Half-year Report

Petrol AD

08 September 2023

 

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, 2023

(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	2023 BGN'000		2022 BGN'000
Continuing operations
Revenue	3	265,423		323,058
Other income	4	603		4,091
Cost of goods sold		(237,878)		(294,647)
Materials and consumables	5	(2,420)		(3,351)
Hired services	6	(10,479)		(14,964)
Employee benefits	7	(12,043)		(10,424)
Depreciation and amortisation	11,12	(6,392)		(1,707)
Reversal of (impairment) losses		(31)		(19)
Other expenses	8	(654)		(374)
Finance income	9	739		891
Finance costs	9	(2,961)		(2,090)
Profit (loss) before tax		(6,093)		464
Tax income	10	102		7
Profit (loss) for the period from continuing operations		(5,991)		471
Discontinued operation
Profit (loss) from discontinued operation (net of income tax)		-		(366)
Profit (loss) for the period		(5,991)		105
Total comprehensive income for the period		(5,991)		105
Profit (loss) attributable to:
Owners of the Parent company		(5,991)		105
Non-controlling interest		-		-
Profit (loss) for the period		(5,991)		105
Total comprehensive income attributable to:
Owners of the Parent company		(5,991)		105
Non-controlling interest		-		-
Total comprehensive income for the period		(5,991)		105
Profit (loss) per share (BGN) from continuing operations and discontinued operation	20	(0.219)		0.004
Profit (loss) per share (BGN) from continuing operations		(0.219)		0.017

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

		Note		June 30 2023 BGN'000				Dec. 31 2022 BGN'000
Non-current assets
Property, plant and equipment and intangible assets		11		43,615				44,434
Investment properties		12		1,577				1,601
Right-of-use asset		13		46,827				52,578
Goodwill		14		57				57
Deferred tax assets		10		2,010				1,896
Loans granted		17		3,022				2,808
Total non-current assets				97,108				103,374
Current assets
Inventories		15		17,178				26,306
Loans granted		17		22,012				19,641
Trade and other receivables		18		31,467				34,051
Cash and cash equivalents		19		1,853				8,773
Total current assets				72,510				88,771
Total assets				169,618				192,145
Equity
Registered capital	20		109,250				109,250
Reserves			47,110				47,415
Accumulated loss			(142,331)				(136,645)
Total equity attributable to the owners of the Parent company			14,029				20,020
Non-controlling interests			38				38
Total equity			14,067				20,058
Non-current liabilities
Loans and borrowings	21		49,831				49,811
Liabilities under lease agreements	13		40,951				42,834
Employee defined benefit obligations	22		807				807
Total non-current liabilities			91,589				93,452
Current liabilities
Trade and other payables	23		51,879				64,517
Loans and borrowings	21		1,468				1,184
Liabilities under lease agreements	13		10,603				12,912
Current income tax liabilities	24		12				22
Total current liabilities			63,962				78,635
Total liabilities			155,551				172,087
Total equity and liabilities			169,618				192,145

COMPREHENSIVE STATEMENT OF CHANGES IN EQUITY

For the period ended June 30, 2023

			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, 2022	109,250		18,864		24,414		(149,199)		3,329		24		3,353
Changes in equity for 2022
Comprehensive income for the period
Profit/ (loss) for the period	-		-		-		11,705		11,705		(1)		11,704
Remeasurement on defined benefits obligations	-		-		-		86		86		-		86
Remeasurement on property, plant and equipment	-		-		5,445		-		5,445		17		5,462
Tax effects on remeasurement on property, plant and equipment	-		-		(545)		-		(545)		(2)		(547)
Other comprehensive income	-		-		4,900		86		4,986		15		5,001
Total comprehensive income	-		-		4,900		11,791		16,691		14		16,705
Transfer of revaluation reserve of assets to retained earnings, net of assets	-		-		(763)		763		-		-		-
Balance at December 31, 2022	109,250		18,864		28,551		(136,645)		20,020		38		20,058
Changes in equity for 2023
Comprehensive income for the period
Loss for the period	-		-		-		(5,991)		(5,991)		-		(5,991)
Total comprehensive income	-		-		-		(5,991)		(5,991)		-		(5,991)
Transfer of revaluation reserve of assets to retained earnings, net of assets	-		-		(305)		305		-		-		-
Balance at June 30, 2023	109,250		18,864		28,246		(142,331)		14,029		38		14,067

CONSOLIDATED STATEMENT OF CASH FLOWS

For the period ended June 30

	2023 BGN'000		2022 BGN'000
Cash flows from operating activities
Net profit (loss) before taxes	(5,991)		105
Adjustments for:
Tax income	(102)		(47)
Depreciation/amortization of property, plant and equipment and intangible assets	6,392		1,718
Interest expense and bank commissions, net	2,202		1,457
Shortages and normal loss, net of excess assets	122		(130)
Provisions for unused paid leave and retirement benefits	458		423
(Reversal of) impairment loss on assets	31		19
Payables written-off	(1,536)		(2,896)
	1,576		649
Change in trade payables	(13,084)		16,208
Change in inventories	8,996		(5,347)
Change in trade and other receivables	2,627		(25,647)
Cash flows generated from operating activities	115		(14,137)
Interest, bank fees and commissions paid	(1,290)		(1,196)
Income tax paid	(22)		(2)
Net cash from operating activities	(1,197)		(15,335)
Cash flows from investing activities
Payments for purchase of property, plant and equipment	(97)		(2,104)
Proceeds from sale of property, plant and equipment	1,378		4,535
Payments for loans granted, net	(1,923)		(2,163)
Proceeds from loans granted, net	3		3,037
Interest received on loans granted	-		716
Proceed (payments) for acquisitions of other investments	-		(25)
Net cash flows used in investing activities	(639)		3,996
Cash flows from financing activities
Proceeds from loans and borrowings	1,400		10,830
Payments of loans and borrowings	(1,100)		(308)
Lease payments	(5,404)		(1,239)
Net cash flows from financing activities	(5,104)		9,283
Net decrease in cash flows during the period	(6,940)		(2,056)
Cash and cash equivalents at the beginning of the period	8,732		3,945
Effect of movements in exchange rates	20		218
Cash and cash equivalents at the end of the period (see also Note 18)	1,812		2,107

Condensed notes

to the interim consolidated financial report

for the period ended June 30, 2023

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, 2023 and 2022 is as follows:

