Chimimport AD

Annual Report (ESEF) • Aug 9, 2022

549300GB265U3RQEQC542021-01-012021-12-31549300GB265U3RQEQC542021-12-31iso4217:BGN549300GB265U3RQEQC542020-12-31549300GB265U3RQEQC542020-01-012020-12-31iso4217:BGNxbrli:shares549300GB265U3RQEQC542020-12-31ifrs-full:IssuedCapitalMember549300GB265U3RQEQC542020-12-31ifrs-full:SharePremiumMember549300GB265U3RQEQC542020-12-31ifrs-full:OtherReservesMember549300GB265U3RQEQC542020-12-31ifrs-full:RetainedEarningsMember549300GB265U3RQEQC542020-12-31ifrs-full:EquityAttributableToOwnersOfParentMember549300GB265U3RQEQC542020-12-31ifrs-full:NoncontrollingInterestsMember549300GB265U3RQEQC542021-01-012021-12-31ifrs-full:IssuedCapitalMember549300GB265U3RQEQC542021-01-012021-12-31ifrs-full:SharePremiumMember549300GB265U3RQEQC542021-01-012021-12-31ifrs-full:OtherReservesMember549300GB265U3RQEQC542021-01-012021-12-31ifrs-full:RetainedEarningsMember549300GB265U3RQEQC542021-01-012021-12-31ifrs-full:EquityAttributableToOwnersOfParentMember549300GB265U3RQEQC542021-01-012021-12-31ifrs-full:NoncontrollingInterestsMember549300GB265U3RQEQC542021-12-31ifrs-full:IssuedCapitalMember549300GB265U3RQEQC542021-12-31ifrs-full:SharePremiumMember549300GB265U3RQEQC542021-12-31ifrs-full:OtherReservesMember549300GB265U3RQEQC542021-12-31ifrs-full:RetainedEarningsMember549300GB265U3RQEQC542021-12-31ifrs-full:EquityAttributableToOwnersOfParentMember549300GB265U3RQEQC542021-12-31ifrs-full:NoncontrollingInterestsMember549300GB265U3RQEQC542019-12-31ifrs-full:IssuedCapitalMember549300GB265U3RQEQC542019-12-31ifrs-full:SharePremiumMember549300GB265U3RQEQC542019-12-31ifrs-full:OtherReservesMember549300GB265U3RQEQC542019-12-31ifrs-full:RetainedEarningsMember549300GB265U3RQEQC542019-12-31ifrs-full:EquityAttributableToOwnersOfParentMember549300GB265U3RQEQC542019-12-31ifrs-full:NoncontrollingInterestsMember549300GB265U3RQEQC542019-12-31549300GB265U3RQEQC542020-01-012020-12-31ifrs-full:IssuedCapitalMember549300GB265U3RQEQC542020-01-012020-12-31ifrs-full:SharePremiumMember549300GB265U3RQEQC542020-01-012020-12-31ifrs-full:OtherReservesMember549300GB265U3RQEQC542020-01-012020-12-31ifrs-full:RetainedEarningsMember549300GB265U3RQEQC542020-01-012020-12-31ifrs-full:EquityAttributableToOwnersOfParentMember549300GB265U3RQEQC542020-01-012020-12-31ifrs-full:NoncontrollingInterestsMember  Consolidated Financial Statements Consolidated Management Report Consolidated Non-financial Declaration Consolidated Report on Payments to Governments Independent Auditor’s Report CHIMIMPORT AD 31 December 2021 Chimimport AD Consolidated financial statements 31 December 2021  Contents Page Consolidated statement of financial position 1 Consolidated statement of profit or loss and other comprehensive income 3 Consolidated statement of changes in equity 4 Consolidated statement of cash flows 6 Notes to the consolidated financial statements 7 Consolidated management report - Consolidated non-financial declaration - Consolidated Report on Payments to Governments - Declaration in accordance to Article 100 n, from the LPOS by CEO and issuer Independent auditor’s report - Chimimport AD Consolidated financial statements 31 December 2021 1 The accompanying notes number 1 to 55 form an integral part of the consolidated financial statements. Consolidated statement of financial position as at 31 December Assets Note 31.12.2021 31.12.2020 BGN’000 BGN’000 Property, plant and equipment 8 356 785 371 559 Right of use assets 9 417 952 417 099 Investment property 10 524 884 440 485 Goodwill 11 23 774 24 066 Other intangible assets 12 124 562 129 496 Deferred tax assets 0 10 845 10 940 Investments accounted for using the equity method 6 26 772 24 253 Loans and advances granted to bank clients 14 3 049 092 2 708 863 Financial assets at fair value through profit or loss 15 2 042 970 2 027 241 Debt instruments at fair value through other comprehensive income 16 859 441 717 595 Equity instruments at fair value through other comprehensive income 17 70 426 83 766 Other financial assets carried at amortized cost 18 1 557 996 1 328 737 Receivables from insurance and reinsurance contracts 20 49 999 45 930 Reinsurance assets 29 69 054 80 379 Tax receivables 19 1 780 1 757 Other receivables 21 25 566 30 276 Inventories 22 54 300 59 369 Cash and cash equivalents 23 2 380 922 2 221 632 Total assets 11 647 120 10 723 443 The consolidated financial statements are approved for issue by decision of the Managing Board on 3 April 2022. Prepared by: ____ Executive director: __ /A. Kerezov/ /I. Kamenov/ With auditor’s report: Mariy Apostolov Zornitza Djambazka Managing Partner Registered auditor responsible for the audit Grant Thornton OOD, audit firm, registered number 032 Aleksandar Dimitrov Kerezov Digitally signed by Aleksandar Dimitrov Kerezov Date: 2022.05.03 21:04:06 +03'00' Ivo Kamenov Georgiev Digitally signed by Ivo Kamenov Georgiev Date: 2022.05.03 21:10:48 +03'00' Digitally signed by MARIY GEO RGIEV APOSTOLOV Date: 2022.05.03 22: 35:29+03'00' MARIY GEORGIEV APOSTOLOV Digitally signed by ZORNITZA VASS ILEVA DJAMBAZKA Date: 2022.05.03 22:43:17+03'00' ZORNITZA VASSILEVA DJAMBAZKA Chimimport AD Consolidated financial statements 31 December 2021 2 The accompanying notes number 1 to 55 form an integral part of the consolidated financial statements. Consolidated statement of financial position as at 31 December (continued) Equity and liabilities Note 31.12.2021 31.12.2020 BGN’000 BGN’000 Equity Share capital 24.1 226 463 226 604 Premium reserve 24.2 246 309 246 462 Other reserves 24.3 300 696 287 583 Retained earnings 711 351 690 078 Profit for the period 35 293 32 003 Equity attributable to the shareholders of Chimimport AD 1 520 112 1 482 730 Non-controlling interest 330 655 321 615 Total equity 1 850 767 1 804 345 Liabilities Liabilities to depositors 25 6 917 880 6 168 872 Other financial liabilities 26 522 103 541 680 Payables to insured individuals 27 1 708 674 1 561 822 Pension and other employee obligations 28.2 17 648 16 993 Deferred tax liabilities 0 37 638 36 503 Insurance reserves 29 238 896 260 142 Liabilities under insurance and reinsurance contracts 30 25 986 21 147 Lease liabilities 31 280 979 249 440 Tax liabilities 32 6 514 5 393 Other liabilities 33 40 035 57 106 Total liabilities 9 796 353 8 919 098 Total equity and liabilities 11 647 120 10 723 443 The consolidated financial statements are approved for issue by decision of the Managing Board on 3 April 2022. Prepared by: ____ Executive director: __ /A. Kerezov/ /I. Kamenov/ With auditor’s report: Mariy Apostolov Zornitza Djambazka Managing Partner Registered auditor responsible for the audit Grant Thornton OOD, audit firm, registered number 032 Aleksandar Dimitrov Kerezov Digitally signed by Aleksandar Dimitrov Kerezov Date: 2022.05.03 21:04:38 +03'00' Ivo Kamenov Georgiev Digitally signed by Ivo Kamenov Georgiev Date: 2022.05.03 21:11:40 +03'00' Digitally signed by MARIY GEO RGIEV APOSTOLOV Date: 2022.05.03 22: 37:28+03'00' MARIY GEORGIEV APOSTOLOV Digitally signed by ZORNITZA VASS ILEVA DJAMBAZKA Date: 2022.05.03 22:44:17+03'00' ZORNITZA VASSILEVA DJAMBAZKA Chimimport AD Consolidated financial statements 31 December 2021 3 The accompanying notes number 1 to 55 form an integral part of the consolidated financial statements. Consolidated statement of profit or loss and other comprehensive income for year ended 31 December All amounts are presented in BGN’000 Note 2021 2020 BGN’000 BGN’000 Revenue from non-financial activities 34 349 062 290 639 Change in fair value of investment property 10 2 624 461 Gain on sale of non-current assets 35 58 2 798 Total revenue from non-financial activities 351 744 293 898 Insurance income 36 385 972 371 445 Insurance expense 37 (319 859) (325 729) Net result from insurance 66 113 45 716 Interest income 38 169 089 179 371 Interest expense 39 (37 942) (37 246) Net interest income 131 147 142 125 Net result from operations with financial instruments 40 80 756 67 933 Operating and administrative expenses 41 (564 006) (518 889) Gain/ (Loss) from investments accounted for using the equity method 6 4 315 (1 400) Other financial income 42 79 671 44 392 Income from allocation to social security accounts (98 663) (30 687) Profit before tax 51 077 43 088 Income tax expense 43 (5 898) (3 525) Net profit for the period 45 179 39 563 Other comprehensive (loss)/income: Revaluation of non-financial assets, net of taxes - 83 176 Revaluation of financial assets, net of taxes (4 667) (4 906) Remeasurement of defined benefit plan liability, net of taxes (105) 140 Other comprehensive (loss)/income (4 772) 78 410 Total comprehensive income for the year 40 407 117 973 Net profit for the year attributable to: The shareholders of Chimimport AD 35 293 32 003 Non-controlling interest 9 886 7 560 Total comprehensive income attributable to: The shareholders of Chimimport AD 31 618 111 541 Non-controlling interest 8 789 6 432 Earnings per share in BGN 44 0.16 0.14 The consolidated financial statements are approved for issue by decision of the Managing Board on 3 April 2022. Prepared by: ____ Executive director: __ /A. Kerezov/ /I. Kamenov/ With auditor’s report: Mariy Apostolov Zornitza Djambazka Managing Partner Registered auditor Grant Thornton OOD, audit firm, registered number 032 responsible for the audit Aleksandar Dimitrov Kerezov Digitally signed by Aleksandar Dimitrov Kerezov Date: 2022.05.03 21:05:01 +03'00' Ivo Kamenov Georgiev Digitally signed by Ivo Kamenov Georgiev Date: 2022.05.03 21:12:53 +03'00' Digitally signed by MARIY GEO RGIEV APOSTOLOV Date: 2022.05.03 22: 38:27+03'00' MARIY GEORGIEV APOSTOLOV Digitally signed by ZORNITZA VASS ILEVA DJAMBAZKA Date: 2022.05.03 22: 45:15+03'00' ZORNITZA VASSILEVA DJAMBAZKA Chimimport AD Consolidated financial statements 31 December 2021 4 The accompanying notes number 1 to 55 form an integral part of the consolidated financial statements. Consolidated statement of changes in equity for the year ended 31 December All amounts are presented in BGN’000 Equity attributable to the shareholders of Chimimport AD Non-controlling interest Total equity Share capital Share premium Other reserves Retained earnings Total Balance at 1 January 2021 226 604 246 462 287 583 722 081 1 482 730 321 615 1 804 345 Decrease in share capital and reserves resulting from change in own shares held by subsidiaries (141) (153) - - (294) - (294) Business combinations - - 1 138 6 028 7 166 769 7 935 Transactions with owners (141) (153) 1 138 6 028 6 872 769 7 641 Profit for the year - - - 35 293 35 293 9 886 45 179 Other comprehensive income - - (3 675) - (3 675) (1 097) (4 772) Total comprehensive income for the year - - (3 675) 35 293 31 618 8 789 40 407 Transfer of retained earnings to other reserves - - 16 394 (16 394) - - - Change in specialized reserves - - (744) 744 - - - Other changes - - - (1 108) (1 108) (518) (1 626) Balance at 31 December 2021 226 463 246 309 300 696 746 644 1 520 112 330 655 1 850 767 The consolidated financial statements are approved for issue by decision of the Managing Board on 3 April 2022. Prepared by: ____ Executive director: __ /A. Kerezov/ Date: 29 April 2021 /I. Kamenov/ With auditor’s report: Mariy Apostolov Zornitza Djambazka Managing partner Registered auditor responsible for the audit Grant Thornton OOD, audit firm, registered number 032 Aleksandar Dimitrov Kerezov Digitally signed by Aleksandar Dimitrov Kerezov Date: 2022.05.03 21:05:28 +03'00' Ivo Kamenov Georgiev Digitally signed by Ivo Kamenov Georgiev Date: 2022.05.03 21:13:20 +03'00' Digitally signed by MARIY GEO RGIEV APOSTOLOV Date: 2022.05.03 22: 39:28+03'00' MARIY GEORGIEV APOSTOLOV Digitally signed by ZORNITZA VASS ILEVA DJAMBAZKA Date: 2022.05.03 22:46: 28+03'00' ZORNITZA VASSILEVA DJAMBAZKA Chimimport AD Consolidated financial statements 31 December 2021 5 The accompanying notes number 1 to 55 form an integral part of the consolidated financial statements. Consolidated statement of changes in equity for the year ended 31 December (continued) All amounts are presented in BGN’000 Equity attributable to the shareholders of Chimimport AD Non-controlling interest Total equity Share capital Share premium Other reserves Retained earnings Total Balance at 1 January 2020 226 955 246 850 179 123 713 710 1 366 638 309 851 1 676 489 Decrease in share capital and reserves resulting from change in own shares held by subsidiaries (351) (388) - - (739) - (739) Business combinations - - (65) 5 355 5 290 5 332 10 622 Transactions with owners (351) (388) (65) 5 355 4 551 5 332 9 883 Profit for the year - - - 32 003 32 003 7 560 39 563 Other comprehensive income - - 79 538 - 79 538 (1 128) 78 410 Total comprehensive income for the year - - 79 538 32 003 111 541 6 432 117 973 Transfer of retained earnings to other reserves - - 27 283 (27 283) - - - Change in specialized reserves - - 1 704 (1 704) - - - Balance at 31 December 2020 226 604 246 462 287 583 722 081 1 482 730 321 615 1 804 345 The consolidated financial statements are approved for issue by decision of the Managing Board on 3 April 2022. Prepared by: ____ Executive director: __ /A. Kerezov/ /I. Kamenov/ With auditor’s report: Mariy Apostolov Zornitza Djambazka Managing partner Registered auditor responsible for the audit Grant Thornton OOD, audit firm, registered number 032 Aleksandar Dimitrov Kerezov Digitally signed by Aleksandar Dimitrov Kerezov Date: 2022.05.03 21:05:52 +03'00' Ivo Kamenov Georgiev Digitally signed by Ivo Kamenov Georgiev Date: 2022.05.03 21:13:45 +03'00' Digitally signed by MARIY GEO RGIEV APOSTOLOV Date: 2022.05.03 22: 40:41+03'00' MARIY GEORGIEV APOSTOLOV Digitally signed by ZORNITZA VASS ILEVA DJAMBAZKA Date: 2022.05.03 22: 47:29+03'00' ZORNITZA VASSILEVA DJAMBAZKA Chimimport AD Consolidated financial statements 31 December 2021 6 The accompanying notes number 1 to 55 form an integral part of the consolidated financial statements. Consolidated statement of cash flows for the year ended 31 December Note 2021 2020 BGN’000 BGN’000 Operating activities Proceeds from short-term loans 66 485 47 657 Payments for short-term loans (55 043) (44 907) Proceeds from sale of short-term financial assets 450 394 462 827 Purchase of short-term financial assets (419 927) (559 216) Cash receipt from customers 247 817 280 916 Cash paid to suppliers (230 348) (222 906) Proceeds from insured persons 186 106 145 128 Payments to insured persons (123 625) (77 149) Payments to employees and social security institutions (120 074) (114 118) Cash receipts from bank operations 61 220 020 50 843 501 Cash paid for bank operations (60 782 527) (50 414 129) Cash receipts from insurance operations 179 971 182 314 Cash paid for insurance operations (133 412) (136 720) Income taxes paid (1 012) (2 076) Other cash outflows (5 280) (3 826) Net cash flow from operating activities 479 545 387 296 Investing activities Dividends from financial assets received 30 805 10 643 Sale of property, plant and equipment 1 084 2 077 Purchase of property, plant and equipment (22 297) (9 238) Purchase of intangible assets (5 174) (854) Sale of investment property 1 544 890 Purchase of investment property (7 215) (22 911) Sale of non-current financial assets 396 109 330 317 Purchase of non-current financial assets (756 352) (597 082) Interest payments received 22 664 30 071 Proceeds from loans granted 11 481 20 131 Payments for loans granted (2 207) (35 555) Other cash inflows 1 021 2 779 Net cash flow from investing activities (328 537) (268 732) Financing activities Purchase of own shares (126) (740) Proceeds from loans received 55 692 22 852 Payments for loans received (30 383) (21 532) Interest paid (4 808) (8 121) Payments for lease contracts (15 844) (21 556) Other cash outflow (864) (1 110) Net cash flow from financing activities 3 667 (30 207) Net change in cash and cash equivalents 154 675 88 357 Cash and cash equivalents, beginning of period 2 221 632 2 136 035 Exchange gain/(loss) on cash and cash equivalents 4 615 (2 760) Cash and cash equivalents, end of period 23 2 380 922 2 221 632 The consolidated financial statements are approved for issue by decision of the Managing Board on 3 April 2022. Prepared by: ____ Executive director: __ /A. Kerezov/ /I. Kamenov/ With auditor’s report: Mariy Apostolov Zornitza Djambazka Managing Partner Registered auditor Grant Thornton OOD, Audit firm, registered number 032 responsible for the audit Aleksandar Dimitrov Kerezov Digitally signed by Aleksandar Dimitrov Kerezov Date: 2022.05.03 21:06:15 +03'00' Ivo Kamenov Georgiev Digitally signed by Ivo Kamenov Georgiev Date: 2022.05.03 21:14:11 +03'00' Digitally signed by MARIY GEO RGIEV APOSTOLOV Date: 2022.05.03 22: 41:48+03'00' MARIY GEORGIEV APOSTOLOV Digitally signed by ZORNITZA VASS ILEVA DJAMBAZKA Date: 2022.05.03 22: 48:39+03'00' ZORNITZA VASSILEVA DJAMBAZKA Chimimport AD Consolidated financial statements 31 December 2021 7 Notes to the consolidated financial statements 1. Nature of operations Chimimport AD (the Group) includes the parent company and all subsidiaries, presented in note 5.1. Information about the names, country of incorporation and percent of the shares of the subsidiaries, included in the consolidation, is provided in note 5.1. The main activities of the Group include the following sectors: Acquisition, management and sale of shares in Bulgarian and foreign companies; Financing of companies in which interest is held; Bank services, finance, life and non-life insurance and pension insurance; Extraction of oil and natural gas; Construction of output capacity in the area of oil-processing industry, production of biodiesel and production of rubber items; Production and trading with oil, chemical products and natural gas; Production of vegetable oil, purchasing, processing and trading with grain foods; Aviation transport and ground activities on servicing and repairing of aircrafts and aircraft engines; River and sea transport and port infrastructure; Commercial agency and brokerage; Commission, forwarding and warehouse activity. Chimimport AD was registered as a joint-stock company at Sofia city court on 24 January 1990 with UIC 000627519. The registered office of the Company is 2 St. Karadzha Str., Sofia, Bulgaria. The address of the Company is 2 St. Karadzha Str., Sofia, Bulgaria. The Company is registered on the Bulgarian Stock Exchange on 30 October 2006 with emission numbers 6C4 for ordinary shares. The parent company has a two-tier management structure consisting of Supervisory Board and Managing Board. The members of the Supervisory Board of the parent company are as follows: Invest Capital AD CCB Group EAD Mariana Bazhdarova The members of the Managing Board of the parent company are as follows: Alexander Kerezov Ivo Kamenov Marin Mitev Nikola Mishev Miroliub Ivanov Tzvetan Botev The parent company is represented by its executive directors Ivo Kamenov and Marin Mitev, together and separately. The number of employees of the Group as at 31 December 2021 is 5 174 (2020: 5 312 employees). During the current and the comparative period, there is no change in the company name of the parent. 2. Basis for the preparation of the consolidated financial statements The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and approved by the EU. The term “IFRS, as adopted by the EU” has the meaning of paragraph 1, subparagraph 8 of the Additional provisions of Accountancy Act in Bulgaria, which is International Accounting Standards (IAS) adopted in accordance with Regulation (EC) 1606/2002 of the European Parliament and of the Council. The parent company Chimimport AD issued audited separate financial statements on 31 March 2021. Chimimport AD Consolidated financial statements 31 December 2021 8 The separate items of the Group’s consolidated financial statements are measured in the currency of the primary economic environment in which the Group’s entities operate (the “functional currency”). The consolidated financial statements are presented in Bulgarian leva (BGN), which is the functional currency of the parent company. This is the functional currency of the parent company and its subsidiaries, except for the subsidiaries operating in Germany and Slovakia whose functional currency is euro; subsidiary operating in Macedonia whose functional currency is Macedonian denar and subsidiaries in Russia whose functional currency is Russian ruble. All amounts are presented in thousand Bulgarian leva (BGN ‘000) (including comparative information for 2020) unless otherwise stated. The consolidated financial statements are prepared under the going concern principle. Emergency epidemic situation in Bulgaria from 14 May 2020 to 31 March 2022 On 13 May 2020, the Council of Ministers declared an epidemic emergency situation, as of 14 May 2020, which was extended periodically before its expiration. As of the date of preparation of these financial statements, the emergency epidemic situation was extended by the government to 31 March 2022. The consolidated financial statements have been prepared in accordance with the going concern principle and taking into account the possible effects of the continuing impact of the Covid-19 pandemic. Even at the date of preparation of these financial statements, travel bans, quarantine measures and restrictions are in force. Businesses have to deal with challenges related to reduced revenues and disrupted supply chains. The pandemic has led to significant volatility in the financial and commodity markets in Bulgaria and worldwide. Various governments, including in Bulgaria, have announced measures to provide both financial and non-financial assistance to the affected sectors and affected business organizations. The effects of the Covid-19 pandemic are presented in the relevant notes to the consolidated financial statements. The group has provided detailed disclosures in note 51 in relation to risk management policies and the effects of Covid-19 on them. The pandemic has led to significant serious disruptions in the activities of many sectors and a sharp economic downturn in Bulgaria and worldwide. One of the sectors most affected by the economy was the transport sector, in particular the aviation industry, including ancillary and ancillary services provided in aviation. The COVID-19 pandemic is a major shock to the global and European economy. As with any crisis, it is perfectly normal for more cyclical sectors to feel tensions much faster and much stronger than non-cyclical ones. Some of the measures taken to limit the spread of the virus were related to travel bans, quarantine, social distancing and the closure of non-essential services. This caused significant disruption to businesses around the world, which led to economic slowdowns and had a direct negative effect on the activities of airlines, which limited flights to urgent ones or related to the delivery of goods and mail. The Covid-19 pandemic has had a significant negative economic impact on aviation throughout 2021. The effect of the pandemic is that business traffic did not recover in 2021. This affected travel to destinations used mainly for pre-pandemic business travel. This decline in demand has necessitated a drastic reduction in the weekly frequencies of the flights to Brussels, Berlin, Frankfurt and others. Tourist traffic, on the other hand, has not recovered either, and although there has been a slight increase compared to 2020, the decline compared to 2019 is over 50%. Tourist traffic throughout 2021 was affected by the pandemic as there were markets for flights to which long periods of the year were banned or opened only for short periods. For example, Israel, Russia, the Czech Republic, Italy, Spain, Great Britain and others. Permanent bans and changes in the requirements for travel to many destinations, as well as to Bulgaria, stopped and led to numerous cancellations of last-minute travel and ethnic traffic. All this predetermines a similar trend in 2020 as a decline in both revenues and flights compared to 2019 levels, but with a slight increase in flights and passengers compared to 2020 levels, and in comparison it should be noted that in 2020 the pandemic began to affect traffic after mid-March. Chimimport AD Consolidated financial statements 31 December 2021 9 In view of the actions taken by various governments, incl. Bulgarian, dynamic measures to restrict the movement of people and the changes imposed by it, directly affecting the development of the economic sectors of the Republic of Bulgaria, EU countries and other trading partners of companies in the country, the impact of the coronavirus pandemic on the future financial condition and performance of the Group, but considers that the impact could lead to volatility in market and price risk associated with the Group's financial assets and may have a negative effect on customers and respectively the results of the Group's activities. Management's expectations are that the negative effects will subside after the restrictions on the movement of people, vehicles and goods are lifted, and economic activity is expected to be positively affected by the announced support measures and the allocated additional state and European funds, leading to additional public guarantees. receivables portfolios, additional interest-free financing of economic operators and direct aids for the affected companies and individuals. To the extent that these complementary measures expand and extend, the Group's management is unable to assess the final effect on economic activity, which also depends on the currently unknown duration of the quarantine restrictions imposed. At the date of preparation of these consolidated financial statements the management has assessed the ability of the Group to continue as a going concern on the basis of the available information for the foreseeable future. Following a review of the activities of the Group, the management anticipates that the Group has sufficient financial resources to continue its operational activities in the near future and continues to apply the going concern assumption in preparing the consolidated financial statements. 3. Changes in accounting policy 3.1. New standards, amendments and interpretations to existing standards that are effective for annual periods beginning on or after 1 January 2021 Amendments to IFRS 4 Insurance Contracts – deferral of IFRS 9 effective from 1 January 2021 adopted by the EU Deferral of the date of initial application of IFRS 17 by two years to annual periods beginning on or after 1 January 2023 and change the fixed expiry date for the temporary exemption in IFRS 4 Insurance Contracts from applying IFRS 9 Financial Instruments, so that entities would be required to apply IFRS 9 for annual periods beginning on or after 1 January 2023. Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Interest Rate Benchmark Reform – Phase 2 effective from 1 January 2021 adopted by the EU Amendments proposed are such that address issues that might affect financial reporting after the reform of an interest rate benchmark, including its replacement with alternative benchmark rates. Phase 2 of the project dealt with replacement issues, therefore, the amendments published address issues that might affect financial reporting when an existing interest rate benchmark is actually replaced. Amendments to IFRS 16 Leases: Covid-19- Related Rent Concessions beyond 30 June 2021 effective from 1 April 2021 adopted by the EU 'Covid-19-Related Rent Concessions extends by one year, beyond 30 June 2021, the May 2020 amendment that provides lessees with an exemption from assessing whether a Covid-19-related rent concession is a lease modification. The Changes in Covid-19-Related Rent Concessions beyond 30 June 2021 (Amendment to IFRS 16) amend IFRS 16 to  permit a lessee to apply the practical expedient regarding COVID-19-related rent concessions to rent concessions for which any reduction in lease payments affects only payments originally due on or before 30 June 2022 (rather than only payments originally due on or before 30 June 2021);  require a lessee applying the amendment to do so for annual reporting periods beginning on or after 1 April 2021;  require a lessee applying the amendment to do so retrospectively, recognizing the cumulative effect of initially applying the amendment as an adjustment to the opening balance of retained earnings (or other component of equity, as appropriate) at the beginning of the annual reporting period in which the lessee first applies the amendment;  and specify that, in the reporting period in which a lessee first applies the amendment, a lessee is not required to disclose the information required by paragraph 28(f) of IAS 8. Chimimport AD Consolidated financial statements 31 December 2021 10 3.2. Standards, amendments and interpretations to existing standards that are not yet effective and have not been adopted early by the Group At the date of authorization of these consolidated financial statements, certain new standards, amendments and interpretations to existing standards have been issued, but are not effective or adopted by the EU for the financial year beginning on 1 January 2021 and have not been adopted early by the Group. Information on those expected to be relevant to the Group’s consolidated financial statements is provided below. Management anticipates that all relevant pronouncements will be adopted in the Group’s accounting policies for the first period beginning after the effective date of the pronouncement. Amendments to IFRS 3 Business Combinations, IAS 16 Property, Plant and Equipment IAS 37 Provisions, Contingent Liabilities and Contingent Assets effective from 1 January 2022 adopted by the EU  FRS 3 Business Combinations – Update on references to the Conceptual Framework with amendments to IFRS 3 'Business Combinations' that update an outdated reference in IFRS 3 without significantly changing its requirements.  IAS 16 Property, Plant and Equipment – „Proceeds before Intended Use“ amends the standard to prohibit deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Instead, an entity recognizes the proceeds from selling such items, and the cost of producing those items, in profit or loss.  IAS 37 Provisions, Contingent Liabilities and Contingent Assets - The changes in Onerous Contracts — Cost of Fulfilling a Contract specify that the ‘cost of fulfilling’ a contract comprises the ‘costs that relate directly to the contract’. Costs that relate directly to a contract can either be incremental costs of fulfilling that contract or an allocation of other costs that relate directly to fulfilling contracts. Annual Improvements 2018-2020 effective from 1 January 2022 adopted by the EU  IFRS 1 First-time Adoption of International Financial Reporting Standards - The amendment permits a subsidiary that applies paragraph D16(a) of IFRS 1 to measure cumulative translation differences using the amounts reported by its parent, based on the parent’s date of transition to IFRSs.  IFRS 9 Financial Instruments - The amendment clarifies which fees an entity includes when it applies the ‘10 per cent’ test in paragraph B3.3.6 of IFRS 9 in assessing whether to derecognize a financial liability. An entity includes only fees paid or received between the entity (the borrower) and the lender, including fees paid or received by either the entity or the lender on the other’s behalf.  IFRS 16 Leases - The amendment to 16 removes from the example the illustration of the reimbursement of leasehold improvements by the lessor in order to resolve any potential confusion regarding the treatment of lease incentives that might arise because of how lease incentives are illustrated in that example.  IAS 41 Agriculture - The amendment removes the requirement in paragraph 22 of IAS 41 for entities to exclude taxation cash flows when measuring the fair value of a biological asset using a present value technique. This will ensure consistency with the requirements in IFRS 13. IFRS 17 “Insurance Contracts” effective from 1 January 2023, adopted by the EU IFRS 17 replaces for IFRS 4 “Insurance Contracts”. It requires a current measurement model where estimates are remeasured each reporting period. Contracts are measured using the building blocks of: - discounted probability-weighted cash flows; - an explicit risk adjustment, and - a contractual service margin (“CSM”) representing the unearned profit of the contract which is recognized as revenue over the coverage period. The standard allows a choice between recognizing changes in discount rates either in the income statement or directly in other comprehensive income. The new rules will affect the financial statements and key performance indicators of all entities that issue insurance contracts. Chimimport AD Consolidated financial statements 31 December 2021 11 Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current effective from 1 January 2023 not yet adopted by the EU The amendments in Classification of Liabilities as Current or Non-current affect only the presentation of liabilities in the consolidated statement of financial position — not the amount or timing of recognition of any asset, liability, income or expenses, or the information that entities disclose about those items. They:  clarify that the classification of liabilities as current or non-current should be based on rights that are in existence at the end of the reporting period and align the wording in all affected paragraphs to refer to the "right" to defer settlement by at least twelve months and make explicit that only rights in place "at the end of the reporting period" should affect the classification of a liability;  clarify that classification is unaffected by expectations about whether an entity will exercise its right to defer settlement of a liability; and  make clear that settlement refers to the transfer to the counterparty of cash, equity instruments, other assets or services. Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting policies effective from 1 January 2023 not yet adopted by the EU The entity is required to disclose its material accounting policy information instead of its significant accounting policies, the amendments clarify that accounting policy information may be material because of its nature, even if the related amounts are immaterial. The amendments clarify that accounting policy information is material if users of an entity’s financial statements would need it to understand other material information in the financial statements and if the entity discloses immaterial accounting policy information, such information shall not obscure material accounting policy information. Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates effective from 1 January 2023 not yet adopted by the EU The amendments introduced the definition of accounting estimates and included other amendments to IAS 8 to help entities distinguish changes in accounting estimates from changes in accounting policies. The amendments will help companies: - improve accounting policy disclosures so that they provide more useful information to investors and other primary users of the financial statements; and - distinguish changes in accounting estimates from changes in accounting policies. Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction effective from 1 January 2023 not yet adopted by the EU An entity applies the amendments to transactions that occur on or after the beginning of the earliest comparative period presented. It also, at the beginning of the earliest comparative period presented, recognizes deferred tax for all temporary differences related to leases and decommissioning obligations and recognizes the cumulative effect of initially applying the amendments as an adjustment to the opening balance of retained earnings (or other component of equity, as appropriate) at that date. Amendments to IFRS 17 Insurance contracts: Initial Application of IFRS 17 and IFRS 9 – Comparative Information effective from 1 January 2023 not yet adopted by the EU The amendment is a transition option relating to comparative information about financial assets presented on initial application of IFRS 17. The amendment is aimed at helping entities to avoid temporary accounting mismatches between financial assets and insurance contract liabilities, and therefore improve the usefulness of comparative information for users of financial statements. IFRS 17 and IFRS 9 Financial Instruments have different transition requirements. For some insurers, these differences can cause temporary accounting mismatches between financial assets and insurance contract liabilities in the comparative information they present in their financial statements when applying IFRS 17 and IFRS 9 for the first time. The amendment will help insurers to avoid these temporary accounting mismatches and, therefore, will improve the usefulness of comparative information for investors. It does this by providing insurers with an option for the presentation of comparative information about financial assets. Chimimport AD Consolidated financial statements 31 December 2021 12 IFRS 14 “Regulatory deferral accounts” effective from 1 January 2016, not adopted by the EU IFRS 14, “Regulatory deferral accounts” permits first–time adopters to continue to recognize amounts related to rate regulation in accordance with their previous GAAP requirements when they adopt IFRS. However, to enhance comparability with entities that already apply IFRS and do not recognize such amounts, the standard requires that the effect of rate regulation must be presented separately from other items. 4. Summary of accounting policies 4.1. Overall considerations The significant accounting policies that have been used in the preparation of these consolidated financial statements are summarized below. The consolidated financial statements have been prepared using the measurement bases specified by IFRS for each type of asset, liability, income and expense. The measurement bases are more fully described in the accounting policies below. It should be noted that accounting estimates and assumptions are used for the preparation of the consolidated financial statements. Although these estimates are based on management's best knowledge of current events and actions, actual results may ultimately differ from those estimates. 4.2. Presentation of consolidated financial statements The consolidated financial statements are presented in accordance with IAS 1 “Presentation of Financial Statements”. The Group has elected to present the consolidated statement of profit or loss and other comprehensive income as a single statement. Two comparative periods are presented for the consolidated statement of financial position when the Group: (i) applies an accounting policy retrospectively, (ii) makes a retrospective restatement of items in its consolidated financial statements, or (iii) reclassifies items in the consolidated financial statements. In 2021 one comparative period is presented, as no restatements to the presentation of the elements of the consolidated financial statements and the corresponding comparative information. In case there are adjustments to the classification of the elements of the consolidated financial statements, relevant comparative information has also been reclassified to ensure comparability between reporting periods. 4.3. Basis of consolidation The consolidated financial statements of the Group have consolidated the financial statements of the parent and subsidiary companies as of 31 December 2021. Subsidiaries are all entities that are under the control of the parent. There is control when a parent is exposed to, or has rights over, the variable return on its participation in the investee and has the potential to impact on that return by virtue of its powers over the investee. All subsidiaries have a reporting period ending on 31 December. All transactions and balances between Group companies are eliminated on consolidation, including unrealized gains and losses on transactions between Group companies. Where unrealized losses on intra-group asset sales are reversed on consolidation, the underlying asset is also tested for impairment from a group perspective. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group. Profit or loss and other comprehensive income of subsidiaries acquired or disposed of during the year are recognized from the effective date of acquisition, or up to the effective date of disposal, as applicable. Non-controlling interests, presented as part of equity, represent the portion of a subsidiary's profit and loss and net assets that is not held by the Group. The Group attributes total comprehensive income or loss of subsidiaries between the owners of the parent and the non-controlling interests based on their respective ownership interests. When the Group ceases the control of a subsidiary, any retained interest in the entity is measured to its fair value as at the date of loss of control, with the change in carrying amount recognized in profit or loss. The fair value of any retained interest in the former subsidiary at the date of loss of control is Chimimport AD Consolidated financial statements 31 December 2021 13 regarded as fair value of initial recognition of financial asset, or where appropriate, the cost on initial recognition of an investment in an associate or jointly controlled entity. In addition, any amounts previously recognized in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities (i.e. reclassified to profit or loss or transferred directly to retained earnings as specified by applicable IFRSs). The profit or loss on disposal is calculated as the difference between i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and ii) the previous carrying amount of the assets (including goodwill) and liabilities of the subsidiary and any non-controlling interest. 4.4. Business combinations Business combinations are accounted for using the purchase method. The consideration transferred by the Group to obtain control of a subsidiary is calculated as the sum of the acquisition-date fair values of assets transferred, liabilities incurred, and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred. The purchase method involves the recognition of the acquiree’s identifiable assets and liabilities, including contingent liabilities, regardless of whether they were recorded in the financial statements prior to acquisition. On initial recognition, the assets and liabilities of the acquired subsidiary are included in the consolidated statement of financial position at their fair values, which are also used as the bases for subsequent measurement in accordance with the Group’s accounting policies. On an acquisition-by-acquisition basis, the Group recognizes any non-controlling interest in the acquiree that is present ownership interests and entitles their holders to a proportionate share of the entity’s net assets in the event of liquidation either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets. Other types of non-controlling interests are measured at fair value or, when applicable, on the basis specified in another IFRS. Goodwill is stated after separate recognition of identifiable intangible assets. It is calculated as the excess of the sum of a) fair value of consideration transferred, b) the recognized amount of any non- controlling interest in the acquiree and c) acquisition-date fair value of any existing equity interest in the acquiree, over the acquisition-date fair values of identifiable net assets. If the fair value of any identifiable net assets exceeds the sum calculated above, the excess amount (i.e. gain on a bargain purchase) is recognized in profit or loss immediately. When a business combination is achieved in stages, the Group’s previously held equity interest in the acquire is remeasured to fair value at the acquisition date (i.e. the date when the Group obtains control) and the resulting gain or loss, if any, is recognized in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have been previously recognized in other comprehensive income are reclassified to profit or loss where such treatment would be appropriate if the interest were disposed of. If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period which cannot exceed one year from the acquisition date or additional assets or liabilities are recognized to reflect new information obtained about facts and circumstances that existed at the acquisition date that, if known, would have affected the amounts recognized at that date. Any contingent consideration to be transferred by the acquirer is measured at fair value at the acquisition date and included as part of the consideration transferred in a business combination. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability, is recognized in accordance with IFRS 9 “Financial Instruments” either in profit or loss or as a change to other comprehensive income. If the contingent consideration is classified as equity, it is not remeasured until it is finally settled within equity. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill. Chimimport AD Consolidated financial statements 31 December 2021 14 4.5. Transactions with non-controlling interest Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are treated as transactions with equity owners of the Group. The carrying amounts of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to owners of the parent company. 4.6. Investments in associates and joint ventures Associates are those entities over which the Group is able to exert significant influence, but which are neither subsidiaries nor interests in a joint venture. Investments in associates are initially recognized at cost and subsequently accounted for using the equity method. The cost of the investment includes transaction costs. Joint ventures are contractual arrangements whereby two or more parties undertake an economic activity that is subject to joint control. They are accounted for using the equity method. Any goodwill or fair value adjustment attributable to the Group's share in the associate is included in the amount recognized as investment in associates. All subsequent changes to the Group’s share of interest in the equity of the associate are recognized in the carrying amount of the investment. Changes resulting from the profit or loss generated by the associate are reported within 'Share of profit from equity accounted investments' in profit or loss. These changes include subsequent depreciation, amortization or impairment of the fair value adjustments of assets and liabilities. Changes resulting from other comprehensive income of the associate or items recognized directly in the associate's equity are recognized in other comprehensive income or equity of the Group, as applicable. However, when the Group's share of losses in an associate equal or exceed its interest in the associate, including any unsecured receivables, the Group does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate. If the associate subsequently reports profits, the investor resumes recognizing its share of those profits only after its share of the profits exceeds the accumulated share of losses that has previously not been recognized. Unrealized gains and losses on transactions between the Group and its associates and joint ventures are eliminated to the extent of the Group's interest in those entities. Where unrealized losses are eliminated, the underlying asset is also tested for impairment losses from a group perspective. Amounts reported in the financial statements of associates and jointly controlled entities have been adjusted where necessary to ensure consistency with the accounting policies of the Group. Upon loss of significant influence over the associate, the Group measures and recognizes any retaining investment at its fair value. Any difference between the carrying amount of the associate upon loss of significant influence and the sum of the fair value of the retaining investment and proceeds from disposal is recognized in profit or loss. If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognized in other comprehensive income are reclassified to profit or loss where appropriate. 4.7. Foreign currency transactions Foreign currency transactions are translated into the functional currency of the respective Group entity, using the exchange rates prevailing at the dates of the transactions (spot exchange rate as published by the Bulgarian National Bank). Foreign exchange gains and losses resulting from the settlement of such transactions and from the re-measurement of monetary items at year-end exchange rates are recognized in profit or loss. Non-monetary items measured at historical cost are translated using the exchange rates at the date of the transaction (not retranslated). Non-monetary items measured at fair value are translated using the exchange rates at the date when fair value was determined. Chimimport AD Consolidated financial statements 31 December 2021 15 In the Group's consolidated financial statements, all assets, liabilities and transactions of Group entities with a functional currency other than the BGN (the Group's presentation currency) are translated into BGN upon consolidation. The functional currency of the entities in the Group has remained unchanged during the reporting period. On consolidation, assets and liabilities have been translated into BGN at the closing rate at the reporting date. Income and expenses have been translated into the Group's presentation currency at the average rate over the reporting period. Exchange differences are charged/credited to other comprehensive income and recognized in the currency translation reserve in equity. On disposal of a foreign operation the cumulative translation differences recognized in equity are reclassified to profit or loss and recognized as part of the gain or loss on disposal. Goodwill and fair value adjustments arising on the acquisition of a foreign entity have been treated as assets and liabilities of the foreign entity and translated into BGN at the closing rate. The Bulgarian lev is pegged to the euro in the ratio of 1 EUR = 1.95583 BGN. 4.8. Segment reporting The Group operates in the following operating segments: production, trade and services finance transportation real estate and engineering Each of these operating segments is managed separately as each of these service lines requires different technologies and other resources as well as marketing approaches. All inter-segment transfers are conducted at arm's length prices. The measurement policies the Group uses for segment reporting under IFRS 8 “Operating Segments” are the same as those used in its consolidated financial statements. Group assets which are not directly attributable to the business activities of any operating segment are not allocated to a segment. Information about the results of the separate segments that is regularly reviewed by the chief operating decision maker does not include isolated unrepeated events. Finance income and costs are also not included in the results of operating segments which are regularly reviewed by the chief operating decision maker. There have been no changes from prior periods in the measurement methods used to determine reported segment profit or loss. No asymmetrical allocations have been applied between segments. 4.9. Revenue To determine whether to recognize revenue, the Group follows a 5-step process: 1 Identifying the contract with a customer 2 Identifying the performance obligations 3 Determining the transaction price 4 Allocating the transaction price to the performance obligations 5 Recognizing revenue when/as performance obligation(s) are satisfied. Revenue from contracts with customers is recognized when the control over the goods and / or services subject of the contract is transferred to the client in an amount that reflects the remuneration that the Group expects to be entitled to in exchange for those goods or services. Control is transferred to the buyer when he satisfies a performance obligation, under the terms of the contract, by transferring the promised product or service to the buyer. A certain asset (product or service) is transferred when a buyer has control over that asset. Any promise to transfer goods and / or services that are identifiable (on their own and in the context of the contract) is reported as a performance obligation. The Group recognizes revenue for each separate performance obligation for an individual contract with a client by analyzing the type, term and conditions of each particular contract. For contracts with similar characteristics, revenue is recognized on a portfolio basis only if their grouping in a portfolio would not Chimimport AD Consolidated financial statements 31 December 2021 16 have a materially different effect on the financial statements. Typically, contracts with clients of the Group include one performance obligation. When a transaction falls partly within the scope of IFRS 15 and partly within the scope of other standards, the Group applies the separation and / or initial measurement requirements set out in those standards if the other standards specify how to divide and / or initially evaluate one or more parts of the contract. The Group excludes from the price the value of the part (or parts) of the contract that is initially measured in accordance with other standards and applies the requirements of IFRS 15 to allocate the remaining cost of the transaction. If other standards do not specify how to separate and / or initially measure one or more parts of the contract, then the Group applies IFRS 15 for the separation and / or initial measurement of the part (or parts) of the contract. Measurement Revenue is measured based on the transaction price specified for each contract. When determining the transaction price, the Group considers the terms of the contract and its usual business practices. The transaction price is the amount of the consideration the Group expects to be entitled to in exchange for the transfer of the promised goods or services to the buyer, except for amounts collected on behalf of third parties (e.g., VAT). The price specified in the contract with the buyer may include fixed amounts, variable amounts, or both. When a performance obligation is satisfied, the Group recognizes revenue at the amount of the transaction cost (which excludes estimates of variable remuneration containing limitations) that is attributable to that performance obligation. The Group considers whether there are other promises in the contract that represent separate performance obligations for which a portion of the transaction price should be allocated. When determining the transaction price, account is taken of the impact of variable remuneration, the existence of significant financing components, non-monetary remuneration and the remuneration due to the client. Principal or agent When a third party participates in the sale of goods or services to a client, the Group determines whether the nature of his promise is a performance obligation related to the sale of the particular goods or services (principal) or by arranging for the third party to provide those goods or services (agent). The Group is a principal when it controls the promised good or service before transferring it to the customer. However, the Group does not necessarily function as a principal if it receives the ownership of an asset only temporarily before the ownership right is transferred to the client. The Group is an agent if the Group's performance obligation is to arrange the delivery of the goods or services from a third party. When the agent company satisfies the performance obligation, it recognizes revenue at the amount of a fee or commission it expects to be entitled to in exchange for arranging the goods and services to be provided by another party. The fee or commission of the Group may be the net amount of the remuneration that the Group retains after paying to the other party the consideration received in exchange for the goods or services to be provided by that party. Trade receivables and contract assets The receivable is the right of the Group to receive remuneration at a certain amount, which is unconditional (i.e., before the payment of the remuneration becomes due, it is only necessary to expire a certain period of time). Contract asset is the Group’s right to receive remuneration in exchange for the goods or services it has transferred to the client, but which is unconditional (charge for the receivable). If, through the transfer of the goods and / or the providing of the services, the Group fulfils its obligation before the client pays the relevant consideration and / or before the payment becomes due, a contract asset is recognized for the earned remuneration (which is conditional). Recognized contract assets are reclassified as a trade receivable when the right to remuneration becomes unconditional. Chimimport AD Consolidated financial statements 31 December 2021 17 Contract liabilities The Group presents as a contracted liability the payments received by the client and/ or an unconditional right to receive payment before fulfilling its obligations to perform the contract. Contract liabilities are recognized as income when the performance obligation has been satisfied. Contract liabilities include liabilities under sold air tickets for which the actual providing of the service has not occurred as at the date of the financial statement, i.e., the carriage. Assets and liabilities arising from one contract are presented net in the statement of financial position even if they are a result of different performance obligations in the contract. After initial recognition, trade receivables and contract assets are reviewed for impairment in accordance with IFRS 9 Financial Instruments. 4.9.1. Revenue recognized over time Rendering of services The services provided by the Group include a wide range of services of the companies in Group, depending on the nature of their business - banking, consulting, drilling, exploration, hydrogeological, repair, air, river and land transport, warehousing services, designing, technical services, IT support and more. The Group also provides IT services, including payroll processing for a fixed monthly fee. Revenue is recognized on a straight-line basis over the term of each contract. Since the amount of work required to execute these contracts does not differ significantly each month, the straight-line method faithfully reflects the transfer of goods or services. Fees that are not an integral part of the effective interest rate of financial instruments are accounted for in accordance with IFRS 15. Revenue from services is recognized when the control over the benefits of the services provided is transferred to the user of the services. Revenue is recognized over time on the basis of performance of individual performance obligations. Revenue from these services is recognized based on time and materials, when the services are provided. When recognizing the revenue from the provided services, the Group applies stage of completion method taking into account outputs/ method reflecting the inputs. Revenue from aviation The main activity of the airline company in the Group is related to providing aviation services both on the territory of the country and abroad. Revenue from flights includes international and domestic scheduled flights, international charter flights and other flight-related services. The Group transfers control over the service over time and therefore satisfies the performance obligation and recognizes revenue over time. Revenue from the operated flights is recognized after the actual flight. The cost of the services may be defined as a fixed remuneration. The price of an airline ticket includes the price of the carriage of both the passenger and a different amount of luggage depending on the applicable tariff, on-board food, insurance; airport charges and fuel charges. Allocation of the price to the performance obligations is made on the basis of unit sales prices. The Group measures its progress towards a full settlement of the performance obligation over time through a confirmation of the operated flight and respectively transportation used the passenger. In cases where customers have purchased tickets but the usage options and / or the period of validity of the tickets have expired and they are not used by the customer, the Group recognizes revenue from expired tickets. The portion of the fee related to airport charges that the Group typically collects from clients as an agent is also recognized as income from tickets that have expired because they are non- refundable and there is no option for their usage. 4.9.2. Revenue recognized at a point in time Sale of goods and production Sale of goods and production comprises the sale of oil, crude oil, natural gas, petroleum products and others. Revenue is recognized when the Group has transferred to the buyer the significant risks and Chimimport AD Consolidated financial statements 31 December 2021 18 rewards of ownership of the goods supplied. Significant risks and rewards are generally considered to be transferred to the buyer when the customer has taken undisputed delivery of the goods. Revenue from the sale of goods with no significant service obligation is recognized on delivery. Where the goods require significant tailoring, modification or integration the revenue is recognized using stage of completion method taking into account outputs/ method reflecting the inputs. When the sale of goods includes incentives for loyal customers, they are distributed within the transaction price and are recognized as contract liabilities. The remuneration received is allocated among the individual performance obligations included in the sales contract based on their unit sale prices/ residual value. Revenue from this type of sale is recognized when the customer exchanges the received rewards with products delivered by the Group. 4.9.3. Other revenue of the Group A major part of the Group’s revenue, which is outside the scope of IFRS 15 and is accounted for under other standards, relates to banking activity, insurance activity and activity related to financial asset management and trading. The Group’s revenue related to transactions with financial instruments is classified as gains on operations with financial instruments and / or financial income from interest on loans and dividend income. Revenue from bank fees and commissions that are not an integral part of the effective interest rate of financial instruments, interest on loans granted, gains on trading with financial instruments are recognized under IFRS 9. Revenue related to the Group’s insurance activity are reported in accordance with IFRS 4. The recognition and reporting are as follow: Bank activity Interest income and interest expenses Interest income and expense are recognized using the effective interest method of the relevant financial asset or liability in all material aspects. Interest income and expense includes the amortization of discount, premium or other differences between the initial carrying amount and the maturity of an interest-bearing instrument calculated using an effective interest method. The effective interest rate is the rate at which the estimated future cash flows of the financial instrument for its lifetime are accurately discounted or, where applicable, for a shorter period, to the net carrying amount of the financial asset or financial liability. Future cash flows are approximated, taking into account the contractual terms of the instrument. Calculation of the effective interest rate includes all fees and charges paid or received between the parties to the contract that are directly related to the specific agreement, transaction costs and any other premiums or discounts. Interest income and interest expense presented in the statement of profit or loss and other comprehensive income include: - Interest from financial assets and liabilities at amortized cost calculated on the basis of the effective interest rate; - Interest from financial assets, at fair value through other comprehensive income (FVTOCI), calculated on the basis of an effective interest rate - Interest from financial assets at fair value through profit or loss. The Group does not accrue any interest income on the statement of financial position from receivables after change of their status to “court”. After the date of classification to court status, interest income from court receivables is recognized on the statement of financial position only in case of their payment. Fees and commissions All fees and commissions that are not an integral part of the effective interest rate of financial instruments are accounted for in accordance with IFRS 15. To determine whether to recognize revenue in accordance with IFRS 15, the Group follows a 5-step process: 1 Identifying the contract with a customer 2 Identifying the performance obligations Chimimport AD Consolidated financial statements 31 December 2021 19 3 Determining the transaction price 4 Allocating the transaction price to the performance obligations 5 Recognizing revenue when performance obligation(s) are satisfied. Revenue is recognized either at a time or with time when, or until the Group meets its performance obligations, transferring promised services to its clients. The Group recognizes as contractual obligations remuneration received in respect of outstanding performance obligations and presents them as other liabilities in the statement of financial position. Similarly, if the Group meets a performance obligation before receiving the remuneration, it recognizes in the statement of financial position or contract asset or receivable, depending on whether or not something other than a specified time is required to receive the remuneration. Fees and commissions consist mainly of bank transfer fees in the country and abroad, account maintenance fees, credit exposures, off-balance sheet and other revenue. Commissions arising from foreign currency transactions are reported in the statement of profit or loss and other comprehensive income on their receipt. Fees and commissions for granting and management of loans when considered to be part of the effective income are amortized during the loan term and are recognized as current financial income during the period by applying the effective interest method. Revenue from insurance activities Revenue recognition from premiums over insurance contracts is based on the amount, due by the insured (insuring) person for the whole term of the insurance, which the Group has the right to receive according to insurance contracts signed during the accounting period and for insurances with terms covering whole or parts of the next accounting period. The Group recognizes revenue from insurance premiums on an accrual basis as income is recognized at the time the policy is issued when the entire premium or first instalment is paid, unless otherwise agreed. In case of co-insurance revenue is recognized only for the insurer’s part from the whole amount of premiums. Premiums signed away to reinsurers for common insurance include premiums due to reinsurers according to reinsurance contracts for reinsurance of risks over signed during the period contracts on direct insurance and inward reinsurance. The reinsurance premiums, which are not paid as at reporting date, are accounted for as payables. The amounts that are subject to reimbursement from the reinsurer in relation to the claims paid during the period by the insurer, are accounted for as reinsurer’s share including the case in which the settlement of the relations with reinsurers occurs in following accounting period. Revenues from the exercise of recourse rights are recognized at the time of their registration. The reinsurance premiums, which are not paid as of the balance sheet date, are reported as payables. Revenue from government grants Revenue from government grants is recognized at fair value when there is reasonable assurance that the Group will comply with the conditions attaching to them and the grant will be received. Revenue from government grants is recognized over the periods in which the related costs for which the grants are intended to compensate are recognized as expenses. Government grants related to depreciable assets are recognized as revenue over the useful life of a depreciable asset by reduced depreciation charges. 4.10. Operating expenses Operating expenses are recognized in profit or loss upon utilization of the service or as incurred. The Group recognizes two types of contract costs related to the execution of contracts for the supply of services with customer: incremental costs of obtaining a contract and costs to fulfil a contract. Where costs are not eligible for deferral under IFRS 15, they are recognized as current expenses at the time they arise, such as they are not expected to be recovered, or the deferral period is up to one year. The following operating expenses are always recognized as current expenses at the time of their occurrence: General and administrative costs (unless those costs that are chargeable to the customer); Chimimport AD Consolidated financial statements 31 December 2021 20 Costs of wasted materials; Costs that relate to satisfied performance obligation; Costs for which the company cannot distinguish whether the costs relate to unsatisfied performance obligation or to satisfied performance obligation. Expenditure for warranties is recognized and charged against the associated provision when the related revenue is recognized. With respect to costs associated with non-regularity and / or other compensations due to customers, the airline company part of the Group has retained its current reporting approach as a current expense. IFRS 15 does not provide explicit guidance for reporting this type of compensations. The Group considers that there is no transfer of a separate good or service against which this benefit should be reduced. Aviation costs are the costs of intermediary commissions and advertising costs and are recognized as current expenses over the term of the respective insurance contracts in full at the time when the revenue is accrued. Cost of insurance activity Expenses for paid compensations are recognized for the period in which they arise. These include the cost of paid compensations and the costs of assessing the compensation due (liquidation costs), less income from regress rights and recoverable compensations from reinsurers adjusted by the change in the provision for outstanding claims, net of reinsurance for the financial year. Acquisition costs are the costs of intermediary commissions and advertising costs and are recognized as current expenses over the life of the respective insurance contracts in full at the time when the revenue is accrued. Operational and administrative expenses are expenses related to the insurer's personnel, the costs of collecting the premiums and managing the insurance portfolio, including advertising, as well as the depreciation and amortization of the fixed assets. Administrative expenses are recognized in profit or loss upon use of the services or on the date of their occurrence. Prepaid expenses are deferred for recognition as current expenses over the period in which the contracts to which they relate are satisfied. 4.11. Interest expenses and borrowing costs Interest expenses are reported on an accrual basis using the effective interest method. Borrowing costs primarily comprise interest on the Group's borrowings. Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalized during the period of time that is necessary to complete and prepare the asset for its intended use or sale. Other borrowing costs are expensed in the period in which they are incurred and reported in 'Interest expenses'. 4.12. Goodwill Goodwill represents the future economic benefits arising from a business combination that are not individually identified and separately recognized. See note 4.4 for information on how goodwill is initially determined. For the purposes of impairment testing, goodwill is allocated to each of the Group’s cash- generating units (or groups of cash-generating units) that is expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units. Goodwill is carried at cost less accumulated impairment losses. Refer to note 4.16 for a description of impairment testing procedures. On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal. 4.13. Intangible assets Intangible assets include trademarks, licenses and patents, software products, relations with clients, research and development products, assets for research and valuation of mineral resources and other. They are accounted for using the cost model. The cost comprises its purchase price, including any import duties and non-refundable purchase taxes, and any directly attributable expenditure on preparing Chimimport AD Consolidated financial statements 31 December 2021 21 the asset for its intended use. If an intangible asset is acquired in a business combination, the cost of that intangible asset is based on its fair value at the date of acquisition. After initial recognition, an intangible asset is carried at its cost less any accumulated amortization and any accumulated impairment losses. Impairment losses are recognized in the consolidated statement of profit or loss and other comprehensive income for the respective period. Subsequent expenditure on an intangible asset after its purchase or its completion is expensed as incurred unless it is probable that this expenditure will enable the asset to generate future economic benefits in excess of its originally assessed standard of performance and this expenditure can be measured reliably and attributed to the asset. If these two conditions are met, the subsequent expenditure is added to the carrying amount of the intangible asset. Residual values and useful lives are reviewed at each reporting date. Amortization is calculated using the straight-line method over the estimated useful life of individual assets as follows: Software 2-5 years Trademarks 6-7 years Property rights 5-7 years Licenses 7 years Certificates 5 years Industrial property rights 27 - 30 years Other 7 - 10 years Amortization has been included in the consolidated statement of profit or loss and other comprehensive income within Depreciation, amortization and impairment of non-financial assets, included in item Expenses for non-financial activities and item Operating and administrative expenses. The gain or loss arising on the disposal of an intangible asset is determined as the difference between the proceeds and the carrying amount of the asset and is recognized in profit or loss and other comprehensive income within Gain from sale of non-current assets. 4.14. Property, plant and equipment and right of use assets Items of property, plant and equipment are initially measured at cost, which comprises its purchase price and any directly attributable costs of bringing the asset to working condition for its intended use. After initial recognition, the property, plant and equipment are carried at its cost less any subsequent accumulated depreciation and any subsequent accumulated impairment losses. Impairment losses are recognized in the consolidated statement of profit or loss and other comprehensive income for the respective period. Subsequent measurement of assets of a group of aircraft, including use-owned assets belonging to the same group, is subsequently measured at revalued amount, which is equal to the fair value at the date of revaluation, less any subsequent accumulated depreciation and amortization and impairment losses. Revaluations are presented in the statement of other comprehensive income and are reported at the expense of equity as a revaluation reserve, if not preceded by previously accrued expenses. Upon sale or write-off of the revalued asset, the remaining revaluation reserve is recorded at the expense of retained earnings. The revaluation value of a group of aircraft is determined on the basis of reports prepared by independent licensed appraisers and is determined every 3 years. When fair values change significantly over a shorter period, revaluations may be made more frequently. Subsequent expenditure relating to an item of property, plant and equipment is added to the carrying amount of the asset when it is probable that this expenditure will enable the asset to generate future economic benefits in excess of its originally assessed standard of performance. All other subsequent expenditure is recognized as incurred. Residual values and useful lives of property, plant and equipment are reviewed by the management at each reporting date. Chimimport AD Consolidated financial statements 31 December 2021 22 Property, plant and equipment acquired under lease agreement, are depreciated based on their expected useful life, determined by reference to comparable assets or based on the period of the lease contract, if shorter. Right of use assets related to lease agreements for aircraft and spare engines are divided into key components based on their value and technical characteristics. The useful lives of the key components of the asset are determined depending on the state of maintenance of those components of the aircraft and continue until the relevant component of the aircraft meets the return conditions set out in the lease. The useful life of components that are not related to the state of maintenance of the underlying assets is the lease term. Accounting for maintenance costs of aircrafts: Amounts related to aircraft maintenance (maintenance reserves) are recognized either as current expenses for the period or as part of the value of the respective asset depending on the nature of the repair or maintenance. Depreciation is calculated using the straight-line method over the estimated useful life of individual assets as follows: Buildings 25 years Machines 3-5 years Fixtures and fittings 4 to 25 years Vehicles 4 to 10 years Aircrafts 20 years Engines 12 years Marine vessels 30 years Equipment 7 years Other 7 years Depreciation has been included in the consolidated statement of profit or loss and other comprehensive income within Depreciation, amortization and impairment of non-financial assets, included in item Expenses for non-financial activities and item Operating and administrative expenses. Gains or losses arising on the disposal of property, plant and equipment are determined as the difference between the disposal proceeds and the carrying amount of the assets and are recognized in profit or loss and other comprehensive income within Gain on sale of non-current assets. 