The year 2017 was used to eliminate all the risks highlighted by the auditors in the past several years. Accordingly, the Management and Supervisory Board of Petrokemija d.d. corrected the previously published unaudited financial results for 2017 in a way that the expressions of reservation are for the most part resolved. Thus, the loss was increased by HRK 95.8 million, which, with the previously reported HRK 146.8 million, makes a total loss of HRK 242.6 million in 2017.
It is important to point out that the loss is accounted for in 2017, but its roots were generated much earlier and were treated as open business and accounting issues for a number of years, assuming that some new market opportunities would open in the coming periods that would enable the reactivation of a part of the passive assets, the stilled facilities, spare parts and materials as well as a part of the investment in the daughter companies, which did not have the expected effects in the previous period.
Transparent presentation of the financial position of Petrokemija d.d.
The strategic goal of these decisions was to align the interests of the majority owner and potential investors based on a transparent presentation of the financial position of the Company and without the reserves expressed by the auditors. After the corrections have been made, the Management Board and the Supervisory Board estimate that the financial statements transparently present the financial position of the Company as at 31 December 2017 and its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards adopted by the European Union (IFRS ).
As regards the first quarter of 2018, where Petrokemija d.d. transferred all the bad debts of the unfinished restructuring process from 2017, the negative financial effects are further strengthened, largely by the high rise in the price of CO2 allowances and the continued growth in natural gas purchasing prices, but also by the fall in sales prices of mineral fertilizers on the global market and purchase prices growth of other raw materials (MAP, DAP, potassium chloride).
The growth of the of CO2 allowances price generates 59% of total losses
The largest single impact on the financial result was the rise in the price of CO2 allowances and it is apparent that out of the HRK 78.8 million losses in the first quarter of 2018, they account for HRK 46.5 million or 59%.
Republic of Croatia as the majority owner has undertaken numerous activities in this multi-annual process to maintain the continuity of production and to open the prospect of further development, not only of the production of mineral fertilizers, but also of all the participants in the value creation chain; from ports, Croatian Railways, natural gas suppliers, manufacturers of equipment and packaging and many other suppliers, to the complete sector of agricultural production as a customer and consumer of mineral fertilizers.
The potential that the Company has in its employees, facilities, market reputation and all other aspects of business could, by activation in a more favorable financial framework in a relatively short period starting from 2019, show significant positive effects, potentially also through the activation of part of the assets and other potentials of the Company, which in previous periods were not in optimum business function.