June 30 2023	Wholesale of fuels		Retail of fuels		All other segments		Total for the Group
	BGN'000		BGN'000		BGN'000		BGN'000
Total segment revenue	37,599		230,959		1,601		270,159
Intra-group revenue	3,149		20		964		4,133
Revenue from external customers	34,450		230,939		637		266,026
Adjusted EBITDA	(77)		2,086		543		2,552
Depreciation/amortization	60		6,218		114		6,392
Reversed impairment	-		-		31		31

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
Impairment	-		(8)		27		19

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, 2023 and 2022 is presented in the table below:

	June 30 2023 BGN'000		June 30 2022 BGN'000
Revenue
Total revenue from reporting segments	268,558		326,995
Revenue from other segments	1,601		1,677
Elimination of revenue from inter-Group sales	(4,133)		(503)
Revenue from external customers	266,026		328,169
Elimination of revenue from discontinued operation	-		(1,020)
Consolidated revenue from continuing operations	266,026		327,149
Adjusted EBITDA
Adjusted EBITDA - reporting segments	2,009		2,177
Adjusted EBITDA - all other segments	543		857
Elimination of adjusted EBITDA from discontinued operation	-		355
Consolidated adjusted EBITDA before taxes from continuing operations	2,552		3,389
Depreciation from continuing operations	(6,392)		(1,707)
Impairment loss from continuing operations	(31)		(19)
Finance costs from continuing operations, net	(2,222)		(1,199)
Profit (loss) before tax from continuing operations	(6,093)		464

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
Revenue from discontinued operation	1,031
Costs of discontinued operation	(1,437)
Loss before taxes	(406)
Tax income	40
Profit (loss) for the period from discontinued operation	(366)
Basic earnings (loss) per share (BGN)	(0.013)

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
Net cash flow from operating activities	(636)
Net cash flow from financial activities	(1)
Net cash flow decrease for the period	(637)

3.         Revenue from sales

	June 30 2023 BGN'000		June 30 2022 BGN'000
Sales of goods	262,862		320,395
Sales of services	2,561		2,663
	265,423		323,058

4.         Other income

	June 30 2023 BGN'000		June 30 2022 BGN'000
Gain on sale of property, plant, equipment and materials including:	327		2,896
Income from sales	676		5,900
Carrying amount	(349)		(3,004)
Income from grants and financing	141		959
Surpluses	26		95
Insurance claims	6		6
Penalties and indemnities	5		7
Other	98		128
	603		4,091

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. The Group has submitted documents to the Employment Agency under the employers compensation programme in order to preserve the employees in state of emergency since the beginning of 2020 and for the period ended June 30, 2022 the Group has received funding from the state in the amount of BGN 147 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, 2023 and June 30, 2022 under this program of BGN 141 thousand and BGN 812 thousand, respectively.

5.         Materials and consumables

	June 30 2023 BGN'000		June 30 2022 BGN'000
Electricity and heating	1,495		2,514
Fuels and lubricants	316		304
Office consumables	219		208
Spare parts	152		119
Working clothes	96		95
Water supply	62		48
Advertising materials	10		15
Other	70		48
	2,420		3,351

6.         Hired services

	June 30 2023 BGN'000		June 30 2022 BGN'000
Dealer and other commissions	5,510		5,411
Maintenance and repairs	1,731		1,115
Rents	603		5,696
Consulting, training and audit	524		574
Security	384		388
State, municipal fees and other costs	318		345
Communications	298		327
Cash collection	269		291
Insurances	187		168
Software licenses	144		157
Advertising	142		103
Transport	43		49
Other	326		340
	10,479		14,964

The rent expenses include rent costs of trade sites for BGN 446 thousand (June, 30 2022: BGN 5,586 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 2023 BGN'000		June 30 2022 BGN'000
Wages and salaries	9,351		8,629
Social security contributions and benefits	2,692		1,795
	12,043		10,424

The Group has signed a contract with licensed operators for giving food vouchers to its workers and/or employees, working under employment obligations or to persons hired under management and control agreements, separately of their remuneration. As a result as at June 30, 2023 are given food vouchers for total amount of BGN 1,076 thousand (BGN 329 thousand as at June 30, 2022).

8.         Other expenses

	June 30 2023 BGN'000		June 30 2022 BGN'000
Local taxes and taxes on expenses	204		149
Entertainment expenses and sponsorship	196		122
Scrap and shortages	136		43
Penalties and indemnities	60		6
Loss on liquidation of property, plant, equipment and materials including:	12		-
Carrying amount	12		-
Revenue from sales	-		-
Business trips	8		9
Other	38		45
	654		374

9.         Finance income and costs

	June 30 2023 BGN'000		June 30 2022 BGN'000
Finance income
Interest income, including	739		673
Interest income on loans granted	706		652
Interest income on trade receivables	33		21
Foreign exchange gain, net	-		218
	739		891
Finance costs
Interest costs, including:	(2,713)		(1,879)
Interest expenses on debenture loans	(851)		(851)
Interest expenses on trade and other payables	(310)		(715)
Interest expenses on bank loans	(366)		(179)
Interest expenses on leases	(1,181)		(128)
Interest expenses on trade loans	(5)		(6)
Loss from cession contracts	(20)		-
Bank fees, commissions and other financial expenses	(228)		(211)
	(2,961)		(2,090)
Finance costs, net	(2,222)		(1,199)

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 2023 BGN'000		June 30 2022 BGN'000
Current tax expense	12		-
Change in deferred tax, including:	(114)		(7)
Temporary differences recognised during the period	77		169
Temporary differences arising during the period	(191)		(172)
Adjustments	-		(4)
Tax income from continuing operations	(102)		(7)

A at June 30, 2022 the amount does not comprise the tax income from discontinued operation of BGN 40 thousand, 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, 2023 and June 30, 2022 is presented in the table below:

	June 30 2023 BGN'000		June 30 2022 BGN'000
Profit (loss) before tax for the period from continuing operations	(6,093)		464
Applicable tax rate	10%		10%
Tax expense at the applicable tax rate	(609)		46
Tax effect of permanent differences	96		12
Tax effect of a tax asset not recognised in the current period that arose in the current period	400		(67)
Tax effect from consolidation adjustments	11		2
Tax income	(102)		(7)
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.

In August 2022 the Parent company was given an order for initiation of a tax audit concerning the declared and paid by the Parent company corporate tax and taxes on expenses for the period 2016-2021 and value added tax for the period 2016 - July 2022. At the time of issuance of the these consolidated financial statements the tax audit was not concluded.

