ROMPETROL WELL SERVICES S.A.
ANNUAL REPORT OF THE BOARD OF DIRECTORS for the 2021 financial year
Page 1 of 33
ANNUAL REPORT
OF THE BOARD OF DIRECTORS
FOR THE 2021 FINANCIAL YEAR
prepared according to Law no. 24/2017 regarding the issuers of financial instruments and
market operations and FSA Regulation no. 5/2018 regarding the issuers of financial instruments
and market operations
Company
ROMPETROL WELL SERVICES S.A.
Registered office: Ploieşti - str. Clopoţei no. 2 bis
Telephone no.: 0244/544321, 0244/544101
Fax no.: 0244/522913
Tax identity code: RO 1346607
Trade Registry no.: J29/110/March 05, 1991
Trading market: BUCHAREST STOCK EXCHANGE
Subscribed and paid in share capital: RON 27,819,090
Main characteristics of the securities issued by the company
No. of shares: 278,190,900
Nominal value (RON/share): RON 0.10
Class and type of securities: “A” nominative
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ROMPETROL WELL SERVICES S.A.
ANNUAL REPORT OF THE BOARD OF DIRECTORS for the 2021 financial year
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Table of contents
1.
Analysis of the company’s activity
……………………………………….………....
3
2. Company’s tangible assets ………………………………….…………….………... 11
3.
Market of the
securities issued by the company
..…………….…
…….
…..……...
1
1
4. Company’s management …………………………………………………….……… 14
5.
Financial
Statements
……………………………………………
…………
………….
1
7
6.
Corporate governance
…………………………………………
…
…………….…….
19
7. Annexes ……………………………………………………...………………………… 32
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ROMPETROL WELL SERVICES S.A.
ANNUAL REPORT OF THE BOARD OF DIRECTORS for the 2021 financial year
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1. Analysis of the company’s activity
Rompetrol Well Services S.A. (RWS) is one of the most important companies in the specific
Romanian market segment. RWS offers a wide range of specialized services for crude oil and
natural gas wells including cementing, stimulations, nitrogen services, tubular running operations
and rentals of equipment and tools.
In 2021 RWS continued to consolidate and develop core activities, mainly those regarding the
provision of special services at the well. On the background of effects generated by the COVID-
19 pandemic and the evolution of the petroleum industry, the Company managed to maintain both
its leading position in this area and record positive financial results.
Two main trends have impacted 2021: growth in quotations and demand for crude oil on the
international markets and fluctuations in the supply chain of raw materials, typical for the upstream
industry.
The evolution of crude oil followed an upward trend in 2021, the price of this raw material
increasing by about 67%, from an average of $41.6/bbl in 2020 to $69.2/bbl in 2021 (Ural Med
crude oil quotation).
Given the international context (COVID evolution – Delta and Omicron, resumption and growth of
economic activities, production increases – OPEC, tensions in the Middle East, impact of
Hurricane Ida), crude oil producers failed to keep up with this growth, development projects frozen
in 2020 not being restarted at full capacity.
Also, the dynamics of quotations was not considered at the beginning of the year as a stable
indicator for a long period, which contributed to maintaining a low level of activities, comparable
to that registered in 2020.
To these were added divestment/ adjustment decisions of the operators' investment budgets, but
also shortcomings in the supply chain of raw materials typical to the upstream industry in the
second half of the year. The cumulative effect of these factors was reflected in even greater delays
in starting and resuming drilling operations.
-RON
2019
2020
2021
Operating income, of which: 66,981,161
48,595,858
45,961,135
Services rendered 65,678,479
47,249,182
44,185,085
Operating expenses, of which: (57,844,704)
(47,713,575)
(46,227,637)
Depreciation (4,883,457)
(4,895,712)
(3,996,830)
Provision adjustments, net 631,085
(157,129)
(545,161)
Net financial income 4,518,132
3,747,231
2,040,690
EBIT 13,654,589
4,629,514
1,774,188
Net Profit 12,170,108
4,362,952
1,629,634
Available funds in cash pooling system 96,010,
188
82,419,445
55,022,238
Number of employees 172
158
149
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ROMPETROL WELL SERVICES S.A.
ANNUAL REPORT OF THE BOARD OF DIRECTORS for the 2021 financial year
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1.1. a) Description of the company’s core activity
Benefiting from almost 70 years of experience, Rompetrol Well Services SA is a competitive, solid
and reliable partner, offering a wide range of services in the oil and gas industry.
The Company’s core activities are: supply of services for oil and gas wells, rental of well tools and
equipment, and other services. The offered services include: cementing, stimulations, tubular
running operations performed in the oil fields in Romania and abroad.
On an annual basis, the Company cements an average of 250 strings and liners, with a depth
varying from 50 to 5,500 meters, supplies tubular running services for casings and liners to all
Romanian clients. The company also offers rental services for drilling tools.
b) Specification of the company’s incorporation date
Rompetrol Well Services S.A. was established in 1951 and in the 70 years of activity, although it
operated with various structures and under various names, the main profile was the performance
of special operations at Romanian oil and gas wells.
Government Decision no. 1213, from November 1990 decided that the company to be
transformed in a joint-stock company, according to Law no. 15/1990, under the name of PETROS
S.A., name under which it operated until September 2001, when it changed its name into
ROMPETROL WELL SERVICES S.A.
c) Description of any merger or signification reorganization of the company, of its
subsidiaries or of controlled companies, during the financial year
During 2021 and respectively 2020, the Company did not participate to any merger or
reorganization.
d) Description of purchases and/or disposals of assets
During 2021, the acquisitions performed by the Company were represented mainly by special
equipment needed for the normal operating activity. The Company did not dispose fixed assets
with significant net book value. During February – May 2021, the Company sold land plots in
Boldesti-Scaieni, Targu Mures, Tecuci and Campina, the total carrying amount being of 145.617
RON and resulted in a net income of 335.727 RON.
e) Description of the main results of the evaluation of the company’s activity.
1.1.1. General assessment elements:
a) Profit;
At the end of 2021, Rompetrol Well Services registered a positive result (profit) of RON 1,629,634.
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ROMPETROL WELL SERVICES S.A.
ANNUAL REPORT OF THE BOARD OF DIRECTORS for the 2021 financial year
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b) Turnover;
In 2021, the turnover was RON 44,597,157, 6% lower than in 2020, respectively 8% lower than
the budgeted turnover. The impact was generated by the delays in restart of normal activities for
the upstream market, delays determined by the global context as well as internal business
decisions of our main customers.
c) Export;
In 2021, due to the restrictions imposed as a result of the Covid pandemic, no services were
provided outside Romania.
d) Costs;
In 2021, the operating expenses adjusted with provisions were RON 45,682,476, 4% lower than
those registered in the previous year, their evolution being directly influenced by the decrease of
the activity volume, as presented under item b).
e) Market percentage;
In Romania the Company holds between 15% and 70% of market shares for various types of
special services rendered.
f) Liquidity (available funds in the account, etc.).
In terms of liquidity, the Company maintained the capacity to cover current debts from current
assets, the current liquidity indicator reaching a level of 9.11 at December 31
st
, 2021.
1.1.2. Assessment of the company’s technical level
Description of the main rendered services
The main services performed by ROMPETROL WELL SERVICES S.A. are the following:
• Cementing and various pumping services such as:
casing cementing, primary cementing, remedial cementing (plug cementing and squeeze
cementing), killing of wells, well circulations, millings and fluids displacements, interventions on
damaged wells, miscellaneous pumping, tubular material, manifold, blow out preventer, etc.
• Stimulation services:
tensio-active treatments, acidizing, handling and transport of fluids (acid solutions, emulsions and
enzymes etc.), aquifers layers isolation.
• Liquid Nitrogen services:
lifting operations, foam acidizing, pipeline pressure testing;
• Tubular running services;
• Rentals of tools and equipment for various drilling-extraction works or the solving
of well technical accidents;
• Cement analysis at the well site or in the lab;
• Cementing solutions preparation according to recipes;
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a) main markets for each product or service and distribution methods;
ROMPETROL WELL SERVICES SA maintained its position on the internal market being
permanently concerned with improving the quality of performed services. With production
capacities spread throughout the territory of the country and qualified labour force, well prepared
in the field of supplies of special services at crude oil and gas wells, ROMPETROL WELL
SERVICES promptly ensures the services requested by their beneficiaries irrespective of the
location.
The main markets for the services of Rompetrol Well Services are in Central and Eastern Europe.
b) weight of each category of products or services in the income and in the total turnover
of the company for the last three years;
The situation of the weight of each category of services in the 2019, 2020, 2021 turnover is
presented in Annex no. 1.
c) new products envisaged to which a large volume of assets will be allocated during the
next financial year, and products’ development stage.
The equipment modernization program in the last years focused on updating technologies for
cementing and well stimulation services, respectively tubing and acidizing services. The
endowment of cementing pump trucks with new high pressure lines is in accordance to the current
safety requirements of the industry. The Company continues to develop and implement efficient
cementing and well stimulation technologies to meet the operational requirements of customers.
1.1.3. Assessment of the technical and material supply activity (domestic sources, import
sources)
Information on the safety of supply sources and the prices of raw materials and the dimension of
raw materials and materials stocks.
The main types of materials necessary to perform the company’s activity are: cement and
additives, fuels and lubricants, car spare parts and technological equipment, ensured based on
annually concluded firm agreements, which ensures stability and safety to the company’s
operation under optimum conditions. The levels of stocks of raw materials and spare parts vary
depending on the volume of activity forecast in the immediately next period. Purchase prices are
the market prices.
1.1.4. Assessment of the selling activity
a) Description of the sales evolution sequentially on the internal and/or external market
and of sales perspectives on a medium and long-term basis;
The income evolution is presented in the table below:
-
RON
201
9
20
20
20
21
Sales by activities, of which:
66,135,769
47,667,818
4
4
,
597
,
157
▪ Income from rendered services 66,100,810
47,597,837
44,450,951
▪ Income from the sale of merchandise
34,959
69,
9
81
146
,
206
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In 2021, the Company's activity continued to record a decrease in orders for the provision of well
services. Despite the constantly changing market conditions, RWS has been able to secure its
leading position in the specific market segment through diversity and flexibility in providing
specialized services tailored to each client. From an operational point of view, the Company has
implemented measures to ensure the availability of labor in order to honor all orders (such as
periodic testing, reduced physical contact between teams). From a commercial point of view, the
Company participated in all publicly announced auctions in order to ensure the activity for the
next period.
Although in 2022 the market is expected to be still volatile, with a moderate level of new
investments from our main customers, the flexibility of the Company in regards to the type of
services rendered, together with a strong financial position, including cash availabilities, will allow
the operational activity to record a similar level as the one recorded in 2021.
Having in mind the increasing trend of crude quotation and increased number of immunized
against COVID-19, as well as past experience with similar events of crude price sudden drop
registered in the past, we expect that in the medium and long-term perspective, the market will
recover up to normal conditions.
b) Description of the competitive situation in the company’s activity field, of the weight
on the market of the products or services of the company and of the main competitors;
Given the conditions of a competitive environment and the maintenance at a prudent level of the
activity in the oil and gas industry, the Company succeeded in maintaining the market share for
most services supplied in Romania, while increasing the complexity of supplied services. A share
varying between 15% and 70% of the specific service market is held by the company.
The Company’s main competitors are: SCHLUMBERGER LOGELCO, HALLIBURTON
ROMANIA, S.M.A.P.E. and TACROM SERVICES.
c) description of any significant dependence of the company on a single client or a group
of clients whose loss would have a negative impact on the company’s income.
We can say that ROMPETROL WELL SERVICES depends on the position of OMV - PETROM
BUCUREŞTI S.A., client which represents approx. 65% of the company’s sales. To reduce this
risk of dependence, the company targets the increase of the proportion of well special services
supplied to other E&P players on the domestic market and the extension of the activity on the
external market.
1.1.5. Assessment of the aspects related to the company’s employees/personnel
a) Specification of the number and training level of the company’s employees and of the
labour force syndication degree;
The Company ensured training for employees, mainly through in-house training programs, to
ensure the achievement of the maximum benefits from the operation of existing equipment,
continuously raising the skills level of employees and to create a safe work environment.
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The structure of employees as at December 31, 2021 was as follows:
Total employees, out of which:
1
49
- with higher education 64
-
with secondary education
8
-
qualified workers
7
7
The labour force syndication degree is 91.28%.
b) Description of the relationships between the manager and the employees, and of any
conflictual elements characterizing such reports.
The relationships between the manager and employees are based on collaboration, according
with “Collective labour agreement“ at a company level, there being no conflictual elements which
could characterize such relationships.
1.1.6. Assessment of the aspects related to the impact of the issuer’s basic activity on
the environment
A brief description of the impact of the issuer's core business activities on the environment as well
as any existing or expected litigation of the breach of environmental protection legislation.
The activity carried out within the Company, both at the headquarters in Ploieşti and at all the
units in the country, strictly follows the observance of the environmental legislation in force, in this
way avoiding any litigation that may arise as a result of violations of applicable law.
The company carries out regular checks on compliance with environmental requirements in
accordance with the environmental permits related to working points in the country to avoid
penalties or fines that could be applied for non-compliance in this field, but also for the relationship
with our suppliers and customers. Lately, more and more attentive to environmental issues and
concerned with identifying solutions that would lead to a reduction in the ecological footprint.
Verification of compliance with the environmental provisions in force is a complex process by
which the Company performs a detailed assessment of activities with environmental impact,
compliance with environmental legislation for both technological processes carried out on site and
documents held, identifying any non-compliance and proposing solutions to comply, prevent or
reduce the impact on the environment.
In July 2021, the audit of the recertification of the Integrated Management System (environment,
quality, safety and health at work) was carried out by DNV Business Assurance, following which
Rompetrol Well Services S.A. has been certified for the next 3 years with the new standards ISO
9001: 2015, ISO 14001: 2015 and ISO 45001: 2018. In order to verify and maintain compliance
with these standards, the Company annually conducts internal audits of the environment, quality
and health and safety at work at all its bases and inspections of the operations it performs at
customer locations. Also, in 2021, the Company was audited in terms of (Environment,
Emergency Situations, Health and Safety at Work) by the KMG Group, obtaining a score of 85.4%
which corresponds to the rating "Excellent".
Rompetrol Well Services aims to achieve several environmental objectives, including:
• Implementation of sustainability ideas within the entity.
• Disposal by authorized companies of all types of waste identified within the Company.
• Optimizing the consumption of electricity and gas by using LED lamps and using new thermal
power plants with low consumption.
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• Reduce paper consumption by electronic archiving.
• Monitoring and implementation of environmental issues imposed in environmental permits.
• Periodic monitoring of the spaces arranged for waste collection and safe storage;
• Training in the field of environmental protection of staff working for and on behalf of the
organization.
• Prevention of any accidental pollution;
• Continuation of the process of renewing the fleet with new generation trucks equipped with Euro
6 engines, thus contributing to the reduction of emissions eliminated in the atmosphere.
• Training of all staff on the selective collection of waste, the reduction of specific consumption
and in particular the responsibility for the implementation of the environmental policy and
environmental objectives that the Company has set out to achieve.
The management of ROMPETROL WELL SERVICES provides the necessary resources and
framework for the implementation of the established environmental objectives, directly and
personally involved in all projects aimed at the continuous improvement of environmental
protection through the services provided.
According to Law no. 105/2006 and the Emergency Ordinance no. 196/2005, regarding the
obligations to the Environmental Fund, Rompetrol Well Sevices S.A. pays monthly taxes on
emissions of pollutants into the air from fixed sources and annual tax on packaging placed on the
market, according to the Declarations on obligations to the Environmental Fund.
1.1.7. Assessment of the research and development activity
Specification of the expenses in the financial year and of those anticipated in the next financial
year for the research and development activity.
In 2021 the Company did not registered research and development expenses.
1.1.8. Assessment of the company’s risk management activity
Description of the Company’s exposure to the price, credit, liquidity and cash flow risk. Description
of the company’s risk management policies and objectives.
The activity performed by the Company implies its exposure to:
- price risk: the Company has a flexible price policy, which enables it to react and adapt to the
potential price fluctuations which could appear on the market;
- credit risk: the Company’s activity is financed from own sources, but the credit risk could not be
totally eliminated. The Company approached client crediting in a procedural, flexible manner,
through the contracting strategy established as an essential risk distribution mechanism. The
company’s management permanently monitors the receivables and their collection;
- interest rate risk: the Company did not contract bank loans, not having any effect of the interest
rate on expenses. For the available funds placed in cash pooling system, the interest income is
variable by reference to ROBOR evolution;
- liquidity risk: until present the liquidity risk was estimated as low, because the company
succeeded in obtaining a stable balance between the due date of receivables generated by sales
and the chargeability of the debts for the operational and investment activity.;
- exchange rate risk: most income achieved by the Company is referred to RON and EUR. The
time difference between the recognition of amounts in foreign currency and their collection cannot
generate significant effects over the Company’s financial position.
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1.1.9. Elements of perspective regarding the company’s activity
a) Presentation and analysis of trends, elements or factors of uncertainty which affect or
could affect the liquidity of the company as compared to the same period of the previous
year.
The activity performed by the company did not determine malfunctions of the cash flows, being
compensated by the efficiency of the management of existing liquidities. The commitments to
suppliers were rhythmically paid. The registered overdue amounts do not have the risk of
significant penalties. As at December 31
st
, 2021 the company is not involved in any litigation for
the payment of outstanding debts. The company ensured permanent promptness in honouring
the agreements throughout the country.
The perspectives of extending service activities on external markets however impose rational
decisions in prudently engaging liquidities upon the conclusion of new agreements.
Main objectives for 2022
To continue offering high quality services in all the main activities performed by the Company.
Taking into account the current market trend, the Company is analyzing the possibility of
expanding on the services market in the Middle East region. In this sense, the Company continued
discussions with possible local partners, including the opening of an operational base in the area.
b) Presentation and analysis of the effects of capital expenses, current or anticipated, on
the company’s financial situation as compared to the same period of last year.
The company operated through the use of its own financing sources, without engaging credits
from banking institutions or other legal persons.
The debt category does not include overdue debts such as interest or other credits engaged from
banking institutions, but only the effect of applying the new leasing standard.
The permanent trend for the constructive and functional improvement of drilling installations
imposed by the necessity to obtain a technical and economic efficiency of extraction wells led to
the necessity to perform investments in order to satisfy market requirements.
A weight of 96% of the increase registered in tangible assets, of RON 4.5 million, is represented
by the purchase and/or modernization of equiment, machinery and tools used for well services
operations and other preliminary operations.
Approximately 4% of the total investments made by the Company in 2021 targeted works made
to rehabilitate and modernize the administrative buildings and the replacement of IT equipment.
The Company ensured its own financial resources to achieve the 2021 capital expenditure
budget.
c) Presentation and analysis of events, transactions, economic changes significantly
affecting the income from the basic activity.
The turnover for 2021 decreased by 6% compared to 2020, due to the reduction of well services
demand. This decrease was limited to level mentioned above due to the solid position of the
Company on the specific market.
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2. Company’s tangible assets
2.1. Specification of the location and of the characteristics of the main production
capacities owned by the company.
The patrimonial assets such as tangible assets enable a flexible organization in the territory to
operatively honour beneficiary’s orders.
The place of service supply is identified at the beneficiaries, not in the organizational perimeter of
the company, the use of production capacities depending on the orders received from
beneficiaries.
The location of plots of land and constructions on the geographic area is identified in the following
localities: Ploieşti (Prahova County), Câmpina (Prahova County), Răzvad (Dâmboviţa County),
Leordeni (Argeş County), Mihăeşti – Stupărei (Vâlcea County), Potcoava (Olt County), Craiova
(Dolj County), Tg. Cărbuneşti (Gorj County), Slobozia – Conachi (Galaţi County), Ianca (Brăila
County), Timişoara (Timiş County), Mediaş (Sibiu County), Moineşti (Bacău County), Videle
(Teleorman County).
The main production capacities are represented by the existence of fixed assets in the patrimony,
such as: cementing units, bulk trucks, tank trucks, cement laboratory equipment and other types
of utility vehicles and drilling tools.
2.2. Description and analysis of the degree of wear and tear of the company’s properties.
The work in open air at wells, the circulation on difficult to access roads and the use of corrosive
materials imply a high degree of wear and tear – compensated through the investments in the
last years. The car specific nature of production capacities implies the recognition of maintenance
costs resulted from the adaptation and recognition of the imperative normative documents specific
to European integration and of environmental protection problems: DGT transport licenses,
vignettes, tachographs, environmental taxes, first registration taxes, local taxes, etc.
2.3. Specification of the potential problems related to the ownership right over the
company’s tangible assets.
For all tangible assets, the ownership right is recognized, according to the held documents and
the regulations in force.
3. Market of the securities issued by “ROMPETROL WELL SERVICES” S.A.
3.1. Specification of the markets in Romania and in other countries on which the
securities issued by the company are negotiated.
The securities issued by ROMPETROL WELL SERVICES S.A. are admitted to the listing of the
Bucharest Stock Exchange through decision no. 133 / March 26, 1998 and are traded on such
market under the STANDARD category in the sector of the securities issued by Romanian legal
persons, starting with June 18, 1998, under the PTR symbol. The securities issued by the
company are in class A – nominative shares.
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The share capital as at December 31, 2021 is RON 27,819,090 equivalent to 278,190,900 shares
with a nominal value of RON 0.10 /share and is distributed by holders as follows:
1. KMG INTERNATIONAL N.V. The Netherlands RON 20,311,015 (73.0111 %)
2. KJK BALKAN HOLDING S.a.r.l Luxembourg RON 2,970,995 (10.6797 %)
3. Other shareholders (3468 shareholders) RON 4,537,080 (16.3092 %)
Shareholding structure
3.2. Description of the company’s dividend policy. Specification of the dividends
due/paid/accumulated in the last 3 years and, if applicable, of the reasons for the
potential decrease of dividends over the last 3 years.
The decision to declare and pay dividends is made in the Annual Ordinary General Meeting of
Shareholders at the recommendation of the Board of Directors. The recommendations on the
dividend value and payment manner are adopted in the meeting of the Board of Directors
proposing the profit distribution based on end-of-year results.
The policy provides a differentiated approach in determining the volume of dividends in respect
of the Company, depending on:
• The nature and profitability of the commercial activity of the Company and its share capital
needs;
• The expected own equity requirements for performance of the activity plans and the
investment projects.
• The actual dividend volume shall take into account own equity financing needs for:
 Financing of capital investments in existing assets;
 Financing of investment projects in respect of the part which requires the allocation of
own funds according to the agreed structure of project financing;
 Debt reimbursement;
 Other relevant factors that influence the company's cash flows.
The Board of Directors drafts proposals for the amount of dividends actually distributed for the
reporting period.
KMG
International
NV (NL),
73.01%
KJK Balkan
Holding
S.a.r.l, (Lux)
10.68%
3468
shareholders
with holdings
below 3%
each; 16.31%
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The dividends distribution rate, subject to the other provisions of this Policy, is set at a minimum
of 30% as long as there is sufficient cash availability computed as following:
Cash balance N + Cash Pooling net balance N + Cash from operations N+1 + Cash from Investing
N+1 + Finance cost paid N+1 + Mandatory loan repayments N+1
Where N is represented by the year for which the distribution is made while N+1 is represented
by the next year. For N+1 computation is prepared based on the budget.
The Dividends are distributed to the Company’s shareholders pro rata with their shareholdings in
the Company.
The final decision shall be taken by the appropriate corporate bodies of the Company.
Amount of dividends shall be identified when decision is made to declare and disburse dividends.
The GMS decision on declaring and paying dividends shall reflect the following:
- the value of the dividend per share;
- the registration date and the adequate ex date, identifying the shareholders entitled to
the dividend;
- the dividend payment date;
- any other legal requirements mentioned in the legal provisions in force.
For the year ended December 31
st
, 2019, the OGMS approved on April 27, 2020 the distribution
of the net profit as dividends of RON 12,170,108, respectively RON 0.0437 gross/share.
For the year ended December 31
st
, 2020, the OGMS, approved on April 26, 2021, the distribution
of the net profit as dividends of RON 4,362,951, respectively RON 0.0156833 gross share and
also aproved the change of the destination of the reserves constituted from the net profit of the
company obtained in the previous years in the amount of RON 29,210,045 and the distribution of
this amount as dividends to shareholders, respectively RON 0.1050 gross / share. Thus, for 2020,
the total value of the dividend was 0.120683 lei gross / share.
For the year ended December 31
st
, 2021, the OGMS, scheduled for April 27(28), 2022 shall
decide on the profit distribution manner. The proposal of the Board of Directors is to distribute net
profit as dividends the amount of RON 1,629,634, respectively RON 0.00585797 gross/share.
Until December 31st, 2021, the following dividends were paid:
- 93 % of the gross dividend approved for the 2018 financial year;
- 93 % of the gross dividend approved for the 2019 financial year;
- 93 % of the gross dividend approved for the 2020 financial year
3.3. Description of any activities of the company related to the purchase of its own shares.
The Company did not perform any activities related to the purchase of its own shares.
3.4. If the company has subsidiaries, specification of the number and nominal value of the
shares issued by the parent company held by subsidiaries.
Not applicable.
3.5. If the company issued bonds and/or other debt securities, presentation of the manner
in which the company pays its obligations to the holders of such securities.
Not applicable.
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4. Management of ROMPETROL WELL SERVICES S.A.
According to the Articles of Incorporation, the Company’s activity is managed by a Board of
Directors formed of 5 members, appointed by the Ordinary General Meeting, who may also be
shareholders of the company, natural or legal persons, of Romanian or foreign citizenship,
respectively nationality.
At the beginning of 2021, the Board of Directors consisted of the following members: Yedil Utekov,
Abzal Doszhanov, Madalin Laurentiu Coltanel, Olga Turcanu, Eugeniu Moby Henke.
In the General Meeting of Shareholders from January 28, 2021 Mr. Yedil Utekov and Mr. Abzal
Doszhanov were elected permanent administrator until April 29, 2022.
During 2021, there was one change in the membership of the Board of Directors.
Following
Abzal Doszhanov’s
waiver of his mandate as member of the Board of Directors,
Florea Georgian Stefan
was appointed as interim member of the Board of Directors, effective as
of October 18, 2021 until the next General Meeting of Shareholders.
Therefore, at the end of 2021, the Board of Directors has the following structure:
Yedil Utekov – Chairman of the Board of Directors
Georgian Stefan Florea – Member/General Manager
Olga Turcanu - Member
Laurentiu Madalin Coltanel - Member
Eugeniu – Moby Henke - Member
4.1. Presentation of the list of company’s directors and of the following information for
each director:
a) CV (forename, surname, age, qualification, professional experience, position and seniority;
• Yedil Utekov - Kazakh citizen, born in 1976
Chairman of the Board of Directors between October 01, 2020 and December 31, 2021.
Term of mandate: until April 29, 2022.
Mr. Yedil Utekov is a graduate of the Faculty of Resources and Hydrocarbons Chemical
Technology of Astrakhan State Technical University in Russia, and started his career in the oil
and gas industry back in 2001, as a process operator with Akasaraisky Gas Processing Plant in
Russia; then in the months September 2001 – June 2002, he worked as operator for ZAO Intergaz
Central Asia, Kazakhstan. Starting with June 2002, he gradually advanced from the position of
engineer with Atyrau Refinery, to that of Ecology, Technology, Health and Safety Manager. During
April 2005 – April 2010, he worked for Agip KCO, in Atyrau, Kazakhstan, the last position held in
this company being that of Group Coordinator for Technical Control and Inspection in August
2008 – April 2010.
