Annual Separate Activity Report
Corporate Governance Declaration
Independent Auditors‘ Report
Annual Separate Financial Statements
Bulgarian Energy Holding EAD
31 December 2021
Contents
Annual Separate Activity Report ......................................................................................................................................... i
Corporate Governance Declaration ..................................................................................................................................... ii
Independent Auditors‘ Report ............................................................................................................................................ iii
Annual Separate Financial Statements ............................................................................................................................... iv
Separate Statement of Profit or Loss ................................................................................................................................... 1
Separate Statement of Comprehensive Income ................................................................................................................... 2
Separate Statement of Changes in Equity ........................................................................................................................... 5
Separate Staement of Cash Flows ....................................................................................................................................... 7
Notes to the Separate Financial Statements ........................................................................................................................ 8
1. Scope of activity ...................................................................................................................................................... 8
2. Basis for the preparation of the separate financial statements ................................................................................. 8
3. Changes in the accounting policy ............................................................................................................................ 9
3.1. General provisions ....................................................................................................................................................... 9
3.2. New standards, amendments and interpretations to IFRS, which came into force on 1 January 2021. ................. 9
3.3. Standards, amendments and clarifications that have not yet entered into force and are not applied from an earlier
date by the Company........................................................................................................................................................... 9
4. Accounting policy .................................................................................................................................................. 10
4.1 General provisions ....................................................................................................................................................... 10
4.2 Presentation of the separate financial statements, comparative information .............................................................. 10
4.3 Consolidated Financial Statements .............................................................................................................................. 10
4.4 Transactions in foreign currency ................................................................................................................................. 10
4.5 Revenue recognition .................................................................................................................................................... 11
4.6 Expenses ...................................................................................................................................................................... 13
4.7 Taxes ........................................................................................................................................................................... 13
4.8 Pension and other liabilities to employees................................................................................................................... 14
4.9 Financial instruments .................................................................................................................................................. 15
4.10 Equity, reserves and dividend payments ............................................................................................................... 20
4.11 Property, plant and equipment .............................................................................................................................. 20
4.12 Leasing .................................................................................................................................................................. 21
4.13 Borrowing costs .................................................................................................................................................... 22
4.14 Intangible assets .................................................................................................................................................... 23
4.15 Investments in subsidiaries ................................................................................................................................... 23
4.16 Investments in associates and joint ventures ......................................................................................................... 23
4.17 Inventories ............................................................................................................................................................. 23
4.18 Impairment of non-financial assets and investments in subsidiaries, joint ventures and associates...................... 24
4.19 Cash and cash equivalents ..................................................................................................................................... 24
4.20 Provisions .............................................................................................................................................................. 24
4.21 Funding (government grants) ................................................................................................................................ 25
4.22 Significant management judgment in applying the accounting policy. Uncertainty of the accounting estimates . 25
5. Dividend income .................................................................................................................................................... 27
6. Revenues from contracts with customers............................................................................................................... 28
7. Other income ......................................................................................................................................................... 28
8. Expenses for impairment ....................................................................................................................................... 29
9. Expenses for materials ........................................................................................................................................... 29
10. Expenses for external services ............................................................................................................................... 29
11. Audit services remuneration .................................................................................................................................. 30
12. Employee expenses ................................................................................................................................................ 30
13. Other expenses ....................................................................................................................................................... 30
14. Finance income ...................................................................................................................................................... 30
15. Finance costs .......................................................................................................................................................... 31
16. Income tax expense ................................................................................................................................................ 31
17. Earnings per share and dividends .......................................................................................................................... 31
17.1 Earnings per share ................................................................................................................................................. 31
