Report and financial statements

31 December 2011

I

www.pwc.com/cy

Cyprus Organisationfor Storage and Management of Oil Stocks

Office copy (signed)

..II PWC

Cyprus Organisation for Storage and Management of Oil Stocks

Report and financial statements 31 December 2011

Contents

Board of Olrectors and other officers

Independent auditor's report

Statement of comprehensive Income

Balance sheet

Statement of changes in equity

Statement of cash flows

Notes to the financial statements

Additional information to the statemen.t ()f comprehensive income

Page

1

2-3

4

5

6

7

8 -27

28 -29

Cyprus Organisation for Storage and Management of Oil Stocks

Board of Directors and other officers

Board of Directors

Odysseus Demetriou (Chairman) Phrosso Hadjiloucas (Vice Chairman) Themis Theodosiou Christos Christofi Antonis Semelides Thomas Sepos Charalambos Eliades Michael Patatakos (resigned 4 November 2011) Antonis Patsali Pavlos Yiavris (appointed 4 November 2011)

Legal Advisors

Louka & Serafim Lawyer and Legel Consultant Vasilissis Friderikis10 Jacki Court, 3rd floor, office 302 1066 Nicosia Cyprus

Auditors

PricewaterhouseCoopers Limited Julia House 3 Themistocles Dervis Street CY -1066 Nicosia

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--pwc

Independent auditor's report To the Members of Cyprus Organisation for Storage and Management of Oil Stocks

Report on the financial statements

We have audited the accompanying financial statements of Cyprus Organisation for Storage and Management of Oil Stocks (the "Organisation"), which comprise the balance sheet as at 31 December 2011, and the statements of comprehensive income, changes in equity and cash flows for the year then ended. and a summary of significant accounting policies and other explanatory infonllation.

Boar'd q(Director's' responsibilityfor the financial statements

The Board of Directors is responsible for the preparatiollof financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the. European Union and the requirements of the Maintenance of Oil Stocks Laws, 2003 to 2005, and for.such internal control as the Board of Directors determines is necessa,y to enable the preparation of financial statements that are free from material misstatement, whether dne to fraud or error.

Auditor's responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordallce with Intemational Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

All audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, induding the assessment oithe Iisks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant tothe entity's preparation of financial statements that give a true and fair view in order to desigu audit procedures that are appropriate in the circumstances, bUlnot for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accQunting policies used aJld the reasonableness of accounting estimates made by the Board of Directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion .

. ,,,.,,,,,,., .. ,\.,,,, ."".-.. ,.,,,,,,, •............ ,,, PricewaterhvuseCoopel's Ltd, Julia House. 3 Themistoc1es Dervis Street. CY-Jo66 Nicosia, CyP"US POBox 2J612, CY~1591 ,Nicosia, Cyprus T: +357 ~ 22 555 000,.F: +.357 - 22 555 0'01, WWW.plO(';COIl1/CY

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In our opinion, the financialstatementsgive a true andfairview of the financial position of Cyprus Organisation for Storage and Management of Oil Stocks as at 31 December 2011, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union and the requiremeuts of the Maintenance of Oil Stocks Laws, 2003 to 2005.

Other matter

11,is report, including the opinion, has been prepared for and only for the Organisation's members as a body in accorda11ce with the Maintenance of Oil Stocks Laws, 2003 to 2005 and for no other purpose. We do not, in giving this opinion, accept or aSS11me responsibility for any other purpose or to any other person to whose knowledge this report may come to.

Andreas TI,. Constantinides Certified Public Accountant and Registered Auditor for and on behalf of

PricewaterhouseCoopers Limited Certified Public Accountants and Registered Auditors

Nicosia, 3 September 2012

Cyprus Organisation for Storage and Management of Oil Stocks

Statement of comprehensive income for the year ended 31 December 2011

Income Cost of income Gross surplus

Surplus from renewal of strategic, invenlory Selling and marketing costs Administrative expenses Other income Operating surplus

Finance costs Surplus before tax

Income laX expense

Surplus and total comprehensive income .for the year

Note

5

6

9

10

2011 €

23.222.212 11~.1I§0;977)

9.261.235

3.099.557 (8.594)

(371.865) §~;g~

12.844.417

1!.219·!§l) 8.624.456

Ij20.§j5)

1,§21·841

The notes on pages 8 to 27 are an integral part of these financial statements.