He has solid professional experience in the oil and gas industry, holding management positions
in various fields thereof, working in various companies such as: Atyrau refinery, Agip KCO and
KazMunayGas.
• Abzal Doszhanov – Kazakh citizen, born in 1984;
Member of the Board of Directors between September 09, 2020 and October 18, 2021.
Term of mandate: until October 18, 2021.
Mr. Abzal Doszhanov graduated from Atyrau Institute of oil and gas and IFP School.
Mr. Abzal Doszhanov joined Rompetrol in 2010, successfully accomplishing various roles –
initially on an operational level, holding key positions as Process improvement manager and then
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at management level, gradually holding positions such as Deputy Production manager and
General Manager.
• Georgian Stefan Florea - Romanian citizen, born in 1982
Member of the Board of Directors between October 18, 2021 - December 31, 2021
Term of mandate: until the next General Meeting of Shareholders
He has graduated from the Petroleum Gas University Ploiesti. Mr. Florea holds a master’s in
reservoir engineering from the Petroleum Gas University Ploiesti.
Mr. Georgian Stefan Florea has joined Rompetrol Well Services since 2007, successfully
accomplishing various roles – initially at the operational level, passing through petroleum engineer
– DST division, field engineer at cementing division, petroleum engineer at technical department,
country representative of Rompetrol Well Services & Rompetrol SA in Kurdistan, sales
coordinator and then at the management level Deputy General Manager Rompetrol Well Services
starting with March 2018.
• Olga Turcanu – Romanian citizen, born in 1979;
Member of the Board of Directors between April 29, 2018 and December 31, 2021.
Term of mandate: until April 29, 2022.
Mrs. Olga Turcanu studied international economic relationships and economic law in the Moldova
Academy of Economic Sciences both at a license and master’s degree level. In 2013 Mrs. Olga
Turcanu was accepted as a Member of the Association of Chartered Certified Accountants
(ACCA), and starting with 2018 she has a Fellow ACCA status.
She has professional experience in fiscal consultancy, financial audit in the oil and gas industry,
economic analysis, budgeting, business planning, taxation, analysis of investment projects,
corporate financing.
She worked in various companies such as: PriceWaterhouseCoopers, Mechel Trade House,
Bluehouse Capital Group, Rominserv.
• Laurentiu Madalin Coltanel – Romanian citizen, born in 1977;
Member of the Board of Directors between February 01, 2020 - December 31, 2021.
Term of mandate: until April 29, 2022.
Mr. Laurentiu Madalin Coltanel holding the position of Production Engineer, later, he has held the
positions of Project Manager and Operations Director within the Rompetrol Rafinare company,
the Head of COO Office.
• Eugeniu – Moby Henke – Romanian citizen, born in 1973;
Member of the Board of Directors between April 29, 2018 and December 31, 2021.
Term of mandate: until April 29, 2022.
He is a lawyer, graduate of the Law Faculty of the Bucharest University (1992-1996) and has a
Master’s Degree in Administrative Sciences (1997-1999) in the Bucharest National School of
Political and Administrative Studies.
He has professional experience in the following fields:
- consultancy for public and private companies (organizations), governmental agencies and
natural persons;
- development and preparation of corporate systems, legal analysis of transactions, projects;
- protection of clients’ rights in general jurisdiction courts at all levels;
- preparation, negotiation and legal support in performing contracts, agreements and other legal
documents;
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- experience as a Manager of the legal department of the KMG International Group, in work teams
for a series of projects (commercial, legislative, etc.).
b) any agreement, understanding or family connection between such director and another person
due to whom such person was appointed director;
As far as directors are aware, there was no agreement, understanding or family connection
between the company’s directors and another person due to whom they were appointed directors.
c) director’s participation in the company’s capital;
As per the company’s Shareholders’ Register, consolidated on December 31, 2021, issued by
the Central Depository, none of the directors participates in the company’s share capital.
d) list of the persons affiliated to the company.
None of the members of the Company’s Board of Directors is affiliated to Rompetrol Well Services
S.A. as provided by FSA Regulation no. 5/2018.
4.2. Presentation of the list of the members of the company’s executive management.
For each of them, the presentation of the following information:
a) the term for which the person is part of the executive management;
During 2021, Management’s structure was as following:
No
Position Forename and surname Period
1. GENERAL MANAGER DOSZHANOV ABZAL January 01, 2021 - October 18,
20
21
2. GENERAL MANAGER FLOREA GEORGIAN STEFAN October 18, 2021 - December
31,
2021
3. FINANCE MANAGER MOISE LUIZA ROXANA January 01, 2021 - December
31
,
20
21
b) any agreement, understanding or family connection between such person and another person
due to whom such person was appointed as member of the executive management;
We are not aware of cases of understandings, agreements or family connections between the
members of the executive management and other persons due to whom they were appointed in
such position.
c) participation of such person in the company’s capital.
According to the Company’s shareholders’ register, consolidated on December 31, 2021, issued
by the Central Depository, no member of the executive management participates in the
company’s share capital.
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4.3. For all the persons presented under 4.1. and 4.2., specification of the potential litigation
or administrative procedures they were involved in, in the last 5 years, regarding their
activity at the issuer and those regarding the capacity of such person to perform their
duties at the issuer.
None of the persons in the company’s management was involved in the last 5 years in litigation
or administrative procedures.
5. Financial Statements
Presentation of an analysis of the current economic and financial situation as compared to the
last 3 years, referring at least to:
a) balance sheet items: assets representing at least 10% of total assets; cash and other liquid
available funds; reinvested profits; total current assets; total current liabilities;
Starting with the year ended as at December 31, 2012, the Company’s individual financial
statements were prepared according to the provisions of Order of the minister of public finances
no. 1286/2012 approving the accounting regulations according to International Financial
Reporting Standards applicable to the companies whose securities are approved for trading on a
regulated market, Order of the Minister of Public Finances no. 2844/2016 with all subsequent
amendments and supplementations.
In order to prepare such financial statements, according to Romanian legislative requirements,
the company’s functional currency is deemed to be the Romanian leu (RON).
Synthesis of patrimonial items:
- RON
2019 2020 2021
Total
assets
,
of which
:
164,278,951
1
51,868,575
15
3
,
439
,57
7
Fixed assets 41,094,485
41,958,743
39,255,033
Current assets
123,184,466
109,909,833
1
14
,
184
,
544
Total
liabilities
,
of which
:
164,278,951
1
51,868,575
153,439,577
Share capital, of which: 28,557,446
28,557,446
28,557,446
Subscribed paid in share capital 27,819,090
27,819,090
27,819,090
Legal reserves
5,563,818
5
,
563
,
818
5,563,818
Other equities
102,412,242
99,452,458
10
3
,
068
,
569
Current profit/loss 12,170,108
4,362,952
1,629,634
Current liabilities
13,114,817
1
0,291,496
1
2
,
531
,
044
Long term liabilities 2,460,521
3,640,405
2,089,065
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b) Statement of profit and loss account
Summary of Statement of profit or loss:
-
RON
201
9
20
20
20
21
Total revenues, of which:
71,661,673
52,695,218
48
,
700
,
607
Operating income
66,981,161
48,595,858
4
5
,
961
,
136
Financial income
4,680,512
4
,099,360
2
,
739
,
471
Total expenses
58,007,084
4
8
,
0
65,704
4
6
,
926
,
418
Operating
expenses, of which:
57,844,704
4
7
,713,575
4
6
,
227
,
637
- consumable material expenses 16,784,640
10,853,051
11,406,887
-
staff costs
19,653,427
1
7,484,748
1
6
,
573
,
739
-
fixed asset
depreciation
expenses
4,883,457
4
,
8
95,712
3
,
996
,
830
- other expenses 16,523,180
14,480,064
14,250,181
Financial expenses
162,380
352,129
698
,
781
Gross profit/loss
–
profit
13,654,589
4,
6
29,514
1
,
774
,
18
8
Income tax and deferred tax
1,484,481
266,562
144
,
554
Net profit/loss
–
profit
12,170,108
4,362,952
1
,
629
,
63
4
Synthesis of budget indicator achievement:
- RON
Achievements –
previous year
20
2
1
Budget forecasts
Achievements
Total revenues, of which
:
52,695,218
53,257,500
48,700,607
Operating income
48,595,858
50,198,700
45,961,136
Financial income
4,099,360
3,058,800
2,739,471
Total expenses, of which:
48,065,704
48,431,900
46,926,418
Operating expenses
47,713,575
48,193,000
46,227,637
Financial expenses 352,129
238,900
698,781
Gross p
rofit
4,629,514
4,825,600
1,774,18
8
Income tax and deferred tax 266,562
617,600
144,554
Net p
rofit
4,362,952
4,208,000
1,629,63
4
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c) cash flow: all the changes occurred in the cash level in the basic activity, investments and
financial activity, cash level at the beginning and end of the period.
Statement of cash flows, synthesis - indirect method
- RON
201
9
20
20
20
21
Net profit/loss before taxation and extraordinary items
13,654,589 4,629,517 1,774,189
Operating profit before changes in the working capital
13,305,339 5,004,516 2,987,443
Net cash from operating activities
16,718,776 1,333,417 3,951,124
Net cash from investment activities
(11,572,624) 12,845,549 27,765,571
Net cash from financing activities
(5,374,941) (14,184,794) (31,640,781)
Net variation of cash and cash equivalents
(230,621) (5,065) 74,975
Unrealized forex expenses
1,832 (762) 1,139
Cash and cash equivalents at the beginning of the financial year
385,733 156,944 151,117
Cash and cash equivalents at the end of the financial year
156,944 151,117 227,231
In 2021 both the performance of agreements with clients and suppliers and the assurance of all
cash available funds to pay fully and timely the salary rights, budgetary debts and dividends were
managed under financial balance conditions. All investment projects were financed from its own
sources. In addition to the cash recorded at the end of the financial year, the available cash in the
main account, in the cash-pooling system of RON 55,022,238 as at December 31, 2021 may be
used without restrictions.
Indicator
201
9
20
20
20
21
Current liquidity ratio
9,
39
10
,
68
9
,
11
Receivable turnover 112
129
120
Asset turnover
1,
61
1,
14
1,14
Gearing ratio
0.3%
0.
6
%
0.
4
%
The gearing ratio is influenced by the application starting with January 1, 2019 of the new
Leasing standard, respectively the recognition in the balance sheet positions of the debt related
to the existing leasing contracts.
6. Corporate governance
ROMPETROL WELL SERVICES S.A. is a company listed on the Bucharest Stock Exchange –
main segment, Standard share category, under symbol << PTR >>, as of June 18, 1998,
according to decision of the Listing registration commission no. 133/March 26, 1998.
The company submits to the current legislation applicable to companies and the capital market:
Company Law no. 31/1990 – as subsequently amended, Accounting Law no. 82/1991 – as
subsequently amended, Law no. 297/2004 regarding the capital market – as subsequently
amended, Law no. 24/2017 regarding the issuers of financial instruments and market operations,
FSA Regulation no. 5/2018 regarding the issuers of financial instruments and market operations.
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The company’s management adopted in a voluntary, self-imposed manner part of the provisions
of the Corporate governance code of the Bucharest Stock Exchange (CGC-BSE).
The Corporate governance code of the Bucharest Stock Exchange is a set of principles and
recommendations for the companies whose shares are admitted for trading on the regulated
market in order to create in Romania a capital market attractive at an international level, based
on the best practices, transparency and trust. The code encourages companies to build a strong
relationship with their shareholders and other stakeholders, to communicate in an efficient and
transparent manner and show openness to all potential investors.
The objective of the Corporate governance code of the Bucharest Stock Exchange is to raise trust
in the listed companies by promoting standards of improved corporate governance in these
companies.
A good corporate governance is a strong instrument to strengthen market competitiveness.
The central elements of this Code are the investors’ access to information and the protection of
shareholders’ rights. Each listed company must pursue the observance of all Code provisions.
The role of a good governance is to facilitate a good and efficient entrepreneurial management,
which can ensure the company’s long-term success.
The stage of Rompetrol Well Services S.A. compliance with the new Corporate governance Code
is presented in Annex no. 2.
According to constitutive documents, Rompetrol Well Services S.A. is managed in a unitary
system through which the administration is provided by a board of directors formed of 5 members,
elected by the ordinary general meeting of shareholders, with a term of mandate of 4 years.
The Board of Directors has full powers in making any administration and management decisions
besides those that law expressly gives to the General Meeting of Shareholders.
By way of exception, the Board of Directors shall exercise the duties of the General Meeting of
Shareholders provided by Art.113 letters b, c and f of Law 31/1990, as republished.
The decisions of the Board of Directors are valid if made with the vote of the majority of present
members. In case of a tie, the chairman shall have a decisive vote.
Duties and competences of the board of directors and of the chairman of the board of directors
The Board of Directors has the duties established by Law no. 31/1990 updated, the company’s
Articles of Incorporation and other duties established by the general meetings of shareholders as
its tasks, respectively, mainly, the following:
a) establish the main directions of activity and development of the company;
b) name and revoke the Company’s managers and supervise their activity;
c) prepare the annual activity report;
d) perform the decisions of general meetings;
e) except for the legal deeds for whose adoption/conclusion the approval of the general
assembly of shareholders is necessary, according to the imperative provisions of law, approve
the adoption/conclusion on behalf of the company of the legal deeds whose object has a value
comprised between USD 500,001 – USD 10,000,000; the approval is necessary if it is about a
single commercial transaction made through one and/or several separate agreements, if the
cumulated value of such agreements exceeds such amount;
f) approve the Company’s organizational structure;
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g) designate and/or revoke the persons acting as company’s representatives in the
relationships with banks, with a first signature right, respectively with a second signature right;
joint signature rules shall apply adequately to make any payment made for and on behalf of the
company;
h) approve the conditions to contract any types of loans from a bank and/or financial
institution, and from any other legal person;
i) approve the company’s intermediary financial statements, prepared according to law;
j) approve the marketing strategy and the investment plan of the company, and the annual
budget (investment expenses and operational expenses), at the common proposal made by the
general manager and economic manager;
k) file the application to open the company’s insolvency procedure according to law no.
85/2014 regarding the insolvency procedure.
During 2021, the membership of the Board of Directors was the following:
• Yedil UTEKOV - Chairman between January 01, 2021 – December 31, 2021;
• Eugeniu Moby HENKE - Member between January 01, 2021 – December 31, 2021;
• Abzal DOSZHANOV - Member between January 01, 2021 – October 18, 2021;
• Georgian Stefan FLOREA - Member between October 18, 2021 – October 18, 2021;
• Olga TURCANU - Member between January 01, 2021 – December 31, 2021;
• Laurentiu Madalin COLTANEL - Member between January 01, 2021 – December 31, 2021;
6.1. Information on the members of the Board of Directors
The CVs of the members of the Board of Directors of Rompetrol Well Services SA are available
on the company’s website at rompetrolwellservices.kmginternational.com. In addition, you can
also find additional information in section 4.1 hereof.
According to the criteria assessing the independence of non-executive members of the Board of
Directors, on December 31, 2021, none of the directors meets the independence criteria provided
by the Code principles and recommendations.
In 2021 there were 18 meetings of the Board of Directors and 30 decisions were adopted, the
directors’ participation in such meetings being as follows: Yedil Utekov- 18 meetings, Eugeniu-
Moby Henke – 18 meetings, Olga Turcanu – 18 meetings, Laurentiu Madalin Coltanel – 18
meetings, Abzal Doszhanov – 13 meetings, Georgian Stefan Florea – 3 meetings.
All the meetings of the Board of Directors were chaired by the Chairman. Subjects and projects
relevant for the Company’s activity were subject to debates. Decisions were adopted, considering
legal provisions, regulations, articles of incorporation and internal incidental procedures. The
decisions were made with the vote „in favour“ of the majority of those present, according to the
provisions of the Articles of incorporation.
For the financial year ended at December 31
st
, 2021, according to the legal provisions, the
directors’ remuneration was approved by the Ordinary General Meeting of Shareholders of April
26, 2021.
The information on the expenses related to directors’ and managers’ remuneration is presented
in the annual financial statements and the remuneration report.
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The company has a financial auditor which performed its activity according to the applicable legal
provisions and the agreements concluded in this respect. Starting with 2008, the financial auditor
is “Ernst & Young Assurance Services SRL“. The financial auditor audited the annual financial
statements.
Information on other commitments and relatively permanent professional obligations of
the members of the Board of Directors
Name Company Position Period
Yedil Utekov Rompetrol Rafinare SA
*
Chairman BoD 01.05.2018- 01.05.2022
Rominserv S.R.L.* Member BoD 15.09.2020-14.09.2024
Rompetrol Petrochemicals
*
Sole
administrator
01.03.2014 – 14.03.2025
Palplast SA* Chairman BoD 19.10.2020 -01.11.2021
Rompetrol Energy S.A. * Chairman BoD 01.10.2020 – 31.01.2022
Olga Turcanu Palplast SA* Member BoD 15.10.2018 – 01.11.2021
KMG Rompetrol SRL* Finance
Manager
07.07.2019 - indetermined
Rominserv Iaifo Zalau SRL* Member BoD 15.09.2018– 07.04.2021
Laurenţiu
Mădălin
Colţănel
Rominserv S.R.L.* Member BoD 15.09.2020 – 14.09.2024
Global Security Sistem S.A.
*
Member BoD 12.05.2020 – 16.05.2022
Rominserv Iaifo Zalau* Member BoD 07.09.2020 – 07.04.2021
KMG Rompetrol
Development SRL*
Member BoD 23.02.2021 – 22.02.2025
* Company member of KMG International Group
Consultative Committees
In its activity, the Board of Directors is supported by an consultative committee, namely the Audit
Committee, being entrusted with concluding analysis and preparing recommendations for the
Board of Directors, in the specific areas of activity, having the obligation of submitting periodic
activity reports to the members of the Board of Directors.
The Audit Committee has been established based on the Decision No.4 of the Board of Directors
as of April 29, 2018.
A detailed description of the tasks and responsibilities of the Advisory Committees is found in the
Organizational and Operational Guidelines approved by the Board of Directors, regulations
published on the company’s webpage rompetrolwellservices.kmginternational.com, section
“Relationship with investors – Corporate Governance – Corporate Governance Documents”.
The Audit Committee fulfils its legal duties provided under Art. 65 of Law No. 162/2017 consisting
mainly in monitoring the financial reporting process, the internal audit process, the risk
management process within the Company and compliance assurance, as well as in supervising
the activity of statutory audit of the annual financial statements and in the management of the
relationship with the external auditor.
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During 2021, the structure of the Audit Committee was as follows:
• Dan Alexandru Iancu - Chairman in the period 01.01.2021 – 31.12.2021
• Yedil Utekov - Member in the period 01.01.2021 – 31.12.2021
• Olga Turcanu - Member in the period 01.01.2021 – 31.12.2021
Information about the meetings of the Audit Committee during 2021
In 2021 there were 11 meetings of the Audit Committee and 8 decisions were adopted, the
members’ participation in such meetings being as follows: Dan Alexandru Iancu - 11 meetings, -
11 meetings, Olga Turcanu - 11 meetings, Yedil Utekov – 11 meetings.
6.2. Executive management
The Company’s management prerogatives are delegated by the shareholders through the Articles
of Incorporation to the General Manager and the Finance Manager.
In 2021, the company’s executive management was provided by the following managers:
• Mr. Abzal DOSZHANOV - General Manager between January 01, 2021 – October 18, 2021
• Mrs. Stefan Georgian FLOREA - General Manager between October 18, 2021 – December 31, 2021
• Mrs. Luiza Roxana MOISE - Finance Manager between January 01, 2021– December 31, 2021
The term of mandate for the General Manager and the Finance Manager ends on April 29, 2022.
6.3. Shareholders’ rights
ROMPETROL WELL SERVICES S.A. ensures an equitable treatment to all shareholders,
including minority and foreign shareholders, according to the legal provisions and the provisions
of the Company’s Articles of Incorporation.
The company makes all diligences to facilitate the shareholders’ participation in the proceedings
of the general meeting of shareholders (GMS). ROMPETROL WELL SERVICES shareholders
have the possibility to participate in the GMS directly, through a representative based on a special
power of attorney or may vote by correspondence (by sending the correspondence vote form
through any form of currier service or by e-mail with extended electronic signature incorporated
according to Law no. 455/2001 regarding electronic signature).
According to article 11 of the Company’s Articles of Incorporation, corroborated with the legal
applicable provisions, the Ordinary General Meeting meets at least once a year within the
imperative term provided by law, and has the following main duties:
a) to discuss, approve or amend the annual financial statements, based on the reports
submitted by the board of directors and the financial auditor, and to set the dividend;
b) to elect and revoke the company’s directors;
c) to name and set the minimum term of the financial audit agreement, and to revoke the
financial auditor;
d) to set for each year in progress the remuneration due to directors;
e) to decide on the directors’ management;
f) to analyse the activity of the board of directors and decide to prosecute the directors for
the damages caused to the company, also designating the person in charge with exercising such
prosecution;
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g) to establish the income and expense budget and as the case may be the activity program,
over the next financial year;
h) to decide the pledging, lease or dissolution of one or more units of the company;
i) to approve the maximum limits of remuneration of the persons occupying/exercising
management positions, when law so provides.
The Extraordinary General Meeting has the following duties:
a) change the company’s legal form;
b) move the company’s headquarters;
c) change the company’s object of activity;
d) establish or dissolve secondary headquarters: branches, agencies, representative offices
or other such units devoid of legal status unless otherwise provided through the articles of
incorporation;
e) extend the company’s duration;
f) increase the share capital;
g) decrease the share capital or replenish it through an issuance of new shares;
h) merge with other companies or divide the company;
i) early dissolute the company;
j) convert shares from one category to another;
k) convert a category of bonds in another category or in shares;
l) issue bonds;
m) approve the adoption/conclusion on behalf of the company of the legal deeds whose
object has a value higher than USD 10,000,000;
n) any other amendment of the articles of incorporation or any other decision for which the
approval of the extraordinary general meeting is required.
The extraordinary general meeting delegates to the board of directors the exercise of the duties
provided under letters b) and c) of the above paragraph.
The extraordinary general meeting may delegate to the board of directors the share capital
increase according to the provisions of Law no.24/2017.
Performance of the General Meeting of Shareholders
The general meeting of shareholders is called by the directors whenever necessary, by publishing
an announcement in the Official Gazette of Romania, Part IV, and in one of the local or national
wide circulation newspapers in the locality where the company’s headquarters are located. The
call shall include: the place, date and time of the meeting, the agenda, explicitly specifying all the
problems to be subject to the meeting debate, a clear and precise description of the procedures
that must be observed by the shareholders to be able to participate and vote in the general
meeting and any other mentions provided by the legislation specific to the capital market.
When proposals to amend the articles of incorporation are mentioned on the agenda, the call shall
include the full text of proposals.
When the directors’ election is mentioned on the agenda, the call shall include the specification
that the list regarding the name, domicile locality and professional qualification of the persons
proposed for the director position is at the shareholders’ disposal, and may be consulted and
supplemented by them.
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The general meeting may assemble at the Company’s headquarters or in other places established
by directors through the call. Shareholders may also be represented in the general meeting by
persons not having the capacity as the Company’s shareholder.
The general meeting is chaired by the Chairman of the Board of Directors or a person appointed
by them, designating, from among the members of the general meeting or from among the
company’s shareholders, one to three secretaries, plus one technical secretary from among the
employees. They shall draft the shareholders’ attendance list, verifying the following:
- the identity documents of the persons coming to the meeting of the General Meeting as
shareholders or proxies thereof;
- the special/general power of attorney presented by the lawyers’ proxies;
- the correspondence vote forms.
The meeting secretary shall also verify the performance of the legal conditions regarding the
presence quorum of shareholders for the validity of general meetings.
If the ordinary or extraordinary general meeting cannot work because of the failure to meet the
attendance legal conditions, the meeting will assembly on a second call may debate on the items
on the agenda of the first assembly, irrespective of the met quorum, making decisions with the
majority of expressed votes.
After the presentation of the materials related to the agenda, the matters subject to the
shareholders’ debate are subject to vote by the Meeting Chairman.
The decisions of the general meeting are made by open vote, except for the cases when the
general meeting decides that the vote is secret or law imposes the secret vote.
Each action entitles to one vote in the General Meeting sessions. The person representing several
shareholders based on special powers of attorney expresses the votes of the represented
persons by totalizing the number of votes “in favour”, “against” and “abstention” without
compensating them (for instance “under item x on the agenda I represent „a” votes „in favour”,
„b” votes „against” and „c” „abstentions”). The votes so expressed are validated or, as the case
may be, invalidated, based on counterpart three of special powers of attorney, by the secretary
of the general meeting. The votes mentioned in the special power of attorney are exercised only
in the manner wished by the shareholder.
The meeting secretary or secretaries, based on the vote freely expressed by the shareholders,
shall draft the minutes of the general meeting.
Decisions adopted by the general meetings of shareholders during the year 2021:
The Ordinary General Meeting of Shareholders of ROMPETROL WELL SERVICES S.A. of
January 28, 2021 decided as follows:
• rejects the change of the destination of the other reserves and the retained earnings from
the company's net profit obtained by the company in the preceding years amounting to 84,370,865
lei and the distribution of this amount as a special dividend to shareholders with a value of 0.3033
lei gross / share and
the date of payment of dividends as of June 24
th
2021.
• approves the termination of Mr. Timur Zhetpisbayev’s mandate as a member of the Board
of Directors following his request starting with the 9
th
of September 2020.
• approves the termination of Mr. Saduokhas Meraliyev’s mandate as a member of the
Board of Directors following his request starting with the 1st of October 2020.
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• approves the Election of 2 (two) new members of the Board of Directors of the Company,
as follows:
a. Mr. UTEKOV YEDIL, as new member of the Board of Directors of the Company for a term that
will begin with the date of this Ordinary General Meeting of Shareholders and which will expire on
29
th
of April
2022 (the expiration date of the term of office of the current members of the Board of
Directors
).
b. Mr. DOSZHANOV ABZAL, as new member of the Board of Directors of the Company for a term
that will begin with the date of this Ordinary General Meeting of Shareholders and which will
expire
on 29
th
of April
2022 (the expiration date of the term of office of the current members of the Board
of Directors
).
• approves, setting the dates 04.06.2021 as Registration Date, according to art. 86 (1) of
the Law no. 24/2017;
• approves, setting the dates 03.06.2021 as the “ex-date”, according to art. 2, para. 2, letter
l) of Regulation no. 5/2018;
• approves empowering Mr. Abzal Doszhanov, General Manager and member of the Board
of Directors, to conclude and/or sign for on behalf of the Company and/or of its shareholders the
resolutions which are to be adopted within this OGMS and to carry out any and all requisite
proceedings for such adopted resolutions to be registered, rendered enforceable, against third
parties and published, the said proxy being entitled to subdelegate third parties to act for such
purpos
The Extraordinary General Meeting of Shareholders of ROMPETROL WELL SERVICES S.A.
of January 28, 2021 decided as follows:
• rejects the policy of distribution of the company's profit and dividend in accordance with the
proposals of the company's shareholder KJK Balkan S.a.r.l.
• approves the policy of distribution of the company's profit and dividend in accordance with the
proposals of the company's shareholder KMG International NV.
• approved, setting the dates 04.06.2021 as Registration Date, according to art. 86 (1) of the Law
no. 24/2017;
• approved setting the date 03.06.2021 as the “ex-date”, according to art. 2, para. 2, letter l) of
Regulation no. 5/2018.