4.15. Leases 4.15.1. Leased assets The Group as a lessee For any new contracts entered the Group considers whether a contract is or contains a lease. A lease is defined as ‘a contract, or part of a contract, which conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration'. To apply this definition the Group assesses whether the contract meets three key evaluations which are whether: the contract contains an identified asset, which is either explicitly identified in the contract or implicitly specified by being identified at the time the asset is made available to the Group the Group has the right to obtain substantially all of the economic benefits from use of the identified asset throughout the period of use, considering its rights within the defined scope of the contract the Group has the right to direct the use of the identified asset throughout the period of use. The Group assesses whether it has the right to direct ‘how and for what purpose' the asset is used throughout the period of use. Measurement and recognition of leases as a lessee At lease commencement date, the Group recognizes a right-of-use asset and a lease liability on the consolidated statement of financial position. The right-of-use asset is measured at cost, which is made up of the initial measurement of the lease liability, any initial direct costs incurred by the Group, an Chimimport AD Consolidated financial statements 31 December 2021 23 estimate of any costs to dismantle and remove the asset at the end of the lease, and any lease payments made in advance of the lease commencement date (net of any incentives received). The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Group also assesses the right-of-use asset for impairment when such indicators exist. At the commencement date, the Group measures the lease liability at the present value of the lease payments unpaid at that date, discounted using the interest rate implicit in the lease if that rate is readily available or the Group’s incremental borrowing rate. To determine the incremental borrowing rate, the Group: where possible, uses recent third-party financing received as a starting point, adjusted to reflect changes in financing conditions since third party financing was received; or interest rate, consisting of the risk-free interest rate and a margin reflecting the credit risk related to the respective component of the Group and additionally adjusted due to the specific conditions of the leasing contract, incl. term, country, currency, collateral and type of leased asset. Lease payments included in the measurement of the lease liability are made up of fixed payments (including in substance fixed), variable payments based on an index or rate, amounts expected to be payable under a residual value guaran tee and payments arising from options reasonably certain to be exercised. After initial measurement, the liability is reduced for payments made and increased for interest. It is remeasured to reflect any reassessment or modification, or if there are changes in in-substance fixed payments. When the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use asset, or profit and loss if the right-of-use asset is already reduced to zero. The Group has elected to account for short-term leases and leases of low-value assets using the practical expedients. Instead of recognizing a right-of-use asset and lease liability, the payments in relation to these are recognized as an expense in profit or loss on a straight-line basis over the lease term. In the consolidated statement of financial position, the right of use assets and lease liabilities are presented on a separate line. Extension and termination options are included in several property and equipment leases at the Group. They are used to increase operational flexibility regarding the management of assets used in the operations of the Group. Most owned extension and termination options are exercised only by the Group and not by the respective lessor. The Group as a lessor As a lessor the Group classifies its leases as either operating or finance leases. A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of the underlying asset and classified as an operating lease if it does not. 4.16. Impairment testing of assets For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are largely independent cash inflows (cash-generating units). As a result, some assets are evaluated individually for impairment, and some are assessed at cash-generating unit level. All assets and cash-generating units are evaluated for impairment at least annually. All other individual assets or cash-generating units are assessed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset's or cash-generating unit's carrying amount exceeds its recoverable amount, which is the higher of fair value less costs to sell and value- in-use. To determine the value-in-use, management estimates expected future cash flows from each cash-generating unit and determines a suitable interest rate in order to calculate the present value of those cash flows. The data used for impairment testing procedures are directly linked to the Group's Chimimport AD Consolidated financial statements 31 December 2021 24 latest approved budget, adjusted as necessary to exclude the effects of future reorganizations and asset enhancements. Discount factors are determined individually for each cash-generating unit and reflect their respective risk profiles as assessed by management. Impairment losses for cash-generating units reduce first the carrying amount of any goodwill allocated to that cash-generating unit. Any remaining impairment loss is charged pro rata to the other assets in the cash-generating unit. All assets are subsequently reassessed for indications that an impairment loss previously recognized may no longer exist. An impairment charge is reversed if the cash-generating unit’s recoverable amount exceeds its carrying amount. 4.17. Investment property The Group reports as investment property buildings and land held for rental income and / or for capital increases, according to the fair value model. Investment property is initially measured at cost, including the purchase price and any costs that are directly attributable to the investment property, such as legal fees, property transfer taxes and other transaction costs. Investment properties are revalued on an annual basis and are included in the consolidated statement of financial position at their market values. They are determined by independent appraisers with professional qualifications and significant professional experience depending on the nature and location of the investment properties, based on evidence of the market conditions. Any gain or loss on a change in fair value or on the sale of an investment property is recognized immediately in profit or loss within ‘Sale of non-current assets’ and ‘Change in fair value of the investment property’. Subsequent expenditure on investment property that is already recognized in the Group's consolidated financial statements is added to the carrying amount of the property when it is probable that future economic benefits associated with the item will exceed the carrying amount of the existing investment property. All other subsequent costs are recognized as an expense in the period in which they are incurred. The Group derecognizes its investment property when it is sold or permanently decommissioned if no economic benefits are expected from its disposal. Gains or losses arising from decommissioning or sale are recognized in the consolidated statement of profit or loss and other comprehensive income and are determined as the difference between the net proceeds from the disposal of the asset and its carrying amount. Rental income and operating expenses related to investment property are presented in the consolidated statement of profit or loss and other comprehensive income in the line “Income from non-financial activities” and the line “Operating and administrative expenses”, respectively, and are recognized as described. in note 4.9 and note 4.10. 4.18. Assets from exploration and evaluation of mineral resources The exploration and evaluation of the mineral resources of the Group is related to the search and exploration of crude oil and natural gas. After being granted the rights for these activities, all corresponding expenses are capitalized initially in a specific “Block”. The Group recognizes as exploration and evaluation assets all accrued expenses in the process of search of resources, exploration with commercial purpose, expenses that can be related directly to specific exploration area “Block”, for which the Group has permission for search and exploration, issued by the state. These expenses include at least the following types: Acquisition of exploration rights Topographic, geologic, geochemical and geophysical exploration Exploration drilling Probing for analysis Activities related to evaluation of technical execution and commercial applicability of the extraction of mineral resources. All expenses made before the permission for exploration and evaluation are assigned to the gain or loss for the period, they were incurred in. Chimimport AD Consolidated financial statements 31 December 2021 25 Exploration and evaluation assets of mineral resources can be classified as follows: Permission for search and exploration, issued by MEW and MEE, in compliance with the Mineral Resources Act and the related taxes; All expenses for topographic, geological, geochemical and geophysical exploration, exploration drilling, digging work, probing for an analysis and other activities, related to the evaluation of the technical execution and the commercial applicability of the extracted mineral resources, as well as other expenses for exploration and evaluation, which are made for a specific area, for which the Group has a permission to explore, are also capitalized. These expenses also include employee remuneration, materials and used fuel, expenses for logistics and payments to suppliers. The exploration and evaluation expenses of mineral resources are capitalized and recognized as intangible assets until the technical feasibility and trade application of the mineral resource are determined. After proving the technical feasibility and trade application of the discovered mineral resource, the cost of exploration and evaluation are transformed in “Property, plant and equipment”. Assets for exploration and evaluation reviewed technically, financially and on a management level, at least annually, with the purpose of confirmation of the continuation of the exploration activities and benefiting from the discovery, as well as for impairment testing. In case that the Group does not intend to continue the exploration activities or indications for impairment are identified, the expenses are written-off. The exploration and evaluation assets of the mineral resources are measured at cost at their initial recognition. The elements of their cost include the exploration and evaluation activities. “Exploration activities” - means activities with the purpose of discovery of oil accumulation. This includes, without being limited to, geological, geophysical, photographic, geochemical and other analyses, studying and explorations, as well as drilling, further deepening, abandonment or besiege and perforation, as well as testing of searching drillings for oil discovery, and the purchase, renting or acquisition of such resources, materials, equipment for such activities, which can be included in the approved annual working projects and budgets. “Evaluation activities” - means evaluation works (part of the exploration) and working program for evaluation, being done after the discoveries, aiming to outline the natural reservoir, to which the discovery is related, in terms of thickness and lateral distribution, and evaluation of the extractable quantities in it, and should include, without being limited to, geological, geophysical, photographic, geochemical and other analyses. 4.19. Financial instruments 4.19.1. Recognition and derecognition Financial assets and financial liabilities are recognized when the Group becomes a party to the contractual provisions of the financial instrument. Financial assets are derecognized when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and substantially all the risks and rewards are transferred. A financial liability is derecognized when it is extinguished, discharged, cancelled or expires. 4.19.2. Classification and initial measurement of financial assets Financial assets are initially measured at fair value, adjusted for transaction costs, except for financial assets at fair value through profit or loss and trade receivables that do not contain a significant financial component. The initial measurement of financial assets at fair value through profit or loss is not adjusted with transaction costs that are reported as current expenses. The initial measurement of trade receivables that do not contain a significant financial component represents the transaction price in accordance with IFRS 15. Depending on the method of subsequent measurement, financial assets are classified into the following categories: Debt instruments at amortized cost; Financial assets at fair value through profit or loss (FVTPL); Chimimport AD Consolidated financial statements 31 December 2021 26 Financial assets at fair value through other comprehensive income (FVOCI) with or without reclassification in profit or loss, depending on whether they are debt or equity instruments The classification is determined by both: the Group’s business model for managing the financial asset; the contractual cash flow characteristics of the financial asset. All income and expenses relating to financial assets that are recognized in profit or loss are presented within finance costs, finance income or other financial items, except for impairment of trade receivables which is presented within other expenses in the consolidated statement of profit or loss and other comprehensive income. 4.19.3. Subsequent measurement of financial assets Financial assets at amortized cost Financial assets are measured at amortized cost if the assets meet the following conditions and are not designated as FVTPL: they are held within a business model whose objective is to hold the financial assets and collect its contractual cash flows; the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding This category includes non-derivative financial assets like loans and receivables with fixed or determinable payments that are not quoted in an active market. After initial recognition, these are measured at amortized cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial. The Group’s cash and cash equivalents, trade and other receivables fall into this category of financial instruments as well as debt instruments that were previously classified as loans and receivables, held-to-maturity investments or available-for-sale financial assets under IAS 39. Financial assets at fair value through profit or loss (FVTPL) Financial assets that are held within a different business model than “hold to collect” or “hold to collect and sell”, and financial assets whose contractual cash flows are not solely payments of principal and interest are accounted for at FVTPL. All derivative financial instruments fall into this category, except for those designated and effective as hedging instruments, for which the hedge accounting requirements apply (see below). Assets in this category are measured at fair value with gains or losses recognized in profit or loss. The fair values of financial assets in this category are determined by reference to active market transactions or using a valuation technique where no active market exists. Financial assets at fair value through other comprehensive income (FVOCI) The Group accounts for financial assets at FVOCI if the assets meet the following conditions: they are held under a business model whose objective it is “hold to collect” the associated cash flows and sell; and the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding. The financial assets at FVOCI include: Equity securities that are not held for trading and which at initial recognition the Group irrevocably has chosen to recognize in this category. These are strategic investments, and the Group considers this classification to be more relevant. Debt securities where the contractual cash flows are solely payments of principal and interest, and the purpose of the Group's business model is achieved both by collecting contractual cash flows and by selling the financial assets. On disposal of equity instruments of this category, any amount recognized in the revaluation reserve is reclassified to retained earnings. On disposal of debt instruments of this category, any amount recognized in the revaluation reserve is reclassified to profit or loss for the period. Chimimport AD Consolidated financial statements 31 December 2021 27 4.19.4. Impairment of financial assets IFRS 9’s new impairment requirements use more forward-looking information to recognize expected credit losses – the “expected credit loss” (ECL) model. This replaces IAS 39’s “incurred loss model”. Instruments within the scope of the new requirements included loans and other debt-type financial assets measured at amortized cost, trade receivables, contract assets recognized and measured under IFRS 15 and loan commitments and some financial guarantee contracts (for the issuer) that are not measured at fair value through profit or loss. Recognition of credit losses is no longer dependent on the Group first identifying a credit loss event. Instead, the Group considers a broader range of information when assessing credit risk and measuring expected credit losses, including past events, current conditions, reasonable and supportable forecasts that affect the expected collectability of the future cash flows of the instrument. In applying this forward-looking approach, a distinction is made between: financial instruments that have not deteriorated significantly in credit quality since initial recognition or that have low credit risk (Stage 1) and financial instruments that have deteriorated significantly in credit quality since initial recognition and whose credit risk is not low (Stage 2) Stage 3 would cover financial assets that have objective evidence of impairment at the reporting date. “12-month expected credit losses” are recognized for the first category while “lifetime expected credit losses” are recognized for the second category. Expected credit losses are determined as the difference between all contractual cash flows attributable to the Group and the cash flows it is actually expected to receive (“cash shortfall”). This difference is discounted at the original effective interest rate (or credit adjusted effective interest rate). Measurement of the expected credit losses is determined by a probability-weighted estimate of credit losses over the expected life of the financial instrument. For the purpose of determining the impairment of financial assets, the Group applies models of calculating the expected credit losses on collective or individual basis. The impairment models for individual measurement of financial assets are applied for debt financial instruments such as debt securities, bank balances, deposits and others. Impairment models for individually measured exposures, are based on discounted cash flows and reflect the different scenarios of expected cash flows, including available reasonable and supportable information without undue cost or effort, which concerns future events /including macroeconomic forecasts/. For the purpose of determining the impairment of the exposure at default /Stage 3/ or credit –impaired financial assets, the Group applies a model for individual impairment of assets above a certain amount. The impairment model for collectively measured financial assets is based on determining amounts for the probability of default /PD/ and for the loss given default for each collectively measured asset, by applying amortization through the effective interest rate /EIR/ when calculating the exposure at default /EAD/. The impairment models of the financial assets collectively measured are applied for debt securities, bank balances and deposits, repurchase agreements and exposures as a result of the Group’s loan activity – loans and off-balance exposures of individuals and legal entities. The models include available reasonable and supportable information, accessible without undue costs or efforts, for external credit rating of the counterparties, as well as 3–year scenarios for the macroeconomic development of the country. The Group updates the values of the forecast indicators used in its model once per year, when the 3-year forecast data is published and disclosed by the respective institutions. At the end of each reporting period, the Group updates the assessment of the change in the credit risk of the respective financial instrument. The Group estimates the impairment loss for the financial instrument at a value that is equal to the expected credit loss over the whole term of the instrument if the credit risk of the financial instrument has increased significantly since initial recognition. If the credit risk of the financial instrument has not significantly increased from the initial recognition, the Group estimates the impairment loss for the financial instrument at an amount equal to the expected credit loss for 12 months. Chimimport AD Consolidated financial statements 31 December 2021 28 Trade and other receivables, contract assets and finance lease receivables The Group makes use of a simplified approach in accounting for trade and other receivables as well as contract assets and records the loss allowance as lifetime expected credit losses. These are the expected shortfalls in contractual cash flows, considering the potential for default at any point during the life of the financial instrument. In calculating, the Group uses its historical experience, external indicators and forward-looking information to calculate the expected credit losses using customer allocation by industry and time structure of receivables and a provision matrix. Financial assets at fair value through other comprehensive income The Group recognizes 12-month expected credit losses for financial assets at FVOCI. As most of these instruments have an outstanding credit rating, the likelihood of default is deemed to be small. However, at each reporting date the Group assesses whether there has been a significant increase in the credit risk of the instrument. In assessing these risks, the Group relies on readily available information such as the credit ratings issued by the major credit rating agencies for the respective asset. The Group only holds simple financial instruments for which specific credit ratings are usually available. In the unlikely event that there is no or only little information on factors influencing the ratings of the asset available, the Group would aggregate similar instruments into a portfolio to assess on this basis whether there has been a significant increase in credit risk. In addition, the Group considers other indicators such as adverse changes in business, economic or financial conditions that could affect the borrower’s ability to meet its debt obligation or unexpected changes in the borrower’s operating results. Should any of these indicators imply a significant increase in the instrument’s credit risk, the Group recognizes for this instrument or class of instruments the lifetime ECL. 4.19.5. Reclassification of financial instruments The Group reclassifies all affected financial assets only when it changes its business model for financial asset management. The Group does not reclassify financial liabilities. The Group reclassifies financial assets prospectively as of the date of reclassification. The Group does not restate any gains or losses recognized previously (including gain and loss on impairment losses) or interest. 4.19.6. Gain or loss on financial instruments Gains and losses on a financial asset or financial liability designated at fair value is recognized by the Group in profit or loss, unless: a) it is part of a hedging relationship b) it is an investment in an equity instrument and the Group has elected to present the gains and losses on this investment in other comprehensive income. c) it is a financial liability designated at fair value through profit or loss, and the Group is obliged to present the effect of the changes in the credit risk of the liability in other comprehensive income d) it is a financial asset measured at fair value through other comprehensive income and the Group is obliged to present some changes in the fair value in other comprehensive income. Gains and losses on a financial asset measured at amortized cost, which are not part of a hedging relationship are recognized by the Group in profit or loss when the financial asset is derecognized or reclassified through amortization or for recognition of impairment gains and losses. Gains and losses on a financial asset measured at fair value through other comprehensive income is recognized by the Group in other comprehensive income, with the exception of gains and losses on impairment and foreign exchange gains and losses up to the moment of derecognition or reclassification of the financial asset. When the financial asset is derecognized, the cumulative gain and loss previously recognized in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment. If the financial asset is reclassified from “measured at fair value through other comprehensive income", the Group takes into consideration the cumulative gain and loss that Chimimport AD Consolidated financial statements 31 December 2021 29 was previously recognized in other comprehensive income. The interest that is calculated by applying the effective interest method is recognized in profit or loss. 4.19.7. Modification of contractual cash flows of a financial asset Modification of a contractual cash flow of a financial asset occurs when the contractual cash flows of a financial asset are renegotiated or otherwise altered, and those amendments have not been contracted at the initial recognition of the financial asset. The change in the interest rate on a financial asset due to a change in market conditions is not considered a modification. When determining the existence of a modification of a financial asset, the factors for its occurrence are analyzed, as well as the accounting reflection of the effect of modification. 4.19.8. Classification and measurement of financial liabilities The Group’s financial liabilities include borrowings, finance lease payments, trade and other payables and derivative financial instruments. Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs unless the Group designated a financial liability at fair value through profit or loss. Subsequently, financial liabilities are measured at amortized cost using the effective interest method except for derivatives and financial liabilities designated at FVTPL, which are carried subsequently at fair value with gains or losses recognized in profit or loss (other than derivative financial instruments that are designated and effective as hedging instruments). All interest-related charges and, if applicable, changes in an instrument’s fair value that are reported in profit or loss are included within finance costs or finance income. 4.19.9. Derecognition of financial instruments Financial assets are derecognized when the Group loses control over the contractual rights and when substantially all the risks and rewards of ownership of the asset are transferred. A financial instrument is derecognized when the rights are realized, they have expired, or they are repurchased. A financial liability is derecognized when it discharged, cancelled or has expired. 4.20. Derivative financial instruments Derivatives are carried at fair value and recognized in the consolidated statement of financial position as trading derivatives. The fair value of derivatives is based on the market price or similar models. Derivative assets are presented as part of the financial assets held for trading and derivative liabilities are presented as part of the financial obligations. Change in fair value of derivatives held for trading are recognized as part of net trading income in the consolidated statement of profit or loss and other comprehensive income. The Group does not apply hedge accounting in accordance with IFRS 9. 4.21. Receivables and liabilities under repurchase agreements Receivables and liabilities under repurchase agreements are recognized at cost, which represents the funds placed/obtained by the Bank owned by the Group, secured by the value of the securities. Interest due on the fair value of the funds placed/obtained for the term of the agreement is accounted for and recognized as interest income/expense in the period of its occurrence. Securities pledged as collateral for repurchase agreements are not derecognized from the statement of financial position of the Group where the risks and rewards of ownership are not transferred. Securities received as collateral for repurchase agreements are not reported in the statement of financial position of the Group where the risks and rewards of ownership are not transferred. 4.22. Provisions for credit related contingent liabilities The amount of provisions for guarantees and other off-balance credit-related commitments is recognized as an expense and a liability when the Group has current legal or constructive obligations, which have occurred as a result of a past event, and it is probable that an outflow of resources embodying economic benefits will be required to settle that obligation and a reasonable estimate of the amount of the liability can be made. Any loss resulting from recognition of provisions for liabilities is reported in the consolidated statement of profit or loss and other comprehensive income for the respective period. Chimimport AD Consolidated financial statements 31 December 2021 30 4.23. Inventory Inventory includes raw materials, finished goods, work in progress and trading goods. Cost of inventories includes all expenses directly attributable to the purchase or manufacturing process, recycling and other direct expenses connected to their delivery as well as suitable portions of related production overheads, based on normal operating capacity. Financing costs are not included in the cost of the inventories. At the end of every accounting period, inventories are carried at the lower of cost and net realizable value. The amount of impairment of inventories to their net realizable value is recognized as an expense for the period of impairment. Net realizable value is the estimated selling price of the inventories less any applicable selling expenses. When the circumstances that previously caused inventories to be written down below cost no longer exist or when there is clear evidence of an increase in net realizable value because of changed economic circumstances, the amount of the write-down is reversed (i.e., the reversal is limited to the amount of the original write-down) so that the new carrying amount is the lower of the cost and the revised net realizable value. The reversal of the write-down is accounted for as decrease in inventory expenses for the period in which the reversal takes place. The Group determines the cost of inventories by using the weighted average cost. When inventory is sold, the carrying amount of those inventories is expensed in the period in which the related revenue is recognized. 4.24. Income taxes Tax expense recognized in profit or loss comprises the sum of deferred tax and current tax not recognized in other comprehensive income or directly in equity. Current income tax assets and/or liabilities comprise those obligations to, or claims from, fiscal authorities relating to the current or prior reporting periods, which are unpaid at the reporting date. Current tax is payable on taxable profit, which differs from profit or loss in the financial statements. Calculation of current tax is based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. Deferred income taxes are calculated using the liability method on temporary differences between the carrying amounts of assets and liabilities and their tax bases. However, deferred tax is not provided on the initial recognition of an asset or liability unless the related transaction affects tax or accounting profit. Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are expected to apply to their respective period of realization, provided they are enacted or substantively enacted by the end of the reporting period. Deferred tax liabilities are always provided for in full. Deferred tax assets are recognized to the extent that it is probable that they will be able to be utilized against future taxable income. For management's assessment of the probability of future taxable income to utilize against deferred tax assets, see note 4.37.1. Deferred tax assets and liabilities are offset only when the Group has a right and intention to set off current tax assets and liabilities from the same taxation authority. Changes in deferred tax assets or liabilities are recognized as a component of tax income or expense in profit or loss, except where they relate to items that are recognized in other comprehensive income or directly in equity, in which case the related deferred tax is also recognized in other comprehensive income or equity, respectively. 4.25. Cash and cash equivalents Cash and cash equivalents comprise cash in hand, current bank accounts, demand deposits, deposits up to 3 months, together with other short-term, highly liquid investments that are readily convertible into known amounts of cash, and which are subject to an insignificant risk of changes in value. Cash and cash equivalents, for the purpose of preparation of the consolidated statement of cash flows, include cash in hand, balances on accounts of the Bulgarian National Bank (BNB) and nostro accounts, which are unrestricted demand deposits at other banks, as well as placement with loans and advances to other banks with a maturity up to 3 months. Chimimport AD Consolidated financial statements 31 December 2021 31 4.26. Equity, reserves and dividend payments Share capital of the Group represents the nominal value of shares that have been issued by the parent company. Share premium includes any premiums received on the initial and subsequent issue of share capital. Any transaction costs associated with the issuing of shares are deducted from share premium. When the subsidiaries of the Group purchase shares from the parent company of the Group (treasury shares), the paid remuneration, including all inherent taxes, is reduced from the Group’s equity, until the shares are sold outside the Group. In case these shares are sold outside the Group, the received remuneration, net of the necessary inherent taxes, is included in the owner’s equity. Revaluation reserve of non-financial assets includes unrealized gains or losses from revaluation of non- financial assets. Other reserves are formed on the base of the requirements of the Commercial act for the formation of legal reserves. Retained earnings include all prior period retained profits and uncovered losses. All transactions with the owners of the Group are presented separately in the consolidated statement of changes in equity. 4.27. Social security and pension contracts The pension insurance company of the Group manages and represents five pension funds for supplementary pension insurance – Voluntary, Professional, Universal, Lifetime Pension and Deferred Payments. Voluntary Pension Fund (VPF) performs supplementary voluntary pension insurance for personal supplementary voluntary pension. The insurance cases covered are: old age, disability and death. Each individual above 16 years of age may insure himself or herself voluntarily. The pension plans offered are developed upon previously determined insurance instalments. The voluntary insurance payments could be at the expense of the individual itself and/or employer and/ or another insurer. The types of pension plans are:  Individual pension plan – based on single or periodical instalments at the expense of the individual;  Collective pension plan – based on single or periodical instalments at the expense of an employer or other insurer; The additional pension is for life or over a term period as the chosen type and term of pension is stated in the pension contract when the right to receive the pension is obtained. The insurance payments are based on:  Additional pensions for old age and disability;  Single or periodical disbursement of the funds from individual batches;  Disbursement if inherited pension;  Single or periodical disbursements of the remaining funds from an individual batch to the heirs of the insured person or the pensioner. The amount of the personal supplementary old-age life pension is calculated based on:  The accumulated funds in the individual batch;  The technical interest rate;  Biometric tables. The right to supplementary pension can be obtained by depositing lump-sum contributions. The amount of the pension is determined based on actuarial reports. The technical interest rate and the biometric tables are approved by the deputy director of the Financial Supervisory Commission, who is in charge of “Insurance control” department. The insurance contract is terminated in the following cases:  upon death of the insured; Chimimport AD Consolidated financial statements 31 December 2021 32  when the insured person transfers the whole amount of his/her individual batch to a third party or another pension fund;  when the insured person withdraws the whole amount from his/her individual batch. Professional Pension Fund (PPF) offers periodic professional pensions for early retirement. The professional pension for early retirement is disbursed until the right to length of service and age pension is acquired under the requirements of part one of the Social Security Code (SSC). The insured persons of the fund have the right to:  a periodic pension for early retirement when working under the conditions of I and II category labor, according to the labor category;  Single disbursement of up to 50% of the amount accumulated in the individual batch in the case of permanent loss of working capacity of over 89.99%;  Single or periodical disbursement of the accumulated funds from an individual batch to the heirs of a deceased insured person or a pensioner of the fund. The amount of the professional pension for early retirement is calculated based on:  The accumulated funds in the individual batch;  The period for the pension disbursement;  The technical interest rate approved by the deputy director of the Financial Supervisory Commission. When acquiring the right to length of service and age pension under requirements of part one of SSC before the period of the professional pension has ended, the remaining funds in the individual batch are disbursed with the last professional pension. The insurance contract is terminated in the following cases:  Upon death of the insured;  When withdraw all accumulated amounts in the individual batch of the insured person after acquiring the right to a length of service and age pension under the requirements of part one of the Social Security Code, if not become entitled to vocational pension under the terms of SSC;  In case of a transfer of funds of the insured person to a professional pension fund, managed by another insurance company and the insured person has signed a valid insurance contract with a pension fund managed by another pension insurance company for which the change of participation procedure has not been terminated.  One-time choice of the insured person under the provisions of Art. 4c of SSC to change its insurance in a pension fund to the fund “Pensions” of Government social fund if no contributory- service and retirement-age pension or early-retirement occupational pension has been granted to them. The insurance is realized with monthly cash insurance contributions, the amount of which is determined in SSC as a percentage of the insurance income. Universal Pension Fund (UPF): The supplementary life insurance for old age is based on a contract between the Group and in the insured persons. The choice of a Universal Pension Fund is a result of the official allocation done by National Revenue Agency. An insured person has the right to a personal supplementary length of service and age pension from an universal pension fund, when he/she acquires the right to a length of service and age pension under the requirements of part one of SSC, or 5 years before turning the age for receiving pension under the condition that the accumulated funds allow the disbursements of such a pension, not smaller that the size of the minimal length of service and age pension under article 68, paragraph 1-3. The insured persons of the fund have the right to:  supplementary life pension for old age after acquiring the right to a length of service and age pension under the requirements of part one of the Social Security Code;  single disbursement of up to 50% of the amount accumulated in the individual batch in the case of permanent loss of working capacity of over 89.99%;  single or periodical disbursement of the accumulated funds from an individual batch to the heirs of a deceased insured person or a pensioner of the fund. The amount of the personal supplementary old-age life pension is calculated based on: Chimimport AD Consolidated financial statements 31 December 2021 33  the accumulated funds in the individual batch;  the technical interest rate;  biometric tables. The technical interest rate and the biometric tables are approved by the deputy director of the Financial Supervisory Commission, who is in charge of “Insurance control” department. The social insurance contract is terminated in the following cases:  upon death of the insured;  in the case of a transfer of funds of the insured person to a universal pension fund, managed by another relevant retirement insurance company and the insured person has signed a valid insurance contract with a universal pension fund managed by another pension insurance company for which the change of participation procedure has not been terminated.  One-time choice of the insured person for transfer of funds from insurance in a universal pension fund to the Pensions Fund for persons under Article 69, but at least 5 years before attaining the age stated in in Article 68 (1), where no contributory-service and retirement-age pension has been granted to them. Lifetime Pension Fund (LPF) : In case of entitlement to a personal supplementary old-age pension, the Company pays from LPF CCP-SILA an additional lifetime old-age pension against transfer to the Fund of the accumulated funds on the individual account of the insured person. in the Universal Pension Fund CCB-SILA or the supplemented amount of the following types of pensions:  additional lifelong old-age pension without additional conditions;  additional lifelong old-age pension with a guaranteed payment period, which can be from 2 to 10 years, depending on the person's choice;  supplementary lifetime old-age pension, including deferred payment of funds until reaching the age chosen by the pensioner, the term and amount of deferred payment and the amount of lifetime pension are determined depending on the choice of the insured person in compliance with CSR requirements. The granting of a supplementary lifelong old-age pension is made on the basis of a written application form submitted to the Company personally by the insured person or by a person authorized by him, to whom relevant documents are attached. In case the necessary documents have been attached and the legal requirements for granting a supplementary lifelong pension have been met, CCB-SILA AD concludes a pension contract with the person. Deferred Payments Fund (DPF): Upon acquiring the right to a personal supplementary lifelong old-age pension, in cases where the funds accumulated in the individual account of the insured person in the CCB-SILA Universal Pension Fund are insufficient for the granting of additional lifelong old-age pension in the amount of art. 167, para 3 CSR, but exceeds three times the amount of the minimum pension for insurance length of service and age under art. 68, para 1 of CSR as of the date of determining the value of the funds on the account, the funds shall be transferred to DPF CCB-SILA. The Company pays from the Fund in installments the amount accumulated in the individual account for a certain period of time. The granting of deferred payments by the Fund is based on a written application form submitted to the Company personally by the insured person or by a person authorized by him, to whom the relevant documents are attached. In case the necessary documents are attached and the legal requirements for granting deferred payment are met, CCB-SILA AD concludes a contract for deferred payment with the person. The contract, among other obligatory requisites, shall specify the order and the manner and the term for making the payments. The monthly amount of the deferred payment by the Fund as of the date of its determination may not be higher than the minimum amount of the pension for length of service and age under Article 68, paragraph 1 of the Social Security Code and less than 15 percent of its size. The insurance is performed with monthly cash instalments form insured individuals to the Pension funds. Social security code determines their amount as a percentage of the individual’s taxable income. 4.28. Special reserves for pension insurance activity In accordance with the provisions of SSC the Group cumulate pension reserves in order to guarantee minimal pay-out from the activity of the supplementary obligator pension insurance. The pension Chimimport AD Consolidated financial statements 31 December 2021 34 reserves cumulated up 31 December 2021 represent 0.8% of the assets of the funds (31 December 2020: 1.45%). 4.29. Pension reserves According to the requirements of the SSC, the Group forms pension reserves for the purpose of paying life pensions to individuals who have lived longer than the preliminary actuarial calculations in UPF and VPF. The pension reserve is formed from own funds of the Pension Fund and from funds of deceased insured individuals from VPF and UPF that have no heirs. The Group annually recalculates the amount of the formed pension reserve as at 31 December. The calculations are made by an actuary. 4.30. Post-employment benefits and short-term employee benefits The Group reports short-term payables relating to unutilized paid leaves, which shall be compensated in case it is expected that the leaves will occur within 12 months after the end of the accounting period during which the employees have performed the work related to those leaves. The short-term payables to personnel include wages, salaries and related social security payments. In accordance with Labor Code requirements, in case of retirement, after the employee has gained the legal right of pension due to years of services and age, the Group is obliged to pay him/her compensation at the amount of up to six gross wages. The liability recognized in the consolidated statement of financial position for defined benefit plans is the present value of the defined benefit obligation at the reporting date. Management estimates the defined benefit obligation annually with the assistance of independent actuaries. The estimate of its post-retirement benefit obligations is based on standard rates of inflation, medical cost trends and mortality. It also takes into account the Group's specific anticipation of future salary increases. Discount factors are determined close to each year-end by reference to Government bonds. Actuarial gains and losses are recognized in other comprehensive income. Interest expenses related to pension obligations are included in 'Finance expenses' in profit or loss. All other post-employment benefit expenses are included in Operating and administrative expenses’. Short-term employee benefits, including holiday entitlement, are current liabilities included in 'Pension and other employee obligations', measured at the undiscounted amount that the Group expects to pay as a result of the unused entitlement. 4.31. Insurance transactions The Group applies IFRS 4 Insurance contracts. The standard defines the requirements for disclosure of the accounting policy and representation of the comparative information with respect to the insurance assets and liabilities as well as income and expenses related to insurance activity. The accounting policy of the Group is taken into consideration with respect to the specificity of the insurance services and the respective legal requirements. 4.32. Insurance contracts Insurance contracts are those that transfer significant insurance risk over to the Group. The Group defines as significant insurance risk the possibility of having to pay benefits on the occurrence of an insured event, which are at least 10% higher than the benefits payable if the insured event had not occurred. Once classified as insurance contracts at the date of the inception, the Group continues to present them as insurance contracts over their lifetime, even if the insurance risk reduces significantly during this period. 4.33. Reinsurance contracts The Group assumes and cedes to reinsurers some of the risk undertaken in the normal course of business. The expected benefits arising from reinsurers contracts are recognized as assets in the statement of financial position at the time of their occurrence. Chimimport AD Consolidated financial statements 31 December 2021 35 The Group performs an impairment review on all reinsurance assents on a regular basis. Reinsurance assets are impaired only if there is objective evidence that the Group may not receive the entire amount due to it under the term of the contract and that this can be measured reliably. The difference is performed as change in the reinsurers’ share into a reserve for outstanding payments in the technical statements for the insurance activity. The Group also performs active reinsurance. The premiums and the collaterals on active reinsurance are accounted together with the registered insurance premiums and the paid gross collaterals on direct insurance operations. 4.34. Insurance reserves Insurance reserves are formed by the insurance companies in order to cover present and future liabilities to insured persons or organizations in accordance with the insurance contract and they are not equity element. Insurance reserves are calculated by the actuaries of the Group by the use of actuarial methods, which consist of mathematical and statistical methods and rules. Insurance reserves are presented in gross in the Group’s statement of financial position, as well as the reinsurer’s portion. When the insurance is denominated in foreign currency, the corresponding reserves are formed in the same currency. The insurance reserves that have been formed during the prior period are recognized as income from released insurance reserves in the current period. The reserves formed at the year-end are recognized as expense for the formation of insurance reserves in the statement of profit or loss and other comprehensive income. The insurance reserves referring to the reinsurers’ share formed in the prior period are recognized as expense for released insurance reserves in the current period statement of profit or loss and other comprehensive income and the reserves formed at the year-end are recognized as income from released insurance reserves in the current period statement of profit or loss and other comprehensive income. 4.35. Adequacy test of insurance reserves An adequacy test is performed by the actuaries to ensure that the reserves, reduced by deferred acquisition costs, are sufficient to meet potential future payments. In accordance with the regulatory requirements the amount of the reserves formed should be completely secured with investments in highly liquid assets (given in percentage, regulated by the applicable acts and regulations). When performing an adequacy test, the cash flows related to payment of collaterals, cash flows generated by collected premiums, and paid commissions are taken into consideration. 4.36. Provisions, contingent liabilities and contingent assets Provisions are recognized when present obligations as a result of a past event will probably lead to an outflow of economic resources from the Group and amounts can be estimated reliably. Timing or amount of the outflow may still be uncertain. A present obligation arises from the presence of a legal or constructive commitment that has resulted from past events. Restructuring provisions are recognized only if a detailed formal plan for the restructuring has been developed and implemented, or management has at least announced the plan's main features to those affected by it. Provisions are not recognized for future operating losses. Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence available at the reporting date, including the risks and uncertainties associated with the present obligation. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. Provisions are discounted to their present values, where the time value of money is material. Any reimbursement that the Group can be virtually certain to collect from a third party with respect to the obligation is recognized as a separate asset. However, this asset may not exceed the amount of the related provision. All provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. In those cases where the possible outflow of economic resources as a result of present obligations is considered improbable or remote, no liability is recognized. Contingent liabilities are subsequently measured at the higher amount of a comparable provision as described above and the amount initially recognized, less any amortization. Chimimport AD Consolidated financial statements 31 December 2021 36 Possible inflows of economic benefits to the Group that do not yet meet the recognition criteria of an asset are considered contingent assets. 4.37. Significant management judgement in applying accounting policy The following are significant management judgments in applying the accounting policies of the Group that have the most significant effect on the consolidated financial statements. Critical estimation uncertainties are described in note 4.38. 4.37.1. Deferred tax assets The assessment of the probability of future taxable income in which deferred tax assets can be utilized is based on the Group's latest approved budget forecast, which is adjusted for significant non-taxable income and expenses and specific limits to the use of any unused tax loss or credit. If a positive forecast of taxable income indicates the probable use of a deferred tax asset, especially when it can be utilized without a time limit, that deferred tax asset is usually recognized in full. The recognition of deferred tax assets that are subject to certain legal or economic limits or uncertainties is assessed individually by management based on the specific facts and circumstances. 4.37.2. Transferred control over subsidiaries In cases in which the parent company owns, directly or indirectly, through its subsidiaries more than half of the voting rights in an entity but is not exposed to, or does not have rights over, the variable return on its participation in the investee and has not the potential to impact on that return by virtue of its powers over the investee and/or contractual agreement according to which the Group does not control the entity exists, then the investment in shares of that entity is reclassified as financial asset under IFRS 9. 4.37.3. Revenue from sale of air tickets with expired validity The Group mainly provides transportation services of passengers in the period the air tickets have been issued for. Revenue from passenger transportation is recognized when the transportation is actually performed. There are cases when the clients do not use their air-tickets and therefore the validity of the ticket expires, and it is no longer available for use. In this case the Group writes-off the existing obligation for transportation service as other income. The amount of other income includes the airport fees and taxes related to the expired air ticket. Revenue recognition of tickets and airport fees with expired validity is based on statistical information extracted from the databases maintained by the Group. The management believes that the expiration of the validity of each ticket, when not being used, gives reason for recognition of revenue. This understanding is based on the basic principle for the recognition of revenue, precisely that it is based on actual services rendered. 4.37.4. Revenue from sale of air tickets when the flight has been interrupted and/or rerouted As a member of the International Air Transport Association – IATA, the Group should follow the rules for air transportation set forth by IATA. According to IATA resolutions 735d and 735e, in cases of involuntary rerouting and/or flight interruptions, the airline company is obliged to issue a FIM (flight interruption manifest). The FIM is valid for a certain flight of the agent airline company that is different from the airline company that has initially issued the original flight ticket. Since the beginning of 2019, there have been changes in IATA Resolution 735d, one of which is the abolition of the FIM (Flight Interruption Manifest) as a document that performs involuntary re-routing and / or flight interruption. This is accomplished with an electronic ticket. The reason is that FIM is a paper document on which no alternative electronic has been created. Therefore, IATA Resolution 735e has been dropped, and airlines may use FIM and other paper documents such as excess baggage receipts in the event of a two-way flight interruption. The change in IATA resolutions has led to new texts in RAM (Revenue Accounting Manual). In Chapter A2, item 2.6, the rules for settlement with FIM are no longer indicated, but those for planned schedule changes. Due to the bilateral agreement between the airlines for the use of FIM, the practice remained, after receiving the FIM invoice, the receiving airline (performing the flight) within four months from the date of issuance of the invoice according to the rules of Chapter A10, item 4.1. of RAM to redebit based on Chimimport AD Consolidated financial statements 31 December 2021 37 the prorate value. Upon receipt of the redebit invoice, the incurred settlement is closed. After the expiration of the four-month period for objections / redebites /, the unsubmitted amounts are recognized as income. Revenue reporting is based on previous experience and management has estimated that 95% of the value of all issued and unreported FIM gives grounds for recognizing revenue based on the services actually provided. For both the current 2021 and the previous period, approximately 5% of the value of issued FIMs is recognized as other income, and the remaining value is reported as an expected liability. 4.37.5. Revenue from sale of air ticket when customer loyalty incentives are used The group has active loyalty programs, where customers can earn bonus points (prize credits), which can then be exchanged for free tickets for the flights of Bulgaria Air AD. In cases where the customer can benefit independently from the product or service, regardless of the use of the transport service, it is considered a separate obligation to perform, if it gives a substantial right. Rights such as free extra luggage, business class transport with an economy class ticket purchased, vouchers for the airport business lounge, attractive discounts when renting a car from Sixt and other similar incentives for loyal customers are not considered separate obligations for performance. In cases where loyalty programs and award credits give substantial rights and are considered as a separate performance obligation, the airline considers them as a separate distinguishable performance obligation in relation to the sale in which the incentives are given. The fair value of the consideration received or receivable in respect of the initial sale is allocated between the bonus points (prize credits) and the other components of the sale. The Group distributes the transaction price between the substantive law and other performance obligations specified in the contract, based on their relatively independent selling price. The Group provides incentives for loyal customers and recognizes the remuneration allocated to the incentives as revenue when these incentives in the form of bonus points are replaced and the Group fulfills its obligation to deliver them. The amount of recognized income is based on the number of prize credits that are exchanged for prizes, in relation to the total number that is expected to be replaced. Revenue from substantive law is recognized on the earlier of the date on which the customers have used the points and the date on which they expire. The reporting of award credits is based on management's estimate of the likelihood that they will be used during their term of validity. Therefore, the amount of reported bonuses and rebates and related revenue may differ from actual results. 4.37.6. Greenhouse gas emissions trading quotes In accordance with the requirements of Directive 2003/87/EC of the European Parliament and of the Council establishing a scheme for greenhouse gas emission allowance trading within the Community, aviation activities are included in the single European greenhouse gas emissions trading scheme (EU ETS). For the periods after 1 January 2012, air operators shall participate in this mechanism to reduce the harmful effects on the environment. Companies receive part of their required emission allowances free of charge. By 30 April of the following year, air carriers must submit to the EU ETS the emission allowances for the emissions of the current year. The Group has adopted a policy for implementing the so-called "net liability approach" with regard to the accounting of greenhouse gas emission allowances. Under this approach, the Group recognizes neither an asset nor income for emission allowances acquired free of charge by the Executive Environment Agency. Greenhouse gas emission allowances (CO2 emissions) received free of charge from the state are not recognized in the statement of financial position, but are recognized as contingent assets and liabilities. Where annual emissions exceed available and gratuitously allocated allowances, the excess obligation shall be measured at the fair value of the greenhouse gas emissions at the end of the reporting period for which they are due and a provision shall be charged. Chimimport AD Consolidated financial statements 31 December 2021 38 A provision is recognized only when the actual amount of emissions exceeds the amount of gratuitously provided emissions. The provision is recognized in the consolidated income statement and other comprehensive income. Emission allowances that are acquired and exceed the allowances allocated free of charge are recognized as an asset at cost. The total number of quotas reached shall be determined by presenting a verified report issued by an independent accredited verification body. 4.37.7. Lease term In determining the lease term, management takes into account all the facts and circumstances that create an economic incentive to exercise the option of extension or not to exercise the option of termination. Extension options (or periods after termination options) are included in the lease term only if it is reasonably certain that the lease is extended (or not terminated). Most options for extending office and vehicle contracts are not included in the lease obligations because the Group can replace the assets without significant cost or business change. For leasing of airplane the following factors are usually most appropriate: Significant penalties for termination (or non-renewal), usually the Group is certain that it will prolong (or will not terminate). If leasehold improvements are expected to have significant residual value, a reasonable security Group will typically extend the contract (or will not terminate). In other cases, the Group reviews other factors, including the historical length of the lease and the costs and changes in business required to replace the leased asset. The lease term is reassessed if the option is actually exercised (or not exercised) or the Group is obliged to exercise it (or not exercise it). The assessment of reasonable certainty is only reviewed if a significant event or significant change in the circumstances affecting that assessment occurs and is under the control of the lessee. In the current financial year, the financial effect of the revision of the lease terms. 4.38. Estimation uncertainty When preparing the consolidated financial statements management undertakes a number of judgments, estimates and assumptions about recognition and measurement of assets, liabilities, income and expenses. The actual results may differ from the judgments, estimates and assumptions made by management, and will seldom equal the estimated results. Information about significant judgments, estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses are discussed below. 4.38.1. Impairment of non-financial assets and goodwill An impairment loss is recognized for the amount by which the asset's or cash-generating unit's carrying amount exceeds its recoverable amount, which is the higher of fair value less costs to sell and value- in-use. To determine the value-in-use, management estimates expected future cash flows from each cash-generating unit and determines a suitable interest rate in order to calculate the present value of those cash flows (see note 4.16). In the process of measuring expected future cash flows management makes assumptions about future operating results. These assumptions relate to future events and circumstances. The actual results may vary and may cause significant adjustments to the Group's assets within the next financial year. In most cases, determining the applicable discount rate involves estimating the appropriate adjustment to market risk and the appropriate adjustment to asset-specific risk factors. The Group has incurred an impairment loss of BGN 292 thousand (2020: BGN 275 thousand), in order to reduce the carrying amount of goodwill to its recoverable amount (see note 11). Chimimport AD Consolidated financial statements 31 December 2021 39 4.38.2. Measurement of expected credit losses for financial assets Credit losses are the difference between all contractual cash flows due to the Group and all cash flows that the Group expects to receive. Expected credit losses are a probability-weighted estimate of credit losses that require the Group’s judgment. Expected credit losses are discounted at the original effective interest rate (or the credit-adjusted effective interest rate for purchased or initially created financial assets with credit impairment). 4.38.3. Fair value measurements Management uses valuation techniques in measuring the fair value of financial instruments (where active market quotes are not available) and non-financial assets. This involves developing estimates and assumptions consistent with how market participants would price the instrument. Management bases its assumptions on observable data as far as possible, but this is not always available. In that case management uses the best information available. Estimated fair values may vary from the actual prices that would be achieved in an arm's length transaction at the reporting date (see note 52.1). 4.38.4. Useful life of depreciable assets Management reviews the useful lives of depreciable assets at each reporting date. At 31 December 2021 management assesses that the useful lives represent the expected utility of the assets to the Group. The carrying amounts are analyzed in notes 12 and 8. Actual results, however, may vary due to technical obsolescence. 4.38.5. Inventory Inventory is measured at the lower of cost and net realizable value. In estimating net realizable values, management takes into account the most reliable evidence available at the times the estimates are made. Future realization of the carrying amounts of inventory assets BGN 54 300 thousand (2020: BGN 59 369 thousand) is affected by the future service providing and market realization of inventories, note 22. 4.38.6. Defined benefit liabilities Management estimates the defined benefit liability annually with the assistance of independent actuaries; however, the actual outcome may vary due to estimation uncertainties. The estimate of its defined benefit liability is based on standard rates of inflation, medical cost trends and mortality. It also takes into account the Group's specific anticipation of future salary increases. Discount factors are determined close to each year-end by reference to the yield of government bonds. 4.38.7. Provisions The Group is currently defending certain lawsuits where the actual outcome may vary from the amount recognized in the financial statements. None of the provisions will be discussed here in further detail so as not to seriously prejudice the Group's position in the related disputes. 4.38.8. Business combinations On initial recognition, the assets and liabilities of the acquired business are included in the consolidated statement of financial position at their fair values. In measuring fair value management uses estimates about future cash flows and discount rates, however, the actual results may vary. Any measurement changes upon initial recognition would affect the measurement of goodwill. Details of acquired assets and liabilities are given in note 5. Chimimport AD Consolidated financial statements 31 December 2021 40 5. Basis for consolidation 5.1. Investments in subsidiaries The subsidiaries included in the consolidation are as follows: Name of the subsidiary Country of incorporation Main activities 31.12.2021 31.12.2021 31.12.2020 31.12.2020 Percentage of consolidation Nominal percentage Percentage of consolidation Nominal percentage Central Cooperative Bank AD Bulgaria Finance 77.13% 77.13% 77.02% 77.02% Central Cooperative Bank AD – Skopje Macedonia Finance 71.85% 91.83% 71.76% 91.83% AO Investment Cooperative Bank Russia Finance 86.27% 86.27% 86.27% 86.27% CCB Group EAD Bulgaria Finance 100.00% 100.00% 100.00% 100.00% CCB Assets Management EOOD Bulgaria Finance 77.13% 100.00% 77.02% 100.00% ZAD Armeec Bulgaria Finance 96.26% 96.26% 96.26% 96.26% ZEАD CCB Life Bulgaria Finance 100.00% 100.00% 100.00% 100.00% POAD CCB Sila Bulgaria Finance 67.43% 67.43% 67.43% 67.43% DPF CCB Sila Bulgaria Finance 67.43% 100.00% 67.43% 100.00% UPF CCB Sila Bulgaria Finance 67.43% 100.00% 67.43% 100.00% PPF CCB Sila Bulgaria Finance 67.43% 100.00% 67.43% 100.00% Zarneni Hrani Bulgaria AD Bulgaria Production, Trade and Services 68.12% 68.12% 68.12% 68.12% Oil and Gas Exploration and Production AD Bulgaria Production, Trade and Services 49.63% 65.92% 49.63% 65.92% Bulgarska Petrolna Rafinieria EOOD Bulgaria Production, Trade and Services 49.63% 100.00% 49.63% 100.00% Slanchevi lachi Provadia EOOD Bulgaria Production, Trade and Services 68.12% 100.00% 68.12% 100.00% Asenova Krepost AD Bulgaria Production, Trade and Services 50.74% 68.31% 53.48% 76.44% PDNG Service EOOD Bulgaria Production, Trade and Services 49.63% 100.00% 49.63% 100.00% Izdatelstvo Geologia i Mineralni Resursi OOD Bulgaria Production, Trade and Services 34.74% 70.00% 34.74% 70.00% Bulchimtrade OOD Bulgaria Production, Trade and Services 44.96% 66.00% 44.96% 66.00% Rubber Trade OOD Bulgaria Production, Trade and Services 40.87% 60.00% 40.87% 60.00% Chimceltex EOOD Bulgaria Production, Trade and Services 68.12% 100.00% 68.12% 100.00% Chimoil BG EOOD Bulgaria Production, Trade and Services 49.63% 100.00% 49.63% 100.00% Zarneni Hrani Grain EOOD Bulgaria Production, Trade and Services 68.12% 100.00% 68.12% 100.00% Techno Capital AD Bulgaria Production, Trade and Services 86.40% 90.00% 86.40% 90.00% Dobrich Fair AD Bulgaria Production, Trade and Services 40.85% 59.97% 40.85% 59.97% National Stokova Borsa AD Bulgaria Production, Trade and Services 75.00% 75.00% 75.00% 75.00% Prime Lega Consult EOOD Bulgaria Production, Trade and Services 100.00% 100.00% 100.00% 100.00% AH HGH Consult OOD Bulgaria Production, Trade and Services 59.34% 59.34% 59.34% 59.34% Omega Finance OOD Bulgaria Production, Trade and Services 96.00% 96.00% 96.00% 96.00% IT Systems Consult EOOD Bulgaria Production, Trade and Services 68.12% 100.00% 68.12% 100.00% Bulgarian Shipping Company EAD Bulgaria Sea and River Transport 100.00% 100.00% 100.00% 100.00% Parahodstvo Bulgarsko Rechno Plavane AD Bulgaria Sea and River Transport 80.67% 80.67% 79.89% 79.89% Port Balchik AD Bulgaria Sea and River Transport 78.64% 100.00% 78.64% 100.00% Port Lesport AD Bulgaria Sea and River Transport 99.00% 99.00% 99.00% 99.00% Chimimport AD Consolidated financial statements 31 December 2021 41 Name of the subsidiary Country of incorporation Main activities 31.12.2021 31.12.2021 31.12.2020 31.12.2020 Percentage of consolidation Nominal percentage Percentage of consolidation Nominal percentage Lesport Project Management EOOD Bulgaria Sea and River Transport 99.00% 100.00% 99.00% 100.00% Mayak - KM AD Bulgaria Sea and River Transport 69.84% 86.57% 69.16% 86.57% Bulgarian Logistic Company EOOD Bulgaria Sea and River Transport 100.00% 100.00% 100.00% 100.00% Port Pristis OOD Bulgaria Sea and River Transport 44.37% 55.00% 43.94% 55.00% Portstroi Invest EOOD Bulgaria Sea and River Transport 100.00% 100.00% 100.00% 100.00% Port Invest EOOD Bulgaria Sea and River Transport 80.67% 100.00% 79.89% 100.00% Port Bimas EOOD Bulgaria Sea and River Transport 80.67% 100.00% - - Interlihter Slovakia Slovakia Sea and River Transport 80.67% 100.00% 79.89% 100.00% Blue Sea Horizon Corp Seychelles Sea and River Transport 80.67% 100.00% 79.89% 100.00% Bulgarian Airways Group EAD Bulgaria Aviation Transport 100.00% 100.00% 100.00% 100.00% Bulgaria Air AD Bulgaria Aviation Transport 99.99% 99.99% 99.99% 99.99% Bulgaria Air Technique EOOD Bulgaria Aviation Transport 99.99% 100.00% 99.99% 100.00% Airport Consult EOOD Bulgaria Aviation Transport 100.00% 100.00% 100.00% 100.00% Fly Lease EOOD Bulgaria Aviation Transport 100.00% 100.00% 100.00% 100.00% Trans intercar EAD Bulgaria Vehicle Transport 100.00% 100.00% 100.00% 100.00% Energoproekt AD Bulgaria Real Estate and engineering 98.69% 98.69% 98.69% 98.69% Bulgaria Air Maintenance EAD Bulgaria Real Estate and engineering 100.00% 100.00% 100.00% 100.00% Golf Shabla AD Bulgaria Real Estate and engineering 32.26% 65.00% 32.26% 65.00% Sporten Complex Varna AD Bulgaria Real Estate and engineering 65.00% 65.00% 65.00% 65.00% Sporten management EOOD Bulgaria Real Estate and engineering 65.00% 100.00% 65.00% 100.00% TI AD Bulgaria Real Estate and engineering 87.66% 87.66% 87.66% 87.66% Bulchimex GmbH Germany Real Estate and engineering 100.00% 100.00% 100.00% 100.00% Invest Capital Consult AD Bulgaria Real Estate and engineering 100.00% 100.00% 100.00% 100.00% Sitniakovo Project Estate EOOD Bulgaria Real Estate and engineering 49.63% 100.00% 49.63% 100.00% Imoti Activities 1 EOOD Bulgaria Real Estate and engineering 68.12% 100.00% 68.12% 100.00% Chimimport AD Consolidated financial statements 31 December 2021 42 The Group includes non-controlling interest (NCI), broken down by segments as follows. Segment Accumulated non- controlling interests 2021 2020 BGN’000 BGN’000 Financial sector 167 959 160 741 Production, trade and services 132 108 129 884 Transport 3 028 3 817 Real estate and engineering 27 560 27 173 330 655 321 615 In 2021 and 2020 there are no dividends paid to non-controlling interest. Summary of financial information of the assets and liabilities before intragroup eliminations is disclosed in note 7 Segment reporting. 