2010 €

23·825.064 (15.161,~3)

8.663.201

1.171.025 (11.129)

(408.468) Q§8·~Z6

9.983.005

p.iiQ6.076) 6.476.929

(61,281 ) 6.4]5.648

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Cyprus Organisation for Storage and Management of Oil Stocks

Balance sheet at 31 December 2011

Assets Non..current assets Plant and equipment StrategiC inventory

Current assets Trade and other receivables Cash and cash equivalents

Total assets

Surplus and liabilities Reserves Retained surplus

Non...,urr_n! lIablll!ies Borrowings

Current liabilities Trade and other payabtes Current income tax liabilities Borrowings

Total liabilities

Total surplus 'and liabilities

Nol_

13 14

15 16

17

18

17

2011 2010 € €

17.243 22.989 114·~2M16 11'.30~.~Q

114'420•759 111.326.949

7.791.130 9.067.255 2~,028.18§ 23.021.079 ~1.81~,~15 ~2.0~8.3;!1

146.242·2Z4 143.415.2~~

52.850,615 44.346.774

86.566·m 90761.749

2.411.315 3.645.897 44.999

4.~§§,~Q§ H§Q§~~ g.822.Ila 8.306.76Q

9H~~~~ 99.06!l.!i\ll!

146.242,!lZ4 143.4l~·'§~

On 3 September 2012 the Board of Directors of Cyprus Organisation for Storage and Management of Oil Stocks authorised these financial statements for issue.

~~-~~'-. ~.~" (2r:I( ~

Phrosso Hadjiloucas, Vice Chairman ~

The notes on pages 8 to 27 are an integral pari of these financial statements.

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Cyprus Organisation for Storage and Management of Oil Stocks

Statement of changes in equity for the year ended 31 December 2011

Balance at 1 January 2010

Comprehensive income Surplus for lhe year

Balance at 31 Deeember 2010/1 January 2011

Comprehensive income SurplUS for the year

Balance at 31 December 2011

The notes on pages 8 to 27 are an integral part of these financial statements.

Relained surpluS €

37.931.126

6,415.648

44.346.774

8.503.841

53,859.615

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Cyprus Organisation for Storage and Management of Oil Stocks

Statement of cash flows for the year ended 31 , December 2011

2011 2010 Nole € e

Cash flows from operating activities Surplus before lax Adjustments for:

U24,456 6.476.929

Depreciation of property, plant and equipment 13 8.769 13.085 Interest income 6 (864.084) (568.027) Interest expense 9 4.219.961 3.506.076 Surplus from renewal of strategic inventory 9 (3,(J9!!·~m (1.171.02§)

8.889.545 8.257.038

Changes in working capital: Trade and other receivables 1.276.125 316.823 Trade and other payables (1.434.582) 1.202.390 Strategic inventory (2.2~3·267)

Cash generated from operations 8.731.088 7.542.284

Income tax paid (7~·§1~) (§1·~§1) Net cash generated trom operating activities 8.65~.473 7.4§1.QQ~

Cash flows from investing activities Purchases of property, plant and equipment 13 (3.023) (926) Interest receiv~d 884.Q§4 56§.Q27 Net cash from investing activities 861,Ogl ~§Z.101

Cash flows from financing activities Repayments of bank borrowings (4.289.467) (5.150.684) Interes! pajd (4.21 a.gBl) (3.506,076) Net cash used in financing actlvltie. (Ug!!·~2§) 1~·§~,7§Q)

Net increasef(decrease) in cash and cash equivalents 1.007.106 (608.656) Cash and cash equivalents at beginning of year ~~.021.DZ!! ,H,~ 7~5

Cash and cash equivalents at end of year 1.6 ~4.0i8.1!~ 2~1~21·27~

The notes on pages 8 to 27 are an integral part of these financial statements.

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Cyprus Organisation for Storage and Management of Oil Stocks

Notes to the financial statements

1 General information

Country of incorporation

The Organisation is established in Cyprus as public law organisation in accordance with the provisions of the Maintenance of Oil StocK. Laws 2003 to 2005. The headquarters of the Organisation are in Nicosia and the offices of the Organisation are at 20 Themistocles Dervis Street, 4th Floor, CY -1066 Nicosia, Cyprus.

Principal activities

The principal activities of the Organisation, which are unchanged from last year, are the Storage and Management of the national oil stocks, in order to ensure the smooth supply of energy to the Republic.

2 Summary of signlflcan~ accounting policies

The principal accounting policies applied in the preparation of these financial statements are set out below. These pOlicies have been consistently applied to all years presented in these financial statements unless otherwise stated.

Basis of preparation

The financial statements of the Organisation have been prepared in accordance with International Financial Reporting Standards (IFRS),asadopted by the European Union (EU), and the requirements of the Maintenance of Oil Stocks Laws 2003 to 2005.