• approved the authorize Mr. Abzal Doszhanov, General Manager and member of the Board of
Directors, to conclude and/or sign for on behalf of the Company and/or of its shareholders the
resolutions which are to be adopted within this EGMS and to carry out any and all requisite
proceedings for such adopted resolutions to be registered, rendered enforceable, against third
parties and published, the said proxy being entitled to subdelegate third parties to act for such
purpose.
The Extraordinary General Meeting of Shareholders of ROMPETROL WELL SERVICES S.A.
of March 29, 2021 decided as follows:
• approves ratification of the execution by the Company with OMV Petrom of the “ Framework
Agreement and Subsequent Contract for Provision of Matrix stimulation (acidizing) services.”
• approves, setting the dates 14.04.2021 as Registration Date, according to art. 86 (1) of the
Law no. 24/2017
• approves, setting the dates 13.04.2021 as the “ex-date”, according to art. 2, para. 2, letter l) of
Regulation no. 5/2018
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• approves empowering Mr. Abzal Doszhanov, General Manager and member of the Board of
Directors, to conclude and/or sign for on behalf of the Company and/or of its shareholders the
resolutions which are to be adopted within this EGMS and to carry out any and all requisite
proceedings for such adopted resolutions to be registered, rendered enforceable, against third
parties and published, the said proxy being entitled to subdelegate third parties to act for such
purpose.
• rejects a program for re-purchasing the own shares by the Company to decrease its share
capital for a maximum 27,819,090 shares (representing 10% of the total number of shares) in
the following conditions:
a) The program shall be performed only for the decrease of the Company’s share capital;
b) Maximum number of shares that can be redeemed: maximum 27,819,090 shares;
c) The minimum price per share shall be 0.1 lei;
d) The maximum price per share shall be 1.5 lei;
e) Duration of this program: maximum 18 months as of the publishing of the Extraordinary General
Shareholders Meeting’s Resolution in Part IV of the Romanian Official Gazette;
f) The payment of the shares re-purchased by the Company through this program shall be made
from the sources provided by the law;
g) The re-purchase of the shares within this program will be carried out through all the market
operations allowed by the law, which may also include public tender offers initiated by the
Company, in compliance with the legal provisions.
For the implementation of this program, the Company’s Board of Directors will be empowered to
adopt all the necessary measures and to fulfil all the required formalities, in compliance with
the above conditions.
• approves empowering Mr. Abzal Doszhanov, General Manager and member of the Board of
Directors, to conclude and/or sign for on behalf of the Company and/or of its shareholders the
resolutions which are to be adopted within this EGMS and to carry out any and all requisite
proceedings for such adopted resolutions to be registered, rendered enforceable, against third
parties and published, the said proxy being entitled to subdelegate third parties to act for such
purpose.
The Ordinary General Meeting of Shareholders of ROMPETROL WELL SERVICES S.A. of
April 26, 2021 decided as follows:
• approves the annual individual financial accounts having as closing day the day of
December 31, 2020, prepared according to the International Financial Reporting Standards,
based on the Report of administrators and the Report of financial auditor of the Company.
• approves the distribution of Company net profit achieved in 2020 amounting RON
4,362,951 as dividends respective 0.0156833 lei gross value/share.
• approves the change of the destination of the reserves constituted from the net profit of
the company obtained in the previous years in the amount of RON 29,210,045 and the distribution
of this amount as dividends to shareholders, respectively RON 0.1050 gross / share.
• approves the discharge of liability of the Company directors for their activity carried out
during the financial year 2020, based on the presented reports.
• approves the Income and Expediture Budget and the Investment plan for 2021.
• rejects the Remuneration policy of the management structure of the Company drafted in
accordance with the provisions of art. 92
1
of Law no. 24/2017 on issuers of financial instruments
and market operations.
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• approves the Remuneration policy of the management structure of the Company drafted in
accordance with the provisions of art. 92
1
of Law no. 24/2017 on issuers of financial instruments
and market operations, according to the proposal of KMG International NV.
• approves the monthly gross remuneration of the members of the Board of Directors for
the financial year 2021, and the general limit of the additional remuneration of the Board of
Directors members to whom specific positions within the Board of Directors were assigned to.
• approves, setting the dates 18.06.2021 as Registration Date, according to art. 86 (1) of
the Law no. 24/2017;
• approves, setting the dates 17.06.2021 as the “ex-date”, according to art. 2, para. 2, letter
l) of Regulation no. 5/2018;
• approves, setting the dates 08.07.
2021 as the Payment day according to art. 86 (2) of
the Law 24/2017, art. 2 para. 2 letter h) and art. 178 of Regulation 5/2018
• approves empowering Mr. Abzal Doszhanov, General Manager and member of the Board
of Directors, to conclude and/or sign for on behalf of the Company and/or of its shareholders the
resolutions which are to be adopted within this OGMS and to carry out any and all requisite
proceedings for such adopted resolutions to be registered, rendered enforceable, against third
parties and published, the said proxy being entitled to subdelegate third parties to act for such
purpose.
The Ordinary General Meeting of Shareholders of ROMPETROL WELL SERVICES S.A. of
October 20, 2021 decided as follows:
• rejects the revocation of the company's administrators for non-compliance with the
provisions of art. 94 para. (1) lit. b) of Law no. 24/2017, respectively of art. 111 para. (1) lit. b) of
Law no. 24/2017, republished.
• rejects the dismissal of the company's auditor, Ernst & Young Assurance Services SRL,
for non-compliance with the provisions of art. 94 para. (1) lit. b) of Law no. 24/2017, respectively
of art. 111 para. (1) lit. b) of Law no. 24/2017, republished.
• rejects election Mr. Lefter Razvan Stefan of company administrators, for a term of office
of 2 years, starting with the date of election of the administrators and ending at the end of the 2-
year term from the date of their election.
• rejects election Mr. Ventseslav Petrov Avramov of company administrators, for a term of
office of 2 years, starting with the date of election of the administrators and ending at the end of
the 2-year term from the date of their election.
• rejects election Mr. Yedil Utekov of company administrators, for a term of office of 2 years,
starting with the date of election of the administrators and ending at the end of the 2-year term
from the date of their election.
• rejects election Mr. Abzal Doszhanov of company administrators, for a term of office of 2
years, starting with the date of election of the administrators and ending at the end of the 2-year
term from the date of their election.
• rejects election Mrs. Olga Turcanu of company administrators, for a term of office of 2
years, starting with the date of election of the administrators and ending at the end of the 2-year
term from the date of their election.
• rejects election Mr. Eugeniu Moby Henke of company administrators, for a term of office
of 2 years, starting with the date of election of the administrators and ending at the end of the 2-
year term from the date of their election.
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• rejects election Mr. Laurentiu Madalin Coltanel of company administrators, for a term of
office of 2 years, starting with the date of election of the administrators and ending at the end of
the 2-year term from the date of their election.
• rejects the appointment of the financial auditor of the company for a period of 2 years
starting from the date of election of the financial auditor and ending at the end of the 2-year term
from the date of his election.
• rejects the remuneration of the newly elected administrators, which will have a value equal
to the value previously approved by the general meeting of shareholders of the company.
• approves, setting the dates 09.11.2021 as Registration Date, according to art. 87 (1) of
the Law no. 24/2017
• approves, setting the dates 08.11.2021 as the “ex-date”, according to art. 2, para. 2, letter
l) of Regulation no. 5/2018
• approves empowering Mr. Abzal Doszhanov, General Manager and member of the Board
of Directors, to conclude and/or sign for on behalf of the Company and/or of its shareholders the
resolutions which are to be adopted within this OGMS and to carry out any and all requisite
proceedings for such adopted resolutions to be registered, rendered enforceable, against third
parties and published, the said proxy being entitled to subdelegate third parties to act for such
purpose.
The Extraordinary General Meeting of Shareholders of ROMPETROL WELL SERVICES
S.A. of October 20, 2021 decided as follows:
• approves, setting the dates 09.11.2021 as Registration Date, according to art. 87 (1) of the Law
no. 24/2017.
• approves, setting the dates 08.11.2021 as the “ex-date”, according to art. 2, para. 2, letter l) of
Regulation no. 5/2018
• approves empowering Mr. Abzal Doszhanov, General Manager and member of the Board of
Directors, to conclude and/or sign for on behalf of the Company and/or of its shareholders the
resolutions which are to be adopted within this EGMS and to carry out any and all requisite
proceedings for such adopted resolutions to be registered, rendered enforceable, against third
parties and published, the said proxy being entitled to subdelegate third parties to act for such
purpose.
Shareholders’ right to dividends
If the General Meeting of Shareholders approves the distribution of dividends from the net profit
achieved by the company, all the shareholders registered in the shareholders’ register on the
registration date decided by the General Meeting, who approve the value of dividends and the
date they are paid to shareholders, are entitled to receive dividends.
6.4. Transparency, communication, financial reporting
Rompetrol Well Services gives special importance to transparency in communication.
Considering that public trust is essential for the company’s operation, the Company makes of its
communication policy an explicit and mutual commitment between the company and its
interlocutors. The performance of reporting obligations and communication transparency are
manners by which investors’ trust is gained.
The company considers to ensure continuous and periodical reporting in an objective and honest
manner comprising all the important aspects of the company’s activity, the financial statements,
the applied accounting policies, the registered performances.
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In 2021 reports and press releases regarding the financial results, the GMS call and decision, the
periodical reporting (monthly, quarterly, bi-annual, annual) etc were prepared. The information
which made the object of mandatory reporting – current and periodical reporting was
communicated to the market operator, the Bucharest Stock Exchange, the Financial Supervision
Authority and was available by posting on the Company’s website,
rompetrolwellservices.kmginternational.com in the Relationships with Investors Section.
To ensure the investors’ equal access to information, the posting on the Company’s web site of
the reports and releases addressed to market participants is made after they were posted on the
web site of the market operator, the Bucharest Stock Exchange.
According to legal provisions, financial and accounting situations and those regarding Rompetrol
Well Services operations are audited by Ernst & Young Assurance Services SRL, independent
financial auditor, appointed by the general meeting of shareholders of April 27, 2020 for a period
of 2 year.
Contact for the relationship with investors
The annual, bi-annual and quarterly reports are provided to shareholders, at their request.
Requests may also be made in electronic format, by e-mail to:
investor.relations.rws@rompetrol.com.
Internal control and risk management systems in relation to financial reporting procedures
The company continuously adapted the internal control mechanism as an ensemble of work
procedures and methods to prevent facts contrary to the Company’s economic interests and the
regulated framework to perform the activity, identify deficiencies and establish the necessary
measures to re-establish the regulated framework. It mainly targets the financial relations,
phenomena and processes, in order to ensure a good operation of the economic activity. Also,
aspects related to the opportunity, necessity and economy of the operations performed by the
company are analysed. In terms of financial reporting procedures, both procedures for internal
reporting at the company’s level and for external reporting outside the company are developed.
Procedures are reviewed periodically by the company’s functional departments. Financial
reporting systems are based on principles, rules and legal regulations in force.
6.5. Social responsibility
Rompetrol Well Services S.A., a Group member of the KMG International, directly supports social
responsibility initiatives initiated at Group level and is actively involved in social projects in the
communities close to its operations. Our efforts to improve the livelihood of local communities
cover all aspects of human life, closely aligned with sustainable development principles.
Community involvement
KMG International is an important investor in the Romanian economy, at the same time being a
responsible corporate citizen. All companies that are part of the Group have a holistic approach
on sustainability, which is why our efforts to improve the quality of life for local communities target
all aspects of human life, from environmental protection or social involvement, to health and well-
being, culture and education, development of professional and leadership skill.
Social responsibility and sustainability are core principles that guide us in our strategic
development and operational management. We strive to become one of the most sustainable
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players in the national and regional energy market, while being constantly involved in the
communities in which we operate.
Our commitment to environmental protection, economic development and social involvement is
deeply rooted in our global and local operations, as we understand our important role and our
valuable contribution to achieving the Sustainable Development Goals (SDGs) included in the
United Nations 2030 Agenda for Sustainable Development.
We actively contribute to the development of the communities where we carry out our activity by
using local providers, employing local labour force and at the same time implementing relevant
social responsibility projects. Our involvement is based on consulting relevant stakeholders, so
that we can identify the projects with the highest added value for our communities.
Community and corporate partnerships
Over the years, Rompetrol Well Services S.A. has developed strong partnerships with
representatives from academia and civil society, aimed at strengthening social responsibility
projects developed for the communities in which we operate. Through dialogue with various
stakeholders, including NGOs, local authorities and communities, government or actors from
academia and civil society, we believe we can identify the right sustainable development
opportunities.
Education is an important pillar for our social responsibility strategy. We have collaborated with
universities and high schools with technical profile from all over the country (eg. the Petroleum-
Gas University of Ploiești, the Lazăr Edeleanu Technological High School), who have supported
us in our various educational investment projects.
2021 marked the 20th anniversary of the "Ready for Your Career" internship program, with Ploiesti
university students being enrolled. For 20 years we have been training future industry
professionals through our traditional Internship program. Due to the challenging external context,
this year’s edition was a hybrid between face-to-face and online activities. After comprehensive
induction sessions designed to help interns better understand the oil and gas industry,
Rompetrol's activities, the fundamentals of an upstream activity and its economic implications,
the interns went through 2 weeks of online study, followed by on-site training provided by mentors
at Rompetrol Well Services platform. The online curricula consisted in the development of soft
skills: communication, project management, personal branding and other skills required at the
start of the career, while on-site learning was focused on technical skills development. The
anniversary edition of the program went beyond knowledge transfer and skill development and
included a shared value component, the “Community Challenge” project which provoked the
interns to also bring change in their communities by addressing real needs and humanitarian
causes.
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7. Annexes
a) the company’s incorporation documents if they were amended in the year the reporting is
made for;
Not applicable.
b) resignation/demission documents, if such situations existed among administration members,
executive management, censors;
In the reporting year, intervened the request of Mr. Abzal Doszhanov to give up the director
capacity starting with October 18, 2021.
c) list of the company’s subsidiaries and of the companies controlled by it;
Rompetrol Well Services S.A. has no subsidiaries or companies controlled by it.
d) list of the persons affiliated to the company
Rompetrol Well Services S.A. is part of KMG International Group.
The Group is registered at the Financial Supervisory Authority.
The parent companies of Rompetrol Well Services S.A. are the national company Welfare Fund
"Samruk-Kazyna" (90%) and the National Bank of the Republic of Kazakhstan (10%),
companies based in Kazakhstan, wholly owned by the State of Kazakhstan.
The affiliated parties are presented bellow:
1. Companies with headquarter in Romania
- Oilfield Exploration Business Solutions S.A.
- Rompetrol Downstream S.R.L.
- Rompetrol Rafinare S.A.
- Rompetrol Logistics S.R.L.
- Rominserv S.R.L.
- Rom Oil S.A.
- Global Security Sistem S.A.
- Uzina Termoelectrică Midia S.A.
- Rompetrol Petrochemicals S.R.L.
- Rompetrol Quality Control S.R.L.
- Rompetrol Financial Group S.R.L.
- Rompetrol Gas S.R.L.
- Midia Marine Terminal S.R.L.
- KMG Rompetrol S.R.L.
- Byron Shipping S.R.L.
- Rompetrol Energy S.A.
- KMG ROMPETROL DEVELOPMENT S.R.L.
- Fondul de Investitii in Energie Kazah-Roman S.A.
- KMG Rompetrol Services Center SRL
- Rompetrol Drilling S.R.L. - suspended activity
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2. Companies with headquarter abroad
- KMG International N.V.
- Byron Shipping LTD
- Intreprinderea Mixtă “Rompetrol Moldova” S.A.
- Rompetrol Georgia LTD
- Rompetrol France SAS
- Dyneff SAS
- TRG PETROL TICARET ANONIM ŞIRKETI
- Rompetrol Bulgaria JSC
- KazMunayGaz Trading A.G.
- Benon Rompetrol LLC
Note: there are also 9 branches and representative offices ale KMG International Group
CHAIRMAN OF THE BOARD OF DIRECTORS,
Mr. Yedil UTEKOV
GENERAL MANAGER,
Mr. Georgian Stefan FLOREA
FINANCE MANAGER,
Mrs. Luiza Roxana MOISE
DocuSign Envelope ID: 8F5F3162-1140-404D-81FC-7A9CF7979795
ROMPETROL WELL SERVICES
Clopotei 2 bis Street
Ploiesti, Prahova County,
ROMANIA
phone: +(40) 244 54 43 21
+(40) 244 54 42 65
email
:
office.rws@rompetrol.com
www.petros.ro
www.rompetrol.com
1
Annex no. 1
Turnover by type of services
For periods ending at 2019, 2020 and 2021
Type of service
2019 2020 2021
Actual Value
(RON)
% Actual Value
(RON)
% Actual Value
(RON)
%
1 2 3 4 5 6 7
Cementing-Pumping services 42.242.753
63.9%
27
.
361
.
114
57.4%
24.543.531
55.0%
Stimulation services 15.606.617
23.6%
15
.
243
.
166
32.0%
14.872.756
33.3%
Nitrogen services 5.362.406
8.1%
2
.
817
.
566
5.9%
2.305.249
5.2%
Casing Running services 926.174
1.4%
638
.
161
1.3%
563.528
1.3%
Tools Rental services 350.358
0.5%
33
.
127
0.1%
38.831
0.1%
Sand Control Services 298.269
0.5%
43
.
086
0.1%
0
0.0%
Other services 1.349.192
2.0%
1
.
531
.
598
3.2%
2.273.261
5.1%
TOTAL 66.135.769
100%
47.667.818
100% 44.597.156
100%
PRESIDENT OF THE BOARD OF DIRECTORS,
Mr. Yedil Utekov
GENERAL MANAGER,
Mr. Georgian Stefan Florea
FINANCE MANAGER,
Mrs. Luiza Roxana Moise
DocuSign Envelope ID: 8F5F3162-1140-404D-81FC-7A9CF7979795
ROMPETROL WELL SERVICES
StradaClopotei, nr. 2 bis,
Ploiesti, JudetulPrahova,
ROMANIA
phone: +(40) 244 54 43
21
+(40) 244 54 42 65
email:
office.rws@rompetrol.com
www.petros.ro
www.rompetrol.com
1
Appendix no.2
Status of compliance of the BSE Corporate Governance Code
as of December 31
th
, 2020
Corporate Governance Code
Compliance
Not
compliant or
partial
compliant
Reason for the non-compliance
A.1. All companies should have internal regulation of the Board which
includes terms of reference/responsibilities for Board and key management
functions of the company, applying, among others, the General Principles of
Section A.
YES
A.2. Provisions for the management of conflict of interest should be included
in Board regulation. In any event, members of the Board should notify the
Board of any conflicts of interest which have arisen or may arise, and should
refrain from taking part in the discussion (including by not being present
where this does not render the meeting non-quorate) and from voting on the
adoption of a resolution on the issue which gives rise to such conflict of
interest.
YES
A.3. The Board of Directors or the Supervisory Board should have at least
five members.
YES
A.4. The majority of the members of the Board of Directors should be non-
executive. At least one member of the Board of Directors or Supervisory
Board should be independent, in the case of Standard Tier companies. Not
less than two non-executive members of the Board of Directors or
Supervisory Board should be independent, in the case of Premium Tier
Companies. Each member of the Board of Directors or Supervisory Board,
as the case may be, should submit a declaration that he/she is independent at
the moment of his/her nomination for election or re-election as well as when
any change in his/her status arises, by demonstrating the ground on which
he/she is considered independent in character and judgement in practice.
Partial
compliance
The majority of the members of the Board are non-
executive members. Currently there are no
independent directors.
A.5. A Board member’s other relatively permanent professional
commitments and engagements, including executive and nonexecutive
Board positions in companies and not
-
for
-
profit institutions, should be
YES
DocuSign Envelope ID: 8F5F3162-1140-404D-81FC-7A9CF7979795
ROMPETROL WELL SERVICES
StradaClopotei, nr. 2 bis,
Ploiesti, JudetulPrahova,
ROMANIA
phone: +(40) 244 54 43
21
+(40) 244 54 42 65
email:
office.rws@rompetrol.com
www.petros.ro
www.rompetrol.com
2
disclosed to shareholders and to potential investors before appointment and
during his/her mandate.
A.6. Any member of the Board should submit to the Board, information on
any relationship with a shareholder who holds directly or indirectly, shares
representing more than 5% of all voting rights. This obligation concerns any
kind of relationship which may affect the position of the member on issues
decided by the Board.
YES
A.7. The company should appoint a Board secretary responsible for
supporting the work of the Board.
YES
A.8. The corporate governance statement should inform on whether an
evaluation of the Board has taken place under the leadership of the chairman
or the nomination committee and, if it has, summarize key action points and
changes resulting from it. The company should have a policy/guidance
regarding the evaluation of the Board containing the purpose, criteria and
frequency of the evaluation process.
NOT The company is in process of developing a policy /
guidance concerning the Board’s evaluation,
including the purpose, criteria and frequency of the
evaluation process.
A.9. The corporate governance statement should contain information on the
number of meetings of the Board and the committees during the past year,
attendance by directors (in person and in absentia) and a report of the Board
and committees on their activities.
YES
A.10. The corporate governance statement should contain information on the
precise number of the independent members of the Board of Directors or of
the Supervisory Board
YES
A.11. The Board of Premium Tier companies should set up a nomination
committee formed of nonexecutives, which will lead the process for Board
appointments and make recommendations to the Board. The majority of the
members of the nomination committee should
be
independent.
N/A The company is included in the Standard Category.
B.1. The Board should set up an audit committee, and at least one member
should be an independent non-executive. The majority of members,
including the chairman, should have proven an adequate qualification
relevant to the functions and responsibilities of the committee. At least one
member of the audit committee should have proven and adequate auditing or
accounting experience. In the case of Premium Tier companies, the audit
committee should be composed of at least three members and the majority of
the audit committee should be independent.
YES
B.2. The audit committee should be chaired by an independent nonexecutive
member.
YES
DocuSign Envelope ID: 8F5F3162-1140-404D-81FC-7A9CF7979795
ROMPETROL WELL SERVICES
StradaClopotei, nr. 2 bis,
Ploiesti, JudetulPrahova,
ROMANIA
phone: +(40) 244 54 43
21
+(40) 244 54 42 65
email:
office.rws@rompetrol.com
www.petros.ro
www.rompetrol.com
3
B.3. Among its responsibilities, the audit committee should undertake an
annual assessment of the system of internal control.
Partial
compliance
See comments presented at B.6.
B.4. The assessment should consider the effectiveness and scope of the
internal audit function, the adequacy of risk management and internal control
reports to the audit committee of the Board, management’s responsiveness
and effectiveness in dealing with identified internal control failings or
weaknesses and their submission of relevant reports to the Board.
Partial
compliance
See comments presented at B.6.
B.5. The audit committee should review conflicts of interests in transactions
of the company and its subsidiaries with related parties.
Partial
compliance
The Regulation of the Audit Committee approved
contains provisions in relation to this obligation.
The Regulation of the Audit Committee will be
revised to include provisions on the evaluation of
conflict of interest in connection with the
Company’s transactions with the affiliated parties.
B.6. The audit committee should evaluate the efficiency of the internal
control system and risk management system.
Partial
compliance
The responsibility to monitor the efficiency of
internal control systems, internal audit and risk
management of the company is stipulated in the
Regulation of the Audit Committee. Audit
Committee evaluates on a continous bases
components of the internal control system.
B.7.
The audit committee should monitor the application of statutory and
generally accepted standards of internal auditing. The audit committee
should receive and evaluate the reports of the inte
rnal audit team.
YES
B.8. Whenever the Code mentions reviews or analysis to be exercised by the
Audit Committee, these should be followed by periodical (at least annual),
or ad
-
hoc reports to be submitted to the Board afterwards.
YES
B.9. No shareholder may be given undue preference over other shareholders
with regard to transactions and agreements made by the company with
shareholders and their related parties.
YES
B.10. The Board should adopt a policy ensuring that any transaction of the
company with any of the companies with which it has close relations, that is
equal to or more than 5% of the net assets of the company (as stated in the
latest financial report), should be approved by the Board following an
obligatory opinion of the Board’s audit committee, and fairly disclosed to the
shareholders and potential investors, to the extent that such transactions fall
under the category of events subject to disclosure requirements.
Partial
compliance
According to the Articles of Incorporation art. 15
alin. 1 letter k, all transactions that respect the
mentioned criteria are approved by the Board si are
included in current reports according art. 108 Law
24/2017 (R)
DocuSign Envelope ID: 8F5F3162-1140-404D-81FC-7A9CF7979795
ROMPETROL WELL SERVICES
StradaClopotei, nr. 2 bis,
Ploiesti, JudetulPrahova,
ROMANIA
phone: +(40) 244 54 43
21
+(40) 244 54 42 65
email:
office.rws@rompetrol.com
www.petros.ro
www.rompetrol.com
4
B.11. The internal audits should be carried out by a separate structural
division (internal audit department) within the company or by retaining an
independent third
-
party entity.
YES
B.12. To ensure the fulfillment of the core functions of the internal audit
department, it should report functionally to the Board via the audit
committee. For administrative purposes and in the scope related to the
obligations of the management to monitor and mitigate risks, it should report
directly to the chief executive officer.
YES
C.1. The company should publish a remuneration policy on its website and
include in its annual report a remuneration statement on the implementation
of this policy during the annual period under review. Any essential change
of the remuneration policy should be published on the corporate website in a
timely fashion.
YES
D.1. The company should have an Investor Relations function - indicated, by
person (s) responsible or an organizational unit, to the general public. In
addition to information required by legal provisions, the company should
include on its corporate website a dedicated Investor Relations section, both
in Romanian and English, with all relevant information of interest for
investors, including:
YES
•
D.1.1. Principal corporate regulations: the articles of association,
general shareholders’ meeting procedures;
YES
•
D.1.2. Professional CVs of the members of its governing bodies, a
Board member’s other professional commitments, including
executive and nonexecutive Board positions in companies and not-
for-profit institutions;
Partial
Compliance
The recommendation is not implemented as
concerns other professional commitments of the
Board’s members, including executive and non-
executive positions in the boards of administration
of other companies or non
-
profit institution.
•
D.1.3. Current reports and periodic reports (quarterly, semi-annual
and annual reports) – at least as provided at item D.8 – including
current reports with detailed information related to non-compliance
with the present Code
YES
•
D.1.4. Information related to general meetings of shareholders: the
agenda and supporting materials; the procedure approved for the
election of Board members; the rationale for the proposal of
candidates for the election to the Board, together with their
professional CVs; shareholders’ questions related to the agenda and
the company’s answers, including the decisions taken
;
YES
DocuSign Envelope ID: 8F5F3162-1140-404D-81FC-7A9CF7979795
ROMPETROL WELL SERVICES
StradaClopotei, nr. 2 bis,
Ploiesti, JudetulPrahova,
ROMANIA
phone: +(40) 244 54 43
21
+(40) 244 54 42 65
email:
office.rws@rompetrol.com
www.petros.ro
www.rompetrol.com
5
•
D.1.5. Information on corporate events, such as payment of
dividends and other distributions to shareholders, or other events
leading to the acquisition or limitation of rights of a shareholder,
including the deadlines and principles applied to such operations.
Such information should be published within a timeframe that
enables investors to make investment decisions
;
YES
•
D.1.6. The name and contact data of a person who should be able to
provide knowledgeable information on request;
YES
•
D.1.7. Corporate presentations (e.g. IR presentations, quarterly
results presentations, etc.), financial statements (quarterly,
semiannual, annual), auditor reports and annual reports.
YES
D.2. A company should have an annual cash distribution or dividend policy,
proposed by the CEO or the Management Board and adopted by the Board,
as a set of directions the company intends to follow regarding the distribution
of net profit. The annual cash distribution or dividend policy principles
should be published on the corporate website
.
