing (to)/from 31-Dec-12 Mountpark Trading Limited (245) (239) Darana Limited BJ Management Limited Acute Enterprises Limited (49) 8 RELATED PARTY Balance owing (to)/from 31-Dec-12 Rent incurred during the year Expenses paid on behalf of related party Sale of inventory to related party Remittances/ advances to/ (from) related party Balance owing (to)/from 31-Dec-13 Mountpark Trading Limited (239) (540) (761) Darana Limited 90 (140) - - (74) (124) Diegoville Limited - (50) BJ Management Limited Acute Enterprises Limited (62) 31 RELATED PARTY Balance owing (to)/ from 31-Dec-13 Rent incurred during the year Expenses paid on behalf of related party Sale of inventory to related party Remittances/ advances to/(from) related party Novation of debt (related parties) Novation of debt (directors) Share issue Balance owing (to)/ from 31-Dec-14 Mountpark Developments Limited (2,432) 1,874 (24) Mountpark Trading Limited (761) Darana Limited (124) (120) (3) Diegoville Limited 611 (106) (531) BJ Management Limited Acute Enterprises Limited (385)

85 Directors Report and Financial Statements 84 Joseph Barrett personally holds the freehold interest in the Monkstown retail site that is let to the group on normal commercial terms. Rent incurred on this property amounted to 55,000 (2013: 55,000, 2012: 55,000). The amounts presented above are in respect of Joseph Barrett s position as a landlord only and not as a director of the company. Brian Geraghty is a director of Phelan Prescott Chartered Accountants and Registered Auditors. Professional services provided by Phelan Prescott whilst Brian Geraghty was also a director of the group amounted to 8,250. Company The company conducted transactions and held balances with fellow group companies and other related parties during the year. Details of these related parties are disclosed below: COMPANY Nature of Relationship Balance Owing (to)/ from 1-Jan 2012 Transfers to/ (from) related party Balance Owing (to)/ from Dec Applegreen Service Areas Limited Subsidiary - 1,005 1,005 Petrogas Group Limited Subsidiary - (1,005) (1,005) COMPANY Nature of Relationship Balance Owing (to)/from Dec-12 Transfers to/(from) group companies Expenses paid on behalf of group companies Purchase of shares in group companies Balance Owing (to)/from Dec-13 Applegreen Service Areas Limited Subsidiary 1, ,125 Petrogas Group Limited Subsidiary (1,005) - (1,376) - (2,381) Petrogas Holdings Limited Subsidiary - 42,109 - (40,809) 1,300 Petrogas Services B.V. Subsidiary - (1,300) - - (1,300) Applegreen Service Areas NI Subsidiary COMPANY Nature of Relationship Transfer balances between group companies Transfers to/(from) group companies Intragroup interest charge Novation of Debt (Directors) Share Issue Debt forgiven by related party Balance Owing (to)/from Dec Applegreen Service Areas Limited Petrogas Group Limited Subsidiary (3,255) ,255 1,215 Subsidiary 2, , Petrogas Holdings Limited Subsidiary (1,300) Petrogas Services B.V. Subsidiary 3,738 (2,396) (42) Applegreen Service Areas NI Subsidiary Petrogas UK Limited Subsidiary (227) Mountpark Developments Limited Subsidiary (2,041) ,874 - (28)

86 PETROGAS GLOBAL Annual Report Directors Report and Financial Statements There are no provisions against amounts receivable from group companies. E Principal Subsidiaries The group s principal subsidiaries are listed in the following table: Subsidiary Principal activity Country of incorporation Equity and voting rights held Petrogas Holdings Limited Holding company Republic of Ireland 100% 100% - Petrogas Group Limited Operation of service stations Republic of Ireland 100% 100% 100% Applegreen Service Areas Limited Operation of service stations Republic of Ireland 100% 100% 100% Petrogas Brands Limited Licencing of Intellectual property Republic of Ireland 100% 100% 100% Applegreen BK Limited Franchise Holder Republic of Ireland 100% 100% 100% Applegreen Cafe Limited Franchise Holder Republic of Ireland 100% 100% 100% Petrogas International Limited Development and service station refurbishment Republic of Ireland 100% 100% 100% Petrogas Facilities Limited Holding company Republic of Ireland 100% 100% 100% Desdale Limited In Liquidation* Republic of Ireland 100% 100% 100% Yerba 2 Limited In Liquidation* Republic of Ireland 100% 100% 100% Black Quarry Service Station Limited In Liquidation* Republic of Ireland 100% 100% 100% Reflare Limited In Liquidation* Republic of Ireland 100% 100% 100% Trukar Limited In Liquidation* Republic of Ireland 100% 100% 100% Tiknock Limited In Liquidation* Republic of Ireland 100% 100% 100% Taciturn Limited In Liquidation* Republic of Ireland 100% 100% 100% Yerba Limited In Liquidation* Republic of Ireland 100% 100% 100% Petrogas Retail Limited In Liquidation* Republic of Ireland 100% 100% 100% Petrogas Services BV Licencing of Intellectual property The Netherlands 100% 100% 100% Petrogas UK Limited Operation of service stations United Kingdom 100% 100% 100% Petrogas Western Limited Operation of service stations United Kingdom 100% 100% 100% Petrogas Group NI Limited Operation of service stations United Kingdom 100% 100% 100% Applegreen Service Areas NI Limited Operation of service stations United Kingdom 100% 100% 100% Petrogas (Southern) Limited In Liquidation* United Kingdom 100% 100% 100% Linkside Estates Limited In Liquidation* United Kingdom 100% 100% 100% Badger Close Limited In Liquidation* United Kingdom 100% 100% 100% Linkside Service Stations Limited In Liquidation* United Kingdom 100% 100% 100% Petrogas Facilities (UK) Limited In Liquidation* United Kingdom 100% 100% 100% Petrogas Retail (UK) Limited In Liquidation* United Kingdom 100% 100% 100% Petrogas Group US Inc. Operation of service stations United States of America 100% 100% - * During 2013, as part of a group re-organisation, the trade and assets of these companies were transferred to other group companies. These companies are now in liquidation. Shares in Petrogas Holdings Limited are held directly by Petrogas Global Limited. Shares in the other subsidiaries are held directly or indirectly by Petrogas Holdings Limited. All principal subsidiary undertakings have the same year end as Petrogas Global Limited. All of the above companies have been included in the group consolidation.