5.2. Acquisition of controlling interest in Port Bimas EOOD In 2021, the Group established a new subsidiary Port Bimas EOOD in order to optimize the activities in the Maritime and River Transport Sector. The subject of activity of the newly registered subsidiary is the activity of a port operator, the provision of port services, chartering, and transport and forwarding activities; commercial shipping by river, sea and related inland waterways, incl. Transport of goods by water and in combined transport, transport of passengers and luggage, rental and leasing of ships, other vessels and other means of transport, towing and pushing of vessels and cargo; ship supply, provision of river and sea services and other ancillary commercial and technical activities and operations related to merchant shipping; trade representation, mediation and ship agency, domestic and foreign trade, ship repair for own and foreign needs, investment and engineering activities, research and development, training and qualification of personnel, other types of commercial activities for which there is no legal prohibition, as well as any other activity not prohibited by law. When there is a permit regime - after the respective permit. The registered capital is worth BGN 100 000, divided into 1 000 shares of BGN 100 each. The registered capital is fully paid up. The controlling interest of the Group amounts to a nominal percentage of 100% and a consolidation rate of 80.67%. 5.3. Sale of non-controlling interest in Asenova Krepost AD In 2021 the Group sold a shareholding of 2.74% consolidation and 8.13% (nominal) in its subsidiary Asenova Krepost AD for an amount of BGN 3,347 thousand for the Group and a nominal price of BGN 4,914 thousand, thus reducing its controlling stake to 50.74% consolidation and 68.31% nominal. The carrying amount of the net assets of the subsidiary Asenova Krepost AD, recognized at the date of sale in the consolidated financial statements in an increase in non-controlling interest, amounts to BGN 1 055 thousand. The Group has recognized an increase in retained earnings of BGN 2 292 thousand. 2021 BGN’000 Total transferred remuneration 3 347 Sold share in the net assets of Asenova Krepost AD (1 055) Increase in retained earnings 2 292 5.4. Acquisition on non-controlling interest in Parahodstvo Bulgarsko Rechno Plavane AD In 2021 the Group acquired an additional shareholding of 0.78% in its subsidiary Parahodstvo Bulgarsko Rechno Plavane AD for an amount of BGN 145 thousand, thus increasing its controlling interest to 80.67% (consolidation). The carrying amount of the newly acquired net assets of the subsidiary Parahodstvo Bulgarsko Rechno Plavane AD, recognized at the acquisition date in the consolidated financial statements, amounts to BGN 557 thousand. The Group has recognized a decrease in non-controlling interest of BGN 557 thousand and an increase in retained earnings in the amount of BGN 412 thousand. Chimimport AD Consolidated financial statements 31 December 2021 43 2021 BGN’000 Total transferred remuneration (145) Additional acquired share in the net assets of PBRP 557 Increase in retained earnings 412 5.5. Acquisition on non-controlling interest in CCB AD In 2021 the Group acquired an additional shareholding of 0.11% in its subsidiary CCB AD for an amount of BGN 139 thousand, thus increasing its controlling interest to 77.13% (consolidation). The carrying amount of newly acquired net assets of the subsidiary CCB AD recognized at the date of acquisition in the consolidated financial statements amounts to BGN 610 thousand. The Group has recognized a decrease in non-controlling interest of BGN 610 thousand and an increase in retained earnings in amounting to BGN 471 thousand. 2021 BGN’000 Total transferred remuneration (139) Additional acquired share in the net assets of CCB AD 610 Increase in retained earnings 471 6. Investments accounted for using the equity method The carrying amount of investments accounted for using the equity method is as follows: Note 2021 2020 BGN’000 BGN’000 Investments in associates 6.1 25 743 23 519 Investments in joint ventures 6.2 1 029 734 Total investments accounted for using the equity method 26 772 24 253 (Loss)/gains from investments under equity method 6.1, 6.2 4 315 (1 400) 6.1. Investments in associates Investments in associates are presented in the financial statements of the Group using the equity method. Associates have a reporting date as at 31 December. The carrying amount of the Group's investments and percentage of participation in the voting rights and equity of associates may be presented as follows: Name of the associate Country of incorporation and principal place of business Main activities 2021 Share 2020 Share BGN’000 % BGN’000 % Lufthansa Technik Sofia OOD Bulgaria Aircraft repair activity 8 944 24.90% 8 558 24.90% Swissport Bulgaria AD Bulgaria Ground handling services 6 886 49.00% 5 665 49.00% Silver Wings Bulgaria OOD Bulgaria Catering services 5 225 42.50% 4 713 42.50% VTC AD Bulgaria Maritime and port services 3 764 41.00% 3 694 41.00% Kavarna Gas OOD Bulgaria Gas transmission services 689 35.00% 626 35.00% Amadeus Bulgaria OOD Bulgaria Reservation services 235 44.99% 263 44.99% 25 743 23 519 Chimimport AD Consolidated financial statements 31 December 2021 44 The Group has pledged as collateral for bank loans shares of its associates in the amount of TBGN 6 886. The Group has pledged as collateral for trade loans shares of its associates with a carrying amount of TBGN 21 290. Summary of financial information about the significant associates of the Group is presented below. It reflects the amount presented in the financial statements of the associate concerned after adjustments in connection with the application of the equity method: 2021 2020 BGN ‘000 BGN ‘000 Non-current assets 179 301 195 118 Current assets 71 319 52 800 Total assets 250 620 247 918 Non-current liabilities 151 714 140 938 Current liabilities 30 410 44 074 Total liabilities 182 124 185 012 Net assets 68 496 62 906 Revenues 144 018 139 594 Profit for the period 10 842 4 668 Profit after taxes 9 714 4 147 Other comprehensive income/(loss) (82) 212 Total comprehensive income for the year 9 632 4 359 A reconciliation of the financial information set out above with the carrying amount of investments in significant associates is presented as follows: 2021 2020 BGN ‘000 BGN ‘000 Total net assets as of January 1 62 906 62 290 Profit for the year 9 714 4 147 Other comprehensive income/ (loss) for the year (82) 212 Dividends paid (4 042) (3 743) Total net assets as of December 31 68 496 62 906 Share of the Group (in thousand BGN) 23 038 20 798 Reputation 2 705 2 721 Carrying value of investment 25 743 23 519 All transfers of cash to the Group, e.g. payment of dividends is made after the approval of at least 51% of all owners of associates. The Group received dividends in the amount of BGN 2 007 thousand for 2021 and BGN 1 342 thousand for 2020, respectively. The Group has no contingent liabilities or other commitments related to its investments in associates. 6.2. Investments in joint ventures Investments in joint ventures are accounted using the equity method. Joint ventures have a reporting date as at 31 December. The carrying amount of the Group's investments and percentage of participation in the voting rights and equity of joint ventures may be presented as follows: Name of the joint venture Country of incorporation and principal place of business Main activities 2021 Share 2020 Share BGN ‘000 % BGN ‘000 % Nuance BG AD Bulgaria Duty free trade 833 50% 538 50% Consortium Bulgaria Air - Direction Bulgaria Sale of airline tickets and hotel accommodation 141 90% 141 90% Consortium Bulgaria Air and Direction Bulgaria Sale of airline tickets and hotel accommodation 55 70% 55 70% 1 029 734 The shares and stocks of joint venture companies are not traded on the public stock exchange market and therefor there are no quoted prices in an active market. Chimimport AD Consolidated financial statements 31 December 2021 45 Summary of financial information of the Group’s major joint ventures is presented below. It reflects the amounts presented in the financial statements of the associate concerned after adjustments in connection with the application of the equity method (including fair value adjustments) or adjustments for differences in accounting policies: 2021 2020 BGN ‘000 BGN ‘000 Non-current assets 15 488 8 447 Current assets 6 978 6 500 Total assets 22 466 14 947 Non-current liabilities - 22 Current liabilities 18 694 16 968 Total liabilities 18 694 16 990 Net assets 3 772 (2 043) Revenues 18 810 19 135 (Loss)/ profit for the period (3 394) (2 246) (Loss)/ profit after taxes (3 317) (2 266) Total comprehensive (loss)/ income for the year (3 317) (2 266) A reconciliation of the financial information set out above with the carrying amount of investments in significant joint ventures is presented as follows: 2021 2020 BGN ‘000 BGN ‘000 Total net assets as of January 1 (2 043) 3 371 Loss for the year (3 317) (2 266) Dividends paid - (3 148) Total net assets as of December 31 (5 360) (2 043) Share of the Group (in thousand BGN) 1 029 734 Carrying value of investment 1 029 734 All transfers of cash to the Group, e.g. payment of dividends shall be made after the approval of the joint ventures. In 2021 no dividend was received, and in 2020 the dividends received amounted to BGN 1 574 thousand. The Group has no contingent liabilities or other commitments in relation to the associated companies. 7. Segment reporting The management responsible for making the business decisions determines the business segments on the grounds of the types of activities, the main products and services rendered by the Group. The activities of the Group are analyzed as a whole of business segments that may vary depending on the nature and development of a certain segment by considering the influence of the risk factors, cash flows, products and market requirements. Each business segment is managed separately as long as it requires different technologies and resources or marketing approaches. The adoption of IFRS 8 had no influence on the identification of the main business segments of the Group in comparison with those determined in the last consolidated financial statements. According to IFRS 8 the profits reported by segments are based on the information used for the needs of the internal management reporting and is regularly reviewed from those responsible for the business decisions. All inter-segment transfers are priced and carried out at market price and condition basis. For segment reporting under IFRS 8, the Group applies the same valuation policy as in the latest annual consolidated financial statements. All transfers between segments are valued and recognized at market prices and conditions. The main operating segments of the Group are the following: Production, trade and services; Finance; Transport; Real estate and engineering. Chimimport AD Consolidated financial statements 31 December 2021 46 The Group's operating segments are summarized as follows: Operating segments Production, trade and services Finance Transport Real estate and engineering Eliminations Consolidated 31.12.2021 BGN’000 BGN’000 BGN’000 BGN’000 BGN’000 BGN’000 Income from non-financial activities from external customers 75 625 29 428 228 463 15 317 229 349 062 Change in fair value of investment property (130) 1 092 - 36 1 626 2 624 Gain from sale of non-current assets - 93 3 (38) - 58 Inter-segment income from non-financial activities 15 387 2 341 8 328 712 (26 768) - Total income from non-financial activities 90 882 32 954 236 794 16 027 (24 913) 351 744 Insurance income from external customers - 387 365 - - (1 393) 385 972 Inter-segment insurance income - 5 848 - - (5 848) - Total insurance income - 393 213 - - (7 241) 385 972 Net result from insurance - 71 656 - - (5 543) 66 113 Interest income 6 609 168 043 4 917 1 206 (11 686) 169 089 Interest expenses (6 455) (23 395) (16 794) (2 984) 11 686 (37 942) Net interest income 154 144 648 (11 877) (1 778) - 131 147 Net result from transactions with financial instruments 2 394 82 037 2 019 4 281 (9 975) 80 756 Operating and administrative expenses (96 672) (260 510) (230 448) (14 857) 38 481 (564 006) Net result from equity accounted investments in associates 26 - 4 289 - - 4 315 Other financial income/(expenses) 5 396 95 944 (13 624) (419) (7 626) 79 671 Allocation of income to individual insurance accounts - (98 663) - - - (98 663) Profit for the period before tax 2 180 68 066 (12 847) 3 254 (9 576) 51 077 Income tax expense (285) (6 767) 1 308 (154) - (5 898) Net profit for the year 1 895 61 299 (11 539) 3 100 (9 576) 45 179 Assets of the segment 719 556 11 791 032 1 236 736 312 354 (2 439 330) 11 620 348 Equity accounted investments 363 - 22 150 2 4 257 26 772 Total consolidated assets 719 919 11 791 032 1 258 886 312 356 (2 435 073) 11 647 120 Liabilities of the segment 284 702 9 451 604 819 427 140 158 (899 538) 9 796 353 Total consolidated liabilities 284 702 9 451 604 819 427 140 158 (899 538) 9 796 353 Chimimport AD Consolidated financial statements 31 December 2021 47 Operating segments Production, trade and services Finance Transport Real estate and engineering Eliminations Consolidated 31.12.2020 BGN’000 BGN’000 BGN’000 BGN’000 BGN’000 BGN’000 Income from non-financial activities from external customers 66 786 31 601 177 819 14 215 218 290 639 Change in fair value of investment property (87) 562 - (14) - 461 Gain from sale of non-current assets 4 (65) 2 245 614 - 2 798 Inter-segment income from non-financial activities 12 761 3 956 6 558 261 (23 536) - Total income from non-financial activities 79 464 36 054 186 622 15 076 (23 318) 293 898 Insurance income from external customers - 371 445 - - - 371 445 Inter-segment insurance income - 5 848 - - (5 848) - Total insurance income - 377 293 - - (5 848) 371 445 Net result from insurance - 50 342 - - (4 626) 45 716 Interest income 6 376 180 415 2 697 1 219 (11 336) 179 371 Interest expenses (6 445) (25 516) (13 639) (2 982) 11 336 (37 246) Net interest income (69) 154 899 (10 942) (1 763) - 142 125 Net result from transactions with financial instruments 2 590 55 308 3 556 500 5 979 67 933 Operating and administrative expenses (78 883) (238 397) (205 998) (13 826) 18 215 (518 889) Net result from equity accounted investments in associates 26 - (1 426) (1 400) Other financial income/(expenses) (588) 30 701 7 164 (286) 7 401 44 392 Allocation of income to individual insurance accounts - (30 687) - - - (30 687) Profit for the period before tax 2 540 58 220 (21 024) (299) 3 651 43 088 Income tax expense (287) (5 270) 2 048 (16) - (3 525) Net profit for the year 2 253 52 950 (18 976) (315) 3 651 39 563 Assets of the segment 684 653 10 892 306 1 083 735 318 531 (2 280 035) 10 699 190 Equity accounted investments 363 - 22 150 2 1 738 24 253 Total consolidated assets 685 016 10 892 306 1 105 885 318 533 (2 278 297) 10 723 443 Liabilities of the segment 228 392 8 610 565 650 758 147 177 (717 794) 8 919 098 Total consolidated liabilities 228 392 8 610 565 650 758 147 177 (717 794) 8 919 098 Chimimport AD Consolidated financial statements 31 December 2021 48 8. Property, plant and equipment Property, plant and equipment of the Group include land, buildings, plant and equipment, vehicles, repairs of rented fixed assets, assets in process of acquisition, etc. Their carrying amount can be analyzed as follows: 2021 Land Building Machines and equipment Facilities and spare parts Vehicles Repairs of rented assets Other Assets in process of acquisition Total BGN’000 BGN’000 BGN’000 BGN’000 BGN’000 BGN’000 BGN’000 BGN’000 BGN’000 Balance at 1 January 2021 52 150 136 508 167 209 85 920 123 188 23 373 82 715 45 910 716 973 Additions: - separately acquired 465 4 154 3 241 809 1 731 1 177 820 79 588 91 985 Disposals - separately disposed - (25) (565) (549) (268) (3) (344) (13 439) (15 193) - transfers - - 55 689 (55 689) - - - - - - reclassification of investment property - (14 539) (61 617) - - - (29) - (76 185) Balance at 31 December 2021 52 615 126 098 163 957 30 491 124 651 24 547 83 162 112 059 717 580 Depreciation Balance at 1 January 2021 - (35 325) (127 520) (36 765) (74 839) (23 373) (47 592) - (345 414) Depreciation of disposed assets: - transfers - - (10 714) 10 714 - - - - - - reclassification of investment property - 1 899 9 912 - - - 21 - 11 832 - separately disposed - 20 508 549 258 3 59 - 1 397 Depreciation - (4 151) (6 066) (1 484) (13 494) (206) (3 209) - (28 610) Balance at 31 December 2021 - (37 557) (133 880) (26 986) (88 075) (23 576) (50 721) - (360 795) Carrying amount at 31 December 2021 52 615 88 541 30 077 3 505 36 576 971 32 441 112 059 356 785 Chimimport AD Consolidated financial statements 31 December 2021 49 - for the period ending 31 December 2020: 2020 Land Building Machines and equipment Facilities and spare parts Vehicles Repairs of rented assets Other Assets in process of acquisition Total BGN’000 BGN’000 BGN’000 BGN’000 BGN’000 BGN’000 BGN’000 BGN’000 BGN’000 Balance at 1 January 2020 52 157 136 486 164 083 86 093 123 875 23 373 81 193 34 818 702 078 Additions: - separately acquired - 78 5 050 607 1 077 - 1 621 15 986 24 419 Disposals - separately disposed (7) (56) (1 943) (780) (1 961) - (100) (4 677) (9 524) - reclassification - - 19 - 197 - 1 (217) - Balance at 31 December 2020 52 150 136 508 167 209 85 920 123 188 23 373 82 715 45 910 716 973 Depreciation Balance at 1 January 2020 - (31 364) (121 524) (35 901) (62 292) (23 373) (43 599) - (318 053) Depreciation of disposed assets: - from separately disposed - 29 1 610 609 902 - 98 - 3 248 Depreciation - (3 990) (7 606) (1 473) (13 449) - (4 091) - (30 609) Balance at 31 December 2020 - (35 325) (127 520) (36 765) (74 839) (23 373) (47 592) - (345 414) Carrying amount at 31 December 2020 52 150 101 183 39 689 49 155 48 349 - 35 123 45 910 371 559 All depreciation and impairment charges are included in consolidated statement of profit or loss and other comprehensive income within “Operating and administrative expenses”. The carrying amount of the Group’s property, plant and equipment pledged as security on borrowings as at 31 December is presented as follows: Land Building Machines plant and equipment Vehicles Other Total BGN’000 BGN’000 BGN’000 BGN’000 BGN’000 BGN’000 Carrying amount as at 31 December 2021 509 126 401 34 468 - - 161 378 Carrying amount as at 31 December 2020 1 173 16 091 37 082 95 10 54 451 Chimimport AD Consolidated financial statements 31 December 2021 50 9. Right of use assets The Group’s right-of-use assets include aircrafts and vehicles, buildings and machinery and equipment, related to right of use of these leased assets. The carrying amounts of these assets can be analyzed as follows: Aircrafts Improvements to leased aircrafts Vehicles Buildings Machinery and equipment Total Right-of-use assets BGN’000 BGN’000 BGN’000 BGN’000 BGN’000. BGN’000 Gross carrying amount Balance at 1 January 2021 367 193 68 872 4 711 77 843 23 273 541 892 Additions 53 520 82 125 1 720 22 669 49 160 083 Disposals (21 775) (94 603) (1 057) (10 815) - (128 250) Revaluation - - (7) (633) - (640) Balance at 31 December 2021 398 938 56 394 5 367 89 064 23 322 573 085 Depreciation Balance at 1 January 2021 (65 848) (27 796) (2 505) (18 283) (10 361) (124 793) Depreciation (39 154) (29 063) (1 026) (18 160) (1 117) (88 520) Disposals 21 747 27 036 1 039 7 654 (149) 57 327 Impairment loss - - 1 852 - 853 Balance at 31 December 2021 (83 255) (29 823) (2 491) (27 937) (11 627) (155 133) Carrying amount at 31 December 2021 315 683 26 571 2 876 61 127 11 695 417 952 Aircrafts Improvements to leased aircrafts Vehicles Buildings Machinery and equipment Total Right-of-use assets BGN’000 BGN’000 BGN’000 BGN’000 BGN’000. BGN’000 Gross carrying amount Balance at 1 January 2020 161 585 19 988 3 824 73 118 23 692 282 207 Additions 106 524 48 884 1 553 14 397 - 171 358 Disposals - - (666) (9 672) (419) (10 757) Revaluation 99 084 - - - - 99 084 Balance at 31 December 2020 367 193 68 872 4 711 77 843 23 273 541 892 Depreciation Balance at 1 January 2020 (32 924) (6 486) (1 353) (7 754) (9 386) (57 903) Depreciation (32 924) (21 310) (1 818) (18 498) (975) (75 525) Disposals - - 666 7 969 - 8 635 Balance at 31 December 2020 (65 848) (27 796) (2 505) (18 283) (10 361) (124 793) Carrying amount at 31 December 2020 301 345 41 076 2 206 59 560 12 912 417 099 Chimimport AD Consolidated financial statements 31 December 2021 51 All depreciation expenses are included in the consolidated statement of profit or loss and other All depreciation expenses are included in the consolidated statement of profit or loss and other comprehensive income within “Operating and administrative expense”. In 2020, the Group entered into lease agreements for three aircrafts type Airbus A-320 with purchase option at the end of the term for each of the contracts. In 2020, the method for subsequent valuation of assets from the group Aircraft and vehicles was changed to revalued amount in accordance with the requirements of IAS 16 Property, Plant and Equipment. In analyzing fair values and transition to the revaluation model, management has concluded that there is no need to account for effects in amounts for prior periods of retrospective application of the change, as carrying amounts are a reasonable estimate of their fair values. As of 31 December 2020, a revaluation was recognized, relating to newly acquired aircraft, for the period in other comprehensive income in the amount of BGN 83,176 thousand net of taxes, based on estimates received from independent licensed appraisers. If the cost model had been applied, the carrying amounts the would be recognized for the revalued assets of the Aircraft and Vehicles is BGN 216 664 thousand (2020: BGN 202 261 thousand). Improvements to leased assets include repairs to leased aircraft and/or engines and other parts of aircraft carried out during previous reporting periods and the initial costs associated with leased assets. Expenses related to leased assets amounts to BGN 578 thousand and represents costs incurred for major repairs, inspections, and maintenance of leased aircrafts and/or engines and other parts of aircrafts covering operating cycles for aircrafts longer than one year. Lease obligations corresponding to right-of-use assets are presented in Note 31 Lease liabilities. 10. Investment property Investment property includes land and buildings, hangars and outbuildings which are owned to earn rentals and capital appreciation. Investment property is recognized in the consolidated financial statements of the Group using fair value model. Changes to the carrying amounts presented in the consolidated statement of financial position can be summarized as follows: Investment property BGN ‘000 Carrying amount at 1 January 2020 421 263 Additions: - through acquisition costs 653 - separately acquired 18 168 Gain from change of the fair value of investment property 1 717 Loss from change of fair value of investment property (1 256) Change in the fair value of investment property 461 Disposals (60) Carrying amount at 31 December 2020 440 485 Additions: - through acquisition costs 5 184 - separately acquired 23 985 - reclassification of property, plant and equipment 64 353 Gain from change of the fair value of investment property 3 248 Loss from change of fair value of investment property (624) Change in the fair value of investment property 2 624 Disposals (11 747) Carrying amount at 31 December 2021 524 884 Chimimport AD Consolidated financial statements 31 December 2021 52 The fair value of the investment property is determined by the Group in accordance with valuation reports from certified valuation specialists, internal group expert reports based on the current market prices. Investment properties that are pledged as collateral are at the amount of BGN 243 791 thousand (2020: BGN 154 317 thousand). Revenue from investment properties for the year 2021 amounted to BGN 15 549 thousand (2020: BGN 14 499 thousand) and are included in the consolidated statement of profit or loss and other comprehensive income within "Income from non-financial activities". Direct operating expenses in the amount of BGN 2 065 thousand are recognized as "Operating and administrative expenses" (2020: BGN 1 378 thousand). 11. Goodwill The main changes in the carrying amount of goodwill arise from the annual impairment tests performed and from the acquisition of subsidiaries in the Group during the reporting period. Goodwill BGN‘000 2020 Carrying amount at 1 January 24 341 Impairment loss recognized for the period (275) Carrying amount at 31 December 24 066 2021 Carrying amount at 1 January 24 066 Impairment loss recognized for the period (292) Carrying amount at 31 December 23 774 For the purpose of annual impairment testing in 2021 the carrying amount of goodwill is allocated to the following cash-generating units: 2021 2020 BGN‘000 BGN‘000 Segment "Finance" 15 559 15 559 Segment "Production, trade and services " 7 477 7 769 Segment "Transport" 566 566 Segment "Real estate and engineering" 172 172 23 774 24 066 The recoverable amount of cash generating units is determined based on value-in-use calculations. These calculations use cash flow projections based on financial budgets approved by management covering a five-year period. Cash flows beyond the five-year period are extrapolated using constant growth rates characteristic of the sector in which each cash-generating unit operates. The discount rates used reflect specific risks relating to the sector in which each cash-generating unit operates. In 2021 impairment of goodwill was carried of segment “Real estate and engineering” BGN 292 thousand. In 2020 impairment of goodwill was carried of segment “Real estate and engineering” BGN 275 thousand. The impairment of goodwill is included within "Operating and administrative expenses" in the consolidated statement of profit or loss and other comprehensive income. Chimimport AD Consolidated financial statements 31 December 2021 53 12. Other intangible assets The carrying amounts of the intangible assets of the Group for the reporting periods can be analyzed as follows: 2021 Trademarks Licenses and patents Software products Customer relationships Research and development activities Exploration and evaluation expenditures Property rights Other BGN‘000 BGN‘000 BGN‘000 BGN‘000 BGN‘000 BGN‘000 BGN‘000 BGN‘000 Gross carrying amount Balance at 1 January 2021 49 096 10 092 12 945 6 058 1 138 7 324 128 259 214 912 Additions: - separately acquired - 904 530 - - - 680 2 114 Disposals - separately disposed - (1) - - - (1 536) (22) (1 559) Balance at 31 December 2021 49 096 10 995 13 475 6 058 1 138 5 788 128 917 215 467 Amortization Balance at 1 January 2021 (34 556) (7 932) (11 301) (6 058) (45) - (25 524) (85 416) Disposals - 1 - - - 12 13 Amortization (1 407) (367) (1 255) - - - (2 473) (5 502) Balance at 31 December 202 (35 963) (8 298) (12 556) (6 058) (45) - (27 985) (90 905) Carrying amount at 31 December 2021 13 133 2 697 919 - 1 093 5 788 100 932 124 562 Chimimport AD Consolidated financial statements 31 December 2021 54 - For the period ended 31 December 2020: 2020 Trade marks Licenses and patents Software products Customer relationships Research and development activities Exploration and evaluation expenditures Property rights Other Total BGN‘000 BGN‘000 BGN‘000 BGN‘000 BGN‘000 BGN‘000 BGN‘000 BGN‘000 BGN‘000 Gross carrying amount Balance at 1 January 2020 49 096 9 702 11 250 6 058 1 145 7 324 - 128 546 213 121 Additions: - - separately acquired - 391 186 - - - 1 577 2 154 Disposals - reclassified to right-of-use assets - (1) - - (7) - - (355) (363) - separately disposed - - 1 509 - - - - (1 509) - Balance at 31 December 2020 49 096 10 092 12 945 6 058 1 138 7 324 - 128 259 214 912 Amortization Balance at 1 January 2020 (33 138) (7 435) (10 769) (6 007) (52) - - (23 392) (80 793) Disposals - - - - 7 15 22 Amortization (1 418) (497) (532) (51) - - (2 147) (4 645) Balance at 31 December 2020 (34 556) (7 932) (11 301) (6 058) (45) - - (25 524) (85 416) Carrying amount at 31 December 2020 14 540 2 160 1 644 - 1 093 7 324 - 102 735 129 496 Chimimport AD Consolidated financial statements 31 December 2021 55 Trademarks Trademarks acquired by the Group are “Bulgaria Air”, national carrier and “Arena Armeec”, representing name of multifunctional hall in Sofia, Bulgaria – Arena Armeec. Exploration and evaluation expenditures The expenses for research and valuation include granted rights and capitalized expenses for research and valuation. As at 31 December 2021 the Group recognized exploration and evaluation expenditures in Block 1-12 Knezha amounting to BGN 5 787 thousand (2020: BGN 7 324 thousand). 2021 2021 BGN‘000 BGN‘000 Block 1-12 Knezha 5 787 7 324 5 787 7 324 As of the period end the Companys management has conducted a technical and financial review of the exploration and evaluation assets in order to confirm the intention to continue the exploration activities. In 2021, there are indications for impairment of exploration and evaluation costs in amount of 1 537 (2020- ) and are presented within "Operating Expenses" in the consolidated statement of profit or loss and other comprehensive income. No intangible assets have been pledged as security for liabilities. 13. Deferred tax assets and liabilities Deferred taxes arise from temporary differences and can be summarized as follows: Deferred tax liabilities (assets) 1 January 2021 Recognized in other comprehensiv e income Recognized in profit and loss 31 December 2021 BGN ’000 BGN ’000 BGN ’000 BGN ’000 Assets Property, plant and equipment and right of use assets 18 973 - (1 037) 17 936 Investment property 5 529 - 49 5 578 Financial assets 6 044 (878) 286 5 452 Trade and other non-financial receivables (734) - (615) (1 349) Inventories (63) - (15) (78) Other assets 5 957 - 2 715 8 672 Liabilities Pension and other employee obligations (2 252) - (29) (2 281) Provisions and trade payables (129) - (100) (229) Unused tax losses (7 762) - 854 (6 908) 25 563 (878) 2 108 26 793 Recognized as: Deferred tax assets (10 940) (10 845) Deferred tax liabilities 36 503 37 638 Chimimport AD Consolidated financial statements 31 December 2021 56 Deferred taxes for the comparative period 2020 can be summarized as follows: Deferred tax liabilities (assets) 1 January 2020 Recognized in other comprehensive income Recognized in profit and loss 31 December 2020 BGN ’000 BGN ’000 BGN ’000 BGN ’000 Assets Property, plant and equipment and right of use assets 8 631 9 908 434 18 973 Investment property 5 478 - 51 5 529 Financial assets 4 203 (738) 2 579 6 044 Trade and other non-financial receivables (415) - (319) (734) Inventories (33) - (30) (63) Other assets 6 354 - (397) 5 957 Liabilities - Pension and other employee obligations (1 900) - (352) (2 252) Provisions and trade payables (381) - 252 (129) Unused tax losses (5 370) - (2 392) (7 762) 16 567 9 170 (174) 25 563 Recognized as: Deferred tax assets (8 099) (10 940) Deferred tax liabilities 24 666 36 503 14. Loans and advances to bank clients Loans and advances can be summarized as follows: (a) Analysis by customer type 2021 2020 BGN ‘000 BGN ‘000 Individuals: In BGN 1 135 195 933 845 In foreign currency 266 552 252 381 Legal entities: In BGN 1 108 359 945 346 In foreign currency 577 769 613 161 Impairment loss (38 783) (35 870) Total loans and advances to bank clients 3 049 092 2 708 863 Loans and advances to customers as at 31 December 2021 include deposits with international financial institutions under marginal derivative transactions amounting to BGN 1 556 thousand (2020: BGN 1 556 thousand), including the result of transactions. (b) Interest rates Loans in BGN and foreign currencies are accrued at a variable interest rate. Under the terms of these loans, the interest rate is calculated on the basis of a reference interest rate of the Bank or an interest rate index for EURIBOR, LIBOR, plus a margin. The allowance for regular loans ranges from 2% to 5%, depending on the credit risk associated with the respective borrower, and overdue loans are charged an additional margin above the agreed interest rate. Chimimport AD Consolidated financial statements 31 December 2021 57 15. Financial assets at fair value through profit or loss Financial assets measured at fair value through profit or loss can be summarized as follows: 2021 2020 BGN ‘000 BGN ‘000 Financial assets measured at fair value through profit or loss: Corporate shares and rights 1 258 422 1 162 656 Bulgarian corporate bonds 213 113 232 178 Medium-term Bulgarian government securities 55 258 53 222 Long-term Bulgarian government securities 30 104 27 381 Securities issued or guaranteed in other countries 486 003 547 016 Derivatives held for trading 70 4 788 2 042 970 2 027 241 Financial assets are measured at fair value based on stock quotes at the date of the financial statements or on the basis of estimates by independent valuers as at the date of the financial statements. Gains and losses are recognized in the consolidated statement of profit or loss and other comprehensive income within "Result from operations with financial instruments". 16. Debt instruments at fair value through other comprehensive income The financial assets at fair value through other comprehensive income, including bonds and government securities, is presented as follows: 2021 2020 BGN ‘000 BGN ‘000 Bonds 413 303 210 804 Government securities 446 138 506 791 Total debt instruments at fair value through other comprehensive income 859 441 717 595 As of 31 December 2021, the financial assets measured at fair value in other comprehensive income formed a related impairment loss amounting to BGN 4 643 thousand (2020: BGN 2 734 thousand), which is reflected in the equity and did not reduce the book value of the assets. As at 31 December 2021 government bonds issued by the Bulgarian government amounting to BGN 153 546 thousand (2020: BGN 116 743 thousand) are pledged as collateral for servicing budget accounts on the grounds of art. 152 of the Public Finance Act. 17. Equity instruments at fair value through other comprehensive income 2021 2020 BGN ‘000 BGN ‘000 Quoted equity instruments 24 605 25 327 Unquoted equity instruments 45 821 58 439 Total equity instruments at fair value through other comprehensive income 70 426 83 766 Chimimport AD Consolidated financial statements 31 December 2021 58 18. Other financial assets at amortized cost Amounts recognized in the consolidated statement of financial position are attributable to other financial assets measured at amortized cost are as follows: Note 2021 2020 BGN ‘000 BGN ‘000 Loans granted 18.1 133 790 138 487 Cession receivables 18.1 60 677 41 244 Receivables under repurchase agreements 18.2 399 895 394 693 Debt instruments measured at amortized cost 18.3 687 184 464 877 Receivables from related parties 46 165 559 172 468 Trade receivables 18.4 116 962 115 382 Other 22 092 21 967 Impairment loss (28 163) (20 381) 1 557 996 1 328 737 18.1. Loans granted and cession receivables 2021 2020 BGN ‘000 BGN ‘000 Loans granted 133 790 138 487 Receivables under cession contracts 60 677 41 244 194 467 179 731 Loans are provided at annual interest rates of 3% to 10% depending on the term of the loan. The fair value of the loans granted is not individually determined as the management considers that their carrying amount gives a true idea of their fair value. 18.2. Receivables under repurchase agreements As at 31 December 2021, the Group has entered into repurchase agreements with a total of BGN 399 895 thousand (2020: BGN 394 693 thousand), including interest receivables. The collateral ratio of agreements with a repurchase clause, which are secured by a pledge of Bulgarian government securities, is at least 100%. The collateral ratio of repurchase agreements that are secured by a pledge of corporate securities is a minimum of 120%. These agreements are due between January and June 2022. (2020: between January and June 2021). The Group has not identified any significant changes in the level of collateral for receivables under repurchase clauses that have been affected by fluctuations in market prices of the instruments as a result of the COVID-19 pandemic. Chimimport AD Consolidated financial statements 31 December 2021 59 18.3. Debt instruments measured at amortized cost As at 31 December 2021, debt instruments measured at amortized cost consist of Bulgarian government bonds, government bonds of EU countries, Bulgarian corporate bonds and foreign corporate bonds, including the amount of accrued interest and discount / premium on the basis of their original maturity, as follows: 2021 2020 BGN ‘000 BGN ‘000 Bulgarian government Bonds 408 414 213 470 Foreign government bonds 268 525 214 915 Bulgarian corporate bonds 7 964 7 963 Foreign corporate bonds 2 935 29 215 Impairment loss (654) (686) Debt instruments measured at amortized cost 687 184 464 877 As of 31 December 2021, government bonds issued by the Bulgarian government amounting to BGN 223 269 thousand (2020: BGN 148 013 thousand) are pledged as collateral for servicing budget accounts on the grounds of art. 152 of the Public Finance Act. 18.4. Trade receivables 2021 2020 BGN ‘000 BGN ‘000 Trade receivables, gross 130 045 130 909 Impairment loss (13 083) (15 527) Trade receivables 116 962 115 382 All receivables are short-term. The net book value of trade receivables is considered a reasonable estimate of their fair value. All trade receivables of the Group have been reviewed for impairment indications. Some trade receivables have been derecognized and the corresponding impairment in the consolidated statement on profit or loss and other comprehensive income within "Operating and Administrative Expenses". The impaired receivables were mainly due to commercial customers who had financial difficulties. 19. Tax receivables 2021 2020 BGN ‘000 BGN ‘000 VAT recovery 297 1 319 Overpaid corporate tax 1 471 430 Other overpaid taxes 12 8 1 780 1 757 20. Insurance and reinsurance receivables 2021 2020 BGN ‘000 BGN ‘000 Receivables on accrued premiums on insurance contracts 50 335 47 370 Receivables from reinsurance contracts 121 98 Receivables from Guarantee fund 262 - Receivables from co-insurance contracts 321 238 Impairment loss for insurance receivables (1 040) (1 776) 49 999 45 930 Chimimport AD Consolidated financial statements 31 December 2021 60 Receivables from insurance premiums under insurance contracts are due insurance premiums from insured persons under contracts with deferred payments. Receivables are subject to impairment test in accordance with the requirements of Ordinance № 53, which is reduced in the gross value of receivables. The Group has not identified significant changes in the collectability ratio of receivables under insurance contracts as a result of the Covid-19 pandemic. 21. Other receivables 2021 2020 BGN ‘000 BGN ‘000 Noncurrent other receivables Advance payments - 259 Prepaid expenses and other receivables 1 202 273 Noncurrent other receivables 1 202 532 Current other receivables Advance payments 12 565 17 223 Prepaid expenses 8 897 7 105 Other receivables 2 902 5 416 Current other receivables 24 364 29 744 Total Other receivables 25 566 30 276 Significant part of short - term advance payments are cash guarantees at the total amount of BGN 17 223 thousand (2020: BGN 17 233thousand) the paid amounts are under warranty contracts for leasing of airplanes, guarantees receivables for airports services, guarantees the rental of premises and other contracts and guarantee duty free - currency trading to Customs Sofia. Short-term portion of prepaid expenses totaling BGN 8 897 thousand (2020: BGN 7 105 thousand) represent prepaid advertising costs, rent, insurance, etc. 22. Inventories Inventories recognized in the consolidated statement of financial position can be analyzed as follows: 2021 2020 BGN’000 BGN’000 Materials 11 321 16 726 Production 1 865 1 853 Goods 1 399 1 121 Unfinished production 591 1 676 Spare parts 6 904 6 599 Assets acquired from foreclosure 32 220 31 394 54 300 59 369 As at 31 December 2021 inventories of the Group amounting to BGN 137 thousand (2020: BGN 5 027 thousand) are pledged as collateral benefitting banks. Assets acquired in foreclose amounting to BGN 32 220 thousand (2020: BGN 31 363 thousand) refer to assets acquired from the Group's banking activities that do not meet the criteria for classification as held for sale and are accounted for under the requirements of IAS 2 Inventories. 23. Cash and cash equivalents Cash and cash equivalents include the following: 2021 2020 Cash in cash and in banks: BGN’000 BGN’000 - BGN 1 836 497 1 796 728 - EUR 198 738 137 007 - USD 153 285 119 360 - other currencies 192 523 168 692 Cash and cash equivalents, gross 2 381 043 2 221 787 Allowance for expected credit loss and impairment (121) (155) Cash and cash equivalents 2 380 922 2 221 632 Chimimport AD Consolidated financial statements 31 December 2021 61 2021 2020 BGN’000 BGN’000 Cash at the Central Bank 1 594 326 1 590 560 Short-term investments and deposits 179 491 194 870 Provided resources and advances to banks and cash 584 858 417 918 Restricted cash 22 247 18 284 2 380 922 2 221 632 24. Equity 24.1. Share capital The share capital of Chimimport AD as at 31 December 2021 consists of 239 646 267 (31.12.2020: 239 646 267) ordinary shares with a par value of BGN 1 per share, including 13 182 738 (31.12.2020: 13 042 238) ordinary shares, acquired by companies of Group of Chimimport AD. The ordinary shares of Chimimport AD are registered and subject to unrestricted transfers and entitle 1 voting right and liquidation quota. 2021 2020 Number of shares Number of shares Shares issued and fully paid at 1 January: 226 604 029 226 955 233 Change in own shares /ordinary and preferred/, acquired by subsidiaries during the year (140 500) (351 204) Shares issued and fully paid as at period end 226 463 529 226 604 029 The list of the principal shareholders, holding ordinary shares of the Group, is as follows: 2021 2021 2020 2020 Number ordinary shares % Number ordinary shares % Invest Capital AD 173 487 247 72.39% 173 487 247 72.39% Other entities 48 845 512 20.38% 49 792 119 20.78% Other individuals 17 313 508 7.23% 16 366 901 6.83% 239 646 267 100.00% 239 646 267 100.00% Own shares held by subsidiaries CCB Group AD (1 296 605) (0.54%) (1 296 605) (0.54%) ZAD Armeec (236 007) (0.10%) (236 007) (0.10%) POAD CCB - Sila (8 782 426) (3.66%) (8 782 426) (3.66%) CCB Asset management EAD (140 500) (0.06%) - - Trans Intercar EAD (2 200) - (2 200) - Omega Finance OOD (2 725 000) (1.14%) (2 725 000) (1.14%) (13 182 738) (5 50%) (13 042 238) (5.44%) Net number of shares 226 463 529 226 604 029 The tax on dividends for individuals and foreign non-EU legal entities is 5%, with the tax deducted from the gross amount of the dividends. 24.2. Premium reserve 2021 2020 BGN’000 BGN’000 Share premium 246 462 246 850 Change in the reserve due to own shares acquired by subsidiaries for the period (153) (388) 246 309 246 462 Chimimport AD Consolidated financial statements 31 December 2021 62 In 2021 the premium reserve decreased by BGN 153 thousand as a result of sale of own shares from subsidiaries of the Group (2020: BGN 388 thousand). As at 31 December 2021 premium reserve amounts to BGN 246 462 thousand (2020: BGN 246 850 thousand). Premium reserve is formed by the issue of privilege shares from 2009 and two issues of ordinary shares from 2007 and 2006. 24.3. Other reserves As at 31 December 2021, the other reserves amounted to BGN 300 696 thousand (2020: BGN 287 583 thousand), including:  BGN 83 176 thousand revaluation reserve on RUA,  BGN 20 481 thousand – Reserve for minimum profitability guarantee of UPF and PPF (2020: BGN 21 225 thousand),  BGN 78 thousand (2020: BGN (183) thousand) remeasurement of defined benefit plan and other reserves. 25. Liabilities to depositors Liabilities to depositors are presented as follows: 2021 2020 Analysis by term and type of currency: BGN ‘000 BGN ‘000 On-demand deposits in BGN 2 205 262 1 739 734 in foreign currency 308 820 304 296 2 514 082 2 044 030 Term deposits in BGN 1 226 347 1 153 213 in foreign currency 1 429 564 1 271 347 2 655 911 2 424 560 Savings accounts in BGN 1 192 269 1 133 292 in foreign currency 544 107 559 023 1 736 376 1 692 315 Other deposits in BGN 11 032 7 697 in foreign currency 479 270 11 511 7 967 Total liabilities to depositors 6 917 880 6 168 872 2021 2020 Analysis by term and type of currency: BGN ‘000 BGN ‘000 Individual deposits in BGN 3 241 091 2 841 485 in foreign currency 1 990 989 1 827 327 5 232 080 4 668 812 Legal entities deposits in BGN 1 382 788 1 179 886 in foreign currency 288 698 304 648 1 671 486 1 484 534 Deposits of other institutions in BGN 11 032 12 565 in foreign currency 3 282 2 961 14 314 15 526 Total liabilities to depositors 6 917 880 6 168 872 Chimimport AD Consolidated financial statements 31 December 2021 63 26. Other financial liabilities Current Non-current 2021 2020 2021 2020 BGN’000 BGN’000 BGN’000 BGN’000 Financial liabilities measured at fair value Derivatives held for trading 26.1 118 86 - - Financial liabilities measured at amortized cost: Bonds and debenture loan 26.2 3 507 3 000 69 450 37 451 Bank borrowings 26.3 57 898 49 514 92 614 127 069 Other borrowings and financing 26.4 20 092 23 040 6 984 6 161 Deposits from banks 26.5 41 146 66 092 - - Cession liabilities 10 708 20 746 32 306 33 180 Liabilities under repurchase agreements 26.6 2 282 15 449 11 678 - Trade payables 26.7 109 406 97 261 598 1 114 Payables to related parties 46 48 922 44 488 14 394 17 029 Total carrying amount 294 079 319 676 228 024 222 004 26.1. Derivatives held for trading As at 31 December 2021 derivatives held for trading amounting to BGN 118 thousand (2020: BGN 86 thousand) are presented at fair value and include transactions for the purchase and sale of currency, valuables securities, forward contracts and currency swaps in the open market. 26.2. Bonds and debenture loans The bond loans received by the Group are as follows: Current Non-current 2021 2020 2021 2020 BGN’000 BGN’000 BGN’000 BGN’000 Bonds and debenture loans 3 507 3 000 69 450 37 451 3 507 3 000 69 450 37 451 The carrying amount of the Group's debts on the aforementioned debenture loans at 31 December 2021 amounted to BGN 72 957 thousand (2020: BGN 40 451 thousand) and was calculated using the effective interest method. 26.3. Bank loans The Bank loans of the Group comprise loans, granted by Bulgarian commercial banks, designated for financing investment projects of the Group, as well as, for refinancing the current operating activity of the Group. Bank loans are classified according to their contracted maturity date. Current Non-current 2021 2020 2021 2020 BGN’000 BGN’000 BGN’000 BGN’000 Bank loans 57 898 49 514 92 614 127 069 26.3.1. Non-current bank borrowings 2021 2020 BGN’000 BGN’000 Revolving and investment bank loans 92 614 127 069 92 614 127 069 Chimimport AD Consolidated financial statements 31 December 2021 64 Investment loans The Group has received the following investment loans: - The Group is party to a contract for an investment bank loan, signed on 30 January 2015 with maturity date on 30 April 2023. The repayment of the loan is made in BGN and is in accordance with an agreed repayment schedule for the whole term of the contract. The annual interest rate on the loan is “Average deposit index” plus 4.732%. The loan is repaid preliminary. - The Group is party to a contract for an investment bank loan, signed on 23 December 2015 with maturity date on 31 December 2025. The value of the loan is BGN 78,233 thousand, which was disbursed in 3 main tranches. With the disbursed loan, two bank loans to another bank were refinanced and an investment project of the Group was financed. The maturity of the loan is on 31.12.2025. The repayment of the principal is in BGN and is in accordance with the agreed repayment plan for the entire term of the contract. The interest rate is formed as a sum of the "Average Deposit Index" plus a margin of 2,727%. Collateral for the loan is a contractual mortgage on a hangar, all receivables of the Group arising from lease agreements concluded with Lufthansa Technik Sofia OOD in its capacity as a tenant. - The Group is party to a contract for an investment bank loan, signed on 01 November 2016. The repayment of the loan is made in BGN and is in accordance with an agreed repayment schedule with beginning date on 31 October 2018. The loan matures on 30 September 2028. The interest rate is formed as the sum of “Average deposit index” plus 2.727 %. The loan is secured by contractual mortgage of a hangar, parking and 2 checkpoints, specific receivables of the Group arising from lease agreements. - The Group is party to a contract for an investment bank loan, signed on 11 August 2017, maturing on 31 December 2027. The interest on the loan is equal to the annual interest rate determined as the sum of the variable base interest rate applicable to the relevant interest rate period and a surplus to the interest rate index of 2.738 %. The loan is secured by a mortgage on a real estate in Sofia and a pledge of shares and receivables. - The Group is a party to an investment bank loan agreement signed on 21 June 2013, maturing on 20 March 2029. The interest on the loan is 3M EURIBOR plus 3 percentage points, but not less than 6%. The loan is secured by a real estate mortgage, a pledge of long-term tangible assets under the Law on Special Pledges. - The Group is a party to an investment bank loan agreement signed on 21 June 2013, maturing on 20 December 2029. The interest on the loan is 3M EURIBOR plus 3 percentage points, but not less than 6.5%. The loan is secured by a real estate mortgage, a pledge of long-term tangible assets under the Law on Special Pledges. Revolving loans - The Group was granted a bank loan on 5 October 2011 for an amount of BGN 3 000 thousand with maturity date on 25 October 2024. The loan is secured by real estate. The annual interest rate equals 4%, formed based on 1M EURIBOR + 4%, but no less than 4%. - The Group is party to a bank loan agreement with a commercial bank signed on 31 January 2019 at the amount of EUR 4 950 thousand with due date on 31 January 2022. The loan is secured by bank deposits. The annual interest rate on the loan is based on BIR plus 0.8%. - The Group was granted a revolving bank credit, signed on 28 January 2008 with maturity date on 25 October 2024. The annual interest rate is 1M EURIBOR plus 4%. Collateral - mortgage on grain depots in the town of Dobrich and the village of General Kolevo (lands, buildings and permanently attached machines and equipment), owned by the Group. - The Group was granted a revolving bank credit, signed on 13 December 2013 with maturity date on 30 September 2024. The annual interest rate is average deposit index (ADI) plus 2.657 %. The loan is secured by a pledge of some inventories and property, plant and equipment owned by the Group. Chimimport AD Consolidated financial statements 31 December 2021 65 - The Group has received three secured bank loans granted by a Bulgarian commercial bank. The loans are denominated in BGN and have an agreed amount of BGN 6 000 thousand, BGN 8 944 thousand and BGN 3 220 thousand, respectively. The interest rates on the loans are 3.3% and 4%, maturing in 2022.To secure two of the loans, pledges of government securities of the Republic of Bulgaria with a nominal value of BGN 8 950 thousand and maturity in 2025 under one loan and a nominal value of BGN 11 300 thousand and maturities of the issues in 2021 have been established, 2025 and 2027. One of the loans is secured by a pledge on cash in the amount of BGN 714 thousand, which are blocked until its repayment and insurance "Financial risk" valid until February 2022. - The Group has a contract for bank investment loan, signed on 23 December 2015. The amount of the loan is BGN 78 233 thousand, which was disbursed in 3 main tranches. Two bank loans to another bank were refinanced with the disbursement of the loan, and an investment project of the Group was financed. The maturity of the loan is on 31 December 2025. The repayment of the principal is in BGN and is in accordance with the agreed repayment plan for the entire term of the contract. The interest rate is formed as a sum of the "Average Deposit Index" plus a margin of 2,727%. Collateral for the loan is a contractual mortgage on a hangar, all receivables of the Group arising from lease agreements signed with one of the associated companies for the Group, in its capacity as a lessee. The joint and debtor under the loan agreement is the Parent Entity of the Group. A corporate guarantee has been issued in favor of the Group by a foreign legal entity. - The Group is also a party to a bank investment loan agreement concluded on 1 November 2016. The amount of the loan is BGN 12 713 thousand, and the utilized amount in 2017 is BGN 12 021 thousand. In 2019, the remaining amount of the loan of BGN 692 thousand was disbursed. The repayment of the principal is in BGN and is in accordance with the agreed repayment plan with a starting date of 31 October 2018. plus a surcharge of 2.727%. The maturity of the loan is 30 September 2028. Collateral for the loan are a contractual mortgage on land and buildings built on it, parking and 2 checkpoints, receivables of the Group, arising from a lease agreement concluded with a tenant. The joint and several debtor under the loan agreement is the Parent Company of the Group. - Bank loan-overdraft agreement signed on 01 August 2018 for working capital with maturity on 20 August 2024. The annual interest rate is 4.2% of the bank's base interest rate plus 12-month Euribor. The loan is secured by a pledge of receivables on current accounts in the creditor bank and a special pledge on goods intended for duty-free foreign exchange trading on board aircraft and / or in a specialized store. The total value of the goods is up to BGN 137 thousand. - The Group is a party to a bank loan-overdraft agreement signed on 25 September 2020 for working capital with a maturity of 20 September 2023. The annual interest rate is 3.8% of the bank's base interest rate plus 12-month Euribor. The loan is secured by a Special Pledge Agreement on all current and future receivables on the accounts of Bulgaria Air AD opened with the creditor bank. - The Group has signed 4 active as of 31 December 2021 contracts for bank loans for working capital with a maturity of 31 December 2022, 30 June 2023 and two loans with a maturity of 30 September 2022. The annual interest rate on loans is in the amount of 3% and 4% of the loan agreement plus 3 months. Euribor, but not less than 4%. The loans are secured by a pledge of receivables from public procurement contracts for the provision of airline tickets, receivables from BSP revenues, receivables from contracts of third parties, as well as suretyship agreements concluded with the Group's parent company. - On 8 October 2021 the Group has entered into a bank loan agreement for working capital in the amount of BGN 500 thousand with an annual interest rate of the ODIHR in BGN plus a 2.5 percentage margin or a minimum total agreed rate of 2.5%. As of 15 April 2022 to 15 September 2023 (inclusive) the loan is repaid in 17 (seventeen) equal monthly installments in the amount of BGN 27 770 and one last equalization installment of BGN 27 910 due on 15 September 2023. On the loan received, the Group has pledged assets from the group of property, plant and equipment. - On 28 April 2021 the Group has entered into a bank loan agreement for working capital in the amount of BGN 367 thousand with an annual interest rate of BGN 2.5% plus a contractual credit Chimimport AD Consolidated financial statements 31 December 2021 66 risk margin of 0.35% or a total agreed rate of 2.85%. As of 20 May 2021 to 20 April 2025 (inclusive) the loan is repaid in 48 (forty eight) equal monthly installments in the amount of BGN 700 and one last installment due on 20 May 2025 in the amount of BGN 333 400 The Group has pledged assets from the group of properties, machinery and equipment to secure the loan. - - On 14 August 2020 the Group entered into a bank loan agreement for working capital in the amount of BGN 250 thousand with an annual interest rate of BGN 2.5% plus a contractual credit risk margin of 1% or a generally agreed rate of 3.5%. A grace period of principal until 19.03.2022 has been agreed. As of 20 March 2022 until 20 August 2023 (incl.) the loan is repaid in seventeen equal monthly installments in the amount of BGN 13 500 and one last installment due to 20 August 2023 in the amount of BGN 20 500 To secure the loan, the Group has pledged assets from the group of properties, machinery and equipment. 26.3.2. Current bank borrowings 2021 2020 BGN’000 BGN’000 Current revolving and investment loans 57 898 49 514 57 898 49 514 Revolving loans - The Group has received three secured bank loans granted by a Bulgarian commercial bank. The loans are denominated in Bulgarian levs and have an agreed amount of BGN 6 000 thousand, BGN 8 944 thousand and BGN 3 220 thousand, respectively. The interest rates on the loans are 3.3% and 4%, maturing in 2022. - To secure two of the loans, pledges of government securities of the Republic of Bulgaria with a nominal value of BGN 8 950 thousand and maturity in 2025 have been established for one loan and a nominal value of BGN 11 300 thousand and maturities of issues in 2021, 2025 and 2027. One of the loans is secured by a pledge on cash in the amount of BGN 714 thousand, which are blocked until its repayment and insurance "Financial risk" valid until February 2022. - On 8 October 2019, the Group entered into a bank loan agreement for working capital in the amount of BGN 150 thousand with an annual interest rate of BGN 2.5% plus a contractual credit risk margin of 1% or a total agreed rate of 3.5%. A grace period of one year has been agreed until 19.10.2020. As of 20.10.2020 until 20.09.2021 (inclusive) the loan is repaid in twelve equal monthly installments in the amount of BGN 12 500. To secure the received loan The Group has pledged some assets from the group of property, plant and equipment. A. As of 31.12.2021 it has been fully repaid. 26.4. Other borrowings, financing and liabilities Current Non-current 2021 2020 2021 2020 BGN’000 BGN’000 BGN’000 BGN’000 Other borrowings and financing 26.4.2 20 092 23 040 26.4.1 6 984 6 161 26.4.1. Other non-current borrowings, financing and liabilities 2021 2020 BGN’000 BGN’000 Non-current borrowings 6 878 5 820 Financing from State Agricultural Fund 106 341 6 984 6 161 Other non-current borrowings are received under annual interest rates from 3% to 8% depending on the contract period, received from third parties. The long-term borrowing is not secured. Payments are concluded in the currency, in which they were granted. Chimimport AD Consolidated financial statements 31 December 2021 67 Financing refers to acquired assets Station for geophysical studies in oil and gas Drilling, Station for drilling geophysical studies in oil and gas drilling under contract between Oil and Gas Exploration and Production and The General Directorate "European Funds for Competitiveness" - Managing Authority of the OPC to the Ministry of Economy and Energy - legal successor of BSMEPA, regarding grant № 2TMG-02-21 / 13.06.2011 under Operational Program "Development of the Competitiveness of the Bulgarian Economy 2007-2013", Financed by the European Union through the European Regional Development Fund, and others. 26.4.2. Other current borrowings 2021 2020 BGN’000 BGN’000 Current borrowings 20 092 22 805 Financing under operational programs - 235 20 092 23 040 Other current borrowings are received under annual interest rates from 3% to 8% depending on the contracted period. The loans are classified according to their repayment deadline, which is 2022. The fair value of the loans is not separately determined as the management considers that the carrying amount of the loans is a reasonable approximation of their fair value. 26.5. Deposits from banks Current 2021 2020 BGN’000 BGN’000 Demand deposits – local banks -in Bulgarian leva 16 445 24 196 -in foreign currency 13 677 7 688 Term deposits from Bulgarian banks in BGN - 22 000 Demand deposits from foreign banks in foreign currency 8 702 9 204 Demand deposits from foreign banks in BGN 37 70 Term deposits from foreign banks in foreign currency 381 489 Term deposits from Bulgarian banks in foreign currency 1 904 2 445 41 146 66 092 26.6. Liabilities under repurchase agreements As at 31 December 2021, the Group has entered into agreements with a repurchase clause with Bulgarian companies amounting to BGN 13 960 thousand. (2020: BGN 15 449 thousand), including accumulated interest payables on them. The maturity of these agreements is until the end of 2022. 26.7. Trade payables Current Non-current 2021 2020 2021 2020 BGN’000 BGN’000 BGN’000 BGN’000 Trade payables 109 406 97 261 598 1 114 The net carrying amount of trade payables is considered a reasonable estimate of their fair value. 27. Payables to insured individuals 2021 2020 BGN’000 BGN’000 Attracted funds in a voluntary pension fund 106 414 96 476 Attracted funds in a professional pension fund 138 607 134 329 Attracted funds in a universal pension fund 1 463 653 1 331 017 1 708 674 1 561 822 Chimimport AD Consolidated financial statements 31 December 2021 68 The net assets value of the funds, managed by the subsidiary POAD CCB - Sila AD as at 31 December 2021 amounts to BGN 1 708 674 thousand (2020: BGN 1 561 822 thousand). The increase at the amount of BGN 146 852 thousand, compared to the liabilities as at 31 December 2020, is a result of proceeds from positive return on investment of the insured individuals, realized in 2021, proceeds from social security contributions and a reduction of the amounts paid under insurance contracts. The change in the net assets available for income is a result of: 2021 2020 BGN ‘000 BGN ‘000 Beginning of the period 1 561 822 1 460 355 Received pension contributions 178 856 159 474 Amounts received from pension funds, managed by other Pension Insurance Companies 44 540 41 442 Funds of persons who have resumed their insurance in UPF under the procedure of Art. 124a of CSR 210 80 Funds transferred to persons from EU, ECB or EIB pension schemes 4 2 Total increase of pension contributions 223 610 200 998 Positive/ (negative) income from investment of funds 98 663 30 687 Result from investment of funds 98 663 30 687 Paid off pensions (125) (139) One-time paid pensions to insured individuals (9 589) (6 330) Funds for disbursement of funds to heirs of insured individuals (5 551) (3 443) Amounts paid to the National Revenue Agency (4 827) (4 716) Amounts paid under social security contracts (20 092) (14 628) Amounts, paid to insured individuals, transferred to other pension funds (108 330) (84 557) Amounts, paid to individuals that have changed their insurance under Article 46 of the SIC (27 223) (14 110) Transferred taxes (107) (125) Amounts paid to state budget - (28) Funds transferred to the Lifetime Pensions Fund for the payment of lifetime pensions (455) - Funds transferred to the Lifetime Pensions Fund to insured persons without inheritance (9) - Funds transferred to the Deferred Payments Fund for making deferred payments (546) - Transferred amount to insured individuals in EU, ECB and EIB schemes - (17) Transferred amount to pension reserve (54) (86) Entrance fee (8) (8) Service fee (233) (179) 9% yield fee (677) (337) Service fee - 3.75% (6 212) (5 683) Investment fee - 0.75% (11 467) (10 450) Withdrawal fee (8) (10) End of the period 1 708 674 1 561 822 The net assets available for income are distributed as follows: 2021 2020 BGN ‘000 BGN ‘000 Individual accounts 1 707 395 1 560 607 Reserve for minimal return 1 279 1 215 Net assets available for income 1 708 674 1 561 822 Chimimport AD Consolidated financial statements 31 December 2021 69 28. Employee remunerations 28.1. Employee benefits expense Employee benefits expense includes current salaries and wages, as well as social security expenses, unused leaves and provisions for pension as follows: 2021 2020 BGN‘000 BGN‘000 Wages expense (99 649) (102 314) Social security costs (17 896) (17 975) Employee benefits expense (117 545) (120 289) 28.2. Pension and other employee obligations The liabilities for pension and other employee obligations recognized in the consolidated statement of financial position consist of the following amounts: 2021 2020 BGN‘000 BGN‘000 Non-current: Pension provisions 4 841 4 723 Non-current pension and other employee obligations 4 841 4 723 Current: Employee benefits obligations 9 109 8 675 Payables to social security institutions 2 707 2 766 Pension provisions 991 829 Current pension and other employee obligations 12 807 12 270 Pension and other employee obligations 17 648 16 993 The current portion of these liabilities represents the Group's obligations to its current and former employees that are expected to be settled during 2022. In determining the pension obligation, actuarial assumptions were used. These assumptions were developed by management under consideration of expert advice provided by independent actuarial appraisers. These assumptions have led to the amounts determined as the Group's defined benefit obligations for the reporting periods under review and should be regarded as management's best estimate. However, the actual outcome may vary. Changes in pension provisions under the Labor code are presented as follows: 2021 2020 BGN‘000 BGN‘000 Pension provisions, beginning of period 5 552 5 708 Expenses for current service 611 589 Interest expenses 52 93 Adjustments - actuarial (gains)/losses from changes in demographic assumptions and financial assumptions 105 (140) Benefits paid (488) (698) 5 832 5 552 Chimimport AD Consolidated financial statements 31 December 2021 70 29. Insurance reserves and reinsurance assets Insurance technical reserves Note 2021 2020 BGN‘000 BGN‘000 Reserves from non-life insurance activities 29.1 237 016 258 376 Life Insurance Reserves 29.2 1 880 1 766 238 896 260 142 The insurance reserves as at 31 December 2021 were set aside in the course of the insurance activity of the Group, performed through ZAD Armeec Insurance Company (General Insurance) and ZEAD CCB Life (Life Insurance). Reserve adequacy Periodically, the actuaries of the Group assess whether the total provision less the deferred acquisition costs is sufficient to cover any future payments. As required by regulators, the amount of such reserves should be fully secured by investing in highly liquid assets. When assessing the adequacy of reserves, account shall be taken of cash flows intended to pay indemnities, cash flows generated by collected premiums, paid commissions. 29.1. Reserves from non-life insurance activities 31.12.2021 31.12.2020 Note Insurance reserves Reinsurance assets Net Insurance reserves Reinsurance assets Net BGN’000 BGN’000 BGN’000 BGN’000 BGN’000 BGN’000 Premium reserve carried forward 29.1.1 95 130 (19 471) 75 659 87 854 (19 896) 67 958 Reserve for outstanding payments 29.1.2 140 598 (48 947) 91 651 169 153 (59 847) 109 306 Unexpired risk reserve 29.1.3 - - - 6 - 6 Reserve for bonuses and discounts 29.1.4 1 288 (636) 652 1 363 (636) 727 237 016 (69 054) 167 962 258 376 (80 379) 177 997 29.1.1. Premium reserves carried forward Premium reserve carried forward as at 31 December 2021 amounting to BGN 95 130 thousand (2020: BGN 87 854 thousand) is formed to cover claims and expenses that are expected to arise after the reporting period under the insurance or reinsurance contracts in force at the time of valuation. The amount of the transfer-premise reserve is determined using the "exact date" method according to which the reserve includes the portion of the premium income related to the time between the end of the reporting period and the expiry date of the insurance contract. The Group has formed its unearned premium reserve on the basis of accrued insurance premiums after deduction of unearned premiums and receivables written off in early terminated contracts and premiums on contracts expired at the reporting date period. Given that the insurer does not pursue a policy of deferral of its acquisition cost, the latter is recognized at the time of the conclusion of the insurance contract and deducted from the accrued premium income in the calculation of the carry-over reserve. The basis for the formation of the reserve corresponds to the accounting recognized premium income. Premium income recognizes the amount owed by the insurer for the entire insurance period that the Group is entitled to receive under the contracts entered into during the accounting year. The accrued premium income includes all the contributions due for the entire duration of the policy, and in the case of multi-year policies with deferred payment of the premium, the consecutive annual contribution is accrued at the maturity date. Chimimport AD Consolidated financial statements 31 December 2021 71 29.1.2. Reserve for outstanding payments The reserve for outstanding payments as at 31.12.2021 amounting to BGN 140 598 thousand (2020: BGN 169 153 thousand) is set up to cover benefits, amounts and other payments under insurance or reinsurance contracts, as well as related costs, on claims that arose before the end of the reporting period, whether or not they were filed, and which were not paid on the same date. The amount of the provision is in line with the estimated cost of settlement of all claims on events occurring by the end of the reporting period, including the estimated amount of unreported claims. The provision for claims outstanding includes the following components: - reported, but not settled claims; - incurred, but not reported claims; - settlement costs. Reserve for reported, but not settled claims (RBNS): The value of RBNS has been calculated using the "Claim by claim" method, including the expected amount of payments for each reported but unpaid claim. For damages brought in legal actions for which there are no enforceable decisions, for insurance with sufficient representative data, correction coefficients are used, calculated according to Art. 90, para. 12 of Ordinance No. 53. As of 31 December 2021, correction coefficients are attached to the claims incurred in insurance claims: "Casco", "Civil liability of the motorist", "Fire and natural disasters" and "General third party liability". Where the damage compensation is paid in the form of an annuity, the amount of the reserve is calculated using recognized actuarial methods, taking into account the annuity period, the value of the periodic payment, the age of the person, and the use of mortality tables and the risk-free interest rate curve published by EIOPA. Under the civil liability insurance lawsuits, as of 31.12.2021 the Group pays five annuity claims. Reserve for incurred, but not reported claims (IBNR): The reserve includes the expected amount of unpublished claims that occurred before the end of the reporting period. In order to determine the IBNR reserve, chain-based methods based on the accumulated value of the paid or claimed claims were used. For all types of insurance, the Group has data for a sufficiently long period to cover the full cycle of claim development as well as to use statistical calculation methods. The amount of the reserve is determined separately for the activity of active reinsurance and direct business. Under Casco Insurance, due to the significant amount of recovered amounts of regressions and sufficient data to predict future revenues, Armeec Insurance Company reduces the reserve for incurred but not reported claims with the expected recoveries by regressions. The latter are calculated using a chain-based method based on the recovered sums for regressions over the past 11 years. Under Motor Third Party Liability insurance, the Unpaid Claims Reserve is calculated separately for property and non-pecuniary damage as well as for minor and major damage. Large claims have been categorized as one event with a total amount over BGN 500 000. The value of the reserve is calculated on a database for the period 2009 - 2020. The calculation of the small-loss reserve was done using a chain-based method based on the accumulated historical values of the claimed and paid claims using weighted averages of development, with the two approaches (paid and claimed) being assigned the same weight in determining of the final amount of the reserve. For the calculation of the large damages reserve Armeec Insurance Company uses a method based on the average number of damages per year per event and year of claim and the average amount of a claim. The method used for the calculation of the motor third party liability insurance was approved by FSC Resolution No. 156 - CP from 29.03.2020. As of 31 December 2021, the Group has not created a provision for incurred but not reported damage to insurances: "Illness", "Rail Vehicles", "Casco on Vessels", "Property Damage", "Credit and Leasing" Guarantee Insurance "," Miscellaneous Financial Losses" and “Legal Expenses”, in the absence of the need to set aside, in view of the historical data and the results obtained from the calculations made. Chimimport AD Consolidated financial statements 31 December 2021 72 Reserve for settlement costs The value of the liquidation cost reserve is calculated on the basis of an expected average liquidation cost per claim. 29.1.3. Unexpired risk reserve The Reserve for unexpired risks as at 31.12.2021 amounting to BGN nil (2020: BGN 6 thousand) is formed when the expectations for the risk and expense of the current policies at the end of the reporting period exceed the amount of the assigned premium reserve. For the insurance under Section II, letter "A", item 10.1 of Annex № 1 to the Insurance Code - "Civil Liability" of motorists, when the amount of expected final loss and operating costs by class of insurance for the respective subscription year exceeds the earned premium, The Group sets aside a reserve for unexpired risks equal to the difference between the expected final loss and operating expenses, on the one hand, and the allocated unearned premium reserve, on the other. As of 31 December 2021, the result of Motor Third Party Liability Insurance, according to the methodology described above, is positive, given that the Group has not set aside a reserve for unexpired insurance risks. For other insurances, other than those under Section II, letter "A", item 10.1 of Annex № 1 to the Insurance Code, the Group forms a reserve for unexpired risks or as a difference between the forecast of expected final loss for claims and the costs of the last signatory. year and the calculated unearned premium reserve or according to Annex №7 of Ordinance №53, when for the last three years, including the current one, the gross technical result under Annex № 6 of Ordinance №53 is negative. 29.1.4. Reserve for bonuses and discounts A Reserve for bonuses and discounts at the amount of BGN 1 288 thousand as of 31 December 2021 (2020: BGN 1,363 thousand) is formed for all contracts for which a refund of a premium is provided in case of a positive result after their expiration or a final settlement of the premium has been agreed on the basis of the realized risks during the term of the insurance. The value of the reserve is determined separately for each policy with a clause for participation in the result, and for all insurances in force at the time of calculation of the reserve, the earned premium is multiplied by an average premium return coefficient calculated on the basis of historical data. As of 31.12.2021 a coefficient of 10% has been applied. For all expired contracts, the specific amount to be reimbursed is calculated or, when sufficient data are not available, the above approach is applied. 29.1.5. Reserve fund As of the end of the previous 2020 and as of 31.12.2021 the Group has not formed a reserve fund for the general insurance activity. 