10.3.    Recognised deferred tax assets and liabilities

	Asset (liability) as at January 1, 2022	Recognised in profit and loss- all operations	Recognised in Equity	Asset (liabilitiy) as at December 31, 2022	Recognised in other compre-hensive income-all operations	Asset (liability) as at June 30, 2023
	BGN'000	BGN'000	BGN'000	BGN'000	BGN'000	BGN'000
Property, plant and equipment	(2,624)	140	(547)	(3,031)	55	(2,976)
Impairment of assets	4,659	56	-	4,715	-	4,715
Tax loss carry-forwards	12	23	-	35	(4)	31
Provisions for unused paid leave and other provisions	139	9	-	148	5	153
Excess of interest payments in accordance with CITA	254	(254)	-	-	52	52
Other temporary differences, including unpaid benefits to individuals	25	4	-	29	6	35
	2,465	(22)	(547)	1,896	114	2,010

The Group has the right to carry forward deferred tax assets on tax losses until 2028.

10.4.    Unrecognized deferred tax assets

As of June 30, 2023 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, 2022	12,559		5,656		19,572		430		2,774		168		558		41,717
		T
Additions	5		78		110		-		26		28		73		320
Transfers	-		14		94		-		-		(108)		-		-
Accumulated depreciation	-		(636)		(2,211)		(5)		(674)		-		(133)		(3,659)
Increase/decrease as a result of revaluation, which are recognized in other comprehensive income	1,302		2,174		1,379		3		522		-		82		5,462
Increase/decrease as a result of revaluation, which are recognized in profit or loss	1,140		(433)		(45)		-		(13)		-		(61)		588
Disposals	(181)		(267)		(667)		-		(228)		(13)		(1)		(1,357)
Balance at December 31, 2022	15,455		7,145		18,205		428		2,571		86		588		44,478
Additions	6		7		70		-		37		1		27		148
Transfers	15		-		8		-		-		(8)		(15)		-
Disposals	(39)		(15)		(292)		-		(18)		(15)		-		(379)
Balance at June 30, 2023	15,437		7,137		17,991		428		2,590		64		600		44,247
Accumulated depreciation
Balance at January 1, 2022	-		423		1,512		21		454		-		82		2,492
Accumulated	-		226		789		10		261		-		51		1,337
Netting of accumulated depreciation	-		(636)		(2,211)		(5)		(674)		-		(133)		(3,659)
Disposals for the period	-		(12)		(73)		-		(41)		-		-		(126)
Balance at December 31, 2022	-		1		17		26		-		-		-		44
Additions	-		104		353		5		114		-		24		600
Transfers	-		-		(6)		-		(6)		-		-		(12)
Balance at June 30, 2023	-		105		364		31		108		-		24		632
Carrying amount at January 1, 2022	13,189		5,792		18,033		409		2,484		179		546		40,632
Carrying amount at December 31, 2022	15,455		7,144		18,188		402		2,571		86		588		44,434
Carrying amount at June 30, 2023	15,437		7,032		17,627		397		2,482		64		576		43,615

As at June 30, 2023 property, plant and equipment with a carrying amount of BGN 24,843 thousand (December 31, 2022: BGN 25,242 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.

The initially revalued (to fair) amount of the property, plant, equipment and other intangible fixed  assets is determined by an independent appraiser's fair value valuation applied from January 01, 2020. Based on the NSI Consumer Price Index in December 2022 compared to December 2021, which shows annual inflation rate of 16.9%, the Management has made a judgement that there could be a material deviation in the fair values of the assets and has ordered a new market valuation as at December 31, 2022. In these interim consolidated financial statements the property, plant and equipment and intangible fixed assets are presented based on the valuation prepared by an independent valuer as at December 31, 2022. The valuation report of the independent licensed appraiser used the methods of intermediate comparisons, capitalized rental income and the tangible fixed asset method to determine the fair value of property, plant, equipment and intangible fixed assets.

12.       Investment property

	June 30, 2023 BGN'000		December 31, 2022 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	282		233
Depreciation	24		49
Balance at the end of the period	306		282
Carrying amount at the beginning of the period	1,601		1,650
Carrying amount at the end of the period	1,577		1,601

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, 2023 and December 31, 2022 is BGN 2,101 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, 2023 and December 31, 2022 are disclosed the following items and amounts related to lease agreements:

Consolidated statement of financial position	June 30, 2023 BGN'000		December 31, 2022 BGN'000
Right-of-use assets, incl.:	46,827		52,578
Property (lands and buildings)	46,135		51,726
Machinery, plants and equipment	25		17
Transport vehicles	667		835
Liabilities under leases, incl.:	(51,554)		(55,746)
Current liabilities	(10,603)		(12,912)
Non-current liabilities	(40,951)		(42,834)
Net effect on equity	(4,727)		(3,168)

The expenses recognized in the these consolidated statement of profit or loss and other comprehensive income from continuing operations and discontinued operations:

As a result the amendments signed in 2022 to the operating lease agreements for renting petrol stations, which extended the term of the agreements to the end of 2027 in order to secure Group's operations and provided for a significant termination penalty in respect of each petrol stations, these agreements no longer meet the criteria for exceptions under the standard and consequently the lease assets and liabilities have been recognised in accordance with the requirements of IFRS 16.

The total outgoing cash flow under right-of-use assets lease agreements as at June 30, 2023 is at the amount of BGN 5,404 thousand (June 30, 2022: BGN 1,239 thousand) excluding the paid value added tax.

The Group has leased various assets: land, retail premises, small offices and buildings, vehicles, photocopiers. The leases are normally for a period of 3 to 10 years, but may contain extension options.

14.       Goodwill

	June 30, 2023 BGN'000		December 31, 2022 BGN'000
Cost of goods	19,844		19,844
Impairment loss	(19,787)		(19,787)
	57		57

The recognised goodwill as at June 30, 2023 and December 31, 2022 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, 2023 BGN'000		December 31, 2022 BGN'000
Goods, including:	16,495		25,615
Fuels	9,638		18,778
Lubricants and other goods	6,857		6,837
Materials	683		691
	17,178		26,306

16.       Loans granted

	June 30, 2023 BGN'000		December 31, 2022 BGN'000
Non-current receivables
Loans granted to unrelated parties, including	3,022		2,808
Initial value	3,555		3,555
Allowance for impairment	(533)		(747)
	3,022		2,808
Current receivables
Loans granted to unrelated parties, including	22,012		19,641
Initial value	36,208		33,583
Allowance for impairment	(14,196)		(13,942)
	22,012		19,641
	25,034		22,449