17.2 Dividends .............................................................................................................................................................. 32
18. Investments in subsidiaries, associates and joint ventures ..................................................................................... 32
19. Property, plant and equipment ............................................................................................................................... 34
20. Intangible assets ..................................................................................................................................................... 36
21. Deferred tax assets ................................................................................................................................................. 37
22. Trade and other receivables ................................................................................................................................... 38
23. Receivables from Toplofikatsia Sofia EAD........................................................................................................... 38
24. Financial assets at fair value through other comprehensive income ...................................................................... 39
25. Cash and cash equivalents ..................................................................................................................................... 40
26. Share capital and reserves ...................................................................................................................................... 40
26.1 Share capital .......................................................................................................................................................... 40
26.2 Other reserves ....................................................................................................................................................... 40
26.3 Reserve from revaluation of financial assets at fair value through other comprehensive income ......................... 41
26.4 Revaluation reserve of non-financial assets .......................................................................................................... 41
26.5 Reserve from remeasurement of defined benefit plans ......................................................................................... 41
27. Issued bonds .......................................................................................................................................................... 41
28. Loan from the European Investment Bank ............................................................................................................ 44
29. Employee retirement benefits liabilities ................................................................................................................ 45
30. Trade and other liabilities ...................................................................................................................................... 47
31. Related party disclosures ....................................................................................................................................... 47
31.1 Loans granted to related parties ............................................................................................................................ 48
31.2 Trade receivables from and payables to related parties ......................................................................................... 53
31.3 Related party transactions ..................................................................................................................................... 53
31.4 Remuneration of key management staff ................................................................................................................ 55
32. Non-cash transactions ............................................................................................................................................ 55
33. Commitments, leases and contingent liabilities ..................................................................................................... 55
34. Financial risk management objectives and policy ................................................................................................. 59
34.1 Categories of financial instruments ....................................................................................................................... 59
34.2 Liquidity risk ......................................................................................................................................................... 59
34.3 Interest rate risk ..................................................................................................................................................... 60
34.4 Currency risk ......................................................................................................................................................... 61
34.5 Credit risk .............................................................................................................................................................. 61
35. Fair value measurement ......................................................................................................................................... 64
35.1 Fair value measurement of financial instruments .................................................................................................. 64
35.2 Fair value measurement of non-financial instruments .......................................................................................... 65
36. Capital management policy and procedures .......................................................................................................... 66
37. Events after the reporting period............................................................................................................................ 66
BULGARIAN ENERGY HOLDING EAD
ANNUAL SEPARATE ACTIVITY REPORT
31 December 2021
Bulgarian Energy Holding EAD
Annual Separate Activity Report
31 December 2021
1
Board of Directors as at the date of publication of the separate financial statements
Vesselina Lachezarova Kanatova-Buchkova
Ivan Todorov Andreev
Zheko Mihailov Zhekov
Anton Georgiev Simeonov
Stelian Penchev Koev
Diyan Stanimirov Dimitrov
Angel Emilov Yankov
Address
16 Veslets Str.
Triaditsa District
Sofia 1000
Sofia-city
Region Bulgaria
Joint auditors
DZZD “AUDIT BEH” with participants in the consortium audit firms “Grant Thornton” OOD and “Zaharinova
Nexia” EOOD, registered respectively under Reg. № 032 and Reg. № 138 from the Register of Registered Auditors
Bulgarian Energy Holding EAD
Annual Separate Activity Report
31 December 2021
2
Annual Separate Activity Report
This Annual Activity Report of Bulgarian Energy Holding EAD (BEH EAD) as at 31.12.2021 presents comments and
analysis of financial statements and other material information concerning the financial position and results from the
Company's activity covering the period from 1 January 2021 to 31 December 2021. It was prepared in accordance
with Art. 39 of the Accountancy Act and Art. 187e, Art. 247, para. 1, 2 and 3 of the Commerce Act.
1. Company information
Company name
UIC
Sole shareholder
Address
Scope of activity
Directors
Bulgarian Energy Holding EAD
Annual Separate Activity Report
31 December 2021
3
Auditors
Basis for preparation of the
financial statements
Bulgarian Energy Holding EAD
Annual Separate Activity Report
31 December 2021
4
1.1. Establishment, management and structure of the Company
1.1.1. Legal status
Bulgarian Energy Holding EAD is a sole-owner joint-stock company, created by decision No. 1371/1990 of the Sofia
City Court, 100% state-owned.
The sole shareholder of the capital is the Republic of Bulgaria and the rights of a sole shareholder are exercised by
the Minister of Energy, who has the capacity of principal and is authorized to take all decisions within the competence
of the sole shareholder of the capital, in compliance with the law and the Company statute.
The Company is managed by a one-tier management system. Governing bodies are:
• General Meeting – Sole Shareholder of the Capital;
• Board of Directors.
1.1.2. History
Bulgarian Energy Holding EAD is the successor of the State company Oil and Gas, founded in 1973, renamed
“Gasosnabdyavane” in December 1975. At the beginning of 1990, the Company was renamed Bulgargaz in
accordance with the Business Activity Decree. Bulgargaz was transformed into a sole-owner joint-stock company by
order of the Council of Ministers of 12 May 1993.
At the end of 2004, the Company established the subsidiary Bulgartel EAD with scope of business activity:
construction, use and maintenance of telecommunications networks and information systems.