YES
D.3. A company should have adopted a policy with respect to forecasts,
whether they are distributed or not. Forecasts means the quantified
conclusions of studies aimed at determining the total impact of a list of
factors related to a future period (so called assumptions): by nature such a
task is based upon a high level of uncertainty, with results sometimes
significantly differing from forecasts initially presented. The policy should
provide for the frequency, period envisaged, and content of forecasts.
Forecasts, if published, may only be part of annual, semi-annual or quarterly
reports.
The forecast policy should be published on the corporate website
.
NOT The requirement will be implemented.
D.4. The rules of general meetings of shareholders should not restrict the
participation of shareholders in general meetings and the exercising of their
rights. Amendments of the rules should take effect, at the earliest, as of the
next general meeting of shareholders.
YES
D.5. The external auditors should attend the shareholders’ meetings when
their reports are presented there.
YES
D.6. The Board should present to the annual general meeting of shareholders
a brief assessment of the internal controls and significant risk management
system, as well as opinions on issues subject to resolution at the general
meeting.
YES
DocuSign Envelope ID: 8F5F3162-1140-404D-81FC-7A9CF7979795
ROMPETROL WELL SERVICES
StradaClopotei, nr. 2 bis,
Ploiesti, JudetulPrahova,
ROMANIA
phone: +(40) 244 54 43
21
+(40) 244 54 42 65
email:
office.rws@rompetrol.com
www.petros.ro
www.rompetrol.com
6
D.7. Any professional, consultant, expert or financial analyst may participate
in the shareholders’ meeting upon prior invitation from the Chairman of the
Board. Accredited journalists may also participate in the general meeting of
shareholders, unless the Cha
irman of the Board decides otherwise.
YES
D.8. The quarterly and semi-annual financial reports should include
information in both Romanian and English regarding the key drivers
influencing the change in sales, operating profit, net profit and other relevant
financial indicators, both on quarter
-
on
-
qua
rter and year
-
on
-
year
terms.
YES
D.9. A company should organize at least two meetings /conference calls with
analysts and investors each year. The information presented on these
occasions should be published in the IR section of the company website at
the time of the meetings/conference calls.
Partial
Compliance
The regular reports prepared by the company to
disclose its financial items are complete, highly
transparent and relevant in terms of information
necessary for making investment decisions. The
organization of such events will be established
depending on the requests from investors.
D.10. If a company supports various forms of artistic and cultural expression,
sport activities, educational or scientific activities, and considers the
resulting impact on the innovativeness and competitiveness of the company
part of its business mission and development strategy, it should publish the
policy guiding its activity in this area.
YES
CHAIRMAN OF THE BOARD OF DIRECTORS,
Mr. Yedil Utekov
GENERAL MANAGER,
Mr. Georgian Stefan Florea
FINANCE MANAGER,
Mrs. Luiza Roxana Moise
DocuSign Envelope ID: 8F5F3162-1140-404D-81FC-7A9CF7979795
S.C. Rompetrol Well Services S.A.
# 2 bis Clopotei Street, 100189, Ploiesti, Prahova County, ROMANIA
phone: + (40) 244 544321; fax.: + (40) 244 522913; email:
office.rws@rompetrol.com; www.rompetrol.com
Company with Management System Certified by DNV GL Trade Registry No:J 29/110/1991 IBAN RO34BACX0000000030551310
ISO 9001;2015 ISO 14001;2015 OHSAS 45001;2018 Fiscal Identification No;RO1346607 UNICREDIT BANK - PLOIESTI
AFFIDAVIT
The undersigned, Yedil Utekov, in capacity of Chairman of the Board, Georgian Stefan Florea
, in capacity of General Manager
and Roxana Luiza Moise in capacity of Finance Manager , in
consideration of the provision of art. 65 of Law no.24/2017 regarding issuers of financial
instruments an market operations and of the provision republished of Regulation no. 5/2018
regarding on issuers of financial instruments and market operations,hereby declare that, to the best
of our knowledge, the annual financial accounting statements on December 31, 2020 prepared in
compliance with the applicable accounting standards offer an accurate and true image of the assets,
liabilities, financial standing, profit and loss account of the Company and, the Report of the Board
of Directors comprise a correct analysis of the Company
’
s development and performance, as well
as a description of the main risks and uncertainties specific to the performed activity.
Chairman of the Board of Directors,
Yedil Utekov
General Manager
Georgian Stefan Florea
Finance Manager,
Roxana Luiza Moise
DocuSign Envelope ID: 8F5F3162-1140-404D-81FC-7A9CF7979795
ROMPETROL WELL SERVICES SA
STANDALONE FINANCIAL STATEMENTS
Prepared in accordance with
Order of Minister of Public Finance no. 2844/2016
31 December 2021
DocuSign Envelope ID: 5B401A76-8749-48E8-A67F-9B6FBE538D17
ROMPETROL WELL SERVICES SA
Stand-alone Financial Statements
Prepared in accordance with
Order of the Minister of Public Finance no. 2844/2016
31 December 2021
Contents Page
Statement of profit or loss and other comprehensive income 3
Statement of the financial position 4
Statement of changes in equity 5 - 6
Statement of cash flow 7
Notes to the standalone financial statements 8 - 52
DocuSign Envelope ID: 5B401A76-8749-48E8-A67F-9B6FBE538D17
ROMPETROL WELL SERVICES SA
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For the year ended as at 31 December 2021
(all amounts expressed in Lei (“RON”), unless otherwise specified)
Explanatory notes from 1 to 25 are part of these financial statements.
3
RESULT BEFORE TAX
1,774,188
4,629,514
Income tax expense
6
(144,554)
(266,562)
RESULT FOR THE YEAR
1,629,634
4,362,952
Earnings per share
7
0.0059
0.0157
Other comprehensive income that will not be reclassified to profit or
loss in subsequent periods (net of tax):
2,890,901
(2,959,784)
Actuarial gain / (losses) relating to retirement benefits
1,257,342
(1,800,752)
Remeasurement of fair value of equity instruments measured at fair value
through other comprehensive income
1,633,559
(1,159,032)
TOTAL COMPREHENSIVE INCOME, net of tax
4,520,535
1,403,168
The Financial Statements from page 1 to page 52 were approved by the Board of Directors in
22 March 2022 and are signed in his name by:
Administrator,
Prepared by,
FLOREA Georgian Stefan
MOISE Luiza-Roxana
Finance Manager
Signature
Signature
Notes
2021
2020
Turnover
44,597,156
47,667,818
Revenues from contracts with customers
2
44,185,085
47,249,182
Rental revenues
2.1
412,071
418,636
Other operating income
3.1
1,363,979
928,040
OPERATING INCOME – TOTAL
45,961,136
48,595,858
Expenses with consumables
(11,406,887)
(10,853,051)
Power and water expenses
(422,678)
(383,087)
Merchandise expenses
(48,065)
(25,500)
Payroll costs, out of which:
5
(16,573,739)
(17,484,748)
- Salaries
(15,556,835)
(16,539,435)
- Social security contributions
(503,961)
(545,618)
Fixed assets’ value adjustments, of which
8,9,10,18
(4,505,501)
(4,895,712)
- Depreciation
(3,996,830)
(4,895,712)
- Impairment of property, plant and equipment
(508,671)
-
Current assets value adjustment
(36,490)
(157,129)
Expenses with third-party services
3.2
(12,118,731)
(12,922,035)
Taxes, duties and similar expenses
(702,696)
(658,869)
Other operating expenses
3.3
(412,850)
(333,444)
OPERATING EXPENSES – TOTAL
(46,227,637)
(47,713,575)
OPERATING RESULT
(266,502)
882,283
Interest income
2,445,163
3,680,119
- of which, revenues from related parties
2,440,580
3,667,494
Other financial income
294,308
419,241
FINANCIAL INCOME - TOTAL
4.1
2,739,471
4,099,360
Other financial expenses
(698,781)
(352,129)
FINANCIAL EXPENSES - TOTAL
4.2
(698,781)
(352,129)
FINANCIAL RESULT
2,040,690
3,747,231
DocuSign Envelope ID: 5B401A76-8749-48E8-A67F-9B6FBE538D17
ROMPETROL WELL SERVICES SA
STATEMENT OF FINANCIAL POSITION
For the year ended as at 31 December 2021
(all amounts expressed in Lei (“RON”), unless otherwise specified)
Explanatory notes from 1 to 25 are part of these financial statements.
4
Notes
31 December
2021
31 December
2020
Assets
Non-current assets
Property, Plant & Equipment
8
25,053,007
26,656,353
Right of use assets
18.1
1,803,236
2,137,506
Investment property
9
451,402
470,005
Intangible assets
10
118,254
195,149
Equity instruments at FVOCI
11
10,203,550
8,258,837
Other financial assets
12
1,625,584
4,240,893
Total non-current assets
39,255,033
41,958,743
Current assets
Inventories, net
13
4,876,107
4,456,063
Trade and other receivables
14
47,694,690
17,048,662
Availabilities in cash pooling system
21
55,022,238
82,419,445
Other current assets
15
566,987
679,272
Collateral cash for guarantee letters
16.1
5,797,291
5,155,274
Cash and deposits
16
227,231
151,117
Total current assets
114,184,544
109,909,833
Total assets
153,439,577
151,868,575
Capital and reserves
Capital
Share capital, of which:
28,557,446
28,557,446
Subscribed and paid in share capital
17.1
27,819,090
27,819,090
Share capital adjustments
17.2
738,356
738,356
Legal reserves
5,563,818
5,563,818
Other reserves
56,194,311
23,368,155
Retained earnings
28,832,880
58,042,926
Retained earnings IFRS transition
18,041,378
18,041,378
Current result
1,629,634
4,362,952
Total equity
138,819,467
137,936,674
Long-term liabilities
Employee benefits liabilities
19
684,006
2,354,410
Deferred tax liabilities
6
1,112,249
648,236
Lease liabilities
18.2
209,813
525,365
Other liabilities
82,997
112,394
Total long-term liabilities
2,089,065
3,640,405
Current liabilities
Trade and other payables
20
11,853,922
9,499,264
Income tax payable
6
382,261
463,953
Lease liabilities
18.2
294,861
328,279
Total current liabilities
12,531,044
10,291,496
Total liabilities
14,620,109
13,931,901
Total equity and liabilities
153,439,577
151,868,575
The Financial Statements from page 1 to page 52 were approved by the Board of Directors in
22 March 2022 and are signed in his name by:
Administrator,
Prepared by,
FLOREA Georgian Stefan
MOISE Luiza-Roxana
Finance Manager
Signature
Signature
DocuSign Envelope ID: 5B401A76-8749-48E8-A67F-9B6FBE538D17
ROMPETROL WELL SERVICES SA
STATEMENT OF CHANGES IN EQUITY
For the year ended as at 31 December 2021
(all amounts expressed in Lei (“RON”), unless otherwise specified)
Explanatory notes from 1 to 25 are part of these financial statements.
5
For the year ended as at 31 December 2020
Share
capital
Legal
reserves
Other
reserves
Retained
earnings
Retained earnings
IFRS transition
Current
result
Total
equity
Balance at 1 January 2020
28,557,446
5,563,818
27,498,620
56,872,244
18,041,378
12,170,108
148,703,614
Current result
-
-
-
-
-
4,362,952
4,362,952
Other comprehensive income
-
-
(2,959,784)
-
-
-
(2,959,784)
Remeasurement of fair value of financial assets measured at fair value
through other comprehensive income (b)
-
-
(1,159,032)
-
-
-
(1,159,032)
Actuarial gain / (losses) relating to retirement benefits (a)
-
-
(1,800,752)
-
-
-
(1,800,752)
Total comprehensive income
-
-
(2,959,784)
-
-
4,362,952
1,403,168
Profit distribution
-
-
-
12,170,108
(12,170,108)
-
Dividends
-
-
-
(12,170,108)
-
-
(12,170,108)
Other movements
-
-
(1,170,682)
1,170,682
-
-
-
Balance at 31 December 2020 including OCI
28,557,446
5,563,818
23,368,155
58,042,925
18,041,378
4,362,952
137,936,674
For the year ended as at 31 December 2021
Share
capital
Legal
reserves
Other
reserves
Retained
earnings
Retained earnings
IFRS transition
Current
result
Total
equity
Balance at 1 January 2021
28,557,446
5,563,818
23,368,155
58,042,926
18,041,378
4,362,952
137,936,674
Profit for the year
1,629,634
1,629,634
Other comprehensive income
-
-
2,890,901
-
-
-
2,890,901
Remeasurement of fair value of financial assets measured at fair value
through other comprehensive income (b)
-
-
1,633,559
-
-
-
1,633,559
Actuarial gain / (losses) relating to retirement benefits (a)
-
-
1,257,342
-
-
-
1,257,342
Total comprehensive income
-
-
2,890,901
-
-
1,629,634
4,520,535
Profit distribution
-
-
-
4,362,952
(4,362,952)
-
Dividends
-
-
-
(33,572,997)
-
-
(33,572,997)
Other Capital Reserves (c)
-
-
29,935,254
-
-
-
29,935,254
Balance at 31 December 2021 including OCI
28,557,446
5,563,818
56,194,311
28,832,881
18,041,378
1,629,634
138,819,467
The Financial Statements from page 1 to page 52 were approved by the Board of Directors in 22 March 2022 and are signed in his name by:
Administrator,
Prepared by,
FLOREA Georgian Stefan
MOISE Luiza-Roxana
Finance Manager
Signature
Signature
DocuSign Envelope ID: 5B401A76-8749-48E8-A67F-9B6FBE538D17
ROMPETROL WELL SERVICES SA
STATEMENT OF CHANGES IN EQUITY
For the year ended as at 31 December 2021
(all amounts expressed in Lei (“RON”), unless otherwise specified)
Explanatory notes from 1 to 25 are part of these financial statements.
6
The legal reserve is in amount of RON 5,563,818 (2020: RON 5,563,818). The company constituted the
legal reserve in accordance with the provisions of the Romanian trading companies law, which requires at
least 5% of the annual company’s profit before tax to be transferred to legal reserve until the ending
balance of this reserve reaches 20% of the company’s share capital.
Other reserves represent reserves constituted on the basis of mandatory legislation, respectively
reserves for elements of other comprehensive income as well as other capital reserves:
a) The decrease in other reserves with the amount of RON 1,257,342 represents the net impact
from remeasurement gain / (loss) of retirement benefits and other similar liabilities related to the
personnel generated by the changes in assumptions and measurement technique applied.
b) The subsequent valuation of financial assets at fair value, representing investments in equity
instruments and for which the Company elected to present the gain / (loss) in other elements of
comprehensive income according to IFRS 9 Financial instruments, has determined an increase in
other reserves with RON 1,633,559.
c) On 24 December 2021, the Company concluded an assignment agreement with majority
shareholder KMG International NV, through which the contractual receivables of Oilfield
Exploration Solutions SA were transferred from Rompetrol Well Services SA to KMG International
NV at the nominal value of RON 34,705,969. As a result of the transaction, the trade receivable
allowance amounting RON 29,935,254 was reversed through Other Capital Reserves, the
receivable balance from Oilfield Exploration Business Solution SA was derecognized while the
Company recognized a receivable from KMG International NV. According to the assignment
agreement, the receivable in amount of RON 34,705,969 will be settled in two installments, June
2022 and December 2022.
Retained earnings represent reserves constituted through the distribution of prior year profits,
respectively the cover of prior year losses.
Retained Earnings IFRS transition represent the retained earnings constituted on the first adoption of
IAS, less IAS 29, as well as adoption of other mandatory IFRSs.
During the General Ordinary Meeting of the Shareholders from 26 April 2021, it was decided the
distribution of the previous years profit as dividends in gross amount of RON 33,572,995.
The Financial Statements from page 1 to page 52 were approved by the Board of Directors in
22 March 2022 and are signed in his name by:
Administrator,
Prepared by,
FLOREA Georgian Stefan
MOISE Luiza-Roxana
Finance Manager
Signature
Signature
DocuSign Envelope ID: 5B401A76-8749-48E8-A67F-9B6FBE538D17
ROMPETROL WELL SERVICES SA
STATEMENT OF CASH FLOW
For the year ended as at 31 December 2021
(all amounts expressed in Lei (“RON”), unless otherwise specified)
Explanatory notes from 1 to 25 are part of these financial statements.
7
Indirect method
Name of item
31 December
2021
31 December
2020
Cash flows from operating activities:
Net result before tax
1,774,189
4,629,514
Adjustments for:
Depreciation and adjustments related to tangible assets and investment properties
3,629,991
4,505,390
Depreciation and adjustments related to right of use assets
289,953
301,916
Depreciation and adjustments related to intangible assets
76,895
78,692
Impairment for property, plant and equipment
508,671
-
Provisions for post-employment benefits plans and other provisions
(103,789)
(44,164)
Adjustments for inventory depreciation
(266,624)
105,679
Allowance for trade and other receivables
303,115
51,450
Trade receivables and sundry debtors write off
52,011
-
Earnings from debts write-off (unclaimed dividends)
(807,378)
(609,424)
Interest income, net
(2,423,599)
(3,643,722)
Loss / (gain) from disposal of property, plant and equipment
(440,113)
(183,980)
Net foreign exchange differences
394,123
(186,831)
Operating profit before working capital changes
2,987,443
5,004,520
Increase / (Decrease) of performance guarantees
1,973,292
(1,878,379)
Increase / (Decrease) of trade and other receivables
(943,321)
1,064,584
Decrease / (Increase) of inventories
(153,420)
(331,101)
Increase / (Decrease) of trade and other debts
469,788
(1,869,180)
Paid income tax
(382,659)
(657,027)
Net cash flow from operating activities
3,951,124
1,333,417
Cash flows from investing activities:
Purchase of purchase of tangible and intangible assets
(2,664,984)
(4,725,664)
Proceeds from sale of tangible and intangible assets
588,385
300,351
Increase of cash pooling balance
27,343,475
13,456,141
Interest received
2,498,895
3,814,721
Net cash from investing activities
27,765,771
12,845,549
Cash flows from financing activities:
Payments of principal portion of lease liabilities
(330,696)
(1,633,934)
Dividends paid to equity holders
(31,310,085)
(12,550,860)
Net cash flows from financing activities
(31,640,781)
(14,184,794)
Net (decrease) / increase of cash and cash equivalents
74,975
(5,065)
Net foreign exchange differences
1,139
(762)
Cash and cash equivalents at the beginning of the financial year
151,117
156,944
Cash and cash equivalents at the end of the financial year
227,231
151,117
The Financial Statements from page 1 to page 52 were approved by the Board of Directors in
22 March 2022 and are signed in his name by:
Administrator,
Prepared by,
FLOREA Georgian Stefan
MOISE Luiza-Roxana
Finance Manager
Signature
Signature
DocuSign Envelope ID: 5B401A76-8749-48E8-A67F-9B6FBE538D17
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2021
(all amounts expressed in Lei (“RON”), unless otherwise specified)
8
1. INFORMATION ON THE ENTITY, ACCOUNTING POLICIES
The financial statements of ROMPETROL WELL SERVICES SA for the financial year ended as at
31 December 2021 are approved according to the resolution of the Board of Directors dated
22 March 2022.
Rompetrol Well Services SA (“the Company”) is a stock company, registered office located in Ploiesti,
Clopotei Street, No. 2 bis, Romania. The Company is registered with the Trade Register under the
number J29/110/05.03.1991.
It was turned into a joint-stock company named SC PETROS SA based on the Government Decision no.
1213 of November 1990, under the Law 15/1990, and operated under such name until September 2001
when its name was changed into ROMPETROL WELL SERVICES SA.
The Company is part of the KazMunayGas International Group. The annual consolidated financial
statements are prepared at the level of the parent company, KMG International NV, with the head office
located in World Trade Center, Strawinskylaan 807, Tower A, 8th Floor, 1077 XX, Amsterdam, The
Netherlands.
The ultimate parent of KazMunayGas International is the National Wealth Fund JSC “Samruk-Kazyna”,
an entity based in Kazakhstan.
The company’s main scope of business mainly consists of: special well operations, rent of special well
tools and devices, other services provision. The Company provides services for both domestic and
foreign markets. Its long history in both the domestic and the foreign oil industry makes it a competitive,
reliable and serious partner for a large range of services:
• Primary and secondary cementing;
• Acidizing and cracking services;
• Sand-Control services (reinforcement and packing);
• Well nitrogen treatment services;
• Well testing services;
• Well lining services;
• Drilling tools and instrumentation rental services.
These annual stand-alone financial statements are public and available on
https://rompetrolwellservices.kmginternational.com/, on Investor Relations section.
1.1. BASIS FOR THE PREPARATION OF THE FINANCIAL STATEMENTS
Starting with 31 December 2012, the financial statements of the Company are prepared in accordance
with the Order no. 1286/2012 of the Ministry of Public Finance, the latest regulation being Order no.
2844/2016 of the Ministry of Public Finance, approving the accounting regulations compliant with the
International Financial Reporting Standards applicable to companies whose securities are admitted to
trading on a regulated market. Such provisions are aligned with the requirements of the International
Financial Reporting Standards adopted by the European Union, except for the provisions of IAS 21 - The
Effects of Changes in Foreign Exchange Rates regarding the functional currency.
In order to prepare these financial statements, pursuant to the Romanian legal requirements, the
functional currency of the Company is deemed to be the Romanian Leu (RON).
The financial statements of the Company are based on the historical cost principle. The stand-alone
financial statements are presented in RON and all amounts are rounded up in RON unless otherwise
specified.
The financial statements of the Company are prepared based on the going concern principle.
DocuSign Envelope ID: 5B401A76-8749-48E8-A67F-9B6FBE538D17
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2021
(all amounts expressed in Lei (“RON”), unless otherwise specified)
9
1. INFORMATION ON THE ENTITY, ACCOUNTING POLICIES (continued)
1.2. ACCOUNTING PRINCIPLES, POLICIES AND METHODS
a) The going concern principle
The regional market and demand for well services registered a significant drop starting with the year 2020
on the background of effects generated by COVID-19 pandemic, as well as due to a negative trend,
registered by the petroleum industry.
The upstream sector was directly impacted by the crude dynamics, quotations volatility for oil products,
production reduction measures or suspension of some major exploration and production projects.
Additionally count geopolitical tensions (USA, Russia, Saudi Arabia, Iran) and OPEC decisions for limiting
or reducing the crude production, Brent quotation in year 2020 being at a level of USD 42 / barrel, 35%
down in comparison with USD 64 / barrel recorded in year 2019. Although the price of crude increased by
67%, in the past financial year, against the background of coal and gas shortages, and the ascending
trend is expected to continue, investment in the sector has remained limited and major producers remain
reticent and are keeping production levels low, adopting a cautious position in the event of reduced
economic activity as a result of the pandemic and the major impact of various COVID-19 virus mutations
globally.
Within the COVID-19 pandemic context, measures for limiting virus spreading and population mobility
imposed in the year 2020 and partially maintained also in the year 2021 were reflected in a dramatic and
sudden drop of demand for oil products, decreased refining margins, generating overstocks of raw
materials and products.
This market context together with climate-change concerns and regulations, had determined big
upstream sector companies to adjust their strategies and development plans, reduce investments and
take other actions like postponing or canceling of some exploration projects, reduction of crude oil
production, implementing of programs for cutting costs and staff, measures for maintaining economic
sustainability.
The company managed to implement measures and programs for optimizing costs, improving current
activities and employees’ protection, in response to major changes in the economic and social climate.
The company continues to maintain the measures adopted and aims to implement new strategies that will
allow it to increase its flexibility to possible unpredictable fluctuations in demand.
Although in 2022 the market is expected to be still volatile, with a moderate level of new investments from
our main customers, the flexibility of the Company in regards to the type of services rendered, together
with a strong financial position, including cash availabilities, will allow the operational activity to record a
similar level as the one recorded in 2021.
Considering all the above as well as next year cash flow projections based on existing and renewed
commercial contracts, the financial statements of the Company were prepared based on the going
concern principle.
b) Foreign Currency Transactions
Transactions in foreign currencies are initially recorded by the Company at their respective functional
currency spot rate at the date the transaction first qualifies for recognition. Monetary assets and liabilities
denominated in foreign currencies are retranslated at the functional currency spot rate of exchange ruling
at the reporting date.
DocuSign Envelope ID: 5B401A76-8749-48E8-A67F-9B6FBE538D17
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2021
(all amounts expressed in Lei (“RON”), unless otherwise specified)
10
1. INFORMATION ON THE ENTITY, ACCOUNTING POLICIES (continued)
Differences arising on settlement or translation of monetary items are recognised in profit or loss. Non-
monetary items that are measured in terms of historical cost in a foreign currency are translated using the
exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a
foreign currency are translated using the exchange rates at the date when the fair value is determined.
The gain or loss resulted from the re-conversion of non-monetary items is treated in line with the
recognition of gain or loss upon the change in fair value (i.e., the exchange rate differences on items
whose fair value gain or loss is recognised in Other elements of global earnings, or the profit or loss are
also recognised in Other elements of global earnings, profit or loss, respectively).
The exchange rates used to translate the balances denominated in foreign currency as at
31 December 2021 were, for RON:
31 December
2021
31 December
2020
1 EUR
4.9481
4.8694
1 USD
4.3707
3.9660
c) Financial instruments
A financial instrument is any contract which produces a financial asset for a company and a financial
liability or equity instrument for another entity. The Company’s financial assets include cash and cash
equivalents, trade receivables and other receivables (including loans to related parties) and financial
investments. The Company’s financial liabilities include trade liabilities and other liabilities. The
accounting policies for the recognition and measurement of each item are described in this Note.
Initial and subsequent measurement
Financial assets and liabilities are initially measured at fair value. Transaction costs which are directly
attributable to acquisition or issuance of financial assets and liabilities (other than financial assets and
financial liabilities at fair value through profit or loss) are added at initial recognition or deducted from the
fair value of respective financial asset or liability, as the case may be.
Financial assets are classified, at initial recognition, as subsequently measured at amortized cost, fair
value through other comprehensive income (OCI), or fair value through profit or loss.
The classification of financial assets at initial recognition depends on the financial asset’s contractual
cash flow characteristics and the Company’s business model for managing them. With the exception of
trade receivables that do not contain a significant financing component or for which the Company has
applied the practical expedient, the Company initially measures a financial asset at its fair value plus, in
the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables
that do not contain a significant financing component or for which the Company has applied the practical
expedient are measured at the transaction price determined under IFRS 15.
In order for a financial asset to be classified and measured at amortized cost or fair value through OCI, it
needs to give rise to cash flows that are ‘solely payments of principal and interest (SPPI)’ on the principal
amount outstanding.
The Company’s business model for managing financial assets refers to how it manages its financial
assets in order to generate cash flows. The business model determines whether cash flows will result
from collecting contractual cash flows, selling the financial assets, or both.
Purchases or sales of financial assets that require delivery of assets within a time frame established by
regulation or convention in the market place (regular way trades) are recognized on the trade date, i.e.,
the date that the Company commits to purchase or sell the asset.
DocuSign Envelope ID: 5B401A76-8749-48E8-A67F-9B6FBE538D17
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2021
(all amounts expressed in Lei (“RON”), unless otherwise specified)
11
1. INFORMATION ON THE ENTITY, ACCOUNTING POLICIES (continued)
Financial liabilities are classified as subsequently measured at amortized cost, except for (a) financial
liabilities at fair value through profit or loss, (b) financial liabilities that arise when a transfer of a financial
asset does not qualify for derecognition, (c) financial guarantee contracts, who is subsequently measured
at the higher of the value of the loss adjustment and the amount initially recognized, (d) commitments to
provide a loan at a below-market interest rate which is subsequently measured at the higher of the value
of the loss adjustment and the amount initially recognized, (e) contingent consideration recognized by an
acquirer in a business combination which subsequently is measured at fair value with changes
recognized in profit or loss.