Borrower	Receivables June, 30 2023 net	Principal	Interest	Accrued Interest	Annual Interest	Maturity
	BGN'000	BGN'000	BGN'000	BGN'000	%
Commercial company	8,921	8,172	1,799	(1,050)	6.70%	31.dec.22
Commercial company	5,657	5,410	1,334	(1,087)	6.70%	31.dec.23
Commercial company	4,704	3,555	1,682	(533)	5.00%	31.dec.25
Commercial company	3,470	3,000	1,002	(532)	5.00%	31.dec.23
Commercial company	1,080	1,167	142	(229)	6.70%	31.dec.19
Commercial company	737	715	22	-	5.00%	31.dec.23
Commercial company	396	314	82	-	7.00%	7.aug.23
Commercial company	66	65	1	-	6.70%	31.dec.23
Commercial company	3	121	10	(128)	5.00%	31.dec.23
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	-	1,257	368	(1,625)	6.70%	31.dec.23
Commercial company	-	-	429	(429)	6.70%	31.dec.19
Commercial company	-	44	-	(44)	9.50%	21.jan.17
Commercial company	-	22	4	(26)	6.70%	31.dec.23
Commercial company	-	12	1	(13)	8.50%	26.aug.15
	25,034	32,754	7,009	(14,729)

Borrower	Receivables Dec., 31 2022 net		Principal		Interest		Accrued Interest		Annual Interest		Maturity
	BGN'000		BGN'000		BGN'000		BGN'000		%
Commercial company		8,646		8,172		1,524		(1,050)		6.70%		31.dec.22
Commercial company		4,614		3,555		1,592		(533)		5.00%		31.dec.25
Commercial company		4,168		4,080		1,177		(1,089)		6.70%		31.dec.23
Commercial company		3,395		3,000		927		(532)		5.00%		31.dec.23
Commercial company		880		1,004		105		(229)		6.70%		31.dec.22
Commercial company		385		314		71		-		7.00%		31.dec.19
Commercial company		361		350		11		-		5.00%		07.aug.23
Commercial company		-		121		7		(128)		5.00%		31.dec.23
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		-		1,260		324		(1,584)		6.70%		31.dec.23
Commercial company		-		44		-		(44)		9.50%		21.jan.17
Commercial company		-		22		3		(25)		6.70%		31.dec.23
Commercial company		-		12		1		(13)		8.50%		26.aug.15
Commercial company		-		-		429		(429)		6.70%		31.dec.19
		22,449		30,834		6,304		(14,689)

17.       Trade and other receivables

	June 30, 2023 BGN'000		December 31, 2022 BGN'000
Receivables from clients, including	22,102		21,300
Initial value	24,318		23,525
Allowance for impairment	(2,216)		(2,225)
Prepaid expenses	3,899		342
Financial assets, measured at fair value through profit or loss	2,200		2,200
Receivables under cession agreements, assumption of debt and regress	1,915		1,840
Initial value	4,173		4,098
Allowance for impairment	(2,258)		(2,258)
Guarantees for participation in tender procedures	784		879
Advances granted, including	243		391
Initial value	312		460
Allowance for impairment	(69)		(69)
Value added tax refunded	176		4,957
Litigations and writs, including	92		92
Initial value	102		102
Allowance for impairment	(10)		(10)
Fuels compensations received	-		1,925
Other	56		125
Initial value	67		136
Allowance for impairment	(11)		(11)
	31,467		34,051

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.

18.       Cash and cash equivalents

	June 30, 2023 BGN'000		December 31, 2022 BGN'000
Cash in transit	390		6,889
Cash at banks	1,338		1,777
Cash on hand	84		66
Cash in statement of cash flows	1,812		8,732
Blocked cash	41		41
Cash in statement of financial position	1,853		8,773

As at June 30, 2023 and December 31, 2022 cash at the amount of BGN 41 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.

19.       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, 2023 and December 31, 2022 the shareholders in the Parent company are as follows:

Shareholder	June 30, 2023		December 31, 2022
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%		9.82%
Petrol Bulgaria AD	7.05%		7.05%
Gryphon Power AD	5.49%		5.49%
Storage Invest EOOD	3.66%		3.66%
VIP Properties EOOD	1.94%		1.94%
The Ministry of Energy	0.65%		0.65%
Other minority shareholders	3.00%		3.00%
	100.00%		100.00%

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

The Management of the Parent company has undertaken a series of measures to optimize its capital adequacy. As a result of several general meetings of shareholders held in the period 2016-2017, a resolution was passed to implement the reverse share split procedure to merge 4 old shares with a par value of BGN 1 into 1 new share with a par value of BGN 4 and a subsequent reduction of the Parent company's capital to cover losses by reducing the par value of the shares from BGN 4 to BGN 1.  In March 2018, following a ruling of the Lovech District Court, which reversed the refusal of the Commercial Register (CR) to register the decision taken by the EGMS to merge 4 old shares with a nominal value of BGN 1 into 1 new share with a par value of BGN 4, the requested change was registered in the CR, resulting in the registered capital of the Parent company amounting to BGN 109,249,612, divided into 27,312,403 shares with a par value of BGN 4 each. The change in the capital structure was also entered in the register of the Central Depository AD. The application filed in April 2018 for the registration of the EGMS's decision on the second stage of the procedure to reduce the Parent company's capital by reducing the nominal value of the shares from BGN 4 to BGN 1 to cover losses was rejected by the Commercial Register.

On 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 legal term. 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 Lovech Regional Court enacted a decision, which indicates CR to register the decrease of the capital after a resumption of the registration proceedings after the pronouncing on the legal proceedings initiated by the minority shareholders.

At EGMS held in February 2019 a decision for the replacement of the deceased member of the Supervisory Board Ivan Voynovski with Rumen Konstantinov was taken. The application for registration of these circumstances in the account of the Parent company was refused, which was disputed within the legal term by the Parent company. In addition to the refusal, the registration proceedings was postponed by a request of minority shareholders until the pronouncing of the Lovech Regional Court on applications for annulment of the decision.

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 registration of the applied entry 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, 2023	June 30, 2022
		Continuing operations	Discontinued operations	Total
Weighted-average number of shares (in thousand)	27,312	27,312	27,312	27,312
Profit (loss) in BGN thousand	(5,991)	471	(366)	105
Profit (loss) per share (BGN)	(0.219)	0.017	(0.013)	0.004

20.       Loans and borrowings

	June 30, 2023 BGN'000		December 31, 2022 BGN'000
Non-current liabilities
Debenture loans	36,331		36,311
Loans from financial institutions	13,500		13,500
	49,831		49,811
Current liabilities
Debenture loans	661		668
Loans from financial institutions	403		516
Trade loans from unrelated parties	404		-
	1,468		1,184
	51,299		50,995

20.1.    Debenture loans

In October 2006, the Parent company issued 2,000 registered transferable bonds with fixed annual interest rate of 8.375% and issue value 99.507% of the face value, which is determined at EUR 50,000 per bond. The purpose of the emission is to provide working capital funds, financing of investment projects and restructuring of outstanding debt of the Parent company. The principal is due in one payment at the maturity date. The bond term is 5 years and the maturity date is in October 2011. 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 December 23, 2016, a procedure of extension of the bond issue to 2022 and reduction of the interest rate in the range from 5.5% to 8% was successfully completed with payments of interest once in a year.