With a transformation plan dated 27 October 2006 and the annexes thereto, Bulgargaz EAD was transformed into
Bulgargaz Holding EAD through the splitting into two sole-owner joint-stock companies – Bulgartransgaz EAD and
Bulgargaz EAD under the conditions of Article 262 (d) of the Commerce Act. Bulgartransgaz EAD and Bulgargaz
EAD are the successors of the respective property (rights and obligations) of Bulgargaz Holding EAD. The
transformation was registered in the court by decision No. 45 of 15 January 2007 of Sofia City Court.
With protocol No. РД-21-305 dated 18.09.2008 the Minister of Economy and Energy changed the company name
from Bulgargaz Holding EAD to Bulgarian Energy Holding EAD, and increased the capital with assets at par value
of all shares of the capital of Natsionalna Elektricheska Kompania EAD, the NPP Kozloduy EAD, TPP Maritsa East
2 EAD, and Mini Maritsa Iztok EAD.
In compliance with the requirements of the Third Energy Package, the Bulgarian legislator has chosen the model of
the independent transmission operator as the unbundling option applicable to the Bulgarian electricity transmission
system operator. By decision of Protocol No. 71-2013 / 11.12.2013 of the Board of Directors of BEH EAD and in
accordance with the decision P-205 of 18.12.2013 of the State Energy and Water Regulatory Commission,
restructuring of NEK EAD was carried out by separation of ESO EAD. As a transmission system operator, ESO EAD
remains part of the vertically integrated undertaking, but detailed unbundling rules that comply with European
directives and national legislation are introduced and implemented.
By Protocol No. РД-21-27/18.09.2017, a decision was taken to make a contribution in kind with the shares of Bulgartel
EAD – 50% of which were paid in as an increase of the capital of Bulgartransgaz EAD, and the remaining 50% – as
an increase of the capital of Electricity System Operator EAD.
At the time of preparation of the Annual Financial Statements, the State has not announced plans for full or partial
privatization of the Company. The assets united within the holding structure are of strategic significance for the
national security of the country and therefore Bulgarian Energy Holding EAD is included in the so-called “prohibitive”
privatization list, according to Annex 1 to Art. 3, para. 1 of the Privatization and Post-privatization Control Act.
1.1.3. Structure
Bulgarian Energy Holding EAD carries out its business activities by operating in different market segments through
its subsidiaries. The Company has no branches.
The Company does not carry out any R&D activities.
Bulgarian Energy Holding EAD
Annual Separate Activity Report
31 December 2021
5
As of 31 December 2021, BEH Group includes the following companies:
Structure of Bulgarian Energy Holding EAD as at 31 December 2021
Information under Art. 187e and Art. 247, para. 2 of the Commerce Act
1.1.4. Share capital
As at 31 December 2021, the share capital of the Company amounts to BGN 3,462,941,744 divided into 3,462,941,744
ordinary registered voting shares with a nominal value of BGN 1 each. The entire amount of the Company's capital is
subscribed and paid in full. The Company's shares are ordinary, registered, non-privileged, with voting rights.
The Company does not own treasury shares. In 2021 the Company did not acquire or transfer its own shares.
1.1.5. Board of Directors
Information about the remuneration of the members of the Board of Directors of Bulgarian Energy Holding EAD
under management and control contracts
In thousand leva
31 December
2021
31 December
2020
Short-term remunerations, including:
thousand BGN
thousand BGN
Remuneration for salaries and other short-term income
322
203
Social security costs
6
-
Social costs
47
28
Total remuneration
375
231
Information about the acquired, held and transferred shares and bonds of the Company by the members of
the Board of Directors of BEH EAD
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Bulgarian Energy Holding EAD
Annual Separate Activity Report
31 December 2021
6
The members of the Board of Directors of Bulgarian Energy Holding EAD do not own shares or bonds of the
Company. They do not have privileges or exclusive rights to acquire shares and bonds of the Company. All shares are
owned by the Bulgarian state.
