RNS Number : 7980X

Petrol AD

31 August 2022

PETROL AD

Legal Entity Identifier (LEI): 4851003SBNLWFQX4XS80

Petrol AD ("74JJ"), announces the publication of its

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

OF PETROL GROUP

AND CONDENSED EXPLANATORY NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD ENDED JUNE 30, 2022

(This document is a translated condensed version of the original Bulgarian document,

 in case of divergence the Bulgarian original text shall prevail)

CONSOLIDATED STATEMENT OF PROFIT OR LOSS

AND OTHER COMPREHENSIVE INCOME

For the period ended June 30

	Note	2022 BGN'000		2021 BGN'000, restated
Continuing operations
Revenue	3	323,058		213,066
Other income	4	4,091		3,312
Cost of goods sold		(294,647)		(186,835)
Materials and consumables	5	(3,351)		(1,837)
Hired services	6	(14,964)		(17,025)
Employee benefits	7	(10,424)		(10,307)
Depreciation and amortisation	11,12	(1,707)		(1,739)
Reversal of (impairment) losses		(19)		4
Other expenses	8	(374)		(413)
Finance income	9	891		705
Finance costs	9	(2,090)		(2,263)
Profit (loss) before tax		464		(3,332)
Tax income	10	7		139
Profit (loss) for the period from continuing operations		471		(3,193)
Discontinued operation
Profit (loss) from discontinued operation (net of income tax)		(366)		409
Profit (loss) for the period		105		(2,784)
Total comprehensive income for the period		105		(2,784)
Profit (loss) attributable to:
Owners of the Parent company		105		(2,784)
Non-controlling interest		-		-
Profit (loss) for the period		105		(2,784)
Total comprehensive income attributable to:
Owners of the Parent company		105		(2,784)
Non-controlling interest		-		-
Total comprehensive income for the period		105		(2,784)
Profit (loss) per share (BGN) from continuing operations and discontinued operation	20	0.004		(0.10)
Profit (loss) per share (BGN) from continuing operations		0.02		(0.12)

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

		Note		June 30 2022 BGN'000				Dec. 31 2021 BGN'000
Non-current assets
Property, plant and equipment and intangible assets		11		39,120				40,632
Investment properties		12		1,626				1,650
Right-of-use asset		13		5,781				6,851
Goodwill		14		57				57
Deferred tax assets		10		2,512				2,465
Loans granted		17		2,808				3,708
Total non-current assets				51,904				55,363
Current assets
Inventories		15		26,261				20,866
Loans granted		17		18,380				18,423
Trade and other receivables		18		52,374				28,349
Cash and cash equivalents		19		2,189				4,027
Total current assets				99,204				71,665
Total assets				151,108				127,028
Equity
Registered capital	20		109,250				109,250
Reserves			42,641				43,278
Accumulated loss			(148,457)				(149,199)
Total equity attributable to the owners of the Parent company			3,434				3,329
Non-controlling interests			24				24
Total equity			3,458				3,353
Non-current liabilities
Loans and borrowings	21		49,792				41,724
Liabilities under lease agreements	13		4,155				4,799
Employee defined benefit obligations	22		870				870
Total non-current liabilities			54,817				47,393
Current liabilities
Trade and other payables	23		87,590				73,183
Loans and borrowings	21		3,607				1,139
Liabilities under lease agreements	13		1,444				1,766
Current income tax liabilities	24		192				194
Total current liabilities			92,833				76,282
Total liabilities			147,650				123,675
Total equity and liabilities			151,108				127,028

COMPREHENSIVE STATEMENT OF CHANGES IN EQUITY

For the period ended June 30, 2022

			Equity attributable to the owners of the Parent company								Non-controlling interests		Total equity
	Registered capital		General reserves		Reval. reserve		Accumulated profit (loss)		Total
	BGN'000		BGN'000		BGN'000		BGN'000		BGN'000		BGN'000		BGN'000
Balance at January 1, 2021	109,250		18,864		-		(113,564)		14,550		23		14,573
Changes in equity for 2021
Comprehensive income for the period
Loss for the period	-		-		-		(25,387)		(25,387)		1		(25,386)
Other comprehensive income	-		-		-		(63)		(63)		-		(63)
Total comprehensive income	-		-		-		(25,450)		(25,450)		1		(25,449)
Transfer of revaluation reserve of assets to retained earnings, net of assets	-		-		(404)		404		-		-		-
Balance at December 31, 2021	109,250		18,864		24,414		(149,199)		3,329		24		3,353
Changes in equity for 2022
Comprehensive income for the period
Profit for the period	-		-		-		105		105		-		105
Total comprehensive income	-		-		-		105		105		-		105
Transfer of revaluation reserve of assets to retained earnings, net of assets	-		-		(637)		637		-		-		-
Balance at June 30, 2022	109,250		18,864		23,777		(148,457)		3,434		24		3,458

CONSOLIDATED STATEMENT OF CASH FLOWS

For the period ended June 30

	2022 BGN'000		2021 BGN'000
Cash flows from operating activities
Net loss before taxes	105		(2,784)
Adjustments for:
Depreciation/amortization of property, plant and equipment and intangible assets	1,718		2,870
Interest expense and bank commissions, net	1,457		1,723
Shortages and normal loss, net of excess assets	(130)		(298)
Provisions for unused paid leave and retirement benefits	423		439
(Reversal of) impairment loss on assets	19		(4)
Payables written-off	(2,896)		(1,155)
Loss (profit) on sale of assets	(47)		(95)
	649		696
Change in trade payables	16,208		10,004
Change in inventories	(5,347)		(590)
Change in trade and other receivables	(25,647)		(7,023)
Cash flows generated from operating activities	(14,137)		3,087
Interest, bank fees and commissions paid	(1,196)		(1,497)
Income tax paid	(2)		-
Net cash from operating activities	(15,335)		1,590
Cash flows from investing activities
Payments for purchase of property, plant and equipment	(2,104)		(400)
Proceeds from sale of property, plant and equipment	4,535		1,524
Payments for loans granted, net	(2,163)		(249)
Proceeds from loans granted, net	3,037		187
Interest received on loans granted	716		17
Proceed (payments) for acquisitions of other investments	(25)		-
Net cash flows used in investing activities	3,996		1,079
Cash flows from financing activities
Proceeds from loans and borrowings	10,830		350
Payments of loans and borrowings	(308)		(424)
Lease payments	(1,239)		(2,307)
Net cash flows from financing activities	9,283		(2,381)
Net decrease in cash flows during the period	(2,056)		288
Cash and cash equivalents at the beginning of the period	3,945		2,722
Effect of movements in exchange rates	218		5
Cash and cash equivalents at the end of the period	2,107		3,015

Condensed notes

to the interim consolidated financial report

for the period ended June 30, 2022

1.         Segments reporting

The Group has identified the following operating segments, based on the reports presented to the Group's Management, which are used in the process of strategic decision-making:

·    Wholesale of fuels - wholesale of petroleum products in Bulgaria;

·    Retail of fuels - retail of petroleum and other products through a network of petrol stations.

·    Other activities - financial and accounting services, consultancy, rental income and other activities.

The segment information, presented to the Group's Management for the periods ended as of June 30, 2022 and 2021 is as follows:

June 30 2022	Wholesale of fuels		Retail of fuels		All other segments		Total for the Group
	BGN'000		BGN'000		BGN'000		BGN'000
Total segment revenue	52,184		274,811		1,677		328,672
Intra-group revenue	-		28		475		503
Revenue from external customers	52,184		274,783		1,202		328,169
Adjusted EBITDA	4,062		(1,885)		857		3,034
Depreciation/amortization	10		1,554		154		1,718
Reversed impairment	-		(8)		27		19

June 30 2021	Wholesale of fuels		Retail of fuels		All other segments		Total for the Group
	BGN'000		BGN'000		BGN'000		BGN'000
Total segment revenue	9,785		208,394		1,700		219,879
Intra-group revenue	-		70		537		607
Revenue from external customers	9,785		208,324		1,163		219,272
Adjusted EBITDA	1,691		(905)		929		1,715
Depreciation/amortization	1,129		1,588		153		2,870
Impairment	-		(3)		(1)		(4)

The policies for recognition of revenue from intra-group sales and sales to external clients for the purposes of the reporting by segments do not differ from these applied by the Group for revenue recognition in the consolidated statement of profit and loss and other comprehensive income.