In September 2020 the Parent company successfully completed a new procedure for renegotiating the conditions of the debenture loan. The maturity of the debenture loan principal is deferred until January 2027, the agreed interest rate is reduced to 4.24% per annum, with six months regularity of the interest (coupon) payments - in January and in July of each year until 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 31,253 thousand, calculated at 14.56% interest rate.

The debenture loan liabilities are disclosed in the statement of financial position at amortised cost. The annual interest rate as at June 30, 2023 is 4.67% (including 4.24% annual coupon rate).

20.2.    Loans from financial institutions

In September 2018, the Group entered into a loan agreement - overdraft on a current account with a commercial bank, intended for working capital with a maximum allowed amount of up to BGN 2,000 thousand with a repayment term of January 31, 2019 and an agreed interest rate as Savings-based interest rate (SIR) plus added amount of 6,1872 points, but cumulatively not less than 6.5% per annum. The loan is secured by a specific pledge of goods in circulation, representing petroleum products, and a pledge of receivables on bank accounts. In December 2018, as a result of an annex to the 2016 agreement for a revolving credit line with the same bank with an initial amount of BGN 6,500 thousand and a subsequent increase by annexes of 2016 and 2017 to BGN 9,500 thousand, the Parent company has agreed to increase the amount of the credit line granted by an additional amount of BGN 11,500 thousand, This brings the total amount to BGN 21,000 thousand, of which BGN 13,500 thousand represents a limit for the issue of bank guarantees, BGN 7,500 thousand for the refinancing of the granted credit facility - overdraft in the amount of BGN 2,000 thousand 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 limit granted for working capital under this credit line was partially repaid and as at December 31, 2020 its amount was BGN 7,000 thousand. In January 2020 the Parent company renegotiated the terms of the used credit line and has achieved a reduction of the annual compound interest rate of SIR (Saving based interest rate) + 5.2802%, but not less than 5.5%. In March and September 2021, the Group repaid BGN 1,650 thousand from the principal of this tranche of the credit line. In December 2021 the bank granted an additional tranche in the amount of BGN 100 thousand, and the term for repayment of the loan was extended until December 15, 2024. As at June 30, 2023 the Group has a liability under this loan for principal in 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, 2023 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 a further increase in the working capital facility with a new tranche up to a maximum amount of BGN 3,600 thousand, reducing the portion provided for bank guarantees by the same amount to BGN 5,400 thousand and bringing the total limit of the revolving bank facility to BGN 18,900 thousand. The amount has been drawn down and as at June 30, 2023 the Group has a liability under this tranche for the principal amount of BGN 3,600 thousand. The agreed annual interest rate is the SIR per BGN plus a margin of 4.1764 percentage points but not less than 4.25%. This tranche matures on December 14, 2024. On September 30, 2022, the Group received a notice from the lending bank to unilaterally increase the agreed annual interest rate premium on the three tranches provided by the bank by 0.5% from October 1, 2022, as a result of the changed interest rate environment and high inflation rates.

In April 2023, the Group negotiated a new tranche of working capital in the amount of BGN 1,000 thousand under the revolving credit facility provided with a drawdown period until May 31, 2023. As a result of the new tranche, the total limit under the revolving credit line amounts to BGN 19,900 thousand. The agreed annual interest rate is the SIR for BGN plus a margin of 5.3608 percentage points, but not less than 5.5%. The maturity date of this tranche is November 1, 2023 and a repayment plan of five equal monthly principal instalments of BGN 200 thousand each has been agreed. The tranche amount has been fully drawn down and as at June 30, 2023 the Group has repaid BGN 600 thousand of principal early, resulting in a liability of BGN 400 thousand as at the date of this report.

20.3        Trade loans received

In January 2023, the Group received a short-term loan from an unrelated party commercial company with a credit limit of BGN 2,000 thousand and interest of 5% on the amount drawn down. The maturity of the loan is December 31, 2023. The Group's liability at June 30, 2023 is BGN 3 thousand for interest.

In June 2022, the Group received a short-term commercial loan from an unrelated party with a credit limit of BGN 1,000 thousand granted against a consideration in the form of annual interest at 5% on the drawn amount due by December 31, 2022. In December, the agreement was amended and the term was extended to June 2023. As at the date of these financial statements, the Group has no liabilities under this loan.

In June 2022, the Group received a short-term commercial loan from an unrelated party. The loan was provided for consideration in the form of interest at 4.5% per annum and has a maturity date of December 31, 2022. The term of the loan has been extended to  December 31, 2023 by an amendment. The liability thereunder as at June 30, 2023 is BGN 400 thousand.

20.4.       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, 2023 the Group has no liabilities related to this factoring agreement.

In November 2021 an annex was signed for special conditions with a right of regress, reduction of the commission fee by 0.13% on the total value of the transferred VAT invoices, and the interest rate was reduced to BDILE + 1.60%, charged daily and deducted monthly at the end of each calendar month. As at June 30, 2023 the Group has net liabilities in connection with received financing under this factoring agreement in the amount of BGN 99 thousand, which are presented as a decrease of the trade receivables concerning this agreement.

21.       Obligation for defined benefit retirement compensations

As at June 30,2023 and December 31, 2022 the Group accrued obligation for defined benefit retirement compensations amounting to BGN 807 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 0.15% 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.