Information on the participation of members of the Board of Directors in companies as unlimited liability
partners, ownership of more than 25 percent of the share capital of another company, as well as their
participation in the management of other companies or cooperatives as procurators, managers or board
members
Jacklen Yosif Cohen - Executive Director of Bulgarian Energy Holding EAD and member of the Board of Directors,
participates as a member of the Board of Directors from 25.07.2015 to 31.05.2021. He is involved in the management
of the following companies:
ContourGlobal Operations Bulgaria AD - Member of the Board of Directors;
South Stream Bulgaria AD - Member of the Board of Directors;
NPP Kozloduy EAD - Chairman of the Board of Directors until April 23, 2021
Andon Petrov Andonov - Chairman of the Board of Directors of Bulgarian Energy Holding EAD from July 25, 2019
to May 31, 2021. He is involved in the management of the following company:
Mini Maritza East EAD - Executive Director and member of the Board of Directors until January 11, 2022
Zhivko Dimitrov Dinchev - Member of the Board of Directors of Bulgarian Energy Holding EAD from March 9,
2015 to May 31, 2021. He has participated in the management of the following company:
TPP Maritza East 2 EAD - Executive Director and member of the Board of Directors until now;
Valentin Alexiev Nikolov - Executive Director of Bulgarian Energy Holding EAD from 31.05.2021 to 19.11.2021
and member of the Board of Directors from 31.05.2021 to 07.01.2022. Owns more than 25 percent of the capital of
the following company:
SAZVEZDIE LION EOOD - sole owner of the capital until now.
Ivan Todorov Andreev - Member of the Board of Directors since 31.05.2021 and Executive Director of Bulgarian
Energy Holding EAD since 12.11.2021. He has participated in the management of the following state-owned
enterprise:
STATE ENTERPRISE "RADIOACTIVE WASTE" - Member of the Management Board until 26.04.2021
Diyan Stanimirov Dimitrov - Chairman of the Board of Directors of Bulgarian Energy Holding EAD from
31.05.2021 to 12.11.2021 and member of the Board of Directors from 31.05.2021. He has participated in the
management of the following company:
TPP Maritza East 2 EAD - member of the Board of Directors until April 27, 2021;
Stelian Penchev Koev - Member of the Board of Directors of Bulgarian Energy Holding EAD from 31.05.2021 to
the present. It owns more than 25 percent of the capital and participates in the management of the following company:
EXACT TAX Ltd. - Partner and manager until January 14, 2021;
Alexander Plamenov Tzarnorechki - Member of the Board of Directors of Bulgarian Energy Holding EAD from
31.05.2021 to 07.01.2022. He owns more than 25 percent of the capital and participates in the management of the
following company:
MUSLITO OOD - Partner and manager until March 2, 2022, when the company was deleted due to liquidation;
Vesselina Lachezarova Kanatova-Buchkova - Chairman of the Board of Directors of Bulgarian Energy Holding
EAD since November 12, 2021. Has no participation as an unlimited liability partner, does not own more than 25
percent of the capital of another company and does not participate in the management to other companies or
cooperatives such as procurator, manager or board member.
Plamen Dilkov Dilkov - Deputy Chairman of the Board of Directors of Bulgarian Energy Holding EAD since
November 12, 2021. He owns more than 25 percent of the capital and participates in the management of the following
companies:
3TE OOD - manager from January 28, 2021 to February 11, 2021;
Bulgarian Energy Holding EAD
Annual Separate Activity Report
31 December 2021
7
DILKOV ESTATE EOOD - Sole owner of the capital and manager until July 27, 2021;
Pravets Estate EOOD - manager from 23.07.2021 to 29.07.2021;
AI2 Energy Ltd. - manager until July 29, 2021;
BULGARIA ENGINEERING EAD - member of the Board of Directors until September 16, 2021;
Zheko Mihailov Zhekov - Member of the Board of Directors of Bulgarian Energy Holding EAD since November
12, 2021. Has no participation as an unlimited liability partner, does not own more than 25 percent of the capital of
another company and does not participate in the management of other companies or cooperatives such as procurator,
manager or board member.
Anton Georgiev Simeonov - Member of the Board of Directors of Bulgarian Energy Holding EAD since November
12, 2021. He owns more than 25 percent of the capital of the following company:
AGRA CONSULT OOD - Partner to date;
Information on contracts under Art. 240b of the Commercial Act
The Company has not entered into contracts with members of the Board of Directors, outside the management and
control contracts, as well as with related parties.