The Management of the Group evaluates the results of the performance of the segments based on the adjusted EBITDA[1]. In the calculation of the adjusted EBITDA the effect of the impairment of assets is not taken into account.

A reconciliation of the reported segments with the interim consolidated financial report figures for the period ended June 30, 2022 and 2021 is presented in the table below:

	June 30 2022 BGN'000		June 30 2021 BGN'000
Revenue
Total revenue from reporting segments	326,995		218,179
Revenue from other segments	1,677		1,700
Elimination of revenue from inter-Group sales	(503)		(607)
Elimination of revenue from discontinued operation	(1,020)		(2,894)
Consolidated revenue from continuing operations	327,149		216,378
Adjusted EBITDA
Adjusted EBITDA - reporting segments	2,177		786
Adjusted EBITDA - all other segments	857		929
Elimination of adjusted EBITDA from discontinued operation	355		(1,754)
Consolidated adjusted EBITDA before taxes from continuing operations	3,389		(39)
Depreciation	(1,707)		(1,739)
Impairment loss	(19)		4
Finance costs, net	(1,199)		(1,558)
Profit (loss) before tax from continuing operations	464		(3,332)

2.         Discontinued operations

At the end of February 2022 the subsidiary Varna Storage EOOD returned a License No 544 for tax warehouse operation, issued by the Customs Agency, due to inability to negotiate an acceptable level of remuneration for the leased storage depot, subject to the license. In this consolidated financial report the operation is classified as discontinued as the comparative period of the statement of profit or loss and other comprehensive income is restated to present the discontinued operation separate from the continuing operations.

The result from discontinued operations and net cash flows, related to the operating, investing and financial operations are disclosed, as follows:

	June 30, 2022 BGN		June 30, 2021 BGN
Revenue from discontinued operation	1,031		2,920
Costs of discontinued operation	(1,437)		(2,467)
Profit (loss) before taxes	(406)		453
Tax income (expense)	40		(44)
Profit (loss) for the period from discontinued operation	(366)		409
Basic earnings (loss) per share (BGN)	(0.01)		0.01

The loss from discontinued operation of BGN 366 thousand (June 30, 2021: profit of 409 thousand) is fully attributable to the owners of the Group.

		June 30, 2022 BGN				June 30, 2021 BGN
Net cash flow from operating activities		(636)				754
Net cash flow from financial activities		(1)				(1,231)
Net cash flow decrease for the period	(637)				(477)

3.         Revenue from sales

	June 30 2022 BGN'000		June 30 2021 BGN'000
Sales of goods	320,395		210,526
Sales of services	2,663		2,540
	323,058		213,066

4.         Other income

	June 30 2022 BGN'000		June 30 2021 BGN'000
Gain on sale of property, plant, equipment and materials including:	2,896		1,155
Income from sales	5,900		1,730
Carrying amount	(3,004)		(575)
Income from financing	959		1,955
Surpluses	95		14
Penalties and indemnities	7		18
Insurance claims	6		11
Other	128		159
	4,091		3,312

As a result of the negative impact and consequences of the global pandemic from the spread of a new type of coronavirus - COVID-19, the Group has taken a series of actions to reorganize the activities of some of its trade sites and establish reduced working hours for some of the staff. From the end of March 2020, the Employment Agency opens an application procedure under Art. 1 of Decree No 55 of March 30, 2020 on determining the terms and conditions for payment of compensations to employers in order to maintain the employment of employees in the state of emergency, declared by a Decision of the National Assembly as of March 13, 2020, which is substituted later by Council of Ministry Decree No 151 from 2020. The Group has submitted documents for application under this procedure and for the periods ended June 30, 2022 and June 30, 2021 has received funding from the state in the amount of BGN 147 thousand and BGN 1,955 thousand.

By Decision No 739 of 26.10.2021, amended by Decision No 771 of 06.11.2021 and Decision No 885 of 16.12.2021, the Council of Ministers adopted a program for compensation of non-residential end customers of electricity. The program aims to protect and assist all non-household end-users to deal with the effects of fluctuations in electricity prices. At the end of the reporting period the Group received and reported income from financing for the period ended June 30, 2022 under this program of BGN 812 thousand.

5.         Materials and consumables

	June 30 2022 BGN'000		June 30 2021 BGN'000
Electricity and heating	2,514		1,079
Fuels and lubricants	304		219
Office consumables	208		190
Spare parts	119		128
Working clothes	95		95
Water supply	48		47
Advertising materials	15		17
Other	48		62
	3,351		1,837

6.         Hired services

	June 30 2022 BGN'000		June 30 2021 BGN'000
Rents	5,696		7,471
Dealer and other commissions	5,411		5,491
Maintenance and repairs	1,115		1,400
Consulting, training and audit	574		609
Security	388		369
State, municipal fees and other costs	345		331
Communications	327		311
Cash collection	291		307
Insurances	168		161
Software licenses	157		103
Advertising	103		92
Transport	49		35
Other	340		345
	14,964		17,025

The rent expenses include rent costs of trade sites for BGN 5,586 thousand (June, 30 2021: BGN 7,439 thousand) leased under operating lease, which fall under the exclusions of IFRS 16 and whose agreements comprise a contractual clause, that the both parties have the right to cease the contract for separate trade sites or as a whole with an insignificant sanction.

7.         Employee benefits

	June 30 2022 BGN'000		June 30 2021 BGN'000
Wages and salaries	8,629		8,624
Social security contributions and benefits	1,795		1,683
	10,424		10,307

8.         Other expenses

	June 30 2022 BGN'000		June 30 2021 BGN'000
Local taxes and taxes on expenses	149		177
Entertainment expenses and sponsorship	122		80
Scrap and shortages	43		14
Penalties and indemnities	6		90
Loss on liquidation of property, plant, equipment and materials including:	-		25
Carrying amount	-		27
Revenue from sales	-		(2)
Business trips	9		7
Other	45		20
	374		413

9.         Finance income and costs

	June 30 2022 BGN'000		June 30 2021 BGN'000
Finance income
Interest income, including	673		705
Interest income on loans granted	652		640
Interest income on trade receivables	21		65
Net foreign exchange gain	218		-
	891		705
Finance costs
Interest costs, including:	(1,879)		(2,110)
Interest expenses on debenture loans	(851)		(897)
Interest expenses on trade and other payables	(715)		(865)
Interest expenses on bank loans	(179)		(203)
Interest expenses on leases	(128)		(243)
Interest expenses on trade loans	(6)		(2)
Loss from cession contracts	-		(5)
Bank fees, commissions and other financial expenses	(211)		(148)
	(2,090)		(2,263)
Finance costs, net	(1,199)		(1,558)

10.       Taxation

10.1.    Tax expenses

Tax expense recognised in profit or loss includes the amount of current and deferred income tax expenses in accordance with IAS 12 Income taxes.

	June 30 2022 BGN'000		June 30 2021 BGN'000
Current tax expense	-		12
Change in deferred tax, including:	(7)		(151)
Temporary differences recognised during the period	169		27
Temporary differences arising during the period	(172)		(178)
Adjustments	(4)		-
Tax income from continuing operations	(7)		(139)

The amount does not comprise the tax income from discontinued operation of BGN 40 thousand (June 30, 2021: BGN 44 thousand tax expense), which is included in the profit (loss) from discontinued operation, net of taxes in the interim financial statement for profit or loss and other comprehensive income (see Note 2).

10.2.    Effective tax rate

The reconciliation between the accounting loss and tax expense, as well as calculation of the effective tax rate as of June 30, 2022 and June 30, 2021 is presented in the table below:

	June 30 2022 BGN'000		June 30 2021 BGN'000
Profit (loss) before tax for the period from continuing operations	464		(3,332)
Applicable tax rate	10%		10%
Tax expense at the applicable tax rate	46		(333)
Tax effect of permanent differences	12		(15)
Tax effect of a tax asset not recognised in the current period that arose in the current period	(67)		203
Tax effect from consolidation adjustments	2		6
Tax income	(7)		(139)
Effective tax rate	-		-

The respective tax periods of the Group may be subject to inspection by the tax authorities until the expiration of 5 years from the end of the year in which a declaration was submitted, or should have been submitted. Consequently additional taxes or penalties may be imposed in accordance with the interpretation of the tax legislation. The Group's management is not aware of any circumstances, which may give rise to a contingent additional liability in this respect.