29.2. Life insurance reserves 2021 2020 BGN’000 BGN’000 Mathematical reserve 314 593 Premium reserve carried forward 921 829 Reserve for outstanding payments 422 344 Unexpired risk 223 - 1 880 1 766 The insurance reserves of the Group's 2021 life insurance business are formed in compliance with the requirements of Ordinance No. 53 of 23.12.2016 on the requirements for accountability, valuation of assets and liabilities and formation of the technical reserves of insurers, reinsurers and the Guarantee Fund. As of 31.12.2021 these data are aligned with accounting data. Chimimport AD Consolidated financial statements 31 December 2021 73 For the Premium reserve carried forward, data from the current policies issued by the Company and recognized as premium income for the period from the beginning of the activity until 2021 have been used. As of 31.12.2021 these data have been reconciled with the accounting data. For the reserve for outstanding payments (pending payments) are used data on the received and unpaid claims under policies as of 31.12.2021 from the register of damages in the Company, provided by the Insurance Payments Directorate. Data on the claims filed in court were presented by the Chief Legal Adviser of the Company, including amounts for court costs and interest on the cases. Chain-column statistical methods have been used as a reserve for claims arising but not filed. For the mathematical reserve, a prospective method was used with regard to the group and individual savings policies "Life" in force as of 31.12.2021. An additional reserve for unexpired risk is set aside for Sickness Insurance and Supplementary Insurance. A stock fund is not formed because there has been no significant deviation in the amount of net allowances in the previous years. A reserve for bonuses and rebates is not set as, under the terms of the insurance contracts and the internal rules of the Group, bonuses and rebates are made only in the case of the policy renewal by the insured person and the calculation of the levy on the expired policy. Given that as of 31.12.2021 a full inspection was made, during which all data used for the calculation of the different types of reserves were checked, we believe that the allocated reserves are adequate and correspond to the actual state of the portfolio of ZEAD CCB LIFE ”EAD. The following methods for calculating the reserves are used: The unearned premium reserve is allocated by the method of the exact date (according to Art. 84 para. 2 of Ordinance № 53). The amount of the reserve amounts to BGN 921 thousand. The reserve for outstanding payments is formed in compliance with the requirements of Ordinance № 53. It includes the amounts for filed and unpaid claims, incurred and unclaimed claims (IBNR) and a reserve for costs for settling claims For the RBNS reserve, the "Claim by Claim" method is used, according to Art. 90 para 1 of Ordinance No. 53. In addition, according to Art. 90 para. 2 of claims on insurance contracts brought before a court for which the Group is informed and on which there is no ruling of the Court are included in the reserve for pending payments at the cost of the claims together with the interest due and the known costs of the cases. Given the small number of legal claims - 5, the coefficient under paragraph 12 of Art. 90 was not administered. The total reserve for claimed and outstanding claims is BGN 422 thousand, the main amount being due to additional insurance. With respect to the reserve currency, all policies in effect as at 31.12.2021 are in EUR or BGN, so BGN assets are used to cover the gross amount of the insurance reserves. 30. Liabilities to insurance and reinsurance contracts 2021 2020 BGN’000 BGN’000 Liabilities to brokers and agents 11 856 11 559 Estimates under reinsurance contracts 14 111 8 820 Settlements with the Guarantee Fund 19 768 25 986 21 147 Chimimport AD Consolidated financial statements 31 December 2021 74 31. Lease liabilities Lease liabilities are presented in the statement of financial position as follows: 2021 2020 BGN’000 BGN’000 Lease liabilities – non-current portion 237 295 199 228 Lease liabilities – current portion 43 684 50 212 Lease liabilities 280 979 249 440 Detailed information on the Group’s right of use assets is presented in note 9. With the exception of short-term leases and leases of low-value assets, each lease is recognized in the consolidated statement of financial position as an asset with a right of use and a lease liability. Variable lease payments that are independent of an index or variable interest rate (for example, lease payments based on a percentage of the Group's sales) are excluded from the initial measurement of the lease liability and asset. Each lease generally imposes a restriction that, unless there is a contractual right for the Group to sublet the asset to another party, the right-of-use asset can only be used by the Group. Leases are either non- cancellable or may only be cancelled by incurring a substantive termination fee. Some leases contain an option to purchase the underlying leased asset outright at the end of the lease, or to extend the lease for a further term. The Group is prohibited from selling or pledging the underlying leased assets as security. For leases over office buildings and factory premises the Group must keep those properties in a good state of repair and return the properties in their original condition at the end of the lease. Further, the Group must insure items of property, plant and equipment and incur maintenance fees on such items in accordance with the lease contracts. Future minimum lease payments at 31 December 2021 were as follows: Minimum lease payments due 2020 2021 2022 2023 2024 >2024 Within 1 year 1-2 years 2-3 years 3-4 years 4-5 years After 5 years Total BGN’000 BGN’000 BGN’000 BGN’000 BGN’000 BGN’000 BGN’000 31 December 2021 Lease payments 54 132 41 979 31 233 30 739 74 803 98 043 330 929 Finance charges (10 448) (8 563) (7 187) (5 958) (4 785) (13 009) (49 950) Net present values 43 684 33 416 24 046 24 781 70 018 85 034 280 979 Future minimum lease payments at 31 December 2020 were as follows: Minimum lease payments due 2020 2021 2022 2023 2024 >2024 Within 1 year 1-2 years 2-3 years 3-4 years 4-5 years After 5 years Total BGN’000 BGN’000 BGN’000 BGN’000 BGN’000 BGN’000 BGN’000 31 December 2020 Lease payments 59 565 55 237 40 155 29 935 28 015 78 871 291 778 Finance charges (9 353) (8 959) (6 636) (5 154) (3 988) (8 248) (42 338) Net present values 50 212 46 278 33 519 24 781 24 027 70 623 249 440 Leases payments not recognized as a lease liability are recognized in profit or loss for the period and presented in note 41 Operating and administrative expenses. As at 31 December 2021 the Group is committed to short-term leases and the total commitment at that date is BGN 1 017 thousand (2020: BGN 1 397 thousand). The maturity structure is as follows: Chimimport AD Consolidated financial statements 31 December 2021 75 Minimum lease payments due Within 1 year 1-2 years 2-3 years 3-4 years 4-5 years After 5 years Total BGN’000 BGN’000 BGN’000 BGN’000 BGN’000 BGN’000 BGN’000 31 December 2021 Lease payments for contracts without recognized right-of-use asset 712 135 57 22 17 74 1 017 31 December 2020 Lease payments for contracts without recognized right-of-use asset 927 201 93 45 29 102 1 397 32. Tax liabilities Tax payables include the following: 2021 2020 BGN’000 BGN’000 Corporate income tax 766 1 574 VAT payables 1 571 1 228 Tax insurance premium 1 927 859 Property tax 574 283 Excise duty 102 208 Other taxes 1 574 1 241 6 514 5 393 33. Other liabilities Other payables can be summarized as follows: Current Non-current 2021 2020 2021 2020 BGN’000 BGN’000 BGN’000 BGN’000 Other payables 33.2 35 353 50 941 33.1 4 682 6 165 33.1. Other non-current payables 2021 2020 BGN’000 BGN’000 Financing for purchase of intangible assets 276 712 Trans-European Transport Network financing 17 18 Provisions 1 389 1 679 Other 3 000 3 756 4 682 6 165 The Group participates in the Operational Program "Development of the Competitiveness of the Bulgarian economy BG161P003-1.1.04 Support for commercialization of innovative products, processes and provision of innovative services". The program includes the purchase of: Three-layer line for inflating foil Flow technology line of installation tapes looms and apparel fabric products As at 31 December 2021 the Group is a beneficiary under the Resolution for granting financial aid, dated 10 June 2009, by the Commission of the European Community for projects of common interest Chimimport AD Consolidated financial statements 31 December 2021 76 “Studies related to the port expansion project for Lesport as part of Port Varna regarding implementation of European standards in Bulgaria” 2008-BG-90300-S in the field of the trans-European transport networks (INEA). 33.2. Other current payables 2021 2020 BGN’000 BGN’000 Airfare tickets sold 15 577 18 662 Advances from customers 5 498 10 421 Guarantees 1 832 5 198 Penalties 1 404 1 114 Other 11 042 15 546 35 353 50 941 Liabilities for airfare tickets sold amounting to BGN 15 577 thousand (2020: BGN 18 662 thousand) represent the tickets sales, which as at the date of the financial statements have not factually occurred i.e. conducting the carriage. 34. Revenue from non-financial activities The non-financial income of the Group can be analyzed as follows: 2021 2020 BGN’000 BGN’000 Income from sale of plane tickets 117 152 106 595 Income from services rendered 50 587 52 154 Income from sale of finished goods 43 022 38 907 Income from sale of trading goods 23 257 17 158 Other 115 044 75 825 349 062 290 639 35. Gain on sale of non-current assets 2021 2020 BGN’000 BGN’000 Proceeds from sale of non-current assets 912 6 854 Carrying amount of non-current assets sold (854) (4 056) 58 2 798 36. Insurance income 2021 2020 BGN’000 BGN’000 Insurance premium income 36.1 212 615 202 014 Income from reinsurance operations 134 546 147 899 Regression income 11 790 11 987 Income from release of insurance reserves 23 126 4 741 Other insurance income 3 895 4 804 385 972 371 445 36.1. Insurance premium income 2021 2021 2020 2020 BGN’000 % BGN’000 % Casco 130 173 61.22% 121 682 60.23% Motor third party liability 42 057 19.78% 39 868 19.74% Fire and natural disasters 18 014 8.47% 18 698 9.26% Travel Assistance 1 138 0.54% 2 049 1.01% Chimimport AD Consolidated financial statements 31 December 2021 77 2021 2021 2020 2020 BGN’000 % BGN’000 % Accidents 3 419 1.61% 3 271 1.62% General third-party liability 2 511 1.18% 2 713 1.34% Other financial losses 6 324 2.97% 4 485 2.22% Additional insurance 2 169 1.02% 2 197 1.09% Casco of aircrafts 3 207 1.51% 3 472 1.72% TPL related to aircraft 524 0.25% 639 0.32% Freight transport 1 253 0.59% 1 403 0.69% Casco of vessels 780 0.37% 760 0.38% Loans and leases 631 0.30% 444 0.22% Health services/ de 146 0.07% 151 0.07% Life and annuity 201 0.09% 136 0.07% TPL related to vessels 35 0.02% 34 0.02% Property damage 13 0.00% 10 0.00% Insurance guarantees 20 0.01% 2 0.00% 212 615 100.00% 202 014 100.00% 37. Insurance expense 2021 2020 BGN’000 BGN’000 Reinsurance costs (166 464) (170 114) Indemnities paid 37.1 (93 832) (94 719) Acquisition costs (47 777) (45 116) Expenses for liquidation of damages (2 562) (5 351) Other insurance costs (9 224) (10 429) (319 859) (325 729) 37.1. Indemnities paid In 2021 and 2020, the following insurance benefits were paid: 2021 2021 2020 2020 Indemnities paid Share Indemnities paid Share BGN’000 % BGN‘000 % Casco (60 726) 64.71% (61 986) 65.43% Motor third party liability (25 932) 27.64% (24 252) 25.60% Property damage - 0.00% (8) 0.01% Travel assistance (452) 0.48% (1 554) 1.64% Accident (862) 0.92% (1 615) 1.71% Casco of aircrafts (93) 0.10% - 0.00% Casco of vessels (267) 0.28% (163) 0.17% Health services (169) 0.18% (70) 0.07% Additional insurance (302) 0.32% (126) 0.13% Life insurance (170) 0.18% (71) 0.07% General Third-Party liability (440) 0.47% (433) 0.46% Freight transport (73) 0.08% (36) 0.04% Fire and natural disaster (4 322) 4.61% (4 399) 4.66% Aircrafts Third Party liabilities (8) 0.01% - 0.00% Vessels Third Party liabilities (16) 0.02% (6) 0.01% (93 832) 100.00% (94 719) 100.00% Chimimport AD Consolidated financial statements 31 December 2021 78 38. Interest income 2021 2020 BGN’000 BGN’000 Interest income by types of sources: Legal entities 97 554 79 569 Government securities 15 436 44 691 Banks 2 123 2 870 Individuals 51 291 50 094 Other 2 685 2 147 169 089 179 371 39. Interest expense 2021 2020 BGN’000 BGN’000 Interest expense due to depositors: Legal entities (18 225) (14 758) Individuals (4 527) (6 157) Banks (6 363) (6 605) Other (8 827) (9 726) (37 942) (37 246) 40. Net result from transactions with financial instruments 2021 2020 BGN’000 BGN’000 Gains from transactions with securities and investments 699 199 698 267 Dividend income 13 138 18 914 712 337 717 181 Losses from transactions with securities and investments (631 581) (649 248) (631 581) (649 248) Result from transactions with financial instruments, net 80 756 67 933 41. Operating and administrative expense Note 2021 2020 BGN’000 BGN’000 Hired services expense (123 642) (115 829) Cost of materials (64 608) (54 301) Cost of goods sold (29 439) (19 119) Employee benefits expense 28.1 (117 545) (120 289) Depreciation expense 8,9,11,12 (122 907) (111 054) Change in inventories and work in progress (1 265) 1 130 Impairment of receivables and non-financial assets (51 959) (54 861) Other expenses (52 641) (44 566) (564 006) (518 889) Remuneration for engagements for independent financial audit of the companies in the Group for 2021, performed by registered auditors, amounts to BGN 2 621 thousand. During the year, consultations or other services not related to the audit performed by registered auditors were provided, for which remunerations in the amount of BGN 318 thousand have been accrued. This disclosure is in compliance with the requirements of Art. 30 of the Accounting Act. Chimimport AD Consolidated financial statements 31 December 2021 79 42. Other financial income 2021 2020 BGN’000 BGN’000 Revenue from fees and commissions, net 42.1, 42.2 72 453 65 827 Net result from foreign exchange differences 3 931 (22 986) Other finance expenses 3 287 1 551 79 671 44 392 42.1. Revenue from fees and commissions 2021 2020 BGN‘000 BGN‘000 Bank transfers in Bulgaria and abroad 31 244 27 522 Maintenance fee on deposit accounts 17 879 17 438 Servicing fee for loans 6 434 4 431 Fee for commitments and contingencies 896 995 Other fees and commissions income, different from banks 18 604 16 664 Other income 15 855 13 455 Revenue from fees and commissions 90 912 80 505 42.2. Expenses from fees and commissions 2021 2020 BGN‘000 BGN‘000 Bank transfers in Bulgaria and abroad (12 120) (9 909) Account maintenance fees (1 213) (1 114) Release of precious parcels (1 556) (882) Transactions with securities (205) (202) Other fees and commissions expenses, different from banks (1 484) (1 226) Other expenses (1 881) (1 345) Total fees and commissions expenses (18 459) (14 678) 43. Income tax expense The relationship between the expected tax expense based on the applicable tax rate of 10 % (2020: 10%) and the reported tax expense in profit or loss can be reconciled as follows: 2021 2020 BGN’000 BGN’000 Profit before tax 51 077 43 088 Tax rate 10% 10% Expected tax expense (5 108) (4 309) Net effect of adjustments of the financial result for tax purpose 1 318 610 Current tax expense (3 790) (3 699) Deferred tax income/(expense), resulting from: - origination and reversal of temporary differences (2 108) 174 Tax expense (5 898) (3 525) Deferred tax (expense)/ income recognized in other comprehensive income (878) (9 170) Chimimport AD Consolidated financial statements 31 December 2021 80 Note 0 presents additional information on the deferred tax assets and liabilities, including the amounts recognized in other comprehensive income. 44. Earnings per share Earnings per share have been calculated using the profit attributed to shareholders of the parent company as the numerator. The weighted average number of outstanding shares used for basic earnings per share as well as the net profit, less the dividend expense, attributable to shareholders, is as follows: 31 December 2021 31 December 2020 Profit attributable to the shareholders of the Group (BGN) 35 293 000 32 003 000 Weighted average number of outstanding shares 239 646 267 239 646 267 Earnings per share (BGN per share) 0.15 0.13 45. Related party transactions The Group’s related parties include its owners, associates and key management personnel. Unless otherwise stated, none of the transactions incorporate special terms and conditions. Outstanding balances are usually settled by bank transfers, in cash or set off. 45.1. Transactions with owners 2021 2020 BGN ‘000 BGN ‘000 Sale of goods and services, interest income and other income - interest income 172 221 - sale of services 10 10 - other income 2 2 Purchase of services, interest expense and other expenses - purchase of services (30) (327) - interest expense (256) (289) 45.2. Transactions with associates and other related parties Sale of goods and services, interest income and other income 2021 2020 BGN ‘000 BGN ‘000 Sale of production - associated companies 1 025 555 - other related parties 228 1 764 Sale of finished goods - associated companies 279 293 - other related parties 462 268 Sale of services - joint ventures 74 10 - associated companies 11 007 11 409 - other related parties 2 287 507 Interest income - joint ventures 225 218 - associated companies 14 22 - other related parties 1 251 1 883 Other income - joint ventures 38 25 Chimimport AD Consolidated financial statements 31 December 2021 81 Sale of goods and services, interest income and other income 2021 2020 BGN ‘000 BGN ‘000 - associated companies 1 189 122 - other related parties 159 380 Purchases of services and interest expense 2021 2020 BGN ‘000 BGN ‘000 Purchases of services - joint ventures - (5) - associated companies (10 072) (9 834) - other related parties (4 971) (4 235) Interest expense - associated companies (144) (35) - other related parties - (5) 45.3. Transactions with key management personnel Key management of Chimimport AD includes members of the Managing Board and Supervisory Board of the parent company. Key management personnel remuneration includes the following expenses: 2021 2020 BGN’000 BGN’000 Short-term employee benefits: Salaries, including bonuses (168) (1 779) Social security costs (16) (24) Total short-term benefits (184) (1 803) 46. Related party balances at year-end 2021 2020 BGN’000 BGN’000 Non-current receivables from: - associates 3 507 3 450 - other related parties 86 302 49 296 Total non-current receivables from related parties 89 809 52 746 Current receivables from: 2021 2020 BGN’000 BGN’000 - owners 30 389 21 820 - associates 1 222 961 - joint ventures 6 493 1 264 - other related parties 37 646 95 677 Total current receivables from related parties 75 750 119 722 Non-current payable to: 2021 2020 BGN’000 BGN’000 - owners 8 12 - associates 7 225 5 010 - joint ventures 947 236 - other related parties 6 214 11 771 Total non-current payables from related parties 14 394 17 029 Chimimport AD Consolidated financial statements 31 December 2021 82 Current payables to: 2021 2020 BGN’000 BGN’000 - owners 25 012 22 153 - associates 6 682 6 099 - joint ventures 584 295 - other related parties 16 644 15 941 Total current payables from related parties 48 922 44 488 47. Contingent assets, contingent liabilities and other commitments As at 31 December 2021 and 2020 the Group as entered into granting bank loans to customers which future utilization depends on whether the lessees fulfil certain requirements, including no overdue loans, granting collateral with certain quality and liquidity, etc. The contingent liabilities related to the bank activity of the Group are as follows: As of 31 December 2021, in accordance with the requirements of IFRS 9 the Group has accrued BGN 714 thousand (2020: BGN 1 004 thousand) future expected credit losses on Groups contingent liabilities The Groups non-banking contingent liabilities are as follows: The Group is a joint debtor under the following bank loan agreements: o Loan agreements between commercial bank and a Company dated 09 August 2019 with a present value of the liability of BGN 15 647 thousand and maturity on 30 November 2027. Pledge of all receivables under leasing contracts; pledge of cash receivables on all accounts. o Credit agreements between commercial bank and a Company dated 01 September 2021 with a present value of the liability of BGN 14 395 thousand and maturity on 01 March 2023; The fair value of the assets / receivables / property pledged as collateral, owned by the borrower, amounts to BGN 17 994 thousand. o Credit agreements between a commercial bank and a Company dated 02 August 2016 with a present value of the liability of BGN 21 630 thousand and maturity on 2 November 2029. The fair value of the collateral owned by the borrower amounts to BGN 31 927 thousand. o Loan agreement with a commercial bank, the Group has established first special pledge on agricultural products on receivables arising from contracts, orders and invoices for the sale of agricultural products and on all receivables on all accounts of the Group in the Bank. o On 13 December 2021, a commercial bank has established new bank guarantee under concession agreement for oil production with №116DSK16000 amounting to BGN 290 000,00 and represent the value of the entire concession fee paid under a concession contract for Dolni Lukovit deposit for 2021 with VAT. The term of validity of the guarantee is until 28 February 2023. o On 26 June 2020 DSK Bank EAD issued a bank guarantee with №116DSK13926 amounting to BGN 100 000, securing the obligations of the company related to its registration under the Law on Administrative Regulation of Economic Activities Related to Oil and Petroleum Products origin. The term of validity of the guarantee is until 24 June 2022. o Because of a bank loan agreement, the Commercial Bank of the Group establishes the first special pledge on part of its opened accounts in the bank. o The Group has a guarantee issued by the Commercial Bank amounting to BGN 2 600 000 in favor of the Customs Agency with a valid until 5 April 2023. 2021 2020 BGN’000 BGN’000 Bank guarantees Bank guarantees in BGN 34 032 34 409 Bank guarantees in foreign currency 18 614 20 378 Impairment loss 244 126 250 952 Total contingent liabilities, net 296 772 305 739 Chimimport AD Consolidated financial statements 31 December 2021 83 The Group is a party to commercial cases in the Sofia City court in connection with commercial contracts from 2014 in the total amount of 24 931 thousand EUR. Based on the factual and legal situation, the Group’s legal advisers expect the cases to be resolved favorably for the Group. The Group is a party to a bank guarantee issued by a commercial bank in the amount of BGN 100 thousand, EUR 85 thousand, as well as a letter of credit in the amount of USD 999 thousand. The bank guarantee was issued in connection with securing the Group’s trade liabilities. Port Concessions: According to the concession agreement for a port for public transport of regional importance “Pritis” – public municipal property, which entered into force on 1 April 2019 for a period of 35 years. The Group has obligations to: o make annual concession payments, consisting of two parts - a fixed part in the amount of BGN 48 900 and a variable part depending on the performed activity; o manages and maintains the concession site at its own risk, in accordance with good engineering and operational practice, with the care of a good owner and in accordance with the requirements of applicable law governing activities and actions arising from the concession contract; o maintains the port in operational condition and the port infrastructure in good operational condition by conducting the necessary repairs at its own expense; o provides port services at its own risk, ensuring their continuity for at least 8 hours a day; o makes investments in accordance with the envisaged annual investment programs; o realizes the annual cargo turnover, defined in conditional transport units as a conditional transport unit is each passenger served at the port and / or ship visit multiplied by 10. Pursuant to the contract for granting a concession for a port for public transport of regional importance "Pristis" - public municipal property, the Group should maintain bank guarantee for good performance of the concession contract, amounting to BGN 100 thousand and validity until 1 March 2028. An agreement signed between the Group and the Ministry of Transport, Information Technology and Communications on a service concession on the Vidin-North Port Terminal and the Vidin Ferry Complex Port Terminal, parts of a public port, enters into force on 20 October 2010. transport of national importance Vidin. The contract is for a period of 30 years. On 24 February 2021, an Additional Agreement was signed extending the term to 40 years. o The concession fee includes: one-time concession fee of BGN 100 thousand, annual concession fees, which contain a fixed and a variable part. o The amount of the fixed annual concession fee amounts to EUR 44 thousand (BGN 87 thousand). In accordance with the concession contract the Group is obligated to: o to operate and maintain the object of concession at its own risk; o to update the master plan of the port of Vidin regarding port terminals - Object of the concession o to make investments in accordance with the annual investment programs; o to develop and submit for approval by the grantor annual investment programs by October 30 of the previous year o to agree in advance and obtain approval from the Minister of Transport, information technology and communications for improvements at the site of concessions that are not provided for in the respective annual investment program o -does not change the purpose of the object of the concession; o presents and maintains bank guarantees The concession contract shall be terminated upon expiration of the term of the contract, by mutual consent, due to circumstances under the Concessions Act or in case of culpable non-fulfillment of the obligations of one of the parties. In accordance with the concession contract of Port Lom Port - part of a port for public transport Lom, the Group should maintain bank guarantees in the established amount:  a bank guarantee for execution of an Investment Program for the seventh contract investment year amounting to BGN 103 thousand with a term of validity as of 31.10.2021; Chimimport AD Consolidated financial statements 31 December 2021 84  a bank guarantee for the good performance of the obligations under the Concession Contract, amounting to BGN 455 thousand with a term of validity as of 27.09.2022. According to the Concession Agreement for the Port Terminal Balchik, the Group has undertaken obligations to operate, maintain and make investments for the development of the terminal; to implement Annual Investment Programs, to maintain a certain average annual turnover, to maintain bank performance guarantees for the term of the contract and to apply a certain social program to the staff. The Concessionaire undertakes to provide and maintain for each consecutive year of the validity of the Concession Agreement confirmed, unconditional, irrevocable bank guarantees for the term of the Concession, as follows:  Guarantee of EUR 220 thousand (BGN 430 thousand) for guaranteeing the implementation of the concession contract, including the obligations for payment of the concession fee, for cargo turnover, for payment of interest and penalties and others specified in the concession contract; On 18 March 2021, a contract was issued for the issuance of a bank guarantee amounting to EUR 220 thousand with a validity until 1 August 2022. The bank guarantee contract was concluded to ensure the fulfilment of the Group's obligations under the Concession Agreement. According to the Concession Agreement concerning the port of Lesport, the Group has undertaken obligations to operate, maintain and make investments for the development of the terminal; to implement Annual Investment Programs, to maintain a certain average annual turnover, to maintain bank performance guarantees for the term of the contract and to apply a certain social program to the staff. The Concessionaire undertakes to provide and maintain for each consecutive year of the validity of the Concession Agreement confirmed, unconditional, irrevocable bank guarantees for the term of the Concession, as follows:  Guarantee for implementation of the Investment Program in the amount of 15 percent of the value of the planned investments for the respective year; Guarantee in the amount of EUR 256 thousand (BGN 501 thousand) for the performance of the contract, including the performance of the contract, including the obligation to pay concession fees, cargo turnover, the obligation to pay interest and penalties specified in the contract. Concessions for oil and gas production The main activity of the Group's subsidiary Oil and Gas Exploration and Production AD is conducted on the basis of concession rights granted by the state and 13 concession agreements concluded as follows: Concession agreement for extraction of crude oil from the field "Bardarski Geran", Concession agreement for extraction of crude oil from the field "Gorni Dabnik", Concession agreement for extraction of crude oil and natural gas from the field "Dolni Dabnik", Concession agreement for extraction of Crude oil and natural gas from the Dolni Lukovit field, Concession agreement for extraction of crude oil from the Dolni Lukovit field - West, Concession agreement for extraction of crude oil and natural gas from the Selanovtsi field, Concession agreement for extraction of crude oil from the Staroseltsi field, Concession agreement for extraction of crude oil from the Tyulenovo field, Concession agreement for extraction of crude oil from natural fields Bulgarevo field, Concession agreement for extraction of crude oil and natural gas from the Marinov Geran field and Concession agreement for extraction of crude oil and natural gas from the Bhutan-South field, Concession agreement for extraction of natural gas from the field Durankulak ”and Concession Agreement for extraction of mineral resources - oil and natural gas - natural gas and condensate from the Iskar West field. In order to ensure the fulfilment of its obligations for the final leaving of the concession areas, according to the concession agreements, the Group annually allocates amounts representing annual contributions to the “Leaving Fund”. Chimimport AD Consolidated financial statements 31 December 2021 85 Future payments in related to the contributions to the Leaving Fund as at 31 December are as follows: Up to 1 year From 1 to 5 years Over 5 years Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 2021 10 40 102 152 2020 23 43 109 175 As of 31 December 2021, the Group has concluded a Framework Agreement for issuing bank guarantees with a commercial bank in the total amount of BGN 1 600 thousand, valid until 28 January 2023. pledged non-current assets of the Group. In the normal course of business for the Group, litigation and claims could arise. According to the Group's management, the costs necessary to resolve these disputes and claims will not have a material impact on the financial position and cash flows in future financial periods, as most of them are considered to be provisional when setting aside technical provisions. 48. Reconciliation of liabilities arising from financing activities The changes in the Group’s long term liabilities arising from financing activities can be classified as follows: Debenture loan Bank loans Other loans Total BGN‘000 BGN‘000 BGN‘000 BGN‘000 1 January 2021 37 451 127 069 6 161 170 681 Cash flows: - Repayment - (30 177) (206) (30 383) Proceeds 35 000 11 272 9 420 55 692 Interest paid (420) (3 054) (1 334) (4 808) Non-cash: - Interest accrued 420 3 054 1 334 4 808 Reclassification (3 001) (36 435) 10 606 (28 830) 31 December 2021 69 450 71 729 25 981 167 160 Debenture loan Bank loans Other loans Total BGN‘000 BGN‘000 BGN‘000 BGN‘000 1 January 2020 40 004 108 417 14 090 162 511 Cash flows: - Repayment - (13 562) (7 970) (21 532) Proceeds - 18 652 4 200 22 852 Interest paid (540) (1 495) (6 086) (8 121) Non-cash: - Reclassification (2 013) 15 057 1 927 14 971 31 December 2020 37 451 127 069 6 161 170 681 49. Non-monetary transactions During the reporting periods presented, the Group has made the following transactions in which no cash or cash equivalents have been used and which are not reflected in the consolidated statement of cash flows from financing activities: - The Group has offset receivables and payables totaling BGN 875 thousand (2020: BGN 2 483 thousand). - In connection with the requirements of IFRS 16 Leasing in 2021, the Group has recognized assets with the right to use a total value of BGN 704 thousand. - The Group has acquired tangible fixed assets in the amount of BGN 249 thousand against proceeds from the sale of tangible fixed assets in the same amount. Chimimport AD Consolidated financial statements 31 December 2021 86 50. Categories of financial assets and liabilities The carrying amount of the Group’s financial assets and liabilities, can be presented in the following categories: Financial assets Note 2021 2020 BGN‘000 BGN‘000 Financial assets at fair value through profit or loss: 15 - Corporate shares, stocks and rights 1 258 422 1 162 656 - Bulgarian corporate bonds 213 113 232 178 - Medium-term Bulgarian government securities 55 258 53 222 - Long-term Bulgarian government securities 30 104 27 381 - Securities issued or guaranteed in other countries 486 003 547 016 - Derivatives held for trading 70 4 788 Equity instruments at fair value through other comprehensive income: 17 - Quoted equity instruments 24 605 25 327 - Unquoted equity instruments 45 821 58 439 Debt instruments measured at fair value through other comprehensive income: 16 - Bonds 413 303 210 804 - Government Securities 446 138 506 791 Debt instruments at amortized cost: - Loans 14, 18.1 3 182 882 2 847 350 - Cession receivables 18.1 60 677 41 244 - Receivables under repurchase agreements 18.2 399 895 394 693 - Debt instruments at amortized cost 18.3 687 184 464 877 - Receivables from related parties 46 165 559 172 468 - Trade receivables 18.4 116 962 115 382 - Others 18 22 092 21 967 Less: Impairment 18 (28 163) (20 381) - Cash and cash equivalents 23 2 380 922 2 221 632 9 960 847 9 087 834 Financial liabilities Note 2021 2020 BGN‘000 BGN‘000 Financial liabilities measured at amortized cost: Liabilities to depositors 25 6 917 880 6 168 872 Borrowings 26.2, 26.3, 26.4 250 545 246 235 Bank deposits 26.5 41 146 66 092 Cession payables 26 43 014 53 926 Obligations under repo agreements 26.6 13 960 15 449 Lease obligations 31 280 979 249 440 Trade and other payables 26.7 110 004 98 375 Related party payables 46 63 316 61 517 7 720 844 6 959 906 Derivatives designated as hedging instruments in cash flow (at fair value): Derivatives 26.1 118 86 7 720 962 6 959 992 Chimimport AD Consolidated financial statements 31 December 2021 87 See note 4.19 for information on accounting policy for each category of financial instruments. The methods used to measure fair values are described in note 52. A description of Group's policy and objectives for risk management is presented in note 51. 51. Financial instruments risks Risk management objectives and policies Due to the use of financial instruments and as a result of its operating and investment activities, the Group is exposed to various risks – insurance risks, market risk, foreign currency risk, interest risk, as well as price risk. The Group’s risk management is coordinated by the Managing board and focuses on actively securing the Company's short to medium-term cash flows by minimizing the exposure to risks. Long-term financial investments are managed to generate lasting returns. The Group is exposed to different types of risk with regards to its financial instruments. For further information regarding the categories of financial assets and liabilities see note 50. The most significant financial risks to which the Group is exposed to are described below. 51.1. Insurance risk Insurance risk is the risk of occurrence of insured events as a result of the portfolio of insurance contracts in which the amount of damages and the benefits to be paid exceeds the amount of the insurance reserves. This depends on the frequency with which the insurance events occur, the type of insurance portfolio, the amount of the insurance benefits. To mitigate this risk, the variety of insurance portfolio and probability theory are of great importance. The Group strives to make a relatively even distribution of insurance contracts and to analyze the different types of insurance risks, which is reflected in the general conditions. Through various assessment and control methods, the Head of Internal Control performs regular risk assessment and monitors the accumulation of insurance sums by group of clients and regions. The risk management is conducted by the Internal Control Directorate in cooperation with the actuaries and the management of the Group. The main factors on which the positive financial result of the Group depends are the loss rate, the cost quota and the investment income. Insurance risk - the technical risk is the risk of occurrence of an insured event, in which the amount of the insurance indemnity exceeds the expectations for risk manifestation, expressed in the amount of the formed insurance reserves, i.e., insurance technical risk exists when the total loss for a certain period of time is greater than the calculated premium and the reserves reserved. The insurance - technical risk is influenced by the frequency and weight of the claims. Every insurance company is seeking to ensure that the coverage of its commitments have allocated sufficient amount insurance technical reserves. The Group manages and balances the insurance risks incurred both within the insurance group and outside it. Within the insurance group, this is achieved by balancing the risks assumed in time, in essence, by location, in risk groups and by increasing the number of insured entities, i.e., through the manifestation of the Law of Big Numbers. The Group conducts a systematic analysis of the risks assumed, their time and territorial diversification, offers new insurance products and strives to incorporate permanently new units into the insurance population with a well anticipated risk exposure. Outside the insurance group, the Group equates the risk by using reinsurance contracts. According to the specifics of the specific insurance products, the choice of the reinsurance contract and the relevant limits of self-retention is determined. The management of insurance risk is also reflected in the application of constraints in signing procedures - Limits of liability, exclusion of risks to which it can be influenced, use of appropriate methods to assess the necessary bonuses and future obligations, implementation of reinsurance program and monitoring of the insurance business. Regardless of the reinsurance protection, the Group is not relieved of its direct liability to the insured against the risks transferred, resulting in credit risk to the extent that the reinsurers of the relevant reinsurance contract are unable to meet their financial obligations under the reinsurance contract. To minimize the exposure to this credit risk, the Group maintains a register of available quantitative indicators of the financial position of its counterparties. Chimimport AD Consolidated financial statements 31 December 2021 88 The Group offers over 70 types of insurance products, thus striving to achieve a diversified and balanced, aggregated insurance portfolio. Ten of the products offered cover risks in Car Insurance; 18 cover risks in Property Insurance; 40 - In liability insurance, Accident and Travel assistance; 10 are the Insurance of Insurance and Financial Risks Insurance and a number of other insurances in different fields of the non-life insurance. The term of the concluded contracts in the aggregated insurance portfolio is mainly one year, but there are also contracts in it that are shorter or longer than one year. The car insurance covers mainly risk related to road accidents, natural disasters and illegal human activities. The risks are tangible and intangible. The covered risks cover to the fullest extent the insurance coverage needs of owners, users and holders of motor vehicles. The territorial scope of insurance covers the whole of Europe. The property insurance covers mainly risk related to fire, natural disasters, equipment and equipment failure, illegal human activity, etc. For property insurance, valuation and reinsurance protection with regard to catastrophic risks is essential. In assessing these risks, the accent is put on the adequate determination of the sum insured, the prevention performed, the periodic inspection of the insured objects. The provided territorial coverage for them is only for the territory of the Republic of Bulgaria. Under Insurances Responsibilities, besides General Civil Liability, a large number of Professional Responsibilities are covered, which are mostly mandatory under different regulations. The cover of these insurances is granted only for the territory of the Republic of Bulgaria. Accident and Travel Assistance covers risks related to: death, permanent and temporary disability of the insured, as a result of an accident and assisted assistance in health conditions. The coverage provided for the different products in this group is different and ranges from cover only for the Republic of Bulgaria to coverage worldwide. Annually, the range of insurance products offered is analyzed, depending on the results of each product, the Group's risky interest, market needs and other factors, adapting existing products or developing new products to meet specific needs. The latter is done after a thorough analysis of consumer demand and market segmentation. The underlying assumption underlying the valuation of liabilities is that the development of future claims to the Group will follow in broad terms the experience of the development of claims in past years. This includes assumptions about the frequency and weight of each claim, as well as an estimate of the inflation factor for each year of insurance events. In addition, a qualitative and quantitative assessment is made of the degree of deviation that can be expected in applying past trends in the future. The Group recognizes the impact of external factors such as changes in legislation, development of case law, etc. on the amount of insurance liabilities. In order to limit exposure to extreme adverse events, especially with regard to catastrophic events, the relevant reinsurance protection applies. Reinsurance contracts distribute the risk and minimize the effect of significant losses, which guarantees the Group's capitalization. In selecting a reinsurer, the Group takes into account the relative reassurance of the reinsurer, assessed on the basis of the public rating and the studies conducted. Insurance risk is reflected in the settlement process and the allocation of reserves. The table below represents an estimate of the RBNS included in the financial statements based on the claims reported and paid, broken down by the year of occurrence of the damage. The table provides a historical review of the sufficiency of the estimate of the amount of outstanding claims used in past years. Due to the inherent uncertainty in the process of determining the reserves, it cannot be guaranteed with absolute certainty that these reserves will suffice as a final result. Chimimport AD Consolidated financial statements 31 December 2021 89 Year of event 2021 2020 2019 2018 2017 2016 BGN’000 BGN’000 BGN’000 BGN’000 BGN’000 BGN’000 At the end of the period 50 885 48 597 52 242 48 674 52 390 54 258 1 year later - 21 260 25 848 32 826 30 963 30 330 2 years later - - 4 576 5 187 8 066 13 422 3 years later - - - 3 798 4 179 5 838 4 years later - - - - 3 337 2 244 5 years later - - - - - 2 350 Cumulative payments to date 50 885 69 857 82 666 90 485 98 935 108 442 Overall assessment of benefits 95 405 84 428 91 206 95 077 101 127 108 442 As of 31 December: Payments: Evaluation 44 520 14 571 8 540 4 592 2 192 - Real Reserves 40 563 15 569 16 467 16 172 12 948 14 053 Some assumptions are made in the calculation of technical provisions. Assignment is a process related to the calculation of neutral estimates of the most probable or expected outcome of the insured event. The sources of information on which assumptions are made are based on in-depth studies on the Group's experience. Where there is insufficient insider information to produce a reliable assessment of the development of insurance claims, market data obtained from its own research or established by the Financial Supervision Commission is used. With regard to the reserve for claimed but unpaid claims, the expertise of the liquidation experts is essential. They examine the damage in terms of the circumstances of the occurrence and the right to compensation. Based on a historically proven experience of the magnitude of such damage, it is assessed. This evaluation is reviewed regularly, and updates are updated when new information is available. In order to create a reserve for incurred but unreported claims (IBNR), the Group uses chain-based methods both on the basis of accrued values of the paid claims and on the basis of the historical claims. Average and weighted average growth rates were used for development factors, with almost all insurance policies being applied for the period 2011-2021. When there is a major variation in development rates for a certain insurance policy for a given year, these years are not taken into account when calculating the reserve. With sufficient data for recovered sums, the Group calculates a regression reserve that is deducted from the reserve for incurred but unproven damages. Such a reserve is calculated only under Casco insurance because of the significant amount of the recovered sums from this insurance. This reserve has been calculated on the basis of a chain-based method based on the recovered sums for the past 11 years. For Motor Third Party Liability insurance, the unsecured claim reserve is considered separately for both property and non-pecuniary damage. The Group uses a combination of chain-based method based on the accumulated historical values of the claims using the weighted average development coefficients derived from the Group's own data and the chain-based method based on accumulated Values of paid claims using weighted average growth rates derived from the Group's own data in a 50/50 ratio. The method described is the method under Art. 92 para. 11 of Ordinance No. 53, which is used to determine the sufficiency of the insurance reserve. The method has been approved for a method of calculating the insurance reserve as at 31.12.2021 by FSC Resolution No. 125 - CP from 14.02.2022. For insurances in which the Group offers active reinsurance and has statistical data on the development of damages for a sufficiently long period, the reserve for incurred but unproven damages shall be calculated separately for direct business and active reinsurance. In active reinsurance, the claim for damages is significantly delayed over time compared to the development of claims under direct Chimimport AD Consolidated financial statements 31 December 2021 90 business, given that, with sufficient data to apply a statistical method, it is more reasonable to conduct the calculations separately. No provision is made for any incurred but unforeseen damages for Illness Insurance, Rail Vehicles, Credit and Leasing, Warranty Insurance, Miscellaneous Financial loss and Legal Expenses Insurance because, using the chain-based method of calculating the reserve for incurred but unproven damages results as the value 0, and insurance "Illness", "Rail vehicles" and "Legal expenses" not realized premium income. The unearned premium reserve is formed to cover claims and expenses that are expected to arise in the insurance or reinsurance contract at the end of the reporting period. The group formed unearned premium reserve base their accrued insurance premiums. All outstanding policy contributions are accrued over the life of the contract for one-year policies and for multiannual premiums with a lump sum payment. For multiannual policies with an annual contribution, the annual instalment is charged at the time of its maturity. When calculating the value of the unearned premium reserve as of 31 December 2021, the "exact date" method was used. The reserve is calculated automatically by the information system individually for each policy and each annex to it, based on the accrued premium income, accrued acquisition costs, the term of the contract and the coverage period after the end of the reporting period. The unearned premium reserve for Cargo and Carrier's Liability insurance for one-time transport is calculated for the insurance period of one month. For crop insurance, the unearned premium reserve is calculated until the end of the contract, but not later than the end of the agricultural year. Given that the accounting policy does not provide for deferral of acquisition costs, when calculating the reserve from the value of accrued premium is deducted the value of acquisition costs - the value of accrued commissions on the policy and other acquisition costs set in the CRA. The proportion of reinsurers in the premium reserve is calculated in proportion to the premium on each policy for the proportionate contracts and facultative entered into. For the disproportionate reinsurance contracts "excess of loss", "stop loss" and CAT contracts, the share of the reinsurer is not set aside. The adequacy of the obligations is ensured by the periodic assessment of the overall reserves and whether they are sufficient to cover any future payments. When assessing the adequacy of the reserves, account shall be taken of all expected cash flows under insurance contracts, such as benefits payments, compensation costs, etc. The adequacy of the unearned premium reserve and loss reserve is established by relevant tests. Adequacy test of unearned premium reserve shall be under Art. 85 of Ordinance No. 53, and in case of established shortage a reserve for unexpired risks is formed. The latter is set aside for a negative gross technical result, determined in accordance with Annex № 6 of Ordinance № 53 for three consecutive years, as the "Civil Liability" of motorists examines the development of risk and costs for only one - the current year. The test is conducted by type of insurance. The amount of the unexpired risk reserve is determined in accordance with Appendix 7 of the Ordinance. As of 31.12.2021 the test for adequacy of the unearned premium reserve does not show a shortage of premium and the need to form a reserve for unexpired risks. The adequacy test of the pending payment reserve was performed using the run-off method. The impact of the development of insurance indicators on the capital adequacy of the Group is simulated in the sensitivity analysis. For the sensitivity analysis presented below, the indicators of uncollectible receivables from insurance operations and reserve for forthcoming payments were selected. The starting point for the analysis is the equity position of the Group as at the date of the financial statements. Chimimport AD Consolidated financial statements 31 December 2021 91 Equity of insurance sector BGN’000 Deviation BGN’000 Deviation % Equity as of 31.12.2021 99 399 Increase of expected future claims payments by 10 % 111 498 (415) (0.37%) Decrease of expected future claims payments by 10 % 112 328 415 0.37% Increase of reserve for unreported and unreported claims by 5% 104 883 (7 030) (6.28%) Decrease of reserve for unreported and unreported claims by 5% 118 943 7 030 6.28% From reviewed scenarios most impact on the Group's equity is that one with a change in the amount of the reserve for upcoming payments. This scenario reflects the inherent uncertainty in the assessment of the reserve as it concerns a current assessment of the expected future claims payments. This uncertainty is most valid with regard to the reserve for incurred but unproven damages and to insurances characterized by a longer claims settlement process, such as Motor Third Party Liability insurance and other types of liability insurances. 51.1.1. Reinsurance strategy The reinsurance campaign of the Group is aimed at preserving its financial stability and ensuring maximum protection of the interests of insured persons in the event of the occurrence of insurance events that involve the risk of sensitive losses as a result of the occurrence of single insurance events and of catastrophic nature. This objective is achieved by continuously analyzing the structure of the insurance portfolio by ensuring the accumulation of cover risks in amounts not exceeding the financial capacity of the Group. Reinsurance Program: - is a capital management tool aimed at reducing the cost of capital funds in the event of adverse events; - is a measure to protect the Group's capital adequacy from accumulating risks, including those of a catastrophic nature; - covers almost all risks and classes of business recorded by the Group. The types of reinsurance protection and contract limits are fully in line with the Group's risk appetite, the type of portfolio and the signing rules of the Group; - accurately and clearly defines the specific needs for transferring risks as well as the right kind of specific contracts; - determines self-retention rates by business class; - is aimed at constantly optimizing reinsurance contracts in order to alleviate capital pressure through the application of different reinsurance options that can partially or totally achieve optimization of capital adequacy; - reduces fluctuations in case of occurrence of insurance events; - evaluates and equalizes the risks of different types of insurance coverage. The Group reinsures part of its risks in order to control its exposures to losses and to protect its capital resources. All optional reinsurance contracts are pre-approved by the management. Before concluding a reinsurance contract, the Group analyses the credit rating of the reinsurers concerned. High reinsurance reinsurers are selected. The Group periodically analyses the current financial position of reinsurers with which reinsurance commitments have been entered into. The Group enters into reinsurance commitments with various reinsurers with a high credit rating to control the exposure to losses as a result of an insured event. 51.1.2. Damage settlement process The damages table and namely the percentage of the damages quota ensures the opportunity for more precise information about the risk development during the reporting periods: Chimimport AD Consolidated financial statements 31 December 2021 92 Types of insurance 2021 Damages quota, gross 2021 Damages, quota, net 2020 Damages quota, gross 2020 Damages quota, net % % % % Accident insurance 14% 12% 46% 38% Including obligatory accident insurance of the passengers in the public transport -20% -28% 42% 44% Disease 0% 0% 0% 0% Casco 42% 41% 38% 37% Rail vehicles 0% 0% 0% 0% Casco Aircraft -35% -524% -8% 187% Casco vessels 7% -89% 89% 81% Freight transport 3% 4% 8% 6% Fire and natural disasters 31% 68% 26% 24% Industrial fire 31% 136% 34% 27% Fire and other hazards 16% 14% 13% 20% Technical insurances -8% -16% 1% 2% Agricultural insurances 99% 96% 26% 26% Property damage -1% -1% -12% -12% Insurance theft, robbery, vandalism 0% 0% 0% 0% Animal insurance -1% -1% -12% -12% Third-party vehicle insurance -6% -26% 62% 126% Third-party aviation insurance 111% 3 812% -4% -18% Third party vessels insurance 2 120% 1 790% 12% 41% General third-party insurance -164% -161% 182% 201% Loans and leasing 0% 0% -1% -1% Insurance of guarantees 0% 0% 0% 0% Miscellaneous financial losses 0% 0% 0% 0% Legal costs 0% 0% 0% 0% Travel Assistance 5% 5% 37% 37% Total: 26% 32% 44% 46% The insurance with the largest relative share in the Group's portfolio - "Casco of motor vehicles" is characterized by favorable risk development in 2021 - 42% gross claims ratio and 41% - net, although compared to the previous year, when 38% of the premium earned was used to cover risk-related payments, there is a slight increase in claims. A prerequisite for the increase in the insurance damage is the removal of the restrictions on the movement of motor vehicles introduced in 2020 due to COVID 19, due to which such low damage was observed at that time. The change in the net loss ratio for the overall activity: 49% - for 2010, 53% - for 2011, 59% - for 2012, 53% - for 2013, 59% - for 2014, 46% - for 2015, 56% - for 2016, 41% - for 2017, 43% - for 2018, 47% - for 2019, 46% - for 2020 and 32% - for 2021, shows a fluctuation in net damage between 41% and 59%, and in the last five to six years there has been a steady downward trend compared to the previous six-year period. The following table shows the average amount of damage paid by type of insurance: Types of insurance Number 2021 Amount in BGN Average indemnity 2021 Number 2020 Amount in BGN Average indemnity 2020 Accident insurance 2 565 861 840 336 2 904 1 632 248 562 Casco 61 642 60 726 391 985 70 641 62 625 144 887 Casco of aircrafts 1 93 168 93 168 - - - Casco of vessels 9 267 405 29 712 12 164 860 13 738 Cargo insurance during transportation 20 73 291 3 665 17 35 626 2 096 Fire and natural calamities insurance 2 102 4 321 944 2 056 1 847 4 443 860 2 406 Property damage insurance - - - 5 7 590 1 518 Insurance associated with the ownership and usage of motor vehicles 5 483 25 931 683 4 729 6 257 24 502 030 3 916 Third-party aviation insurance 1 7 500 7 500 - - - Third party vessels insurance 1 15 732 15 732 1 5 705 5 705 General third-party insurance 28 440 238 15 723 51 437 301 8 575 Travel assistance 768 451 462 588 2 227 1 570 532 705 Total: 72 620 93 190 654 1 283 83 962 95 424 896 1 137 Chimimport AD Consolidated financial statements 31 December 2021 93 The average paid damage in 2021 is BGN 1 283 and compared to the same indicator for the previous years: BGN 1 137 - for 2020 and BGN 1 124 - for 2019 marks an insignificant increase. The highest is the amount of the average damage under the "Casco on Aircraft" and "Casco on Vessels" insurance, and the lowest - on the "Accident" and "Travel Assistance" insurances. 51.2. Foreign currency risk The foreign currency risk is a potential cause for losses for the Group when the foreign currency rates fluctuate. Group’s policy regarding other than banking activities Most of the Group's transactions are carried out in BGN. The foreign transactions of the Group, denominated in US dollars, expose the Group to currency risk. The Group has long-term trade payables and short-term finance lease liabilities in US dollars, the greater part of which is related to the purchase of aircraft. These liabilities are stated at amortized cost. The Group has short-term and long-term US dollar loans. These receivables are classified as loans and receivables. The foreign transactions of the Group denominated in euro do not expose the Group to currency risk as the exchange rate of the Bulgarian lev is fixed to the euro under the Currency Board Act. In order for the foreign currency risk to be decreased, the non-BGN cash flows are monitored by the Group. Generally, the Group has different procedures for risk management for the short-term (due within 6 months) and long-term non-BGN cash flows. Group’s policies regarding the banking activities In the Republic of Bulgaria, the exchange rate of the Bulgarian lev to the euro is fixed by the Currency Board Act, which is why the Group's long position in euro does not pose a risk to the Group. The risk-weighted net currency position as at 31 December 2021 in financial instruments denominated in currencies other than leva or euro is less than 2% of the capital base and no foreign exchange risk capital requirements on the part of the Group with respect to banking activities. Due to the low size of this position, the potential effect of changes in exchange rate will not lead to significant effects on equity and therefore the risk-weighted effect on capital will be below the materiality threshold for the Group and the regulatory framework – EU Regulation 2013/575. The development of the global pandemic has affected the economies of countries at the global level and, accordingly, has no pronounced effect on the currency of a particular individual country and hence the design of specific currency risk. As the Group's net exchange rate regarding the banking activities result in 2021 is a loss due mainly to currency revaluation, it is not possible to estimate what part of this result was due to the effects of the Covid-19 pandemic and what due to market and political factors related to the development of exchange rates. The process of economic recovery in different countries is happening at different speeds, influenced by their ability to organize a process of vaccinating their populations, and hence the currency of these countries will change its course from those in which the pandemic continues to rage. The EU and Bulgaria are in a slow process of dealing with the Covid-19 pandemic, but as the Bulgarian lev is pegged to the euro and the Group's exposure in other currencies (mainly US dollars) is not significant, the Group's currency risk has no direct effect. from the Covid-19 pandemic. Chimimport AD Consolidated financial statements 31 December 2021 94 The currency structure of financial assets and liabilities at book value as of 31 December 2021 is as follows: BGN EUR USD Other Total FINANCIAL ASSETS BGN’000 BGN’000 BGN’000 BGN’000 BGN’000 Cash and cash balances with the Central Bank 1 808 132 69 823 14 750 70 847 1 963 552 Provided resources and advances to banks 152 18 149 59 849 104 275 182 425 Receivables under repurchase agreements 315 777 41 205 - - 356 982 Financial assets at fair value through profit or loss 236 468 13 100 6 137 38 278 293 983 Loans and advances to customers 2 294 974 590 163 52 235 449 3 120 638 Financial assets measured at fair value in other comprehensive income 416 380 437 364 4 465 897 859 106 Financial assets at amortized cost 185 146 445 875 - 56 164 687 185 TOTAL ASSETS 5 257 029 1 615 679 85 253 505 910 7 463 871 FINANCIAL LIABILITIES Deposits from banks 21 168 26 609 2 922 2 194 52 893 Liabilities to other depositors 4 681 404 1 728 017 213 577 323 585 6 946 583 Issued bonds - 25 450 - - 25 450 Other attracted funds 34 928 16 361 - 7 51 296 TOTAL LIABILITIES 4 737 500 1 796 437 216 499 325 786 7 076 222 NET POSTION 519 529 (180 758) (131 246) 180 124 387 649 The currency structure of financial assets and liabilities at book value as of 31 December 2020 is as follows: BGN EUR USD Other Total FINANCIAL ASSETS BGN’000 BGN’000 BGN’000 BGN’000 BGN’000 Cash and cash balances with the Central Bank 1 765 953 76 037 8 902 61 851 1 912 743 Provided resources and advances to banks 159 20 632 77 964 89 313 188 068 Receivables under repurchase agreements 313 332 46 340 - - 359 672 Financial assets at fair value through profit or loss 217 941 8 814 5 017 35 880 267 652 Loans and advances to customers 1 906 595 646 860 48 230 957 2 784 460 Financial assets measured at fair value in other comprehensive income 278 287 432 650 4 131 938 716 006 Financial assets at amortized cost 26 352 394 316 - 42 621 463 289 TOTAL ASSETS 4 508 619 1 625 649 96 062 461 560 6 691 890 FINANCIAL LIABILITIES Deposits from banks 46 266 16 347 1 341 2 098 66 052 Liabilities to other depositors 4 063 383 1 631 121 195 775 300 668 6 190 947 Issued bonds - 25 451 - - 25 451 Other attracted funds 34 994 11 510 - - 46 504 TOTAL LIABILITIES 4 144 643 1 684 429 197 116 302 766 6 328 954 NET POSTION 363 976 (58 780) (101 054) 158 794 362 936 51.3. Interest risk analysis Group’s policy regarding other than banking activities The policy of the Group is aimed at minimizing interest rate risk on long-term financing. Therefore, long- term loans are usually with fixed interest rates. As at 31 December 2021, the Group is exposed to the risk of a change in market interest rates on its variable-rate bank loans. All other financial assets and liabilities of the Group have fixed interest rates. All investments in the Group's bonds are paid on a fixed interest rate basis. Group’s policies regarding the banking activities Interest rate risk is the probability of a potential change in net interest income or net interest margin due to a change in overall market interest rates. Interest rate risk management in the Group seeks to minimize the risk of reducing net interest income as a result of changes in interest rates. For measuring and assessing interest rate risk, the Group uses the GAR-analysis method (mismatch / imbalance analysis). It identifies the sensitivity of the expected revenues and expenditures to the development of the interest rate. Chimimport AD Consolidated financial statements 31 December 2021 95 The GAP analysis method aims to determine the Group's position, generally and by individual types of financial assets and liabilities, in terms of expected changes in interest rates and the impact of this change on net interest income. It assists in the management of assets and liabilities and is a tool to provide sufficient and stable net interest rate profitability. The Group's imbalance between interest rate assets and interest-bearing liabilities as of 31 December 2021 is negative, amounting to BGN 1 880 731 thousand. The GAP coefficient, as an expression of this imbalance, compared to the Group's total profitable assets (interest-bearing assets, derivatives and investments in subsidiaries) is minus 34.20%. Up to 1 month 1 to 3 months 3 to 12 months 1 to 5 years Over 5 years Total INTEREST-BEARING ASSETS BGN’000 BGN’000 BGN’000 BGN’000 BGN’000 BGN’000 Provided resources and advances to banks 179 507 - - - 2 918 182 425 Receivables under repurchase agreements 111 225 114 303 131 454 - - 356 982 Financial assets measured at fair value through profit or loss - - - - 4 062 4 062 Loans and advances to customers 38 827 68 738 458 739 1 363 017 1 191 317 3 120 638 Financial assets measured at fair value in other comprehensive income - 122 858 31 928 258 446 430 967 844 199 Financial assets at amortized cost 9 640 11 097 58 551 217 778 390 119 687 185 TOTAL INTEREST-BEARING ASSETS 339 199 316 996 680 672 1 839 241 2 019 383 5 195 491 INTEREST-BEARING LIABILITIES Deposits from banks 52 893 - - - - 52 893 Liabilities to other depositors 3 112 063 451 048 1 153 755 2 228 951 766 6 946 583 Issued bonds - - - - 25 450 25 450 Liabilities under leasing contracts 1 038 1 842 8 001 27 500 12 915 51 296 TOTAL INTEREST–BEARING LIABILITIES 3 165 994 452 890 1 161 756 2 256 451 39 131 7 076 222 IMBALANCE BETWEEN INTEREST BEARING ASSETS AND LIABILITIES, NET (2 826 795) (135 894) (481 084) (417 210) 1 980 252 (1 880 731) The Group's imbalance between interest rate assets and interest-bearing liabilities as of 31 December 2020 is negative, amounting to BGN 1 831 732 thousand. The GAP coefficient, as an expression of this imbalance, compared to the Group's total profitable assets (interest-bearing assets, derivatives and investments in subsidiaries) is minus 37.97%. In connection with the reform in the way of formation and use of interest rate indices (IBOR), in the Group such are not actively used, the main interest rate indices, which are introduced in the interest rates of the parent bank and the subsidiary bank are synthetic, with sources from the bank interest rate statistics (BNB / NBRSM) and in this sense the effect of the reform is insignificant on the value of the Group's cash flows. Up to 1 month 1 to 3 months 3 to 12 months 1 to 5 years Over 5 years Total INTEREST-BEARING ASSETS BGN’000 BGN’000 BGN’000 BGN’000 BGN’000 BGN’000 Provided resources and advances to banks 185 150 - - - 2 918 188 068 Receivables under repurchase agreements 122 659 120 456 116 557 - - 359 672 Loans and advances to customers 33 819 36 013 296 599 1 435 795 982 234 2 784 460 Financial assets measured at fair value in other comprehensive income - 34 106 22 879 300 272 344 476 701 733 Financial assets at amortized cost 9 280 12 634 46 527 127 321 267 527 463 289 TOTAL INTEREST-BEARING ASSETS 350 908 203 209 482 562 1 863 388 1 597 155 4 497 222 INTEREST-BEARING LIABILITIES Deposits from banks 66 052 - - - - 66 052 Liabilities to other depositors 2 894 855 414 560 1 132 674 1 747 894 964 6 190 947 Issued bonds - - - - 25 451 25 451 Liabilities under leasing contracts 1 003 1 823 7 105 24 167 12 406 46 504 TOTAL INTEREST–BEARING LIABILITIES 2 961 910 416 383 1 139 779 1 772 061 38 821 6 328 954 IMBALANCE BETWEEN INTEREST BEARING ASSETS AND LIABILITIES, NET (2 611 002) (213 174) (657 217) 91 327 1 558 334 (1 831 732) Maintaining a negative imbalance exposes the Group to the risk of a decrease in net interest income when interest rates rise. The impact of the imbalance reported as of 31 December 2021 on net interest income, with a forecast of 2% increase in interest rates over a 1-year horizon, is a decrease in net interest income by BGN 5 373 thousand (2020: BGN 4 579 thousand). Chimimport AD Consolidated financial statements 31 December 2021 96 In the tables above, part of the attracted funds on current accounts without residual maturity in the amount of BGN 2 153 008 thousand as of 31 December 2021 (2020: BGN 1 665 762 thousand) is presented in the range from 1 year to 5 years, as the Group considers this availability to be a reliable long-term resource based on the average daily availability on these accounts in 2021 and 2020. 