1.1.6. Staff
As at 31 December 2021, the total number of employees of the Company under employment contracts is 80 people,
divided into the following categories:
Registered number of staff
31 December
2021
31 December
2020
Total employees under an employment relationship, including
80
76
Executives
15
12
Analytical specialists
54
53
Applied specialists
2
2
Support staff
6
6
Vehicle operators
3
3
1.1.7. Related parties
Bulgarian Energy Holding EAD is the owner of an economically related group, which includes the following direct
subsidiaries as at 31 December 2021:
Company
Country of
incorporation
Share
31 December
2021
%
BGN’000
Subsidiaries
Bulgartransgaz EAD
Bulgaria
100.00%
734,569
Bulgargaz EAD
Bulgaria
100.00%
325,391
NEK EAD
Bulgaria
100.00%
1,051,427
NPP Kozloduy EAD
Bulgaria
100.00%
101,716
TPP Maritsa East 2 EAD
Bulgaria
100.00%
673,916
Mini Maritsa Iztok EAD
Bulgaria
100.00%
65,000
ESO EAD
Bulgaria
100.00%
61,103
Total subsidiaries
3,013,122
The following tables summarize financial information based on the financial statements of the associate and joint
ventures of the Company as at 31 December 2021.
The Company participated in joint ventures and associate companies as at 31 December 2021 as follows:
Bulgarian Energy Holding EAD
Annual Separate Activity Report
31 December 2021
8
Company
Country of
incorporation
Share
31 December
2021
%
BGN’000
Joint ventures
ICGB AD
Bulgaria
50.00%
57,991
South Streаm Bulgaria AD
Bulgaria
50.00%
10,626
Total jointly controlled companies
68,617
Associates
ZAD Energy
Bulgaria
0.32%
21
Total associated companies
21
Joint venture ICGB AD
BEH EAD is a shareholder in ICGB AD. The project company will build a gas interconnector between Greece and
Bulgaria with a capacity of up to 3 billion m3/year from Komotini to the town of Stara Zagora with a length of 182
km. It is envisaged that the joint venture will build, hold the ownership of the pipeline and receive income from the
transit of natural gas.
Joint venture South Stream Bulgaria AD
The South Stream project envisaged the construction of a new gas pipeline system for transporting natural gas from
Russia to the European market with a technical capacity of the 900-kilometer Black Sea section of 63 billion m3/year.
It was envisaged that the offshore gas pipeline through the Black Sea would have an entry point at the Beregovaya
compressor station, Anapa, on the Russian coast and an exit point on the Bulgarian coast in the Pasha Dere area, south
of Galata residential area, Varna. For the overland gas pipeline on the territory of Bulgaria two directions were
considered – northwestern route (in the direction of Serbia) and southwestern route (in the direction of Turkey, Greece,
Macedonia), for which the transport services of the Bulgarian gas transmission system to be used. The northern
direction of South Stream would pass through the territories of Bulgaria, Serbia (with deviations to Bosnia and
Herzegovina and Croatia), Hungary and Slovenia, to Northern Italy.
The part of the gas pipeline on the Bulgarian territory was planned to be built, owned and operated by the joint
company South Stream Bulgaria AD, established in December 2010 (with shareholders 50% BEH EAD, 50% PAO
Gazprom). In the course of the preparation for the construction phase, in June 2014 the European Commission initiated
an infringement procedure against Bulgaria related to the project. On December 1, 2014, the Government of the
Russian Federation and the management of PJSC Gazprom announced in public the termination of the project. In
September 2015, the shareholder PJSC Gazprom notified Bulgarian Energy Holding EAD that it considered the South
Stream project to be terminated, in connection with which the shareholders have started settling their relations under
the project.
With an agreement from December 27, 2019 (Deed of settlement) the overall settlement of the relations for the
completion of the project has been made. On May 11, 2020, a reduction of the capital of the project company South
Stream Bulgaria AD in the amount of BGN 377,726,000 was entered in the Commercial Register. With the amount
of the reduced capital due to Bulgarian Energy Holding EAD in the amount of BGN 188,863,000 ( 96,560,662.61
euros) repaid most of the holding's loan to Gazprom EP International BV. The balance of the loan in the amount of
EUR 1,107,149.39 will be repaid by the liquidation quota of Bulgarian Energy Holding EAD upon liquidation of the
project company. The parties to the project will no longer have claims against each other. At the moment, all project
activities have been terminated and a significant part of the assets have been sold to Bulgartransgaz EAD, which
helped speed up the implementation of the Balkan Stream project.
2. Main results in 2021
2.1. Strategic projects
Bulgarian Energy Holding EAD
Annual Separate Activity Report
31 December 2021
9
Interconnection Greece-Bulgaria (IGB)
The gas interconnection project Greece-Bulgaria (IGB project) foresees the construction of a cross-border reverse gas
pipeline with a capacity of up to 3 billion m3/year from Komotini to the town of Stara Zagora with a length of 182
km. Construction of the pipeline is planned to be completed in 2022.