10.3.    Recognised deferred tax assets and liabilities

	Asset (liability) as at January 1, 2021	Recognised in profit and loss	Asset (liabilitiy) as at December 31, 2021	Recognised in other compre-hensive income	Asset (liability) as at June 30, 2022
	BGN'000	BGN'000	BGN'000	BGN'000	BGN'000
Property, plant and equipment	(2,703)	79	(2,624)	98	(2,526)
Impairment of assets	4,342	317	4,659	(1)	4,658
Tax loss carry-forwards	7	5	12	56	68
Provisions for unused paid leave and other provisions	141	(2)	139	9	148
Excess of interest payments in accordance with CITA	171	83	254	(126)	128
Other temporary differences, including unpaid benefits to individuals	19	6	25	11	36
	1,977	488	2,465	47	2,512

The Group has the right to carry forward deferred tax assets on tax losses until 2027.

10.4.    Unrecognized deferred tax assets

As of June 30, 2022 the Group's Management reviews the recoverability of deductible temporary differences and tax loss carry-forward, forming tax assets. Because of this review, the Group's Management estimates that there might be no sufficient taxable profits in the near future against which the assets will be utilized. Consequently, the Group does not recognize tax assets on the following deductible temporary differences and tax loss carry forward and impairment of assets, incurred during the current and previous reporting periods.

11.       Property, plant, equipment and intangible assets

	Land BGN'000		Buildings BGN'000		Plant and equipment BGN'000		Vehicles BGN'000		Other BGN'000		Assets under constr. BGN'000		Intangible assets BGN'000		Total BGN'000
Cost Balance at January 1, 2021	12,559		5,656		19,572		430		2,774		168		558		41,717
		T
Additions	-		16		138		-		108		565		85		912
Transfer of held-for-sale assets	744		438		240		-		-		-		-		1,422
Transfers	-		161		169		-		167		(497)		-		-
Disposals	(114)		(56)		(574)		-		(111)		(57)		(15)		(927)
Balance at December 31, 2021	13,189		6,215		19,545		430		2,938		179		628		43,124
Additions	5		77		41		-		15		3		16		157
Transfers	-		-		75		-		-		(75)		-		-
Disposals	(175)		(190)		(546)		-		(142)		-		(15)		(1,068)
Balance at June 30, 2022	13,019		6,102		19,115		430		2,811		107		629		42,213
Accumulated depreciation
Balance at January 1, 2021	-		206		757		10		217		-		48		1,238
Accumulated	-		218		788		11		245		-		34		1,296
Disposals for the period	-		(1)		(33)		-		(8)		-		-		(42)
Balance at December 31, 2021	-		423		1,512		21		454		-		82		2,492
Additions	-		114		401		5		133		-		25		678
Transfers	-		(11)		(44)		-		(22)		-		-		(77)
Balance at June 30, 2022	-		526		1,869		26		565		-		107		3,093
Carrying amount at January 1, 2021	12,559		5,450		18,815		420		2,557		168		510		40,479
Carrying amount at December 31, 2021	13,189		5,792		18,033		409		2,484		179		546		40,632
Carrying amount at June 30, 2022	13,019		5,576		17,246		404		2,246		107		522		39,120

As at June 30, 2022 property, plant and equipment with a carrying amount of BGN 22,461 thousand (December 31, 2021: BGN 23,926 thousand) are mortgaged or pledged as collaterals under bank loans, granted to the Parent company and to unrelated parties, under credit limit agreements for issuance of bank guarantees.

The assets under construction include mainly incurred expenses for reconstruction of trade sites.

12.       Investment property

	June 30, 2022 BGN'000		December 31, 2021 BGN'000
Cost
Balance at the beginning of the period	1,883		1,883
Acquisitions	-		-
Balance at the end of the period	1,883		1,883
Accumulated depreciation
Balance at the beginning of the period	233		184
Depreciation	24		49
Balance at the end of the period	257		233
Carrying amount at the beginning of the period	1,650		1,699
Carrying amount at the end of the period	1,626		1,650

Investment property representing land and building were acquired through business combination in December 2016. The Group determines the fair value of the investment property for reporting purposes, using a valuation report of independent appraiser, which is calculated by the method of comparatives, the method of discounted free cash flows and the amortised cost method. The fair value of the investment properties as at June 30 2022 and December 31, 2021 is BGN 1,987 thousand. The investment properties are part of a set of assets, which serve to secure a revolving credit line of BGN 1,500 thousand signed in 2016.

13.       Assets and liabilities under leases

In the consolidated statement of financial position as at June 30, 2022 and December 31, 2021 are disclosed the following items and amounts related to lease agreements:

Consolidated statement of financial position	June 30, 2022 BGN'000		December 31, 2021 BGN'000
Right-of-use assets, incl.:	5,781		6,851
Property (lands and buildings)	5,715		6,573
Machinery, plants and equipment	24		144
Transport vehicles	42		134
Liabilities under leases, incl.:	(5,599)		(6,565)
Current liabilities Non-current liabilities	(1,444) (4,155)		(1,766) (4,799)
Net effect on equity	182		286

The total outgoing cash flow under right-of-use assets lease agreements as at June 30, 2022 is at the amount of BGN 1,239 thousand (June 30, 2021: BGN 2,307 thousand) excluding the paid value added tax.

14.       Goodwill

	June 30, 2022 BGN'000		December 31, 2021 BGN'000
Cost of goods	19,844		19,844
Impairment loss	(19,787)		(19,787)
	57		57

The recognised goodwill as at June 30, 2022 and December 31, 2021 arose as a result of the acquisition of the subsidiaries: Varna Storage EOOD - BGN 19,787 thousand, Lozen Asset AD - BGN 29 thousand and Petrol Technologies OOD - BGN 28 thousand.

At the end of February 2022 the subsidiary Varna Storage EOOD returned a Licence No 544 for tax warehouse operation, issued by the Customs Agency, due to an inability to negotiate an acceptable remuneration for the lease tax warehouse, subject to the license. In this relation in the consolidated financial statement for the year ended on December 31, 2021, an impairment of the goodwill arising from the acquisition of the subsidiary at the amount of BGN 19,787 thousand is reported.

15.       Inventory

	June 30, 2022 BGN'000		December 31, 2021 BGN'000
Goods, including:	25,581		20,196
Fuels	18,744		13,408
Lubricants and other goods	6,837		6,788
Materials	680		670
	26,261		20,866

16.       Non-current assets held for sale

In February 2022 the Group acquired assets for BGN 2,027 thousand, in order to sell them. According to the plan the assets are sold in May 2022 for BGN 4,322 thousand, reporting a profit of BGN 2,295 thousand.

17.       Loans granted

	June 30, 2022 BGN'000		December 31, 2021 BGN'000
Non-current receivables
Loans granted to unrelated parties, including	2,808		3,708
Initial value	3,555		4,455
Allowance for impairment	(747)		(747)
	2,808		3,708
Current receivables
Loans granted to unrelated parties, including	18,380		18,423
Initial value	31,773		31,797
Allowance for impairment	(13,393)		(13,374)
	18,380		18,423
	21,188		22,131

Borrower	Receivables June, 30 2022 net	Principal	Interest	Accrued Interest	Annual Interest	Maturity
	BGN'000	BGN'000	BGN'000	BGN'000	%
	Commercial company	7,811	7,607	1,253	(1,049)		6.70%	31.dec.22
Commercial company	4,309	3,555	1,501	(747)	5.00%	31.dec.25
Commercial company	4,329	4,045	1,036	(752)	6.70%	31.dec.22
Commercial company	3,102	3,000	850	(748)	5.00%	31.dec.22
Commercial company	783	821	74	(112)	6.70%	31.dec.19
Commercial company	429	-	429	-	6.70%	31.dec.19
Commercial company	372	313	59	-	7.00%	7.aug.22
Commercial company	53	121	4	(72)	5.00%	31.dec.22
Commercial company	-	-	-	-	6.70%	31.dec.22
Commercial company	-	5,190		(5,190)	0.00%	28.oct.15
Commercial company	-	2,210		(2,210)	9.50%	28.oct.15
Commercial company	-	1,266	281	(1,547)	6.70%	31.dec.22
Commercial company	-	1,500	133	(1,633)	8.75%	17.jul.15
Commercial company	-	20	3	(23)	6.70%	31.dec.22
Commercial company	-	44		(44)	9.50%	21.jan.17
Commercial company	-	12	1	(13)	8.50%	26.aug.15
	21,188	29,704	5,624	(14,140)