51.4. Credit risk analysis Group’s policy regarding other than banking activities Credit risk is the risk that counterparty fails to discharge an obligation to the Group. The Group is exposed to this risk for various financial instruments, for example by granting loans and receivables to customers, placing deposits etc. The Group’s maximum exposure to credit risk is limited to the carrying amount of financial assets recognized at the reporting date, as summarized below: 2021 2020 BGN‘000 BGN‘000 Financial assets – carrying amounts: Financial assets measured at fair value through profit or loss 2 042 970 2 027 241 Equity instruments at fair value through other comprehensive income 70 426 83 766 Debt instruments measured at fair value through other comprehensive income 859 441 717 595 Debt instruments at amortized cost 6 988 010 6 259 232 Carrying amount 9 960 847 9 087 834 The Group continuously monitors defaults of customers and other counterparties, identified either individually or by group and incorporates this information into its credit risk controls. The Group's policy is to deal only with creditworthy counterparties. The Group's management considers that all the above financial assets that are not impaired or past due for each of the reporting dates under review are of good credit quality. In respect of trade and other receivables, the Group is not exposed to any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. Trade receivables consist of a large number of customers in different industries and geographical areas. Based on historical indicators, the management considers that the trade receivables that are not past due are of good credit quality. The credit risk related to cash and cash equivalents and financial market funds is considered immaterial as the contracting parties are banks with good reputation and good credit rating. The carrying amounts presented above represent the maximum exposure to credit risk the Group might experience, regarding these financial instruments. Group’s policies regarding the banking activities Credit risk is the probability of a loss arising from the non-performance of contractual obligations of the counterparty on financial assets held by the Group. The Group manages credit risk inherent in both the banking and trading book. The Group has structured credit risk monitoring and management units for individual business segments by applying individual credit policies. The credit risk of individual exposures is managed over the life of the exposure - from the decision to form the exposure to its full repayment. In order to minimize credit risk in the credit process, detailed procedures are applied for the analysis of the economic feasibility of each project, the control over the use of the funds allocated and the administration related to this activity. To reduce credit risk, appropriate type and value collateral and guarantees are adhered to, in accordance with the Internal Rules, the approach used for calculating capital requirements and current banking legislation. Cash, cash equivalents and cash balances in Central bank amounting to BGN 1 963 552 thousand are not carrying significant credit risk for the Group due to their nature and the Group’s ability for disposal. The provided resources and advances to banks amounting to BGN 182 425 thousand are primarily deposits with international and Bulgarian financial institutions with a maturity of up to 7 days. These financial assets carry a credit risk with a maximum exposure of 20%, 50% and 100% according to the Chimimport AD Consolidated financial statements 31 December 2021 97 policy of the Group, the percentage being determined by the quality characteristics of the financial institution. Claims under repurchase agreements amounting to BGN 356 982 thousand carry a credit risk for the Group, depending on the risk of the collateral being provided. Part of the receivables amounting to BGN 48 145 thousand is secured by government securities issued by the Republic of Bulgaria and bear 0% risk. The remaining receivables amounting to BGN 308 837 thousand are secured by corporate securities and carry respectively: BGN 300 300 thousand - 100% risk and BGN 8 537 thousand - 150% risk depending on the issuer of the securities provided as collateral. Financial assets measured at fair value through profit or loss in the amount of BGN 293 983 thousand represent equity instruments - shares in financial and non-financial enterprises in the amount of BGN 135 898 thousand, whose maximum exposure in percentage terms is as follows - BGN 103 334 thousand - 100% risk and BGN 32 564 thousand - 250% risk; units in mutual funds in the amount of BGN 149 124 thousand - with risk weight from 0% to 1250% depending on the type of the underlying asset, debt instruments in the amount of BGN 8 891 thousand and derivatives in the amount of BGN 70 thousand - 100% risk. Equity securities measured at fair value in other comprehensive income of BGN 14 908 thousand represent shares in financial and non-financial corporations carrying credit risk with a maximum exposure of 100% or BGN 14 908 thousand in absolute amount. Debt securities measured at fair value through other comprehensive income and issued by the Republic of Bulgaria in the amount of BGN 289 380 thousand bear 0% credit risk for the Group. Debt securities measured at fair value through other comprehensive income and issued by other countries in the amount of BGN 141 517 thousand carry credit risk for the Group depending on the credit risk of the issuing country. Debt securities measured at fair value through other comprehensive income and issued by domestic and foreign companies in the amount of BGN 413 301 thousand carry credit risk for the Group, whose maximum percentage exposure is 100% or BGN 413 301 thousand in absolute amount. Debt securities valued at amortized cost and issued by the Republic of Bulgaria have a carrying amount of BGN 408 414 thousand and carry 0% risk. Debt securities reported at amortized cost and issued by other countries and central banks have a carrying amount of BGN 267 906 thousand and carry credit risk for the Group depending on the credit rating of the issuing country. Debt securities measured at amortized cost and issued by domestic and foreign companies with a carrying amount of BGN 10 865 thousand carry credit risk for the Group, whose maximum exposure in percentage is 100% or BGN 10 865 thousand in absolute amount. Loans and advances to customers with a carrying amount of BGN 3 120 638 thousand carry credit risk for the Group. To determine the amount of the Group's exposure to this risk, an analysis of the individual risk for the Group arising from each specific exposure is performed, the Group applying the criteria for assessment and classification of risk exposures set out in the banking legislation of the Republic of Bulgaria and IFRS. . According to these criteria and the performed analysis, the maximum exposure of the Credit Risk Group amounts to BGN 2 169 234 thousand. As of 31 December 2021, the amount of the provisions formed by the Group to cover expected credit losses on loans and advances is BGN 38 743 thousand. During the reporting period, the activities of the Group were affected by the spread of a new coronavirus (Covid-19), and in early 2020 worldwide, there were difficulties in the business and economic activities of many companies and entire industries and they continued to operate and in 2021, in parallel with the development of new epidemiological strains. As the Group operates in a specific sector - the financial sector, where supply chain disruptions, traffic disruptions and quarantine measures are not directly affected, its activities were affected rather indirectly - through the effect on its customers and volatility in the prices of financial instruments owned by the Group. In 2021, as at the date of this consolidated financial statement, businesses must face challenges related to reduced revenues and disrupted supply chains, shortages of certain raw materials, etc., related to the consequences of the global pandemic. . With the development of the third and fourth waves of the pandemic and the slow process of vaccination and extension of measures in EU countries (including Chimimport AD Consolidated financial statements 31 December 2021 98 Bulgaria) in 2021, there were objective obstacles to the activities of companies in individual economic sectors and a great deal of uncertainty when revenue and normal operations will be restored. The Group's exposure to the most affected sectors, such as restaurant business and tourism services, is extremely insignificant, and the exposures to hotel business and transport are also with a low share in the portfolio and, as the financial condition of these clients is monitored in great detail. the credit risk for the entire life of the instruments, incl. there is also a positive effect of incentives at the government level and the proposed compensation schemes. The expected recovery after mid-2021, supported by vaccination and the introduction of vaccination passports, is expected to support the hotel business and related transport of tourists during the summer season in Bulgaria and the Republic of Northern Macedonia. Until the end of 2021, the Group continued to apply a moratorium on payments, according to the "Procedure for deferral and settlement of due liabilities to banks and their subsidiaries - financial institutions in connection with the actions taken by the authorities of the Republic of Bulgaria to limit the Covid-19 pandemic and its aftermath”. Deferred payments under this procedure shall not be treated as a “restructuring measure” within the meaning of Article 47b of Regulation (EU) № 575/2013, nor as compulsory restructuring under Article 178 (3) of that Regulation. Where, in the course of monitoring exposures with a moratorium on payments, an indication of the likelihood of non-payment is identified, those exposures shall be classified at a higher stage in accordance with the applicable regulatory framework. The exposures in respect of which a moratorium on payments has been applied are identified in the information system of the Group, incl. Applied Deferral mechanism that facilitates tracking and monitoring of exposures. In 2021, the debt moratorium imposed by the Banking Regulator in the Republic of Northern Macedonia came into force, allowing for the deferral of debts of clients whose activities were affected by the coronavirus pandemic, without affecting the classification of loans in terms of their restructuring. With regard to the assessment of the probability of non-payment of clients subject to a moratorium on payments, the Parent Bank shall implement the approvals approved by the Governing Council with Protocol № 52 / 23.12.2020 "Operational plan and an assessment of the probability of default on deferred exposures ”. According to this plan, the Parent Bank assesses the probability of non-payment both during the moratorium and 3 months after its expiration. With regard to the modifications accepted for relief of borrowers affected by the Covid-19 pandemic - in 2021 the Group implemented the current "Policy for classification, restructuring and reporting of exposures, credit risk holders". For the purposes of assessing the probability of non-payment - for customers for whom no moratorium on payments has been applied, the Group applies its internal policies for assessing the probability of non-payment. In the context of the Covid-19 pandemic and the measures taken to limit it, leading to sudden changes in the short-term economic outlook and lack of available and reliable information, as well as the unrepresentation of financial information in assessing the likelihood of default, Article 178 of Regulation (EU) № 575/2013, the Group shall take into account the information that is expected to have an impact for the entire duration of the exposures. The Group's credit loss assessment models have not been modified in connection with the global Covid- 19 pandemic, as their accuracy and adequacy depend on the risk parameters used to calculate the amount of expected credit losses. In 2021, the quality of the Group's exposure portfolio remains very good and there is no increase in the share of non-performing exposures, the credit loss models used have adequately assessed the size of the ECL. According to the current "Rules for acceptance, evaluation and management of collateral for credit transactions", collateral evaluations, incl. commercial real estate is updated every 12 months, and residential real estate - every three years. If necessary, it may also require more frequent updates, e.g. in case of a change in the parameters of a credit transaction or when the information at its disposal shows that their value has decreased significantly compared to the total market prices. Real estate appraisals are performed by independent certified appraisers. In the current pandemic environment affected by Covid-19, no dynamic adverse fluctuations in real estate prices have been observed, requiring a change in the policies for valuation of collateral accepted by the Group. In the process of credit risk management, the level of moratorium loans is monitored in great detail, as well as the assessment of the significant increase in credit risk for the entire term of the instruments, taking preventive actions to manage them, respectively classification and provisioning. Assets quality Chimimport AD Consolidated financial statements 31 December 2021 99 In the tables below, the Group presents the structure and the change in the adjustment for expected credit losses. Stage 1 Stage 2 Stage 3 Impairment loss - Loans and advances to banks at amortized cost 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Impairment loss on 1 January 2021 30 - - 30 Change in impairment loss 2 - - 2 Accrued for the period 16 - - 16 Derecognized for the period (14) - - (14) Impairment loss on 31 December 2021 32 - - 32 Stage 1 Stage 2 Stage 3 Impairment loss - Loans and advances to banks at amortized cost 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Impairment loss on 1 January 2020 45 - - 45 Change in impairment loss (15) - - (15) Accrued for the period 28 - - 28 Derecognized for the period (43) - - (43) Impairment loss on 31 December 2020 30 - - 30 Stage 1 Stage 2 Stage 3 Impairment loss – Receivables under repurchase agreements of securities 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Impairment loss on 1 January 2021 1 245 - - 1 245 Change in impairment loss 1 - - 1 Accrued for the period 1 246 - - 1 246 Derecognized for the period (1 245) - - (1 245) Impairment loss on 31 December 2021 1 246 - - 1 246 Stage 1 Stage 2 Stage 3 Impairment loss – Receivables under repurchase agreements of securities 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Impairment loss on 1 January 2020 1 094 - - 1 094 Change in impairment loss 151 - - 151 Accrued for the period 1 245 - - 1 245 Derecognized for the period (1 094) - - (1 094) Impairment loss on 31 December 2020 1 245 - - 1 245 Stage 1 Stage 2 Stage 3 Impairment loss – Loans and advances granted to customers at amortized cost 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Impairment loss on 1 January 2021 12 349 809 22 723 35 881 Change in impairment loss recognized in Profit and loss 602 (389) 4 231 4 444 – Transfer to Stage 1 297 (70) (227) - – Transfer to Stage 2 (22) 193 (170) 1 – Transfer to Stage 3 (6) (44) 50 - – Increase due to change in credit risk 1 87 972 1 060 – Decrease due to change in credit risk (2 502) (583) (386) (3 471) – Increase due to originated or purchased assets 2 473 89 80 2 642 – Change in risk parameters 361 (61) 3 912 4 212 – Decrease due to derecognition for uncollectibility - - (1 489) (1 489) – Decrease due to derecognition for transfer (9) - (92) (101) – Interest income adjustment - - (1) (1) – Currency differences and other adjustments 2 1 6 9 Impairment loss on 31 December 2021 12 944 421 25 378 38 743 Stage 1 Stage 2 Stage 3 Impairment loss – Loans and advances granted to customers at amortized cost 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Impairment loss on 1 January 2020 11 046 801 67 940 79 787 Change in impairment loss recognized in Profit and loss 1 305 7 5 636 6 948 – Transfer to Stage 1 264 (81) (183) - – Transfer to Stage 2 (32) 119 (86) 1 – Transfer to Stage 3 (11) (26) 37 - Chimimport AD Consolidated financial statements 31 December 2021 100 – Increase due to change in credit risk - 106 932 1 038 – Decrease due to change in credit risk (1 726) (489) (1 293) (3 508) – Increase due to originated or purchased assets 2 309 381 411 3 101 – Change in risk parameters 501 (3) 5 818 6 316 – Decrease due to derecognition for uncollectibility - - (1 492) (1 492) – Decrease due to derecognition for transfer - - (49 374) (49 374) – Interest income adjustment - - (4) (4) – Currency differences and other adjustments (1) 1 16 16 Impairment loss on 31 December 2020 12 350 809 22 722 35 881 Stage 1 Stage 2 Stage 3 Impairment loss – Investments in debt securities at amortized cost 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Impairment loss on 1 January 2021 200 - - 200 Change in impairment loss 454 - - 454 Accrued for the period 560 - - 560 Derecognized for the period (106) - - (106) Impairment loss on 31 December 2021 654 - - 654 Stage 1 Stage 2 Stage 3 Impairment loss – Investments in debt securities at amortized cost 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Impairment loss on 1 January 2020 674 - - 674 Change in impairment loss (474) - - (474) Accrued for the period 85 - - 85 Derecognized for the period (559) - - (559) Impairment loss on 31 December 2020 200 - - 200 Stage 1 Stage 2 Stage 3 Impairment loss – Investments in debt securities at FVTOCI 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Impairment loss on 1 January 2021 2 734 - - 2 734 Change in impairment loss 1 909 - - 1 909 Accrued for the period 2 032 - - 2 032 Derecognized for the period (123) - - (123) Impairment loss on 31 December 2021 4 643 - - 4 643 Stage 1 Stage 2 Stage 3 Impairment loss – Investments in debt securities at FVTOCI 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Impairment loss on 1 January 2020 3 179 - - 3 179 Change in impairment loss (445) - - (445) Accrued for the period 1 096 - - 1 096 Derecognized for the period (1 541) - - (1 541) Impairment loss on 31 December 2020 2 734 - - 2 734 Stage 1 Stage 2 Stage 3 Impairment loss – Loan commitments 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Impairment loss on 1 January 2021 947 7 23 977 Change in impairment loss (301) (2) 21 (282) Accrued for the period 587 15 85 687 Derecognized for the period (888) (17) (64) (969) Currency and other movements 22 3 (24) 1 Impairment loss on 31 December 2021 668 8 20 696 Stage 1 Stage 2 Stage 3 Impairment loss – Loan commitments 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Impairment loss on 1 January 2020 1 035 4 46 1 085 Change in impairment loss (142) - 34 (108) Accrued for the period 675 27 104 806 Derecognized for the period (817) (27) (71) (915) Currency and other movements 54 3 (57) - Impairment loss on 31 December 2020 947 7 23 977 Chimimport AD Consolidated financial statements 31 December 2021 101 Stage 1 Stage 2 Stage 3 Impairment loss – Financial guarantee contracts 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Impairment loss on 1 January 2021 26 - - 26 Change in impairment loss (9) - - (9) Accrued for the period 22 - - 22 Derecognized for the period (31) - - (31) Impairment loss on 31 December 2021 17 - - 17 Stage 1 Stage 2 Stage 3 Impairment loss – Financial guarantee contracts 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Impairment loss on 1 January 2020 15 2 - 17 Change in impairment loss 11 (2) - 9 Accrued for the period 25 2 - 27 Derecognized for the period (14) (4) - (18) Impairment loss on 31 December 2020 26 - - 26 In the tables below, the Group presents the structure and the change in the gross values of the asset categories as of 01.01.2021 and 01.01.2020 and their change until the end of the financial period. Stage 1 Stage 2 Stage 3 Carrying amount before impairment – Loans and advances granted to banks at amortized cost 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Gross carrying amount at 1 January 2021 188 098 - - 188 098 Change in the gross carrying amount (5 641) - - (5 641) Increase for the period 338 215 - - 338 215 Decrease for the period (343 864) - - (343 864) Wright-off 8 - - 8 Other changes 182 457 - - 182 457 Gross carrying amount at December 31 December 2021 (32) - - (32) Impairment loss at 31 December 2021 182 425 - - 182 425 Stage 1 Stage 2 Stage 3 Carrying amount before impairment – Loans and advances granted to banks at amortized cost 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Gross carrying amount at 1 January 2020 232 360 - - 232 360 Change in the gross carrying amount (44 223) - - (44 223) Increase for the period 315 828 - - 315 828 Decrease for the period (360 051) - - (360 051) Wright-off - - - - Other changes (39) - - (39) Gross carrying amount at December 31 December 2020 188 098 - - 188 098 Impairment loss at 31 December 2020 (30) - - (30) Carrying amount at 31 December 2020 188 068 - - 188 068 Chimimport AD Consolidated financial statements 31 December 2021 102 Stage 1 Stage 2 Stage 3 Carrying amount before impairment – Receivables under repurchase agreements of securities 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Gross carrying amount at 1 January 2021 360 917 - - 360 917 Change in the gross carrying amount (2 689) - - (2 689) Increase for the period 358 228 - - 358 228 Decrease for the period (360 917) - - (360 917) Gross carrying amount at December 31 December 2021 358 228 - - 358 228 Impairment loss at 31 December 2021 (1 246) - - (1 246) Carrying amount at 31 December 2021 356 982 - - 356 982 Stage 1 Stage 2 Stage 3 Carrying amount before impairment – Receivables under repurchase agreements of securities 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Gross carrying amount at 1 January 2020 304 324 - - 304 324 Change in the gross carrying amount 56 593 - - 56 593 Increase for the period 360 917 - - 360 917 Decrease for the period (304 324) - - (304 324) Gross carrying amount at December 31 December 2020 360 917 - - 360 917 Impairment loss at 31 December 2020 (1 245) - - (1 245) Carrying amount at 31 December 2020 359 672 - - 359 672 Stage 1 Stage 2 Stage 3 Loans and advances granted to customers at amortized cost 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Gross carrying amount at 1 January 2021 2 714 435 27 363 78 543 2 820 341 Change in the gross carrying amount 345 891 (4 222) 1 072 342 741 – Transfer to Stage 1 5 450 (4 522) (928) - – Transfer to Stage 2 (7 242) 8 162 (920) - – Transfer to Stage 3 (1 454) (2 221) 3 675 - – Increase due to change in credit risk 20 67 21 108 – Decrease due to change in credit risk (310 790) (3 995) (1 125) (315 910) – Increase due to originated or purchased assets 814 315 1 414 167 815 896 – Change in risk parameters (154 408) (3 127) 182 (157 353) – Decrease due to write-off for uncollectibility - - (1 489) (1 489) – Decrease due to write-off for transfer (2 371) - (90) (2 461) – Currency differences and other adjustments 243 6 - 249 Gross carrying amount at 31 December 2021 3 058 198 23 147 78 036 3 159 381 Impairment loss at 31 December 2021 (12 944) (421) (25 378) (38 743) Carrying amount at 31 December 2021 3 045 254 22 726 52 658 3 120 638 Stage 1 Stage 2 Stage 3 Loans and advances granted to customers at amortized cost 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Gross carrying amount at 1 January 2020 2 499 258 32 951 205 952 2 738 161 Change in the gross carrying amount 215 871 (5 551) (37 452) 172 868 – Transfer to Stage 1 5 203 (3 793) (1 410) - – Transfer to Stage 2 (7 448) 7 739 (291) - – Transfer to Stage 3 (2 628) (1 590) 4 218 - – Increase due to change in credit risk 22 88 53 163 – Decrease due to change in credit risk (265 700) (9 097) (41 181) (315 978) – Increase due to originated or purchased assets 556 272 2 866 464 559 602 – Change in risk parameters (69 850) (1 764) 695 (70 919) – Decrease due to write-off for uncollectibility - - (1 492) (1 492) – Decrease due to write-off for transfer - - (88 457) (88 457) – Interest income adjustment - - (4) (4) – Currency differences and other adjustments (694) (37) (4) (735) Gross carrying amount at 31 December 2020 2 714 435 27 363 78 543 2 820 341 Impairment loss at 31 December 2020 (12 350) (809) (22 722) (35 881) Carrying amount at 31 December 2020 2 702 085 26 554 55 821 2 784 460 Chimimport AD Consolidated financial statements 31 December 2021 103 Stage 1 Stage 2 Stage 3 Carrying amount before impairment – Investments in debt securities at amortized cost 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Gross carrying amount at 1 January 2021 463 489 - - 463 489 Change in the gross carrying amount 224 350 - - 224 350 Increase for the period 426 813 - - 426 813 Decrease for the period (202 463) - - (202 463) Gross carrying amount at 31 December 2021 687 839 - - 687 839 Impairment loss at 31 December 2021 (654) - - (654) Carrying amount at 31 December 2021 687 185 - - 687 185 Stage 1 Stage 2 Stage 3 Carrying amount before impairment – Investments in debt securities at amortized cost 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Gross carrying amount at 1 January 2020 357 228 - - 357 228 Change in the gross carrying amount 106 261 - - 106 261 Increase for the period 307 727 - - 307 727 Decrease for the period (201 466) - - (201 466) Gross carrying amount at 31 December 2020 463 489 - - 463 489 Impairment loss at 31 December 2020 (200) - - (200) Carrying amount at 31 December 2020 463 289 - - 463 289 Stage 1 Stage 2 Stage 3 Carrying amount before impairment – Investments in debt securities at FVTOCI 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Gross carrying amount at 1 January 2021 716 006 - - 716 006 Change in the gross carrying amount 143 100 - - 143 100 Increase for the period 348 001 - - 348 001 Decrease for the period (204 901) - - (204 901) Gross carrying amount at 31 December 2021 859 106 - - 859 106 Impairment loss at 31 December 2021 (4 643) - - (4 643) Stage 1 Stage 2 Stage 3 Carrying amount before impairment – Investments in debt securities at FVTOCI 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Gross carrying amount at 1 January 2020 567 573 - - 567 573 Change in the gross carrying amount 148 433 - - 148 433 Increase for the period 258 580 - - 258 580 Decrease for the period (110 147) (110 147) Gross carrying amount at 31 December 2020 716 006 - - 716 006 Impairment loss at 31 December 2020 (2 734) - - (2 734) Stage 1 Stage 2 Stage 3 Loan commitments 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Total amount of loan commitments at 1 January 2021 251 109 435 383 251 927 Change in the amount of loan commitments (6 965) (101) (49) (7 115) Increase for the period 55 756 127 117 56 000 Decrease for the period (62 721) (228) (166) (63 115) Other movements (903) 776 137 10 Total amount of loan commitments at 31 December 2021 243 241 1 110 471 244 822 ECL allowance at 31 December 2021 (668) (8) (20) (696) Stage 1 Stage 2 Stage 3 Loan commitments 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Total amount of loan commitments at 1 January 2020 238 300 339 453 239 092 Change in the amount of loan commitments 13 058 36 (227) 12 867 Increase for the period 60 804 187 77 61 068 Decrease for the period (47 746) (151) (304) (48 201) Other movements (248) 60 157 (31) Total amount of loan commitments at 31 December 2020 251 110 435 383 251 928 ECL allowance at 31 December 2020 (947) (7) (23) (977) Chimimport AD Consolidated financial statements 31 December 2021 104 Stage 1 Stage 2 Stage 3 Financial guarantee contracts 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Total amount of guarantees at 1 January 2021 54 815 - - 54 815 Change in the gross carrying amount (2 150) - - (2 150) Increase for the period 18 911 - - 18 911 Decrease for the period (21 061) - - (21 061) Total amount of guarantees at 31 December 2021 52 665 - - 52 665 ECL allowance at 31 December 2021 (18) - - (18) Stage 1 Stage 2 Stage 3 Financial guarantee contracts 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Total amount of guarantees at 1 January 2020 58 073 43 - 58 116 Change in the gross carrying amount (3 258) (43) - (3 301) Increase for the period 12 999 - - 12 999 Decrease for the period (16 257) (43) - (16 300) Total amount of guarantees at 31 December 2020 54 815 - - 54 815 ECL allowance at 31 December 2020 (27) - - (27) ECL by type of asset 2021 2020 BGN ‘000 BGN ‘000 Loans and advances granted to banks at amortized cost (32) (30) Receivables under repurchase agreements of securities (1 246) (1 245) Loans and advances granted to customers at amortized cost (38 743) (35 881) Investments in debt securities at amortized cost (654) (200) Investments in debt securities at FVTOCI (4 643) (2 734) (45 318) (40 090) 2021 2020 Loans and advances granted to customers Gross carrying amount Impairment loss Gross carrying amount Impairment loss BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 0-29 days 3 076 075 (13 702) 2 735 767 (13 659) 30-59 days 6 391 (116) 6 591 (441) 60-89 days 971 (64) 2 555 (67) 90-180 days 881 (215) 1 841 (424) Over 181 days 75 063 (24 646) 73 587 (21 290) Total 3 159 381 (38 743) 2 820 341 (35 881) 2021 2020 BGN ‘000 BGN ‘000 Loans and advances granted to customers at amortized cost 3 159 381 2 820 341 Less impairment for uncollectibility (38 743) (35 881) Total loans and advances granted to customers 3 120 638 2 784 460 31.12.2021 31.12.2020 Gross carrying amount ECL impairment Carrying amount Gross carrying amount ECL impairment Carrying amount BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Retail banking Mortgages 767 555 (564) 766 991 616 209 (473) 615 736 Consumer loans 609 073 (7 014) 602 059 544 375 (6 400) 537 975 Credit cards 17 878 (977) 16 901 19 946 (984) 18 962 Other 2 333 (2 333) - 2 304 (2 304) - Total retail banking 1 396 839 (10 888) 1 385 951 1 182 834 (10 161) 1 172 673 Corporate lending 1 762 542 (27 855) 1 734 687 1 637 507 (25 720) 1 611 787 Total 3 159 381 (38 743) 3 120 638 2 820 341 (35 881) 2 784 460 Chimimport AD Consolidated financial statements 31 December 2021 105 2021 Placements with, and advances to, banks at amortized cost Stage 1 Stage 2 Stage 3 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Category 182 457 - - 182 457 Total gross carrying amount 182 457 - - 182 457 Impairment loss (32) - - (32) Carrying amount 182 425 - - 182 425 2020 Stage 1 Stage 2 Stage 3 Placements with, and advances to, banks at amortized cost 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Category 188 098 - - 188 098 Total gross carrying amount 188 098 - - 188 098 Impairment loss (30) - - (30) Carrying amount 188 068 - - 188 068 2021 Stage 1 Stage 2 Stage 3 Placements with, and advances to, banks at amortized cost 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Category 358 228 - - 358 228 Total gross carrying amount 358 228 - - 358 228 Impairment loss (1 246) - - (1 246) Carrying amount 356 982 - - 356 982 2020 Stage 1 Stage 2 Stage 3 Receivables under repurchase agreements of securities 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Category 360 917 - - 360 917 Total gross carrying amount 360 917 - - 360 917 Impairment loss (1 245) - - (1 245) Carrying amount 359 672 - - 359 672 2021 Stage 1 Stage 2 Stage 3 Receivables under repurchase agreements of securities 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Category 3 058 198 23 147 78 036 3 159 381 Total gross carrying amount 3 058 198 23 147 78 036 3 159 381 Impairment loss (12 944) (421) (25 378) (38 743) Carrying amount 3 045 254 22 726 52 658 3 120 638  2020 Stage 1 Stage 2 Stage 3 Loans and advances to customers at amortized cost 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Category 2 714 435 27 363 78 543 2 820 341 Total gross carrying amount 2 714 435 27 363 78 543 2 820 341 Impairment loss (12 350) (809) (22 722) (35 881) Carrying amount 2 702 085 26 554 55 821 2 784 460  2021 Stage 1 Stage 2 Stage 3 Investments in debt securities at amortized cost 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Category 687 839 - - 687 839 Total gross carrying amount 687 839 - - 687 839 Impairment loss (654) - - (654) Carrying amount 687 185 - - 687 185  Chimimport AD Consolidated financial statements 31 December 2021 106  2020 Stage 1 Stage 2 Stage 3 Investments in debt securities at amortized cost 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Category 463 489 - - 463 489 Total gross carrying amount 463 489 - - 463 489 Impairment loss (200) - - (200) Carrying amount 463 289 - - 463 289  2021 Stage 1 Stage 2 Stage 3 Investments in debt securities at FVTOCI 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Category 859 106 - - 859 106 Total gross carrying amount 859 106 - - 859 106 Impairment loss (4 643) - - (4 643) 2020 Stage 1 Stage 2 Stage 3 Investments in debt securities at FVTOCI 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Category 716 006 - - 716 006 Total gross carrying amount 716 006 - - 716 006 Impairment loss (2 734) - - (2 734) 2021 Stage 1 Stage 2 Stage 3 Loan commitments 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Category 243 241 1 110 471 244 822 Total gross carrying amount 243 241 1 110 471 244 822 Impairment loss (668) (8) (20) (696)  2020 Stage 1 Stage 2 Stage 3 Loan commitments 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Category 251 110 435 383 251 928 Total gross carrying amount 251 110 435 383 251 928 Impairment loss (947) (7) (23) (977)  2021 Stage 1 Stage 2 Stage 3 Financial guarantee contracts 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Category 52 665 - - 52 665 Total gross carrying amount 52 665 - - 52 665 Impairment loss (18) - - (18)  2020 Stage 1 Stage 2 Stage 3 Financial guarantee contracts 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Category 54 815 - - 54 815 Total gross carrying amount 54 815 - - 54 815 Impairment loss (27) - - (27) Credit risk concentration Concentration risk is the possibility of loss due to incorrect diversification of exposures to customers, groups of connected clients, customers in the same economic sector or geographic area. The tables below represent a cross-section of the concentrations of the different asset classes of the Group by region and by economic sector. Chimimport AD Consolidated financial statements 31 December 2021 107 Placements with, and advances to, banks at amortized cost 2021 2020 BGN‘000 BGN‘000 Concentration by sector Central banks 1 914 5 499 Bulgarian commercial banks 66 767 76 822 Foreign commercial banks 113 776 105 777 Total 182 457 188 098 Concentration by region Europe 172 022 178 404 America 5 146 3 132 Asia 5 289 6 562 Total 182 457 188 098 Receivables under repurchase agreements of securities 2021 2020 BGN‘000 BGN‘000 Corporate: Construction 69 265 86 923 Commerce and finance 207 958 198 689 Transport and communications 21 696 20 827 Production 14 713 11 574 Other 44 596 42 904 Total 358 228 360 917 Concentration by region Europe 358 228 360 917 Total 358 228 360 917 Investments in debt securities at amortized cost 2021 2020 BGN‘000 BGN‘000 Concentration by sector States 670 469 421 552 Bank 6 470 31 040 Corporate: Commerce and finance 10 900 10 897 Total 687 839 463 489 Concentration by region Europe 678 178 453 828 Asia 9 661 9 661 Total 687 839 463 489  Investments in debt securities at FVTOCI 2021 2020 BGN‘000 BGN‘000 Concentration by sector States 430 894 490 928 Corporate: Construction 135 781 53 372 Industry 31 069 30 578 Commerce and finance 214 796 115 276 Other 31 658 11 579 Total 844 198 701 733 Concentration by region Europe 844 198 701 733 Total 844 198 701 733 Chimimport AD Consolidated financial statements 31 December 2021 108 Loans and advances at amortized cost granted to customers 2021 2020 BGN‘000 BGN‘000 Concentration by sector Retail banking: 1 396 839 1 182 834 Mortgage 767 555 616 209 Consumer 609 073 544 375 Credit cards 17 878 19 946 Other 2 333 2 304 Corporate: 1 762 542 1 637 507 Agriculture and forestry 96 789 104 454 Industry 60 818 58 366 Construction 502 017 509 851 Commerce and finance 873 153 726 178 Transport and communications 127 500 126 429 Other 102 265 112 229 Total 3 159 381 2 820 341 Concentration by region Europe 3 159 225 2 820 189 America 5 5 Middle East and Africa 151 147 Total 3 159 381 2 820 341  Credit commitments 2021 2020 BGN‘000 BGN‘000 Concentration by sector Retail banking: 51 698 54 446 Mortgage 1 280 1 239 Consumer 11 160 11 742 Credit cards 39 258 41 465 Corporate: 193 124 197 482 Agriculture and forestry 8 043 3 724 Industry 27 233 26 425 Construction 35 934 44 868 Commerce and finance 114 623 114 695 Transport and communications 5 430 4 161 Other 1 861 3 609 Total 244 822 251 928 Concentration by region Europe 244 787 251 895 America 1 29 Middle East and Africa 34 4 Total 244 822 251 928 Financial guarantee contracts 2021 2020 BGN‘000 BGN‘000 Concentration by sector Retail banking: 66 146 Other 66 146 Corporate: 52 599 54 669 Agriculture and forestry 400 987 Industry 7 462 10 987 Construction 12 320 6 703 Commerce and finance 19 927 23 010 Transport and communications 6 372 8 140 Other 6 118 4 842 Total 52 665 54 815 Concentration by regions Europe 52 665 54 815 Total 52 665 54 815 Credit exposures with restructuring measures As exposures with restructuring measures the Group accepts credit exposures that have modified the original terms of the contract caused by a deterioration in the financial condition of the debtor leading to the inability to repay the full amount of the debt in due time and which discounts the Group would Chimimport AD Consolidated financial statements 31 December 2021 109 not circumstances. Amendments to the original terms of the contract in connection with the implementation of the restructuring measures may include: - Postponing or rescheduling the payment of principal interest or where applicable fees resulting in a reduction in the amount of the financial commitment; - Partial or total refinancing of a troubled debt contract which is only allowed when the debtor is in financial difficulties; - Partial or total debt write-off, which write-off leads to a reduction in the amount of the financial liability: - An amendment involving repayments resulting from a collateral acquisition by the Group is treated as a restructuring measure when the debtor is in financial difficulty; - Granted rebates to a debtor who is in default before granting the rebates; - Decrease in the interest rate under the contract except for a change in the agreed interest rate resulting from changes in market interest rates. The information on exposures with restructuring measures is as follows: 2021 Corporate customers Individuals BGN‘000 BGN‘000 Amount before impairment 43 407 2 721 Impairment (8 005) (414) Amount after impairment 35 402 2 307 2020 Corporate customers Individuals BGN‘000 BGN‘000 Amount before impairment 41 457 1 949 Impairment (6 101) (433) Amount after impairment 35 356 1 516 Collaterals on loans granted Housing mortgage loans to individuals The table below presents the carrying amount of reported housing mortgage loans to individuals based on loan-to-value ratio. The ratio is calculated as a correlation of the gross amount of loan exposure to the collateral value. Collateral value on housing mortgage loans is determined upon loan granting and is updated in case of significant changes in the prices of real estate market. Loan-to-value 2021 2020 BGN ‘000 BGN ‘000 Below 50% 187 086 148 095 From 50% to 75% 289 412 250 819 From 75% to 90% 216 569 146 350 From 90% to 100% 8 256 7 620 Above 100% 8 203 6 159 Total 709 526 559 043 Loans granted to legal entities With respect to loans to legal entities the Group identifies the creditworthiness of each individual client as the most appropriate risk exposure indicator. For this the Group has adopted an approach to individual credit assessment and impairment testing of loans to corporates. To ensure additional security in addition to regular monitoring of the financial position of borrowing enterprises the Group also requires collateral to be set up in the credit exposures. The Group accepts collateral for loans to legal persons mortgages on real estate a pledge of a commercial enterprise a special pledge of tangible assets as well as other guarantees and rights of ownership. Chimimport AD Consolidated financial statements 31 December 2021 110 The Group periodically analyses and updates the value of the collateral taking into account significant changes in the market environment the regulatory framework or other occurring circumstances. In the event that there is a decrease in the value of the collateral as a result of which the Group considers that it is not sufficient the Group requires that the debtor be constituted additional collateral by setting a certain period within which the supplementation will be fulfilled. 51.5. Liquidity risk analysis Liquidity risk is the risk that the Group cannot meet its liabilities. The Group manages its liquidity needs by carefully monitoring scheduled debt servicing payments for long-term financial liabilities as well as cash in- and outflows due to day-to-day business. Liquidity needs are monitored in various time bands on a day-to-day and week-to-week basis as well as on the basis of a rolling 30-day projection. Long- term liquidity needs for a 180-day and a 360-day lookout period are identified monthly. The need for cash is compared to the available loans in order to determine shortage or surplus. This analysis determines whether the loans available will be enough to cover the Group’s needs for the period. The Group holds cash to meet its liquidity needs for periods of up to 30 days. Funds for long-term liquidity needs are provided through loans in the appropriate amount and sale of long-term financial assets. As at 31 December 2020, the maturities of the Group's contractual obligations (containing interest payments, where applicable) are summarized as follows. Current Non-current Within 12 months From 2 to 5 years Over 5 years BGN‘000 BGN‘000 BGN‘000 Bank and other loans 81 497 152 167 16 881 Related party payables 48 922 14 394 - Lease liabilities 43 684 152 261 85 034 Liabilities to other depositors 4 697 376 2 219 741 763 Deposits from banks 41 146 - - Obligations under repo agreements 2 282 11 678 - Liabilities under cession agreements 10 708 32 306 - Trade and other payables 109 406 598 - Derivatives 118 - - Total 5 035 139 2 583 145 102 678 As at 31 December 2020 Group’s liabilities (including interest payables where applicable) have contractual maturities summarized below: Current Non-current Within 12 months From 2 to 5 years Over 5 years BGN‘000 BGN‘000 BGN‘000 Bank and other loans 75 554 154 090 16 591 Related party payables 44 488 17 029 - Lease liabilities 50 212 128 605 70 623 Liabilities to other depositors 4 426 091 1 741 817 964 Deposits from banks 66 092 - - Obligations under repo agreements 15 449 - - Liabilities under cession agreements 20 746 33 180 - Trade and other payables 97 261 1 114 - Derivatives 86 - - Total 4 795 979 2 075 835 88 178 The amounts disclosed in this obligation maturity analysis represent the undiscounted cash flows under the contracts that may differ from the carrying amounts of the liabilities at the reporting date. Group’s policies regarding the banking activities The liquidity risk arises from the discrepancy between the maturity structure of assets and liabilities and the lack of sufficient funds, with which the Group has to meet payments on current financial liabilities, as well as to provide financing for the increase of financial assets, and possible claims on off-balance sheet liabilities. Chimimport AD Consolidated financial statements 31 December 2021 111 Adequate liquidity is achieved when the Group is able to provide sufficient funds for these purposes, by increasing liabilities or converting assets as quickly as possible at relatively low cost, by selling liquid assets or attracting additional funds from the money, capital or foreign exchange markets. The preventive function in liquidity risk management is to maintain an acceptable level of liquidity to provide protection against possible losses in case of unforeseen sale of assets. The specialized collective body for liquidity management in the Group is the Assets and Liabilities Management Committee. The Committee implements the liquidity risk management policy adopted by the Group’s management. Quantitative measure of the liquidity risk according to the regulations of the BNB and EBA is the Liquid Coverage Ratio - the LCR indicator. This ratio represents the excess of the liquidity buffer (liquid assets) of the Group over net outflows. The Group's liquidity coverage ratio as at 31.12.2021 amounted to 357.20% (31.12.2020: 382.82%) and exceeded the statutory requirement of 100%. The allocation of the Group's financial liabilities as at 31 December 2021 based on their residual maturity is as follows: Up to 1 month 1 to 3 months 3 to 12 months 1 to 5 years Over 5 years Total FINANCIAL ASSETS BGN’000 BGN’000 BGN’000 BGN’000 BGN’000 BGN’000 Cash and cash balances with the Central Bank 1 963 552 - - - - 1 963 552 Placements with, and advances to banks 179 507 - - - 2 918 182 425 Receivables under repurchase agreements 111 225 114 303 131 454 - - 356 982 Financial assets at fair value through profit or loss 25 379 - 257 829 11 937 (1 162) 293 983 Loans and advances to customers, net 38 827 68 738 458 739 1 363 017 1 191 317 3 120 638 Financial assets measured at fair value in other comprehensive income 753 122 858 31 928 272 600 430 967 859 106 Financial assets at amortized cost 9 640 11 097 58 551 217 778 390 119 687 185 TOTAL FINANCIAL ASSETS 2 328 883 316 996 938 501 1 865 332 2 014 159 7 463 871 FINANCIAL LIABILITIES Deposits from banks 52 893 - - - - 52 893 Liabilities to other depositors 3 112 063 451 048 1 153 755 2 228 951 766 6 946 583 Issued bonds - - - - 25 450 25 450 Provisions for liabilities - - 713 - - 713 Other liabilities 12 285 1 842 8 001 27 500 14 549 64 177 TOTAL FINANCIAL ASSETS 3 177 241 452 890 1 162 469 2 256 451 40 765 7 089 816 The allocation of the Group's financial liabilities as at 31 December 2020 based on their residual maturity is as follows: Up to 1 month 1 to 3 months 3 to 12 months 1 to 5 years Over 5 years Total FINANCIAL ASSETS BGN’000 BGN’000 BGN’000 BGN’000 BGN’000 BGN’000 Cash and cash balances with the Central Bank 1 912 743 - - - - 1 912 743 Placements with, and advances to banks 185 150 - - - 2 918 188 068 Receivables under repurchase agreements 122 659 120 456 116 557 - - 359 672 Financial assets at fair value through profit or loss 17 053 - 245 927 - 4 672 267 652 Loans and advances to customers, net 33 819 36 013 296 599 1 435 795 982 234 2 784 460 Financial assets measured at fair value in other comprehensive income 753 34 106 22 879 313 792 344 476 716 006 Financial assets at amortized cost 9 280 12 634 46 527 127 321 267 527 463 289 TOTAL FINANCIAL ASSETS 2 281 457 203 209 728 489 1 876 908 1 601 827 6 691 890 FINANCIAL LIABILITIES Deposits from banks 66 052 - - - - 66 052 Liabilities to other depositors 2 894 855 414 560 1 132 674 1 747 894 964 6 190 947 Issued bonds - - - - 25 451 25 451 Provisions for liabilities - - 1 003 - - 1 003 Other liabilities 11 167 2 314 9 693 24 167 13 819 61 160 TOTAL FINANCIAL ASSETS 2 972 074 416 874 1 143 370 1 772 061 40 234 6 344 613 Financial liabilities of the Group are formed mainly by borrowing from other depositors – deposits of natural persons and legal entities. In the tables above a part of the attracted funds on current accounts with no residual maturity amounting to BGN 2 153 008 thousand as at 31 December 2021 (2020: BGN 1 665 762 thousand) is presented in Chimimport AD Consolidated financial statements 31 December 2021 112 the range from 1 year to 5 years since the Group considers this reserve to be a reliable long-term resource based on the average daily balance on those accounts in 2021 and 2020. The ongoing global Covid-19 coronavirus pandemic has no direct effect on the Group's liquidity, as the liquidity position measured by liquidity coverage is several times above the regulatory requirement. There are no outflows of clients' funds, on the contrary, the funds attracted from other depositors increase their annual growth. 52. Fair value measurement 52.1. Fair value measurement of financial instruments Financial assets and liabilities at fair value in the consolidated financial statements of financial position are grouped into three levels according to the fair value hierarchy This hierarchy groups are based on the significance of inputs used in measuring the fair value of the financial assets and liabilities. The fair value hierarchy has the following levels:  Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;  Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability either directly (i.e. as prices) or indirectly (i.e. derived from prices); and  Level 3: inputs for the asset that are not based on observable market data. A financial asset or liability is classified to the lowest level of significant input information used to determine its fair value. 31 December 2021 Level 1 Level 2 Level 3 Total BGN‘000 BGN‘000 BGN‘000 BGN‘000 Assets Financial assets measured at fair value through profit or loss 1 610 512 2 743 429 715 2 042 970 Equity instruments at fair value through other comprehensive income 23 852 753 45 821 70 426 Debt instruments measured at fair value through other comprehensive income 729 286 259 129 896 859 441 Total assets 2 363 650 3 755 605 432 2 972 837 Liabilities Derivatives - 118 - 118 Total liabilities - 118 - - 31 December 2020 Level 1 Level 2 Level 3 Total BGN‘000 BGN‘000 BGN‘000 BGN‘000 Assets Financial assets measured at fair value through profit or loss 1 571 955 7 696 447 590 2 027 241 Equity instruments at fair value through other comprehensive income 24 573 754 58 439 83 766 Debt instruments measured at fair value through other comprehensive income 661 489 - 56 106 717 595 Total assets 2 258 017 8 450 562 135 2 828 602 Liabilities Derivatives - 36 - 36 Total liabilities - 36 - 36 There have been no transfers between levels 1 and 2 during the reporting period. Chimimport AD Consolidated financial statements 31 December 2021 113 Measurement of fair value The methods and valuation techniques used for the purpose of measuring fair value are unchanged compared to the previous reporting period. a) Listed equity instruments All listed equity investments are denominated in BGN and are publicly traded on the Bulgarian Stock Exchange Sofia. Fair values have been determined by reference to their quoted bid prices at the reporting date. b) Non-listed equity instruments The fair value of these instruments is based on observed rates of recent market transactions with shares of similar companies adjusted for specific factors. c) Derivatives When derivative financial instruments are traded on stock markets or liquid OTC markets the Group uses the closing prices on the stock markets at the reporting date. When derivative financial instruments are not traded on active markets the fair value of these contracts is determined by using valuation techniques using observable market data (Level 2). All significant inputs to the model are based on observable market prices namely market interest rates on similar loans with similar risk. d) loans in BGN The fair value of loans is determined using valuation techniques. All significant inputs for the model are based on observed market prices - market interest rates on similar loans with similar risk. 52.2. Fair value measurements of non-financial assets The following table shows the levels within the hierarchy of non-financial assets measured at fair value on a recurring basis at 31 December 2021: 31 December 2021 Level 1 Level 2 Level 3 Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Investment property: - Land, building, machines and equipment - - 524 884 524 884 Right of use assets: - aircrafts - - 315 748 315 748 31 December 2020 Level 1 Level 2 Level 3 Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Investment property: - Land, building, machines and equipment - - 440 485 440 485 Right of use assets: - aircrafts - - 301 345 301 345 Fair value of the Company's main property assets is estimated based on appraisals performed by independent qualified appraisers. Land, buildings, machines and equipment (Level 3) The land buildings machines and equipment are revaluated on 31 December 2021. 53. Capital management policies and procedures The Group’s capital management objectives are: To ensure the Group’s ability to continue as a going concern; and Chimimport AD Consolidated financial statements 31 December 2021 114 To provide an adequate return to the shareholders by pricing products and services commensurately with the level of risk. The Group monitors capital on the basis of the correlation between capital to net debt. The Group determines the capital based on the carrying amount of the equity presented in the statement of financial position. Net debt is calculated as total liabilities less the carrying amount of the cash and cash equivalents. Group’s goal is to maintain a capital-to-net-debt ratio in a reasonable range which would ensure relevant and conservative ratio of financing. The Group manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure the Group may adjust the amount of dividends paid to shareholders return capital to shareholders issue new shares or sell assets to reduce debt. The capital for the presented reporting periods is summarized as follows: 2021 2020 BGN‘000 BGN‘000 Shareholders’ equity 1 850 767 1 804 345 Equity 1 850 767 1 804 345 Debt 9 796 353 8 919 098 - Cash and cash equivalents (2 380 922) (2 221 632) Net debt 7 415 431 6 697 466 Capital to net debt 1:4.01 1:3.71 In 2021 the change in the ratio is minimal. The Group has complied with its contractual obligations including the maintenance of certain capital ratios. 54. Post-reporting date events The following significant non-adjusting events for the Group occurred between the date of the consolidated financial statements and the date of its authorization for issue: In April 2022, the Group finalized a deal to purchase the four Embraer aircraft, which until the date of purchase are in the airline's fleet leased under operating leases. In April 2022, the Group entered into an agreement to extend the operating lease with an option to purchase an Airbus aircraft. Because of the ongoing pandemic situation lasting more than two years and in order to partially cover the negative consequences for air transport, in September 2021 the state decided to provide financial assistance to air operators operating charter flights and renting aircraft. In this connection is Decree № 51 of 13 April 2022 supplementing Decree № 454 of the Council of Ministers of 2021 approving additional expenditures in the budget of the Ministry of Transport and Communications for 2021, which starts the procedure for applying for financial aid. On 5 January 2022, the Ministry of Transport and Communications approved restructuring and increase of the investment program for 2021. The amount of the same was increased from BGN 203 thousand to BGN 294 thousand. On 24 February 2022, a military conflict broke out between the Russian Federation and the Republic of Ukraine. The economic consequences of these actions are extremely far-reaching and unpredictable. Energy and raw material prices have risen sharply, further exacerbating inflationary pressures from supply chain disruptions and the recovery from the Covid-19 pandemic. The imposed restrictions on the export of cereals, both from Ukraine and from the territory of Bulgaria are expected to reflect on the cargo turnover for the next periods. Chimimport AD Consolidated financial statements 31 December 2021 115 The medium and long-term consequences for the global economy of the Russian invasion of Ukraine will depend on the choice of countermeasures. As sanctions and counter-responses escalate, the costs will be higher - primarily for Russia, but also to the rest of the world economy. As of 31 December 2021, the Groups attracted resource from persons from the Russian Federation, Belarus and Ukraine is unsignificant - under 0.5% of balance sheet assets with no significant decrease. These funds are used by persons who, according to available information, are permanently established in the Republic of Bulgaria and the Republic of Northern Macedonia and in this sense their dependence on the development of hostilities or sanctions regimes is weak and potential changes will not significantly affect the Group. The funds attracted from 1 financial institution from the Russian Federation amount to less than 0.16% of the total attracted funds and are denominated in EUR, as their amount is not significant for the Group's activities. As the Group's liquid assets exceed the regulatory requirements and liquidity buffers are currently unaffected, Management does not expect to depend on funding affected by the coronavirus epidemic or hostilities. The Groups reinsurance exposure to reinsurance brokers and/or companies based in Russia is insignificant as of the date of the consolidated financial statements and there are no incurred/declared claims protected by these companies. As of 15 March 2022, the relations with all brokers and reinsurance companies in the Russian Federation have been terminated. The counterparties have already been replaced. No negative impact on the solvency and liquidity of the Insurance Companies of the Group is expected. The Group's management will continue to monitor the potential impact and will take all possible measures to mitigate any potential effects. The Group's management has taken a set of organizational measures in order for the Group to comply with all restrictions and sanctions imposed on the transfer of funds to and from Russia and/or sanctioned persons and institutions, including activities to increase and strengthen protection against potentially harmful actions and attacks on information resources and infrastructure. As the situation and actions of the state authorities in Bulgaria and the world are extremely dynamic, the Group's management is not able to fully quantify the impact of the event on future financial condition and achieved results but believes that the impact will have a negative impact on the Group. The Group's management is unable to assess the impact of a potential new wave or strain of coronavirus on its future financial condition and performance, but considers that with a fading effect, the potential impact could lead to lower volatility of the market and price risk related to the financial assets of the Group and less likelihood of negative effects on its operations. On 01 April 2022, the epidemiological situation in the Republic of Bulgaria was terminated. 55. Authorization of the consolidated financial statements The consolidated financial statements for the year ended 31 December 2021 (including comparatives) were approved by the Managing board on 03 May 2022. 2021 CONSOLIDATED ACTIVITY REPORT CONTENT CONSOLIDATED ACTIVITY REPORT GENERAL INFORMATION  INTRODUCTION  INFORMATION FOR THE GROUP OF CHIMIMPORT AD  THE COMPANY TODAY  MANAGING BODIES  SCOPE OF ACTIVITY  LIST OF SUBSIDIARIES INFORMATION ACCORDING TO ORDINANCE №2/09.11.2021 MAIN RISKS AND UNCERTAINTIES CONSOLIDATED CORPORATE MANAGEMENT DECLARATION CONSOLIDATED NON-FINANCIAL DECLARATION CONSOLIDATED REPORT ON PAYMENTS TO GOVERMENTS CONTACT US For more information, please visit: www.chimimport.bg CHIMIMP ORT GENERAL INFORMATION 1 INTRODUCTION The present Consolidated Activity Report of the Group of Chimimport AD presents comments and analyses of the financial statements and other material data on the financial position and the results of the Company's activity covering the one-year period from 1 January 2021 until 31 December 2021. The report is prepared in accordance with the requirements of the Accountancy Act, Art. 100n, par. 7 of the Public Offering of Securities Act and Appendix № 2 to Art. 10 from Ordinance № 2 of 09 November 2021. More than 75 years “Chimimport” AD is one of the most successful Bulgarian enterprises. It started as a foreign trade company specializing in the marketing of chemical products, today “Chimimport” AD is an established holding company, uniting successful businesses. The main area of activity of “Chimimport” AD is the acquisition, sale of shares in Bulgarian and foreign companies, restructuring and management of subsidiaries of the portfolio. Subsidiaries of the Group occupy leading positions in various economic sectors, which operate: • banking and finance; • non-life insurance; • life insurance; • pensions; • air transport and ground activities on servicing and repair of aircraft; • manufacture, production and marketing of petroleum and chemical products and natural gas; • production, processing and trade with cereals and vegetable oils. Each of every nearly 5 000 employees in the structure of “Chimimport” AD contributes to the successful integration of Bulgarian business to European standards. Recent years have strengthened the company as a leader of the “Bulgarian Stock Exchange” AD, included in “Premium” segment share, in the indices SOFIX, BGBX40 and BGTR30, which is the result of proper planning of investments and professional actions and efforts of management. The parent company’s activities as a public company is the creation and establishment of effectively functioning corporate governance models to ensure equal treatment and protection of the rights of all shareholders. The common practice is the transparent and fair disclosure of information needed by current shareholders, stakeholders and potential investors. At this stage the main advantages of the Group of "Chimimport" AD are: • Knowledge of economic and political conditions and resources in Bulgaria, needs and specificities of clients conquered good positions in strategic sectors of the economy; • Approved management team - the group has a highly motivated team of managers with a vision for the growth of the holding company, with proven skills and experience in management, acquisition and restructuring of companies in both favourable and unfavourable market environment. IVO KAMENOV CEO /Chief Executive Officer/ Ivo Kamenov Georgiev Digitally signed by Ivo Kamenov Georgiev Date: 2022.05.03 21:17:18 +03'00' CHIMIMP ORT GENERAL INFORMATION 2 INFORMATION FOR THE GROUP OF CHIMIMPORT AD Chimimport AD, parent company, is a public company with a two-tier management system. All members of the Management Board and the Supervisory Board shall meet the legal requirements for taking up their position. Management bodies of the Company are: General Meeting of Shareholders, Supervisory Board and Management Board. The Management Board manages in accordance with the established vision, goals and strategy of Chimimport AD. All members and management and supervisory bodies are guided by their generally accepted principles of integrity, managerial and professional competence. The basic strategy and investment policy of “Chimimport” AD are focused on positioning the group as a significant partner in servicing the traditional for the country and region trade activities. In particular, this motivates the entry of the group in sectors such as transport, agriculture, financial operations and real estate. The companies of the economic group of Chimimport AD are 59, in total, in the following leading and key sectors: - The financial sector, an area where the group strives to offer a full range of services to its clients. The financial group under the “Chimimport” AD includes a universal commercial bank, which has traditionally good positions in lending, life and non- life insurance companies, pension company, management company (mutual funds).. - Transport is an important sector for the group. Bulgaria is geographically located at the crossroads between Europe and Asia / Middle East, as five of the ten Trans European transport corridors pass through the country. The group of “Chimimport” AD develops air, river and sea transport, and in all three cases seek to cover the entire spectrum of activities, not just transport ( incl. the management of airports and ports, repair and maintenance vehicles, cargo handling, agency). - Both in the transport sector and in agriculture, “Chimimport” AD seeks to spread its activities over the full spectrum of business - in this case, focusing firstly on buying, trading, logistics, storage of grain and oilseeds, actively seeking and exploiting interconnections and synergies with other businesses (transport, finance, etc.). - The sector exploration and production of oil and gas is primarily develop through its subsidiary PDNG AD, which is the only Bulgarian company engaged in the full range of activities in prospecting, exploration, development and exploitation of oil and gas fields and processing crude oil into finished products for the market. And is the successor of the main geological, scientific research and production enterprises and objects of Bulgarian oil industry with over 50 years of history. CHIMIMP ORT GENERAL INFORMATION 3 THE COMPANY TODAY Share capital BGN 239 646 thousand owned by subsidiaries BGN (13 183) thousand Equity /consolidated/ BGN 1 850 767 thousand Assets /consolidated/ BGN 11 647 120 thousand Profit for the year attributable to the shareholders of Chimimport AD BGN 35 293 thousand Executive directors Ivo Kamenov Marin Mitev Majority shareholder The parent company management in the face of “Invest Capital” AD -72,39 % Minority shareholders of Chimimport AD are respected international companies and institutions Uncredit Bank Austria – Austria Eurobank Ergasias - Greece Eaton Vance Emerging Markets Funds – USA Raiffeisen Bank International – Austria BNP Paribas Securities Services S.C.A. – France UBS Switzerland AG - Cl Approximately 201 legal entities and over 3 200 individuals. CHIMIMP ORT GENERAL INFORMATION 4 MANAGING BODIES CHIMIMP ORT GENERAL INFORMATION 5 SCOPE OF ACTIVITY Chimimport AD develops its activities through its subsidiaries. Its financial position, operating results and prospects are directly dependent on the status, results and prospects of its subsidiaries. CHIMIMP ORT GENERAL INFORMATION 6 LIST OF SUBSIDIARIES Name of the subsidiary Country of incorporation Main activities 31.12.2021 Percentage of consolidation 31.12.2021 Nominal percentage 31.12.2020 Percentage of consolidation 31.12.2020 Nominal percentage Central Cooperative Bank AD Bulgaria Finance 77.02% 77.02% 77.00% 77.00% Central Cooperative Bank AD – Skopje Macedonia Finance 67.28% 91.83% 67.26% 91.83% AO Investment Cooperative Bank Russia Finance 86.27% 86.27% 86.27% 86.27% CCB Group EAD Bulgaria Finance 100.00% 100.00% 100.00% 100.00% CCB Assets Management EOOD Bulgaria Finance 77.02% 100.00% 77.02% 100.00% ZAD Armeec Bulgaria Finance 96.26% 96.26% 96.26% 96.26% ZEАD CCB Life Bulgaria Finance 100.00% 100.00% 100.00% 100.00% POAD CCB Sila Bulgaria Finance 67.43% 67.43% 67.43% 67.43% DPF CCB Sila Bulgaria Finance 67.43% 100.00% 67.43% 100.00% UPF CCB Sila Bulgaria Finance 67.43% 100.00% 67.43% 100.00% PPF CCB Sila Bulgaria Finance 67.43% 100.00% 67.43% 100.00% Zarneni Hrani Bulgaria AD Bulgaria Production, Trade and Services 68.12% 68.12% 68.12% 68.12% Oil and Gas Exploration and Production AD Bulgaria Production, Trade and Services 49.59% 65.92% 49.59% 65.92% Bulgarska Petrolna Rafinieria EOOD Bulgaria Production, Trade and Services 49.59% 100.00% 49.59% 100.00% Slanchevi lachi Provadia EOOD Bulgaria Production, Trade and Services 68.12% 100.00% 68.12% 100.00% Asenova Krepost AD Bulgaria Production, Trade and Services 53.48% 76.44% 49.93% 72.36% PDNG Service EOOD Bulgaria Production, Trade and Services 49.59% 100.00% 49.59% 100.00% Izdatelstvo Geologia i Mineralni Resursi OOD Bulgaria Production, Trade and Services 34.71% 70.00% 34.71% 70.00% Bulchimtrade OOD Bulgaria Production, Trade and Services 44.96% 66.00% 44.96% 66.00% Rubber Trade OOD Bulgaria Production, Trade and Services 40.87% 60.00% 40.87% 60.00% Chimceltex EOOD Bulgaria Production, Trade and Services 68.12% 100.00% 68.12% 100.00% Chimoil BG EOOD Bulgaria Production, Trade and Services 49.59% 100.00% 49.59% 100.00% Zarneni Hrani Grain EOOD Bulgaria Production, Trade and Services 68.12% 100.00% 68.12% 100.00% Techno Capital AD Bulgaria Production, Trade and Services 86.40% 90.00% 86.40% 90.00% Dobrich Fair AD Bulgaria Production, Trade and Services 40.85% 59.97% 40.85% 59.97% National Stokova Borsa AD Bulgaria Production, Trade and Services 75.00% 75.00% 75.00% 75.00% Prime Lega Consult EOOD Bulgaria Production, Trade and Services 100.00% 100.00% 100.00% 100.00% AH HGH Consult OOD Bulgaria Production, Trade and Services 59.34% 59.34% 59.34% 59.34% Omega Finance OOD Bulgaria Production, Trade and Services 96.00% 96.00% 96.00% 96.00% IT Systems Consult EOOD Bulgaria Production, Trade and Services 68.12% 100.00% 68.12% 100.00% CHIMIMP ORT GENERAL INFORMATION 7 Name of the subsidiary Country of incorporation Main activities 31.12.2021 Percentage of consolidation 31.12.2021 Nominal percentage 31.12.2020 Percentage of consolidation 31.12.2020 Nominal percentage Bulgarian Shipping Company EAD Bulgaria Sea and River Transport 100.00% 100.00% 100.00% 100.00% Parahodstvo Bulgarsko Rechno Plavane AD Bulgaria Sea and River Transport 79.89% 79.89% 79.89% 79.89% Port Balchik AD Bulgaria Sea and River Transport 78.64% 100.00% 78.64% 100.00% Port Lesport AD Bulgaria Sea and River Transport 99.00% 99.00% 99.00% 99.00% Lesport Project Management EOOD Bulgaria Sea and River Transport 99.00% 100.00% 99.00% 100.00% Mayak - KM AD Bulgaria Sea and River Transport 69.16% 86.57% 69.16% 86.57% Bulgarian Logistic Company EOOD Bulgaria Sea and River Transport 100.00% 100.00% 100.00% 100.00% Port Pristis OOD Bulgaria Sea and River Transport 43.94% 55.00% 43.94% 55.00% Portstroi Invest EOOD Bulgaria Sea and River Transport 100.00% 100.00% 100.00% 100.00% Port Invest EOOD Bulgaria Sea and River Transport 79.89% 100.00% 79.89% 100.00% Interlihter Slovakia Slovakia Sea and River Transport 79.89% 100.00% 79.89% 100.00% Blue Sea Horizon Corp Seychelles Sea and River Transport 79.89% 100.00% 79.89% 100.00% Bulgarian Airways Group EAD Bulgaria Aviation Transport 100.00% 100.00% 100.00% 100.00% Bulgaria Air AD Bulgaria Aviation Transport 99.99% 99.99% 99.99% 99.99% Bulgaria Air Technique EOOD Bulgaria Aviation Transport 99.99% 100.00% 99.99% 100.00% Airport Consult EOOD Bulgaria Aviation Transport 100.00% 100.00% 100.00% 100.00% Fly Lease EOOD Bulgaria Aviation Transport 100.00% 100.00% - - Trans intercar EAD Bulgaria Vehicle Transport 100.00% 100.00% 100.00% 100.00% Energoproekt AD Bulgaria Real Estate and engineering 98.69% 98.69% 98.69% 98.69% Bulgaria Air Maintanance EAD Bulgaria Real Estate and engineering 100.00% 100.00% 100.00% 100.00% Golf Shabla AD Bulgaria Real Estate and engineering 32.23% 65.00% 32.23% 65.00% Sporten Complex Varna AD Bulgaria Real Estate and engineering 65.00% 65.00% 65.00% 65.00% Sporten management EOOD Bulgaria Real Estate and engineering 65.00% 100.00% 65.00% 100.00% TI AD Bulgaria Real Estate and engineering 87.66% 87.66% 87.66% 87.66% Bulchimex GmBH Bulgaria Real Estate and engineering 100.00% 100.00% 100.00% 100.00% Invest Capital Consult AD Bulgaria Real Estate and engineering 100.00% 100.00% 100.00% 100.00% Sitniakovo Project Estate EOOD Bulgaria Real Estate and engineering 49.59% 100.00% 49.59% 100.00% Imoti Activities 1 EOOD Bulgaria Real Estate and engineering 68.12% 100.00% CHIMIMP ORT GENERAL INFORMATION 8 The Group includes non-controlling interest (NCI), broken down by segments as follows: Name segment Accumulated non controlling interest 2021 2020 BGN’000 BGN’000 Finance sector 167 959 160 741 Production, trade and services 132 108 129 884 Transport 3 028 3 817 Real Estate 27 560 27 173 TOTAL 330 665 321 615 In 2021 and 2020 no dividends were paid to non-controlling. - аn objective review, which presents true and fair the development and results of the Group's activities, as well as its condition, together with a description of the main risks it faces; Detailed information is presented in the section Main risks and uncertainties. - analysis of financial and non-financial key performance indicators relevant to the business, including information on environmental issues and staff Detailed information is presented in the Information section according to Ordinance № 2/ 09.11.2021 - significant events that occurred after the date on which the annual financial statements were prepared The following significant non-adjusting events for the Group occurred between the date of the consolidated financial statements and the date of its authorization for issue: In April 2022, the Group finalized a deal to purchase the four Embraer aircraft, which until the date of purchase are in the airline's fleet leased under operating leases. In April 2022, the Group entered into an agreement to extend the operating lease with an option to purchase an Airbus aircraft. Because of the ongoing pandemic situation lasting more than two years and in order to partially cover the negative consequences for air transport, in September 2021 the state decided to provide financial assistance to air operators operating charter flights and renting aircraft. In this connection is Decree № 51 of 13 April 2022 supplementing Decree № 454 of the Council of Ministers of 2021 approving additional expenditures in the budget of the Ministry of Transport and Communications for 2021, which starts the procedure for applying for financial aid. On 5 January 2022, the Ministry of Transport and Communications approved restructuring and increase of the investment program for 2021. The amount of the same was increased from BGN 203 thousand to BGN 294 thousand. On 24 February 2022, a military conflict broke out between the Russian Federation and the Republic of Ukraine. The economic consequences of these actions are extremely far-reaching and unpredictable. Energy and raw material prices have risen sharply, further exacerbating inflationary pressures from supply chain disruptions and the recovery from the Covid-19 pandemic. The imposed restrictions on the CHIMIMP ORT GENERAL INFORMATION 9 export of cereals, both from Ukraine and from the territory of Bulgaria are expected to reflect on the cargo turnover for the next periods. The medium and long-term consequences for the global economy of the Russian invasion of Ukraine will depend on the choice of countermeasures. As sanctions and counter-responses escalate, the costs will be higher - primarily for Russia, but also to the rest of the world economy. As of 31 December 2021, the Groups attracted resource from persons from the Russian Federation, Belarus and Ukraine is unsignificant - under 0.5% of balance sheet assets with no significant decrease. These funds are used by persons who, according to available information, are permanently established in the Republic of Bulgaria and the Republic of Northern Macedonia and in this sense their dependence on the development of hostilities or sanctions regimes is weak and potential changes will not significantly affect the Group. The funds attracted from 1 financial institution from the Russian Federation amount to less than 0.16% of the total attracted funds and are denominated in EUR, as their amount is not significant for the Group's activities. As the Group's liquid assets exceed the regulatory requirements and liquidity buffers are currently unaffected, Management does not expect to depend on funding affected by the coronavirus epidemic or hostilities. The Groups reinsurance exposure to reinsurance brokers and/or companies based in Russia is insignificant as of the date of the consolidated financial statements and there are no incurred/declared claims protected by these companies. As of 15 March 2022, the relations with all brokers and reinsurance companies in the Russian Federation have been terminated. The counterparties have already been replaced. No negative impact on the solvency and liquidity of the Insurance Companies of the Group is expected. The Group's management will continue to monitor the potential impact and will take all possible measures to mitigate any potential effects. The Group's management has taken a set of organizational measures in order for the Group to comply with all restrictions and sanctions imposed on the transfer of funds to and from Russia and/or sanctioned persons and institutions, including activities to increase and strengthen protection against potentially harmful actions and attacks on information resources and infrastructure. As the situation and actions of the state authorities in Bulgaria and the world are extremely dynamic, the Group's management is not able to fully quantify the impact of the event on future financial condition and achieved results but believes that the impact will have a negative impact on the Group. The Group's management is unable to assess the impact of a potential new wave or strain of coronavirus on its future financial condition and performance, but considers that with a fading effect, the potential impact could lead to lower volatility of the market and price risk related to the financial assets of the Group and less likelihood of negative effects on its operations. On 01 April 2022, the epidemiological situation in the Republic of Bulgaria was terminated. - future development; In 2022, the Group continues to follow its path of intensive development in each of the sectors in which it operates. The main focus of the banking activity will be the provision of banking services for the population - consumer and mortgage loans, bank cards and services based on them, electronic banking and payment services. CHIMIMP ORT GENERAL INFORMATION 10 - research and development activities; The Group does not operate in the field of research and development during the period. - information for acquisition of own shares, required by the order of art. 187e of the Commercial Code; Information about the Group is presented in the section on own shares below. - branches; The parent company has no registered branches. - information on the financial instruments used by the Company; The information is included in the Information section according to Ordinance № 2 / 09.11.2021 - number and nominal value of the acquired and transferred during the year own shares; There are no own shares owned by the Parent Company during the period. The shares of the Parent Company held by the subsidiaries are disclosed in Note 24.1 of the consolidated financial statements. - number and nominal value of the held own shares; There are no own shares owned by the Parent Company during the period. The shares of the Parent Company held by the subsidiaries are disclosed in Note 24.1 of the consolidated financial statements. - remuneration received in total during the year from board members The information is disclosed in point 16 of the Information section according to Ordinance № 2 / 09.11.2021. - the shares and bonds of the issuer acquired, held and transferred by the members of the boards during the year The information is disclosed in point 18 of the Information section according to Ordinance № 2 / 09.11.2021. - the rights of the members of the boards to acquire shares and bonds of the issuer Not applicable. - the participation of board members in companies as partners with unlimited liability, the holding of more than 25 per cent of the capital of another company, and their participation in the management of other companies or cooperatives such as procurators, managers or board members; CHIMIMP ORT GENERAL INFORMATION 11 SUPERVISORY BOARD of the Parent Company Mariana Angelova Bajdarova - Member of the Supervisory Board: Company UIC Interest Chimimport AD 000627519 Member of the Supervisory Board MB CONSULT COMMERS (in liquidation) 203868694 Partner– over 25% Does not participate in the management of other companies or cooperatives as procurator, manager or member of boards according to art. 247 of the CA; MANAGEMENT BOARD of the Parent Company Tsvetan Tsankov Botev Chairman of the Management Board of Chimimport AD: Company UIC Interest Chimimport AD 000627519 Chair of the Supervisory Board Central Cooperative Bank AD 831447150 Deputy chair of the managing board Bulhimtrade OOD 200477808 Manager PHARMA GBS DZZD 176397025 Manager Chimimport-Biopharm Engineering Consortium DZZD 131071224 Manager Does not own more than 25 percent of the capital of other commercial companies. Ivo Kamenov Georgiev - Executive Director, Representative of a legal entity in the Supervisory Board and member of the Management Board and the Management Board of Chimimport AD: Company UIC Interest Chimimport AD 000627519 Member of the Management Board, Member of the Supervisory Board and Executive Director Invest Capital AD 831541734 Member of the Board of Directors and Executive Director CCB Group EAD 121749139 Chairman of the Board Central Cooperative Bank AD 831447150 Chairman of the Supervisory Board Capital Invest EAD 121878333 Representative who exercises the rights and obligations of the member CHIMIMP ORT GENERAL INFORMATION 12 Company UIC Interest Invest Capital AD in the Board of Directors Invest Capital Asset Management EAD 200775128 Representative who exercises the rights and obligations of the member Invest Capital AD in the Board of Directors Invest Capital Management OOD 103045368 Partner - over 25% Varna consulting company OOD 103060548 Partner - over 25% National Martial Arts Association 176868502 Representative and manager Georgiev Law firm 177523879 Manager M CAR GROUP AD 203384266 Procurator M CAR PLEVEN OOD 114074410 Procurator M CAR SOFIA EOOD 203645296 Procurator Marin Velikov Mitev - Executive Director, Member of the Supervisory Board and the Management Board of Chimimport AD: Company UIC Interest Chimimport AD 000627519 Member of the Management Board and Executive Director Golf Shabla AD 124712625 Member of the Management Board and Executive Director Invest Capital AD 831541734 Member of the Management Board and Executive Director Sporten Complex Varna AD 103941472 Member of the Management Board and Executive Director Varna plod AD 103106697 Member of the Management Board CCB Group EAD 121749139 Member of the Supervisory Board Central Cooperative Bank AD 831447150 Member of the Supervisory Board Association Sports Club TIM 103014351 Chairman and Manager CHIMIMP ORT GENERAL INFORMATION 13 Company UIC Interest Martial Arts Sports Club Association TIM 103606634 Chairman of the Board and Manager Bulgarian Karate Kyokoshin Federation 103570622 Chairman of the Board and Manager Association - Aerobics Club "TIM - Class" 103556156 Member of the Board Association of Black Sea Sports Clubs 000090542 Member of the Board National Board of Tourism Association 175090938 Member of the Board ET Marin Mitev Project Management 103326073 Owner Varna Consulting Company OOD 103060548 Partner – over 25% Invest Capital Management OOD 103045368 Partner – over 25% Alexander Dimitrov Kerezov - Deputy. Chairman and member of the Management Board of Chimimport AD: Company UIC Interest Chimimport AD 000627519 Member of the Board Central Cooperative Bank AD 831447150 Member of the Board Bulgarian Airways Group EAD 131085074 Member of the Board of Directors CCB Group EAD 121749139 Member of the Board Zarneni Hrani Bulgaria AD 175410085 Member of the Board and representative ZAD Armeec AD 121076907 Member of the Board Parahodstvo Bulgarsko Rechno Plavane AD 827183719 Member of the Board POAD CCB Sila AD 825240908 Member of the Supervisory Board Asenova Krepost AD 115012041 Member of the Board SK HGH Consult OOD 130452457 Manager Proekt ART OOD 203844348 Manager and Partner - over 25% Association SAGLASIE 066 176941060 Chairman of the Management Board and representative Foundation SAGLASIE Sofia 205004556 Chairman of the Management CHIMIMP ORT GENERAL INFORMATION 14 Board and representative United Grand Lodge of Bulgaria Association 130688048 Member of the Management Board ALEX AS EOOD 131105146 Manager and Owner Zarneni Hrani Plovdiv EOOD 130574490 Manager Nikola Peev Mishev - Member of the Management Board of Chimimport AD: Company UIC Interest Chimimport AD 000627519 Member of the Board Zarneni Hrani Bulgaria AD 175410085 Member of the Board Asenova Krepost AD 115012041 Member of the Board and representative Energoproekt AD 831367237 Member of the Supervisory Board Ekspert snab OOD 131388356 Manager Bulhimtrade OOD 200477808 Manager Rabur Trade OOD 130430425 Manager Chimceltex EOOD 130434434 Manager Does not own more than 25 percent of the capital of other commercial companies. Mirolyub Panchev Ivanov - Member of the Management Board of Chimimport AD: Company UIC Interest Chimimport AD 000627519 Member of the Board ZAD Armeec 121076907 Representative and Member of the Board National Stock Exchange AD 115223519 Member of the Board of Directors Bulgarska korabna kompania EAD 175389730 Member of the Board of Directors CCB Real Estate Fund ADSIC 131550406 Executive Director and Member of the Board of Directors Oil and Gas production and exploration AD 824033568 Member of the Board Capital Invest EAD 121878333 Executive Director and Member of the Board of Directors Invest Capital Asset Management EAD 200775128 Executive Director and Member of the Board of Directors POAD CCB Sila AD 825240908 Member of the CHIMIMP ORT GENERAL INFORMATION 15 Company UIC Interest Supervisory Board Omega Finance OOD 181385114 Manager Prime Lega Consult EOOD 130993620 Manager TI AD 121483350 Executive Director and Member of the Board of Directors Zarneni hrani Bulgaria AD 175410085 Member of the Board Project Company 1 AD 205105587 Executive Director and Member of the Board of Directors Rubicon Project EOOD 202902446 Manager Mutual Fund "Invest Capital-High-yield " 175860666 Manager ENERGOMAT EOOD 131095780 Manager ENERGOPROEKT AD 831367237 Member of the Supervisory Board CONSORTIUM TECHNOCAPITAL DZZD 176018753 Manager CENTRAL VACUUM SYSTEMS EOOD 200631195 Manager CRONE BULGARIA AD 130517595 Executive Director and Member of the Board of Directors Does not own more than 25 percent of the capital of other commercial companies. - concluded contracts under Art. 240b of the Commercial Code Not applicable. - the planned economic policy for the next year The Group does not anticipate significant changes in its economic policy for the next year. 16 INFORMATION ACCORDING TO ORDINANCE № 2 09.11.2021 CHIMIMP ORT INFORMATION ACCORDING TO ORDINANCE №2 / 09.11.2021 17 Appendix № 2 to Art. 10 of Ordinance №2 / 09.11.2021 1. Information, given in value and quantity, regarding the main categories of goods, products and / or services provided, indicating their share in the revenues from sales of the issuer, respectively the person under § 1e of the additional provisions of LPOS, as a whole and the changes during the reporting financial year.  