22.       Trade and other payables

	June 30, 2023 BGN'000		December 31, 2022 BGN'000
Payables to suppliers	45,165		50,062
Payables to personnel and social security funds	3,023		2,824
Advances received and deferred income	1,749		10,494
Tax payables, including	752		281
Excise duty and other taxes	372		251
VAT	380		30
Payables to related parties	12		12
Other	1,178		844
	51,879		64,517

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, 2023 BGN'000		December 31, 2022 BGN'000
Balance at the beginning of the year	668		629
Accrued during the period	458		580
Utilised during the period	(406)		(541)
Balance at the end of the period, including:	720		668
Paid leaves	606		563
Social security on paid leaves	114		105

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

23.       Current income tax

	June 30, 2023 BGN'000		December 31, 2022 BGN'000
Income tax payable at the beginning of the period	22		194
Corporate income tax accrued	12		22
Corporate income tax paid	(22)		(194)
Refundable corporate income tax at the end of the period	12		22

24.       Subsidiaries

The subsidiaries, included in the consolidation, over which the Group has control as of June 30, 2023 and December 31, 2022 are as follows:

Subsidiary	Main activity	Investment  at June 30 2023	Investment  at Dec. 31 2022
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 Export EOOD	Trade of fuels for export	100%	-
Bulgaria Cargo Rail EOOD	Export and transport of petrol and petroleum products	100%	-
Petrol Oil Recycling EOOD	Organizing and collecting the wastes of oil	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 June 2023, a new subsidiary named Petrol Oil Recycling EOOD was incorporated by way of a cash contribution. Against the cash contribution made, the Parent company acquired 5,000 (five thousand) shares representing 100% of the share capital.

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. There is no difference between the consideration transferred for the acquisition of a controlling interest and the fair value of the net assets. As at June 30, 2023, the consideration transferred for the acquisition of Petrol Investment EOOD has been partially paid - BGN 25 thousand and the unpaid portion of BGN 25 thousand is presented in Trade and other payables. As a result of the acquisition the Group has recognised cash acquired of BGN 50 thousand.

In July 2022, the Group established a new subsidiary, Petrol Export EOOD, in order to separate and facilitate the administration of the wholesale of fuels for export.

In December 2022, a new subsidiary Bulgaria Cargo Rail EOOD was established with 100% shareholding and with the business of export and transport of petroleum and petroleum products.

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 Group. 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 procedure for change in Commercial Register must be initiated again by the buyer.

25.       Capital management

In accordance with the provisions of Art. 252 of the Commercial Act (CA), the Group must maintain the value of its net assets above the value of its registered capital.

As of June 30, 2023 and December 31, 2022, the net assets are BGN 14,067 thousand and BGN 20,058 thousand, respectively.

In order to ensure the functioning of the Group as a going concern, Management has undertaken a series of measures, both purely procedural and business-oriented, aimed at bringing the Group's capital in line with the requirements of the Commercial Act (CA) as well as improving the overall financial position.

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.

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 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.

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 legal 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.

The major ratios, which give an information about the financial position of the Group are disclosed in Selected performance indicators from the Interim Consolidated Management Report of Petrol Group for 2023.

In the first half of 2023, the Group's current ratio maintained at 1.13 compared to 1.13 at the end of 2022. As at June 30, 2023, current assets decreased by BGN 16,261 thousand (EUR 8,314 thousand) to BGN 72,510 thousand (EUR 37,074 thousand), while current liabilities decreased by BGN 14,673 thousand (EUR 7,502 thousand) compared to the end of 2022 to BGN 63,962 thousand (EUR 32,703 thousand). The decrease in current assets and liabilities is the result of the decrease in activity during the period and sales revenues and the related lower fuel inventories, as well as the repayment during the period of trade payables.

An additional effect is the reduction in selling prices in the current period, which results in less working capital being committed.

During the current period, the Group's consolidated indebtedness including trade loans, loans from financial institutions and finance lease contracts increased by BGN 304 thousand (EUR 155 thousand) to BGN 51,299 thousand (EUR 26,229 thousand).The increase in total debt is mainly due to the drawdown of BGN 1,000 thousand (EUR 500 thousand) under a revolving bank credit facility during the period, with the Group's liability under bank borrowings increasing to BGN 13,904 thousand (EUR 7,109 thousand) at the end of the period. As at the end of the first half of 2023, the Debt/Assets ratio increased marginally to 0.30 compared to 0.27 as at December 31, 2022.

In the first half of 2023, the turnover ratio increases to 16 days compared to 11 days at the end of 2022. The time taken by the Group to collect its receivables from customers increases to 15 days vs. 10 days for 2022.

Macroeconomic conditions and legal framework

The Petrol Group's activity is influenced by the general economic condition of the country and in particular the degree of the successful adoption of the market-oriented economic reforms by the government, changes in the gross domestic product (GDP) and the purchasing power of the Bulgarian customers. In the long term the change in the fuels consumption in the country is commensurate with the GDP.

In 2022 the consumer price inflation continued to rise significantly with the CPI recording double-digit growth towards the end of the year. During the year the central banks of the leading economies, in their efforts to normalize the rampant inflation, significantly raised the base interest rates, but this did not lead to a significant reversal of the upward trend in prices that started in 2020. The situation in Bulgaria followed the global trend of rising prices, as at the end of the year, the consumer price index published by the National Statistical Institute recorded an increase of 16.9% year over year, with inflation declining at the end of the year as a result of the reported significant slowdown in the annual increase of petrol and gas prices. The main reason for the increase compared to 2022 is the increase in the prices of food and non-food goods, which rose by 25.6% and 13.3% respectively over the period, while the cost of services increased by 10.3% compared to the same month of the previous year. The main reasons for the increase in the inflation rate in 2022 are the anti-crisis measures taken by the government in the last three years, the military conflict that occurred in Ukraine in February 2022, as well as the disruption caused by sanctions, and the change in some cases of supply chains led to the rise in prices of fuels and other goods and resources caused by increased demand.

The high inflation was a factor that Management considered and assigned a new valuation as at December 31, 2022 to the property, plant and equipment carried at revalued carrying amounts.

The tightening of monetary policy by leading central banks that began in 2022, combined with the sharp rise in key interest rates, has begun to have an impact on economic activity and the financial health of companies in both the financial and non-financial sectors.

If these restrictive actions by the central banks continue, it will inevitably lead to a future long-term slowdown in the country's economic life and, combined with the sustained containment of inflation and price increases, will create risks and curtail consumption of goods and services in the country, including fuel, which in turn will lead to a reduction in the Group's earnings, difficulties in servicing regular payments and the generation of a loss from operations.

COVID-19 influence on the Group's activity

Long-term impact of the COVID-19 pandemic

The global spread of the COVID-19 virus and the subsequent imposition of anti-epidemic measures in the country have created a number of obstacles and negative consequences for the Bulgarian economy. As a result of the disturbances in the supply chains internationally, the forced restriction of the movement of citizens, as well as the temporary suspension of the activity of specific business sectors, led to disturbances in the economic activity in the country. Unlike the previous two consecutive years, in 2022 no anti-epidemic measures limiting the movement of people and goods were imposed. In 2021, the government of the Republic of Bulgaria, represented by the Minister of Health, twice imposed anti-epidemic measures limiting the movement of people and goods. Despite the imposed restrictive measures in 2021, the country's GDP recorded a growth of 7.6% on an annual basis compared to 2020, with a decrease of 4% in 2020 compared to 2019. For 2022 the GDP of the country grew by 3.4% on an annual basis and for the first half of 2023 by 1.8% compared to the same period of 2022.