Borrower	Receivables Dec., 31 2021 net		Principal		Interest		Accrued Interest		Annual Interest		Maturity
	BGN'000		BGN'000		BGN'000		BGN'000		%
	Commercial company		5,718		5,737		1,030		(1,049)				6.70%		31.dec.22
Commercial company		5,107		4,455		1,399		(747)		5.00%		31.dec.25
Commercial company		4,095		3,945		902		(752)		6.70%		31.dec.22
Commercial company		3,028		3,000		776		(748)		5.00%		31.dec.22
Commercial company		2,779		2,122		665		(8)		6.70%		31.dec.22
Commercial company		613		677		48		(112)		6.70%		31.dec.19
Commercial company		429		-		429		-		6.70%		31.dec.19
Commercial company		362		314		48		-		7.00%		7 aug. 22
Commercial company		-		5,190				(5,190)		0.00%		28.oct.15
Commercial company		-		2,210				(2,210)		9.50%		28.oct.15
Commercial company		-		1,500		133		(1,633)		8.75%		17.jul.15
Commercial company		-		1,284		239		(1,523)		6.70%		31.dec.22
Commercial company		-		72		2		(74)		5.00%		31.dec.22
Commercial company		-		44				(44)		9.50%		21.jan.17
Commercial company		-		17		1		(18)		6.70%		31.dec.22
Commercial company		-		12		1		(13)		8.50%		26.aug.15
		22,131		30,579		5,673		(14,121)

18.       Trade and other receivables

	June 30, 2022 BGN'000		December 31, 2021 BGN'000
Receivables from clients, including	38,193		22,553
Initial value	39,733		24,093
Allowance for impairment	(1,540)		(1,540)
Prepaid expenses	4,491		2
Financial assets, measured at fair value through profit or loss	2,235		2,235
Advances granted, including	1,846		366
Initial value	1,915		435
Allowance for impairment	(69)		(69)
Receivables under cession agreements, assumption of debt and regress	1,785		1,785
Initial value	4,043		4,043
Allowance for impairment	(2,258)		(2,258)
Guarantees for participation in tender procedures	800		911
Prepaid expenses	237		164
Litigations and writs, including	166		169
Initial value	176		179
Allowance for impairment	(10)		(10)
Other	2,621		164
Initial value	2,632		175
Allowance for impairment	(11)		(11)
	52,374		28,349

In accordance with the established policy, the Group provides its clients a credit period, after which an interest for delay is charged on the unpaid balance. An interest for delay is provided for in every particular contract. As at the end of every reporting period the Group carries out a detailed review and analysis of the significant due trade receivables and the assessed as uncollectible are impaired.

The adoption of the new IFRS 9 changed essentially the accounting of the impairment losses of financial assets and substitute the method of the accrued losses under IAS 39 with the oriented to a greater extent to the future model of the expected credit losses. The IFRS 9 obligates the Group to recognize a provision for the expected credit losses for all debt instruments, which are not recognised at fair value in the profit or loss and for the assets under contracts.

The Group considers that unimpaired overdue receivables are collectible based on historical information about payments, guarantees received and a detailed analysis of the credit risk and collaterals of its customers.

19.       Cash and cash equivalents

	June 30, 2022 BGN'000		December 31, 2021 BGN'000
Cash in transit	1,439		1,286
Cash at banks	605		2,612
Cash on hand	63		47
Cash in statement of cash flows	2,107		3,945
Blocked cash	82		82
Cash in statement of financial position	2,189		4,027

As at June 30, 2022 and December 31, 2021 cash at the amount of BGN 82 thousand, blocked under enforcement court cases to which the Group is a party, were presented as blocked cash.

Cash in transit comprises cash collected from fuel stations as at the end of the reporting period, but actually received in the bank accounts of the Group in the beginning of the next reporting period.

20.       Registered capital

The Group's registered capital is presented at its nominal value. The registered capital of the Group represents the registered capital of the Parent company Petrol AD.

As at June 30, 2022 and December 31, 2021 the shareholders in the Parent company are as follows:

Shareholder	June 30, 2022		December 31, 2021
Alfa Capital AD	28.85%		28.85%
Yulinor EOOD	23.11%		23.11%
Perfeto consulting EOOD	16.43%		16.43%
Trans Express Oil EOOD	9.82%		9.86%
Petrol Bulgaria AD	7.05%		7.32%
Gryphon Power AD	5.49%		-
Storage Invest EOOD	3.66%		3.66%
VIP Properties EOOD	2.05%		2.26%
The Ministry of Energy	0.65%		0.65%
Corporate Commercial Bank AD	-		5.51%
Other minority shareholders	2.89%		2.35%
	100.00%		100.00%

Given the structure of shareholding, there is no ultimate Parent company above the Parent company Petrol AD.

In February 2022 a notification under Art. 145 of the Public Offering of Securities Act by Corporate Commercial Bank AD (CCB AD) was entered in the Parent-company's office. With the notification the Bank notified that the shareholder CCB AD has transferred all its shares (5.51%) of the capital of Petrol AD on February 21, 2022 and lowering its interest below the 5% threshold. In the same month another shareholder - Trans Express Oil EOOD, increased its share in the capital of the Parent-company from 9.86% to 15.31%. As a result of subsequent transactions, the share of Trans Express Oil EOOD in the capital of the Parent company decreased to 9.82% as of the date of approval of the consolidated financial statements. During the same month another shareholder - Gryphon Power AD announced for the acquisition of 5.49% of the capital of Petrol AD.

The Management of the Parent company has undertaken series of measures related to optimization of its capital adequacy. At several General Meetings of Shareholders (GMS) held in the period of 2016 - 2017 a decision for reverse-split procedure for merging 4 old shares with a nominal value of BGN 1 into 1 share with a nominal value of BGN 4 and consequent decrease of the capital of the Parent company in order to cover losses by decreasing the nominal value of the shares from BGN 4 to BGN 1, was voted. In March 2018, following a decision of the Lovech Regional Court, which repealed the refusal of the Commercial Register (CR) to register the decision voted on EGMS for merging 4 old shares with a nominal value of BGN 1 into 1 new share with a nominal value of BGN 4, the applied change was registered in CR resulting in registered capital of the Parent company of BGN 109 249 612, distributed in 27 312 403 shares with a nominal value of BGN 4 each. The change in the capital structure of the Parent company was registered also in Central Depositary AD. The submitted in April 2018 application for registration of the voted on EGMS decision for the second stage of the procedure of the Parent company's capital to be decreased by decreasing the nominal value of the shares from BGN 4 to BGN 1 in order to cover losses, was refused by the Commercial Register.

At EGMS of Petrol AD held on November 8, 2018 the decision to decrease the capital of the Parent company in order to cover losses by decreasing the nominal value of the shares from BGN 4 to BGN 1 was voted again. A refusal of the application for registration of the decision in CR was enacted, which was appealed by the Parent company within the statutory term. The minority shareholders disputed the decision of the EGMS and additionally to the refusal the application proceeding was postponed until the pronouncing of the Lovech Regional Court on the court proceedings, initiated on minority shareholders request. In March 2019 the Lovech Regional Court enacted a decision, which rules the CR to register the decrease of the capital after a resumption of the registration proceedings following the pronouncing on the legal proceedings initiated by the minority shareholders request.

In February 2019 was held a new EGMS, where the decision for reduction of capital was voted again and a decision for substitution of the deceased member of Supervisory Board Ivan Voynovski with Rumen Konstantinov was taken. A refusal on the application for registration of these circumstances in the file of the Parent company was enacted, which was appealed by the Parent company within the statutory term. In addition to the refusal, the registration proceeding was ceased on request of minority shareholders until the Lovech Regional Court rules on.

In May 2019 the Lovech Regional Court enacted a decision, which repealed the enacted refusal and turn back the case to the Registry Agency for a registration of the application after a resumption of the ceased registration proceedings. At present, the court proceedings for repealing of the decisions of EGMS from February 2019 are pending.

The procedure for distribution of profits and coverage of losses is provided in the Commercial Act and the Articles of Association of the Parent company.

Profit (loss) per share

The loss per share is calculated by dividing the net loss for the period by the weighted average number of ordinary shares held during the reporting period.