Due to the specific nature of the activity of the issuer - holding activity, the main revenues of the company are both income from operating activities and financial, formed by positive differences from operations with financial instruments, interest income and dividends. Operating revenues are mainly related to investment property, services and others. Changes in Profit and Income from Non-Financial Activities of Segment Group: Business Segments Production, Trade and Services Financial Sector Transport Sector Real estate BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 31 December 2021 Share of the single segment in the Group’s profit 3.46% 111.95% (21.07%) (5.66%) 31 December 2020 Share of the single segment in the Group’s profit 6.27% 147.44% (52.84%) (0.88%) The Finance segment has the largest share of the Group’s net profit in 2021. CHIMIMP ORT INFORMATION ACCORDING TO ORDINANCE №2 / 09.11.2021 18 Information on revenue broken down by category of activity, internal and external markets. Operating segments Production, trade and services Finance Transport Real estate and engineering Eliminations Consolidated 31.12.2021 BGN’000 BGN’000 BGN’000 BGN’000 BGN’000 BGN’000 Income from non-financial activities from external customers 75 625 29 428 228 463 15 317 229 349 062 Change in fair value of investment property (130) 1 092 - 36 1 626 2 624 Gain from sale of non-current assets - 93 3 (38) - 58 Inter-segment income from non-financial activities 15 387 2 341 8 328 712 (26 768) - Total income from non-financial activities 90 882 32 954 236 794 16 027 (24 913) 351 744 Insurance income from external customers - 387 365 - - (1 393) 385 972 Inter-segment insurance income - 5 848 - - (5 848) - Total insurance income - 393 213 - - (7 241) 385 972 Net result from insurance - 71 656 - - (5 543) 66 113 Interest income 6 609 168 043 4 917 1 206 (11 686) 169 089 Interest expenses (6 455) (23 395) (16 794) (2 984) 11 686 (37 942) Net interest income 154 144 648 (11 877) (1 778) - 131 147 Net result from transactions with financial instruments 2 394 82 037 2 019 4 281 (9 975) 80 756 Operating and administrative expenses (96 672) (260 510) (230 448) (14 857) 38 481 (564 006) Net result from equity accounted investments in associates 26 - 4 289 4 315 Other financial income/(expenses) 5 396 95 944 (13 624) (419) (7 626) 79 671 Allocation of income to individual insurance accounts - (98 663) - - - (98 663) Profit for the period before tax 2 180 68 066 (12 847) 3 254 (9 576) 51 077 Income tax expense (285) (6 767) 1 308 (154) - (5 898) Net profit for the year 1 895 61 299 (11 539) 3 100 (9 576) 45 179 Assets of the segment 719 556 11 791 032 1 236 736 312 354 (2 439 330) 11 620 348 Equity accounted investments 363 - 22 150 2 4 257 26 772 Total consolidated assets 719 919 11 791 032 1 258 886 312 356 (2 435 073) 11 647 120 Liabilities of the segment 284 702 9 451 604 819 427 140 158 (899 538) 9 796 353 Total consolidated liabilities 284 702 9 451 604 819 427 140 158 (899 538) 9 796 353 CHIMIMP ORT CHIMIMP ORT INFORMATION ACCORDING TO ORDINANCE №2 / 09.11.2021 19 2. Information on revenues distributed by different categories of activities, internal and external markets, as well as information on the sources of supply of materials needed for the production of goods or provision of services, reflecting the degree of dependence on each individual seller or buyer / consumer, in case the relative share of any of them exceeds 10 percent of the costs or revenues from sales, information shall be provided for each person separately, for his share in sales or purchases and his relations with the issuer, respectively the person under § 1e of the additional provisions of the Law on Public Offering of Securities Income and expenses structure Income from non-financial activities 2021 BGN ‘000 2020 BGN ‘000 Change % Income from the sale of plane tickets 117 152 106 595 10% Income from sale of finished goods 50 587 52 154 -3% Income from services rendered 43 022 38 907 11% Income from sale of trading goods 23 257 17 158 36% Other 115 044 75 825 52% TOTAL 349 062 290 639 Gain from change in fair value of investment property 2021 BGN ‘000 2020 BGN ‘000 Change % Gain on change in fair value of investment properties 3 248 1 717 89% Loss from change in fair value of investment properties (624) (1 256) -50% Net effect of changes in fair value of investment properties 2 624 461 Interest expenses by depositors: 2021 BGN ‘000 2020 BGN ‘000 Change % Legal entities (18 225) (14 758) 23% Individuals (4 527) (6 157) -26% Banks (6 363) (6 605) -4% Other (8 827) (9 726) -9% TOTAL (37 942) (37 246) Results from transactions with financial instruments 2021 BGN ‘000 2020 BGN ‘000 Change % Gains from transactions with securities and investments 699 199 698 267 0% Dividend income 13 138 18 914 -31% TOTAL 712 337 717 181 Interest income by types of sources: 2021 BGN ‘000 2020 BGN ‘000 Change % Legal entities 97 554 79 569 23% Government securities 15 436 44 691 -65% Banks 2 123 2 870 -26% Individuals 51 291 50 094 2% Other 2 685 2 147 25% TOTAL 169 089 179 371 CHIMIMP ORT CHIMIMP ORT INFORMATION ACCORDING TO ORDINANCE №2 / 09.11.2021 20 Losses from transactions with securities and investments 2021 BGN ‘000 2020 BGN ‘000 Change % Losses from transactions with securities and investments (631 581) (649 248) -3% TOTAL (631 581) (649 248) Net result from transactions with financial instruments 80 756 67 933 51.72% Other financial income, net 2021 BGN ‘000 2020 BGN ‘000 Change % Revenue from fees and commissions, net 72 453 65 827 10% Net result from foreign exchange differences 3 931 (22 986) -117% Other finance expenses 3 287 1 551 112% TOTAL 79 671 44 392 Revenue from fees and commissions 2021 BGN ‘000 2020 BGN ‘000 Change % Bank transfers in Bulgaria and abroad 31 244 27 522 14% Maintenance fee on deposit accounts 17 879 17 438 3% Servicing fee for loans 6 434 4 431 45% Fee for commitments and contingencies 896 995 -10% Other fees and commissions income, different from banks 18 604 16 664 12% Other income 15 855 13 455 18% Revenue from fees and commissions 90 912 80 505 Fees and commissions expenses 2021 BGN ‘000 2020 BGN ‘000 Change % Bank transfers in Bulgaria and abroad (12 120) (9 909) 22% Account maintenance fees (1 213) (1 114) 9% Release of precious parcels (1 556) (882) 76% Transactions with securities (205) (202) 1% Other fees and commissions expenses, different from banks (1 484) (1 226) 21% Other expenses (1 881) (1 345) 40% Total fees and commissions expenses (18 459) (14 678) Information on concluded large transactions. Operating and administrative expenses 2021 BGN ‘000 2020 BGN ‘000 Change % Hired services (123 642) (115 829) 7% Cost of materials (64 608) (54 301) 19% Cost of goods sold (29 439) (19 119) 54% Employee benefits expense (117 545) (120 289) -2% Depreciation and impairment of non-financial assets (122 907) (111 054) 11% Changes in inventories of products and work in progress (1 265) 1 130 -212% Impairment of receivables (51 959) (54 861) -5% Other expenses (52 641) (44 566) 18% (564 006) (518 889) CHIMIMP ORT CHIMIMP ORT INFORMATION ACCORDING TO ORDINANCE №2 / 09.11.2021 21 In 2021, no major and significant transactions were concluded under Art. 114, para 1 of Public Offering of Securities Act. 3. Information on the transactions concluded between the issuer, respectively the person under § 1e of the additional provisions of LPOS, and related parties, during the reporting period, proposals for such transactions, as well as transactions that are outside its normal activities or significantly deviate from the market conditions under which the issuer, respectively the person under § 1e of the additional provisions of LPOS or its subsidiary, is a party indicating the value of transactions, the nature of connectivity and any information necessary to assess the impact on the financial condition of the issuer, respectively the person under § 1e of the additional provisions of LPOS Transactions with owners 2021 2020 BGN ‘000 BGN ‘000 Sale of goods and services, interest income and other income - interest income 172 221 - sale of services 10 10 - other income 2 2 Purchase of services, interest expense and other expenses - purchase of services (30) (327) - interest expense (256) (289) Transactions with associates and other related parties Sale of goods and services, interest income and other income 2021 BGN ‘000 2020 BGN ‘000 Sale of production - associated companies 1 025 555 - other related parties 228 1 764 Sale of finished goods - associated companies 279 293 - other related parties 462 268 Sale of services - joint ventures 74 10 - associated companies 11 007 11 409 - other related parties 2 287 507 Interest income - joint ventures 225 218 - associated companies 14 22 - other related parties 1 251 1 883 Other income - joint ventures 38 25 - associated companies 1 189 122 - other related parties 159 380 CHIMIMP ORT CHIMIMP ORT INFORMATION ACCORDING TO ORDINANCE №2 / 09.11.2021 22 Transactions with key management personnel: 2021 BGN ‘000 2020 BGN ‘000 Short-term wages: - Salaries, including bonuses (168) (1 779) - Social security costs (16) (24) Total short-term benefits (184) (1 803) Related party balances at year-end: 2021 BGN ‘000 2020 BGN ‘000 Non-current Receivables from: - associates 3 507 3 450 - other related parties under common control 86 302 49 296 Total non-current receivables from related parties 89 809 52 746 Current Receivables from: 2021 BGN ‘000 2020 BGN ‘000 - owners 30 389 21 820 - associates 1 222 961 - joint ventures 6 493 1 264 - other related parties under common control 37 646 95 677 Total current receivables from related parties 75 750 119 722 Non-current Payables to: 2021 BGN ‘000 2020 BGN ‘000 - owners 8 12 - associates 7 225 5 010 - joint ventures 947 236 - other related parties under common control 6 214 11 771 Total non-current payables to related parties 14 394 17 029 Current Payables to: 2021 BGN ‘000 2020 BGN ‘000 - owners 25 012 22 153 - associates 6 682 6 099 - joint ventures 584 295 - other related parties under common control 16 644 15 941 Total current payables to related parties 48 922 44 488 Liabilities under securities repurchase agreements As of December 31, 2021 the Group has concluded agreements with a clause for repurchase of securities with Bulgarian companies in the total amount of BGN 13 960 thousand (2020: BGN 15 449 thousand), including accrued interest liabilities on them. These agreements are due by the end of 2022. 4. Information on events and indicators of an unusual nature for the issuer, respectively the person under § 1e of the additional provisions of the Law on Public Offering of Securities, having a significant impact on its activities, and the revenues and expenses incurred by it; assessment of their impact on the results in the current year. Because of the ongoing pandemic situation lasting more than two years and in order to partially cover the negative consequences for air transport, in September 2021 the state decided to provide financial assistance to air operators operating charter flights and renting aircraft. In this connection is Decree № 51 of 13 April 2022 supplementing Decree № 454 of the Council of Ministers of 2021 approving additional CHIMIMP ORT CHIMIMP ORT INFORMATION ACCORDING TO ORDINANCE №2 / 09.11.2021 23 expenditures in the budget of the Ministry of Transport and Communications for 2021, which starts the procedure for applying for financial aid. On 5 January 2022, the Ministry of Transport and Communications approved restructuring and increase of the investment program for 2021. The amount of the same was increased from BGN 203 thousand to BGN 294 thousand. On February 24, 2022, a military conflict broke out between the Russian Federation and the Republic of Ukraine. The economic consequences of these actions are extremely far-reaching and unpredictable. Energy and raw material prices have risen sharply, further exacerbating inflationary pressures from supply chain disruptions and the recovery from the Covid-19 pandemic. The imposed restrictions on the export of cereals, both from Ukraine and from the territory of Bulgaria are expected to reflect on the cargo turnover for the next periods. The medium and long-term consequences for the global economy of the Russian invasion of Ukraine will depend on the choice of countermeasures. As sanctions and counter-responses escalate, the costs will be higher - primarily for Russia, but also to the rest of the world economy. As of 31 December 2021 the Groups attracted funds from persons from the Russian Federation, Belarus and Ukraine is unsignificant - under 0.5% of balance sheet assets with no significant decrease. These funds are used by persons who, according to available information, are permanently established in the Republic of Bulgaria and the Republic of Northern Macedonia and in this sense their dependence on the development of hostilities or sanctions regimes is weak and potential changes will not significantly affect the Group. The funds attracted from 1 financial institution from the Russian Federation amount to less than 0.16% of the total attracted funds and are denominated in EUR, as their amount is not significant for the Group's activities. As the Group's liquid assets exceed the regulatory requirements and liquidity buffers are currently unaffected, Management does not expect to depend on funding affected by the coronavirus epidemic or hostilities. The Groups reinsurance exposure to reinsurance brokers and/or companies based in Russia is insignificant as of the date of the consolidated financial statements and there are no incurred/declared claims protected by these companies. As of 15 March 2022, the relations with all brokers and reinsurance companies in the Russian Federation have been terminated. The counterparties have already been replaced. No negative impact on the solvency and liquidity of the Insurance Companies of the Group is expected. The Group's management will continue to monitor the potential impact and will take all possible measures to mitigate any potential effects. The Group's management has taken a set of organizational measures in order for the Group to comply with all restrictions and sanctions imposed on the transfer of funds to and from Russia and/or sanctioned persons and institutions, including activities to increase and strengthen protection against potentially harmful actions and attacks on information resources and infrastructure. CHIMIMP ORT CHIMIMP ORT INFORMATION ACCORDING TO ORDINANCE №2 / 09.11.2021 24 As the situation and actions of the state authorities in Bulgaria and the world are extremely dynamic, the Group's management is not able to fully quantify the impact of the event on future financial condition and achieved results, but believes that the impact will have a negative impact on the Group. The Group's management is unable to assess the impact of a potential new wave or strain of coronavirus on its future financial condition and performance, but considers that with a fading effect, the potential impact could lead to lower volatility of the market and price risk related to the financial assets of the Group and less likelihood of negative effects on its operations. On 01 April 2022 the epidemiological situation in the Republic of Bulgaria was terminated. 5. Information on off-balance sheet transactions - nature and business purpose, indication of the financial impact of the transactions on the activity, if the risk and benefits of these transactions are significant for the issuer, respectively the person under § 1e of the additional provisions of LPOS, and if the disclosure of this information is essential for assessing the financial condition of the issuer under § 1e of the additional provisions of LPOS As at 31 December 2021 and 2020 the Group as entered into granting bank loans to customers which future utilization depends on whether the lessees fulfil certain requirements, including no overdue loans, granting collateral with certain quality and liquidity, etc. The contingent liabilities related to the bank activity of the Group are as follows: 2021 2020 BGN ‘000 BGN ‘000 Bank guarantees in BGN 34 032 34 409 Bank guarantees in foreign currency 18 614 20 378 Irrevocable commitments 244 126 250 952 Total contingent liabilities 296 772 305 739 As at 31 December 2021 in accordance with the requirements of IFRS 9, the Group has recognized BGN 714 thousand (2020: BGN 1 004 thousand) of provisions for expected credit losses related to the contingent liabilities of the Group. The contingent liabilities of the Group in accordance with non-banking activities are as follows: As at 31 December 2021 the Group has entered into granting bank loans to customers amounting to BGN 244 822 thousand, respectively (2020: BGN 251 928 thousand). The future utilization depends on whether the borrowers fulfil certain requirements, including no overdue loans, granting collateral with certain quality and liquidity, etc. As of 31 December 2021 in accordance with the requirements of IFRS 9 the Group has accrued BGN 714 thousand (2020: BGN 1 004 thousand) future expected credit losses on Groups contingent liabilities The Groups non-banking contingent liabilities are as follows: The Group is a joint debtor under the following bank loan agreements: - Loan agreements between commercial bank and a Company dated 09 August 2019 with a present value of the liability of BGN 15 647 thousand and maturity on 30 November 2027. Pledge of all receivables under leasing contracts; pledge of cash receivables on all accounts. CHIMIMP ORT CHIMIMP ORT INFORMATION ACCORDING TO ORDINANCE №2 / 09.11.2021 25 - Credit agreements between commercial bank and a Company dated 01 September 2021 with a present value of the liability of BGN 14 395 thousand and maturity on 01 March 2023; The fair value of the assets / receivables / property pledged as collateral, owned by the borrower, amounts to BGN 17 994 thousand. - Credit agreements between a commercial bank and a Company dated 02 August 2016 with a present value of the liability of BGN 21 630 thousand and maturity on 2 November 2029. The fair value of the collateral owned by the borrower amounts to BGN 31 927 thousand. - Loan agreement with a commercial bank, the Group has established first special pledge on agricultural products on receivables arising from contracts, orders and invoices for the sale of agricultural products and on all receivables on all accounts of the Group in the Bank. - On 13 December 2021 a commercial bank has established new bank guarantee under concession agreement for oil production with №116DSK16000 amounting to BGN 290 000 and represent the value of the entire concession fee paid under a concession contract for Dolni Lukovit deposit for 2021 with VAT. The term of validity of the guarantee is until 28 February 2023. - On 26 June 2020 DSK Bank EAD issued a bank guarantee with №116DSK13926 amounting to BGN 100 000, securing the obligations of the company related to its registration under the Law on Administrative Regulation of Economic Activities Related to Oil and Petroleum Products origin. The term of validity of the guarantee is until 24 June 2022. - Because of a bank loan agreement, the Commercial Bank of the Group establishes the first special pledge on part of its opened accounts in the bank. - The Group has a guarantee issued by the Commercial Bank amounting to BGN 2 600 000 in favour of the Customs Agency with a valid until 5 April 2023. The Group is a party to commercial cases in the Sofia City court in connection with commercial contracts from 2014 in the total amount of BGN 14 909 thousand. The value of the material interest of the specific court cases amounts to 24 931 thousand EUR. Based on the factual and legal situation, the Group’s legal advisers expect the cases to be resolved favourably for the Group. The Group is a party to a bank guarantee issued by a commercial bank in the amount of BGN 100 thousand, EUR 85 thousand, as well as a letter of credit in the amount of USD 999 thousand. The bank guarantee was issued in connection with securing the Group’s trade liabilities. Port Concessions: According to the concession agreement for a port for public transport of regional importance “Pritis” – public municipal property, which entered into force on 1 April 2019 for a period of 35 years. The Group has obligations to: - make annual concession payments, consisting of two parts - a fixed part in the amount of BGN 48 900 and a variable part depending on the performed activity; - manages and maintains the concession site at its own risk, in accordance with good engineering and operational practice, with the care of a good owner and in accordance with the requirements of applicable law governing activities and actions arising from the concession contract; - maintains the port in operational condition and the port infrastructure in good operational condition by carrying out the necessary repairs at its own expense; - provides port services at its own risk, ensuring their continuity for at least 8 hours a day; - makes investments in accordance with the envisaged annual investment programs; CHIMIMP ORT CHIMIMP ORT INFORMATION ACCORDING TO ORDINANCE №2 / 09.11.2021 26 - realizes the annual cargo turnover, defined in conditional transport units as a conditional transport unit is each passenger served at the port and / or ship visit multiplied by 10. Pursuant to the contract for granting a concession for a port for public transport of regional importance "Pristis" - public municipal property, the Group should maintain bank guarantee for good performance of the concession contract, amounting to BGN 100 thousand and validity until 1 March 2028. An agreement signed between the Group and the Ministry of Transport, Information Technology and Communications on a service concession on the Vidin-North Port Terminal and the Vidin Ferry Complex Port Terminal, parts of a public port, enters into force on 20 October 2010. transport of national importance Vidin. The contract is for a period of 30 years. On 24 February 2021 an Additional Agreement was signed extending the term to 40 years. - The concession fee includes: one-time concession fee of BGN 100 thousand, annual concession fees, which contain a fixed and a variable part. The amount of the fixed annual concession fee amounts to EUR 44 thousand (BGN 87 thousand). In accordance with the concession contract the Group is obligated to: - to operate and maintain the object of concession at its own risk; - to update the master plan of the port of Vidin regarding port terminals - Object of the concession - to make investments in accordance with the annual investment programs; - to develop and submit for approval by the grantor annual investment programs by October 30 of the previous year - to agree in advance and obtain approval from the Minister of Transport, information technology and communications for improvements at the site of concessions that are not provided for in the respective annual investment program - does not change the purpose of the object of the concession; - presents and maintains bank guarantees The concession contract shall be terminated upon expiration of the term of the contract, by mutual consent, due to circumstances under the Concessions Act or in case of culpable non-fulfillment of the obligations of one of the parties. In accordance with the concession contract of Port Lom Port - part of a port for public transport Lom, the Group should maintain bank guarantees in the established amount: - a bank guarantee for execution of an Investment Program for the seventh contract investment year amounting to BGN 103 thousand with a term of validity as of 31.10.2021; - a bank guarantee for the good performance of the obligations under the Concession Contract, amounting to BGN 455 thousand with a term of validity as of 27.09.2022. According to the Concession Agreement for the Port Terminal Balchik, the Group has undertaken obligations to operate, maintain and make investments for the development of the terminal; to implement Annual Investment Programs, to maintain a certain average annual turnover, to maintain bank performance guarantees for the term of the contract and to apply a certain social program to the staff. The Concessionaire undertakes to provide and maintain for each consecutive year of the validity of the Concession Agreement confirmed, unconditional, irrevocable bank guarantees for the term of the Concession, as follows: CHIMIMP ORT CHIMIMP ORT INFORMATION ACCORDING TO ORDINANCE №2 / 09.11.2021 27 - Guarantee of EUR 220 thousand (BGN 430 thousand) for guaranteeing the implementation of the concession contract, including the obligations for payment of the concession fee, for cargo turnover, for payment of interest and penalties and others specified in the concession contract; On 18 March 2021 a contract was issued for the issuance of a bank guarantee amounting to EUR 220 thousand with a validity until 1 August 2022. The bank guarantee contract was concluded to ensure the fulfilment of the Group's obligations under the Concession Agreement. According to the Concession Agreement concerning the port of Lesport, the Group has undertaken obligations to operate, maintain and make investments for the development of the terminal; to implement Annual Investment Programs, to maintain a certain average annual turnover, to maintain bank performance guarantees for the term of the contract and to apply a certain social program to the staff. The Concessionaire undertakes to provide and maintain for each consecutive year of the validity of the Concession Agreement confirmed, unconditional, irrevocable bank guarantees for the term of the Concession, as follows: - Guarantee for implementation of the Investment Program in the amount of 15 percent of the value of the planned investments for the respective year; Guarantee in the amount of EUR 256 thousand (BGN 501 thousand) for the performance of the contract, including the performance of the contract, including the obligation to pay concession fees, cargo turnover, the obligation to pay interest and penalties specified in the contract. Concessions for oil and gas production The main activity of the Group's subsidiary Oil and Gas Exploration and Production AD is carried out on the basis of concession rights granted by the state and 13 concession agreements concluded as follows: Concession agreement for extraction of crude oil from the field "Bardarski Geran", Concession agreement for extraction of crude oil from the field "Gorni Dabnik", Concession agreement for extraction of crude oil and natural gas from the field "Dolni Dabnik", Concession agreement for extraction of Crude oil and natural gas from the Dolni Lukovit field, Concession agreement for extraction of crude oil from the Dolni Lukovit field - West, Concession agreement for extraction of crude oil and natural gas from the Selanovtsi field, Concession agreement for extraction of crude oil from the Staroseltsi field, Concession agreement for extraction of crude oil from the Tyulenovo field, Concession agreement for extraction of crude oil from natural fields Bulgarevo field, Concession agreement for extraction of crude oil and natural gas from the Marinov Geran field and Concession agreement for extraction of crude oil and natural gas from the Bhutan-South field, Concession agreement for extraction of natural gas from the field Durankulak ”and Concession Agreement for extraction of mineral resources - oil and natural gas - natural gas and condensate from the Iskar West field. In order to ensure the fulfilment of its obligations for the final leaving of the concession areas, according to the concession agreements, the Group annually allocates amounts representing annual contributions to the “Leaving Fund”. Future payments in related to the contributions to the Leaving Fund as at 31 December are as follows: Up to 1 year From 1 to 5 years Over 5 years 2021 BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 2021 10 40 102 152 2020 23 43 109 175 CHIMIMP ORT CHIMIMP ORT INFORMATION ACCORDING TO ORDINANCE №2 / 09.11.2021 28 As of 31 December 2021, the Group has concluded a Framework Agreement for issuing bank guarantees with a commercial bank in the total amount of BGN 1 600 thousand, valid until 28 January 2023. pledged non-current assets of the Group. In the normal course of business for the Group, litigation and claims could arise. According to the Group's management, the costs necessary to resolve these disputes and claims will not have a material impact on the financial position and cash flows in future financial periods, as most of them are considered to be provisional when setting aside technical provisions. 6. Information on share participations of the issuer, respectively the person under § 1e of the additional provisions of LPOS, for its main investments in the country and abroad (in securities, financial instruments, intangible assets and real estate), as well as investments in equity securities outside its group of enterprises within the meaning of the Accounting Act and the sources / methods of financing. Investments in associates 2021 2020 BGN’ 000 BGN’ 000 Investments in associates 25 743 23 519 Investments in joint ventures 1 029 734 Total investments accounted for using the equity method 26 772 24 253 Gain/(loss) from investments under equity method 4 315 (1 400) Investments in associates are presented in the financial statements of the Group using the equity method. Associates have a reporting date as at 31 December. The carrying amount of the Group's investments and percentage of participation in the voting rights and equity of associates may be presented as follows: Name of the associate Country of incorporation and principal place of business Main activities 2021 Share 2020 Share BGN ‘000 % BGN ‘000 % Lufthansa Technik Sofia OOD Bulgaria Aircraft repair activity 8 944 24.90% 8 558 24.90% Swissport Bulgaria AD Bulgaria Ground handling services 6 886 49.00% 5 665 49.00% Silver Wings Bulgaria OOD Bulgaria Catering services 5 225 42.50% 4 713 42.50% VTC AD Bulgaria Maritime and port services 3 764 41.00% 3 694 41.00% Kavarna Gas OOD Bulgaria Gas transmission services 689 35.00% 626 35.00% Amadeus Bulgaria OOD Bulgaria Reservation services 235 44.99% 263 44.99% 25 743 23 519 CHIMIMP ORT CHIMIMP ORT INFORMATION ACCORDING TO ORDINANCE №2 / 09.11.2021 29 The Group has pledged as collateral for bank loans shares of its associates in the amount of BGN 6 886 thousand. The Group has pledged as collateral for trade loans shares of its associates with a carrying amount of BGN 21 290 thousand. Summary of financial information about the significant associates of the Group is presented below. It reflects the amount presented in the financial statements of the associate concerned after adjustments in connection with the application of the equity method: 2021 2020 BGN ‘000 BGN ‘000 Non-current assets 179 301 195 118 Current assets 71 319 52 800 Total assets 250 620 247 918 Non-current liabilities 151 714 140 938 Current liabilities 30 410 44 074 Total liabilities 182 124 185 012 Net assets 68 496 62 906 Revenues 144 018 139 594 Profit for the period 10 842 4 668 Profit after taxes 9 714 4 147 Other comprehensive (loss)/income (82) 212 Total comprehensive income for the year 9 632 4 359 A reconciliation of the financial information set out above with the carrying amount of investments in significant associates is presented as follows: 2021 2020 BGN ‘000 BGN ‘000 Total net assets as of January 1 62 906 62 290 Profit for the year 9 714 4 147 Other comprehensive (loss) / income for the year (82) 212 Dividends paid (4 042) (3 743) Total net assets as of December 31 68 496 62 906 Share of the Group (in thousand BGN) 23 038 20 798 Reputation 2 705 2 721 Carrying value of investment 25 743 23 519 All transfers of cash to the Group, e.g. payment of dividends is made after the approval of at least 51% of all owners of associates. The Group received dividends in the amount of BGN 2 007 thousand for 2021 and BGN 1 342 thousand for 2020, respectively. CHIMIMP ORT CHIMIMP ORT INFORMATION ACCORDING TO ORDINANCE №2 / 09.11.2021 30 Investments in joint ventures Investments in joint ventures are accounted using the equity method. Joint ventures have a reporting date as at 31 December. The carrying amount of the Group's investments and percentage of participation in the voting rights and equity of joint ventures may be presented as follows: Name of the joint venture Country of incorporation and principal place of business Main activities 2021 Share 2020 Share BGN ‘000 % BGN ‘000 % Nuance BG AD Bulgaria Duty free trade 833 50% 538 50% Consortium Bulgaria Air - Direction Bulgaria Sale of airline tickets and hotel accommodation 141 90% 141 90% Consortium Bulgaria Air and Direction Bulgaria Sale of airline tickets and hotel accommodation 55 70% 55 70% 1 029 734 Summary of financial information of the Group’s major joint ventures is presented below. It reflects the amounts presented in the financial statements of the associate concerned after adjustments in connection with the application of the equity method (including fair value adjustments) or adjustments for differences in accounting policies: 2021 2020 BGN ‘000 BGN ‘000 Non-current assets 15 488 8 447 Current assets 6 978 6 500 Total assets 22 466 14 947 Non-current liabilities - 22 Current liabilities 18 694 16 968 Total liabilities 18 694 16 990 Net assets 3 772 (2 043) Revenues 18 810 19 135 Loss for the period (3 394) (2 246) Loss after taxes (3 317) (2 266) Total comprehensive loss for the year (3 317) (2 266) CHIMIMP ORT CHIMIMP ORT INFORMATION ACCORDING TO ORDINANCE №2 / 09.11.2021 31 A reconciliation of the financial information set out above with the carrying amount of investments in significant joint ventures is presented as follows: 2021 2020 BGN ‘000 BGN ‘000 Total net assets as of January 1 (2 043) 3 371 Profit for the year (3 317) (2 266) Dividends paid - (3 148) Total net assets as of December 31 (5 360) (2 043) Share of the Group (in thousand BGN) 1 029 734 Carrying value of investment 1 029 734 All transfers of cash to the Group, e.g. payment of dividends shall be made after the approval of the joint ventures. The Group hasn’t received dividends for 2021 (2020: BGN 1 574 thousand) Financial assets at fair value through profit or loss Financial assets measured at fair value through profit or loss can be summarized as follows: 2021 2020 BGN ‘000 BGN ‘000 Financial assets measured at fair value through profit or loss: Corporate shares and rights 1 258 422 1 162 656 Bulgarian corporate bonds 213 113 232 178 Medium-term Bulgarian government securities 55 258 53 222 Long-term Bulgarian government securities 30 104 27 381 Securities issued or guaranteed in other countries 486 003 547 016 Derivatives held for trading 70 4 788 2 042 970 2 027 241 Financial assets are measured at fair value based on stock quotes at the date of the financial statements or on the basis of estimates by independent valuers as at the date of the financial statements. Gains and losses are recognized in the consolidated statement of profit or loss and other comprehensive income within "Result from operations with financial instruments". Debt instruments at fair value through other comprehensive income The financial assets at fair value through other comprehensive income, including bonds and government securities, is presented as follows: 2021 2020 BGN ‘000 BGN ‘000 Bonds 413 303 210 804 Government securities 446 138 506 791 Total debt instruments at fair value through other comprehensive income 859 441 717 595 As of 31 December 2021, the financial assets measured at fair value in other comprehensive income formed a related impairment loss amounting to BGN 4 643 thousand (2020: BGN 2 734 thousand), which is reflected in the equity and did not reduce the book value of the assets. CHIMIMP ORT CHIMIMP ORT INFORMATION ACCORDING TO ORDINANCE №2 / 09.11.2021 32 As at 31 December 2021 government bonds issued by the Bulgarian government amounting to BGN 153 546 thousand (2020: BGN 116 743 thousand) are pledged as collateral for servicing budget accounts on the grounds of art. 152 of the Public Finance Act. Equity instruments at fair value through other comprehensive income 2021 2020 BGN ‘000 BGN ‘000 Quoted equity instruments 24 605 25 327 Unquoted equity instruments 45 821 58 439 Total equity instruments at fair value through other comprehensive income 70 426 83 766 Debt instruments measured at amortized cost As at 31 December 2021, debt instruments measured at amortized cost consist of Bulgarian government bonds, government bonds of EU countries, Bulgarian corporate bonds and foreign corporate bonds, including the amount of accrued interest and discount / premium on the basis of their original maturity, as follows: 2021 2020 BGN ‘000 BGN ‘000 Bulgarian government Bonds 408 414 213 470 Foreign government bonds 268 525 214 915 Bulgarian corporate bonds 7 964 7 963 Foreign corporate bonds 2 935 29 215 Impairment loss (654) (686) Debt instruments measured at amortized cost 687 184 464 877 As of 31 December 2021, government bonds issued by the Bulgarian government amounting to BGN 223 269 thousand (2020: BGN 148 013 thousand) are pledged as collateral for servicing budget accounts on the grounds of art. 152 of the Public Finance Act. 7. Information on the loan agreements concluded by the issuer, respectively the person under § 1e of the additional provisions of the Law on Public Offering of Securities, by its subsidiary, in their capacity as borrowers, indicating the terms and conditions, including payment deadlines, as well as information on provided guarantees and commitments CHIMIMP ORT CHIMIMP ORT INFORMATION ACCORDING TO ORDINANCE №2 / 09.11.2021 33 BANK ACTIVITY Liabilities to depositors are presented as follows: 2021 2020 Analysis by term and type of currency: BGN ‘000 BGN ‘000 On-demand deposits in BGN 2 205 262 1 739 734 in foreign currency 308 820 304 296 2 514 082 2 044 030 Term deposits in BGN 1 226 347 1 153 213 in foreign currency 1 429 564 1 271 347 2 655 911 2 424 560 Savings accounts in BGN 1 192 269 1 133 292 in foreign currency 544 107 559 023 1 736 376 1 692 315 Other deposits in BGN 11 032 7 697 in foreign currency 479 270 11 511 7 967 Total liabilities to depositors 6 917 880 6 168 872 2021 2020 Analysis by term and type of currency: BGN ‘000 BGN ‘000 Individual deposits in BGN 3 241 091 2 841 485 in foreign currency 1 990 989 1 827 327 5 232 080 4 668 812 Legal entities deposits in BGN 1 382 788 1 179 886 in foreign currency 288 698 304 648 1 671 486 1 484 534 Deposits of other institutions in BGN 11 032 12 565 in foreign currency 3 282 2 961 14 314 15 526 Total liabilities to depositors 6 917 880 6 168 872 CHIMIMP ORT CHIMIMP ORT INFORMATION ACCORDING TO ORDINANCE №2 / 09.11.2021 34 Other financial liabilities Current Non-current 2021 2020 2021 2020 BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Financial liabilities measured at fair value Derivatives held for trading 118 86 - - Financial liabilities measured at amortized cost: Bonds and debenture loan 3 507 3 000 69 450 37 451 Bank borrowings 57 898 49 514 92 614 127 069 Other borrowings and financing 20 092 23 040 6 984 6 161 Deposits from banks 41 146 66 092 - - Cession liabilities 10 708 20 746 32 306 33 180 Liabilities under repurchase agreements 2 282 15 449 11 678 - Trade payables 109 406 97 261 598 1 114 Payables to related parties 48 922 44 488 14 394 17 029 Total carrying amount 294 079 319 676 228 024 222 004 Bonds and debenture loans The bond loans received by the Group are as follows: Current Non-current 2021 BGN ‘000 2020 BGN ‘000 2021 BGN ‘000 2020 BGN ‘000 Bonds and debenture loans 3 507 3 000 69 450 37 451 The carrying amount of the Group's debts on the aforementioned debenture loans at 31 December 2021 amounted to BGN 72 957 thousand (2020: BGN 40 451 thousand) and was calculated using the effective interest method. CHIMIMP ORT CHIMIMP ORT INFORMATION ACCORDING TO ORDINANCE №2 / 09.11.2021 35 Bank loans The Bank loans of the Group comprise loans, granted by Bulgarian commercial banks, designated for financing investment projects of the Group, as well as, for refinancing the current operating activity of the Group. Bank loans are classified according to their contracted maturity date. Current Non-current 2021 BGN ‘000 2020 BGN ‘000 2021 BGN ‘000 2020 BGN ‘000 Bank loans 57 898 49 514 92 614 127 069 Non-current bank borrowings 2021 BGN ‘000 2020 BGN ‘000 Revolving and investment bank loans 92 614 127 069 The Group has received the following investment loans: - The Group is party to a contract for an investment bank loan, signed on 30 January 2015 with maturity date on 30 April 2023. The repayment of the loan is made in BGN and is in accordance with an agreed repayment schedule for the whole term of the contract. The annual interest rate on the loan is “Average deposit index” plus 4.732%. The loan is repaid preliminary. - The Group is party to a contract for an investment bank loan, signed on 23 December 2015 with maturity date on 31 December 2025. The value of the loan is BGN 78 233 thousand, which was disbursed in 3 main tranches. With the disbursed loan, two bank loans to another bank were refinanced and an investment project of the Group was financed. The maturity of the loan is on 31.12.2025. The repayment of the principal is in BGN and is in accordance with the agreed repayment plan for the entire term of the contract. The interest rate is formed as a sum of the "Average Deposit Index" plus a margin of 2.727%. Collateral for the loan is a contractual mortgage on a hangar, all receivables of the Group arising from lease agreements concluded with Lufthansa Technik Sofia OOD in its capacity as a tenant. - The Group is party to a contract for an investment bank loan, signed on 01 November 2016. The repayment of the loan is made in BGN and is in accordance with an agreed repayment schedule with beginning date on 31 October 2018. The loan matures on 30 September 2028. The interest rate is formed as the sum of “Average deposit index” plus 2.727 %. The loan is secured by contractual mortgage of a hangar, parking and 2 checkpoints, specific receivables of the Group arising from lease agreements. - The Group is party to a contract for an investment bank loan, signed on 11 August 2017, maturing on 31 December 2027. The interest on the loan is equal to the annual interest rate determined as the sum of the variable base interest rate applicable to the relevant interest rate period and a surplus to the interest rate index of 2.738 %. The loan is secured by a mortgage on a real estate in Sofia and a pledge of shares and receivables. - The Group is a party to an investment bank loan agreement signed on 21 June 2013, maturing on 20 March 2029. The interest on the loan is 3M EURIBOR plus 3 percentage points, but not less than 6%. The loan is secured by a real estate mortgage, a pledge of long-term tangible assets under the Law on Special Pledges. - The Group is a party to an investment bank loan agreement signed on 21 June 2013, maturing on 20 December 2029. The interest on the loan is 3M EURIBOR plus 3 percentage points, but not less than 6.5%. The loan is secured by a real estate mortgage, a pledge of long-term tangible assets under the Law on Special Pledges. CHIMIMP ORT CHIMIMP ORT INFORMATION ACCORDING TO ORDINANCE №2 / 09.11.2021 36 Revolving loans - The Group was granted a bank loan on 5 October 2011 for an amount of BGN 3 000 thousand with maturity date on 25 October 2024. The loan is secured by real estate. The annual interest rate equals 4%, formed based on 1M EURIBOR + 4%, but no less than 4%. - The Group is party to a bank loan agreement with a commercial bank signed on 31 January 2019 at the amount of EUR 4 950 thousand with due date on 31 January 2022. The loan is secured by bank deposits. The annual interest rate on the loan is based on BIR plus 0.8%. - The Group was granted a revolving bank credit, signed on 28 January 2008 with maturity date on 25 October 2024. The annual interest rate is 1M EURIBOR plus 4%. Collateral - mortgage on grain depots in the town of Dobrich and the village of General Kolevo (lands, buildings and permanently attached machines and equipment), owned by the Group. - The Group was granted a revolving bank credit, signed on 13 December 2013 with maturity date on 30 September 2024. The annual interest rate is average deposit index (ADI) plus 2.657 %. The loan is secured by a pledge of some inventories and property, plant and equipment owned by the Group. - The Group has received three secured bank loans granted by a Bulgarian commercial bank. The loans are denominated in BGN and have an agreed amount of BGN 6 000 thousand, BGN 8 944 thousand and BGN 3 220 thousand, respectively. The interest rates on the loans are 3.3% and 4%, maturing in 2022.To secure two of the loans, pledges of government securities of the Republic of Bulgaria with a nominal value of BGN 8 950 thousand and maturity in 2025 under one loan and a nominal value of BGN 11 300 thousand and maturities of the issues in 2021 have been established, 2025 and 2027. One of the loans is secured by a pledge on cash in the amount of BGN 714 thousand, which are blocked until its repayment and insurance "Financial risk" valid until February 2022. - The Group has a contract for bank investment loan, signed on 23 December 2015. The amount of the loan is BGN 78 233 thousand, which was disbursed in 3 main tranches. Two bank loans to another bank were refinanced with the disbursement of the loan, and an investment project of the Group was financed. The maturity of the loan is on 31 December 2025. The repayment of the principal is in BGN and is in accordance with the agreed repayment plan for the entire term of the contract. The interest rate is formed as a sum of the "Average Deposit Index" plus a margin of 2,727%. Collateral for the loan is a contractual mortgage on a hangar, all receivables of the Group arising from lease agreements signed with one of the associated companies for the Group, in its capacity as a lessee. The joint and debtor under the loan agreement is the Parent Entity of the Group. A corporate guarantee has been issued in favor of the Group by a foreign legal entity. - The Group is also a party to a bank investment loan agreement concluded on 1 November 2016. The amount of the loan is BGN 12 713 thousand, and the utilized amount in 2017 is BGN 12 021 thousand. In 2019, the remaining amount of the loan of BGN 692 thousand was disbursed. The repayment of the principal is in BGN and is in accordance with the agreed repayment plan with a starting date of 31 October 2018. plus a surcharge of 2.727%. The maturity of the loan is 30 September 2028. Collateral for the loan are a contractual mortgage on land and buildings built on it, parking and 2 checkpoints, receivables of the Group, arising from a lease agreement concluded with a tenant. The joint and several debtor under the loan agreement is the Parent Company of the Group. - Bank loan-overdraft agreement signed on 01 August 2018 for working capital with maturity on 20 August 2024. The annual interest rate is 4.2% of the bank's base interest rate plus 12-month Euribor. The loan is secured by a pledge of receivables on current accounts in the creditor bank and a special pledge on goods intended for duty-free foreign exchange trading on board aircraft and / or in a specialized store. The total value of the goods is up to BGN 137 thousand. - The Group is a party to a bank loan-overdraft agreement signed on 25 September 2020 for working capital with a maturity of 20 September 2023. The annual interest rate is 3.8% of the bank's base interest rate plus 12-month Euribor. The loan is secured by a Special Pledge CHIMIMP ORT CHIMIMP ORT INFORMATION ACCORDING TO ORDINANCE №2 / 09.11.2021 37 Agreement on all current and future receivables on the accounts of Bulgaria Air AD opened with the creditor bank. - The Group has signed 4 active as of 31 December 2021 contracts for bank loans for working capital with a maturity of 31 December 2022, 30 June 2023 and two loans with a maturity of 30 September 2022. The annual interest rate on loans is in the amount of 3% and 4% of the loan agreement plus 3 months. Euribor, but not less than 4%. The loans are secured by a pledge of receivables from public procurement contracts for the provision of airline tickets, receivables from BSP revenues, receivables from contracts of third parties, as well as suretyship agreements concluded with the Group's parent company. - On 8 October 2021 the Group has entered into a bank loan agreement for working capital in the amount of BGN 500 thousand with an annual interest rate of the ODIHR in BGN plus a 2.5 percentage margin or a minimum total agreed rate of 2.5%. As of 15 April 2022 to 15 September 2023 (inclusive) the loan is repaid in 17 (seventeen) equal monthly installments in the amount of BGN 27 770 and one last equalization installment of BGN 27 910 due on 15 September 2023. On the loan received, the Group has pledged assets from the group of property, plant and equipment. - On 28 April 2021 the Group has entered into a bank loan agreement for working capital in the amount of BGN 367 thousand with an annual interest rate of BGN 2.5% plus a contractual credit risk margin of 0.35% or a total agreed rate of 2.85%. As of 20 May 2021 to 20 April 2025 (inclusive) the loan is repaid in 48 (forty eight) equal monthly installments in the amount of BGN 700 and one last installment due on 20 May 2025 in the amount of BGN 333 400 The Group has pledged assets from the group of properties, machinery and equipment to secure the loan. - - On 14 August 2020 the Group entered into a bank loan agreement for working capital in the amount of BGN 250 thousand with an annual interest rate of BGN 2.5% plus a contractual credit risk margin of 1% or a generally agreed rate of 3.5%. A grace period of principal until 19.03.2022 has been agreed. As of 20 March 2022 until 20 August 2023 (incl.) the loan is repaid in seventeen equal monthly installments in the amount of BGN 13 500 and one last installment due to 20 August 2022. .2023 in the amount of BGN 20 500 To secure the loan, the Group has pledged assets from the group of properties, machinery and equipment. Current bank borrowings 2021 BGN ‘000 2020 BGN ‘000 Current revolving and investment loans 57 898 49 514 Revolving loans - The Group has received three secured bank loans granted by a Bulgarian commercial bank. The loans are denominated in Bulgarian levs and have an agreed amount of BGN 6 000 thousand, BGN 8 944 thousand and BGN 3 220 thousand, respectively. The interest rates on the loans are 3.3% and 4%, maturing in 2022. - To secure two of the loans, pledges of government securities of the Republic of Bulgaria with a nominal value of BGN 8 950 thousand and maturity in 2025 have been established for one loan and a nominal value of BGN 11 300 thousand and maturities of issues in 2021, 2025 and 2027. One of the loans is secured by a pledge on cash in the amount of BGN 714 thousand, which are blocked until its repayment and insurance "Financial risk" valid until February 2022. - On 8 October 2019, the Group entered into a bank loan agreement for working capital in the amount of BGN 150 thousand with an annual interest rate of BGN 2.5% plus a contractual credit risk margin of 1% or a total agreed rate of 3.5%. A grace period of one year has been agreed until 19.10.2020. As of 20.10.2020 until 20.09.2021 (inclusive) the loan is repaid in twelve equal monthly installments in the amount of BGN 12 500. To secure the received loan The Group has pledged some assets from the group of property, plant and equipment. A. As of 31.12.2021 it has been fully repaid. CHIMIMP ORT CHIMIMP ORT INFORMATION ACCORDING TO ORDINANCE №2 / 09.11.2021 38 Other borrowings, financing and liabilities Current Non-current 2021 BGN ‘000 2020 BGN ‘000 2021 BGN ‘000 2020 BGN ‘000 Other borrowings and financing 20 092 23 040 6 984 6 161 Other non-current borrowings, financing and liabilities 2021 BGN ‘000 2020 BGN ‘000 Non-current borrowings 6 878 5 820 Financing from State Agricultural Fund 106 341 TOTAL 6 984 6 161 Other non-current borrowings are received under annual interest rates from 3% to 8% depending on the contract period, received from third parties. The long-term borrowing is not secured. Payments are concluded in the currency, in which they were granted. Financing refers to acquired assets Station for geophysical studies in oil and gas Drilling, Station for drilling geophysical studies in oil and gas drilling under contract between Oil and Gas Exploration and Production and The General Directorate "European Funds for Competitiveness" - Managing Authority of the OPC to the Ministry of Economy and Energy - legal successor of BSMEPA, regarding grant № 2TMG-02-21 / 13.06.2011 under Operational Program "Development of the Competitiveness of the Bulgarian Economy 2007-2013", Financed by the European Union through the European Regional Development Fund, and others. Other current borrowings 2021 BGN ‘000 2020 BGN ‘000 Current borrowings 20 092 22 805 Financing under operational programs - 235 TOTAL 20 092 23 040 Other current borrowings are received under annual interest rates from 3% to 8% depending on the contracted period. The loans are classified according to their repayment deadline, which is 2022. The fair value of the loans is not separately determined as the management considers that the carrying amount of the loans is a reasonable approximation of their fair value. Deposits from banks Current 2021 BGN ‘000 2020 BGN ‘000 Demand deposits – local banks -in Bulgarian leva 16 445 24 196 -in foreign currency 13 677 7 688 Term deposits from Bulgarian banks in BGN - 22 000 Demand deposits from foreign banks in foreign currency 8 702 9 204 Demand deposits from foreign banks in BGN 37 70 Term deposits from foreign banks in foreign currency 381 489 Term deposits from Bulgarian banks in foreign currency 1 904 2 445 41 146 66 092 CHIMIMP ORT CHIMIMP ORT INFORMATION ACCORDING TO ORDINANCE №2 / 09.11.2021 39 8. Information on the loans granted by the issuer, respectively by a person under § 1e of the Additional Provisions of the Law on Public Offering of Securities, or by their subsidiaries, providing guarantees or assuming obligations to one person or his subsidiary, including related parties names or title and UIC of the person, the nature of the relationship between the issuer, respectively the person under § 1e of the additional provisions of the LPOS, or their subsidiaries and the borrower, the amount of outstanding principal, interest rate, contract date, deadline repayment, amount of the commitment, specific conditions other than those specified in this provision, as well as the purpose for which they were granted, if they were concluded as earmarked. Loans and advances to bank clients Loans and advances can be summarized as follows: (a) Analysis by customer type 2021 2020 BGN ‘000 BGN ‘000 Individuals: In BGN 1 135 195 933 845 In foreign currency 266 552 252 381 Legal entities: In BGN 1 108 359 945 346 In foreign currency 577 769 613 161 Impairment loss (38 783) (35 870) Total loans and advances to bank clients 3 049 092 2 708 863 Loans and advances to customers as at 31 December 2021 include deposits with international financial institutions under marginal derivative transactions amounting to BGN 1 556 thousand (2020: BGN 1 556 thousand), including the result of transactions. (b) Interest rates Loans in BGN and foreign currencies are accrued at a variable interest rate. Under the terms of these loans, the interest rate is calculated on the basis of a reference interest rate of the Bank or an interest rate index for EURIBOR, LIBOR, plus a margin. The allowance for regular loans ranges from 2% to 5%, depending on the credit risk associated with the respective borrower, and overdue loans are charged an additional margin above the agreed interest rate. Loans granted and cession receivables 2021 2020 BGN ‘000 BGN ‘000 Loans granted 133 790 138 487 Receivables under cession contracts 60 677 41 244 194 467 179 731 Loans are provided at annual interest rates of 3% to 10% depending on the term of the loan. The fair value of the loans granted is not individually determined as the management considers that their carrying amount gives a true idea of their fair value. CHIMIMP ORT CHIMIMP ORT INFORMATION ACCORDING TO ORDINANCE №2 / 09.11.2021 40 Receivables under repurchase agreements As at 31 December 2021, the Group has entered into repurchase agreements with a total of BGN 399 895 thousand (2020: BGN 394 693 thousand), including interest receivables. The collateral ratio of agreements with a repurchase clause, which are secured by a pledge of Bulgarian government securities, is at least 100%. The collateral ratio of repurchase agreements that are secured by a pledge of corporate securities is a minimum of 120%. These agreements are due between January and June 2022. (2020: between January and June 2021). The Group has not identified any significant changes in the level of collateral for receivables under repurchase clauses that have been affected by fluctuations in market prices of the instruments as a result of the COVID-19 pandemic. Related party receivables 2021 2020 BGN ‘000 BGN ‘000 Non-current receivables from: - associates 3 507 3 450 - other related parties 86 302 49 296 Total non-current receivables from related parties 89 809 52 746 Current receivables from: 2021 2020 BGN ‘000 BGN ‘000 - owners 30 389 21 820 - associates 1 222 961 - joint ventures 6 493 1 264 - other related parties 37 646 95 677 Total current receivables from related parties 75 750 119 722 9. Information on the use of funds from a new issue of securities during the reporting period. - No new issue of securities was issued during the reporting period. 10. Analysis of the ratio between the achieved financial results, reflected in the financial report for the financial year, and previously published forecasts for these results. The Company has not published forecasts for the financial result for 2021. At the same time, the publicly announced intentions of the Company have been fulfilled and the planned goals have been achieved. The Companies from the Chimimport group - Not applicable. 11. Analysis and evaluation of the policy on financial resources management with indication of the possibilities for servicing the obligations, possible threats and measures that the issuer, respectively the person under § 1e of the additional provisions of LPOS, has taken or is about to take in order to eliminate them. - The parent company successfully manages its financial resources and normally and timely serves its obligations, although in the times of the Covid crisis. CHIMIMP ORT CHIMIMP ORT INFORMATION ACCORDING TO ORDINANCE №2 / 09.11.2021 41 12. Assessment of the possibilities for realization of the investment intentions with indication of the amount of the available funds and reflection of the possible changes in the structure of financing of this activity - The companies of the Group have the necessary resources for the realization of their future investment intentions and defines the assessment of the possibilities for realization as positive. 13. Information on changes occurred during the reporting period in the basic principles of management of the issuer, respectively the person under § 1e of the additional provisions of the Law on Public Offering of Securities and its group of enterprises within the meaning of the Accounting Act. In 2021 there were no changes in the basic principles of management of the issuer. 14. Information on the main characteristics of the system of internal control and risk management system applied by the issuer, respectively the person under § 1e of the additional provisions of LPOS, in the process of preparation of the financial statements The main features of the internal control system and the risk management system are described in detail in the Consolidated Corporate Governance Statement to this report. 15. Information on changes in the management and supervisory bodies during the reporting financial year. - During the reporting period there were no changes in the number and persons participating in the Management and Supervisory Boards of the Company. 16. Information on the amount of remuneration, rewards and / or benefits of each of the members of the management and supervisory bodies for the reporting financial year, paid by the issuer and its subsidiaries, regardless of whether they were included in the issuer's expenses or distribution of profits, including: Name By Issuer By Subsidiaries Supervisory Board BGN ‘000 BGN ‘000 Mariana Bazhdarova 24 - Management Board Ivo Kamenov 24 198 Nikola Mishev 24 61 Cvetan Botev 24 118 Miroljub Ivanov 24 78 Marin Mitev 24 120 Alexandar Kerezov 24 197 Key management staff - executive directors Ivo Kamenov 24 - Marin Mitev 24 - CHIMIMP ORT CHIMIMP ORT INFORMATION ACCORDING TO ORDINANCE №2 / 09.11.2021 42 17. Information on the shares of the issuer held by the members of the management and control bodies and the procurators, including the shares held by each of them separately and as a percentage of the shares of each class, as well as options provided by the issuer on its securities - type and the amount of the securities on which the options are based, the exercise price of the options, the purchase price, if any, and the term of the options. Shareholder structure as of 31.12.2021 According to a report from the Central Depository, issued as of 31 December 2021, the members of the Supervisory Board and the Management Board hold the following number of shares: Members of the Managing Board IVO KAMENOV 495 880 0.21% ALEXANDER KEREZOV 160 000 0.07% MIROLYUB IVANOV 89 066 0.04% NIKOLA MISHEV 36 790 0.02% MARIN MITEV 26 533 0.01% Members of Supervisory Board: INVEST CAPITAL AD 173 487 247 72.39% CCB GROUP EAD 1 296 605 0.54% MARIANA BAZHDAROVA 199 0.00% 18. Information on the arrangements known to the company (including after the end of the financial year), as a result of which changes in the relative share of shares or bonds held by current shareholders or bondholders may occur in the future. - The Group is not aware of any agreements, as a result of which changes in the relative share of the shares held by the current shareholders may occur in the future. 19. Information on pending court, administrative or arbitration proceedings concerning liabilities or receivables of the issuer in the amount of at least 10 percent of its equity; if the total value of the issuer's liabilities or receivables in all initiated proceedings exceeds 10 per cent of its own capital, information on each proceeding shall be provided separately. The Group has no pending litigation, administrative or arbitration cases, receivables or liabilities that together or separately amount to at least 10% of its equity. 20. Information on the Investor Relations Director, including telephone, e-mail and mailing address Investor Relations Director Dina Paskova Telephone +359 2 981 05 69 E-mail d.paskova@chimimport.bg Address Sofia, 2 Stefan Karadja Str. Postal code 1000 21. Other information at the discretion of the company Not applicable. 43 GENERAL RISKS AND UNCERTAINTIES CHIMIMP ORT GENERAL RISKS AND UNCERTAINTIES 44 Categories of financial assets and liabilities The carrying amount of the Group’s financial assets and liabilities, can be presented in the following categories: Financial assets 2021 2020 BGN‘000 BGN‘000 Financial assets at fair value through profit or loss: - Corporate shares, stocks and rights 1 258 422 1 162 656 - Bulgarian corporate bonds 213 113 232 178 - Medium-term Bulgarian government securities 55 258 53 222 - Long-term Bulgarian government securities 30 104 27 381 - Securities issued or guaranteed in other countries 486 003 547 016 - Derivatives held for trading 70 4 788 Equity instruments at fair value through other comprehensive income: - Quoted equity instruments 24 605 25 327 - Unquoted equity instruments 45 821 58 439 Debt instruments measured at fair value through other comprehensive income: - Bonds 413 303 210 804 - Government Securities 446 138 506 791 Debt instruments at amortized cost: - Loans 3 182 882 2 847 350 - Cession receivables 60 677 41 244 - Receivables under repurchase agreements 399 895 394 693 - Debt instruments at amortized cost 687 184 464 877 - Receivables from related parties 165 559 172 468 - Trade receivables 116 962 115 382 - Others 22 092 21 967 Less: Impairment (28 163) (20 381) - Cash and cash equivalents 2 380 922 2 221 632 9 960 847 9 087 834 Financial liabilities 2021 2020 BGN‘000 BGN‘000 Financial liabilities measured at amortised cost: Liabilities to depositors 6 917 880 6 168 872 Borrowings 250 545 246 235 Bank deposits 41 146 66 092 Cession payables 43 014 53 926 Obligations under repo agreements 13 960 15 449 Lease obligations 280 979 249 440 Trade and other payables 110 004 98 375 Related party payables 63 316 61 517 7 720 844 6 959 906 Derivatives designated as hedging instruments in cash flow (at fair value): Derivatives 118 86 7 720 962 6 959 992 The accounting policy for each category of financial instruments is detailed described into consolidated financial statement. CHIMIMP ORT GENERAL RISKS AND UNCERTAINTIES 45 Financial instruments risks Risk management objectives and policies Due to the use of financial instruments and as a result of its operating and investment activities, the Group is exposed to various risks – insurance risks, market risk, foreign currency risk, interest risk, as well as price risk. The Group’s risk management is coordinated by the Managing board and focuses on actively securing the Company's short to medium-term cash flows by minimizing the exposure to risks. Long-term financial investments are managed to generate lasting returns. The Group is exposed to different types of risk with regards to its financial instruments. The most significant financial risks to which the Group is exposed to are described below. Insurance risk Insurance risk is the risk of occurrence of insured events as a result of the portfolio of insurance contracts in which the amount of damages and the benefits to be paid exceeds the amount of the insurance reserves. This depends on the frequency with which the insurance events occur, the type of insurance portfolio, the amount of the insurance benefits. To mitigate this risk, the variety of insurance portfolio and probability theory are of great importance. The Group strives to make a relatively even distribution of insurance contracts and to analyze the different types of insurance risks, which is reflected in the general conditions. Through various assessment and control methods, the Head of Internal Control performs regular risk assessment and monitors the accumulation of insurance sums by group of clients and regions. The risk management is conducted by the Internal Control Directorate in cooperation with the actuaries and the management of the Group. The main factors on which the positive financial result of the Group depends are the loss rate, the cost quota and the investment income. Insurance risk - the technical risk is the risk of occurrence of an insured event, in which the amount of the insurance indemnity exceeds the expectations for risk manifestation, expressed in the amount of the formed insurance reserves, i.e., insurance technical risk exists when the total loss for a certain period of time is greater than the calculated premium and the reserves reserved. The insurance - technical risk is influenced by the frequency and weight of the claims. Every insurance company is seeking to ensure that the coverage of its commitments have allocated sufficient amount insurance technical reserves. The Group manages and balances the insurance risks incurred both within the insurance group and outside it. Within the insurance group, this is achieved by balancing the risks assumed in time, in essence, by location, in risk groups and by increasing the number of insured entities, i.e., through the manifestation of the Law of Big Numbers. The Group conducts a systematic analysis of the risks assumed, their time and territorial diversification, offers new insurance products and strives to incorporate permanently new units into the insurance population with a well anticipated risk exposure. Outside the insurance group, the Group equates the risk by using reinsurance contracts. According to the specifics of the specific insurance products, the choice of the reinsurance contract and the relevant limits of self-retention is determined. The management of insurance risk is also reflected in the application of constraints in signing procedures - Limits of liability, exclusion of risks to which it can be influenced, use of appropriate methods to assess the necessary bonuses and future obligations, implementation of reinsurance program and monitoring of the insurance business. Regardless of the reinsurance protection, the Group is not relieved of its direct liability to the insured against the risks transferred, resulting in credit CHIMIMP ORT GENERAL RISKS AND UNCERTAINTIES 46 risk to the extent that the reinsurers of the relevant reinsurance contract are unable to meet their financial obligations under the reinsurance contract. To minimize the exposure to this credit risk, the Group maintains a register of available quantitative indicators of the financial position of its counterparties. The Group offers over 70 types of insurance products, thus striving to achieve a diversified and balanced, aggregated insurance portfolio. Ten of the products offered cover risks in Car Insurance; 18 cover risks in Property Insurance; 40 - In liability insurance, Accident and Travel assistance; 10 are the Insurance of Insurance and Financial Risks Insurance and a number of other insurances in different fields of the non- life insurance. The term of the concluded contracts in the aggregated insurance portfolio is mainly one year, but there are also contracts in it that are shorter or longer than one year. The car insurance covers mainly risk related to road accidents, natural disasters and illegal human activities. The risks are tangible and intangible. The covered risks cover to the fullest extent the insurance coverage needs of owners, users and holders of motor vehicles. The territorial scope of insurance covers the whole of Europe. The property insurance covers mainly risk related to fire, natural disasters, equipment and equipment failure, illegal human activity, etc. For property insurance, valuation and reinsurance protection with regard to catastrophic risks is essential. In assessing these risks, the accent is put on the adequate determination of the sum insured, the prevention performed, the periodic inspection of the insured objects. The provided territorial coverage for them is only for the territory of the Republic of Bulgaria. Under Insurances Responsibilities, besides General Civil Liability, a large number of Professional Responsibilities are covered, which are mostly mandatory under different regulations. The cover of these insurances is granted only for the territory of the Republic of Bulgaria. Accident and Travel Assistance covers risks related to: death, permanent and temporary disability of the insured, as a result of an accident and assisted assistance in health conditions. The coverage provided for the different products in this group is different and ranges from cover only for the Republic of Bulgaria to coverage worldwide. Annually, the range of insurance products offered is analyzed, depending on the results of each product, the Group's risky interest, market needs and other factors, adapting existing products or developing new products to meet specific needs. The latter is done after a thorough analysis of consumer demand and market segmentation. The underlying assumption underlying the valuation of liabilities is that the development of future claims to the Group will follow in broad terms the experience of the development of claims in past years. This includes assumptions about the frequency and weight of each claim, as well as an estimate of the inflation factor for each year of insurance events. In addition, a qualitative and quantitative assessment is made of the degree of deviation that can be expected in applying past trends in the future. The Group recognizes the impact of external factors such as changes in legislation, development of case law, etc. on the amount of insurance liabilities. In order to limit exposure to extreme adverse events, especially with regard to catastrophic events, the relevant reinsurance protection applies. Reinsurance contracts distribute the risk and minimize the effect of significant losses, which guarantees the Group's capitalization. In selecting a reinsurer, the Group takes into account the relative reassurance of the reinsurer, assessed on the basis of the public rating and the studies conducted. Insurance risk is reflected in the settlement process and the allocation of reserves. The table below represents an estimate of the RBNS included in the financial statements based on the claims reported and paid, broken down by the year of occurrence of the damage. The table provides a historical review of the CHIMIMP ORT GENERAL RISKS AND UNCERTAINTIES 47 sufficiency of the estimate of the amount of outstanding claims used in past years. Due to the inherent uncertainty in the process of determining the reserves, it cannot be guaranteed with absolute certainty that these reserves will suffice as a final result. Year of event 2021 2020 2019 2018 2017 2016 BGN’000 BGN’000 BGN’000 BGN’000 BGN’000 BGN’000 At the end of the period 50 885 48 597 52 242 48 674 52 390 54 258 1 year later - 21 260 25 848 32 826 30 963 30 330 2 years later - - 4 576 5 187 8 066 13 422 3 years later - - - 3 798 4 179 5 838 4 years later - - - - 3 337 2 244 5 years later - - - - - 2 350 Cumulative payments to date 50 885 69 857 82 666 90 485 98 935 108 442 Overall assessment of benefits 95 405 84 428 91 206 95 077 101 127 108 442 As of 31 December: Payments: Evaluation 44 520 14 571 8 540 4 592 2 192 - Real Reserves 40 563 15 569 16 467 16 172 12 948 14 053 Some assumptions are made in the calculation of technical provisions. Assignment is a process related to the calculation of neutral estimates of the most probable or expected outcome of the insured event. The sources of information on which assumptions are made are based on in-depth studies on the Group's experience. Where there is insufficient insider information to produce a reliable assessment of the development of insurance claims, market data obtained from its own research or established by the Financial Supervision Commission is used. With regard to the reserve for claimed but unpaid claims, the expertise of the liquidation experts is essential. They examine the damage in terms of the circumstances of the occurrence and the right to compensation. Based on a historically proven experience of the magnitude of such damage, it is assessed. This evaluation is reviewed regularly, and updates are updated when new information is available. In order to create a reserve for incurred but unreported claims (IBNR), the Group uses chain-based methods both on the basis of accrued values of the paid claims and on the basis of the historical claims. Average and weighted average growth rates were used for development factors, with almost all insurance policies being applied for the period 2011-2021. When there is a major variation in development rates for a certain insurance policy for a given year, these years are not taken into account when calculating the reserve. With sufficient data for recovered sums, the Group calculates a regression reserve that is deducted from the reserve for incurred but unproven damages. Such a reserve is calculated only under Casco insurance because of the significant amount of the recovered sums from this insurance. This reserve has been calculated on the basis of a chain-based method based on the recovered sums for the past 11 years. For Motor Third Party Liability insurance, the unsecured claim reserve is considered separately for both property and non-pecuniary damage. The Group uses a combination of chain-based method based on the accumulated historical values of the claims using the weighted average development coefficients derived from the Group's own data and the chain-based method based on accumulated Values of paid claims using weighted average growth rates derived from the Group's own data in a 50/50 ratio. The method described is the method under Art. 92 para. 11 of Ordinance No. 53, which is used to determine the CHIMIMP ORT GENERAL RISKS AND UNCERTAINTIES 48 sufficiency of the insurance reserve. The method has been approved for a method of calculating the