In 2020 and 2021 COVID-19 had a significant impact on the activities of the Petrol Group, as in 2020 the Group reduced its sales revenue by 27.5% on an annual basis, which in the past 2021 were partially recovered to BGN 499,841 thousand (before restatement for discontinued operations) compared to BGN 538,499 thousand for 2019. In 2022 the Group increases its sales revenue to BGN 812,431 thousand. Despite the growth of sales revenue over the last two consecutive years, the Petrol Group cannot restore its retail sales to pre-pandemic levels, which in the event of unfavorable future development and further spread of the virus could become a long-term negative effect from the pandemic for the Group.

The accumulated historical information on the financial condition of the Petrol Group for the last three consecutive years and the effects on the Group caused by COVID-19 for this period create future preconditions in the medium and long term if the pandemic continues to spread at certain intervals, the Group will fail to restore sales to its pre-pandemic levels. Subsequent restrictions on the movement of people may permanently change people's attitudes and habits in the medium term, which would directly reflect on the financial performance, liquidity, cash flow and sales of the Group, as double-digit sales declines close to those of 2020 (-27.5%) and loss of market share in such a scenario are not excluded.

In response to the complex economic and geopolitical situation, the Group's management takes action to optimize costs and diversify products and services for its customers. One of the projects in this direction is the construction of a chain of self-service petrol stations that provide customers with an alternative to the standard service, reduce the carbon footprint, including electricity, heating and water consumption, and last but not least the costs for the Group. As at June 30, 2023 the Group operates 16 full or partial self-service petrol stations, and the Group plans to double them in two years. With the self-service chain projects and processes undertaken by the Petrol Group management, the Group will try to respond to the change in consumer demand and the new challenges posed by COVID-19 and the increase in expenses during the last year.

COVID-19 recovery

Following the initial shock caused by COVID-19, in 2021 the Petrol Group recovered part of the sales lost due to COVID-19, as at December 31, 2021 the Group reports an annual increase in sales revenue of goods and services of 28% to BGN 499,841 thousand (before restatement for discontinued operations). In 2022 the Group managed to realize an additional growth of 64.7% on an annual basis, with a major contribution of sales of wholesale fuels. Despite the rise in revenue from sales of goods and services in two consecutive years, in 2022 the Petrol Group failed to reach the retail fuel sales from pre-pandemic levels. The rapid recovery after the pandemic inspires a dose of optimism that the main upheavals for the Petrol Group caused by the virus have passed. Growth in revenues from sales of fuel and other goods in 2021 and 2022 have helped the Group to restore to a large extent the normal rhythm of work, however, the negative effects on liquidity, retail fuel sales and the general financial condition of the Petrol Group have not completely faded away. In the first half of 2023 the sales revenue decreased. The high inflation, the growth of the minimum wage and the increase in fuel prices have prevented the Group from reaching pre-pandemic levels of financial results and retail fuel sales.

In addition, the dynamics of the spread of COVID-19 combined with the emerging military conflict between Russia and Ukraine and its potential risks, as well as the high volatility of international crude oil prices in recent months, which directly affect the activities of the Petrol Group, create significant risks in front of the Group and at the same time hinder the coverage and the successful planning of the potential intensity of the negative effects on the activity of the Petrol Group.

War conflict between Russia and Ukraine

On February 24, 2022 Russian military units enter the territory of Ukraine, while the Russian army begins to launch missile strikes on strategic Ukrainian targets. From that day in February, the military conflict between Russia and Ukraine began. The clash between the two countries and the departure of Ukrainian civilians of their homelands to save themselves from Russia's military invasion in Ukraine has created an unprecedented humanitarian crisis in Europe since World War II. All business sectors are influenced to some extent by the military conflict.

The arising military conflict and the imposed by the EU and the US economic, financial and other sanctions on Russia to end the conflict are blocking the economic activity between the European Union and Russia, restricting the payments and the free movement of people, goods and services, and simultaneously cause significant ubiquitous disruptions on financial markets and non-financial sector.

The military conflict has further affected the prices of many goods, resources and services, as Russia is a major exporter of fossil fuels, metals and other resources, and the purpose of sanctions imposed by the European Union and the United States is to limit Russia's economic activity. Fossil fuels are still a major part of the process from the creation to final consumption of almost all goods in the EU, as a result of which a future uncertainty about prices and availability of fossil fuels and other resources worsens the economic prospects for the EU and Bulgaria in particular. The warm winter and the increase in the fossil supplies from alternative sources help the EU countries to overcome the breaking out short-term anomalies caused by the sanctions and restrictions.

As the main activity of the Petrol Group is wholesale and retail trading and storage of fuels and other petroleum products, a lasting increase in international fossil fuel prices will have a negative impact on the Group's sales, leading to significant losses and deterioration of the financial condition and operational results of the Petrol Group. As the majority of fossil fuel supplies in the country in 2022 and the first half of 2023 are of Russian origin, a potential complete ban on fuel supplies from Russia could lead to a shortage of fuels in the country and problems for the Petrol Group to secure its sales, with the risk of closure of retail petrol stations, temporary working hours and other negative consequences. To respond to this scenario, the Group's management is examining the possibility of importing fuels from third countries, thus being able to reduce the potential future consequences for the Petrol Group of the EU and the US sanctions imposed on Russia and potential reciprocal sanctions.

An important decision for the activities of Petrol Group is the amendment by the Council of the European Union, adopted on June 4, 2022 of Council Regulation (CR) № 833/2014 of July 31, 2014 regarding the restrictive measures concerning the Russia's destabilizing actions in Ukraine, which amendment allows, after approval by the Council of Ministers of Republic of Bulgaria, import by sea of crude oil and petroleum products under Annex XXV of Council Regulation (EU) 833/2014 with a origin from  Russia under contracts signed before June 4, 2022 or under additional contracts necessary for execution of such contracts.

Additionally, with a decision of the Council of Ministers from December 2, 2022 is allowed the execution in the period from December 5, 2022 to December 31, 2024 of contracts signed before June 4, 2022 or of additional contracts necessary for the execution of such contracts, for the purchase, import or transfer of crude oil transported by sea, and of petroleum products listed in Annex XXV of Council Regulation (EU) 833/2014 concerning restrictive measures in view of Russia's actions destabilizing the situation in Ukraine, originating in Russia or exported from Russia, in accordance with Art. 3m, paragraph 5 of the European Regulation.