	June 30, 2022			June 30, 2021
	Continuing operation	Discontinued operation	Total	Continuing operation	Discontinued operation	Total
Weighted-average number of shares (in thousand)	27,312	27,312	27,312	27,312	27,312	27,312
Profit (loss) in BGN thousand	471	(366)	105	(3,193)	409	(2,784)
Profit (loss) per share (BGN)	0.02	(0.01)	0.004	(0.12)	0.01	(0.10)

21.       Loans and borrowings

	June 30, 2022 BGN'000		December 31, 2021 BGN'000
Non-current liabilities
Debenture loans	36,292		36,274
Loans from financial institutions	13,500		5,450
	49,792		41,724
Current liabilities
Debenture loans	2,742		-
Loans from financial institutions	661		668
Trade loans from unrelated parties	204		471
	3,607		1,139
	53,399		42,863

21.1.    Debenture loans

In October 2006, the Parent company issued 2,000 registered transferable bonds with fixed annual interest rate of 8.375% and emission value of 99.507% of the nominal, which is determined at EUR 50,000 per bond. The purpose of the issue is to provide funds for working capital, financing of investment projects and restructuring of previous debt of the Parent company. The principal is due  

The principal is due in one payment at the maturity date and the interest is paid once per year. At the general meetings of the bondholders conducted in October and December 2011, it was decided to extend the term of the issue until January 26, 2017. On 23 December 2016, a procedure for extension of the bond issue to 2022 and reduction of the interest rate in the range from 5.5% to 8% was successfully completed.

In September 2020 the Parent company successfully completed a new procedure for renegotiating the conditions of the debenture loan. The maturity of the principal of the debenture loan is deferred until January 2027, the agreed interest rate is reduced to 4.24% per annum, and the periodicity of the interest (coupon) payments is every six months - in January and in July of each year to the maturity of the loan.

As at the date of preparation of these financial statements the nominal value of the debenture loan is EUR 18,659 thousand, and the fair value is BGN 34,620 thousand (2021: BGN 34,620 thousand), calculated at 7.51% interest rate (2021: 7.51%).

The debenture loan liabilities are disclosed in the statement of financial position at amortised cost. The annual interest rate as at June 30, 2022 is 4.67% (including 4.24% annual coupon rate).

21.2.    Loans from financial institutions

In July 2016, the Parent company entered into an investment loan agreement, prepaying the liabilities on finance lease contract from November 2015. Collateral of the loan is mortgage of property, acquired through finance lease and pledge of receivables. The term of the contract is May 2022 and the contracted interest rate is 3mEuribor+5.25%. In April 2020 the Parent company has renegotiated the terms under the investment loan agreement, as the agreed interest rate on principal was reduced to 3mEuribor plus 3.5%, but not less than 3.5%. With an additional agreement from January 2021 the repayment period of the loan is extended to September 30, 2022. The Group's liabilities as at June 30, 2022 under this bank loan are at the amount of BGN 204 thousand current liabilities (December 31, 2021: BGN 463 thousand).

In September 2018 the Parent company entered into a credit-overdraft agreement on current account in commercial bank, intended for working capital with maximum allowed amount of BGN 2,000 thousand and repayment period until January 31, 2019 and contracted interest rate as Savings-based Interest Rate (SIR) plus added amount of 6,1872 points, but cumulatively not less than 6.5% annually. The credit is secured with a special pledge of its goods in turnover, representing oil products and with a pledge of receivables on bank accounts. In December 2018, as a result of a signed annex to an agreement from 2016 for revolving credit line with the same bank, the Group negotiated an increase of the amount of the credit line of BGN 9,500 thousand with an additional amount of BGN 11,500 thousand, by which the total amount of credit line rose to BGN 21,000 thousand. The line is separated in total limit of BGN 13,500 for issuance of bank guarantees and BGN 7,500 for refinancing of the received credit-overdraft of BGN 2,000 thousand and the rest for working capital.

The increased amount of the credit limit on the revolving credit line is covered additionally with establishment of mortgages and pledges of properties, plants and equipment. In June 2019 the loan was partially repaid and the limit for working capital decreased from BGN 7,500 thousand to BGN 7,000 thousand. In January 2020 the Parent company renegotiated the terms of the used credit line granted to it by a commercial bank under a revolving credit line agreement dated September 2016, with a credit limit of BGN 7,000 thousand and achieved a reduction of the annual compound IRBS + 5,2802%, but not less than 5.5%. In March and September 2021, the Group repaid BGN 1,650 thousand of the principal under this tranche of the credit line. In December 2021, the bank granted an additional tranche in the amount of BGN 100 thousand and the loan repayment term was extended to December 15, 2024. As at June 30, 2022, the Group has an obligation under this loan for principal at the amount of BGN 5,400 thousand.

In April 2022 the Group negotiated an increase of working capital with a credit line under new tranche with a maximum amount of up to BGN 4,500 thousand, and with the same amount the credit line for bank guarantees is decreased. The amount is received and as at June 30, 2022 the principal liability under this tranche is BGN 4,500 thousand. The contracted annual interest rate is at the amount of the Interest Rate based on Savings increased by a margin of 4.174 points, but not less than 4.25%. The maturity of this tranche is December 16, 2024.

In June 2022 the Group negotiated another increase of working capital with a credit line under new tranche with a maximum amount of up to BGN 3,600 thousand, and with the same amount the credit line for bank guarantees is decreased. The amount is received and as at June 30, 2022 the principal liability under this tranche is BGN 3,600 thousand. The contracted annual interest rate is at the amount of the Interest Rate based on Savings increased by a margin of 4.1764 points, but not less than 4.25%. The maturity of this tranche is December 14, 2024.

21.3        Trade loans received

In February 2021 the Group received a short-term trade loan from an unrelated party with a credit limit of BGN 200 thousand, available in tranches at 4% annual interest rate on the received amount and due until December 31, 2021. Further the term of the loan was extended until December 31, 2022 and the credit limit increased to BGN 850 thousand. As at the date of preparation of this financial statements the Group does not have liabilities under this loan.

In May 2022 the Group received short-term loans from three unrelated commercial companies, as each loan is with a credit limit of BGN 2,000 thousand and interest at the amount of 5% on the received amount. The maturity of the loans is December, 31 2022. As at June 30, 2022 the liability on these loans is BGN 1,364 thousand.

In June 2022 the Group received a short-term trade loan from unrelated party. As at June 30, 2022 the liability is BGN 1,002 thousand. The loan is granted for annual interest rate of 4.5% and with a repayment period until December 31, 2022.

In June 2022 the Group received a short-term trade loan from unrelated party. As at June 30, 2022 the liability is BGN 376 thousand. The loan is granted for annual interest rate of 5% and with a repayment period until December 31, 2022.

21.4.       Factoring

In March 2021 the Group signed with a commercial bank an agreement for purchasing of receivables on trade invoices (standard factoring) with a total limit of advance payment of BGN 402 thousand and interest rate, based on savings (IRBS) in BGN, increased with a margin of 3.8382 points, but not less than 4% annually on the amount paid in advance. The contract is secured by a pledge of receivables on bank accounts of the Group opened in the bank. As at June 30, 2022 the Group has no liabilities related to this factoring agreement.

22.       Obligation for defined benefit retirement compensations

As at June 30,2022 and December 31, 2021 the Group accrued obligation for defined benefit retirement compensations amounting to BGN 870 thousand. The amount of the liability is determined based on an actuarial valuation, based on assumptions for mortality, disability, employment turnover, salary increases, etc. The present value of the liability is calculated using a discount factor of 0.20% and increase of the expected salary by 4%

The demographic assumptions are related to the likelihood individuals to leave the plan before retirement due to various reasons: withdrawal, staff reduction, illness, death, disability, etc. They are based on a statistical information about the population and are attached to the staff structure by gender and age at the time of the assessment.

23.       Trade and other payables

	June 30, 2022 BGN'000		December 31, 2021 BGN'000
Payables to suppliers	69,821		63,928
Advances received and deferred income	12,913		257
Payables to personnel and social security funds	2,563		2,640
Tax payables, including	451		5,342
Excise duty and other taxes	435		4,561
VAT	16		781
Payables to related parties	12		12
Other	1,830		1,004
	87,590		73,183

The Group accrues unused paid leave provision of employees in compliance with IAS 19 Employee Benefits. The movement of these provisions for the period is as follows:

	June 30, 2022 BGN'000		December 31, 2021 BGN'000
Balance at the beginning of the year	629		674
Accrued during the period	423		546
Utilised during the period	(345)		(591)
Balance at the end of the period, including:	707		629
Paid leaves	594		529
Social security on paid leaves	113		100

The balance at the end of the year is presented in the consolidated statement of financial position together with current payables to personnel.