insurance reserve as at 31.12.2021 by FSC Resolution No. 125 - CP from 14.02.2022. For insurances in which the Group offers active reinsurance and has statistical data on the development of damages for a sufficiently long period, the reserve for incurred but unproven damages shall be calculated separately for direct business and active reinsurance. In active reinsurance, the claim for damages is significantly delayed over time compared to the development of claims under direct business, given that, with sufficient data to apply a statistical method, it is more reasonable to conduct the calculations separately. No provision is made for any incurred but unforeseen damages for Illness Insurance, Rail Vehicles, Credit and Leasing, Warranty Insurance, Miscellaneous Financial loss and Legal Expenses Insurance because, using the chain-based method of calculating the reserve for incurred but unproven damages results as the value 0, and insurance "Illness", "Rail vehicles" and "Legal expenses" not realized premium income. The unearned premium reserve is formed to cover claims and expenses that are expected to arise in the insurance or reinsurance contract at the end of the reporting period. The group formed unearned premium reserve base their accrued insurance premiums. All outstanding policy contributions are accrued over the life of the contract for one-year policies and for multiannual premiums with a lump sum payment. For multiannual policies with an annual contribution, the annual instalment is charged at the time of its maturity. When calculating the value of the unearned premium reserve as of 31 December 2021, the "exact date" method was used. The reserve is calculated automatically by the information system individually for each policy and each annex to it, based on the accrued premium income, accrued acquisition costs, the term of the contract and the coverage period after the end of the reporting period. The unearned premium reserve for Cargo and Carrier's Liability insurance for one-time transport is calculated for the insurance period of one month. For crop insurance, the unearned premium reserve is calculated until the end of the contract, but not later than the end of the agricultural year. Given that the accounting policy does not provide for deferral of acquisition costs, when calculating the reserve from the value of accrued premium is deducted the value of acquisition costs - the value of accrued commissions on the policy and other acquisition costs set in the CRA. The proportion of reinsurers in the premium reserve is calculated in proportion to the premium on each policy for the proportionate contracts and facultative entered into. For the disproportionate reinsurance contracts "excess of loss", "stop loss" and CAT contracts, the share of the reinsurer is not set aside. The adequacy of the obligations is ensured by the periodic assessment of the overall reserves and whether they are sufficient to cover any future payments. When assessing the adequacy of the reserves, account shall be taken of all expected cash flows under insurance contracts, such as benefits payments, compensation costs, etc. The adequacy of the unearned premium reserve and loss reserve is established by relevant tests. Adequacy test of unearned premium reserve shall be under Art. 85 of Ordinance No. 53, and in case of established shortage a reserve for unexpired risks is formed. The latter is set aside for a negative gross technical result, determined in accordance with Annex № 6 of Ordinance № 53 for three consecutive years, as the "Civil Liability" of motorists examines the development of risk and costs for only one - the current year. The test is conducted by type of insurance. The amount of the unexpired risk reserve is determined in accordance with Appendix 7 of the Ordinance. As of 31.12.2021 the test for adequacy of the unearned premium reserve does not show a shortage of premium and the need to form a reserve for unexpired risks. The adequacy test of the pending payment reserve was performed using the run-off method. CHIMIMP ORT GENERAL RISKS AND UNCERTAINTIES 49 The impact of the development of insurance indicators on the capital adequacy of the Group is simulated in the sensitivity analysis. For the sensitivity analysis presented below, the indicators of uncollectible receivables from insurance operations and reserve for forthcoming payments were selected. The starting point for the analysis is the equity position of the Group as at the date of the financial statements. Equity BGN’000 Deviation BGN’000 Deviation % Equity as of 31.12.2021 99 399 Increase of expected future claims payments by 10 % 111 498 (415) (0.37%) Decrease of expected future claims payments by 10 % 112 328 415 0.37% Increase of reserve for unreported and unreported claims by 5% 104 883 (7 030) (6.28%) Decrease of reserve for unreported and unreported claims by 5% 118 943 7 030 6.28% From reviewed scenarios most impact on the Group's equity is that one with a change in the amount of the reserve for upcoming payments. This scenario reflects the inherent uncertainty in the assessment of the reserve as it concerns a current assessment of the expected future claims payments. This uncertainty is most valid with regard to the reserve for incurred but unproven damages and to insurances characterized by a longer claims settlement process, such as Motor Third Party Liability insurance and other types of liability insurances. Reinsurance strategy The reinsurance campaign of the Group is aimed at preserving its financial stability and ensuring maximum protection of the interests of insured persons in the event of the occurrence of insurance events that involve the risk of sensitive losses as a result of the occurrence of single insurance events and of catastrophic nature. This objective is achieved by continuously analysing the structure of the insurance portfolio by ensuring the accumulation of cover risks in amounts not exceeding the financial capacity of the Group. Reinsurance Program: - is a capital management tool aimed at reducing the cost of capital funds in the event of adverse events; - is a measure to protect the Group's capital adequacy from accumulating risks, including those of a catastrophic nature; - covers almost all risks and classes of business recorded by the Group. The types of reinsurance protection and contract limits are fully in line with the Group's risk appetite, the type of portfolio and the signing rules of the Group; - accurately and clearly defines the specific needs for transferring risks as well as the right kind of specific contracts; - determines self-retention rates by business class; - is aimed at constantly optimizing reinsurance contracts in order to alleviate capital pressure through the application of different reinsurance options that can partially or totally achieve optimization of capital adequacy; - reduces fluctuations in case of occurrence of insurance events; - evaluates and equalizes the risks of different types of insurance coverage. The Group reinsures part of its risks in order to control its exposures to losses and to protect its capital resources. All optional reinsurance contracts are pre-approved by the management. Before concluding a reinsurance contract, the Group analyses the credit rating of the reinsurers concerned. High reinsurance reinsurers are selected. The Group periodically analyses the current financial position of reinsurers with which reinsurance commitments have been entered into. CHIMIMP ORT GENERAL RISKS AND UNCERTAINTIES 50 The Group enters into reinsurance commitments with various reinsurers with a high credit rating to control the exposure to losses as a result of an insured event. Damage settlement process The damages table and namely the percentage of the damages quota ensures the opportunity for more precise information about the risk development during the reporting periods: Types of insurance 2021 Damages quota, gross 2021 Damages, quota, net 2020 Damages quota, gross 2020 Damages quota, net % % % % Accident insurance 14% 12% 46% 38% Including obligatory accident insurance of the passengers in the public transport -20% -28% 42% 44% Disease 0% 0% 0% 0% Casco 42% 41% 38% 37% Rail vehicles 0% 0% 0% 0% Casco Aircraft -35% -524% -8% 187% Casco vessels 7% -89% 89% 81% Freight transport 3% 4% 8% 6% Fire and natural disasters 31% 68% 26% 24% Industrial fire 31% 136% 34% 27% Fire and other hazards 16% 14% 13% 20% Technical insurances -8% -16% 1% 2% Agricultural insurances 99% 96% 26% 26% Property damage -1% -1% -12% -12% Insurance theft, robbery, vandalism 0% 0% 0% 0% Animal insurance -1% -1% -12% -12% Third-party vehicle insurance -6% -26% 62% 126% Third-party aviation insurance 111% 3 812% -4% -18% Third party vessels insurance 2 120% 1 790% 12% 41% General third-party insurance -164% -161% 182% 201% Loans and leasing 0% 0% -1% -1% Insurance of guarantees 0% 0% 0% 0% Miscellaneous financial losses 0% 0% 0% 0% Legal costs 0% 0% 0% 0% Travel Assistance 5% 5% 37% 37% Total for non-life insurance: 26% 32% 44% 46% The insurance with the largest relative share in the Group's portfolio - "Casco of motor vehicles" is characterized by favorable risk development in 2021 - 42% gross claims ratio and 41% - net, although compared to the previous year, when 38% of the premium earned was used to cover risk-related payments, there is a slight increase in claims. A prerequisite for the increase in the insurance damage is the removal of the restrictions on the movement of motor vehicles introduced in 2020 due to COVID 19, due to which such low damage was observed at that time. The change in the net loss ratio for the overall activity: 49% - for 2010, 53% - for 2011, 59% - for 2012, 53% - for 2013, 59% - for 2014, 46% - for 2015, 56% - for 2016, 41% - for 2017, 43% - for 2018, 47% - for 2019, 46% - for 2020 and 32% - for 2021, shows a fluctuation in net damage between 41% and 59%, and in the last five to six years there has been a steady downward trend compared to the previous six-year period. CHIMIMP ORT GENERAL RISKS AND UNCERTAINTIES 51 The following table shows the average amount of damage paid by type of insurance: Types of insurance Number 2021 Amount in BGN Average indemnity 2021 Number 2020 Amount in BGN Average indemnity 2020 Accident insurance 2 565 861 840 336 2 904 1 632 248 562 Casco 61 642 60 726 391 985 70 641 62 625 144 887 Casco of aircrafts 1 93 168 93 168 - - - Casco of vessels 9 267 405 29 712 12 164 860 13 738 Cargo insurance during transportation 20 73 291 3 665 17 35 626 2 096 Fire and natural calamities insurance 2 102 4 321 944 2 056 1 847 4 443 860 2 406 Property damage insurance - - - 5 7 590 1 518 Insurance associated with the ownership and usage of motor vehicles 5 483 25 931 683 4 729 6 257 24 502 030 3 916 Third-party aviation insurance 1 7 500 7 500 - - - Third party vessels insurance 1 15 732 15 732 1 5 705 5 705 General third-party insurance 28 440 238 15 723 51 437 301 8 575 Travel assistance 768 451 462 588 2 227 1 570 532 705 Total: 72 620 93 190 654 1 283 83 962 95 424 898 1 137 The average paid damage in 2021 is BGN 1 283 and compared to the same indicator for the previous years: BGN 1 137 - for 2020 and BGN 1 124 - for 2019 marks an insignificant increase. The highest is the amount of the average damage under the "Casco on Aircraft" and "Casco on Vessels" insurance, and the lowest - on the "Accident" and "Travel Assistance" insurances. Foreign currency risk The foreign currency risk is a potential cause for losses for the Group when the foreign currency rates fluctuate. Group’s policy regarding other than banking activities Most of the Group's transactions are carried out in BGN. The foreign transactions of the Group, denominated in US dollars, expose the Group to currency risk. The Group has long-term trade payables and short-term finance lease liabilities in US dollars, the greater part of which is related to the purchase of aircraft. These liabilities are stated at amortized cost. The Group has short-term and long-term US dollar loans. These receivables are classified as loans and receivables. The foreign transactions of the Group denominated in euro do not expose the Group to currency risk as the exchange rate of the Bulgarian lev is fixed to the euro under the Currency Board Act. In order for the foreign currency risk to be decreased, the non-BGN cash flows are monitored by the Group. Generally, the Group has different procedures for risk management for the short-term (due within 6 months) and long-term non-BGN cash flows. CHIMIMP ORT GENERAL RISKS AND UNCERTAINTIES 52 Group’s policies regarding the banking activities In the Republic of Bulgaria, the exchange rate of the Bulgarian lev to the euro is fixed by the Currency Board Act, which is why the Group's long position in euro does not pose a risk to the Group. The risk-weighted net currency position as at 31 December 2021 in financial instruments denominated in currencies other than leva or euro is less than 2% of the capital base and no foreign exchange risk capital requirements on the part of the Group with respect to banking activities. Due to the low size of this position, the potential effect of changes in exchange rate will not lead to significant effects on equity and therefore the risk-weighted effect on capital will be below the materiality threshold for the Group and the regulatory framework – EU Regulation 2013/575. The development of the global pandemic has affected the economies of countries at the global level and, accordingly, has no pronounced effect on the currency of a particular individual country and hence the design of specific currency risk. As the Group's net exchange rate regarding the banking activities result in 2021 is a loss due mainly to currency revaluation, it is not possible to estimate what part of this result was due to the effects of the Covid-19 pandemic and what due to market and political factors related to the development of exchange rates. The process of economic recovery in different countries is happening at different speeds, influenced by their ability to organize a process of vaccinating their populations, and hence the currency of these countries will change its course from those in which the pandemic continues to rage. The EU and Bulgaria are in a slow process of dealing with the Covid-19 pandemic, but as the Bulgarian lev is pegged to the euro and the Group's exposure in other currencies (mainly US dollars) is not significant, the Group's currency risk has no direct effect. from the Covid-19 pandemic. The currency structure of financial assets and liabilities at book value as of 31 December 2021 is as follows: BGN EUR USD Other Total FINANCIAL ASSETS BGN’000 BGN’000 BGN’000 BGN’000 BGN’000 Cash and cash balances with the Central Bank 1 808 132 69 823 14 750 70 847 1 963 552 Provided resources and advances to banks 152 18 149 59 849 104 275 182 425 Receivables under repurchase agreements 315 777 41 205 - - 356 982 Financial assets at fair value through profit or loss 236 468 13 100 6 137 38 278 293 983 Loans and advances to customers 2 294 974 590 163 52 235 449 3 120 638 Financial assets measured at fair value in other comprehensive income 416 380 437 364 4 465 897 859 106 Financial assets at amortized cost 185 146 445 875 - 56 164 687 185 TOTAL ASSETS 5 257 029 1 615 679 85 253 505 910 7 463 871 FINANCIAL LIABILITIES Deposits from banks 21 168 26 609 2 922 2 194 52 893 Liabilities to other depositors 4 681 404 1 728 017 213 577 323 585 6 946 583 Issued bonds - 25 450 - - 25 450 Other attracted funds 34 928 16 361 - 7 51 296 TOTAL LIABILITIES 4 737 500 1 796 437 216 499 325 786 7 076 222 NET POSTION 519 529 (180 758) (131 246) 180 124 387 649 CHIMIMP ORT GENERAL RISKS AND UNCERTAINTIES 53 The currency structure of financial assets and liabilities at book value as of 31 December 2020 is as follows: BGN EUR USD Other Total FINANCIAL ASSETS BGN’000 BGN’000 BGN’000 BGN’000 BGN’000 Cash and cash balances with the Central Bank 1 765 953 76 037 8 902 61 851 1 912 743 Provided resources and advances to banks 159 20 632 77 964 89 313 188 068 Receivables under repurchase agreements 313 332 46 340 - - 359 672 Financial assets at fair value through profit or loss 217 941 8 814 5 017 35 880 267 652 Loans and advances to customers 1 906 595 646 860 48 230 957 2 784 460 Financial assets measured at fair value in other comprehensive income 278 287 432 650 4 131 938 716 006 Financial assets at amortized cost 26 352 394 316 - 42 621 463 289 TOTAL ASSETS 4 508 619 1 625 649 96 062 461 560 6 691 890 FINANCIAL LIABILITIES Deposits from banks 46 266 16 347 1 341 2 098 66 052 Liabilities to other depositors 4 063 383 1 631 121 195 775 300 668 6 190 947 Issued bonds - 25 451 - - 25 451 Other attracted funds 34 994 11 510 - - 46 504 TOTAL LIABILITIES 4 144 643 1 684 429 197 116 302 766 6 328 954 NET POSTION 363 976 (58 780) (101 054) 158 794 362 936 Interest risk analysis Group’s policy regarding other than banking activities The policy of the Group is aimed at minimizing interest rate risk on long-term financing. Therefore, long- term loans are usually with fixed interest rates. As at 31 December 2021, the Group is exposed to the risk of a change in market interest rates on its variable-rate bank loans. All other financial assets and liabilities of the Group have fixed interest rates. All investments in the Group's bonds are paid on a fixed interest rate basis. Group’s policies regarding the banking activities Interest rate risk is the probability of a potential change in net interest income or net interest margin due to a change in overall market interest rates. Interest rate risk management in the Group seeks to minimize the risk of reducing net interest income as a result of changes in interest rates. For measuring and assessing interest rate risk, the Group uses the GAR-analysis method (mismatch / imbalance analysis). It identifies the sensitivity of the expected revenues and expenditures to the development of the interest rate. The GAP analysis method aims to determine the Group's position, generally and by individual types of financial assets and liabilities, in terms of expected changes in interest rates and the impact of this change on net interest income. It assists in the management of assets and liabilities and is a tool to provide sufficient and stable net interest rate profitability. The Group's imbalance between interest rate assets and interest-bearing liabilities as of 31 December 2021 is negative, amounting to BGN 1 880 731 thousand. The GAP coefficient, as an expression of this imbalance, compared to the Group's total profitable assets (interest-bearing assets, derivatives and investments in subsidiaries) is minus 34.20%. CHIMIMP ORT GENERAL RISKS AND UNCERTAINTIES 54 Up to 1 month 1 to 3 months 3 to 12 months 1 to 5 years Over 5 years Total INTEREST-BEARING ASSETS BGN’000 BGN’000 BGN’000 BGN’000 BGN’000 BGN’000 Provided resources and advances to banks 179 507 - - - 2 918 182 425 Receivables under repurchase agreements 111 225 114 303 131 454 - - 356 982 Financial assets measured at fair value through profit or loss - - - - 4 062 4 062 Loans and advances to customers 38 827 68 738 458 739 1 363 017 1 191 317 3 120 638 Financial assets measured at fair value in other comprehensive income - 122 858 31 928 258 446 430 967 844 199 Financial assets at amortized cost 9 640 11 097 58 551 217 778 390 119 687 185 TOTAL INTEREST-BEARING ASSETS 339 199 316 996 680 672 1 839 241 2 019 383 5 195 491 INTEREST-BEARING LIABILITIES Deposits from banks 52 893 - - - - 52 893 Liabilities to other depositors 3 112 063 451 048 1 153 755 2 228 951 766 6 946 583 Issued bonds - - - - 25 450 25 450 Liabilities under leasing contracts 1 038 1 842 8 001 27 500 12 915 51 296 TOTAL INTEREST–BEARING LIABILITIES 3 165 994 452 890 1 161 756 2 256 451 39 131 7 076 222 IMBALANCE BETWEEN INTEREST BEARING ASSETS AND LIABILITIES, NET (2 826 795) (135 894) (481 084) (417 210) 1 980 252 (1 880 731) The Group's imbalance between interest rate assets and interest-bearing liabilities as of 31 December 2020 is negative, amounting to BGN 1 831 732 thousand. The GAP coefficient, as an expression of this imbalance, compared to the Group's total profitable assets (interest-bearing assets, derivatives and investments in subsidiaries) is minus 37.97%. In connection with the reform in the way of formation and use of interest rate indices (IBOR), in the Group such are not actively used, the main interest rate indices, which are introduced in the interest rates of the parent bank and the subsidiary bank are synthetic, with sources from the bank interest rate statistics (BNB / NBRSM) and in this sense the effect of the reform is insignificant on the value of the Group's cash flows. Up to 1 month 1 to 3 months 3 to 12 months 1 to 5 years Over 5 years Total INTEREST-BEARING ASSETS BGN’000 BGN’000 BGN’000 BGN’000 BGN’000 BGN’000 Provided resources and advances to banks 185 150 - - - 2 918 188 068 Receivables under repurchase agreements 122 659 120 456 116 557 - - 359 672 Loans and advances to customers 33 819 36 013 296 599 1 435 795 982 234 2 784 460 Financial assets measured at fair value in other comprehensive income - 34 106 22 879 300 272 344 476 701 733 Financial assets at amortized cost 9 280 12 634 46 527 127 321 267 527 463 289 TOTAL INTEREST-BEARING ASSETS 350 908 203 209 482 562 1 863 388 1 597 155 4 497 222 INTEREST-BEARING LIABILITIES Deposits from banks 66 052 - - - - 66 052 Liabilities to other depositors 2 894 855 414 560 1 132 674 1 747 894 964 6 190 947 Issued bonds - - - - 25 451 25 451 Liabilities under leasing contracts 1 003 1 823 7 105 24 167 12 406 46 504 TOTAL INTEREST–BEARING LIABILITIES 2 961 910 416 383 1 139 779 1 772 061 38 821 6 328 954 IMBALANCE BETWEEN INTEREST BEARING ASSETS AND LIABILITIES, NET (2 611 002) (213 174) (657 217) 91 327 1 558 334 (1 831 732) Maintaining a negative imbalance exposes the Group to the risk of a decrease in net interest income when interest rates rise. The impact of the imbalance reported as of 31 December 2021 on net interest income, with a forecast of 2% increase in interest rates over a 1-year horizon, is a decrease in net interest income by BGN 5 373 thousand (2020: BGN 4 579 thousand). In the tables above, part of the attracted funds on current accounts without residual maturity in the amount of BGN 2 153 008 thousand as of 31 December 2021 (2020: BGN 1 665 762 thousand) is presented in the range from 1 year to 5 years, as the Group considers this availability to be a reliable long-term resource based on the average daily availability on these accounts in 2021 and 2020. Credit risk analysis Group’s policy regarding other than banking activities CHIMIMP ORT GENERAL RISKS AND UNCERTAINTIES 55 Credit risk is the risk that counterparty fails to discharge an obligation to the Group. The Group is exposed to this risk for various financial instruments, for example by granting loans and receivables to customers, placing deposits etc. The Group’s maximum exposure to credit risk is limited to the carrying amount of financial assets recognized at the reporting date, as summarized below: 2021 2020 BGN‘000 BGN‘000 Financial assets – carrying amounts: Financial assets measured at fair value through profit or loss 2 042 970 2 027 241 Equity instruments at fair value through other comprehensive income 70 426 83 766 Debt instruments measured at fair value through other comprehensive income 859 441 717 595 Debt instruments at amortized cost 6 988 010 6 259 232 Carrying amount 9 960 847 9 087 834 The Group continuously monitors defaults of customers and other counterparties, identified either individually or by group and incorporates this information into its credit risk controls. The Group's policy is to deal only with creditworthy counterparties. The Group's management considers that all the above financial assets that are not impaired or past due for each of the reporting dates under review are of good credit quality. In respect of trade and other receivables, the Group is not exposed to any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. Trade receivables consist of a large number of customers in different industries and geographical areas. Based on historical indicators, the management considers that the trade receivables that are not past due are of good credit quality. The credit risk related to cash and cash equivalents and financial market funds is considered immaterial as the contracting parties are banks with good reputation and good credit rating. The carrying amounts presented above represent the maximum exposure to credit risk the Group might experience, regarding these financial instruments. Group’s policies regarding the banking activities Credit risk is the probability of a loss arising from the non-performance of contractual obligations of the counterparty on financial assets held by the Group. The Group manages credit risk inherent in both the banking and trading book. The Group has structured credit risk monitoring and management units for individual business segments by applying individual credit policies. The credit risk of individual exposures is managed over the life of the exposure - from the decision to form the exposure to its full repayment. In order to minimize credit risk in the credit process, detailed procedures are applied for the analysis of the economic feasibility of each project, the control over the use of the funds allocated and the administration related to this activity. To reduce credit risk, appropriate type and value collateral and guarantees are adhered to, in accordance with the Internal Rules, the approach used for calculating capital requirements and current banking legislation. Cash, cash equivalents and cash balances in Central bank amounting to BGN 1 963 552 thousand are not carrying significant credit risk for the Group due to their nature and the Group’s ability for disposal. The provided resources and advances to banks amounting to BGN 182 425 thousand are primarily deposits with international and Bulgarian financial institutions with a maturity of up to 7 days. These financial assets carry a credit risk with a maximum exposure of 20%, 50% and 100% according to the CHIMIMP ORT GENERAL RISKS AND UNCERTAINTIES 56 policy of the Group, the percentage being determined by the quality characteristics of the financial institution. Claims under repurchase agreements amounting to BGN 356 982 thousand carry a credit risk for the Group, depending on the risk of the collateral being provided. Part of the receivables amounting to BGN 48 145 thousand is secured by government securities issued by the Republic of Bulgaria and bear 0% risk. The remaining receivables amounting to BGN 308 837 thousand are secured by corporate securities and carry respectively: BGN 300 300 thousand - 100% risk and BGN 8 537 thousand - 150% risk depending on the issuer of the securities provided as collateral. Financial assets measured at fair value through profit or loss in the amount of BGN 293 983 thousand represent equity instruments - shares in financial and non-financial enterprises in the amount of BGN 135 898 thousand, whose maximum exposure in percentage terms is as follows - BGN 103 334 thousand - 100% risk and BGN 32 564 thousand - 250% risk; units in mutual funds in the amount of BGN 149 124 thousand - with risk weight from 0% to 1250% depending on the type of the underlying asset, debt instruments in the amount of BGN 8 891 thousand and derivatives in the amount of BGN 70 thousand - 100% risk. Equity securities measured at fair value in other comprehensive income of BGN 14 908 thousand represent shares in financial and non-financial corporations carrying credit risk with a maximum exposure of 100% or BGN 14 908 thousand in absolute amount. Debt securities measured at fair value through other comprehensive income and issued by the Republic of Bulgaria in the amount of BGN 289 380 thousand bear 0% credit risk for the Group. Debt securities measured at fair value through other comprehensive income and issued by other countries in the amount of BGN 141 517 thousand carry credit risk for the Group depending on the credit risk of the issuing country. Debt securities measured at fair value through other comprehensive income and issued by domestic and foreign companies in the amount of BGN 413 301 thousand carry credit risk for the Group, whose maximum percentage exposure is 100% or BGN 413 301 thousand in absolute amount. Debt securities valued at amortized cost and issued by the Republic of Bulgaria have a carrying amount of BGN 408 414 thousand and carry 0% risk. Debt securities reported at amortized cost and issued by other countries and central banks have a carrying amount of BGN 267 906 thousand and carry credit risk for the Group depending on the credit rating of the issuing country. Debt securities measured at amortized cost and issued by domestic and foreign companies with a carrying amount of BGN 10 865 thousand carry credit risk for the Group, whose maximum exposure in percentage is 100% or BGN 10 865 thousand in absolute amount. Loans and advances to customers with a carrying amount of BGN 3 120 638 thousand carry credit risk for the Group. To determine the amount of the Group's exposure to this risk, an analysis of the individual risk for the Group arising from each specific exposure is performed, the Group applying the criteria for assessment and classification of risk exposures set out in the banking legislation of the Republic of Bulgaria and IFRS. According to these criteria and the performed analysis, the maximum exposure of the Credit Risk Group amounts to BGN 2 169 234 thousand. As of 31 December 2021, the amount of the provisions formed by the Group to cover expected credit losses on loans and advances is BGN 38 743 thousand. During the reporting period, the activities of the Group were affected by the spread of a new coronavirus (Covid-19), and in early 2020 worldwide, there were difficulties in the business and economic activities of many companies and entire industries and they continued to operate and in 2021, in parallel with the development of new epidemiological strains. CHIMIMP ORT GENERAL RISKS AND UNCERTAINTIES 57 As the Group operates in a specific sector - the financial sector, where supply chain disruptions, traffic disruptions and quarantine measures are not directly affected, its activities were affected rather indirectly - through the effect on its customers and volatility in the prices of financial instruments owned by the Group. In 2021, as at the date of this consolidated financial statement, businesses must face challenges related to reduced revenues and disrupted supply chains, shortages of certain raw materials, etc., related to the consequences of the global pandemic. . With the development of the third and fourth waves of the pandemic and the slow process of vaccination and extension of measures in EU countries (including Bulgaria) in 2021, there were objective obstacles to the activities of companies in individual economic sectors and a great deal of uncertainty when revenue and normal operations will be restored. The Group's exposure to the most affected sectors, such as restaurant business and tourism services, is extremely insignificant, and the exposures to hotel business and transport are also with a low share in the portfolio and, as the financial condition of these clients is monitored in great detail. the credit risk for the entire life of the instruments, incl. there is also a positive effect of incentives at the government level and the proposed compensation schemes. The expected recovery after mid-2021, supported by vaccination and the introduction of vaccination passports, is expected to support the hotel business and related transport of tourists during the summer season in Bulgaria and the Republic of Northern Macedonia. Until the end of 2021, the Group continued to apply a moratorium on payments, according to the "Procedure for deferral and settlement of due liabilities to banks and their subsidiaries - financial institutions in connection with the actions taken by the authorities of the Republic of Bulgaria to limit the Covid-19 pandemic and its aftermath”. Deferred payments under this procedure shall not be treated as a “restructuring measure” within the meaning of Article 47b of Regulation (EU) № 575/2013, nor as compulsory restructuring under Article 178 (3) of that Regulation. Where, in the course of monitoring exposures with a moratorium on payments, an indication of the likelihood of non-payment is identified, those exposures shall be classified at a higher stage in accordance with the applicable regulatory framework. The exposures in respect of which a moratorium on payments has been applied are identified in the information system of the Group, incl. Applied Deferral mechanism that facilitates tracking and monitoring of exposures. In 2021, the debt moratorium imposed by the Banking Regulator in the Republic of Northern Macedonia came into force, allowing for the deferral of debts of clients whose activities were affected by the coronavirus pandemic, without affecting the classification of loans in terms of their restructuring. With regard to the assessment of the probability of non-payment of clients subject to a moratorium on payments, the Parent Bank shall implement the approvals approved by the Governing Council with Protocol № 52 / 23.12.2020 "Operational plan and an assessment of the probability of default on deferred exposures ”. According to this plan, the Parent Bank assesses the probability of non-payment both during the moratorium and 3 months after its expiration. With regard to the modifications accepted for relief of borrowers affected by the Covid-19 pandemic - in 2021 the Group implemented the current "Policy for classification, restructuring and reporting of exposures, credit risk holders". For the purposes of assessing the probability of non-payment - for customers for whom no moratorium on payments has been applied, the Group applies its internal policies for assessing the probability of non-payment. In the context of the Covid-19 pandemic and the measures taken to limit it, leading to sudden changes in the short-term economic outlook and lack of available and reliable information, as well as the unrepresentation of financial information in assessing the likelihood of default, Article 178 of Regulation (EU) № 575/2013, the Group shall take into account the information that is expected to have an impact for the entire duration of the exposures. CHIMIMP ORT GENERAL RISKS AND UNCERTAINTIES 58 The Group's credit loss assessment models have not been modified in connection with the global Covid- 19 pandemic, as their accuracy and adequacy depend on the risk parameters used to calculate the amount of expected credit losses. In 2021, the quality of the Group's exposure portfolio remains very good and there is no increase in the share of non-performing exposures, the credit loss models used have adequately assessed the size of the ECL. According to the current "Rules for acceptance, evaluation and management of collateral for credit transactions", collateral evaluations, incl. commercial real estate is updated every 12 months, and residential real estate - every three years. If necessary, it may also require more frequent updates, e.g. in case of a change in the parameters of a credit transaction or when the information at its disposal shows that their value has decreased significantly compared to the total market prices. Real estate appraisals are performed by independent certified appraisers. In the current pandemic environment affected by Covid-19, no dynamic adverse fluctuations in real estate prices have been observed, requiring a change in the policies for valuation of collateral accepted by the Group. In the process of credit risk management, the level of moratorium loans is monitored in great detail, as well as the assessment of the significant increase in credit risk for the entire term of the instruments, taking preventive actions to manage them, respectively classification and provisioning. Assets quality In the tables below, the Group presents the structure and the change in the adjustment for expected credit losses. Stage 1 Stage 2 Stage 3 Impairment loss - Loans and advances to banks at amortized cost 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Impairment loss on 1 January 2021 30 - - 30 Change in impairment loss 2 - - 2 Accrued for the period 16 - - 16 Derecognised for the period (14) - - (14) Impairment loss on 31 December 2021 32 - - 32 Stage 1 Stage 2 Stage 3 Impairment loss - Loans and advances to banks at amortized cost 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Impairment loss on 1 January 2020 45 - - 45 Change in impairment loss (15) - - (15) Accrued for the period 28 - - 28 Derecognised for the period (43) - - (43) Impairment loss on 31 December 2020 30 - - 30 Stage 1 Stage 2 Stage 3 Impairment loss – Receivables under repurchase agreements of securities 12-month ECL Lifetime ECL Lifetime ECL Total CHIMIMP ORT GENERAL RISKS AND UNCERTAINTIES 59 BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Impairment loss on 1 January 2021 1 245 - - 1 245 Change in impairment loss 1 - - 1 Accrued for the period 1 246 - - 1 246 Derecognised for the period (1 245) - - (1 245) Impairment loss on 31 December 2021 1 246 - - 1 246 Stage 1 Stage 2 Stage 3 Impairment loss – Receivables under repurchase agreements of securities 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Impairment loss on 1 January 2020 1 094 - - 1 094 Change in impairment loss 151 - - 151 Accrued for the period 1 245 - - 1 245 Derecognised for the period (1 094) - - (1 094) Impairment loss on 31 December 2020 1 245 - - 1 245 Stage 1 Stage 2 Stage 3 Impairment loss – Loans and advances granted to customers at amortised cost 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Impairment loss on 1 January 2021 12 349 809 22 723 35 881 Change in impairment loss recognised in Profit and loss 602 (389) 4 231 4 444 – Transfer to Stage 1 297 (70) (227) - – Transfer to Stage 2 (22) 193 (170) 1 – Transfer to Stage 3 (6) (44) 50 - – Increase due to change in credit risk 1 87 972 1 060 – Decrease due to change in credit risk (2 502) (583) (386) (3 471) – Increase due to originated or purchased assets 2 473 89 80 2 642 – Change in risk parameters 361 (61) 3 912 4 212 – Decrease due to derecognition for uncollectibility - - (1 489) (1 489) – Decrease due to derecognition for transfer (9) - (92) (101) – Interest income adjustment - - (1) (1) – Currency differences and other adjustments 2 1 6 9 Impairment loss on 31 December 2021 12 944 421 25 378 38 743 CHIMIMP ORT GENERAL RISKS AND UNCERTAINTIES 60 Stage 1 Stage 2 Stage 3 Impairment loss – Loans and advances granted to customers at amortised cost 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Impairment loss on 1 January 2020 11 046 801 67 940 79 787 Change in impairment loss recognised in Profit and loss 1 305 7 5 636 6 948 – Transfer to Stage 1 264 (81) (183) - – Transfer to Stage 2 (32) 119 (86) 1 – Transfer to Stage 3 (11) (26) 37 - – Increase due to change in credit risk - 106 932 1 038 – Decrease due to change in credit risk (1 726) (489) (1 293) (3 508) – Increase due to originated or purchased assets 2 309 381 411 3 101 – Change in risk parameters 501 (3) 5 818 6 316 – Decrease due to derecognition for uncollectibility - - (1 492) (1 492) – Decrease due to derecognition for transfer - - (49 374) (49 374) – Interest income adjustment - - (4) (4) – Currency differences and other adjustments (1) 1 16 16 Impairment loss on 31 December 2020 12 350 809 22 722 35 881 Stage 1 Stage 2 Stage 3 Impairment loss – Investments in debt securities at amortised cost 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Impairment loss on 1 January 2021 200 - - 200 Change in impairment loss 454 - - 454 Accrued for the period 560 - - 560 Derecognised for the period (106) - - (106) Impairment loss on 31 December 2021 654 - - 654 Stage 1 Stage 2 Stage 3 Impairment loss – Investments in debt securities at amortised cost 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Impairment loss on 1 January 2020 674 - - 674 Change in impairment loss (474) - - (474) Accrued for the period 85 - - 85 Derecognised for the period (559) - - (559) Impairment loss on 31 December 2020 200 - - 200 Stage 1 Stage 2 Stage 3 Impairment loss – Investments in debt securities at FVTOCI 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Impairment loss on 1 January 2021 2 734 - - 2 734 Change in impairment loss 1 909 - - 1 909 Accrued for the period 2 032 - - 2 032 Derecognised for the period (123) - - (123) Impairment loss on 31 December 2021 4 643 - - 4 643 CHIMIMP ORT GENERAL RISKS AND UNCERTAINTIES 61 Stage 1 Stage 2 Stage 3 Impairment loss – Investments in debt securities at FVTOCI 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Impairment loss on 1 January 2020 3 179 - - 3 179 Change in impairment loss (445) - - (445) Accrued for the period 1 096 - - 1 096 Derecognised for the period (1 541) - - (1 541) Impairment loss on 31 December 2020 2 734 - - 2 734 Stage 1 Stage 2 Stage 3 Impairment loss – Loan commitments 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Impairment loss on 1 January 2021 947 7 23 977 Change in impairment loss (301) (2) 21 (282) Accrued for the period 587 15 85 687 Derecognised for the period (888) (17) (64) (969) Currency and other movements 22 3 (24) 1 Impairment loss on 31 December 2021 668 8 20 696 Stage 1 Stage 2 Stage 3 Impairment loss – Loan commitments 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Impairment loss on 1 January 2020 1 035 4 46 1 085 Change in impairment loss (142) - 34 (108) Accrued for the period 675 27 104 806 Derecognised for the period (817) (27) (71) (915) Currency and other movements 54 3 (57) - Impairment loss on 31 December 2020 947 7 23 977 Stage 1 Stage 2 Stage 3 Impairment loss – Financial guarantee contracts 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Impairment loss on 1 January 2021 26 - - 26 Change in impairment loss (9) - - (9) Accrued for the period 22 - - 22 Derecognised for the period (31) - - (31) Impairment loss on 31 December 2021 17 - - 17 CHIMIMP ORT GENERAL RISKS AND UNCERTAINTIES 62 Stage 1 Stage 2 Stage 3 Impairment loss – Financial guarantee contracts 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Impairment loss on 1 January 2020 15 2 - 17 Change in impairment loss 11 (2) - 9 Accrued for the period 25 2 - 27 Derecognised for the period (14) (4) - (18) Impairment loss on 31 December 2020 26 - - 26 In the tables below, the Group presents the structure and the change in the gross values of the asset categories as of 01.01.2021 and 01.01.2020 and their change until the end of the financial period. Stage 1 Stage 2 Stage 3 Carrying amount before impairment – Loans and advances granted to banks at amortised cost 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Gross carrying amount at 1 January 2021 188 098 - - 188 098 Change in the gross carrying amount (5 641) - - (5 641) Increase for the period 338 215 - - 338 215 Decrease for the period (343 864) - - (343 864) Wright-off 8 - - 8 Other changes 182 457 - - 182 457 Gross carrying amount at December 31 December 2021 (32) - - (32) Impairment loss at 31 December 2021 182 425 - - 182 425 Stage 1 Stage 2 Stage 3 Carrying amount before impairment – Loans and advances granted to banks at amortised cost 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Gross carrying amount at 1 January 2020 232 360 - - 232 360 Change in the gross carrying amount (44 223) - - (44 223) Increase for the period 315 828 - - 315 828 Decrease for the period (360 051) - - (360 051) Wright-off - - - - Other changes (39) - - (39) Gross carrying amount at December 31 December 2020 188 098 - - 188 098 Impairment loss at 31 December 2020 (30) - - (30) Carrying amount at 31 December 2020 188 068 - - 188 068 CHIMIMP ORT GENERAL RISKS AND UNCERTAINTIES 63 Stage 1 Stage 2 Stage 3 Carrying amount before impairment – Receivables under repurchase agreements of securities 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Gross carrying amount at 1 January 2021 360 917 - - 360 917 Change in the gross carrying amount (2 689) - - (2 689) Increase for the period 358 228 - - 358 228 Decrease for the period (360 917) - - (360 917) Gross carrying amount at December 31 December 2021 358 228 - - 358 228 Impairment loss at 31 December 2021 (1 246) - - (1 246) Carrying amount at 31 December 2021 356 982 - - 356 982 Stage 1 Stage 2 Stage 3 Carrying amount before impairment – Receivables under repurchase agreements of securities 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Gross carrying amount at 1 January 2020 304 324 - - 304 324 Change in the gross carrying amount 56 593 - - 56 593 Increase for the period 360 917 - - 360 917 Decrease for the period (304 324) - - (304 324) Gross carrying amount at December 31 December 2020 360 917 - - 360 917 Impairment loss at 31 December 2020 (1 245) - - (1 245) Carrying amount at 31 December 2020 359 672 - - 359 672 Stage 1 Stage 2 Stage 3 Loans and advances granted to customers at amortised cost 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Gross carrying amount at 1 January 2021 2 714 435 27 363 78 543 2 820 341 Change in the gross carrying amount 345 891 (4 222) 1 072 342 741 – Transfer to Stage 1 5 450 (4 522) (928) - – Transfer to Stage 2 (7 242) 8 162 (920) - – Transfer to Stage 3 (1 454) (2 221) 3 675 - – Increase due to change in credit risk 20 67 21 108 – Decrease due to change in credit risk (310 790) (3 995) (1 125) (315 910) – Increase due to originated or purchased assets 814 315 1 414 167 815 896 – Change in risk parameters (154 408) (3 127) 182 (157 353) – Decrease due to write-off for uncollectibility - - (1 489) (1 489) – Decrease due to write-off for transfer (2 371) - (90) (2 461) – Currency differences and other adjustments 243 6 - 249 Gross carrying amount at 31 December 2021 3 058 198 23 147 78 036 3 159 381 Impairment loss at 31 December 2021 (12 944) (421) (25 378) (38 743) Carrying amount at 31 December 2021 3 045 254 22 726 52 658 3 120 638 CHIMIMP ORT GENERAL RISKS AND UNCERTAINTIES 64 Stage 1 Stage 2 Stage 3 Loans and advances granted to customers at amortised cost 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Gross carrying amount at 1 January 2020 2 499 258 32 951 205 952 2 738 161 Change in the gross carrying amount 215 871 (5 551) (37 452) 172 868 – Transfer to Stage 1 5 203 (3 793) (1 410) - – Transfer to Stage 2 (7 448) 7 739 (291) - – Transfer to Stage 3 (2 628) (1 590) 4 218 - – Increase due to change in credit risk 22 88 53 163 – Decrease due to change in credit risk (265 700) (9 097) (41 181) (315 978) – Increase due to originated or purchased assets 556 272 2 866 464 559 602 – Change in risk parameters (69 850) (1 764) 695 (70 919) – Decrease due to write-off for uncollectibility - - (1 492) (1 492) – Decrease due to write-off for transfer - - (88 457) (88 457) – Interest income adjustment - - (4) (4) – Currency differences and other adjustments (694) (37) (4) (735) Gross carrying amount at 31 December 2020 2 714 435 27 363 78 543 2 820 341 Impairment loss at 31 December 2020 (12 350) (809) (22 722) (35 881) Carrying amount at 31 December 2020 2 702 085 26 554 55 821 2 784 460 Stage 1 Stage 2 Stage 3 Carrying amount before impairment – Investments in debt securities at amortised cost 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Gross carrying amount at 1 January 2021 463 489 - - 463 489 Change in the gross carrying amount 224 350 - - 224 350 Increase for the period 426 813 - - 426 813 Decrease for the period (202 463) - - (202 463) Gross carrying amount at 31 December 2021 687 839 - - 687 839 Impairment loss at 31 December 2021 (654) - - (654) Carrying amount at 31 December 2021 687 185 - - 687 185 Stage 1 Stage 2 Stage 3 Carrying amount before impairment – Investments in debt securities at amortised cost 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Gross carrying amount at 1 January 2020 357 228 - - 357 228 Change in the gross carrying amount 106 261 - - 106 261 Increase for the period 307 727 - - 307 727 Decrease for the period (201 466) - - (201 466) Gross carrying amount at 31 December 2020 463 489 - - 463 489 Impairment loss at 31 December 2020 (200) - - (200) Carrying amount at 31 December 2020 463 289 - - 463 289 CHIMIMP ORT GENERAL RISKS AND UNCERTAINTIES 65 Stage 1 Stage 2 Stage 3 Carrying amount before impairment – Investments in debt securities at FVTOCI 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Gross carrying amount at 1 January 2021 716 006 - - 716 006 Change in the gross carrying amount 143 100 - - 143 100 Increase for the period 348 001 - - 348 001 Decrease for the period (204 901) - - (204 901) Gross carrying amount at 31 December 2021 859 106 - - 859 106 Impairment loss at 31 December 2021 (4 643) - - (4 643) Stage 1 Stage 2 Stage 3 Carrying amount before impairment – Investments in debt securities at FVTOCI 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Gross carrying amount at 1 January 2020 567 573 - - 567 573 Change in the gross carrying amount 148 433 - - 148 433 Increase for the period 258 580 - - 258 580 Decrease for the period (110 147) (110 147) Gross carrying amount at 31 December 2020 716 006 - - 716 006 Impairment loss at 31 December 2020 (2 734) - - (2 734) Stage 1 Stage 2 Stage 3 Loan commitments 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Total amount of loan commitments at 1 January 2021 251 109 435 383 251 927 Change in the amount of loan commitments (6 965) (101) (49) (7 115) Increase for the period 55 756 127 117 56 000 Decrease for the period (62 721) (228) (166) (63 115) Other movements (903) 776 137 10 Total amount of loan commitments at 31 December 2021 243 241 1 110 471 244 822 ECL allowance at 31 December 2021 (668) (8) (20) (696) CHIMIMP ORT GENERAL RISKS AND UNCERTAINTIES 66 Stage 1 Stage 2 Stage 3 Loan commitments 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Total amount of loan commitments at 1 January 2020 238 300 339 453 239 092 Change in the amount of loan commitments 13 058 36 (227) 12 867 Increase for the period 60 804 187 77 61 068 Decrease for the period (47 746) (151) (304) (48 201) Other movements (248) 60 157 (31) Total amount of loan commitments at 31 December 2020 251 110 435 383 251 928 ECL allowance at 31 December 2020 (947) (7) (23) (977) Stage 1 Stage 2 Stage 3 Financial guarantee contracts 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Total amount of guarantees at 1 January 2021 54 815 - - 54 815 Change in the gross carrying amount (2 150) - - (2 150) Increase for the period 18 911 - - 18 911 Decrease for the period (21 061) - - (21 061) Total amount of guarantees at 31 December 2021 52 665 - - 52 665 ECL allowance at 31 December 2021 (18) - - (18) Stage 1 Stage 2 Stage 3 Financial guarantee contracts 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Total amount of guarantees at 1 January 2020 58 073 43 - 58 116 Change in the gross carrying amount (3 258) (43) - (3 301) Increase for the period 12 999 - - 12 999 Decrease for the period (16 257) (43) - (16 300) Total amount of guarantees at 31 December 2020 54 815 - - 54 815 ECL allowance at 31 December 2020 (27) - - (27) ECL by type of asset 2021 2020 BGN ‘000 BGN ‘000 Loans and advances granted to banks at amortised cost (32) (30) Receivables under repurchase agreements of securities (1 246) (1 245) Loans and advances granted to customers at amortised cost (38 743) (35 881) Investments in debt securities at amortised cost (654) (200) Investments in debt securities at FVTOCI (4 643) (2 734) (45 318) (40 090) CHIMIMP ORT GENERAL RISKS AND UNCERTAINTIES 67 2021 2020 Loans and advances granted to customers Gross carrying amount Impairment loss Gross carrying amount Impairment loss BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 0-29 days 3 076 075 (13 702) 2 735 767 (13 659) 30-59 days 6 391 (116) 6 591 (441) 60-89 days 971 (64) 2 555 (67) 90-180 days 881 (215) 1 841 (424) Over 181 days 75 063 (24 646) 73 587 (21 290) Total 3 159 381 (38 743) 2 820 341 (35 881) 2021 2020 BGN ‘000 BGN ‘000 Loans and advances granted to customers at amortised cost 3 159 381 2 820 341 Less impairment for uncollectibility (38 743) (35 881) Total loans and advances granted to customers 3 120 638 2 784 460 31.12.2021 31.12.2020 Gross carrying amount ECL impairment Carrying amount Gross carrying amount ECL impairment Carrying amount BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Retail banking Mortgages 767 555 (564) 766 991 616 209 (473) 615 736 Consumer loans 609 073 (7 014) 602 059 544 375 (6 400) 537 975 Credit cards 17 878 (977) 16 901 19 946 (984) 18 962 Other 2 333 (2 333) - 2 304 (2 304) - Total retail banking 1 396 839 (10 888) 1 385 951 1 182 834 (10 161) 1 172 673 Corporate lending 1 762 542 (27 855) 1 734 687 1 637 507 (25 720) 1 611 787 Total 3 159 381 (38 743) 3 120 638 2 820 341 (35 881) 2 784 460 2021 Placements with, and advances to, banks at amortised cost Stage 1 Stage 2 Stage 3 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Category 182 457 - - 182 457 Total gross carrying amount 182 457 - - 182 457 Impairment loss (32) - - (32) Carrying amount 182 425 - - 182 425 CHIMIMP ORT GENERAL RISKS AND UNCERTAINTIES 68 2020 Stage 1 Stage 2 Stage 3 Placements with, and advances to, banks at amortised cost 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Category 188 098 - - 188 098 Total gross carrying amount 188 098 - - 188 098 Impairment loss (30) - - (30) Carrying amount 188 068 - - 188 068 2021 Stage 1 Stage 2 Stage 3 Placements with, and advances to, banks at amortised cost 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Category 358 228 - - 358 228 Total gross carrying amount 358 228 - - 358 228 Impairment loss (1 246) - - (1 246) Carrying amount 356 982 - - 356 982 2020 Stage 1 Stage 2 Stage 3 Receivables under repurchase agreements of securities 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Category 360 917 - - 360 917 Total gross carrying amount 360 917 - - 360 917 Impairment loss (1 245) - - (1 245) Carrying amount 359 672 - - 359 672 2021 Stage 1 Stage 2 Stage 3 Receivables under repurchase agreements of securities 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Category 3 058 198 23 147 78 036 3 159 381 Total gross carrying amount 3 058 198 23 147 78 036 3 159 381 Impairment loss (12 944) (421) (25 378) (38 743) Carrying amount 3 045 254 22 726 52 658 3 120 638 CHIMIMP ORT GENERAL RISKS AND UNCERTAINTIES 69 2020 Stage 1 Stage 2 Stage 3 Loans and advances to customers at amortized cost 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Category 2 714 435 27 363 78 543 2 820 341 Total gross carrying amount 2 714 435 27 363 78 543 2 820 341 Impairment loss (12 350) (809) (22 722) (35 881) Carrying amount 2 702 085 26 554 55 821 2 784 460 2021 Stage 1 Stage 2 Stage 3 Investments in debt securities at amortised cost 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Category 687 839 - - 687 839 Total gross carrying amount 687 839 - - 687 839 Impairment loss (654) - - (654) Carrying amount 687 185 - - 687 185 2020 Stage 1 Stage 2 Stage 3 Investments in debt securities at amortised cost 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Category 463 489 - - 463 489 Total gross carrying amount 463 489 - - 463 489 Impairment loss (200) - - (200) Carrying amount 463 289 - - 463 289 2021 Stage 1 Stage 2 Stage 3 Investments in debt securities at FVTOCI 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Category 859 106 - - 859 106 Total gross carrying amount 859 106 - - 859 106 Impairment loss (4 643) - - (4 643) 2020 Stage 1 Stage 2 Stage 3 Investments in debt securities at FVTOCI 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Category 716 006 - - 716 006 Total gross carrying amount 716 006 - - 716 006 Impairment loss (2 734) - - (2 734) CHIMIMP ORT GENERAL RISKS AND UNCERTAINTIES 70 2021 Stage 1 Stage 2 Stage 3 Loan commitments 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Category 243 241 1 110 471 244 822 Total gross carrying amount 243 241 1 110 471 244 822 Impairment loss (668) (8) (20) (696) 2020 Stage 1 Stage 2 Stage 3 Loan commitments 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Category 251 110 435 383 251 928 Total gross carrying amount 251 110 435 383 251 928 Impairment loss (947) (7) (23) (977) 2021 Stage 1 Stage 2 Stage 3 Financial guarantee contracts 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Category 52 665 - - 52 665 Total gross carrying amount 52 665 - - 52 665 Impairment loss (18) - - (18) 2020 Stage 1 Stage 2 Stage 3 Financial guarantee contracts 12-month ECL Lifetime ECL Lifetime ECL Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Category 54 815 - - 54 815 Total gross carrying amount 54 815 - - 54 815 Impairment loss (27) - - (27) Credit risk concentration Concentration risk is the possibility of loss due to incorrect diversification of exposures to customers, groups of connected clients, customers in the same economic sector or geographic area. The tables below represent a cross-section of the concentrations of the different asset classes of the Group by region and by economic sector. CHIMIMP ORT GENERAL RISKS AND UNCERTAINTIES 71 Placements with, and advances to, banks at amortised cost 2021 2020 BGN‘000 BGN‘000 Concentration by sector Central banks 1 914 5 499 Bulgarian commercial banks 66 767 76 822 Foreign commercial banks 113 776 105 777 Total 182 457 188 098 Concentration by region Europe 172 022 178 404 America 5 146 3 132 Asia 5 289 6 562 Total 182 457 188 098 Receivables under repurchase agreements of securities 2021 2020 BGN‘000 BGN‘000 Corporate: Construction 69 265 86 923 Commerce and finance 207 958 198 689 Transport and communications 21 696 20 827 Other 14 713 11 574 Total 44 596 42 904 Concentration by region Europe 358 228 360 917 Total 358 228 360 917 CHIMIMP ORT GENERAL RISKS AND UNCERTAINTIES 72 Investments in debt securities at amortised cost 2021 2020 BGN‘000 BGN‘000 Concentration by sector States 670 469 421 552 Bank 6 470 31 040 Corporate: Commerce and finance 10 900 10 897 Total 687 839 463 489 Concentration by region Europe 678 178 453 828 Asia 9 661 9 661 Total 687 839 463 489 Investments in debt securities at FVTOCI 2021 2020 BGN‘000 BGN‘000 Concentration by sector States 430 894 490 928 Corporate: Construction 135 781 53 372 Industry 31 069 30 578 Commerce and finance 214 796 115 276 Other 31 658 11 579 Total 844 198 701 733 Concentration by region Europe 844 198 701 733 Total 844 198 701 733 Loans and advances at amortised cost granted to customers 2021 2020 BGN‘000 BGN‘000 Concentration by sector Retail banking: 1 396 839 1 182 834 Mortgage 767 555 616 209 Consumer 609 073 544 375 Credit cards 17 878 19 946 Other 2 333 2 304 Corporate: 1 762 542 1 637 507 Agriculture and forestry 96 789 104 454 Industry 60 818 58 366 Construction 502 017 509 851 Commerce and finance 873 153 726 178 Transport and communications 127 500 126 429 Other 102 265 112 229 Total 3 159 381 2 820 341 CHIMIMP ORT GENERAL RISKS AND UNCERTAINTIES 73 Concentration by region Europe 3 159 225 2 820 189 America 5 5 Middle East and Africa 151 147 Total 3 159 381 2 820 341 Credit commitments 2021 2020 BGN‘000 BGN‘000 Concentration by sector Retail banking: 51 698 54 446 Mortgage 1 280 1 239 Consumer 11 160 11 742 Credit cards 39 258 41 465 Corporate: 193 124 197 482 Agriculture and forestry 8 043 3 724 Industry 27 233 26 425 Construction 35 934 44 868 Commerce and finance 114 623 114 695 Transport and communications 5 430 4 161 Other 1 861 3 609 Total 244 822 251 928 Concentration by region Europe 244 787 251 895 America 1 29 Middle East and Africa 34 4 Total 244 822 251 928 Financial guarantee contracts 2021 2020 BGN‘000 BGN‘000 Concentration by sector Retail banking: 66 146 Other 66 146 Corporate: 52 599 54 669 Agriculture and forestry 400 987 Industry 7 462 10 987 Construction 12 320 6 703 Commerce and finance 19 927 23 010 Transport and communications 6 372 8 140 Other 6 118 4 842 Total 52 665 54 815 Concentration by regions Europe 52 665 54 815 Total 52 665 54 815 CHIMIMP ORT GENERAL RISKS AND UNCERTAINTIES 74 Credit exposures with restructuring measures As exposures with restructuring measures the Group accepts credit exposures that have modified the original terms of the contract caused by a deterioration in the financial condition of the debtor leading to the inability to repay the full amount of the debt in due time and which discounts the Group would not circumstances. Amendments to the original terms of the contract in connection with the implementation of the restructuring measures may include: - Postponing or rescheduling the payment of principal interest or where applicable fees resulting in a reduction in the amount of the financial commitment; - Partial or total refinancing of a troubled debt contract which is only allowed when the debtor is in financial difficulties; - Partial or total debt write-off, which write-off leads to a reduction in the amount of the financial liability: - An amendment involving repayments resulting from a collateral acquisition by the Group is treated as a restructuring measure when the debtor is in financial difficulty; - Granted rebates to a debtor who is in default before granting the rebates; - Decrease in the interest rate under the contract except for a change in the agreed interest rate resulting from changes in market interest rates. The information on exposures with restructuring measures is as follows: 2021 Corporate customers Individuals BGN‘000 BGN‘000 Amount before impairment 43 407 2 721 Impairment (8 005) (414) Amount after impairment 35 402 2 307 2020 Corporate customers Individuals BGN‘000 BGN‘000 Amount before impairment 41 457 1 949 Impairment (6 101) (433) Amount after impairment 35 356 1 516 Collaterals on loans granted Housing mortgage loans to individuals The table below presents the carrying amount of reported housing mortgage loans to individuals based on loan-to-value ratio. The ratio is calculated as a correlation of the gross amount of loan exposure to the collateral value. Collateral value on housing mortgage loans is determined upon loan granting and is updated in case of significant changes in the prices of real estate market. Lоаn-to-value 2021 2020 BGN ‘000 BGN ‘000 Below 50% 187 086 148 095 From 50% to 75% 289 412 250 819 From 75% to 90% 216 569 146 350 From 90% to 100% 8 256 7 620 Above 100% 8 203 6 159 Total 709 526 559 043 CHIMIMP ORT GENERAL RISKS AND UNCERTAINTIES 75 Loans granted to legal entities With respect to loans to legal entities the Group identifies the creditworthiness of each individual client as the most appropriate risk exposure indicator. For this the Group has adopted an approach to individual credit assessment and impairment testing of loans to corporates. To ensure additional security in addition to regular monitoring of the financial position of borrowing enterprises the Group also requires collateral to be set up in the credit exposures. The Group accepts collateral for loans to legal persons mortgages on real estate a pledge of a commercial enterprise a special pledge of tangible assets as well as other guarantees and rights of ownership. The Group periodically analyses and updates the value of the collateral taking into account significant changes in the market environment the regulatory framework or other occurring circumstances. In the event that there is a decrease in the value of the collateral as a result of which the Group considers that it is not sufficient the Group requires that the debtor be constituted additional collateral by setting a certain period within which the supplementation will be fulfilled. Liquidity risk analysis Liquidity risk is the risk that the Group cannot meet its liabilities. The Group manages its liquidity needs by carefully monitoring scheduled debt servicing payments for long-term financial liabilities as well as cash in- and outflows due to day-to-day business. Liquidity needs are monitored in various time bands on a day-to- day and week-to-week basis as well as on the basis of a rolling 30-day projection. Long-term liquidity needs for a 180-day and a 360-day lookout period are identified monthly. The need for cash is compared to the available loans in order to determine shortage or surplus. This analysis determines whether the loans available will be enough to cover the Group’s needs for the period. The Group holds cash to meet its liquidity needs for periods of up to 30 days. Funds for long-term liquidity needs are provided through loans in the appropriate amount and sale of long-term financial assets. As at 31 December 2020, the maturities of the Group's contractual obligations (containing interest payments, where applicable) are summarized as follows. Current Non-current Within 12 months From 2 to 5 years Over 5 years BGN‘000 BGN‘000 BGN‘000 Bank and other loans 81 497 152 167 16 881 Related party payables 48 922 14 394 - Lease liabilities 43 684 152 261 85 034 Liabilities to other depositors 4 697 376 2 219 741 763 Deposits from banks 41 146 - - Obligations under repo agreements 2 282 11 678 - Liabilities under cession agreements 10 708 32 306 - Trade and other payables 109 406 598 - Derivatives 118 - - Total 5 035 139 2 583 145 102 678 CHIMIMP ORT GENERAL RISKS AND UNCERTAINTIES 76 As at 31 December 2020 Group’s liabilities (including interest payables where applicable) have contractual maturities summarized below: Current Non-current Within 12 months From 2 to 5 years Over 5 years BGN‘000 BGN‘000 BGN‘000 Bank and other loans 75 554 154 090 16 591 Related party payables 44 488 17 029 - Lease liabilities 50 212 128 605 70 623 Liabilities to other depositors 4 426 091 1 741 817 964 Deposits from banks 66 092 - - Obligations under repo agreements 15 449 - - Liabilities under cession agreements 20 746 33 180 - Trade and other payables 97 261 1 114 - Derivatives 86 - - Total 4 795 979 2 075 835 88 178 The amounts disclosed in this obligation maturity analysis represent the undiscounted cash flows under the contracts that may differ from the carrying amounts of the liabilities at the reporting date. Group’s policies regarding the banking activities The liquidity risk arises from the discrepancy between the maturity structure of assets and liabilities and the lack of sufficient funds, with which the Group has to meet payments on current financial liabilities, as well as to provide financing for the increase of financial assets, and possible claims on off-balance sheet liabilities. Adequate liquidity is achieved when the Group is able to provide sufficient funds for these purposes, by increasing liabilities or converting assets as quickly as possible at relatively low cost, by selling liquid assets or attracting additional funds from the money, capital or foreign exchange markets. The preventive function in liquidity risk management is to maintain an acceptable level of liquidity to provide protection against possible losses in case of unforeseen sale of assets. The specialized collective body for liquidity management in the Group is the Assets and Liabilities Management Committee. The Committee implements the liquidity risk management policy adopted by the Group’s management. Quantitative measure of the liquidity risk according to the regulations of the BNB and EBA is the Liquid Coverage Ratio - the LCR indicator. This ratio represents the excess of the liquidity buffer (liquid assets) of the Group over net outflows. The Group's liquidity coverage ratio as at 31.12.2021 amounted to 357.20% (31.12.2020: 382.82%) and exceeded the statutory requirement of 100%. CHIMIMP ORT GENERAL RISKS AND UNCERTAINTIES 77 The allocation of the Group's financial liabilities as at 31 December 2021 based on their residual maturity is as follows: Up to 1 month 1 to 3 months 3 to 12 months 1 to 5 years Over 5 years Total FINANCIAL ASSETS BGN’000 BGN’000 BGN’000 BGN’000 BGN’000 BGN’000 Cash and cash balances with the Central Bank 1 963 552 - - - - 1 963 552 Placements with, and advances to banks 179 507 - - - 2 918 182 425 Receivables under repurchase agreements 111 225 114 303 131 454 - - 356 982 Financial assets at fair value through profit or loss 25 379 - 257 829 11 937 (1 162) 293 983 Loans and advances to customers, net 38 827 68 738 458 739 1 363 017 1 191 317 3 120 638 Financial assets measured at fair value in other comprehensive income 753 122 858 31 928 272 600 430 967 859 106 Financial assets at amortized cost 9 640 11 097 58 551 217 778 390 119 687 185 TOTAL FINANCIAL ASSETS 2 328 883 316 996 938 501 1 865 332 2 014 159 7 463 871 FINANCIAL LIABILITIES Deposits from banks 52 893 - - - - 52 893 Liabilities to other depositors 3 112 063 451 048 1 153 755 2 228 951 766 6 946 583 Issued bonds - - - - 25 450 25 450 Provisions for liabilities - - 713 - - 713 Other liabilities 12 285 1 842 8 001 27 500 14 549 64 177 TOTAL FINANCIAL ASSETS 3 177 241 452 890 1 162 469 2 256 451 40 765 7 089 816 The allocation of the Group's financial liabilities as at 31 December 2020 based on their residual maturity is as follows: Up to 1 month 1 to 3 months 3 to 12 months 1 to 5 years Over 5 years Total FINANCIAL ASSETS BGN’000 BGN’000 BGN’000 BGN’000 BGN’000 BGN’000 Cash and cash balances with the Central Bank 1 912 743 - - - - 1 912 743 Placements with, and advances to banks 185 150 - - - 2 918 188 068 Receivables under repurchase agreements 122 659 120 456 116 557 - - 359 672 Financial assets at fair value through profit or loss 17 053 - 245 927 - 4 672 267 652 Loans and advances to customers, net 33 819 36 013 296 599 1 435 795 982 234 2 784 460 Financial assets measured at fair value in other comprehensive income 753 34 106 22 879 313 792 344 476 716 006 Financial assets at amortized cost 9 280 12 634 46 527 127 321 267 527 463 289 TOTAL FINANCIAL ASSETS 2 281 457 203 209 728 489 1 876 908 1 601 827 6 691 890 FINANCIAL LIABILITIES Deposits from banks 66 052 - - - - 66 052 Liabilities to other depositors 2 894 855 414 560 1 132 674 1 747 894 964 6 190 947 Issued bonds - - - - 25 451 25 451 Provisions for liabilities - - 1 003 - - 1 003 Other liabilities 11 167 2 314 9 693 24 167 13 819 61 160 TOTAL FINANCIAL ASSETS 2 972 074 416 874 1 143 370 1 772 061 40 234 6 344 613 Financial liabilities of the Group are formed mainly by borrowing from other depositors – deposits of natural persons and legal entities. In the tables above a part of the attracted funds on current accounts with no residual maturity amounting to BGN 2 153 008 thousand as at 31 December 2021 (2020: BGN 1 665 762 thousand) is presented in the range from 1 year to 5 years since the Group considers this reserve to be a reliable long-term resource based on the average daily balance on those accounts in 2021 and 2020. The ongoing global Covid-19 coronavirus pandemic has no direct effect on the Group's liquidity, as the liquidity position measured by liquidity coverage is several times above the regulatory requirement. There are no outflows of clients' funds, on the contrary, the funds attracted from other depositors increase their annual growth. Financial assets used for managing liquidity risk CHIMIMP ORT GENERAL RISKS AND UNCERTAINTIES 78 In assessing and managing liquidity risk the Group recognizes the expected cash flows from financial instruments in particular available cash and trade receivables. Available cash resources and trade and other receivables significantly exceed the current outflow cash flow requirements. Under the contracts entered into all cash flows from trade and other receivables are due within 1 year. Fair value measurement Fair value measurement of financial instruments Financial assets and liabilities at fair value in the consolidated financial statements of financial position are grouped into three levels according to the fair value hierarchy This hierarchy groups are based on the significance of inputs used in measuring the fair value of the financial assets and liabilities. The fair value hierarchy has the following levels:  Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;  Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability either directly (i.e. as prices) or indirectly (i.e. derived from prices); and  Level 3: inputs for the asset that are not based on observable market data. A financial asset or liability is classified to the lowest level of significant input information used to determine its fair value. 31 December 2021 Level 1 Level 2 Level 3 Total BGN‘000 BGN‘000 BGN‘000 BGN‘000 Assets Financial assets measured at fair value through profit or loss 1 610 512 2 743 429 715 2 042 970 Equity instruments at fair value through other comprehensive income 23 852 753 45 821 70 426 Debt instruments measured at fair value through other comprehensive income 729 286 259 129 896 859 441 Total assets 2 363 650 3 755 605 432 2 972 837 Liabilities Derivatives - 118 - 118 Total liabilities - 118 - - 31 December 2020 Level 1 Level 2 Level 3 Total BGN‘000 BGN‘000 BGN‘000 BGN‘000 Assets Financial assets measured at fair value through profit or loss 1 571 955 7 696 447 590 2 027 241 Equity instruments at fair value through other comprehensive income 24 573 754 58 439 83 766 Debt instruments measured at fair value through other comprehensive income 661 489 - 56 106 717 595 Total assets 2 258 017 8 450 562 135 2 828 602 Liabilities Derivatives - 36 - 36 Total liabilities - 36 - 36 There have been no transfers between levels 1 and 2 during the reporting period. Measurement of fair value CHIMIMP ORT GENERAL RISKS AND UNCERTAINTIES 79 The methods and valuation techniques used for the purpose of measuring fair value are unchanged compared to the previous reporting period. a) Listed equity instruments All listed equity investments are denominated in BGN and are publicly traded on the Bulgarian Stock Exchange. Fair values have been determined by reference to their quoted bid prices at the reporting date. b) Non-listed equity instruments The fair value of these instruments is based on observed rates of recent market transactions with shares of similar companies adjusted for specific factors. c) Derivatives When derivative financial instruments are traded on stock markets or liquid OTC markets the Group uses the closing prices on the stock markets at the reporting date. When derivative financial instruments are not traded on active markets the fair value of these contracts is determined by using valuation techniques using observable market data (Level 2). All significant inputs to the model are based on observable market prices namely market interest rates on similar loans with similar risk. d) loans in BGN The fair value of loans is determined using valuation techniques. All significant inputs for the model are based on observed market prices - market interest rates on similar loans with similar risk. Fair value measurement of non-financial assets The following table shows the levels within the hierarchy of non-financial assets measured at fair value on a recurring basis at 31 December 2021: 31 December 2021 Level 1 Level 2 Level 3 Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Investment property: - Land, building, machines and equipment - - 524 884 524 884 Right of use assets: - aircrafts - - 315 748 315 748 31 December 2020 Level 1 Level 2 Level 3 Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Investment property: - Land, building, machines and equipment - - 440 485 440 485 Right of use assets: - aircrafts - - 301 345 301 345 Fair value of the Company's main property assets is estimated based on appraisals performed by independent qualified appraisers. Capital management policies and procedures The Group’s capital management objectives are: To ensure the Group’s ability to continue as a going concern; and To provide an adequate return to the shareholders by pricing products and services commensurately with the level of risk. The Group monitors capital on the basis of the correlation between capital to net debt. CHIMIMP ORT GENERAL RISKS AND UNCERTAINTIES 80 The Group determines the capital based on the carrying amount of the equity presented in the statement of financial position. Net debt is calculated as total liabilities less the carrying amount of the cash and cash equivalents. Group’s goal is to maintain a capital-to-net-debt ratio in a reasonable range which would ensure relevant and conservative ratio of financing. The Group manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure the Group may adjust the amount of dividends paid to shareholders return capital to shareholders issue new shares or sell assets to reduce debt. The capital for the presented reporting periods is summarized as follows: 2021 2020 BGN‘000 BGN‘000 Shareholders’ equity 1 850 767 1 804 345 Equity 1 850 767 1 804 345 Debt 9 796 353 8 919 098 - Cash and cash equivalents (2 380 922) (2 221 632) Net debt 7 415 431 6 697 466 Capital to net debt 1:4.01 1:3.71 In 2021 the change in the ratio is minimal. The Group has complied with its contractual obligations including the maintenance of certain capital ratios. 