For purposes of subsequent measurement, the company’s specific financial assets and liabilities are
classified in three categories:
• Financial asset measured at amortized cost (Receivables and loans granted); and
• Trade payables and other liabilities;
• Financial assets measured at fair value through other comprehensive income (Financial assets,
Note 1h).
Receivables and loans
This category is the most relevant to the Company. Receivables and loans are non-derivative financial
assets with fixed or determinable payments that are not quoted in an active market. After initial
measurement, such financial assets are subsequently measured at amortized cost using the effective
interest rate (EIR) method, less impairment. Amortized cost is calculated taking into account any discount
or premium on acquisition and any fees or costs that are an integral part of the EIR. The EIR amortization
is included in finance income in the statement of profit or loss. The losses arising from impairment are
recognized in the statement of profit or loss in finance costs for loans and in cost of sales or other
operating expenses for receivables.
Trade payables and other liabilities
Trade payables and other liabilities are subsequently measured at amortized cost, using the effective
interest rate. The effective interest method is a method to calculate the amortized cost of a financial
liability and to allocate interest expenses from the relevant period. The effective interest rate is the rate
that exactly discounts the estimated future cash payments over the expected life of the financial liability
(including all paid or received commissions which are part of the effective interest rate, transaction costs
and other bonuses or discounts) or (if the case) on a shorter period, to the net carrying amount from the
initial recognition.
Derecognition
A financial asset is primarily derecognised when:
• The rights to receive cash flows from the asset have expired;
or
• The Company has transferred its rights to receive cash flows from the asset or has assumed an
obligation to pay the received cash flows in full without material delay to a third party under a
‘pass-through’ arrangement; and either (a) the Company has transferred substantially all the risks
and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all
the risks and rewards of the asset, but has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a
pass-through arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of
ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the
asset, nor transferred control of the asset, the Company continues to recognise the transferred asset to
the extent of its continuing involvement. In that case, the Company also recognises an associated liability.
The transferred asset and the associated liability are measured on a basis that reflects the rights and
obligations that the Company has retained.
DocuSign Envelope ID: 5B401A76-8749-48E8-A67F-9B6FBE538D17
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2021
(all amounts expressed in Lei (“RON”), unless otherwise specified)
12
1. INFORMATION ON THE ENTITY, ACCOUNTING POLICIES (continued)
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or
expires. When an existing financial liability is replaced by another from the same lender on substantially
different terms, or the terms of an existing liability are substantially modified, such an exchange or
modification is treated as the derecognition of the original liability and the recognition of a new liability.
The difference in the respective carrying amounts is recognised in the statement of profit or loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the statement of
financial position if there is a currently enforceable legal right to offset the recognised amounts and there
is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
d) Impairment of financial assets
The Company recognizes an allowance for expected credit losses (ECLs) for debt instruments not held at
fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due
in accordance with the contract and all the cash flows that the Company expects to receive, discounted at
an approximation of the original effective interest rate.
For trade receivables and contract assets, the Company applies a simplified approach in calculating
ECLs. Therefore, the Company does not track changes in credit risk, but instead recognizes a loss
allowance based on lifetime ECLs at each reporting date. The Company has established a provision
matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to
the debtors and the economic environment.
The Company considers a financial asset in default when contractual payments are 90 days past due.
However, in certain cases, the Company may also consider a financial asset to be in default when
internal or external information indicates that the Company is unlikely to receive the outstanding
contractual amounts in full before taking into account any credit enhancements held by the Company. A
financial asset is written off when there is no reasonable expectation of recovering the contractual cash
flows.
e) Property, plant and equipment
Property, plant and equipment are stated at cost less cumulative depreciation and, if the case, less loss
from impairment, in the financial statements of the Company.
The initial cost of property, plant and equipment comprises its purchase price, including import duties and
non-refundable purchase taxes and any directly attributable costs of bringing the asset to its working
condition and location for its intended use. Expenditures incurred after the assets have been put to
operation, such as repairs and maintenance are charged to the profit and loss statement in the period in
which the costs are incurred. In cases where it can be proved that expenses have increased the future
economic benefits obtained from the use of intangible assets besides the standard evaluation of its
performance, the expenditure is capitalized as additional costs of the property, plant and equipment.
Construction in progress represents plant and properties under construction and is stated at cost, less
any impairment loss. This includes the cost of construction and other direct costs. Depreciation of these
and other assets is registered starting with the date when they are ready to be used for the activity they
are intended for.
DocuSign Envelope ID: 5B401A76-8749-48E8-A67F-9B6FBE538D17
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2021
(all amounts expressed in Lei (“RON”), unless otherwise specified)
13
1. INFORMATION ON THE ENTITY, ACCOUNTING POLICIES (continued)
Depreciation for property, plant and equipment except land and construction in progress is computed
using the straight-line method over the following estimated useful lives:
Years
Buildings and other constructions
5 - 60
Machinery and other equipment
3 - 27
Vehicles
3 - 15
The useful life and methods of depreciation of intangible assets are revised at each fiscal year end and
adjusted prospectively if the case.
When assets are sold or disposed of, their cost and related accumulated depreciation are removed and
any income or loss resulting from their output is included in the profit or loss account.
f) Investment property
Investment properties are measured initially at cost, including transaction costs. Subsequent to initial
recognition, investment properties are disclosed at their historical cost less the provisions for depreciation
and impairment. Depreciation of investment properties is computed using straight-line method through
their useful life of between 35 and 40 years.
For the purpose of disclosure of fair values are consequently assessed by an accredited external,
independent valuator, by applying a valuation model recommended by the International Valuation
Standards Committee. The revaluation is performed at least every 3 years.
Investment properties are derecognised when either they have been disposed of or when the investment
property is permanently withdrawn from use and no future economic benefit is expected from its disposal.
The difference between the net disposal proceeds and the carrying amount of the asset is recognised in
the income statement in the period of derecognition.
Transfers are made to or from investment property only when there is a change in use. For a transfer
from investment property to owner-occupied property, the deemed cost for subsequent accounting is the
fair value at the date of change of use. If an owner-occupied property becomes an investment property,
the Company accounts for such property in accordance with the policy stated under property, plant and
equipment up to the date of change of use.
g) Intangible assets
Intangible assets are measured initially at cost. Intangible assets are recognized if it is probable that the
future economic benefits attributable to the asset will flow to the enterprise and the cost of the asset can
be measured reliably. After the initial recognition, intangible assets are measured at cost less the
accumulated amortization and any accumulated impairment losses. Intangible assets are amortized on a
straight-line basis over the best estimate of their useful lives:
• Intangible assets consist mainly of software and licenses and are amortized on a straight-line basis
over 3 to 5 years;
• The carrying amount of each intangible asset is reviewed annually and adjusted for impairment
where it is considered necessary. External and internal costs specifically associated with the
maintenance of already existing computer software programmers are expensed as incurred.
DocuSign Envelope ID: 5B401A76-8749-48E8-A67F-9B6FBE538D17
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2021
(all amounts expressed in Lei (“RON”), unless otherwise specified)
14
1. INFORMATION ON THE ENTITY, ACCOUNTING POLICIES (continued)
h) Equity instruments at FVOCI
Equity instruments at FVOCI represent strategic long term investments and are recorded at fair value
through other comprehensive income.
Dividends received from entities in which the Company has shares are recognized in profit and loss
account of the year when the right of the Company the collect dividends is established and it is probable
that the will be collected.
The changes in fair value are recognized in other elements of the comprehensive income until the
investment is derecognized or depreciated, moment when the cumulative gain or losses are reclassified
from other comprehensive income in a retained earnings account for the respective period.
Fair value is the priced received from selling an assets or the price paid to transfer a liability in a normal
transaction between market participants, at the date of the valuation.
Valuation at fair value implies that the asset is exchanged in a normal transaction for the sale of the asset
or transfer of the debt, between market participants, at the valuation date, under current market
conditions. In a valuation at fair value it is assumed that the transaction of sale of the asset takes place
either:
- on the main market of the asset, or
- in the absence of a main market, on the market most advantageous for the asset.
The valuation at fair value of an asset is based on the assumption that market participants would use
when determining the value of the asset, assuming that market participants act to obtain maximum
economic benefit.
The Company uses valuation techniques appropriate to the circumstances and for which there are
available sufficient data for fair value valuation, using to the maximum the relevant observable input data
and minimizing the unobservable input data used.
The financial assets that are the object of valuation at fair value are classified within the fair value
hierarchy, based on the input data, which is the necessary basis for selecting and using the necessary
approach for its reliable determination. The data entry hierarchy consists of three levels:
(i) Level 1 - prices quotations (unadjusted) on active markets for identical assets and liabilities, to
which the entity has access to at the valuation date;
(ii) Level 2 - entry data, other than the price quotations included in level one, which are observed for
assets or liabilities, either directly or indirectly;
(iii) Level 3 - non-observable entry data for assets or liabilities.
Additional details on structure of financial assets, classified according to IFRS 9 in financial assets valued
at fair value through other comprehensive income, are presented in Note 11.
i) Impairment of non-financial assets
At each reporting date, the Company reviews the carrying amounts of its property, plant and equipment
and intangible assets to determine whether there is any indication that those assets have undergone an
impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to
determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable
amount of an individual asset, the Company estimates the recoverable amount of the cash-generating
unit to which the respective asset belongs.
DocuSign Envelope ID: 5B401A76-8749-48E8-A67F-9B6FBE538D17
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2021
(all amounts expressed in Lei (“RON”), unless otherwise specified)
15
1. INFORMATION ON THE ENTITY, ACCOUNTING POLICIES (continued)
The recoverable amount is the higher of fair value less costs to sell and value in use. In order to
determine the recoverable amount of property, plant and equipment, the Company uses value in use, this
being assessed based on estimated future cash flows that are discounted to their present value using a
pre-tax discount rate. The discount rate reflects current market assessments of time value of money and
risks specific to the asset for which the estimates of future cash flows have not been adjusted already.
The company bases its impairment computation on detailed budgets and forecast calculations which
cover a period of 7 years. A long-term growth rate is calculated and applied to the future cash flows
determined based on the company’s budgets and forecasts.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying
amount, the carrying amount of the assets (or cash-generating unit) is reduced to its recoverable amount.
Impairment losses are recognized as an expense immediately, unless the relevant asset is stated at its
revalued amount, in which case the impairment loss is treated as a revaluation decrease.
When an impairment loss is reversed, the carrying amount of the asset (cash-generating unit) is
increased to the revised estimate of its recoverable amount, but so that the increased carrying amount
does not exceed the carrying amount that would have been determined if no impairment loss had been
recognized for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is
recognized as income immediately, unless the relevant asset is carried at a revalued amount, in which
case the reversal of the impairment loss is treated as a revaluation increase.
j) Provisions
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result
of a past event, it is probable that an outflow of resources embodying economic benefits will be required
to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the
Company expects a provision to be reimbursed partially or totally, the reimbursement is recognized as a
separate asset, but only when the reimbursement is certain. The expense related to any provision is
presented in the profit and loss statement net of any reimbursement. If the effect of the time value of
money is material, the provisions are discounted using a current pre-tax rate that reflects, where
appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due
to the passage of time is recognized as interest cost.
Provisions are not recognized for future operating losses.
Provisions are measured at the present value of management’s best estimate of the expenditure required
to settle the present obligation at the reporting date. The discount rate used to determine the present
value reflects current market assessments of the time value of money and the risks specific to the liability.
k) Leases
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the
contract conveys the right to control the use of an identified asset for a period of time in exchange for
consideration.
Company as a lessee
The Company applies a single recognition and measurement approach for all leases, except for short-
term leases and leases of low-value assets. The Company recognises lease liabilities to make lease
payments and right-of-use assets representing the right to use the underlying assets.
DocuSign Envelope ID: 5B401A76-8749-48E8-A67F-9B6FBE538D17
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2021
(all amounts expressed in Lei (“RON”), unless otherwise specified)
16
1. INFORMATION ON THE ENTITY, ACCOUNTING POLICIES (continued)
i) Right-of-use assets
The Company recognises right-of-use assets at the commencement date of the lease (i.e., the date the
underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated
depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of
right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and
lease payments made at or before the commencement date less any lease incentives received. Right-of-
use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated
useful lives of the assets, as follows:
► Other equipment 3 – 5 years
ii) Lease liabilities
At the commencement date of the lease, the Company recognises lease liabilities measured at the
present value of lease payments to be made over the lease term. The lease payments include fixed
payments (including in-substance fixed payments) less any lease incentives receivable, variable lease
payments that depend on an index or a rate, and amounts expected to be paid under residual value
guarantees. The lease payments also include the exercise price of a purchase option reasonably certain
to be exercised by the Company and payments of penalties for terminating the lease, if the lease term
reflects the Company exercising the option to terminate.
Variable lease payments that do not depend on an index or a rate are recognised as expenses (unless
they are incurred to produce inventories) in the period in which the event or condition that triggers the
payment occurs.
In calculating the present value of lease payments, the Company uses its incremental borrowing rate at
the lease commencement date because the interest rate implicit in the lease is not readily determinable.
After the commencement date, the amount of lease liabilities is increased to reflect the accretion of
interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is
remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g.,
changes to future payments resulting from a change in an index or rate used to determine such lease
payments) or a change in the assessment of an option to purchase the underlying asset.
iii) Short-term leases and leases of low-value assets
The Company applies the short-term lease recognition exemption to its short-term leases of machinery
and equipment (i.e., those leases that have a lease term of 12 months or less from the commencement
date and do not contain a purchase option). It also applies the lease of low-value assets recognition
exemption to leases of equipment that are considered to be low value. Lease payments on short-term
leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease
term.
Company as lessor
Leases in which the Company does not transfer substantially all the risks and rewards incidental to
ownership of an asset are classified as operating leases. Rental income arising is accounted for on a
straight-line basis over the lease terms and is included in revenue in the statement of profit or loss due to
its operating nature. Initial direct costs incurred in negotiating and arranging an operating lease are added
to the carrying amount of the leased asset and recognised over the lease term on the same basis as
rental income. Contingent rents are recognised as revenue in the period in which they are earned.
DocuSign Envelope ID: 5B401A76-8749-48E8-A67F-9B6FBE538D17
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2021
(all amounts expressed in Lei (“RON”), unless otherwise specified)
17
1. INFORMATION ON THE ENTITY, ACCOUNTING POLICIES (continued)
l) Inventories
Inventories are valued at the lower of cost and net realizable value. Net realizable value is the estimated
selling price in the ordinary course of business, less the estimated costs of completion and the estimated
costs necessary to make the sale. Cost comprises the acquisition cost and other costs that have been
incurred in bringing the inventories to their present location and condition and is determined by weighted
average method for all the inventories.
m) Receivables
A receivable represents the Company’s right to an amount of consideration that is unconditional. Trade
receivables that do not contain a significant financing component or for which the Company has applied
the practical expedient are measured at the transaction price determined under IFRS 9.
An impairment analysis is performed at each reporting date using a provision matrix to measure expected
credit losses. The provision rates are based on days past due for groupings of various customer
segments with similar loss patterns. The calculation reflects the probability-weighted outcome, the time
value of money and reasonable and supportable information that is available at the reporting date about
past events, current conditions and forecasts of future economic conditions.
n) Cash and cash equivalents
Cash includes petty cash, cash at banks and cheques in course of being cashed. Cash equivalents are
short-term, highly liquid investments that are readily convertible to known amounts of cash in less than
three months to maturity from the date of acquisition and that are subject to an insignificant risk of
devaluation.
o) Revenue from contracts with customers
Revenue is recognised at the level of consideration to which the Company expects to be entitled in
exchange for transferring goods or services to a customer, excluding amounts collected on behalf of third
parties. The revenue is recognised when the Company satisfies a performance obligation by transferring
a promised good or service (i.e. an asset) to a customer. An asset is transferred when the customer
obtains control of that asset. The Company assesses its revenue arrangements against specific criteria in
order to determine if it is acting as principal or agent. The Company has concluded that it is the principal
in its revenue arrangements because it typically controls the goods or services before transferring them to
the customer.
The Company’s business model establish the identification of performance obligations as the written
requests of clients, which represent the commitment to purchase goods or services, based on the
framework contract.
The Company has framework agreements concluded with customers, services provided/merchandise
sold being made based on purchase order. The Company has assessed, by type of contract, the goods
and/or services promised in each type of contract and has identified the following contracts as separate
performance obligations (POs):
• contracts for well services: specific well operation to a specific defined well.
• Other segments: rental (distinct space and vehicle), ITP services (specific vehicle verification) and
other merchandise (distinct goods).
DocuSign Envelope ID: 5B401A76-8749-48E8-A67F-9B6FBE538D17
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2021
(all amounts expressed in Lei (“RON”), unless otherwise specified)
18
1. INFORMATION ON THE ENTITY, ACCOUNTING POLICIES (continued)
The transaction price is the client's promise to pay in cash a fixed amount of the consideration. The
company analyzed the transaction price and concluded that it did not include a significant financing
component or a variable component.
The company has determined for each performance obligation identified at the beginning of the contract
whether it will be fulfilled over time or at a specific time. The company collects commercial receivables
within 30 - 90 days. Revenue is recorded based on job ticket which is approved by the customer at the
end of the well work.
p) Retirement benefit costs
Payments made to state - managed retirement benefit schemes are dealt with as defined contribution
plans where the Company pays fixed contributions into the state-managed fund and has no legal or
constructive obligation to pay further contributions if the fund does not hold sufficient assets to pay all
employee benefits relating to employee service in the current and prior period. The contributions are
charged as an expense in the same period when the employee service was rendered.
Under the provisions of the collective labor agreement, employees are entitled to specified retirement
benefits, payable on retirement, if they are employed with the Company at the date of their retirement.
These amounts are estimated as of the reporting date and the measurement process applied is subject to
uncertainty. The retirement benefit is determined through a measurement technique applied judgments
and estimates such as applicable benefits provided in the agreement, the Company headcount and
specific actuarial estimates such as discount rate, price inflation and key demographic figures like
mortality rates. (Note 19). The defined benefit liability as of reporting date comprises the estimated
present value of the defined benefit obligation and while the related current year service cost recorded in
the profit and loss statement. All actuarial gains and losses are fully recognized in other comprehensive
income in the period in which they occur.
Actuarial gains and losses recognized in other comprehensive income are presented in the statement of
comprehensive income.
The Company has no other liabilities with respect to future pension benefits, health and other costs for its
employees.
q) Taxes
- Current income tax
Current income tax assets and liabilities for the current and prior periods are measured at the amount
expected to be recovered from or paid to the tax authorities. The tax rates and tax laws used to compute
the amount are those that are enacted or substantively enacted, by the reporting date, in the countries
where the Company operates and generates taxable income.
Current income tax relating to items recognized directly in equity is recognized in equity and not in the
profit and loss statement. Management periodically evaluates positions taken in the tax returns with
respect to situations in which applicable tax regulations are subject to interpretation and establishes
provisions where appropriate.
DocuSign Envelope ID: 5B401A76-8749-48E8-A67F-9B6FBE538D17
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2021
(all amounts expressed in Lei (“RON”), unless otherwise specified)
19
1. INFORMATION ON THE ENTITY, ACCOUNTING POLICIES (continued)
- Deferred tax
Deferred tax is recorded using the liability method on temporary differences at the reporting date between
the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred tax liabilities are recognized for all taxable temporary differences, except:
► Where the deferred tax liability arises from the initial recognition of an asset or liability in a
transaction that is not a business combination and, at the time of the transaction, affects neither
the accounting profit nor taxable profit or loss.
► The deductible temporary differences associated with investments in subsidiaries and related
parties and interests in joint ventures when the reversal of such temporary differences can be
controlled and likely not to be reversed in the foreseeable future.
Deferred tax assets are recognized for all deductible temporary differences, carry forward of unused
losses and tax credits, to the extent that it is probable that taxable profit will be available against which
the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses
can be utilized except:
► Where the deferred tax asset arises from the initial recognition of an asset or liability in a
transaction that is not a business combination and, at the time of the transaction, affects neither
the accounting profit nor taxable profit or loss.
► In case of deductible temporary differences associated with investments in subsidiaries and
related parties and interests in joint ventures, the deferred tax asset is recognised only when the
temporary differences are likely to be reversed in a foreseeable future and when there can be a
taxable profit for which temporary differences may be used.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced
consequently to the extent that it is no longer probable that sufficient taxable profit will be available to
allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are reassessed
at each reporting date and are recognized to the extent that it has become probable that future taxable
profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year
when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been
enacted or substantively enacted until the end of the reporting period.
Deferred tax relating to items recognized outside the profit and loss statement is recognized outside the
profit or loss account. Deferred tax items are recognized depending on the nature of the underlying
transaction either in other comprehensive income or directly in equity.
Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off
current tax assets against current income tax liabilities and the deferred taxes relate to the same taxable
entity and are collected by the same tax authority.
- Revenue related taxes
Revenues, expenses and assets are recognized net of the amount of sales tax except:
► Where the sales tax incurred on a purchase of assets or services is not recoverable from the tax
authority, in which case the sales tax is recognized as part of the acquisition cost of the asset or as
part of the expense item as the case may be.
► Receivables and payables whose taxes are included in their amount.
The net amount of sales tax recoverable from, or payable to, the tax authority is included in the
receivables or payables in the balance sheet.
DocuSign Envelope ID: 5B401A76-8749-48E8-A67F-9B6FBE538D17
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2021
(all amounts expressed in Lei (“RON”), unless otherwise specified)
20
1. INFORMATION ON THE ENTITY, ACCOUNTING POLICIES (continued)
r) Dividends
Dividends are recorded in the year in which they are approved by the shareholders.
s) Contingent assets and liabilities
Contingent liabilities are not recognized in the financial statements. They are however disclosed unless
the possibility of an outflow of resources embodying economic benefits is remote.
Contingent assets are not recognized in the financial statements but disclosed when an inflow of
economic benefits is probable.
1.3. SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS
The preparation of the Company’s stand-alone financial statements requires the management to make
judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets
and liabilities, and the disclosure of contingent liabilities, at the balance sheet date. The estimates and
associated assumptions rely on the historical experience and other factors that are considered to be
relevant. However, uncertainty about these assumptions and estimates could result in outcomes that
require an adjustment to the carrying amount of the assets or liabilities in the future periods.
The estimates and assumptions that accounting judgements rely on are subject to constant review.
Revisions to accounting estimates are recognized in the period in which the estimate is revised if such
revision only affects that period or in the period of the revision and future periods if such revision affects
both current and future periods.
The matters presented below are considered to be paramount in understanding the judgments that are
involved in preparing these statements and the uncertainties that could impact the amounts reported in
the results of operations, financial position and cash flows.
(i) Carrying value of trade receivables
The Company use the simplified approach in calculating the expected credit losses for trade receivables
as these do not contain a significant financing component. The Company has applied the practical
expedient to calculate expected credit losses using a provision matrix that is based on its historical credit
loss experience, adjusted for forward-looking factors specific to the debtors and the economic
environment. The Company assesses the requirement for an allowance for impairment in trade and other
receivables when contractual payments are 90 days past due. However, in certain cases, the Company
may also consider a financial asset to be in default when internal or external information indicates that the
Company is unlikely to receive the outstanding contractual amounts in full before taking into account any
credit enhancements held by the Company.
DocuSign Envelope ID: 5B401A76-8749-48E8-A67F-9B6FBE538D17
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2021
(all amounts expressed in Lei (“RON”), unless otherwise specified)
21
1. INFORMATION ON THE ENTITY, ACCOUNTING POLICIES (continued)
(ii) Impairment of property, plant & equipment and investment properties
The Company analyses at each reporting date if there are indicators of impairment of tangible assets and
investment properties. If any indication exists, or when annual impairment testing for assets is required,
the Company estimates the assets recoverable amount. Assets are analyzed each time when events or
changes in market or industry indicates the fact that the accounting value of these assets may not be
recoverable. If for these assets allowances for impairment are necessary, the accounting value for these
assets is adjusted to the recoverable amount, which is determined as the highest between fair value less
cost to sale and the value in use (based on discounted future cash flows). The allowances for impairment
are reversed only in the case when the events or circumstances that determined the initial impairment
have changed. The discounted cash flows are determined based on Company’s management estimation
as regards to contracts and future projects concluded at the date of evaluation or estimated to be
contracted in the future, closely linked to market conditions. Other factors that might lead to changes in
estimations could include restructuring plans or changes in legislation.
The recoverable amount is sensitive to the discount rate applied to discounted cash flows, as well as to
the inputs of cash flows and the growth rate estimated for the analyzed period.
At the end of financial year 2021, the Company has performed the impairment test for all its tangible
assets using the discounted cash flow method. The discounted cash flow method assumes the value of
cash-generating units by estimating the present value of the future expected earnings arising from the
use of the cash generating unit, using a discount rate. Estimated cash flows were determined taking into
account the company’s projections regarding the operating profits for the next seven years, discounted
with an estimated economic growth rate of the industry in which the company operates.
The recoverable amount of the CGU of RON 21.4 million was determined based on the value in use (VIU)
calculation using the cash flow projections from the approved business plan. Business Plan take into
account only the turnover expected to be generated from agreements already signed with main
customers for cementing and acidizing services. Revenues expected to be generated by new services to
be provided were not considered given Management’s conservative approach when preparing the
budgets for the next period. This is also linked to the inherent risk generated by the timing of receiving
work orders from customers. As a result of the analysis, Management identified an impairment for this
CGU in amount of RON 508,671.
Significant estimates applied to the determination of the value in use by the Company are:
- Operating profit margin;
- Discount rate.
The estimated operating profit margin is presented below:
2022
2023
2024
2025
2026
2027
2028
%
%
%
%
%
%
%
Rompetrol Well Services SA
6.06
6.94
8.04
8.25
8.21
7.8
8.6
Operating profit margins are estimated based on the average historical operational results recorded for
2018 – 2021, further revised to reflect the anticipated effects of COVID-19 which might trigger a downturn
of CAPEX investments for the Company’s main customers.
The discount rate applied in the model was 11.86% and reflects the current assessment of the market
risk for Company. The discount rate was estimated based on weighted average cost of capital for the
industry. This rate was corrected in order to reflect the market assessment of certain industry risks for
which future cash flows were not adjusted.
DocuSign Envelope ID: 5B401A76-8749-48E8-A67F-9B6FBE538D17
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2021
(all amounts expressed in Lei (“RON”), unless otherwise specified)
22
1. INFORMATION ON THE ENTITY, ACCOUNTING POLICIES (continued)
Sensitivity of estimates
The recoverable amount determined based on value of in use would equal the carrying amount of the
property, plant and equipment if operating profits would increase by 3.2% obtaining the following
operating profit margin.
2022
2023
2024
2025
2026
2027
2028
%
%
%
%
%
%
%
Rompetrol Well Services SA
6.25
7.17
8.3
8.51
8.48
8.05
8.87
The break-even point for the current model is achieved by is obtained by decreasing the discount rate
from 11.86% to 11.23%.
(iii) Fair value measurement of financial instruments
When the fair values of financial assets and financial liabilities recorded in the statement of financial
position cannot be measured based on quoted prices in active markets, their fair value is measured using
valuation techniques including the discounted cash flow (DCF) model. The inputs to these models are
taken from observable markets where possible, but where this is not feasible, a degree of judgement is
required in establishing fair values. Judgements include considerations of inputs such as liquidity risk,
credit risk and volatility. Changes in assumptions relating to these factors could affect the reported fair
value of financial instruments.