24.       Current income tax

	June 30, 2022 BGN'000		December 31, 2021 BGN'000
Income tax payable at the beginning of the period	194		-
Corporate income tax accrued	-		194
Corporate income tax paid	(2)		-
Refundable corporate income tax at the end of the period	192		194

25.       Subsidiaries

The subsidiaries, included in the consolidation, over which the Group has control as of June 30, 2022 and December 31, 2021 are as follows:

Subsidiary	Main activity	Investment  at June 30 2022	Investment  at Dec. 31 2021
Varna Storage EOOD	Trade with petrol and petroleum products	100%	100%
Petrol Finance EOOD	Financial and accounting services	100%	100%
Elit Petrol -Lovech AD	Trade with petrol and petroleum products	100%	100%
Lozen Asset AD	Acquisition, management and exploitation of property	100%	100%
Petrol Properties EOOD	Trading movable and immovable property	100%	100%
Kremikovtsi Oil EOOD	Processing, import, export and trading with petroleum products	100%	100%
Shumen Storage EOOD	Processing, import, export and trading with petroleum products	100%	100%
Office Estate EOOD	Ownership and management of real estates	100%	100%
Svilengrad Oil EOOD	Processing, import, export and trading with petroleum products	100%	100%
Varna 2130 EOOD	Trade with petrol and petroleum products	100%	100%
Petrol Investment AD	Investment activity	99.98%	-
Petrol Finances OOD	Financial and accounting services	99%	99%
Petrol Technologies OOD	IT services and consultancy	98.80%	98,80%
Petrol Technology OOD	IT services and consultancy	98.80%	98.80%

In the period between May and the end of June 2022, through share purchase agreements, the Group acquired 4,999 (four thousand nine hundred ninety nine) shares with a nominal value of 10 BGN, which represent 99.98% of the capital of Petrol Investment AD.

In December 2021, the Group became a co-founder by making a cash contribution to a new subsidiary named Petrol Technology OOD. Against the cash contribution of BGN 8 thousand, the Group acquires 8,210 (eight thousand two hundred and ten) company shares, each with a nominal value of BGN 1 (one), representing 98.80% of the capital. There is no effect on the current consolidated financial statements at the date of the investment.

All subsidiaries are with address and registration in Republic of Bulgaria

Disposal of interest in subsidiaries during previous years

In December 2015 a contract with notarized signatures, whereby Petrol AD transferred to a company outside the Group 100% of Naftex Petrol EOOD's equity shares against BGN 1. Changing the sole owner of Naftex Petrol EOOD is filed timely for entry in the Commercial register at the Registry Agency, but has not been recorded because of incompleteness in the documents attached to the application. However, since the contract, as at December 2015, has been concluded properly according to the prescribed by the Commercial Code form, it raises legal action between the parties involved, due to which Petrol AD is no longer the sole shareholder of Naftex Petrol EOOD. Consequently, it is accepted that the Group has lost control and assets and liabilities of the subsidiary were written off and the gain was recognized resulting from the loss of control in the consolidated statement of profit or loss and other comprehensive income. As at the transaction date  the consolidated net assets of the subsidiary amounted to negative BGN 314,452 thousand. The result of the sale of the Group was a profit amounted to BGN 314,452 thousand.

In March 2016, the change of the sole owner of Naftex Petrol EOOD (subsidiary until December 2015) has been repeatedly applied for registration with the Commercial Register when a completed set of documents as instructed by the officials has been submitted. The registration was suspended by the court because of a request by a shareholder of the Parent company, on the grounds that the sale contract was challenged in court because executives were not authorized to conclude the agreement by the general meeting of the company contrary to the provisions of POSA. Before the conclusion of the transaction, it was thoroughly checked for compliance with the law and that fall below the thresholds for convening the General Meeting pursuant to Art. 114 of the POSA as documents proving this circumstance are duly implemented in the Commercial Register with the application for registration of the change of the sole owner of the company.

In December 2021, the Lovech District Court issued a final decision on the pending litigation, rejecting the claim filed against the Parent company. In its decision, the court found that the contract for sale of company's shares was concluded validly in the form required by law and in compliance with the provisions of the POSA. The sale of the shares is to be entered in the Commercial Register on the account of Naftex Petrol EOOD in accordance with the court decision.

26.       Capital management

In order to ensure the going concern functioning of the Group, the Management has undertaken series of purely procedural and business oriented measures, aimed to bring the capital of the Parent company in consistence with the requirements of Art. 252, par. 1, item 5 of the Commercial Act (CA) and overall improvement of the financial position of the Group.

As of June 30, 2022 and December 31, 2021, the net assets are BGN 3,458 thousand and BGN 3,353 thousand, respectively.

The Management of the Group has undertaken series of measures in order to optimize the capital adequacy of the company. As a result of the several General Meetings of Shareholders held during 2016 and 2017 a decision for reverse split procedure for merging 4 old shares with a nominal of BGN 1 into 1 new share with nominal of BGN 4 and subsequent decrease of capital of the Parent company in order to cover losses by decreasing the nominal value of the shares from BGN 4 to BGN 1 was voted.

In March 2018 following a decision of the Lovech Regional Court, which cancelled the refusal of the Commercial Register (CR) to register the decision taken on EGMS for merging of 4 old shares with BGN 1 nominal in 1 new share with BGN 4 nominal. The submitted change was registered in Commercial Register and the registered capital of the Parent company of BGN 109 249 612 was distributed in 27 312 403 shares with nominal of BGN 4 each. The change in capital structure was registered also in the register of Central Depository AD. The Commercial Register enacted a refusal on the submitted in April 2018 application for registration of the decision of EGMS for the second stage of the procedure reducing the nominal value of the shares of the Parent company from BGN 4 to BGN 1 in order to cover losses.

At EGMS of Petrol AD held on November 8, 2018 the decision to decrease the capital of the Parent company in order to cover losses by decreasing the nominal value of the shares from BGN 4 to BGN 1 was voted again. A refusal was given on the application for registration of the decision in CR, which was appealed by the Group within the statutory term. The minority shareholders disputed the decision of the EGMS and additionally to the refusal, the application proceedings was postponed until the pronouncing of the Lovech Regional Court on the court proceedings, initiated on minority shareholders request. In March 2019, the Lovech Regional Court ruled a decision instructing Commercial Register to reflect the reduction of capital after the resumption of the registration proceedings and ruling on the cases initiated at the request of the minority shareholders. At present  the court proceedings on the claims for annulment of the decisions taken by EGMS from November 2018 are pending.

The decision for decreasing the capital was voted again on a new EGMS held in February 2019. On the same EGMS was also taken a decision for replacement of the deceased member of the Supervisory Board Ivan Voynovski with Rumen Konstantinov. The application for registration of these circumstances in the account of the Parent company was refused, which was disputed within the statutory term by the Group.

In addition to the refusal the registration proceedings was postponed by a request of minority shareholders until the pronouncing of the Lovech Regional Court. In May 2019 the Lovech Regional Court enacted a decision, which repealed the enacted refusal and turn back the case to the Registry Agency for a registration of the application after a resumption of the ceased registration proceedings. At present, the court proceedings for repealing of the decisions of EGMS from February 2019 are pending.

Next capital adequacy measure, which the Group has taken, is a change in accounting policy in relation to non-current tangible assets - property, plant and equipment and intangible fixed assets of the policy applied in its financial statements until 2019 including the cost model, with the application from the beginning of 2020 of the other model - the revaluation model, which the Management considers to reflect more objectively the value of the held non-current tangible and intangible assets.

To carry out its business activity the Group needs free capital to provide the necessary working capital, to pay its obligations on timely manner and to follow its investment intentions. Major sources of liquidity are cash and its equivalents, intra-group cash flows, long-term and short-term loans, reduction of receivables collection period and extension of the liabilities paying period.

