What is the primary source of information for determining value in use for Petro Stopping Center?
Petro_Stopping_Center Franchise · 2025 FDDAnswer from 2025 FDD Document
The business plans, which are approved on an annual basis by the group's senior management, are the primary source of information for the determination of value in use. They contain forecasts for oil and natural gas production, power generation, refinery throughputs, sales volumes for various types of refined products (e.g. gasoline and lubricants), revenues, costs and capital expenditure. Carbon taxes and costs of emissions allowances are included in estimates of future cash flows, where applicable, based on the regulatory environment in each jurisdiction in which the Company operates. As an initial step in the preparation of these plans, various assumptions regarding market conditions, such as oil prices, natural gas prices, power prices, refining margins, refined product margins and cost inflation rates are set by senior management. These assumptions take account of existing prices, global supply-demand equilibrium for oil and natural gas, other macroeconomic factors and historical trends and variability. In assessing value in use, the estimated future cash flows are adjusted for the risks specific to the asset group to the extent that they are not already reflected in the discount rate and are discounted to their present value typically using a pre-tax discount rate that reflects current market assessments of the time value of money.
Source: Item 23 — RECEIPTS **RECEIPTS (FDD pages 87–131)
What This Means (2025 FDD)
According to Petro Stopping Center's 2025 Franchise Disclosure Document, the primary source of information for determining value in use are the business plans. These plans are approved annually by the group's senior management and include forecasts for various factors such as oil and natural gas production, power generation, refinery throughputs, sales volumes for refined products like gasoline and lubricants, revenues, costs, and capital expenditure. These plans also incorporate carbon taxes and costs of emissions allowances, where applicable, based on the regulatory environment of each operating jurisdiction.
Senior management sets assumptions regarding market conditions like oil prices, natural gas prices, power prices, refining margins, refined product margins, and cost inflation rates as an initial step in preparing these business plans. These assumptions consider existing prices, global supply-demand equilibrium for oil and natural gas, macroeconomic factors, and historical trends.
To assess value in use, the estimated future cash flows are adjusted for risks specific to the asset group, if not already reflected in the discount rate. These cash flows are then discounted to their present value, typically using a pre-tax discount rate that reflects current market assessments of the time value of money. This comprehensive approach ensures that the value in use is determined based on a wide range of factors and assumptions, all reviewed and approved by senior management.