The fair values of the non-listed equity investments have been estimated using a DCF model. The
valuation requires management to make certain assumptions about the model inputs, including forecast
cash flows, the discount rate, credit risk and volatility. The probabilities of the various estimates within the
range can be reasonably assessed and are used in management’s estimate of fair value for these non-
listed equity investments.
Valuation techniques used to measure fair value shall be applied consistently. However, a change in a
valuation technique or its application (eg a change in its weighting when multiple valuation techniques are
used or a change in an adjustment applied to a valuation technique) is appropriate if the change results in
a measurement that is equally or more representative of fair value in the circumstances. That might be
the case if, for example, any of the following events take place:
(a) new markets develop;
(b) new information becomes available;
(c) information previously used is no longer available;
(d) valuation techniques improve; or
(e) market conditions change.
Set out below is a comparison between the fair value as at 31 December 2021 and as at
31 December 2020:
Fair Value
2021
2020
Rompetrol Rafinare SA*
1,802,384
967,133
Rompetrol Logistics SRL
8,401,066
7,291,604
*Company listed on Bucharest Stock Exchange under RRC symbol.
The fair value of the investment in Rompetrol Rafinare SA was determined based on price quotation
available on Bucharest Stock Exchange at the reporting date.
DocuSign Envelope ID: 5B401A76-8749-48E8-A67F-9B6FBE538D17
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2021
(all amounts expressed in Lei (“RON”), unless otherwise specified)
23
1. INFORMATION ON THE ENTITY, ACCOUNTING POLICIES (continued)
The Company has a minority participation of 6.98% in Rompetrol Logistics, a dormant entity part of KMG
International NV Group. Further, Rompetrol Logistics is the sole shareholder of Rompetrol Gas, the LPG
distribution company of the KMG International NV Group. Rompetrol Gas is a profitable company and
according to the forecasted figures for the following 5 years will continue to be profitable.
At the end of financial year 2021, based on new information available, the Company has performed the
fair value assessment of the investment in Rompetrol Logistics using the discounted cash flow method.
The fair value assessment of the investment in Rompetrol Logistics and further in Rompetrol Gas has
also been determined based on financial budgets approved by senior management covering a five-year
period. The discount rate applied to cash flow projections for Rompetrol Gas is 11.4% (2020: 9.7%) 9.6%
(2020: 9.7%) for Rompetorl Logistics. Cash flows beyond the 5-year period are extrapolated using a 2.5%
growth rate that is the same as the long-term average growth rate for the industry. The capitalization rate
used for residual values is 8.9%. (2020: 7.8%).
Considering that Rompetrol Logistics is a dormant company, fair value assessment of the Company’s
investment is influenced by the operational performance of Rompetrol Gas, that requires the use of
estimates and assumptions such as, discount rates, gross margin and operating costs.
The key assumptions used to determine the fair value of the investment are:
• Discount rates;
• Gross margin considered for Rompetrol Gas;
• Operating expense considered for Rompetrol Gas.
After performing the fair value assessment as of 31 December 2021, the Company considered necessary
to record a gain through other comprehensive income amounting RON 931,948, net of tax.
Description of significant unobservable inputs in valuation
The fair values of the non-listed equity investments have been estimated using a DCF model. The
valuation requires management to make certain assumptions about the model inputs, including forecast
cash flows, the discount rate, credit risk and volatility. The probabilities of the various estimates within the
range can be reasonably assessed and are used in management’s estimate of fair value for these non-
listed equity investments.
Non-listed equity
investment
Valuation
technique
Significant
unobservable
inputs
Range
(weighted
average)
Sensitivity of the input to fair value
Rompetrol Logistics
DCF method
Discount rate
9.56%
1% increase (decrease) in the WACC would result in
a decrease (increase) in fair value by RON 1,983 –
decrease; RON 2,181 – increase
Rompetrol Logistics
DCF method
Discount for lack
of marketability
20%
5% increase (decrease) in the marketability
discounts would result in an increase (decrease) in
fair value by RON 129,247
Minority interest
discount rate
15%
5% increase (decrease) in the minority interest
discount would result in an increase (decrease) in
fair value by RON 96,935
Rompetrol Gas
DCF method
Discount rate
11.40%
1% increase (decrease) in the WACC would result in
an increase (decrease) in fair value by RON 81,757
- increase and respectively RON 83,805 - decrease
Rompetrol Gas
DCF method
Gross margin
n/a
5% increase (decrease) in the Gross margin would
result in an increase (decrease) in fair value by RON
2,380 thousand
Rompetrol Gas
DCF method
Operating
expenses
n/a
5% increase (decrease) in the Operating Expenses
would result in an increase (decrease) in fair value
by RON 10,013 thousand - decrease respectively
RON 17,882 thousand – increase
DocuSign Envelope ID: 5B401A76-8749-48E8-A67F-9B6FBE538D17
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2021
(all amounts expressed in Lei (“RON”), unless otherwise specified)
24
1. INFORMATION ON THE ENTITY, ACCOUNTING POLICIES (continued)
Reconciliation of fair value measurement of investments classified as equity instruments
designated at fair value through other comprehensive income (‘OCI’):
Rompetrol
Rafinare SA
Rompetrol
Logistics SRL
Total
1 January 2021
967,133
7,291,604
8,258,737
Remeasurement recognized in OCI
835,251
1,109,462
1,994,713
31 December 2021:
1,802,384
8,401,066
10,203,450
1.4 CHANGES IN ACCOUNTING POLICY AND DISCLOSURES
The accounting policies adopted are consistent with those of the previous financial year except for the
following amended IFRSs which have been adopted by the Company as of 1 January 2021:
• Interest Rate Benchmark Reform – Phase 2 – IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16
(Amendments)
In August 2020, the IASB published Interest Rate Benchmark Reform – Phase 2, Amendments to
IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16, completing its work in response to IBOR reform. The
amendments provide temporary reliefs which address the financial reporting effects when an interbank
offered rate (IBOR) is replaced with an alternative nearly risk-free interest rate (RFR). In particular, the
amendments provide for a practical expedient when accounting for changes in the basis for
determining the contractual cash flows of financial assets and liabilities, to require the effective interest
rate to be adjusted, equivalent to a movement in a market rate of interest. Also, the amendments
introduce reliefs from discontinuing hedge relationships including a temporary relief from having to
meet the separately identifiable requirement when an RFR instrument is designated as a hedge of a
risk component. There are also amendments to IFRS 7 Financial Instruments: Disclosures to enable
users of financial statements to understand the effect of interest rate benchmark reform on an entity’s
financial instruments and risk management strategy. While application is retrospective, an entity is not
required to restate prior periods. Management has estimated that there is no impact on the financial
statements by applying the amendments.
• IFRS 16 Leases-Cοvid 19 Related Rent Concessions (Amendment)
The amendment applies, retrospectively, to annual reporting periods beginning on or after 1 June
2020. Earlier application is permitted, including in financial statements not yet authorized for issue at
28 May 2020. IASB amended the standard to provide relief to lessees from applying IFRS 16
guidance on lease modification accounting for rent concessions arising as a direct consequence of
the Covid-19 pandemic. The amendment provides a practical expedient for the lessee to account for
any change in lease payments resulting from the Covid-19 related rent concession the same way it
would account for the change under IFRS 16, if the change was not a lease modification, only if all of
the following conditions are met:
 The change in lease payments results in revised consideration for the lease that is substantially
the same as, or less than, the consideration for the lease immediately preceding the change.
 Any reduction in lease payments affects only payments originally due on or before 30 June 2021.
 There is no substantive change to other terms and conditions of the lease.
Management has estimated that there is no impact on the financial statements by applying the
amendments.
DocuSign Envelope ID: 5B401A76-8749-48E8-A67F-9B6FBE538D17
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2021
(all amounts expressed in Lei (“RON”), unless otherwise specified)
25
1. INFORMATION ON THE ENTITY, ACCOUNTING POLICIES (continued)
1.5 STANDARDS ISSUED BUT NOT YET EFFECTIVE AND NOT EARLY ADOPTED
• IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-
current (Amendments)
The amendments were initially effective for annual reporting periods beginning on or after January 1,
2022 with earlier application permitted. However, in response to the Covid-19 pandemic, the Board
has deferred the effective date by one year, i.e. 1 January 2023, to provide companies with more time
to implement any classification changes resulting from the amendments. The amendments aim to
promote consistency in applying the requirements by helping companies determine whether, in the
statement of financial position, debt and other liabilities with an uncertain settlement date should be
classified as current or non-current. The amendments affect the presentation of liabilities in the
statement of financial position and do not change existing requirements around measurement or
timing of recognition of any asset, liability, income or expenses, nor the information that entities
disclose about those items. Also, the amendments clarify the classification requirements for debt
which may be settled by the company issuing own equity instruments.
In November 2021, the Board issued an exposure draft (ED), which clarifies how to treat liabilities that
are subject to covenants to be complied with, at a date subsequent to the reporting period. In
particular, the Board proposes narrow scope amendments to IAS 1 which effectively reverse the 2020
amendments requiring entities to classify as current, liabilities subject to covenants that must only be
complied with within the next twelve months after the reporting period if those covenants are not met
at the end of the reporting period. Instead, the proposals would require entities to present separately
all non-current liabilities subject to covenants to be complied with only within twelve months after the
reporting period. Furthermore, if entities do not comply with such future covenants at the end of the
reporting period, additional disclosures will be required. The proposals will become effective for annual
reporting periods beginning on or after 1 January 2024 and will need be applied retrospectively in
accordance with IAS 8, while early adoption is permitted. The Board has also proposed to delay the
effective date of the 2020 amendments accordingly, such that entities will not be required to change
current practice before the proposed amendments come into effect. These Amendments, including ED
proposals, have not yet been endorsed by the EU.
• IFRS 3 Business Combinations; IAS 16 Property, Plant and Equipment; IAS 37 Provisions,
Contingent Liabilities and Contingent Assets as well as Annual Improvements 2018 - 2020
(Amendments)
The amendments are effective for annual periods beginning on or after 1 January 2022 with earlier
application permitted. The IASB has issued narrow-scope amendments to the IFRS Standards as
follows:
 IFRS 3 Business Combinations (Amendments) update a reference in IFRS 3 to the Conceptual
Framework for Financial Reporting without changing the accounting requirements for business
combinations.
 IAS 16 Property, Plant and Equipment (Amendments) prohibit a company from deducting from
the cost of property, plant and equipment amounts received from selling items produced while the
company is preparing the asset for its intended use. Instead, a company will recognise such sales
proceeds and related cost in profit or loss.
 IAS 37 Provisions, Contingent Liabilities and Contingent Assets (Amendments) specify
which costs a company includes in determining the cost of fulfilling a contract for the purpose of
assessing whether a contract is onerous.
 Annual Improvements 2018 - 2020 make minor amendments to IFRS 1 First-time Adoption of
International Financial Reporting Standards, IFRS 9 Financial Instruments, IAS 41 Agriculture and
the Illustrative Examples accompanying IFRS 16 Leases.
The amendments have not yet been endorsed by the EU
.
DocuSign Envelope ID: 5B401A76-8749-48E8-A67F-9B6FBE538D17
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2021
(all amounts expressed in Lei (“RON”), unless otherwise specified)
26
1. INFORMATION ON THE ENTITY, ACCOUNTING POLICIES (continued)
• IFRS 16 Leases-Cοvid 19 Related Rent Concessions beyond 30 June 2021 (Amendment)
The Amendment applies to annual reporting periods beginning on or after 1 April 2021, with earlier
application permitted, including in financial statements not yet authorized for issue at the date the
amendment is issued. In March 2021, the Board amended the conditions of the practical expedient in
IFRS 16 that provides relief to lessees from applying the IFRS 16 guidance on lease modifications to
rent concessions arising as a direct consequence of the Covid-19 pandemic. Following the
amendment, the practical expedient now applies to rent concessions for which any reduction in lease
payments affects only payments originally due on or before 30 June 2022, provided the other
conditions for applying the practical expedient are met.
Management has assessed and concluded that the updates included in this standard will not impact
the financial statements of the Company.
• IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of
Accounting policies (Amendments)
The Amendments are effective for annual periods beginning on or after January 1, 2023 with earlier
application permitted. The amendments provide guidance on the application of materiality judgements
to accounting policy disclosures. In particular, the amendments to IAS 1 replace the requirement to
disclose ‘significant’ accounting policies with a requirement to disclose ‘material’ accounting policies.
Also, guidance and illustrative examples are added in the Practice Statement to assist in the
application of the materiality concept when making judgements about accounting policy disclosures.
The Amendments have not yet been endorsed by the EU.
• IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of
Accounting Estimates (Amendments)
The amendments become effective for annual reporting periods beginning on or after January 1,
2023 with earlier application permitted and apply to changes in accounting policies and changes in
accounting estimates that occur on or after the start of that period. The amendments introduce a new
definition of accounting estimates, defined as monetary amounts in financial statements that are
subject to measurement uncertainty. Also, the amendments clarify what changes in accounting
estimates are and how these differ from changes in accounting policies and corrections of errors. The
Amendments have not yet been endorsed by the EU.
• IAS 12 Income taxes: Deferred Tax related to Assets and Liabilities arising from a Single
Transaction (Amendments)
The amendments are effective for annual periods beginning on or after January 1, 2023 with earlier
application permitted. In May 2021, the Board issued amendments to IAS 12, which narrow the scope
of the initial recognition exception under IAS 12 and specify how companies should account for
deferred tax on transactions such as leases and decommissioning obligations. Under the
amendments, the initial recognition exception does not apply to transactions that, on initial
recognition, give rise to equal taxable and deductible temporary differences. It only applies if the
recognition of a lease asset and lease liability (or decommissioning liability and decommissioning
asset component) give rise to taxable and deductible temporary differences that are not equal. The
Amendments have not yet been endorsed by the EU.
DocuSign Envelope ID: 5B401A76-8749-48E8-A67F-9B6FBE538D17
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2021
(all amounts expressed in Lei (“RON”), unless otherwise specified)
27
2. REVENUE FROM CONTRACTS WITH CUSTOMERS
Below there is an analysis of Company’s revenues:
2021
2020
Revenue from well services
43,968,023
47,111,434
Revenue from other services
70,857
67,767
Revenue from goods sold
146,206
69,981
Total
44,185,085
47,249,182
2021
2020
Export
-
-
Internal market sales
44,185,085
47,249,182
Total sales
44,185,085
47,249,182
During 2021, the Company’s activity experienced a reduction of orders for rendering well services. From
operational point of view, the Company implemented measures to secure the workforce available in order
to honor all orders (such as periodic testing, reduced physical contact between teams). From a
commercial point of view, the Company participated to several publicly announced tenders in order to
secure activity for the period to come.
Having in mind the increasing trend of crude quotation and the increased number of immunized against
COVID-19, as well as past experience with similar events of crude price sudden drop registered in the
past, we expect that in the medium and long-term perspective, the market will gradually recover, however
there is still an inherent risk of having significant volatility of crude oil prices generated by different
international market conditions.
The Company analyzed the criteria for defining an operational segment according to IFRS 8 Operating
segments and concluded that business is organized as single cash generating unit, with one segment,
considering the nature of the services provided, the type of customers and the method used to provide
services. For the purpose of making decisions about resource allocation and performance assessment,
Management analyze and monitors the operating results of the business as a single segment.
2.1 RENTAL REVENUES
Below there is an analysis of Company’s rental revenues:
2021
2020
Revenue from office space rental
394,191
400,756
Revenue from equipment’s rental
17,880
17,880
Total
412,071
418,636
DocuSign Envelope ID: 5B401A76-8749-48E8-A67F-9B6FBE538D17
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2021
(all amounts expressed in Lei (“RON”), unless otherwise specified)
28
3. OTHER REVENUES AND OTHER EXPENSES
3.1. Other operating income
In the table below other operating revenues are being detailed depending on their nature:
2021
2020
Other operating income:
- earnings from debts write-off
807,378
609,424
- earnings from sale of waste
86,123
51,380
- earnings from disposal of fixed assets
440,113
183,980
- earnings from compensations and penalties
29,854
24,300
- other revenues
510
58,956
Total
1,363,979
928,040
Revenues from the debts write-off in amount of RON 807,378 (2020: RON 609,424) represent mainly the
cancellation of unclaimed dividends obligation, which were within the prescription limit and for which the
Company has taken all legal steps to settle. Debts write-off was made based of the Board of Directors
decision from 9 December 2021.
3.2. Expenses with third-party services
In the table below expenses for third party services are being detailed depending on their nature:
2021
2020
Travel expenses
1,030,112
1,069,557
Maintenance and repair expenses
757,208
931,019
Royalties and rental expenses
792,811
603,914
Insurance premiums
638,266
707,461
Postage and telecommunications
46,478
74,708
Bank commissions and similar charges
57,346
51,167
Entertaining, promotion and advertising
123,420
19,121
Other third party services, from which:
8,673,089
9,465,088
Goods transportation services
3,381,950
3,423,583
Well services rendered –by subcontractors
618,888
1,057,169
Outsourced activities services
1,652,209
2,188,277
Dedicated management assistance and specialized technical consulting
services
1,402,809
1,287,184
Others
723,832
614,131
Security services
646,525
650,087
Consultancy and audit
246,876
244,658
Total
12,118,730
12,922,035
The weight of these expenses in the structure of the operating costs is specific to the main activity,
regarding the service delivery at the headquarters of the beneficiaries with auto type equipment and the
flexible adaptability to the current market conditions.
During 2021, the company partially subcontracted services of acidizing, hot oil pumping and nitrogen for a
specific project to a third party. The value of the services performed by this subcontractor in order to fulfill
the contractual obligations assumed by the Company, as a supplier, amounts to RON 618,888 for the
financial year ended (2020: RON 1,057,169).
DocuSign Envelope ID: 5B401A76-8749-48E8-A67F-9B6FBE538D17
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2021
(all amounts expressed in Lei (“RON”), unless otherwise specified)
29
3. OTHER REVENUES AND OTHER EXPENSES (continued)
3.3. Other operating expenses
In the table below other operating expenses are being detailed depending on their nature:
2021
2020
Compensations, fines, penalties
7,239
8,697
Amounts or goods granted as sponsorship
-
297,486
Write-off trade receivables and sundry debtors
52,011
-
Destroyed / improper stocks
353,594
-
Other operating expenses
6
27,261
Total
412,850
333,444
4. FINANCIAL EXPENSES AND REVENUES
4.1. Financial revenues
2021
2020
Interest income, from which:
2,445,163
3,680,119
Income obtained from the entities within the group
2,440,580
3,667,494
Income from exchange rate differences
293,466
418,970
Other financial income
842
271
Total financial income
2,739,471
4,099,360
The line “Income obtained from the entities within the group” in amount of RON 2,440,580 (2020:
RON 3,667,494) represents interest revenue from cash-pooling.
4.2. Financial expenses
2021
2020
Expenses from exchange rate differences
626,008
318,232
Other financial expenses, out of which
72,773
33,897
Interest expense on the lease liability
17,780
28,118
Total financial expenses
698,781
352,129
DocuSign Envelope ID: 5B401A76-8749-48E8-A67F-9B6FBE538D17
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2021
(all amounts expressed in Lei (“RON”), unless otherwise specified)
30
5. EXPENSES WITH EMPLOYEES
The expenses with salaries and taxes, recorded during 2021 and 2020 are as follows:
2021
2020
Expenses related to salaries and allowances
15,556,835
16,539,435
Other expenses with employees benefits
512,943
399,695
Contributions to special funds
149,178
168,499
Expenses related to the social insurances
354,783
377,119
Total
16,573,739
17,484,748
The average number of employees decreased from 158 at 31 December 2020 to 142 employees at
31 December 2021.
The average number of employees has evolved as follows:
2021
2020
Management personnel
1
3
Administrative personnel
22
19
Production personnel
125
136
The Administrators and Managers
During 2021 and 2020, the Company has paid the following remuneration to the members of the Board of
Directors and to the executive directors:
2021
2020
The Members of the Board of Directors
213,049
359,088
Executive directors
383,795
787,843
Total
596,844
1,146,931
In 2021, the presentation of average number of management personnel (executive directors), as well as
level the remuneration paid to the executive directors, were disclosed according to the principles included
in the Remuneration Policy and Remuneration Report. If the same principles would have been applied in
2020, the average number of management personnel would have been 1 and the remuneration paid
RON 272,148.
As at 31 December 2021, the Company had no obligations regarding the payment of the retirement
benefits to former members of the Board of Directors and of the executive management.
At the end of 2021, the Company had no advance payments to be reimbursed to the members of the
executive management and there were also no guarantees of future obligations taken over by the
company under the name of the Managers or Administrators.
DocuSign Envelope ID: 5B401A76-8749-48E8-A67F-9B6FBE538D17
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2021
(all amounts expressed in Lei (“RON”), unless otherwise specified)
31
6. INCOME TAX
Main components of income tax expenses for fiscal years ended as of 31 December 2021 and 2020 are:
Statement of profit and loss
2021
2020
Current income tax:
Expenses regarding the current income tax
300,967
764,477
Deferred income tax
For the initial registration and continuation of the temporary differences
(156,413)
(497,915)
Expenses regarding the income tax reported in statement of total
comprehensive income
144,554
266,562
Reconciliation between the expenses regarding the current income tax and the deferred income tax and
the accounting profit is as follows for fiscal years 2021 and 2020:
2021
2020
Accounting result before tax
1,774,189
4,629,514
At Company’s statutory income tax rate of 16% (2020: 16%)
283,871
740,722
Effect of value adjustments from non-taxable incomes
(66,291)
-
Effect of value adjustments from items similar to revenues
-
-
Non-deductible expenses for tax computation:
Allowance for trade receivables and inventories
72,130
25,141
Depreciation of tangible assets
95,746
19,101
Other non-deductible expenses
(9,246)
(19,009)
Reinvested profit
-
-
Fiscal credit
(75,243)
(153,191)
Effect of fiscal (profit) / loss carried forward
-
-
Expenses with current income tax at effective rate 16% (2020: 16%)
300,967
612,764
Cancellation of fiscal facility related to 2019
-
187,309
Bonus income tax payment according OUG 33/2020
-
(35,596)
Expenses with current income tax reported in statement of profit and loss
300,967
764,477
The General Meeting of Shareholders decided on 27 April 2020 the profit distribution as dividends, and as
a result, the Company decided to cancel the fiscal facility for reinvested profit related to 2019.
DocuSign Envelope ID: 5B401A76-8749-48E8-A67F-9B6FBE538D17
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2021
(all amounts expressed in Lei (“RON”), unless otherwise specified)
32
6. INCOME TAX (continued)
Deferred income tax
The deferred income tax refers to the following:
Statement of the financial position
Profit and Loss Statement
Other Comprehensive Income
31 December
2021
31 December
2020
31 December
2021
31 December
2020
31 December
2021
31 December
2020
Revaluation of assets (fair value as deemed cost) with reserve transfer
to retained earnings (at transition to IFRS)
(936,673)
(1,042,392)
105,718
15,918
-
-
Recognition of right of use assets
(80,979)
(134,462)
53,483
(39,252)
-
-
Recognition of estimates for retirement benefits
109,441
376,706
42,008
489,693
(309,272)
(248,380)
Recognition of lease liability
80,748
136,583
(55,835)
36,800
-
-
Fair value valuation of financial assets
(588,591)
(277,437)
-
-
(311,154)
220,768
Recognition of estimate for untaken holiday
68,468
62,623
5,845
(30,501)
-
-
Temporary adjustment inventories
78,863
121,523
(42,660)
16,909
-
-
Temporary adjustment receivables
156,473
108,620
47,853
8,348
-
-
(Expenses regarding) /income from the deferred tax
156,413
497,915
(620,426)
(27,612)
Assets regarding the deferred tax
493,994
806,055
Liabilities regarding the deferred tax
(1,606,243)
(1,454,291)
Assets / (Liabilities) regarding the deferred tax, net
(1,112,249)
(648,236)
The reconciliation of deferred tax payable is as follows:
2021
2020
Beginning of balance
648,236
1,118,539
Deferred tax expense recognized in profit and loss
(156,413)
(497,915)
Deferred tax expense recognized in other comprehensive income
620,426
27,612
Ending Balance
1,112,249
648,236
DocuSign Envelope ID: 5B401A76-8749-48E8-A67F-9B6FBE538D17
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2021
(all amounts expressed in Lei (“RON”), unless otherwise specified)
33
7. EARNINGS PER SHARE
The value of earning per share is calculated by dividing the net profit of the year attributable to
shareholders by the weighted average number of shares outstanding during the period.
The following report present the net profit and the number of shares used in computing earnings per
share:
31 December
2021
31 December
2020
Net result attributable to shareholders
1,629,634
4,362,952
Weighted average number of shares
278,190,900
278,190,900
Earnings per share (RON / share)
0.0059
0.0157
There was no issue or cancellation of shares between the date of the report and the date of the
presentation of the financial statements.
8. PROPERTY, PLANT & EQUIPMENT
Land
Buildings and
special
constructions
Technical
equipment and
machinery and
other tangible
assets
Advances
and
Tangible
assets in
progress
Total
Cost
On 1 January 2020
5,585,846
7,505,647
94,868,231
3,213,356
111,173,080
Additions
-
23,293
26,712
4,675,659
4,725,664
Disposals
-
(96,107)
(4,268,947)
-
(4,365,054)
Transfers
-
539,858
1,993,299
(2,533,157)
-
On 31 December 2020
5,585,846
7,972,691
92,619,295
5,355,858
111,533,690
Additions
-
10
268,262
2,396,711
2,664,984
Disposals
(145,617)
(12,879)
(11,387,752)
-
(11,546,248)
Transfers
-
101,977
3,971,996
(4,073,973)
-
On 31 December 2021
5,440,229
8,061,799
85,471,802
3,678,596
102,652,424
Depreciation and Impairment
On 1 January 2020
-
2,694,303
81,944,929
-
84,639,234
Depreciation charge for the year
-
392,766
4,094,020
-
4,486,787
Disposals
-
(72,080)
(4,176,601)
-
(4,248,681)
Depreciation
-
-
-
-
-
On 31 December 2020
-
3,014,991
81,862,346
-
84,877,339
Depreciation charge for the year
-
418,697
3,192,692
-
3,611,388
Disposals
-
(12,879)
(11,385,098)
-
(11,397,977)
Depreciation
-
0
508,671
-
508,671
On 31 December 2021
-
3,420,808
74,178,610
-
77,599,419
Net accounting value
On 31 December 2021
5,440,229
4,640,991
11,293,192
3,678,596
25,053,005
On 31 December 2020
5,585,846
4,957,701
10,756,949
5,355,858
26,656,351
On 1 January 2020
5,585,846
4,811,342
12,923,303
3,213,356
26,533,846
DocuSign Envelope ID: 5B401A76-8749-48E8-A67F-9B6FBE538D17
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2021
(all amounts expressed in Lei (“RON”), unless otherwise specified)
34
8. PROPERTY, PLANT & EQUIPMENT (continued)
A percentage of 96% from the increase recorded during 2021 for plant and equipment, in amount of
RON 4.5 million, is represented by the acquisition and / or the upgrade of machinery, equipment and
handling tools used for well services operations and other preliminary operations.
Approximately 4% from total investments conducted by the company in 2021 were related to rehabilitation
and modernization of the headquarter building and replacement of IT equipment.
The Company used own funds in order to finance the budgeted capital expenditure for 2021.
On 23 February 2021 the Company sold to a third party a surface of 442 sqm together with a storage
shed, both having a carrying amount of RON 24,617. The assets were located on Campina base. The
consideration obtained from the sale were RON 112,116 resulting in a net income of RON 87,499,
amounts detailed in Note 3.1.