In the first half of 2022 the current liquidity ratio of the Group increased to 1.07 compared to 0.94 at the end of 2021. The improvement of the ratio is due to the increase in current assets by BGN 27,539 thousand (EUR 14,080 thousand), as the current liabilities increased by BGN 16,551 thousand (EUR 8,462 thousand) compared to 2021. The increase of current assets and liabilities is a result of the recovery of the economic activity in the country following the crisis caused by COVID-19 and the consequent increase of the trade receivable and payables, and materials. An additional effect caused also the increase in the selling prices during the current period, which led to a demand of a larger working capital. The higher by BGN 10,988 thousand (EUR 5,618 thousand) increase of the current assets compared to the current liabilities is explained mainly with the increase by BGN 7,424 thousand (EUR 3,796 thousand) of the long-term liabilities of the Group as at June 30, 2022 due to the received funds under revolving credit line at the amount of BGN 8,100 thousand (EUR 4,141 thousand).

During the current period the consolidated total indebtedness of the Group includes trade loans, credits from financial institutions and finance lease agreements increased by BGN 10,536 thousand (EUR 5,387 thousand) to BGN 53,399 thousand (EUR 27,302 thousand). The decline of total debt is due to a greatest extend to the received during the period funds of BGN 81,00 thousand (EUR 4,141 thousand) under a revolving credit line, as the liability of the Group on received bank loans increased to BGN 13,704 thousand (EUR 7,007 thousand). As at the end of the first six months of 2022 the Debt/Assets ratio minimally increased to 0.35 compared to 0.34 at the end of 2021.

For the first six months of 2022 the goods turnover ratio declines to 14 days compared to 16 days as at the end of 2021. The time required for the Group to collect its receivables from clients increased to 17 days compared to 15 days for 2021.

At the end of 2019, a new coronavirus was identified in China. Due to the fast widespread of the virus worldwide at the beginning of 2020, the World Health Organization declared a global pandemic. On March 13, 2020 the Parliament of the Republic of Bulgaria declared a state of emergency on request of the Government of the Republic of Bulgaria and on March 24, 2020 the Law on Measures and Actions during a State of Emergency became effective. In order to restrict the widespread of coronavirus infection, an Order of the Health Minister was issued for the introduction of anti-epidemic measures, which directly affect the business activity of the Group. Part of the measures include extension and interruption of the administrative deadlines, extension of the of administrative acts, suspension of the procedural court terms and the statute of limitations, changes in the labor legislation, referring to new working hours, suspension of work and / or reduction of working hours and use of leave, etc.

The pandemic causes a significant reduction in economic activity in the country and raises significant uncertainty about future processes in macroeconomics in 2020 and beyond. The Group's Management monitors the emergence of risks and negative consequences in the outcome of the pandemic with Covid-19, currently assessing the possible effects on the assets, liabilities and activities of the Group, striving to comply with contractual commitments, despite the uncertainties and force majeure circumstances. In view of the introduced anti-epidemic measures and restrictions in the pandemic, which cause a significant reduction in economic activity and creates significant uncertainty about future business processes, there is a real risk of a decline in sales of the Group. However, Management believes that it will be able to successfully bring the Group out of the state of emergency in which it is placed.

The plans for the future development of the company are closely related and depend to a greater extent to the stated expectations for changes in the market environment. The Management continues to follow the program outlined and started in the beginning of 2014 for restructuring the activities of Petrol Group, aiming to concentrate the efforts to optimize and develop the core business - wholesale and retail trading with fuels. With the aim to improve the financial position, the Management continues to analyze actively all expenses and to look for hidden reserves for optimization.

In the coming years the results of the Group will also depend on the possibilities to carry out the investments and the successful delivering of new projects. From the end of 2021, an active program is underway to increase the number of sites - self-service petrol stations. The Group's investments will be primarily focused on the construction of new petrol stations and increase the sales and market share of Petrol AD, mainly through the transformation of retail outlets into modern places for comprehensive customer service.

The results of the Group's activities are influenced by a number of factors, such as macroeconomic conditions in Bulgaria, competition, the dynamics of gross trade margins, the dynamics of crude oil and oil products prices, product mix, supplier relations, regulatory changes, changes in exchange rates , climatic conditions, seasonality, etc. In 2021 the need for actions on climate change continues, with all players in economic and social life in the face of consumers, governments and businesses working to reduce gas emissions and the greenhouse effect.

The specifics of the Group's core business challenge the Group to meet the expectations of shareholders, creditors and other stakeholders, while developing its business model in line with the environment, contributing to reducing carbon emissions and the overall impact on the environment.

In the process of managing petrol stations and storage depots and selling of fuels, petroleum products and other wholesale and retail goods, the Group is responsible for addressing environmental challenges in working with fuels and derivative chemicals, minimizing the environmental impact of sales of wholesale and retail fuels, as well as reducing the depletion of natural resources.

The significant risks related to the impact of climate and climate change, as well as the main commitments and activities undertaken by the Group in this regard are detailed and are part of the annual activity report of the Group.

In 2021 and 2022 the Group suffered negative consequences from the drastic increase in the prices of electricity and raw materials, both on the domestic and global markets.

Following the strategy for expanding the market share of the retail market under the franchise program, the Group plans and attracts more new petrol stations under the Petrol brand, as well as develops and increases the structure of franchised petrol stations leased.

The Group's management conduct an active marketing policy. Marketing events are planned, supported by sufficient media appearances to lead to an increase of fuel sales. The Group will continue to develop its card system and create a customer loyalty system.

The Group's Management activities are directed to validation of the principles and traditions of good corporate governance, increasing the trust of the interested parties, namely shareholders, investors and counterparties, and to disclosure of timely and precise information in accordance with the legal requirements.

27.       Disclosure of transactions with related parties

The Parent company (Controlling company) is Petrol AD. It has a two-tier management system, which includes a Management Board (MB) and a Supervisory Board (SB). Below are the names and functions of the members of the Supervisory and Management Board of Petrol AD.

Supervisory Board
Ivan Voynovski[2]	Chairman
Petrol Correct EOOD, represented by Nikolay Gergov	Member
Petrol Asset Management EOOD, represented by Armen Nazaryan	Member
Management Board
Grisha Ganchev	Chairman of the Management Board
Georgy Tatarski	Deputy chairman of MB and Executive director
Milko Dimitrov	Member of MB and Executive director
Lachezar Gramatikov	Member of MB
Kiril Shilegov	Member of MB

The total amount of the accrued remunerations of the members of Management and Supervisory Board of the Parent company, included in the personnel expenses as at June 30, 2022, amounted to BGN 626 thousand (BGN 883 thousand as at June 30, 2021) and unsettled liabilities of BGN 73 thousand (BGN 73 thousand as at December 31, 2021), where BGN 61 thousand are disclosed as personnel liabilities and BGN 12 thousand as liabilities to related parties.

In the first half of 2022 other transactions with related parties have been not carried out.

28.       Contingent liabilities

As at June 30, 2022 the Group has contingent liabilities, including issued mortgages and pledges of property, plant and equipment, which serve as a collateral for bank loans and credit limits for issuance of bank guarantees, as well as factoring agreements granted to the Group and unrelated parties with a total carrying amount of BGN 22,461 thousand, including in favour of First Investment Bank AD - BGN 16,179 thousand, in favour of Investbank AD - 3,432 thousand, in favour of Eurobank Bulgaria AD - BGN 1,477 thousand, in favour of DSK AD - BGN 1,373 thousand.

Pursuant to an agreement dated October 17, 2018 and its annexes the Group is a joint co-debtor and avalist on promissory note for BGN 48,750 thousand in favour of Investbank AD under loan agreement of unrelated supplier, including limit for overdraft and limit for stand-by credit for issuance of bank guarantees in favour of Customs Agency. The total amount of the utilized funds and issued bank guarantees of all borrower's exposures to the Bank shall not exceed BGN 45,000 thousand. In relation to this credit agreement, the Group has established in favour of Investbank AD a special pledge on its cash in the bank account opened in the bank-creditor with total amount of BGN 51 thousand as at June 30, 2022 and a special pledge on receivables from contractors for BGN 4,000 thousand average monthly turnover.

Pursuant to an agreement dated June 22, 2020 and its annexes the Group is a joint debtor and avalist of a promissory note in favour of Investbank AD under a credit agreement - overdraft from a financial institution, granted to an unrelated party - a major fuel supplier for a total amount of BGN 7,000 thousand.