81 CONSOLIDATED CORPORATE GOVERNANCE STATEMENT CHIMIMP ORT CONSOLIDATED CORPORATE GOVERNANCE STATEMENT 82 The consolidated corporate governance statement of the Group of Chimimport AD is prepared pursuant the Bulgarian legislation requirements and principles of good corporate management, set out in the National Corporate Governance Code, the Commercial Act (CA), the Public Offering of Securities Act (POCA), the Accountancy Act (AA), the Independent Financial Audit Act (IFAA) and other laws and regulations and internationally recognized standards. The declaration of corporate management is prepared in accordance with the requirements of Article 39 of the Accountancy Act and Article 100n of POSA. The Corporate governance statement of the Chimimport Group applies to public companies in the Group. The Separate Corporate Governance Statements are integral part of the separate company activity reports for 2021 and have been published at 31 March 2022. 1. Information under Article 100m, paragraph 8, subparagraphs 1 and 2 of POSA Implementation, enforcement and compliance, as appropriate, by Chimimport AD of the principles of the National Corporate Governance Code. As of 18 January 2008, Chimimport AD embraced the National Corporate Governance Code and conducts its activity in accordance with the set principles and provisions. All public companies in the Group comply with the National Corporate Governance Code. In its activities the Group of Chimimport AD is governed by the national corporate governance principles recommended for application by the National Committee on Corporate Governance, reflecting the international standards of good corporate governance and best practices. The management of Chimimport AD aims at strengthening the principles of good corporate governance, enhancing the confidence of shareholders, investors and other stakeholders interested in the management and operations of the Company. The management of Chimimport AD considers that the effective application of the good corporate management practices, contribute to sustainable growth and reaching the long-term goals of the Company, and to establish transparent and honest relationships with all stakeholders. Information on corporate governance practices applied by the issuer in addition to the corporate governance code approved by the Deputy Chairperson or any other corporate governance code The Group of Chimimport AD does not apply other corporate management practices in addition of the National Corporate Governance Code. Explanation by the issuer as to which parts of the corporate management code, approved by the Deputy Chairperson or any other corporate governance code the issuer does not comply with and to what was the ground for the non-compliance when the issuer opted not to refer to any of the rules of the corporate management code The basic principle of the National Corporate Governance Code is the principle of “comply or explain”. The companies in the group aims to comply with the recommendations of the Code and in case of deviation, the management provides explanations on the reasons for the non-compliance. Chimimport AD presents the current information regarding compliance with the Code, and the same will be published on the website of the company. INFORMATION REGARDING CORPORATE MANAGEMENT Chimimport AD is a listed company with two-tier management system. All members of the Managing Board and the Supervisory Board comply with the legal requirements for their appointment. The managing bodies of the Company comprise: General meeting of the shareholders, Supervisory Board and Managing Board. Members of the Supervisory Board: 1. Invest Capital AD 2. CCB Group EAD; 3. Mariana Bazhdarova. CHIMIMP ORT CONSOLIDATED CORPORATE GOVERNANCE STATEMENT 83 Members of the Managing Board: 1. Alexander Kerezov 2. Ivo Kamenov 3. Marin Mitev 4. Nikola Mishev 5. Miroljub Ivanov 6. Tsvetan Botev Key functions, responsibilities, structure and competence The Supervisory Board of Chimimport AD consists of three members. It conducts regular control over the Managing Board, concerning the management of the Company by ensuring that the actions of the MB increase the interest of shareholders and facilitate the application of good corporate governance principles within the Company. The Supervisory Board, if necessary, may take the necessary steps to facilitate their duties through consultations with experts. The Supervisory Board shall appoint and dismiss members of the Managing Board delimiting the powers delegated to them, the application of their powers and the frequency with which they are to report to the SB. The Supervisory Board assesses the overall performance the Company, paying special attention to the information received by the Managing Board and periodically reconciles and analyses the difference between the achievements and goals. The Supervisory Board monitors and controls the process of disclosing information by the Company. The Supervisory Board has included restrictions in its internal rules on the maximum number of companies in which members of the Managing and the Supervisory Board of Chimimport AD can sit on the managing and supervisory bodies, participation in which is considered acceptable in view of the requirement for effective implementation of obligations as a member of the boards of the Company. The Supervisory Board has set criteria that distinguish participations in other companies, depending on the position held and the time that each of the positions requires for the relevant obligations. Following the requirements of the POSA and the Statute of the Company, the Supervisory Board, if necessary, reassesses the structure of the Managing Board, the division of duties, powers and the remuneration of each member of the MB. In carrying out its activities, the Supervisory Board members are obliged to perform their duties with due diligence in a manner that reasonably believed is in the interest of all shareholders and by using only information that they reasonably believe is reliable and complete, and show loyalty to the Company under POSA. The Supervisory Board of the Company is supported by the Audit Committee. The structure and functions of the Committee are set out in the Internal rules of operation of the Audit Committee of Chimimport AD. The Managing Board of Chimimport AD consists of six members. The competence, rights and obligations of the Managing Board are conducted in accordance with the legal requirements, the requirements of the current Company’s Statute and the rules for its operation as approved by the Supervisory Board. The Managing Board reports, on its activities, to the Supervisory Board at least quarterly. The Managing Board shall immediately notify the chairman of the Supervisory Board of any circumstances that are essential for the Company. The Managing Board provides to the Supervisory Board the Annual Financial Statements, the Annual Activity Report and the Independent Auditor’s Report, together with proposal for profit distribution, which will be brought to the General Meeting of Shareholders. The Managing Board governs in accordance with the established vision, goals and strategy of Chimimport AD. The Board members are guided in their activities by the generally accepted principles of integrity and management and professional competence. Appointment and dismissal of board members Members of the Supervisory Board are appointed and dismissed by the General Meeting of the Shareholders, in accordance with the Company’s Statute. Members of the Managing Board are appointed by the Supervisory Board, which also determines their remuneration and can dismiss them at any point in time. CHIMIMP ORT CONSOLIDATED CORPORATE GOVERNANCE STATEMENT 84 Remunerations of the Managing and Supervisory Boards The General Meeting of the Shareholders has affirmed the remuneration policy of the Managing and Supervisory Boards of the Company, developed by the Supervisory Board. The remuneration paid to the members of the Managing and Supervisory Boards of the Company, may be permanent (fixed) or variable in the form of premiums, bonuses, retirement benefits and other incentives, based on assessment criteria of the conducted activities. The proportion of the fixed remuneration in the total amount of the remuneration shall allow the implementation of flexible policy by the Company on the variable remuneration of the members of the Managing and Supervisory Boards of the Company. In 2021, the Company shall update the policy with the recommendation of the Code, namely the remuneration of the members of the SB to conform their activities and obligations and not be bound to the results of the Company operations and will present it to the General Meeting of the Shareholders for approval. The remuneration policy observes the following principles and criteria: - Consistency of the remunerations with the business goals and development strategy of the Company, the protection of the interests and promotion of the values of Chimimport AD; - Providing remuneration that allows attraction, retention and motivation of board members with the necessary skills for successful management and development of the Company. - Excluding discrimination, conflict of interest and unequal treatment of members of the Supervisory Board of the Company in setting and negotiating remunerations; - Appreciation of the duties and input of each member of the Managing Board in the performance and results of the Company. The Management discloses the remunerations of the Managing Board in accordance with the legal requirements and Company’s policies regularly within the quarterly financial statements. Shareholders are provided easy access to information on remunerations. Conflict of interest The members of the Supervisory and Managing Boards avoid any real or potential conflict of interest. Procedures for preventing and detecting conflicts of interest are regulated by the statutes of the Company. Committees The Company has set Audit Committee in accordance with the requirements of the Independent Financial Audit Act of public interest companies. In view of the change in the regulatory framework regarding requirements for Audit Committees, changes in the composition of the committee will be proposed at the next general meeting of the shareholders, as to comply with the new requirements of the IFAA. The Management of the Company will prepare and submit for approval to the General Meeting of Shareholders the statute of the Audit Committee regulating its structure, scope, tasks, operations and reporting procedures consistent with the new requirements of the legislation. INFORMATION REGARDING CONDUCT OF AUDIT AND INTERNAL CONTROL The Companies from the group have developed and implemented internal control system that ensures the proper identification of risks associated with the Company’s operations and supports their effective management, and adequate operation of the reporting systems and disclosure of information. Internal control and risk management are dynamic and iterative processes carried out by management and supervisory bodies designed to provide a reasonable degree of certainty in terms of achieving the organization's objectives in terms of efficiency and effectiveness of operations; Reliability of financial statements; Compliance and enforcement of existing legal and regulatory frameworks. The main components of internal control systems are: • Control environment • Risk Assessment • Activity control • Information and communication CHIMIMP ORT CONSOLIDATED CORPORATE GOVERNANCE STATEMENT 85 • monitoring activities These components are relevant to the overall organization and to its individual levels and subdivisions, or to individual operational units, functions or other structural elements thereof, and this relationship is represented by the “COSO” Cube 1 One of the main objectives of the internal control and risk management system is to assist the management of the companies and other stakeholders in assessing the reliability of the financial statements of the companies. The Audit Committees apply the requirements of the Code of Ethics for Professional Accountants on the rotation of registered auditors when drafting proposals and recommendations for the selection of external auditors. They supervise internal audit activities and monitor the overall relationship with the external auditor, including the nature of the non-audit services provided by the auditor of the company. Registered auditors are elected by the individual General Meetings of the Shareholders of the various companies to perform an independent financial audit of the annual financial statements of the companies for 2021 in accordance with the requirements of the Independent Financial Audit Act. The independent financial audit covers procedures to achieve a reasonable level of security: • compliance with the accounting principles according to the applicable accounting basis; • whether the accounting policy of the audited entity is appropriate for its operations and is consistent with the applicable accounting and accounting policies used in the industry concerned; • the consistency of the application of the disclosed accounting policy under the applicable accounting basis; • the effectiveness of the internal control system limited to the achievement of the audit objectives; • the process of accounting closure and preparation of the financial statements • the reliability and user-friendliness of the information presented and disclosed in the financial statements according to the applicable accounting basis. • the consistency between the information in the financial statements and that in the management report of the audited entity as well as any other information that the management of the entity provides with the audited financial statement 1 The Committee of Sponsoring Organizations of the Treadway Commission (COSO) - Basic Concept of Internal Control CHIMIMP ORT CONSOLIDATED CORPORATE GOVERNANCE STATEMENT 86 To ensure the effectiveness of the external auditors of Chimimport AD, the Managing Board implements measures to ensure effective implementation of the obligations of auditors of the Company based on the requirements of the Independent Financial Audit Act. INFORMATION ON PROTECTION OF THE RIGHTS OF SHAREHOLDERS The management of Chimimport AD guarantees equal treatment of all shareholders of the Company, including minority and international. The Company applies established rules of the organization and conduct of regular and extraordinary General Meetings of Shareholders. The protection of shareholders’ rights is ensured through: - facilitation of the shareholders’ effective participation in the work of the General Meetings of shareholders through timely disclosure of all materials for the GMS, on the following websites: www.x3news.com, www.investor.bg and www.chimimport.bg. - transparent procedures regarding organization and conduct of regular and extraordinary General Meetings of Shareholders; - established procedures on representation of shareholders at the GMS, including templates of letter of attorney both in Bulgarian and English; - providing opportunity for participation in the profit distributions to the Company, if the General Meeting of Shareholders adopts a specific resolution for dividend distribution; - implementing a policy to assist shareholders in exercising their rights. INFORMATION ON PROCEDURES FOR DISCLOSURE OF INFORMATION The Company has adopted rules for internal personnel and internal information, that regulate the obligations, order and responsibility for the public disclosure of inside information for Chimimport AD, prohibit insider trading and market manipulation of financial instruments. The public information regarding the activities of Chimimport AD is presented to the Financial Supervisory Commission, the Bulgarian Stock Exchange - Sofia AD and the investing community, distributed through the information agency X3 NEWS - www.x3news.com. Chimimport AD regularly updates its corporate website www.chimimport.bg both in Bulgarian and English, consistent in structure and volume with the information provided with the recommendations of the National Code and established good practices on systems of disclosure of information. The website provides general information about the Company and the segments of operations of all companies within the economic group, current data on the financial and economic situation of the Company, including interim and annual financial statements of Chimimport AD on an individual and consolidated basis, as well as information on the Group structure, corporate governance and management of the company, corporate documents prepared and approved by the Managing Board of the Company and the securities issued. All shareholders, investors and interested parties can obtain information about upcoming and already held important corporate events, meetings of the General Meeting of Shareholders and the planned investment policy of the Company. INFORMATION ABOUT INTERESTED PARTIES AND RECOGNITION OF THEIR RIGHTS AND INTERESTS The Company has not developed its own rules on accounting for the interests of stakeholders, but for all matters that directly or indirectly affect them, coordination procedures are carried out. Chimimport AD identifies as stakeholders with respect to its activities all persons who are not shareholders and who have an interest in the economic prosperity of the Company: - bondholders, - employees, - clients, - suppliers, - bank – creditors; - the public, in general. Within its policy towards stakeholders, the Company complies with the legal requirements and principles of transparency, accountability and business ethics. The Stakeholders are provided with the necessary information about the company’s current data of the financial situation and everything that would help correct their orientation and make an informed and reasoned decision. CHIMIMP ORT CONSOLIDATED CORPORATE GOVERNANCE STATEMENT 87 2. Information under Article 100m, paragraph 8, subparagraph 3 of the POSA Characteristics of the internal control and risk management systems Internal control and risk management The Managing Board is responsible for the internal control and risk management systems and monitors their effectiveness. These systems are created to manage but cannot fully eliminate the risk from falling behind the set business objectives. They can only provide reasonable, but not absolute assurance on the lack of any substantial inaccuracies or errors. The Managing Board has established an ongoing process for identifying, evaluating and managing significant risks for the Company. Internal control Every year, the Company reviews and confirms the degree of compliance with the policies of the National Corporate Governance Code. All major plans and programs of the Company require approval by the Managing Board. There are limits to the authority to ensure that the appropriate approvals are obtained if the Board is not required to verify the segregation of duties. Financial policies, controls and procedures are enforced within the Company and are reviewed and updated regularly. The main activities comprised within the system of internal control of the Company are: - Control over the functioning of the current reporting and documentation of the Company; - Maintaining the high competence of personnel with financial and reporting functions; - Control over the content, accuracy and timeliness of financial statements; - Completeness of the range and reliability of the financial information system; - Lawful implementation of tax and social security obligations; - Protection and preservation of assets; - Control over disposal of assets and resources. А system of internal control and risk management operates to ensure the effective functioning of the reporting and disclosure of information. The internal control system is built and functions to identify inherent risks of the company and support their effective management. The code of conduct of employees of Chimimport AD, determining the required levels of ethics and conduct, is communicated to all employees and any amendments to it are included in the employee training. Management has overall responsibility of ensuring proper maintenance of accounting data and processes to ensure that financial information is relevant, reliable, consistent with applicable law and the financial statements and management reports are prepared and published by the Company in due course. The Company’s management reviews and approves the financial statements to ensure that the financial position and results of the Company are presented fairly and correctly. The financial information published by the Company is subject for approval by the Supervisory Board. Annual review of the internal control environment is carried out by the Managing Board, with the assistance of the Audit Committee. Analysis and risk management The Managing Board determines the main risks of the Company regularly and monitors throughout the year the measures to address those risks, including through internal control and monitoring. The risk analysis includes business and operational risks, health and safety of employees, financial, market and operational risks, reputation risks, which may affect the Company, as well as specific areas identified in the business plan and the budget process. All significant plans relating to the acquisition of assets or realization of operating income include consideration of relevant risks and appropriate action plans. Inherently the risk management is a set of processes to identify, assess and control the risks that ensure that the objectives of the Group of Chimimport AD are met and effective management is achieved. Risk management is systematic, structured and in due time and thus facilitates continuous improvement of the organization. CHIMIMP ORT CONSOLIDATED CORPORATE GOVERNANCE STATEMENT 88 The risk management system comprises the following activities: - identification of the different groups of risks (indicated in the reports on the activities of the group) - evaluation and risk analysis (indicated in the reports on the activities of the group) - monitoring and procedures that will be applied to prevent or reduce the effects of onset risks. Risk management is part of the internal control system. The goal of management is to detect risks that cast doubt on the functioning of the company, to assess and reduce critical risks. Well-managed risk- taking is a prerequisite for sustainable improvement of the organization. The Company management seeks to develop an active risk management by introducing a risk management system and directing efforts to improve it in line with international best practices. The risk management system defines the duties and responsibilities in the structural divisions of the Company, organization, and procedure for interaction in risk management, analysis, and evaluation of information related to risks, preparing periodic reporting on risk management. The internal control system and the risk management system are continuously improved following the legislative requirements and best practices. Their goals may be summarized as follows: compliance with the strategies, plans, internal regulations and procedures for the implementation of the activities to ensure effective and efficient operations, reliable financial reporting, storage and protection of assets. Risk management in Chimimport AD is performed by employees at all levels of management and is an integral part of operations and the corporate governance of the Company. Statement by the directors on the Annual Activity Report and the Financial Statements Pursuant to the requirements of the Code, the directors confirm their responsibility for preparing the annual activity report and the annual financial statements and consider the Annual Activity Report is transparent, balanced and understandable and provides the necessary information to shareholders, to assess the Company’s position and operations, its business model and strategy. Responsibilities and interaction between the Supervisory Board, the Audit Committee and the external auditor of the Company As a public At the General Meeting of Shareholders held on 30 September 2020, under the proposal of the Managing Board, the shareholders of Chimimport AD elected the following Audit Committee members: Petar Krasimirov Terziev (Chairman), Veselina Petrova Stefanova and Elena Milcheva Karakasheva under Article 107, Paragraph 1 of the Independent Financial Audit Act. (promulgated SG, issue 95 of 29.11.2016) The Committee recommends the registered auditor to conduct an independent financial audit of the company and monitor its independence in accordance with the law and the Code of Ethics for Professional Accountants. The mandate and the number of members of the Audit Committee shall be determined by the General Meeting of Shareholders. The functions and responsibilities of the Audit Committee are regulated by the Rules of the Audit Committee. Committee members have unlimited access to the members of the Supervisory Board, the Managing Board and the senior management personnel directly responsible for the activities falling within the scope of the delegated competence of the Committee. The Audit Committee reports its activity to the General Meeting of Shareholders annually. The main functions of the Audit Committee include: - to monitor the financial reporting processes; - to monitor the effectiveness of internal control systems; - to monitor the effectiveness of risk management systems; - to monitor the independent financial audit on the Company; - to oversee the independence of the registered auditor of the Company in accordance with the IFAA and monitor the provision of ancillary services by the auditor. CHIMIMP ORT CONSOLIDATED CORPORATE GOVERNANCE STATEMENT 89 3. Information in accordance with Article 10, paragraph 1, items “c”, “d”, “f”, “h”, and “i” of Directive 2004/25/EC of the European Parliament and of the Council of 21 April 2004 3.1 Information in accordance with Article 10, paragraph 1, item “c” of Directive 2004/25/EC on takeover bids regarding significant direct and indirect shareholdings (including indirect shareholdings through pyramid structures and cross-shareholdings) within the meaning of Article 85 of Directive 2001/34/EC. In 2021, no changes have been made relating to the acquisition or sale of shares of the Company that reach, exceed or fall below one of the thresholds of 10%, 20%, 1/3, 50% and 2/3 of the voting rights of the Company for the period as defined in Article 85 of Directive 2001/34/EC. The share capital of the Company as of 31 December 2021 consists of 239 646 267 ordinary shares with par value of BGN 1 per share. The ordinary shares of the Company are dematerialized, registered and freely transferable and entitle to one (1) vote and liquidation share. The list of major shareholders holding more than 5% of the shares of the Company is as follows: Ordinary shares As a t 31.12.2021 number Ordinary shares As a t 31.12.2021 % Invest Capital AD 173 487 247 72,39% Other legal entities and individuals not exceeding 5% 49 019 954 20,46% Invest Capital AD 17 139 066 7,15% TOTAL 239 646 267 100,00% 3.2 Information in accordance with Article 10, paragraph 1, item “d” of Directive 2004/25/EC on takeover bids regarding the holders of any securities with special control rights and a description of those right Chimimport AD has no shareholders with special control rights. 3.3 Information in accordance with Article 10, paragraph 1, item “f” of Directive 2004/25/EC on takeover bids regarding any restrictions on voting rights, such as limitations of the voting rights of holders of a given percentage or number of votes, deadlines for exercising voting rights, or systems whereby, with the company’s cooperation, the financial rights attaching to securities are separated from the holding of securities. There are no restrictions on voting rights, such as limitations of the voting rights of holders of a given percentage or number of votes, deadlines for exercising voting rights, or systems whereby, with the company’s cooperation, the financial rights attaching to securities are separated from the holding of securities. 3.4 Information in accordance with Article 10, paragraph 1, item “h” of Directive 2004/25/EC on takeover bids regarding the rules governing the appointment and replacement of board members and the amendment of the articles of association The management bodies of the Company are: - General Meeting of the Shareholders; - Supervisory Board; - Managing Board. The General Meeting of the Shareholders elects and dismisses members of the Supervisory Board and determines their compensation and bonuses. The members of the Managing board are appointed by the Supervisory Board, which can replace them at any time. One individual cannot be both a member of the Managing and Supervisory Board. Members of the Managing Board may be re-elected without limitation. Members of the Managing Board of “Chimimport” AD are elected only if they meet the following legal requirements: - be either individuals or legal entities; - at the moment of election have not been convicted of crimes against property, economy or against the fiscal, tax and CHIMIMP ORT CONSOLIDATED CORPORATE GOVERNANCE STATEMENT 90 - insurance authorities of the Republic of Bulgaria or abroad, unless rehabilitated; - are not members of the managing or supervisory body of a company terminated due to bankruptcy in the past two years preceding the date of the declaration of insolvency, if any unsatisfied creditors remain; Amendments to the Articles of Association of the Company are approved by General Meeting of the Shareholders. 3.5 Information in accordance with Article 10, paragraph 1, item “i” of Directive 2004/25/EC on takeover bids regarding the powers of board members, and in particular the power to issue or buy back shares The amount of capital may be amended in the manner provided by the law and the Statutes of the Company. The decision to amend shall contain all the details required by law. The decision to increase the capital is taken by the General Meeting of the Shareholders or the Managing Board, within the mandate under Article 17 of the Statute of the Company. If new shares are sold at a price higher than nominal, their issue price is determined with the decision to increase the capital. Each shareholder is entitled to acquire part of the new shares, which corresponds to its share capital before the increase, unless that right is limited by law (Article 113, paragraph 2, subparagraph 2 of the Public Offering of Securities Act). In the event of a capital increase through the capitalization of retained earnings and other assets by issuing new shares, the latter shall be acquired by the shareholders in proportion to shares already owned. In its decision for capital increase under Article 17, the Managing Board sets the amount and purpose of the increase; the number and type of the new shares, their rights and privileges, deadline and conditions of transfer of rights under § 1, p. 3 of POSA issued against existing shares; the deadline and conditions for subscription of new shares; the amount of the issue price and terms and conditions for its payment; the investment intermediary entrusted with the implementation of the subscription; as well as determines any other terms and conditions provided for in the regulations or necessary to make the corresponding increase in equity. Capital decrease The capital reduction is carried out by decision of the General Meeting of Shareholders by decreasing the nominal value of shares or through cancellation of shares. Cancellation of shares shall be allowed only through the purchase of company’s own shares under the conditions and according to the Commercial Code.. 4. Composition and functions of the administrative, management and supervisory bodies The Supervisory Board of Chimimport consists of 3 members who are elected by the General Meeting of the Shareholders for a term of five years. The Supervisory Board performs its activities in conformity with the Statute of Chimimport AD and the Internal rules of the Supervisory Board. The Managing Board of Chimimport AD consists of six members who are elected by the Supervisory Board for a term of five years. The Managing Board performs its activities in conformity with the Statute of Chimimport AD and the Internal rules of the Managing Board. In carrying out their duties and responsibilities the members of the Managing and Supervisory Boards are governed by the legal requirements, by-laws of the Company and the standards of integrity and competence. The Managing Board: • governs and represents Chimimport AD; • manages the operating activities of the Company; • approves plans and programs for the Company’s activities; • approves the organizational and managerial structure of the Company; • approves decisions that are not in the express competence of the General Meeting of the Shareholders and the Supervisory Board; CHIMIMP ORT CONSOLIDATED CORPORATE GOVERNANCE STATEMENT 91 • decides on capital increase or decrease under the Articles of Association. The Managing Board, with the approval of the Supervisory Board: • approves and proposes for approval to the General Meeting of Shareholders the annual financial statements and the activity report of the Company; • based on the financial performance of the Company at the end of the reporting year, makes a proposal on the appropriation of the profit. Members of the Managing Board are guided in their activities by the generally accepted principles of integrity and management and professional competence. Members of the Supervisory and Managing Board apply the principle of avoidance and prevention of actual or potential conflict of interest. Any conflict of interest should be disclosed to the Supervisory Board. Members of the Managing Board should inform the Supervisory Board about whether directly, indirectly or on behalf of third parties have a significant interest in any transactions or matters that have a direct impact on the Company. 5. Description of the diversity policy Chimimport AD, appoints and recommends for election by the Supervisory Board, candidates for members of the Management Board, taking into account the balance of professional knowledge and skills, the various qualifications and professional experience of the members of the board, necessary for the management of the Company. 1 Consolidated non-financial declaration CHIMIMP ORT NON-FINANCIAL DECLARATION 2 This Consolidated non-financial declaration is prepared in accordance with the requirements of Art. 48 of the Accountancy Act and is an integral part of the Consolidated Activity report of Chimimport AD for 2021. The management of Chimimport AD declares its Social Responsibility Policy, which is documented, implemented, maintained, and communicated at all levels of the company structure. Chimimport's Corporate Social Responsibility Policy is geared towards implementing strategic management activities that contribute to sustainable economic development, fair and ethical working relationships with employees, their families and society as a whole in order to improve the quality of life. The management is committed to creating the necessary conditions for complying with the requirements of the Social Responsibility System and for the active assistance of the management and executive staff in its development. Company's general principles on social responsibility include: • compliance with applicable national legal and other requirements and respect for international instruments and their interpretation in the field of social responsibility; • preventing child labour in contravention of labour law; • non-participation or assistance in the use of forced or compulsory labour; • preventing trafficking in human beings; • ensuring healthy and safe working conditions for its employees; • respect for human rights and fundamental freedoms as set out in the Universal Declaration of Human Rights; • protecting common human values; • developing and motivating staff; • ensuring security of payments; • maintaining adequate remuneration of labour with timely payment of salaries, taxes and types of social security contributions for employees and workers; • ensuring that the policy is documented, implemented, maintained and disseminated in accessible and comprehensible form to all employees, including management, technical and executive staff as well as subcontractors and suppliers; I. Business model For its more than 75 years of existence, Chimimport AD has become a successful foreign trade company specializing in the trade in chemical products in a large-scale holding company that brings together nearly 70 subsidiaries and associated companies operating in different sectors of the Bulgarian economy. The company's priority investments are concentrated in the following industries: - Banking, Finance, Insurance and Pension Insurance; - Oil and gas extraction; - Manufacture and trade in petroleum and chemical products; - Capacity building in the petroleum, biofuel and rubber industry; - Production of vegetable oils, purchase, processing and marketing of cereals; - Aviation transport and ground handling activities for the maintenance and repair of aircraft and aircraft engines; - River and maritime transport, port infrastructure; - Securitization of real estate and receivables; - Commercial representation and mediation; - Commissioning, logistics and warehousing. The main strategy and investment policy of Chimimport AD are focused on positioning the group as a significant partner in servicing the traditional trade flows for the country and the region. In particular, this motivates the group to enter into sectors such as transport, agriculture, financial operations and real estate. The financial sector is another area where the group strives to offer a full range of services to its clients. The business model of the group is built to implement the above-defined development strategy based on maintaining and expanding the company's leading role in the sectors identified as important for the Bulgarian economy. CHIMIMP ORT NON-FINANCIAL DECLARATION 3 Some of the more specific objectives set by the management of Chimimport AD are: - maintaining high growth rates of the Group's assets and equity, which is related to ensuring stable long- term returns to shareholders; - validation of Chimimport AD as a holding with a strong presence in the economy of Bulgaria and Central and Eastern Europe; - maintaining a leading position among the public companies in Bulgaria and improving the international reputation of the band. II. Policy description For Chimimport AD the highest priority is to adhere to high standards in all its business relationships. The company's procedures have mechanisms in place to ensure that senior management and all stakeholders have the adequate and effective functioning of internal control, risk management, accountability and transparency systems. The company applies a clear and categorical policy as well as transparent procedures for assessment, selection and interaction with its partners, suppliers, customers and all stakeholders. In addition to providing reliable and high-quality products and services, Chimimport's employees aim to precisely serve the needs, rights and interests of our clients, seek mutual benefit, comply with the law and internal rules and operate in full confidentiality, according to the requirements of current legislation in the country. Chimimport AD imposes serious resources and efforts to investigate, formulate and select the appropriate solutions to prevent the occurrence of any problem encountered in practice. Ethics Business Code of Chimimport AD In order to control the ethical aspects of the work of Chimimport AD employees, the Code of Conduct and Professional Ethics of the company has a system of rules that are systematically updated and supplemented. The Code sets out the principles of honesty, loyalty and conscientiousness, as well as stringent requirements for employee behaviour regarding their personal and professional ethics. It contains rules and norms that guide employees in their day-to-day work and set the tone of their relationship both within the company and with third parties. Anti-Corruption Policy Chimimport AD does not tolerate any form of bribery or corruption. In particular, the company agrees to refrain from any action or conduct that might be perceived as active or passive bribery. Employees are obliged to comply with the Money Laundering Act, the Implementing Regulations of the Money Laundering Act, the Act on Measures against the Financing of Terrorist Activity and the Internal Rules for the Control and Prevention of Money Laundering and Financing of Terrorist Activity. Employees are required to comply with the Anti-Money Laundering Measures Act, the Regulations for the Implementation of the Anti-Money Laundering Measures Act, the Anti-Terrorist Financing Measures Act and the internal rules for control and prevention of money laundering and terrorist financing. Well-tested procedures are applied, and they guarantee the company's assets and prevent insider trading and potential employee abuse. Apart from customer care, business partners, authorities and the public, all employees of Chimimport AD are also committed to ensuring fair treatment of all their colleagues and to strictly adhere to the requirements of the Protection against Discrimination Act. The management of the company is aware that his professional and life example has a greater impact on employees than spoken or written words. That is why each of them strives to be an example of imitation in terms of professional ethics and high moral qualities, and in his duties to be guided by values such as honesty, fairness, precision, loyalty, respect, and prudence. The management shares the belief that good corporate governance is not limited to covering the requirements set out in the legal framework, but above all is a matter of deep internal conviction. For Chimimport AD, good corporate management implies first and foremost respect for shareholders who have confided of MB, as well as awareness of the immediate and long-term benefits of management transparency. Employee policy Led by the challenges of today's market environment and responding to rising requirements, management believes that successful business and stable development are only possible through focusing on quality across the whole range of activities of Chimimport AD. CHIMIMP ORT NON-FINANCIAL DECLARATION 4 As one of the largest employers in the country, employing nearly 6 000 people, Chimimport is aware that the way it treats its employees and the social benefits it provides is among the main mechanisms by which the company can works for the public good. Therefore, since its inception, the company has invested in the continuous improvement of its human resources by applying precise methods of selection, training, evaluation and rewarding of staff. These practices build on the leadership's belief that people are their most valuable asset and the prerequisite for future growth. Chimimport AD and the group attach great importance to: - Job candidates based on their personal qualities and merits, based on a careful assessment of the knowledge, competence, and professionalism of potential employees. It gives equal opportunity to all decent candidates to become part of their team regardless of their gender, ethnic origin, public position, beliefs, political views or any other factors unrelated to their professionalism and skills. - Ensuring equal opportunities for training and career development for all employees, regardless of their current position. -Creating a work environment that values, recognizes and rewards the efforts and achievements that are among the core values of the organization. Developing the potential of employees Chimimport AD seeks to direct its employees to business activities that would allow the full deployment of their potential and the realization of their personal and professional ambitions. Emphasis is also placed on the development of qualities that allow the continuous growth of employees and hence of the whole organization. The staff development policy at Chimimport AD enables employees of all hierarchical levels who have proven their professional qualities to be promoted not only within the same management / branch but also to be re-appointed to other positions in the organization, possess the experience and professional qualities required for the new positions. Last, but not least, Chimimport AD is of the utmost importance to retain and develop its cadres and consistently makes efforts in this direction. Throughout the year, staff development programs are being set up to explore and improve the professional qualities of its staff and to fully exploit their potential. Assessment of performance and development The overall performance of a company undoubtedly depends on the individual performance and achievements of its employees. Therefore, it is extremely important for the company to objectively assess the contribution of each employee, which is done during the annual evaluation of performance and development. The annual evaluation aims to determine the remuneration of employees that corresponds to their performance and to help them to improve their skills constantly. The annual evaluation procedure itself ensures transparency and objectivity. It allows staff to be assessed on the basis of the position they occupy and takes into account the different nature of the duties performed. The appraisal system does not only address the extent to which the objectives are met but also draws attention to the way the tasks are done. This promotes communication between evaluators and evaluates and encourages the professional and personal development of each employee. Labour remuneration and social benefits The pay and additional benefits policy have been developed to attract, hire and retain highly qualified staff. It is based on the following principles: internal balance, recognition of the personal qualities of each employee, remuneration consistent with performance and competitiveness. Companys values: - fairness-equal opportunities for development. - quality-we strive for perfection in every endeavour - respect- to our colleagues, clients and fellow citizens - teamwork - we succeed when we are together - trust -it also makes the impossible achievable - social responsibility - we work with public care - effectiveness-we are looking for innovative ideas in our quest for improvement - creativity - we always aim to achieve our goals. CHIMIMP ORT NON-FINANCIAL DECLARATION 5 III. Major risks related to environmental and social issues The success of any business is inextricably linked to the well-being of the community within which it operates. That is why the daily operations of Chimimport AD are subject to the highest ethical principles and to the unwavering desire of the company to make a significant contribution to the development of Bulgarian society. Chimimport AD also welcomes new opportunities for initiatives that benefit local communities and increase civic awareness among its employees. The policy of the company for environmental protection consists of: 1. Implement the activities in a way that guarantees the protection of the environment 2. Analysis and assessment of the impact on nature as a result of the activities of all the companies in the Group 3. Take precautionary measures against potential environmental pollution 4. Respect all laws and regulations as well as the internal regulations adopted by the company for environmental equilibrium. The main environmental risks that are relevant to the company's activities are related to non-compliance with environmental standards and established rules. The main social risk faced by the company is the risk of an increase in the average age of the staff. Other employee-related risks are the occupational risk and the low qualification of newly recruited personnel. Future tasks to Chimimport AD are: 1. Getting new qualified staff and lowering the average age of staff. 2. Limiting turnover to a minimum by introducing incentives to achieve results and expanding the social agenda 3. Training of newly recruited personnel Chimimport adheres to all its environmental and social policies. Chimimport adheres to all its accepted environmental and social policies. 1 Consolidated report on payments to governments CHIMIMP ORT CONSOLIDATED REPORT ON PAYMENTS TO GOVERNMENTS 2 Consolidated report on payments to governments The Group, through its subsidiary Oil and Gas Exploration and Production AD, operates in the extractive industry and according to Art. 53 and Art. 58 of the Accounting Act has the obligation to prepare and publish a consolidated report on payments to governments, simultaneously with the consolidated report on its activities. The main activity of Oil and Gas Exploration and Production AD is carried out on the basis of concession rights granted by the state under 13 concession contracts. According to the concluded contracts, Oil and Gas Exploration and Production AD is obliged to make concession payments (concession fee) every six months on the basis of sold quantities of crude oil and natural gas, and the payment is due by the end of the month following the six months. In 2021 Oil and Gas Exploration and Production AD has paid a concession fee to the Ministry of Energy as follows:  for the second half of 2020 - BGN 655 068;  for the first half of 2021 - BGN 919 443; The stated amounts include value added tax and represent the payments made by the Parent Company in 2021, which differ from the amounts accrued as expenses of the Concession Remuneration Group, specified in Note 28 to the consolidated financial statements. In 2021 Oil and Gas Exploration and Production AD has paid corporate tax in the amount of BGN 1 388 and expenses taxes in the amount of BGN 729 under the annual tax return for 2020 and an advance payment of corporate tax in the amount of BGN 95 000 for 2021. CHIMIMP ORT CONTACT US 3 DECLARATION in accordance to Article 100n, Para. 4, Item 4 from the Public Offering of Securities Act DECLARATION in accordance to Article 100n, Para. 4, Item 4 from the Public Offering of Securities Act Today, May 3 rd 2022 Sofia The undersigned, 1. Ivo Kamenov - CEO and Member of the Management Board of Chimimport АD and 2. Alexander Kerezov – Chief accountant of Chimimport AD in accordance to Article 100n, Paragraph 5 from the Public Offering of Securities Act and Article 32a, Paragraph 1, Item 3 from ORDINANCE № 2 on the prospectuses to be published when securities are offered to the public or admitted to trading on a regulated market and on disclosure of information by the public companies and the other issuers of securities We declare, that to our knowledge: 1. The set of annual consolidated financial statements for the year ending in 2021 are prepared in accordance with the applicable accounting standards and give a true and fair statement of assets and liabilities, financial position and profit or loss of Chimimport AD; 2. The annual consolidated activity report of Chimimport AD for 2021 includes a fair review of the information in accordance to Article 100, Paragraph 4 from the Public Offering of Securities Act. 3 rd May 2022 Declarants: Sofia 1...................................... /CEO/ 2...................................... /Chief Accountant/ Aleksandar Dimitrov Kerezov Digitally signed by Aleksandar Dimitrov Kerezov Date: 2022.05.03 21:06:56 +03'00' Ivo Kamenov Georgiev Digitally signed by Ivo Kamenov Georgiev Date: 2022.05.03 21:16:02 +03'00' DECLARATION Today, 03 rd May 2022, Sofia The undersigned, 1. Ivo Kamenov – CEO and Member of the Management Board of Chimimport АD and 2. Alexander Kerezov – Chief accountant of Chimimport AD We declare, that to our knowledge: The submitted forms for financial reporting prepared in accordance with the requirements of the "Financial Supervision Commission" are identical in form and content, match the information on paper, duly signed by the declarants and available on storage in the company. We are aware of our responsibility under Art. 313 of the Penal Code. 03 rd May 2022 Declarants: Sofia 1............................. /CEO/ 2............................... /Chief Accountant/ Aleksandar Dimitrov Kerezov Digitally signed by Aleksandar Dimitrov Kerezov Date: 2022.05.03 21:07:56 +03'00' Ivo Kamenov Georgiev Digitally signed by Ivo Kamenov Georgiev Date: 2022.05.03 21:15:35 +03'00' 1 Grant Thornton OOD A 26, Cherni Vrah Blvd, 1421 Sofia A 4, Paraskeva Nikolau Str., 9000 Varna T (+3592) 987 28 79, (+35952) 69 55 44 F (+3592) 980 48 24, (+35952) 69 55 33 E office@bg.gt.com W www.grantthornton.bg INDEPENDENT AUDITOR’S REPORT To the shareholders of Chimimport AD 2, Stefan Karadja Str., 1000 Sofia, Bulgaria Report on the Audit of the Consolidated Financial Statements Opinion We have audited the consolidated financial statements of Chimimport AD and its subsidiaries (the “Group”), which contain the consolidated statement of financial position as at 31 December 2021 and the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, as well as the notes to the consolidated financial statements, including a summary of significant accounting policies. In our opinion, the accompanying consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at 31 December 2021, its consolidated financial performance and consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS), adopted by the EU and Bulgarian legislation. Basis for Opinion We conducted our audit in accordance with the International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the “Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements” section of our report. We are independent of the Group in accordance with the International Code of Ethics for Professional Accountants (including International Independent Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code), together with the ethical requirements of Bulgarian Independent Financial Audit Act, and we have fulfilled our other responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Emphasis of Matter 1. We draw attention to Note 54 Post- reporting date events to the consolidated financial statements, which describes that the Group's management is unable to reliably assess the impact of military action in Ukraine on the future financial condition and performance of the Group in 2022 in terms of the overall effects on the national economy, energy prices, inflation and other economic sectors, but considers that it may have a negative impact. The change in the business environment as a result of the expected negative effects could lead to a potential change in the carrying amounts of assets and liabilities and the results of the Group's activities, which are assessed in the consolidated financial statements after a number of judgments and assumptions by management. , taking into account the most reliable information available at the date of the estimates. The Group's management monitors the development of the military conflict in a timely manner and analyzes their possible effects on the operational and financial condition of the Group and its investments, in order to balance liquidity positions and ensure financial stability. The Group's management will continue to monitor the potential effects on all economic sectors and other countries in the region, in particular those related to its 2 investment activities, taking all necessary measures to limit the potential future negative effects on financial condition. and the results of its activities. 2. We draw attention to Note 12 Other Intangible Assets, in which it is disclosed that as of 31 December 2021 the Group reports intangible assets - property rights related to the aviation industry, with a carrying amount of BGN 97 529 thousand. Conducting impairment tests on these intangible assets, the Group has not identified the need for impairment of their carrying amount. For the purposes of these tests were considered the existing uncertainties and restrictions in the Group's activities in the aviation industry, including ancillary services, which is one of the most affected sectors by the negative effects of the Covid-19 pandemic, and in which the Group's airline and its associates and joint ventures operate. In 2021, the Group's investments in the aviation industry registered a performance improvement compared to 2020, but the impact of the epidemic and the consequences after its end are identified as the main risk for the Group's investments in the aviation sector. The assessment for determining the recoverable amount of these intangible assets takes into account the forecasts and expectations for a recovery in the aviation sector in the coming periods, which are largely based on external factors beyond the control of the Group. The effects of all actions and planned actions and measures taken by the management, which are expected to have an impact in response to the deteriorating economic situation with regard to the Group's activities in the aviation industry, disclosed in Note 2 Basis of preparation of the consolidated financial statements, were also considered. Management's impairment tests for these intangible assets - property rights - are based on significant estimates, assumptions, and uncertain future events about the activities of investments operating in the aviation industry, which are related to the negative effects of the Covid-19 pandemic. Our opinion has not been modified on these issues. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Impairment of loans and advances to bank customers Notes 14 and 51 to the consolidated financial statements Key audit matter How this matter was addressed during the audit Loans and advances to bank customers represent a significant part (26%) of the total assets of the Group as at 31 December 2021, as their gross carrying amount amounts to BGN 3 087 875 thousand and the accumulated impairment amounts to BGN 38 783 thousand. The Group applies an impairment model based on expected credit losses in accordance with the requirements of IFRS 9 Financial Instruments. The assessment of impairment losses on loans and advances to bank customers requires the Group's management to apply a significant level of judgment, especially with respect to the identification of impaired receivables and the quantification of loan impairments. To determine the amount of impairment for expected credit losses, the Group applies statistical models with input data obtained from internal and external sources. In accordance with the requirements of IFRS 9 “Financial Instruments”, the Group distinguishes three phases of impairment, as the criteria for classification in the individual phases are based on an assessment of the objective characteristics of loans and borrowers and on the Group's subjective judgments. The assessment of classification in the individual impairment phases is the result of a combination of quantitative and qualitative factors. Expected credit losses are calculated using available historical information and expected future developments During our audit, our audit procedures included, but are not limited to the following: • gaining an understanding of the impairment processes for loans to customers applied by the Group. • assessment of the adequacy of the policies, procedures and controls in place in order to develop our further audit procedures in such a way as to be able to address the risks of material misstatement related to the accrued impairment losses on loans and advances to customers. • we included in the audit our experts in the areas requiring specific expertise. • review of the quality of the historical data used in the calculation of the risk parameters. For a sample of exposures, we have performed: • assessment of the appropriateness of the methods used to determine impairment • an independent expectation for the level of required impairments of loans and advances to customers as of 31 December 2021 based on a review of internal and external information and compared our expectation with the impairments 3 determined using macroeconomic indicators. The statistical models used are based on the probability of default (PD), the expected amount of the default loss (LGD), and the default exposition (EAD). The input data for the models, calculation methodologies and their application depend on the judgment of the Group's management. The COVID-19 pandemic has increased uncertainty about the economic outlook and, together with various government measures, including the moratorium on credit payments, has increased the complexity of assessing and monitoring customers' financial condition, which requires an increased level of judgment in calculating impairments of loans and advances. As disclosed in note 51 to the accompanying consolidated financial statements, the Group has reported as at 31 December 2021 accumulated impairment of loans and advances to customers in the amount of BGN 38 783 thousand. We have determined that the impairment of loans and advances to customers is a key audit issue due to the following factors: • the significance of the assessment of loans and advances to customers for the consolidated financial statements; • the fact that the assumptions for determining impairment losses inherently involve significant estimates; • the effect that the COVID-19 pandemic has on these assessments. determined by management and presented in the financial statements. • assessment of the appropriateness of the phase classification, taking into account whether there are factors indicating a significant increase in credit risk. • professional judgment and assessment of the assumptions used in determining impairment and comparing our estimates with those used by the Group regarding bank activity; • analysis of the financial condition of the borrowers and verification of whether there are breaches of contracts and / or deviations in compliance with the contractual terms. • analysis of the main assumptions and judgments of the Group's management, including assessment of the applied scenarios for the expected cash flows from loans and advances to bank customers; • analysis of the impact of current economic conditions, collateral estimates and other factors that may affect the collection of loans and advances to bank customers; • assessment of the adequacy of the Group's assumptions and assessments related to the impact of the COVID-19 pandemic, including the moratorium on credit payments and other government measures, on the assessment of expected credit losses and all aspects of the identification process; • recalculation of the impairment of a sample of exposures, based on the values of the risk parameters obtained as a result of the application of the models. We have assessed the completeness and adequacy of the disclosures in the consolidated financial statements of the Group related to the valuation of loans and advances to bank customers. Impairment of goodwill Note 11 to the consolidated financial statements Key audit matter How this matter was addressed during the audit As of 31 December 2021, the Group's goodwill amounts to BGN 23 774 thousand. We focused on management's estimates used for impairment testing because of the significant assumptions required to predict the expected future cash flows and the applicable discount factors when calculating the recoverable amount of cash-generating units. During our audit, our audit procedures included, but were not limited to: - assessment of the relevance of key assumptions, including discount factors, expected growth, and other key performance indicators, with our internal valuation experts, by comparing with average market performance of companies with similar activity and the Group's current financial performance; - an assessment of the adequacy of the disclosures in the consolidated financial statements, including the disclosures of the main assumptions and judgments related to recognized goodwill in the consolidated financial statements. Information Other than the Consolidated Financial Statements and Auditor’s Report Thereon Management is responsible for the other information. The other information comprises the annual consolidated management report, including the consolidated corporate governance statement, the consolidated non- financial declaration and the consolidated report on payments to governments, prepared in accordance with 4 Bulgarian Accountancy Act, but does not include the consolidated financial statements and our auditor’s report thereon. Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or whether our knowledge obtained in the audit may indicate that there is a material misstatement or otherwise the other information appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with International Financial Reporting Standards (IFRS), as adopted by the EU and Bulgarian legislation, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Group’s financial reporting process. Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs and Bulgarian Independent Financial Audit Act will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. As part of our audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also: − identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control; − obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control; − evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management; − conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern; − evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. − obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are 5 responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on Other Legal and Regulatory Requirements In addition to our responsibilities for reporting under ISAs, described above in section “Information Other than the Consolidated Financial Statements and Auditor’s Report Thereon”, regarding annual consolidated management report, including the consolidated corporate governance statement, the consolidated non- financial declaration and the consolidated report on payments to governments, we have performed the additional procedures contained in the Guidelines of the professional organization of certified public accountants and registered auditors in Bulgaria - Institute of Certified Public Accountants (ICPA). The procedures on the existence, form and contents of the other information have been conducted in order to state whether the other information includes the elements and disclosures in accordance with Chapter Seven of Bulgarian Accountancy Act and Article 100m, paragraph (10) in relation to Article 100m, paragraph (8), subparagraphs (3) and (4) of Bulgarian Public Offering of Securities Act. Statement Pursuant to Article 37, Paragraph (6) of Bulgarian Accountancy Act Based on the procedures performed, we describe the outcome of our work: (а) the information in the consolidated management report is consistent with the consolidated financial statements for the same reporting period; (b) the consolidated activity report has been prepared in accordance with the applicable legal requirements. We draw your attention to the fact that in item 8 and item 9 of the information to the consolidated activity report, containing information according to Ordinance №2 / 09.11.2021 in connection with Art. 100 (n), para (7), item 2 of LPOS, the required information regarding the loan agreements under which Chimimport AD or its subsidiaries are borrowers and lenders is not included in full. The Group has presented summary data on borrowed funds and loans related to its banking activities, announcing that due to restrictions arising from Art. 62 of the Credit Institutions Act, concerning banking and professional secrecy, more detailed information cannot be provided. Our opinion has not been modified on this issue. (c) as a result of the acquired knowledge and understanding of the activities of the Group and the environment in which it operates, we have found no cases of material misrepresentation in the consolidated management report; (d) the consolidated corporate governance statement for the financial year contains the required information in accordance with the applicable legal requirements, including Article 100m, paragraph (8) of Bulgarian Public Offering of Securities Act; (e) the consolidated non-financial declaration is prepared and made available in accordance with the requirements of Bulgarian Accountancy Act; (f) the consolidated report on payments to governments is and made available in accordance with the requirements of Bulgarian Accountancy Act. Statement Pursuant to Article 100m, Paragraph (10) of Bulgarian Public Offering of Securities Act Based on the procedures performed and our knowledge of the Group and the environment in which it operates, in our opinion, there is no material misstatement in the description of the main characteristics of the internal control system and of the risk management system of the Group in connection with the financial reporting process and also in the information pursuant to Article 10, paragraph 1, items “c”, “d”, “f”, “h” and “i” of Directive 2004/25/EC of the European Parliament and of the Council of 21 April 2004 on takeover bids, which are 6 included in the consolidated corporate governance statement, being a component of the consolidated activity report. Reporting on compliance with the electronic format of the consolidated financial statement included in the annual consolidated financial statement for the activity under Art. 100m, para 5 of Public Offering of Securities Act with the requirements of the EEEF Regulation We have undertaken a reasonable assurance engagement on the compliance of the electronic format of the consolidated financial statements of Chimimport Bulgaria AD for the year ended on 31 December 2021 included in the digital file „549300GB265U3RQEQC54-20211231-EN-CON.zip“, with the requirements of Commission Delegated Regulation (EU) 2019/815 of 17 December 2018 supplementing Directive 2004/109/EC of the European Parliament and of the Council with regard to regulatory technical standards on the specification of a single electronic reporting format (“ESEF Regulation”). Our opinion is only regarding the electronic format of the consolidated financial statements and does not include the other information contained in the annual consolidated financial report on the activity under art. 100n, para. 5 of Bulgarian Public Offering of Securities Act. Description of subject matter and applicable criteria Management has prepared the electronic format of Group’s consolidated financial statements for the year ended 31 December 2021 in accordance with ESEF Regulation in order to comply with Bulgarian Public Offering of Securities Act. The rules for preparation of the consolidated financial statements in this electronic format are described in the ESEF Regulation and in our opinion, they are applicable criteria for providing reasonable assurance. Responsibilities of management and those charged with governance Group’s management is responsible for the application of the requirements of ESEF Regulation in preparing the electronic XHTML format of the consolidated financial statements. These responsibilities include the selection and application of suitable iXBRL tags in accordance with the taxonomy of ESEF Regulation, as well as the application of such internal controls, which are necessary for the preparation of the electronic format of Group’s annual consolidated financial statements, which are free from material misstatements in accordance with ESEF Regulation. Those charged with governance are responsible for the oversight of the process of preparing the Group's annual consolidated financial statements, including the implementation of the ESEF Regulation. Auditor’s responsibilities Our responsibility is to obtain reasonable assurance about whether the electronic format of the consolidated financial statements complies with ESEF Regulation. We applied the “Guidance on issuing an opinion on the application of ESEF Regulation by issuers whose securities are admitted to trading on a regulated market in the European Union” and conducted our reasonable assurance engagement in accordance with International Standard on Assurance Engagements 3000 (Revised) “Assurance Engagements Other than Audits or Reviews of Historical Financial Information (ISAE 3000 (Revised))”. The standard requires that we comply with ethical requirements, design and perform audit procedures to obtain reasonable assurance whether the electronic format of Group’s consolidated financial statements have been prepared in accordance with the applicable criteria described above. The nature, timing and extent of our procedures depend on our professional judgement, including the risk of material misstatements whether due to fraud or error, in applying the requirements of ESEF Regulation. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAE 3000 (Revised) will always detect a material misstatement when it exists. Quality Control Requirements We have applied the requirements of International Standard on Quality Control (ISQC) 1 and accordingly, maintain a comprehensive system of quality control, including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements of the registered auditors in Bulgaria. We have complied with the independence and other ethical requirements of the International Code of Ethics for Professional Accountants (including International Independent Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code) and adopted by BICPA, together with the ethical requirements of Bulgarian Independent Financial Audit Act. 7 Summary of the Work Performed The purpose of the designed and performed procedures was to obtain reasonable assurance whether the electronic format of the consolidated financial statements has been prepared in all material aspects in compliance with the requirements of ESEF Regulation. In performing procedures for assessing compliance with the requirements of ESEF Regulation on electronic (XHTML) format of Group’s consolidated financial statements, we used professional judgement and applied professional scepticism. We have also: - obtained an understanding of the internal control and processes, related to the application of ESEF Regulation in preparing Groups’ consolidated financial statements in XHTM format with iXBRL tags; - checked that the enclosed XHTML format is valid; - reconciling the data in the electronic format of the consolidated financial statements with the audited consolidated financial statements; - evaluated the completeness of Group’s tagging of the consolidated financial statements using the XBRL markup language; - evaluated the appropriateness of the use of iXBRL elements selected from the ESEF taxonomy and the creation of extension elements where no suitable element in the ESEF taxonomy has been identified; and - evaluated the use of anchoring in relation to the extension elements in accordance with ESEF Regulation. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Opinion on compliance of the electronic format of the consolidated financial statements with ESEF Regulation Based on the performed procedures, our opinion is that the electronic format of the consolidated financial statements of the Group for the year ended 31 December 2021, contained in the attached electronic file „549300GB265U3RQEQC54-20211231-EN-CON.zip“,has been prepared in all material respects in accordance with the requirements of the ESEF Regulation. Reporting Pursuant to Article 59 of Bulgarian Independent Financial Audit Act in relation to Article 10 of Regulation (ЕС) № 537/2014 In accordance with the requirements of Bulgarian Independent Financial Audit Act and in relation with Article 10 of Regulation (EС) № 537/2014, we report additionally the information as follows: − Grant Thornton OOD was appointed as statutory auditor of the consolidated financial statements of Chimimport AD for the year ended on 31 December 2021 by the general meeting of shareholders, held on 05 October 2021, for a period of one year. − The audit of the consolidated financial statements of the Group for the year ended on 31 December 2021 has been made for the twentieth consecutive year of a continuing engagement for statutory audit of the Group, performed by us. − In support of our audit opinion, we have provided a description of the most significant assessed risks of material misstatement, a summary of the auditor’s response and where relevant, key observations arising with respect to those risks in the section „Key audit matters“ of this report. − We confirm that our audit opinion is consistent with the additional report to the Audit Committee of Chimimport AD, which is in accordance with Article 60 of Bulgarian Independent Financial Audit Act. − We declare that prohibited non-audit services referred to in Article 64 of Bulgarian Independent Financial Audit Act were not provided. − We confirm that we remained independent of the Company in conducting the audit. − For the period for which we were engaged as statutory auditors, in addition to the statutory audit we have not provided any other services to Chimimport AD and its subsidiaries that have not been disclosed in the consolidated activity report or consolidated financial statements. Mariy Apostolov Zornitza Djambazka Managing partner Registered auditor, responsible for the audit Grant Thornton OOD Audit firm, registration № 032 Sofia 3 May 2022 Bulgaria, Sofia, 26, Cherni Vrah Blvd. Digitally signed by ZORNITZA VASS ILEVA DJAMBAZKA Date: 2022.05.03 22: 32:47+03'00' ZORNITZA VASSILEVA DJAMBAZKA Digitally signed by MARIY GEO RGIEV APOSTOLOV Date: 2022.05.03 22: 33:23+03'00' MARIY GEORGIEV APOSTOLOV