87 Directors Report and Financial Statements Share based payment plans Long Term Incentive Plan (LTIP) Share Option Scheme The group operates an equity-settled, share-based compensation plan, under which the entity receives services from employees as consideration for equity instruments (options) of the group. The share options are granted to directors and selected employees. The options are granted with a fixed exercise price which is determined firstly based on the implied market value per share of the company at the grant date of the options and secondly based on the tenure of the employee. The share options vest and are exercisable either immediately once the company s shares become publicly traded or three years after the date of grant. Employees are required to remain in employment with the group until the options become exercisable. The options expire seven years after the date of grant. The scheme was established during 2014, so no comparative information is presented. The group has no legal or constructive obligation to repurchase or settle the options in cash. The company recognises a share-based payment expense based on the fair value of the awards granted, and an equivalent credit directly in equity. The expense recognised for employee services received during the year is shown in the following table: Expense arising from equity settled transactions 332 Expense arising from cash settled transactions - Total expense arising for share based payments 332 Movements in share option schemes during the year No. of share options Weighted Average Exercise Price Cost At 1 January - - Granted during the year 6,800, Forfeited during the year - - Exercised during the year - - Expired during the year - - Outstanding 31 December 6,800, Exercisable 31 December December ,776 13,415 Out of the 6,800,000 outstanding options, none were exercisable at 31 December Share options outstanding at the end of the year have the following expiry dates and exercise prices;

88 PETROGAS GLOBAL Annual Report Directors Report and Financial Statements Grant date Vest date Expiry date Exercise price per share option No. of share options 5 December 2014 IPO 5 December ,350,000 5 December December December ,400,000 5 December December December ,500,000 5 December December December ,000 6,800,000 The weighted average remaining contractual life for the share options outstanding as at 31 December 2014 is 7 years. The weighted average fair value of the options granted during the year was The group has used the Black Scholes valuation model to determine the grant date fair value of share options. The following table lists the inputs used in the model for the year ended 31 December 2014: 31 December 2014 Expected volatility (%) 28.3 Risk free interest rate (%) 0.38 Expected life of share options (years) 7 Weighted average share price ( ) 1.67 Valuation model for new grants Black Scholes Expected volatility reflects historic volatility of similar companies over a period equal to the expected life of the share options. The risk-free rate is the rate of interest obtainable from government securities over the expected life of the share options. 30. Post year end events Since the year end, the group has opened four new sites in Ireland, two in the USA and one in the UK. In March 2015, the group entered into new banking arrangements with its senior lenders, Allied Irish Bank Plc and Ulster Bank Ireland. These new agreements extend the maturity of the group s debt and make additional facilities available to the group. Had these arrangements been in place at 31 December 2014, the impact on the Consolidated Statement of Financial Position would be to decrease current borrowings by 15 million and increase non current borrowings by the same amount. The group has entered into franchise arrangements with two new food offerings, with the first sales from Chopstix and Greggs taking place in March 2015 and April 2015 respectively.

89 Directors Report and Financial Statements Ultimate controlling party On 18 December 2013 B&J Holdings Limited, a company registered in Malta, acquired the entire share capital of Petrogas Global Limited from Robert Etchingham and Joseph Barrett, and subsequently became the immediate controlling party of Petrogas Global Limited. Robert Etchingham and Joseph Barrett wholly own the shares in B&J Holdings Limited and are consequently the ultimate controlling parties of Petrogas Global Limited. Petrogas Global Limited, for the Year ended 31 December 2014 is the smallest group to consolidate these financial statements. B&J Holdings Limited is the largest group to consolidate these financial statements. Copies of the Petrogas Global Limited financial statements can be obtained from Block 17, Joyce Way, Parkwest, Dublin Approval of financial statements The Board of Directors approved and authorised for issue the financial statements in respect of the year ended 31 December 2014 on the 30 April 2015.

90 PETROGAS GLOBAL Annual Report Directors Report and Financial Statements Directors and Other Information Board of Directors Robert Etchingham Joseph Barrett Michael O Loughlin Eugene Moore Paul Lynch Martin Southgate Brian Geraghty Auditors PricewaterhouseCoopers Chartered Accountants and Registered Auditors One Spencer Dock North Wall Quay Dublin 1 Ireland Secretary and Registered Office Joseph Barrett Block 17 Joyce Way Parkwest Dublin 12 Ireland Solicitors Eugene F Collins Temple Chambers 3 Burlington Road Dublin 4 Ireland Company Number: Bankers Ulster bank George s Quay Dublin 2 Ireland AIB Bank Centre Ballsbridge Dublin 4 Ireland

91 Directors Report and Financial Statements 90 Concept, graphic design, layout and illustrations by: biográfica Handcrafted wooden objects and photography by: Rafael García Printed in Madrid, Spain by: TF Artes Gráficas

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