Pursuant to an agreement dated June 17, 2021 the Group is a joint debtor for BGN 600 thousand in favour of Investbank AD under a credit limit for bank guarantees, granted to an unrelated party - a supplier.

Pursuant to an agreement dated February 24, 2022 the Group is a joint debtor for USD 1,260 thousand in favour of Investbank AD under an investment loan agreement, granted to unrelated party - supplier.

As at June 30, 2022 the Group bears a joint obligation for BGN 2,346 thousand according to a contract for debt dated January 13, 2017 on an obligation of a subsidiary until March 2018 - Elit Petrol AD.

Under a bank agreement for revolving credit line dated September 21, 2016, bank guarantees were issued for a total amount of BGN 2,787 thousand as at June 30, 2022, including BGN 300 thousand in favor of third parties - Group's suppliers, BGN 500 thousand in favour of Ministry of Economy to its registration under the Law on the Administrative Regulation of Economic Activities Related to Oil and Petroleum Products and BGN 1,987 thousand to secure own liabilities related to contracts under the Public Procurement Act. As at June 30, 2022 the contract is secured by a pledge of all receivables on bank accounts of the Parent company for BGN 192 thousand. In July 2017 the credit limit under the revolving credit line was increased from BGN 8,500 thousand to BGN 9,500 thousand. Assets amounted to BGN 1,500 thousand, owned by a subsidiary, additionally secured the credit limit. With an annex from December 2018 the limit is increased to BGN 21,000 thousand.

As a collateral of an investment loan signed on June 29, 2016 with Eurobank Bulgaria AD, a mortgage of property, acquired through the investment loan and a pledge of receivables, arising from opened bank accounts of the Parent company to the amount of the outstanding balance of the loan, which as at the June 30, 2022 amounting to BGN 204 thousand principal.

In relation to a signed in 2015 guarantee contract for obligations of subsidiary until February 2018, arising of a cession contract with outstanding book value of BGN 245 thousand, in April 2020 the Court ruled a final decision on this pending litigation. The Court assumed that the Group is responsible as a guarantor for the obligations of the subsidiary under the cession agreement. The Court of Appeal has entirely annulled the decision of the first instance court and admitted the receivable of the Group under the guarantee contract jointly with the other party. The decision of the Appellate Court was appealed by the Parent company before the Supreme Court of Cassation, but was not allowed. The Group file a new claim to establish the non-existence of these receivables on a newly arising basis. In favour of the Group a collateral for the negative ascertainable claim was admitted as the Group granted a guarantee for BGN 25 thousand in a court account and the court enforcement proceedings initiated against the Parent company was suspended. With a decision from November 2021 the court ruled as established on the appealed by the Parent company negative ascertainable claim, that the Group does not due to the defendant the appointed receivables. The Decision from November 2021 is appealed by the defendant and the court case is currently pending before second instance.

The funds given as collateral under Art. 180 and Art. 181 of the CPA in the amount of BGN 245 thousand under the case initiated against the Group in 2015, together with the amount of BGN 93 thousand, were collected by the bailiff in the course of the enforcement proceedings initiated against the Group. However, they have not been distributed due to the suspension of the enforcement case, based on the security of a future claim provided in favor of the Group and remain blocked on the account of the bailiff until the final conclusion of the litigation.

In the previous reporting periods companies from the Group have entered into the debt under two loan agreements of a subsidiary with a bank-creditor for USD 15,000 thousand and USD 20,000 thousand, respectively. In 2015 the bank -creditor acquired court orders for immediate execution and receiving orders against the subsidiaries - joint debtors. In relation to the complains filed by the subsidiaries, the competent court has revoked the immediate enforcement orders and has invalidated the receiving orders. In October and December 2015 the creditor has filed claims under Art. 422 of Civil Procedure Code (CPC) against the subsidiaries for the existence of the receivables under each loan agreement. The court proceedings of the creditor are still pending.

In December 2016 the first instance court decreed a decision (the Decision) which admit for established that the bank has a receivable amounted to USD 15,527 thousand from the subsidiaries - joint debtors, arising from a signed loan agreement for USD 15,000 thousand. With the same decision the court has ordered the joint-debtors to pay BGN 411 thousand to the bank - creditor for legal advisory fees and court dispute expenses and BGN 538 thousand state fee in favor of the judiciary state for the ordered proceedings and BGN 538 thousand state fee for claim proceedings. In January 2017, the co-debtors have filed in time appeals against the court decision, because of that the decision did not come into force. As at the date of the preparation of these explanatory notes, the dispute is pending in the appeal court. The Group's Management considers that there are grounded chances the Decision to be entirely repealed.

As at the date of the preparation of these financial statements, the filed proceedings against the subsidiaries - joint debtors for estimation of the bank receivables due to the loan agreement for USD 20,000 thousand is pending before the first-instance court. The Management expects favorable decision by the competent court. In 2018 the Parent company sold its interest in one of co-debtor subsidiaries and the potential risk for the Group is reduced to the court proceedings against the second subsidiary.

A creditor of a subsidiary (until December 2015) unreasonably claimed in court the responsibility of the Parent company under a contract of guarantee for liabilities arising from a contract for a framework credit limit as a result of that the bank accounts of the Parent company amounting to USD 29,983 thousand were garnished. This claim was disputed in court by Petrol AD because the liability as guarantor has not occurred and / or extinguished pursuant to Art. 147, par. 2 of the LOC. At the time of conclusion of the guarantee deadline of the arrangements between the lender and subsidiary contractual framework for credit limit was July 1, 2014. The term of the framework credit limit was extended without the consent of the customer, therefore the responsibility of the latter has fallen by six months after initially agreed period, during which the creditor has brought an action against the principal debtor. The term of Art. 147, par. 1 of the LOC is final and upon its expiration the company's guarantee has been terminated, so the objection of the Parent company was granted by the court and imposed liens on bank accounts lifted.

After the writ of execution, pursuant to order proceedings, was cancelled on which were imposed liens on bank accounts of the Parent company, the creditor has initiated legal claim proceedings under Art. 422 of the CPC to establish the same claims against the subsidiary (until December 2015) and the guarantor Petrol AD. In these proceedings the objections are repeated, that liability as guarantor has not occurred and / or extinguished pursuant to Art. 147, par. 2 of the LOC, and therefore the Management expects that the claim of the creditor against the Parent company will be dismissed permanently by a court decision on those cases. At present, the case is suspended due to the existence of a preliminary ruling, which is important for the correct resolution of the case.

On March 10, 2021 the Group signed with a commercial bank an agreement for purchasing of receivables on trade invoices (standard factoring) with a total limit of advance payment of BGN 402 thousand and interest rate, based on savings (IRBS) in BGN, increased with a margin of 3.8382 points, but not less than 4% annually on the amount paid in advance. The contract is secured by a pledge of receivables on bank accounts of the Group, opened in the bank. As at June 30, 2022 the Group has no liabilities related to this factoring agreement.

On November 4, 2021, the Group signed with Allianz Bank Bulgaria AD a factoring agreement with a regress with an interest rate, Base Deposit Index for Companies +1.6%, but not less than 1.6% per year on the amount of the advance provided. As at June 30, 2022, the Group has liabilities at the amount of BGN 537 thousand in connection with the financing received under this factoring agreement.

The Group deposited as a collateral in favour of Chez Trade Bulgaria EAD to a contract for purchase of electricity for the amount of BGN 50 thousand.

As at June 30, 2022 funds in bank accounts at the amount of BGN 82 thousand are blocked in enforcement cases to which the Group is a party.

29. Events after the reporting date

In July 2022 the Group established a subsidiary named Petrol Export EOOD. The activities of the company include processing, import, export, supply and trade with oil and petrol products.

[1] EBITDA (earnings before interest, tax, depreciation and amortization)

[2] [2] Ivan Alipiev Voinovski - died on February 23, 2017. On February 18, 2019, an EGMS of Petrol AD was held, where was voted a replacement of the deceased Ivan Voynovski. The application for entry in the CR was rejected, which was appealed by Petrol AD within the statutory term, and the registration proceedings were suspended at the request of minority shareholders until the District Court - Lovech rules on proceedings for annulment of decisions taken. In May 2019, the Lovech District Court ruled with a decision revoking the refusal and returning the file to the Registry Agency to make the requested entry after the resumption of the suspended registration proceedings. At present, the court proceedings on the claims for annulment of the decisions of EGMS from February 2019 are pending.

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