The Petrol Group does not carry out business activities on the territory of Ukraine or Russia and does not bear direct negative consequences of the breaking out military conflict. Moreover in 2022 the Group generating a significant increase in wholesales of fuels, which reached BGN 220,554 thousand compared to BGN 16,817 thousand for the previous year, as BGN 168,557 thousand are from export of fuels to third countries.

With the adopted decisions by the Council of the European Union and the Council of Ministers aiming to ensure the consumption of fuels, the Management of the Group believes that in the short-term disruptions leading to significant losses for the Group should not be expected. However in a situation of war on the territory of a country close to Bulgaria, there is always a risk of expansion and/or worsening of the military conflict with a subsequent destructive consequences.

As a result of the effects of the pandemic and the resulting military conflict in early 2022 and the economic consequences they have caused and continue to cause, together with geopolitical risks and high commodity prices, the Group's management expects competition to intensify in the coming years, mainly in the retail market, with a gradual exit of some of the smaller independent traders from the fuel business. At the same time, trading margins, particularly in the retail market, are forecast to be around or below the European average.

In 2023, the Management will continue the process of analyzing and exploring opportunities to expand the wholesale business, including through the import and export of petroleum products.

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 of improving 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 delivery 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 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.

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 has conducted 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.

At the beginning of 2023, the Group's Board of Directors has decided to take action to actively advertise and organize tenders for the sale of unprofitable and non-operational sites in order to eliminate maintenance costs and improve the Group's liquidity.

In addition to the above measures to increase the value of the Group's equity, active actions have also been taken to expand the Group's market share by securing the long-term use of oil depots - licensed fuel storage depots strategically located in the country. The management is in the process of analyzing and exploring opportunities to increase the wholesale business, including through importation of petroleum products.

The Group's management monitors the emergence of risks and negative consequences as a result of the pandemic caused by COVID-19, the military conflict between Russia and Ukraine and the high levels of inflation, making ongoing assessments of the possible effects on the Group's assets, liabilities and operations, seeking to comply as far as possible with contractual commitments, despite the force majeure circumstances that have arisen. In view of the effects of the pandemic, military conflict and high inflation, which are challenging economic activity in the country and creating significant uncertainty about future business developments, there is a real risk of a decline in sales and losses for the Group. However, management believes that it will be able to successfully steer the Group out of the emergency situation in which it has been placed.

26.       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, 2023, amounts to BGN 652 thousand (BGN 626 thousand as at June 30, 2022) and unsettled liabilities of BGN 79 thousand (BGN 90 thousand as at December 31, 2022), including liabilities to legal entities.

In the first half of 2023 other transactions with related parties have been not carried out.

27.       Contingent liabilities

As at June 30, 2023 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 24,843 thousand, including in favour of First Investment Bank AD - BGN 19,358 thousand, in favour of Investbank AD - 3,413 thousand, and in favour of DSK AD - BGN 2,072 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 10 thousand as at June 30, 2023 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, totally repaid on June 26, 2023.

As at June 30, 2023 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 5,392 thousand as at June 30, 2023, including BGN 2,850 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 2,042 thousand to secure own liabilities related to contracts under the Public Procurement Act. As at June 30, 2023 the contract is secured by a pledge of all receivables on bank accounts of the Parent company for BGN 47 thousand and а mortgage of real estate and pledge of plants and equipment, as well as assets owned by a subsidiary totaling BGN 1,500 thousand.

There is pending litigation in relation to a signed in 2015 guarantee contract of the liabilities of a subsidiary until February 2018, arising of a cession contract with outstanding book value of BGN 245 thousand. In April a final decision on the pending case was ruled. The court held that the Group is responsible as a guarantor for the obligations of the subsidiary under the cession contract. The Court of Appeal annulled the decision of the first-instance court in its entirety and found that the Group's claim under the warranty agreement had been established jointly with the other related party. The decision of the Court of Appeal was appealed by the Parent company in the Supreme Court of Cassation, but was not allowed to appeal. The Group has filed a claim to establish the non-existence of these receivables, and the case initiated is pending. A collateral at the amount of BGN 25 thousand to the court's account was admitted for a future claim against the provision of a guarantee in favor of the Group, as a result of which the enforcement proceedings initiated against the Group for these receivables were suspended. The decision from November 2021 has been appealed by the defendant and the case is currently pending before a second instance. In August 2022, the Sofia Court of Appeals (SCA) overturned the decision of the first instance court in its entirety. The decision of the SCA has been appealed and the case is currently pending before the Supreme Court of Cassation.

The funds given as collateral under Art. 180 and Art. 181 of the Law on Obligations and Contracts (LOC) at the amount of BGN 245 thousand in the case initiated against the Group in 2015, together with the amount of BGN 93 thousand, were collected by the bailiff under 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 (until December 2015) 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 claims 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 consolidated financial statements, the court 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.

Corporate Commercial bank AD (in insolvency) - 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 the Group because the liability as guarantor has not occurred and / or extinguished pursuant to Art. 147, par. 2 of the LOC. At the time of signing of the guarantee agreement, the 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 canceled 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 the Parent company. 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.

The Group has appealed its receivables to the subsidiary (until December 2015). The filed receivables are included in the list of accepted receivables under Art. 686 of the Commercial Act (CA), but the same are disputed by another creditor in the bankruptcy proceedings. At present, the pending court proceedings to establish the existence of these receivables under Art. 694 of the CA ended with a decision, as the court accepted the receivables of the Group up to the amount of BGN 4,794 thousand.

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 for 47 thousand. As at June 30, 2023 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, 2023, the Group has liabilities at the amount of BGN 99 thousand in connection with the financing received under this factoring agreement.

As at June 30, 2023 funds in bank accounts at the amount of BGN 41 thousand are blocked in enforcement cases to which the Group is a party.

28. Events after the reporting date

At the end of July 2023, the Group signed an agreement for the sale of 100% of the capital of the subsidiary Svilengrad Oil EOOD with a sale price of BGN 2,500 thousand.

At the end of July 2023, the Group entered into a revolving credit facility agreement with a total limit of BGN 220,000 thousand and a drawdown period until August 15, 2033. The funds are intended for investment purposes, refinancing of current exposures for working capital and credit lines under which bank guarantees and letters of credit have been issued, as well as for working capital related to the Parent company's core business, including fuel supplies and prepayments in order to negotiate better supply prices, purchase and storage of fuels, settlement of accounts with counterparties and expansion of operations through import and reexport of fuels and other petroleum products. The funds will be disbursed in phases in four tranches once the conditions set out in the agreement have been met.

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

[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.

 

END