The project is implemented by a joint investment company, ICGB AD, having equal shareholding of IGI Poseidon
and Bulgarian Energy Holding EAD. IGI Poseidon is an investment company with equal shareholding of DEPA S.A.
and Edison SpA. ICGB AD was registered in 2011 in the Republic of Bulgaria. The joint venture is planned to
construct, hold the ownership of the gas pipeline and receive the revenues from the transmission of natural gas.
Through the construction of the IGB gas pipeline, it is aimed to connect the country to the Trans Adriatic Pipeline for
natural gas supplies from the Azerbaijani Shah Deniz field, Phase 2 and the Greek gas transmission system, which
has a functioning re-gasification LNG terminal, Revithoussa, and is connected through a functioning gas
interconnection with Turkey (TGI) for natural gas imports from the Caspian region and the Middle East. The Trans
Adriatic Pipeline crosses the area of the town of Komotini in northern Greece, where it will connect to the IGB entry
point.
The IGB gas pipeline will create opportunities for long-term delivery of the agreed for the Bulgarian market 1 billion
m3/year for 25 years from Phase 2 of the Shah-Deniz field, as well as for deliveries from the liquefied natural gas
(LNG) market through the existing re-gasification terminal Revithoussa (Greece) and the planned new FSRU terminal
in Northern Greece near the town of Alexandroupolis, in the construction of which the Bulgarian State will also
participate with a shareholding of Bulgartransgaz EAD.
By building the gas pipeline, Bulgaria and Greece will be able to respond adequately to possible interruptions in
natural gas supplies from external sources or seasonal peaks in natural gas consumption – there will be infrastructure
to ensure crisis supplies and cover peak consumption in the respective months.
Main activities in 2021
In 2021, the actual construction of the interconnection began with the following activities:
• Construction activities continued in the aftermath of the COVID-19 pandemic;
• Completion of construction under the Contract with the contractor IDS (contract for design, supply and construction)
was extended until the end of 2021 in connection with the complicated situation of the pandemic and a reasoned
request of the contractor, accepted by the project company ICGB AD.
• Three tranches of EUR 90 million in loan financing provided by the EIB were disbursed;
• The last tranche of EUR 19.9 million is to be disbursed in the first half of 2022;
• By the end of 2021 the linear part is almost completely built, there are still finishing activities related to the laying
of protective pipes for the main optical line and the laying of the optical line, connecting the sections after the hydraulic
tests, etc .; certain intersections remain to be completed;
• The deliveries of equipment for the ground facilities to the gas pipeline are in the process of implementation, and by
the end of the year there is a delay in the delivery of the crane units due to the complicated situation with the global
supply chain;
• The crossing of the Maritsa River and the Studen Kladenets Dam was successfully completed by the method of
inclined directional drilling (HDD technology);
• Grant funding from the European Energy Program for Reconstruction (EEPR) and OPIC with transfers of grant
funds to the project company is in the process of utilisation;
• In November 2021 the company ICGB AD received from the EWRC a license for transmission of natural gas on the
territory of the Republic of Bulgaria;
• In the last quarter of 2021 the preparation of the documentation for licensing the project company as an Independent
Transmission Operator in Bulgaria and Greece began, for the purposes of which a new Articles of Association were
negotiated between the shareholders. A new Shareholder Agreement in 2022 for the period of operation is to be
negotiated and finalized, which will also reflect the changes in the Articles of Association.
South Stream Project
Bulgarian Energy Holding EAD
Annual Separate Activity Report
31 December 2021
10
Due to the termination of the South Stream Project, the activity of the project company South Stream Bulgaria AD
has been reduced to a complete minimum.
The decision on the liquidation of the project company and its deletion from the Commercial Register is to be assessed.
In the liquidation process, if such a decision is made, the other assets - land properties should be liquidated. As of
December 31, 2021, 18 properties in the area around Pasha Dere remain unsold as main assets. If the Ministry of
Agriculture (MoА) does not show interest in repurchase (most of the properties have been acquired by the MoА), the
properties may be announced for sale, either before the liquidation process begins or within the liquidation procedure.
if such a decision is made.
2.2. Financial results for 2021
Bulgarian Energy Holding EAD operates as a financial holding company and the companies within its structure retain
their operational independence. The Company is the largest state-owned enterprise in Bulgaria in terms of total assets
and generated annual turnover. This allows the holding to achieve economies of scale by applying effective
management practices in the financial management of the group of companies. Through its participation in the capital
markets, BEH EAD managed to provide external financing to the group at competitive interest rates and the attracted
funds are used for the financial stabilization of the companies within the group and to implement projects of strategic
importance for the future development of the energy sector in Bulgaria.