As of the date of the authorisation of the financial statements, all International Financial Reporting Standards issued by the International Accounting Standards Board (IASB) that are effective as of 1 January 2011 have been adopted by the EU through the endorsement procedure established by the European Commission.

The financial statements have been prepareq under the historica.1 cost convention.

The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates and requires management to exercise its judgment in the process of applying the Organisation's accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial.statements are disclosed in Note 4.

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Cyprus Organisation for Storage and Management of Oil Stocks

2 Summary of significant accounting policies (cohtinued)

Adoption of new and revised IFRSs

During the current year the Organisation adopted all the new and revised InternationCiI Financial Reporting Standards (IFRS) that are relevant to its operations and are effective for accounting periods beginning on 1 January 2011. This adoption did not have a material effect on the accounting policies ofthe Organisation.

At the date of approval of these financial statements the following financial reporting standards were issued by the International Accounting Standards Board but were not yet effective:

(i) Adopted by the European Union

Amendments

• Amendments to IFRS 7 "Financial Instruments: Disclosures" on derecognition of financial instruments (effective for annual periods beginning on or after 1 July 2011 ).

(ii) Not adopted by the European Union

New standards

• IFRS 9 "Financial Instruments" (and subsequent amendments to IFRS g and IFRS 7) (effective for annual periods beginning on or after 1 January 2015).

• IFRS 10 "Consolidated Financial Statements" (effective for annual periods beginning on or after 1 January 2013).

• IFRS 11, "Joint Arrangements" (effective for annual periods beginning on or after 1 January 2013);

• IFRS 12, 'Disclosure of Interests in Other entities" (effective for annual periods beginning on or after 1 January 2013).

• IFRS 13, "Fair Value Measurement" (effective for annual periods beginning on or after 1 January 2013).

• lAS 27, "Consolidated and Separate Financial Statements" (effective for annual periods beginning on or after 1 January 2013).

• lAS 28, "Investments in Associates and Joint Ventures" (effective for annual periods beginning on or after 1 January 2013).

Amendments

• Amendment to lAS 1.2 "Income Taxe,s" on deferred tax relating to recovery of underlying assets (effective for annual periods beginning on or after 1 January 2012).

• Amendment to IFRS 1 "First-time adoption of International Financial Reporting Standards" on severe hyperinflation and removal of fixed dates for First Time Adopters (effective for annual periods beginning on or after 1 July 2011).

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Cyprus Organisation for Storage and Management of Oil Stocks

2 Summary of significant accounting PQUcies (continued)

Adoption of new and revised IFRSs (continued)

• Amendment to lAS 1 "Financial Statements Presentation" on Presentation of Items of Other Comprehensive Income" (effective for annual periods beginning on or after 1 July 2012).

• Amendments to lAS 19 "Employee Benefits" (effective for annual periods beginning on or after 1 January 2013).

• Amendments to IFRS 7 "Financial Instruments: Disclosures" on Offsetting Financial Assets and Financial Liabilities (effective for annual periods beginning on or after 1 January 2013).

• Amendments to lAS 32 "Financial Instruments: Presentation" on Offsetting Financial Assets and Financial Liabilities (effective ·for annual periods beginning on or after 1 January 2014).

New IFRles

• IFRIC 20 "Stripping Costs in the Production Phase of a Surface Mine" (effective for annual periods beginning on or after 1 January 2013).

The Board of Directors expects that the adoption of these financial reporting standards in future periods will not have a material effect on the financial statements of the Organisation, with the exception of the following:

(I) lAS 24 (Revised) "Related party disclosures". The revised standard clarifies and simplifies the definition of a related party and removes the requirement for government-related entities to disclose d.etails of all transaCtions with the government and other government-related entities. The Organisation will apply the standard from 1 January 2011. When the revised standard is applied, the Organisation will need to disclose any transactions between its subSidiaries and its associates. The Organisation is currently putting systems in place to capture the necessary information. It is, therefore, not possible at this stage to disclose the impact, if any, of the revised standard on the related party disclosures.

(ii) Amendments to IFRS 7, "Financial Instruments: Disclosures" on derecognition of financial instruments. These .amendments will promote transparency in the reporting of transfer transactions and improve users' understanding of the risk exposures relating to transfers of financial assets and the effect of those risks on an entity's financial pOSition, particularly those involving securit.isat.ion of financial assets. These amendments are effective for annual per.iods beginning on or after 1 July 2011 and have not yet been endorsed by the European Union.

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