On 30 March 2021 the Company sold to a third party a surface of 5923 sqm located in Boldesti-Scaeni,
having a carrying amount of RON 51,000. The consideration obtained from the sale were RON 129,776
resulting in a net income of RON 76,776, amounts detailed in Note 3.1.
On 21 April 2021 the Company sold to a third party a surface of 1506 sqm located in Targu Mures, having
a carrying amount of RON 58,000. The consideration obtained from the sale were RON 187,260 resulting
in a net income of RON 129,260, amounts detailed in Note 3.1.
On 14 May 2021 the Company sold to a third party a surface of 1381 sqm located in Tecuci, having a
carrying amount of RON 12,000. The consideration obtained from the sale were RON 54,192 resulting in
a net income of RON 42,192, amounts detailed in Note 3.1.
The Company is performing an annual assessment in order to identify potential indicators for impairment
of tangible assets, considering specific characteristics of these assets and taking into account estimates
of future cash flows generated by the respective assets.
The Company performed an impairment test for tangible assets as of 31 December 2021, which aimed to
determine the recoverable amount of the equipment and the production capacities, and concluded there
is the need to record an impairment. The recoverable amount of this equipment was determined based on
discounted cash flows estimated to be generated by the assets. The impairment recorded for the
difference between the recoverable amount of the equipment and the net book value is RON 508,671
(Note 1.3 ii)).
All presented tangible assets are the property of the Company.
DocuSign Envelope ID: 5B401A76-8749-48E8-A67F-9B6FBE538D17
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2021
(all amounts expressed in Lei (“RON”), unless otherwise specified)
35
9. INVESTMENT PROPERTIES
The company has an apartment block in Campina and two apartments in Timisoara, held with the
exclusive target to obtain income from rents. These are being classified as investment properties.
2021
2020
Initial balance on 1 January
470,005
488,608
Depreciation expenses
(18,603)
(18,603)
Ending balance on 31 December
451,402
470,005
2021
2020
Income from rents obtained from real estate investments
12,017
11,951
Direct operational expenses (including repairs and maintenance) which
generate income from rents
(35,920)
(35,920)
Net result from investment property recorded at cost
(23,903)
(23,969)
As of 31 December 2021, the fair values of the investment properties are based on the fair valuation
made as of 31 December 2019 by SC Accento Management Consultants SRL, a recognised independent
evaluator. During 2021, the real estate market in the area where the properties are located did not varied
significantly in order to give a material impact on their fair value.
10. INTANGIBLE ASSETS
Patents and
licenses
Intangible assets
in progress
Total
Costs
On 1 January 2020
765,916
-
765,916
Additions
-
-
-
Disposals
-
-
-
Transfers
-
-
-
On 31 December 2020
765,916
-
765,916
Additions
-
-
-
Disposals
-
-
-
Transfers
-
-
-
On 31 December 2021
765,916
-
765,916
Amortisation and impairment
On 1 January 2020
492,073
-
492,073
Depreciation charge for the year
78,693
-
78,693
Disposal
-
-
-
On 31 December 2020
570,766
-
570,766
Depreciation charge for the year
76,896
-
76,896
Disposal
-
-
-
On 31 December 2021
647,663
-
647,663
Net accounting value
On 31 December 2021
118,253
-
118,252
On 31 December 2020
195,150
-
195,150
On 1 January 2020
273,841
-
273,841
DocuSign Envelope ID: 5B401A76-8749-48E8-A67F-9B6FBE538D17
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2021
(all amounts expressed in Lei (“RON”), unless otherwise specified)
36
11. EQUITY INSTRUMENTS AT FVOCI
Name of the company
Nature of the
relationship
Year of
investment
Percent held on
Fair value of the investment on
31 January
2020
31 December
2021
31 December
2020
31 December
2021
Rompetrol Logistics SRL
Long term
investment
2002/2003/2007
6.98%
6.98%
7,291,604
8,401,066
Rompetrol Rafinare SA*
Long term
investment
2003/2004
0.05%
0.05%
967,133
1,802,384
Rompetrol Drilling SRL
Long term
investment
2014
1%
1%
100
100
Total
8,258,837
10,203,550
*Company listed on Bucharest Stock Exchange under RRC symbol.
For more details regarding equity instruments at FVOCI please refer to Note 1.3) iii) Fair value of financial
instruments.
12. OTHER FINANCIAL ASSETS
31 December
2021
31 December
2020
Collateral account for guarantee letters with maturity over one year
890,196
3,948,400
Specific account for dividends
707,633
257,483
Specific accounts for other guarantee
27,755
35,010
Other financial assets
1,625,584
4,240,893
The details on the structure of collateral account for guarantee letters with maturity over one year can be
found bellow (see details in Note 22):
Number
Beneficiary
Currency
Amount
equivalent
RON
Start date
Maturity
date
Currency
collateral
deposit
Collateral
deposit
equivalent
RON
30495
SNGN ROMGAZ SA
RON
68,673
17-Feb-21
17-Mar-22
RON
68,673
28471
SNGN ROMGAZ SA
RON
821,523
02-Sep-20
22-Sep-22
RON
821,523
Total collateral accounts with maturity over one year as of 31 December 2021
890,196
Number
Beneficiary
Currency
Amount
equivalent
RON
Start date
Maturity
date
Currency
collateral
deposit
Collateral
deposit
equivalent
RON
16201
SNGN ROMGAZ SA
RON
3,628,678
12-Jun-17
07-Sep-20
RON
3,628,678
26527/26528
SNGN ROMGAZ SA
RON
48,262
17-Feb-20
17-Mar-21
RON
48,262
28471
SNGN ROMGAZ SA
RON
271,460
02-Sep-20
22-Sep-22
RON
271,460
Total collateral accounts with maturity over one year as of 31 December 2020
3,948,400
DocuSign Envelope ID: 5B401A76-8749-48E8-A67F-9B6FBE538D17
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2021
(all amounts expressed in Lei (“RON”), unless otherwise specified)
37
13. INVENTORIES
31 December
2021
31 December
2020
Cement and additives
3,064,253
2,813,665
Spare parts equipment
1,981,716
2,142,767
Other inventories
323,033
259,150
Allowance for inventories
(492,895)
(759,519)
Total inventories, net
4,876,107
4,456,063
The inventories mainly contain cement, additives and spare parts for special equipment. For the items
whose procurement process is relatively long, as well for the items whose consumption is dependent on
fluctuating demand of our customers, it is applied an optimization quantitative procurement, which
explains a variation of inventory value between two acquisitions.
The presented allowance for inventories is related to inventories with no movement for more than one
year.
Allowance for
inventories
On 1 January 2020
653,840
Additions
131,594
Used during the year
(25,915)
Exchange rate differences
-
On 31 December 2020
759,519
Additions
89,692
Used during the year
(356,316)
On 31 December 2021
492,894
14. TRADE AND OTHER RECEIVABLES
31 December
2021
31 December
2020
Trade receivables - third parties
14,306,969
13,054,705
Trade receivables with affiliated entities
26,513
34,652,129
Allowance for trade receivables – third parties
(1,045,512)
(1,259,090)
Allowance for trade receivables – affiliated entities
(535,458)
(29,862,363)
Total trade receivables, net
12,752,512
16,585,381
Other receivables – third parties
519,605
770,266
Other receivables with the affiliated entities
34,859,988
248,288
Other receivables with state budget
145,019
108,838
Value adjustments for other receivables – third parties
(429,853)
(428,463)
Value adjustments for other receivables – affiliated entities
(152,580)
(235,648)
Total other receivables, net
34,942,178
463,282
Total receivables, net
47,694,690
17,048,662
At year-end 2021, a receivables assignment agreement was concluded between the Company and KMG
International NV (KMGI), whereby the Company, as creditor, assigns the uncontested, liquid and payable
claim of the aggregate amount of RON 34.7 million held against Oilfield Exploration Business Solutions
SA (OEBS), to KMGI.
DocuSign Envelope ID: 5B401A76-8749-48E8-A67F-9B6FBE538D17
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2021
(all amounts expressed in Lei (“RON”), unless otherwise specified)
38
14. TRADE AND OTHER RECEIVABLES (continued)
The Company assigns the claim together with any and all rights, accessories and guarantees deriving
therefrom, and KMGI takes over the claim together with any and all rights, accessories and guarantees
deriving therefrom. The transfer of all rights held in relation to the financial asset OEBS has been
reflected in the financial statements by the derecognition of the financial asset OEBS against the
recognition of a new one against KMGI. The reversal of the impairment losses recorded in the previous
financial years for the financial asset, in amount of RON 29,935,254, was assimilated to a gain from other
capital reserves.
Trade receivables are usually collected within 30 to 90 days.
In the table below, there are detailed the movements within the provision for the impairment of trade and
other receivables:
Individually
impaired
Collectively
impaired
Total
On 1 January 2020
30,802,789
919,667
31,722,456
Transfer between category
-
-
-
Charge for the year
6,239
97,376
103,614
Unused amounts, reversed
(13,243)
(38,744)
(51,987)
Amounts written-off
-
-
-
Exchange rate differences
-
11,480
11,480
On 31 December 2020
30,795,785
989,779
31,785,564
Transfer between category
-
-
-
Charge for the year
527,878
2,612
530,490
Unused amounts, reversed
(30,002,127)
(160,503)
(30,162,629)
Amounts written-off
-
-
-
Exchange rate differences
-
9,980
9,980
On 31 December 2021
1,321,536
841,868
2,163,404
The impairment loss for financial assets evaluated at amortized cost are calculated based on three stage
model, using swap for credit risk, internal or external ratings of counterparties and corresponding
probability of default. For all trade receivables, the impairment losses are estimated based on simplified
approach, recognizing anticipated losses for their entire lifetime.
Impairment losses, calculated and recognized, based on the new model required by IFRS 9 for
Company’s trade receivables, is presented as follows:
Total trade receivables
At 31 December 2021
Current
< 30 days
31 – 60
days
61- 90
days
91 - 180
days
181 - 360
days
> 360 days
Total
Expected credit loss rate (%)
0.43%
7.18%
41.94%
35.14%
29.91%
67.52%
100%
-
Estimated total gross
carrying amount at default
10,925,519
2,098,600
48,288
86,880
4,458
99,906
1,069,831
14,333,482
Expected credit loss
(531,588)
(261)
(61)
(36)
(36)
-
(1,048,987)
(1,580,970)
Total trade receivables
At 31 December 2020
Current
< 30 days
31 – 60
days
61- 90
days
91 - 180
days
181 - 360
days
> 360 days
Total
Expected credit loss rate (%)
2.64%
12.60%
63.82%
62.08%
60.74%
90.00%
100%
-
Estimated total gross
carrying amount at default
10,274,077
1,526,086
17,449
19,019
106,407
24,045
35,739,752
47,706,834
Expected credit loss
(32,071)
(44,446)
(11,016)
(7,623)
(54,513)
(21,955)
(30,949,830)
(31,121,453)
DocuSign Envelope ID: 5B401A76-8749-48E8-A67F-9B6FBE538D17
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2021
(all amounts expressed in Lei (“RON”), unless otherwise specified)
39
15. OTHER CURRENT ASSETS
31 December
2021
31 December
2020
Advance expenses for car insurance
35,167
94,648
Advance expenses for vignette
103,586
110,329
Advance expenses for business insurance
336,608
342,704
Advance expenses for authorizations, transportation licenses,
subscriptions, others
91,626
131,591
Other current assets TOTAL
566,987
679,272
The values represent the payments carried out during the current year, for costs which affect the next
financial year in accordance with the validity period for the insurances, authorizations, licenses,
subscriptions.
16. CASH AND DEPOSITS
31 December
2021
31 December
2020
Bank accounts in RON
403
780
Bank accounts in foreign currency
11,297
9,070
Short term deposits in RON
194,064
120,140
Petty cash in RON
11,534
9,933
Petty cash in foreign currency
9,932
11,194
Total cash and short term deposits
227,231
151,117
The cash in banks records interests at variable rates, depending on the daily rates of the deposits in
banks. The short term deposits are being constituted for periods of one day and records interests for the
respective rates of the short term deposits.
The service providing contracts concluded with our main customers contain clauses referring to creation
of performance guarantees through a guarantee granting instrument issued under the provisions of the
law, by a bank or insurance company, i.e. Letters of Bank Guarantees.
Collateral deposits were classified depending on the maturity calculated from the starting date of the
deposit. (details in Note 12 and 16.1).
In note 21 it is presented the details regarding the company’s participation for the year 2021 to the system
for optimization of cash availability between the companies within KazMunayGas International Group,
known as cash pooling concept. The amount available in the principal account on 31 December 2021 was
of RON 54,822,634 (2020: RON 82,166,109), being ready to use without restriction, depending on the
necessity.
DocuSign Envelope ID: 5B401A76-8749-48E8-A67F-9B6FBE538D17
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2021
(all amounts expressed in Lei (“RON”), unless otherwise specified)
40
16. CASH AND DEPOSITS (continued)
16.1 COLLATERAL CASH FOR LETTERS OF GUARANTEE
The detail of the collateral deposits as at 31 December 2021 for the Letters of Bank Guarantee with maturity between less than 12 months is enclosed in the table
below:
Number
Beneficiary
Currency
Amount
equivalent
RON
Start Date
Maturity date
Currency
collateral
deposit
Collateral
deposit
equivalent
RON
00888-02-0737559
OMV PETROM SA
EUR
264,382
7-Jan-21
18-Jan-22
EUR
264,382
00888-02-0740162
OMV PETROM SA
EUR
494,810
18-Jan-21
15-Jan-22
EUR
494,810
00888-02-0740171
OMV PETROM SA
EUR
593,772
18-Jan-21
15-Jan-22
EUR
593,772
00888-02-0761638
OMV PETROM SA
EUR
395,848
8-Apr-21
14-Jan-22
RON
395,848
00888-02-0814163
OMV PETROM SA
EUR
272,259
5-Nov-21
11-Nov-22
EUR
272,259
00888-02-0750347
OMV PETROM SA
RON
1,746,324
3-Mar-21
7-Mar-22
RON
1,746,324
00888-02-0815359
OMV PETROM SA
RON
2,014,989
12-Nov-21
12-Nov-22
RON
2,014,989
34741
SNGN ROMGAZ SA
RON
14,907
7-Oct-21
5-Jul-22
RON
14,907
Total collateral deposits
5,797,291
The collateral deposits as at 31 December 2020 had the following components:
Number
Beneficiary
Currency
Amount
equivalent
RON
Start Date
Maturity date
Currency
collateral
deposit
Collateral
deposit
equivalent
RON
00888-02-0647852
OMV PETROM SA
EUR
584,328
20-Jan-20
20-Jan-21
RON
584,328
00888-02-0647861
OMV PETROM SA
EUR
730,410
20-Jan-20
20-Jan-21
RON
730,410
00888-02-0667278
OMV PETROM SA
RON
1,444,169
26-Mar-20
11-Mar-21
RON
1,444,169
00888-02-0691054
OMV PETROM SA
EUR
340,858
20-Jul-20
14-Jan-21
RON
340,858
00888-02-0703416
OMV PETROM SA
RON
1,084,732
7-Sep-20
3-Sep-21
RON
1,084,732
00888-02-0647843
OMV PETROM SA
EUR
316,511
20-Jan-20
20-Jan-21
RON
316,511
00888-02-0652907
OMV PETROM SA
RON
654,266
7-Feb-20
22-Jan-21
RON
654,266
Total collateral deposits
5,155,274
DocuSign Envelope ID: 5B401A76-8749-48E8-A67F-9B6FBE538D17
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2021
(all amounts expressed in Lei (“RON”), unless otherwise specified)
41
17. SHARE CAPITAL
17.1. Subscribed share capital
The last modification of the share capital has been in 2008, when the shareholders have decided, after
the general meeting which has taken place on 20 June 2008, to increase the share capital of the
company by the amount of RON 13,909,545, from RON 13,909,545 up to RON 27,819,090, through
issuing, for free, of a number of 139,095,450 new shares with a nominal value of RON 0.10 / share.
The new issued shares have been allocated for the shareholders registered under the Shareholders’
Registry at the date of the registration, approved by the Extraordinary Meeting of the Shareholders,
respectively July 8th 2008, proportional to the amounts held by each of them. The allocation index has
been 1. The issuing of shares has been financed from the reserves of the result carried forward of the
financial year 2007, respectively from the amount allocated to Other reserves.
The finalization of the procedural phases for approval and recognition has been officially signaled through
the repetition of the transacting of the shares, after the increase of the share capital, on
18 September 2008, without undergoing modifications until 31 December 2021.
31 December
2021
31 December
2020
Number
Number
Subscribed capital, ordinary shares
278,190,900
278,190,900
RON
RON
Nominal value, ordinary shares
0.1
0.1
RON
RON
Value of the share capital
27,819,090
27,819,090
The share capital of the company is totally paid in on 31 December 2021.
The Company is listed under the Bucharest Stock Exchange under the symbol PTR.
17.2. Adjustments on share capital
According to the IAS 29 provisions, the company has adjusted the costs of its purchased investments
until 31 December 2003 with the purpose of reflecting the accounting impact in the hyperinflation. The
value of the share capital has been increased at 31 December 2012 by RON 166,740,745. This
adjustment had no impact over the carried forward distributable profit of the company. In 2013, the
general ordinary meeting of shareholders on 30 April 2013 approved to cover the brought forward
accounting loss from first application of IAS 29 “Financial Reporting in Hyperinflationary Economies” in
amount of RON 166,002,389, from own capitals, i.e. “adjustment of share capital”. The effect of this
decision for the structure of share capital on 31 December 2021, as well as on 31 December 2020 and is
presented in the table below:
31 December
2021
31 December
2020
Share capital, from which:
28,557,446
28,557,446
Paid-in share capital
27,819,090
27,819,090
The adjustment of the share capital
738,356
738,356
DocuSign Envelope ID: 5B401A76-8749-48E8-A67F-9B6FBE538D17
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2021
(all amounts expressed in Lei (“RON”), unless otherwise specified)
42
18. LEASES
18.1 The right-of-use assets
The statement of the identified assets as of 31 December 2021 is presented in the table below:
Cost
Technical equipment
and machinery and
other tangible assets
Advances
Total Right
of use
assets
On 1 January 2020
800,974
-
800,974
Additions
611,628
1,297,120
1,908,748
Remeasurement
(64,358)
-
(64,358)
Transfers
-
-
-
On 31 December 2020
1,348,214
1,297,120
2,645,334
Additions
-
-
-
Remeasurement
(44,317)
-
(44,317)
Transfers
-
-
-
On 31 December 2021
1,303,897
1,297,120
2,601,017
Depreciation and impairment
On 1 January 2020
205,913
-
205,913
Depreciation charge for the year
301,916
301,916
Transfers
-
-
On 31 December 2020
507,829
-
507,829
Depreciation charge for the year
289,953
-
289,953
Transfers
-
-
-
On 31 December 2021
797,782
-
797,782
Net accounting value
On 31 December 2021
506,116
1,297,120
1,803,236
On 31 December 2020
840,386
1,297,120
2,137,506
On 1 January 2020
595,061
-
595,061
At the beginning of 2020, the Company signed a financial leasing contract which acquires the right to use
two production equipment (cement pumping units). The financing contract has a period of 5 years,
starting with the date of the goods receipt, the total value of the equipment’s being of EUR 2,680,000. The
Company paid in the first half of the year the advance, as part of the leasing contract, in amount of
RON 1,297,120. The equipment will be delivered during 2022. (Note 22).
DocuSign Envelope ID: 5B401A76-8749-48E8-A67F-9B6FBE538D17
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2021
(all amounts expressed in Lei (“RON”), unless otherwise specified)
43
18. LEASES (continued)
18.2 Lease liability
The accounting value of the lease liability and the movements recorded in this category during financial
year 2021:
2021
2020
At 1 January
853,644
623,644
Additions during the period
-
589,886
Remeasurement of lease contract
(47,773)
(64,386)
Interest associated to lease liability
17,780
27,701
Principal payments
(330,696)
(336,814)
Exchange rate difference for liability
11,718
13,614
Balance at 31 December
504,674
853,644
The following expenses represent amounts recognized in profit and loss account in connection to lease
contracts:
2021
2020
Depreciation expense of right of use assets
289,953
311,630
Interest expense on lease liability
17,780
28,118
Expense relating to short-term leases
20,707
12,692
Expense relating to leases of low-value assets
-
4,072
Variable lease payments
13,935
15,739
Total amounts recognised in profit or loss account
342,376
372,250
19. OTHER POST EMPLOYMENT BENEFITS
2021
2020
Balance at 1 January
2,354,410
846,202
Included in profit or loss
Interest expense
54,151
5,549
Service Cost
127,405
42,209
(Gain) / loss on settlement
(285,345)
(91,921)
Included in other comprehensive income
Actuarial loss/(gain)
(1,566,614)
1,552,372
Balance at 31 December
684,006
2,354,410
The liabilities regarding pensions and other similar obligations have been determined based on the
provisions of the collective labour contract of the Company, which stipulates the payment of a number of
salaries to each employee at retirement, depending on the period of employment. As of 31 December
2021, the amount of the provision for benefits to be granted at retirement is RON 684,006. In 2021, the
Company analyzed and adjusted the simplified internal model used to determine the retirement benefits
which resulted in a change of the measurement technique applied as the current model is more detailed
and considers a wider range of assumptions, also using an actuarial model. The effect of the change in
the measurement techniques used for the computation of the retirement benefit led to a decrease of the
provision of RON 1,566,614 that fully recognized in other comprehensive income in the current period in
which they occur.
DocuSign Envelope ID: 5B401A76-8749-48E8-A67F-9B6FBE538D17
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2021
(all amounts expressed in Lei (“RON”), unless otherwise specified)
44
19. OTHER POST EMPLOYMENT BENEFITS (continued)
The management has taken into consideration for carrying out the calculation, mainly the turnover of the
employees, the age of the employees, the estimated mortality rate, the estimated salary costs evolution,
discount rates. Due to micro and macroeconomic trends observed in the oil and gas sector, the estimates
applied for the computation of the retirement benefits have been revised being summarized in the table
bellow:
31 December
2021
31 December
2020
%
%
The turnover of the personnel in one year
10.00
13.95
The mortality rate for the current year
1.17
-
The contribution of the company to the gross salary
2.50
3.00
The inflation rate of the salary
3.00
2.31
The nominal discounting rate (the interest rate for governmental bonds)
5.20
2.97
Real discounting rate
2.20
0.66
A quantitative sensitivity analysis for significant assumptions as at 31 December is, as shown below:
Assumptions for pension plan:
31 December
2021
31 December
2020
Rate of staff turnover, estimated up to the retirement date
10% increase
(54,201)
(273,621)
10% decrease
60,293
273,621
Future salary increases, estimated up to the retirement date
10% increase
27,482
235,441
10% decrease
(26,142)
(235,441)
Discount rate
10% increase
(23,576)
(291,040)
10% decrease
24,933
355,458
Probability to survive up to retirement date / mortality rate
10% increase
68,401
10% decrease
(68,401)
DocuSign Envelope ID: 5B401A76-8749-48E8-A67F-9B6FBE538D17
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2021
(all amounts expressed in Lei (“RON”), unless otherwise specified)
45
20. TRADE PAYABLES AND SIMILAR LIABILITIES (CURRENT)
31 December
2021
31 December
2020
Trade payables - third parties
5,247,393
4,356,225
Trade payables with affiliated entities
976,098
1,191,924
Advance payments and deferred income
1,314
5,912
Salaries
1,282,822
1,245,624
Dividends to be paid
3,453,475
1,997,940
Taxes
892,820
651,638
Other liabilities
-
50,000
Total
11,853,922
9,499,264
The increase registered in the category of trade payables at the end of the financial year 2021 compared
to the previous year is determined both by the timing of the acquisitions made by the Company, at the
end of the year, in order to ensure the optimum level of working capital, as well as the necessity and the
opportunity to carry out expenses for the modernization and refurbishment of the production equipment.
21. PRESENTATION OF THE AFFILIATED PARTIES
The following tables present information on transactions with companies under common control of
KazMunayGas Group as of 31 December 2021.
Name of the company
Transaction type
Country of
origin
The nature of relationship
KMG International NV
Payments of dividends, transfer of
the receivable from Oilfield
Exploration Business Solutions
SA
Holland
Parent Company
Rompetrol Rafinare SA
ITP services
Romania
Minority investment of 0.05% of the
Rompetrol Rafinare share capital
Rompetrol Logistics SRL
Rental services, ITP services,
reinforcement security services
Romania
Minority investment of 6.98%, of the
Rompetrol Logistics share capital
Oilfield Exploration Business Solutions
SA
Render of services, rental of
premises, ITP services
Romania
Company member of KMG International
Group
Rompetrol Downstream SRL
Procurement of fuel, GPS
services, procurement of
rovignete
Romania
Company member of KMG International
Group
KMG Rompetrol SRL
Management and IT services,
cash pooling services, rental of
premises
Romania
Company member of KMG International
Group
Rominserv SRL
Miscellaneous repairs services,
ITP services
Romania
Company member of KMG International
Group
Rompetrol Drilling SRL
Rental of premises
Romania
Company's subsidiary, where
Rompetrol Well Services has 1%
KMG Rompetrol Services Center SRL
Services for procurement, legal,
employees, translations and IT
Romania
Company member of KMG International
Group
Rompetrol Quality Control SRL
Laboratory test
Romania
Company member of KMG International
Group
Global Security Sistem SA
Security services
Romania
Associate of KMG International Group
DocuSign Envelope ID: 5B401A76-8749-48E8-A67F-9B6FBE538D17
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2021
(all amounts expressed in Lei (“RON”), unless otherwise specified)
46
21. PRESENTATION OF THE AFFILIATED PARTIES (continued)
Receivables
31 December
2021
31 December
2020
KMG Rompetrol SRL
55,022,238
82,430,038
KMG International NV
34,178,091
-
Oilfield Exploration Business Solutions SA*
-
4,770,000
Rompetrol Logistics SRL
19,618
20,329
KMG Rompetrol Services Center SRL
754
1,484
Total
89,220,701
87,221,851
*) At the year-end 2021, the Oilfield Exploration Business Solutions SA receivables was assigned to KMG Internationa NV As of
31 December 2020, Oilfield Exploration Business Solutions SA was presented at recoverable amount of RON 4,770,000. (see
Note 14).
Liabilities
31 December
2021
31 December
2020
KMG Rompetrol SRL
543,769
718,563
Rompetrol Downstream SRL
392,678
200,851
KMG Rompetrol Services Center SRL
32,693
271,386
Rompetrol Quality Control SRL
864
-
Global Security Sistem SA
6,094
1,125
Total
976,098
1,191,924
Sales
2021
2020
KMG Rompetrol SRL
2,440,580
3,667,494
Rompetrol Logistics SRL
201,360
204,916
KMG Rompetrol Services Center SRL
7,678
7,545
Oilfield Exploration Business Solutions SA
3,393
4,579
Rompetrol Rafinare SA
155
387
Rompetrol Drilling SRL
361
355
Rominserv SRL
-
108
Total
2,653,526
3,885,384
DocuSign Envelope ID: 5B401A76-8749-48E8-A67F-9B6FBE538D17
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2021
(all amounts expressed in Lei (“RON”), unless otherwise specified)
47
21. PRESENTATION OF THE AFFILIATED PARTIES (continued)
Acquisition of goods and services
2021
2020
Rompetrol Downstream SRL
3,168,305
2,654,922
KMG Rompetrol SRL
2,472,856
2,295,292
KMG Rompetrol Services Center SRL
1,341,390
1,830,428
Global Security Sistem SA
25,468
21,045
Rompetrol Quality Control SRL
1,089
1,089
Rominserv SRL
-
-
Total
7,009,107
6,802,776
Starting with 2014, it was implemented an optimization system for the cash availability between the
companies within KazMunayGas International Group, known as cash pooling concept. Cash pooling
system was implemented in relation to cash availability from certain bank accounts of the Company, and
the direct effect will be transposed to the optimization of cash for the company, with impact in the interest
income. According to the cash pooling system, in terms of assets presentation, the amounts available at
the end of the reporting period is reflected in the statement of financial position in the line “Availabilities in
cash pooling system”. During the reporting period, the average balance of master account was
RON 72,348,598, generating interest in amount of RON 2,440,580. The value of these receivables as of
31 December 2021 was of RON 55,022,238
.