As a financial holding company, the main revenues that the Company realizes are income from dividends, interest
income received on loans granted and revenues related to the services provided for the management of the subsidiaries
through the concluded holding agreements. The services provided to the subsidiaries are in the areas of financial
management, project management, corporate governance and business planning, legal and regulatory issues, public
relations and communication. These activities ensure the implementation of a unified approach within the group
regarding the future development of the energy companies, which is in line with the directions set out in the Energy
Strategy of Bulgaria. The values of the main financial indicators characterizing the activity of the company for 2021
and their change compared to 2020 are presented in the table below:
Financial results
31.12.2021
31.12.2020
Change 2021/2020
BGN’000
BGN’000
BGN’000
%
Revenue from operating activities
766,770
169,958
596,812
351.15%
Operating expenses (excluding depreciation,
impairment and financial income/expense-
net)
(9,221)
(11,296)
2,075
18.37%
EBITDA
757,549
158,662
598,887
377.46%
EBIT
230,036
(59,536)
289,572
486.38%
Profit/loss before tax (EBT)
271,877
(15,230)
287,107
1885.14%
Net profit
320,828
3,007
317,821
10569.37%
EBITDA margin
99%
93%
-
5.83%
Return on equity
7.84%
0.08%
-
9733.03%
Return on assets
4.74%
0.05%
-
9634.33%
Registered number of staff
80
76
4
5.26%
Financial position
31.12.2021
31.12.2020
Change 2021/2020
thousand
BGN
thousand BGN
thousand
BGN
%
Total assets
6,768,391
6,175,225
593,166
9.61%
Bulgarian Energy Holding EAD
Annual Separate Activity Report
31 December 2021
11
Working capital
1,050,136
624,413
425,723
68.18%
Equity
4,092,604
3,771,798
320,806
8.51%
Cash
730,011
173,465
556,546
320.84%
In 2021 BEH EAD realized a positive operating financial result from its activity (EBIT) in the amount of BGN 230,036
thousand, as the improvement compared to the operating loss reported in 2020 is by BGN 289,572 thousand. At the
level of profit before taxes, the result reported in 2021 is BGN 271,877 thousand and is by BGN 287,107 thousand
higher than the reported loss of BGN 15,230 thousand in 2020. The working capital of BEH EAD for 2021 amounts
to BGN 1,076,016 thousand, as the improvement compared to 2020 amounts to BGN 451,603 thousand, as a result of
the reported increase in cash in 2021 and the reduction of short-term liabilities in 2021 with a view to refinancing the
matured in 2021 the bond issue with a face value of EUR 550 million.
In 2021 BEH EAD implemented a strategy of current purchase of emission allowances of the EUA type to cover the
obligations of TPP Maritza Iztok 2 EAD related to ensuring the production activity of the plant in 2021. In this way
they were optimized the costs of carbon emissions at the holding level by applying a competitive principle in their
purchase, as the costs of their purchase were correctly reflected in the price of electricity sold by the plant. As a result,
the cost of purchased allowances was reduced by minimizing the burden of brokerage commissions.
In April 2021, a contract was signed with TPP Maritza East 2 EAD for the purchase and sale of 4,280,000 tons of
European greenhouse gas emission allowances of the EUA type for greenhouse gases emitted by the buyer in the
calendar year 2020. The quotas were purchased by the holding in early 2021.
In July 2021, a framework agreement was concluded between BEH EAD and TPP Maritza East 2 EAD for the
purchase and sale of European allowances for EU GHG emissions for a period of one year. According to the clauses
of the framework agreement, BEH EAD currently purchases the requested quantities of spot allowances or through a
forward contract, as the purchased allowances from BEH EAD are transferred to the account of TPP Maritza East 2
EAD after being fully paid by the plant. For 2021, the allowances purchased and transferred to the buyer's account
amount to 6,538,807 tons.
The favorable prices on the European and Bulgarian electricity exchanges in 2021 helped the realization of the
electricity produced by the plant, as the price levels fully covered the variable and part of its fixed production costs.
This had a positive effect on the company's ability to service its obligations related to the current purchase of
greenhouse gas emission allowances on time.
The main factor that has a direct impact on the amount of revenues of BEH EAD is the financial condition of the
companies in the group, as the amount of dividend they pay in favor of BEH EAD is determined based on the reported
by the subsidiaries net financial result of their activities . In 2021 there is no change in the rate for deduction from the
profits of state-owned companies and enterprises in favor of the state. According to Order №1 of the Council of
Ministers of 28.04.2021, the dividend deduction is retained in the amount of 50% of the net profit after deductions for
the Reserve Fund.