DocuSign Envelope ID: 5B401A76-8749-48E8-A67F-9B6FBE538D17
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2021
(all amounts expressed in Lei (“RON”), unless otherwise specified)
48
21. PRESENTATION OF THE AFFILIATED PARTIES (continued)
Description
Validity term
Contract
Date
Maturity
Date
Interest rate
Currency
Principal
Interest
receivable
as of
31 December
2020
Balance existing
as of
31 December
2020
Interest
receivable
as of
31 December
2021
Balance
existing
as of
31 December
2021
Cash Optimization System
implementation of The KMG
Rompetrol Group companies
(cash pooling)
12 months, with
automatically
extension
15-Sep-14
15-Sep-22
Based on
ROBOR
OVERNIGHT
RON
Depending on the
working capital
needs
253,336
82,166,109
199,604
54,822,634
Total
253,336
82,166,109
199,604
54,822,634
On 17 October 2019, KMG International NV issued a deed guarantee in favor of the Company for an amount up to 30 million USD, in connection with the current
cash pooling contract.
DocuSign Envelope ID: 5B401A76-8749-48E8-A67F-9B6FBE538D17
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2021
(all amounts expressed in Lei (“RON”), unless otherwise specified)
49
22. COMMITMENTS AND CONTINGECIES
At the beginning of 2020, the Company signed a financial leasing contract which acquires the right to use
two production equipment (cement pumping units). The financing contract has a period of 5 years,
starting with the date of the goods receipt, the option to buy the goods being expressed at the moment
the contract was signed. The value of the assets is in amount of EUR 2,680,000, and the value financed,
in the amount of EUR 2,412,000.
The IFRS 16 standard establishes the moment of the initial recognition of an right-of-use asset
concurrently with a debt arising from the lease agreements at the beginning of the roll-out, that is, the
date on which a lessor makes available to the lessee, for use, the underlying asset. Due to the fact that
the date of making available to the Company the vehicles that are the object of the contract occurs during
the financial year 2022, the Company did not recognized the asset and debt arising from the mentioned
contract.
Guarantees to third parties
The service providing contracts concluded with our main customers contain clauses referring to creation
of performance guarantees through a guarantee granting instrument issued under the provisions of the
law, by a bank or insurance company, i.e. Letters of Bank Guarantees.
The detail of the collateral accounts on 31 December 2021 and 2020 for the Letters of Bank Guarantee is
enclosed in Note 12 and Note 16.1.
Transfer pricing
Fiscal legislation in Romania includes the principle of “market value”, according to which transactions
between affiliated parties must be conducted at market value. Taxpayers which conduct transactions with
affiliated parties must prepare and readily present to Romanian fiscal authorities at their written demand
the transfer price file. The failure to present the transfer price file or the presentation of an incomplete file
may lead to application of penalties for nonconformity; in addition to the content of the transfer price file,
the fiscal authorities might interpret differently the transactions and circumstances than the interpretation
of management and, as a consequence, might impose additional fiscal obligations resulting from
adjustment of transfer prices. The management of the Company is considering that it will not suffer losses
in case of a fiscal control for the verification of transfer prices. However, the impact of possible different
interpretations of the fiscal authorities can’t be estimated.
DocuSign Envelope ID: 5B401A76-8749-48E8-A67F-9B6FBE538D17
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2021
(all amounts expressed in Lei (“RON”), unless otherwise specified)
50
23. OBJECTIVES AND POLICIES FOR THE FINANCIAL RISK MANAGEMENT
The risk of the interest rate
 Loans received: the company is not being involved in any loan contract and therefore not
exposed to risks regarding the movement of the interest rate;
 Loan granted: for the loans granted presented in note 21 (Availabilities in cash pooling system),
the income from interest varies, depending on OVERNIGHT ROBOR.
If interest rates would have varied with + / - 1 percent and all other variables would have been constant,
the net result of the Company as of 31 December 2021 would increase / decrease with RON 735,848
(2020: increase / decrease with RON 894,057).
Risk of the exchange rate variations
Most of the transactions of the company are in RON. Depending on the case, the structure of the
amounts available in cash and the short term deposits are also being adapted. The difference between
the entry of the amounts in foreign currency and their repayment cannot generate, through the variation of
the exchange rate, significant impact in the Company’s financial position.
Foreign currency sensitivity
The following tables demonstrate the sensitivity towards a possible reasonable change (5%) of the
exchange rate of the USD dollar, EUR, all other variables being maintained constant.
The impact over the profit of the company before taxation is due to the changes in fair value of the assets
and monetary debts. The exposure of the company to the foreign currency modifications for any other
foreign currency is not significant.
Total
5%
5%
RON
USD
EUR
31 December 2020
Balance
(14,421)
(57,122)
42,702
Monetary assets
100,676
702
99,974
Monetary liabilities
(115,097)
(57,824)
(57,273)
31 December 2021
Balance
(141,087)
(73,475)
(67,612)
Monetary assets
4,320
634
3,686
Monetary liabilities
(145,406)
(74,109)
(71,297)
The credit risk
The company treats the crediting of its customers procedural, with flexibility through the stable contracting
strategy as an essential mechanism for the risk repartition. The unfavorable conditions of the financial -
banking market is also experienced by the customers of the company, but the Management permanently
monitors the receivables, collections and potential impairments.
The market risk
Taking into consideration the structure and continuance of trade contracts, it can be highlighted as
important clients SC OMV Petrom SA and SNGN Romgaz SA concentrating around 84% of the total
turnover registered for the financial year 2021. The main contracts with SC OMV Petrom SA and
SNGN Romgaz SA are valid until 3 January 2024, respectively 7 September 2022.
DocuSign Envelope ID: 5B401A76-8749-48E8-A67F-9B6FBE538D17
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2021
(all amounts expressed in Lei (“RON”), unless otherwise specified)
51
23. OBJECTIVES AND POLICIES FOR THE FINANCIAL RISK MANAGEMENT (continued)
Liquidity risk
The Company monitors its risk of a shortage of funds using a liquidity planning tool.
The Company’s objective is to maintain a balance between continuity of funding and flexibility through the
efficient use of working capital. Approximately 67% of the Company’s debt will mature in less than one
year at 31 December 2021 (2020: 85%) based on the carrying value reflected in the financial statements.
The Company assessed the concentration of risk with respect to chargeability of its debt and concluded it
to be low.
The table below details the profile of the payment terms of the financial liabilities of the Company, based
on non-updated contractual payments:
Trade payables and similar liabilities
On
demand
Under
3 months
Between 3 and
12 months
Between
1 and 5
years
Over
5 years
Total
Trade payables - third parties
327,385
3,991,243
928,765
-
-
5,247,393
Trade payables with affiliated entities
272,839
703,259
-
-
-
976,098
Lease liabilities
-
53,395
221,458
229,822
-
504,674
Dividends to be paid
33,893
-
330,589
3,088,993
-
3,453,475
Other liabilities
-
-
-
-
-
-
Total year 2021
634,116
4,747,897
1,480,811
3,318,815
-
10,181,639
Trade payables and similar liabilities
On
demand
Under
3 months
Between 3 and
12 months
Between
1 and 5
years
Over
5 years
Total
Trade payables - third parties
516,243
2,848,482
991,500
-
-
4,356,225
Trade payables with affiliated entities
279,679
912,245
-
-
-
1,191,924
Lease liabilities
-
87,359
240,918
525,367
853,644
Dividends to be paid
1,238,319
-
-
759,621
-
1,997,940
Other liabilities
-
50,000
-
-
-
50,000
Total year 2020
2,034,242
3,898,086
1,232,418
1,284,988
-
8,449,734
24. AUDIT EXPENSES
Contractual costs for audit services with the financial auditor for financial year ended 31 December 2021
were in amount of RON 79,982, equivalent of EUR 16,464.
All paid fees refer to auditing services on individual financial statements prepared by the Company in
accordance with Order of Minister of Public Finance no. 2844/2016.
25. EVENTS SUBSEQUENT TO THE REPORTING PERIOD
Letter of bank guarantee with number LG/ 99007664 having as beneficiary OMV Petrom SA, in amount of
RON 39,552, was issued on 18 January 2022 with maturity date 14 January 2023
Letter of bank guarantee with number LG/ 99007665 having as beneficiary OMV Petrom SA, in amount of
RON 44,496, was issued on 18 January 2022 with maturity date 14 January 2023.
DocuSign Envelope ID: 5B401A76-8749-48E8-A67F-9B6FBE538D17
ROMPETROL WELL SERVICES SA
NOTES TO FINANCIAL STATEMENTS
For the year ended as at 31 December 2021
(all amounts expressed in Lei (“RON”), unless otherwise specified)
52
25. EVENTS SUBSEQUENT TO THE REPORTING PERIOD (continued)
Impact of sanction risks and conflict in Ukraine
In the context of the military conflict between Russia and Ukraine, started on 24 February 2022, the EU,
USA, UK and other countries imposed various sanctions against Russia, including financing restrictions
on certain Russian banks and state-owned companies as well as personal sanctions against a number of
individuals.
Considering the geopolitical tensions, since February 2022, there has been an increase in financial
markets volatility and exchange rate depreciation pressure.
It is expected that these events may affect the activities in various sectors of the economy, could result in
further increases in European energy prices and increased risk of supply chain disturbances.
The Company does not have direct exposures to related parties and/or key customers or suppliers from
those countries since the Company and its main customers activate only on local market, therefore the
most recently sanctions imposed against Russia are not expected to have an impact on the Company’s
activity.
The Company regards these events as non-adjusting events after the reporting period, the quantitative
effect of which cannot be estimated at the moment with a sufficient degree of confidence. Currently, the
Company's management is analyzing the possible impact of changing micro-and macroeconomic
conditions on the Company's financial position and results of operations.
At this stage Management doesn’t expect that such conflict will have a significant negative impact on the
Company’s operations and on the recoverable value of the Company’s long term assets.
Cyber risk
The progress made toward digitalization certainly brings great benefits, however as the use of new
technologies and their capabilities increases, so do the risks derived from their exposure in cyberspace,
the reliance on the systems deployed and the information generated by the Company. The risks are not
only technical but also business related and may lead to operational disruptions, fraud or theft of sensitive
information.
In subsequent period, we were subject to an attempt to gain unauthorized access to our computer
network and systems, which did not result in major operational disruptions and have not had a material
adverse effect on us, however this kind of events may occur in the future.
The Company continuously improves cyber security capabilities. and supervise the cyber security activity,
ensuring the protection of the confidentiality, integrity and availability of data. Also, the Company
continuously educates their employees and partners about cyber security risks and support them to act in
a responsible way.
On 22 March 2022, the Board of Directors approved the proposal to distribute gross dividends in amount
of RON 1,629,634, respectively RON 0.005857970 / share, proposal on which the General Ordinary
Meeting of the Shareholders that will take place on 27 April 2022 shall decide.
The Financial Statements from page 1 to page 52 were approved by the Board of Directors in
22 March 2022 and are signed in his name by:
Administrator,
Prepared by,
FLOREA Georgian Stefan
MOISE Luiza-Roxana
Finance Manager
Signature
Signature
DocuSign Envelope ID: 5B401A76-8749-48E8-A67F-9B6FBE538D17
Ernst & Young Assurance Services SRL
Bucharest Tower Center Building, 21
st
Floor
15-17 Ion Mihalache Blvd., District 1
011171 Bucharest, Romania
Tel: +40 21 402 4000
Fax: +40 21 310 7193
office@ro.ey.com
ey.com
INDEPENDENT AUDITOR’S REPORT
To the Shareholders of Rompetrol Well Services S.A.
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of Rompetrol Well Services S.A. (the Company) with
official head office in Ploiesti, Clopotei Street, No. 2 bis,, identified by sole fiscal registration
number RO1346607, which comprise the statement of financial position as at December 31,
2021, and the income statement and statement of comprehensive income, statement of
changes in equity and statement of cash flows for the year then ended, and a summary of
significant accounting policies and other explanatory information.
In our opinion, the accompanying financial statements give a true and fair view of the
financial position of the Company as at December 31, 2021, and of its financial performance
and its cash flows for the year then ended in accordance with the Order of the Minister of
Public Finance no. 2844/2016, approving the accounting regulations compliant with the
International Financial Reporting Standards, with all subsequent modifications and
clarifications.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs),
Regulation (EU) No. 537/2014 of the European Parliament and of the Council of 16 April
2014 (“Regulation (EU) No. 537/2014“) and Law 162/2017 („Law 162/2017”). Our
responsibilities under those standards are further described in the Auditor’s Responsibilities
for the Audit of the Financial Statements section of our report. We are independent of the
Company in accordance with the International Code of Ethics for Professional Accountants
(including International Independence Standards) as issued by the International Ethics
Standards Board for Accountants (IESBA Code) together with the ethical requirements that
are relevant to the audit of the financial statements in Romania, including Regulation (EU)
No. 537/2014 and Law 162/2017 and we have fulfilled our other ethical responsibilities in
accordance with these requirements and the IESBA Code. We believe that the audit evidence
we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most
significance in our audit of the financial statements of the current period. These matters were
addressed in the context of our audit of the financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters.
For each matter below, our description of how our audit addressed the matter is provided in
that context.
2
We have fulfilled the responsibilities described in the “Auditor’s responsibilities for the audit
of the financial statements” section of our report, including in relation to these matters.
Accordingly, our audit included the performance of procedures designed to respond to our
assessment of the risks of material misstatement of the financial statements. The results of
our audit procedures, including the procedures performed to address the matters below,
provide the basis for our audit opinion on the accompanying financial statements.
Key Audit Matter
How our audit addressed the key audit matter
Fai alue easueet fo iestet i euit istuets
Disclosures on fair value measurement for investment in equity instruments are included in Note 1.3 and Note
11.
Iestets i euit istuets at Fai Value though
othe opehesie ioe ae easued at RON
10,204 thousand as at 31 December 2021.
We osideed the fai alue easueet of euit
iestets to e sigifiat i ou audit due to the
agitude of the aouts ioled, the high leel of
sujetiit i espet of assuptios udelig the fai
alue assesset ad the sigifiat judgeets ad
estiates that eed to e ade  aageet oe the
deteiatio of the fai alue of fiaial assets ot
uoted i a atie aket.
The Copa has elo % patiipatios i Ropetol
Rafiae S.A. a listed etit ad Ropetol Logistis
S.R.L. a o-listed etit, as idiated i ote . Both
iestets ae easued at fai alue though othe
opehesie ioe.
The fai alue of iestet i Ropetol Rafiae S.A. is
ased o uoted pies i a atie aket.
The iestet i Ropetol Logisti S.R.L., is easued
at FV of RON 8,401 thousand as of  Deee ,
epesetig Leel  fai alue hieah, fo hih uoted
pies i a atie aket ae uaailale ad hose
alue is deteied  iteal aluatio tehiues that
geeall use o-oseale data. Applied iteal
aluatio tehiues a e sujetie i atue,
iolig ultiple assuptios ad estiates.
As of  Deee , the Copa used i the fai
alue easueet ifoatio fo a aluatio epot
pepaed  a eteal epet fo Ropetol Logisti,
iludig its oeship i Ropetol Gas, hih as
futhe adjusted to eflet the speifi situatio of the
opa as ioit shaeholde. The easueet
ioled sigifiat judgeet ad estiates.
For these reasons, we have considered this as a key audit
matter.
We audited aageet’s estiate of the fai
alue of fiaial assets ot uoted i a atie
aket, haig a fai alue of RON 8, thousad
as of  Deee . Speifiall, ou ok
iluded, ut as ot liited to the folloig
poedues:
• We aalsed the ke assuptios used i
the aluatio epot pepaed  a
eteal epet,  aalzig thei
osiste ith the idust-speifi
eooi eioet, eleat aailale
aket ifoatio ad the usiess plas
appoed  aageet;
• We ealuated if the aluatio eeise
iluded all fatos that ifluee the
iestet at the ed of the epotig
peiod ad its i opliae ith
Iteatioal Fiaial Repotig
Stadads euieets;
• We ioled ou aluatio speialists to
assist us i ealuatig speifi assuptios
applied i.e. the disout ate,
aketailit disout, ioit disout
ad odellig tehiues used  the
Copa fo the aluatio eeise of the
fiaial asset;
• We heked the atheatial aua of
aageet’s eeise fo deteiig
the fai alue.
Furthermore, we assessed the adequacy of the
Copa’s dislosues aout fai alue
measurement of equity investments.
3
Key Audit Matter
How our audit addressed the key audit matter
Assessment of property, plant and equipment impairment
Disclosures on property, plant and equipment including related impairment are included in Note 1.3 and
Note 8.
Measurement of Property, plant and equipment is
significant to our audit because of the magnitude of
the balances involved, having a net book value of RON
25.053 thousand as at 31 December 2021, out of
which advances and tangible assets in progress of RON
3.679 thousand. Also, we considered this matter to be
one of most significance in the audit due the high level
of subjectivity in respect of assumptions underlying
impairment analysis and significant judgements and
estimates made by the management.
In the current year, the oilfield services industry has
been further significantly affected by the reduction of
investments in upstream oil & gas that followed the
decline in oil and gas prices started in the first half of
2020, given the economic situation generated by the
Covid-19 pandemic. These aspects had a significant
effect on the Company’s performance and therefore
impairment indicators were identified.
Under the International Financial Reporting Standards,
an entity is required to assess whether triggers for
potential impairment or reversal of impairment
previously recorded exist. The assessment of whether
there is an indication that an asset may be impaired, or
an impairment may be reversed requires significant
judgement, as it involves consideration of various
sources of information, including factors related to the
economic environment and industry specific factors.
As at 31 December 2021, the management has
performed a triggering events analysis and an
impairment assessment in respect of the Company’s
property, plant and equipment based on which the
recoverable amount was lower than the carrying value
and therefore an impairment of RON 509 thousand was
recorded.
The impairment assessment process is complex,
requires significant management judgments and is
based on assumptions that are affected by expected
future market conditions.
For this reason, we have considered this as a key audit
matter.
We audited management’s assessment of the
triggers for potential impairment as well as the
related impairment test performed. Specifically,
our work included, but was not limited to the
following procedures:
• We analyzed the key assumptions used for
the future cash flows, by analysing their
consistency with the industry-specific
economic environment, relevant available
market information and the business plans
of the Company, as well as the sensitivity
analysis of the recoverable amounts to
changes in the significant assumptions;
• We evaluated if the impairment assessment
included all assets for which impairment
indicators existed at the end of the
reporting period;
• We assessed the historical accuracy of
management’s budgets and forecasts by
comparing them to actual performance and
to prior year;
• We involved our valuation specialists to
assist us in evaluating the discount rate
applied and methodologies / models used
by the Company for the impairment
assessment of property, plant and
equipment;
• We checked the mathematical accuracy of
management’s cash flow model for
determining the value-in-use and its
compliance with International Financial
Reporting Standards requirements.
Furthermore, we assessed the adequacy of the
Company’s disclosures about Impairment testing of
property, plant and equipment.
4
Other information
The other information comprises the Administrators’ Report and the Remuneration Report,
but does not include the financial statements and our auditors’ report thereon. Management
is responsible for the other information.
Our audit opinion on the financial statements does not cover the other information and we do
not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge obtained in the audit or otherwise
appears to be materially misstated. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we are required to report that
fact. We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the Financial
Statements
Management is responsible for the preparation and fair presentation of the financial
statements in accordance with the Order of the Minister of Public Finance no. 2844/2016
approving the accounting regulations compliant with the International Financial Reporting
Standards, with all subsequent modifications and clarifications, and for such internal control
as management determines is necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the
Company's ability to continue as a going concern, disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting unless management either
intends to liquidate the Company or to cease operations, or has no realistic alternative but to
do so.
Those charged with governance are responsible for overseeing the Company's financial
reporting process.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as
a whole are free from material misstatement, whether due to fraud or error, and to issue an
auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with ISAs will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these financial statements.
5
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those
risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for
our opinion. The risk of not detecting a material misstatement resulting from fraud is
higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of management's use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt on the Company's
ability to continue as a going concern. If we conclude that a material uncertainty exists,
we are required to draw attention in our auditors’ report to the related disclosures in the
financial statements or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditors’
report. However, future events or conditions may cause the Company to cease to
continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements,
including the disclosures, and whether the financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the
planned scope and timing of the audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with
relevant ethical requirements regarding independence, and to communicate with them all
relationships and other matters that may reasonably be thought to bear on our independence,
and where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated with those charged with governance, we determine those
matters that were of most significance in the audit of the financial statements of the current
period and are therefore the key audit matters.
6
Report on Other Legal and Regulatory Requirements
Reporting on Information Other than the Financial Statements and Our Auditors’ Report
Thereon
In addition to our reporting responsibilities according to ISAs described in section “Other
information”, with respect to the Administrators’ Report and Remuneration Report, we have
read these reports and report that:
a) in the Administrators’ Report we have not identified information which is not consistent,
in all material respects, with the information presented in the accompanying financial
statements as at December 31, 2021;
b) the Administrators’ Report identified above includes, in all material respects, the required
information according to the provisions of the Ministry of Public Finance Order
no. 2844/2016 approving the accounting regulations compliant with the International
Financial Reporting Standards, with all subsequent modifications and clarifications,
Annex 1 articles 15 – 19;
c) based on our knowledge and understanding concerning the entity and its environment
gained during our audit of the financial statements as at December 31, 2021, we have
not identified information included in the Administrators’ Report that contains a material
misstatement of fact.
d) the Remuneration Report identified above includes, in all material respects, the required
information according to the provisions of article 107 (1) and (2) from Law 24/2017 on
issuers of financial instruments and market operations.
Other requirements on content of auditor’s report in compliance with Regulation (EU)
No. 537/2014 of the European Parliament and of the Council
Appointment and Approval of Auditor
We were appointed as auditors of the Company by the General Meeting of Shareholders on 27
April 2020 to audit the financial statements for the financial year end December 31, 2021.
Total uninterrupted engagement period, including previous renewals (extension of the period
for which we were originally appointed) and reappointments for the statutory auditor, has
lasted for 14 years, covering the financial periods end December 31, 2008 till December 31,
2021.
Consistency with Additional Report to the Audit Committee
Our audit opinion on the financial statements expressed herein is consistent
with the additional report to the Audit Committee of the Company, which we issued on 18
March 2022.
7
Provision of Non-audit Services
No prohibited non-audit services referred to in Article 5(1) of Regulation (EU) No. 537/2014
of the European Parliament and of the Council were provided by us to the Company and we
remain independent from the Company in conducting the audit.
In addition to statutory audit services and services disclosed in the annual report and in the
financial statements, no other services which were provided by us to the Company, and its
controlled undertakings.
Report on the compliance of the electronic format of the financial statements, included in
the annual separate report with the requirements of the ESEF Regulation
We have performed a reasonable assurance engagement on the compliance of the financial
statements presented in XHTML format of Rompetrol Well Services S.A. (the Company) for
the year ended 31 December 2021, with the requirements of the Commission Delegated
Regulation (EU) 2019 /815 of 17 December 2018 supplementing Directive 2004/109/EC of
the European Parliament and of the Council with regard to regulatory technical standards on
the specification of a single electronic reporting format (the “ESEF Regulation).
These procedures refer to testing the format and whether the electronic format of the
financial statements (XHTML) corresponds to the audited financial statements and expressing
an opinion on the compliance of the electronic format of the financial statements of the
Company for the year ended 31 December 2021 with the requirements of the ESEF
Regulation. In accordance with these requirements, the electronic format of the financial
statements, included in the annual report should be presented in XHTML format.
Responsibilities of the Management and Those Charged with Governance
The Management of the Company is responsible for the compliance with the requirements of
the ESEF Regulation in the preparation of the electronic format of the financial statements in
XHTML format and for ensuring consistency between the electronic format of the financial
statements (XHTML) and the audited financial statements.
The responsibility of the Management also includes the design, implementation and
maintenance of such internal control as determined is necessary to enable the preparation of
the financial statements in ESEF format that are free from any material non-compliance with
the ESEF Regulation.
Those charged with governance are responsible for overseeing the financial reporting process
for the preparation of financial statements, including the application of the ESEF Regulation.
8
Auditor’s Responsibility
Our responsibility is to express an opinion providing reasonable assurance on the compliance
of the electronic format of the financial statements with the requirements of the ESEF
Regulation.
We have performed a reasonable assurance engagement in accordance with ISAE 3000
(revised) Assurance Engagements Other Than Audits or Reviews of Historical Financial
Information (ISAE 3000 (revised)). This standard requires that we comply with ethical
requirements, plan and perform our engagement to obtain reasonable assurance about
whether the electronic format of the financial statements of the Company is prepared, in all
material respects, in accordance ESEF regulation. The nature, timing, and extent of the
procedures selected depend on our judgment, including an assessment of the risk of material
non-compliance with the requirements of the ESEF Regulation, whether due to fraud or error.
Reasonable assurance is a high level of assurance, but it is not guaranteed that the assurance
engagement conducted in accordance with ISAE 3000 (revised) will always detect material
non-compliance with the requirements when it exists.
Our Independence and Quality Control
We apply International Standard on Quality Control 1, Quality Control for Firms that Perform
Audits and Reviews of Financial Statements, and Other Assurance and Related Services
Engagements, and accordingly, maintain a comprehensive system of quality control including
documented policies and procedures regarding compliance with ethical requirements,
professional standards and applicable legal and regulatory requirements to the registered
auditors in Romania.
We have maintained our independence and confirm that we have met the ethical and
independence requirements of the International Ethics Standards Board for Accountants’
International Code of Ethics for Professional Accountants (including International
Independence Standards) (IESBA Code).
9
Summary of procedures performed
The objective of the procedures that we have planned and performed was to obtain
reasonable assurance that the electronic format of the financial statements is prepared, in all
material respects, in accordance with the requirements of ESEF Regulation. When conducting
our assessment of the compliance with the requirements of the ESEF Regulation of the
electronic reporting format (XHTML) of the financial statements of the Company, we have
maintained professional skepticism and applied professional judgement. We have also:
• obtained an understanding of the internal control and the processes related to the
application of the ESEF Regulation in respect of the financial statements of the
Company, including the preparation of the financial statements of the Company in
XHTML format
• tested the validity of the applied XHTML format
• checked whether the electronic format of the financial statements (XHTML)
corresponds to the audited financial statements
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Opinion on the compliance of the electronic format of the financial statements with the
requirements of the ESEF Regulation
Based on the procedures performed, our opinion is that the electronic format of the financial
statements is prepared, in all material respects, in accordance with the requirements of ESEF
Regulation.
On behalf of,
Ernst & Young Assurance Services SRL
15-17, Ion Mihalache Blvd., floor 21, Bucharest, Romania
Registered in the electronic Public Register under No. FA77
Name of the Auditor/Associate Partner: Carmen Spiridon
Registered in the electronic Public Register under No. AF4838
Bucharest, Romania
24 March 2022