In 2021 the reported income from dividends and participations (including income from overdue interest) reached BGN
762,748 thousand, compared to BGN 168,319 thousand in 2020. They are formed on the one hand, from the due
dividend by some of the subsidiaries companies with a positive financial result for 2020 such as NPP Kozloduy EAD,
ESO EAD, Bulgargaz EAD, Bulgartransgaz EAD and on the other hand - from the distribution of additional dividends.
In 2021, the Board of Directors of Bulgarian Energy Holding EAD has distributed an additional dividend from other
reserves to the subsidiaries NPP Kozloduy EAD and ESO EAD in the total amount of BGN 505 million. With the
expansion of the national gas transmission infrastructure, which hindered the payment of dividends in favor of the
holding, in 2021 Bulgartransgaz EAD also paid the dividend due by the company for 2019 and 2020.
Revenues from dividends and participations accrued in favor of BEH EAD in 2021 on the basis of the net financial
result reported by the subsidiaries in 2020, after deducting the contributions to the Reserve Fund amount to BGN
257,200 thousand, compared to their value of BGN 168,319 thousand in the previous reporting period an increase of
BGN 88,881 thousand was reported.
Bulgarian Energy Holding EAD
Annual Separate Activity Report
31 December 2021
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On the one hand, their change was negatively affected by the lower net financial result of NPP Kozloduy EAD reported
in 2020 (BGN 275,810 thousand) compared to 2019 (BGN 324,892 thousand), and on the other hand - the growth of
the dividend contributions from ESO EAD and Bulgargaz EAD in 2021, which after covering losses from previous
years reported a dividend amounting to a total of BGN 39,642 thousand.
The reported operating expenses (BGN 9,221 thousand) decreased by BGN 2,075 thousand compared to those
reported in 2020 (BGN 11,296 thousand). The main cost reduction was reported in consulting services, which in 2021
were reduced compared to those realized in 2020.
In 2021 in the item "Impairment " an expense was reported in the amount of BGN 527,058 thousand, while in 2020 it
was in the amount of BGN 217,709 thousand. The increase is mainly due to the accrued impairment of receivables
from Toplofikatsia Sofia EAD in view of the concluded contracts for assignments with the company in 2021 and the
delay in servicing the obligations of the district heating company under already concluded loan agreements with BEH
EAD.
In terms of administrative costs, management's efforts are focused on optimizing them by applying a selection of good
management practices and approaches aimed at effective use of available resources.
In the course of its activities, in addition to dividend income, the Company also realizes interest income on loans
granted to its subsidiaries. The reported financial revenues in 2021 amount to BGN 216,297 thousand, by BGN 71,863
thousand more than the revenues reported in 2020 (BGN 144,434 thousand). The main reason for the growth is a
result of the two additional annexes to loan agreements and an agreement for rescheduling interest with NEK EAD
agreed in July 2021, also as a result of the contract for renewal of liabilities with TPP Maritza East 2 EAD, through
which the liabilities of the plant to BEH EAD were renewed and rescheduled. The repayment plans reflect an interest
rate in line with the weighted average price of the external financing attracted on the bond issued by the holding in
2021.
In 2021 the reported financial expenses of the company amount to BGN 174,456 thousand, as the change compared
to 2020 (BGN 100,128 thousand) is an increase of BGN 74,328 thousand. The financial expenses of the company
reflect the accrued interest on the bond issues of BEH EAD, as the increase is a result of expenses related to
discounting of non-current receivables from related parties.
2.3. External debt
The attracted external financial resource of BEH EAD as of 31.12.2021 includes two bond issues issued in 2018 and
2021.
In addition to the two bond issues mentioned above, BEH EAD has repaid in full the following bond issues:
- issued in 2013 with a nominal value of EUR 500 million and an annual interest rate of 4.25%, repaid at maturity – 7
November 2018.
- issued in 2016 with a nominal value of EUR 550 million and an annual interest rate of 4.875%, repaid at maturity -
2 August 2021.
Bond issue 2018
On 28 June 2018, in conditions of highly volatile financial markets influenced by a number of negative factors on the
international political scene, BEH EAD successfully placed its third Eurobond issue worth EUR 400 million. With
significant investor interest, the Company recorded two increases in its Eurobond issue, respectively by EUR 150
million on 31 July 2018 and EUR 50 million on 12 October 2018, resulting in a total value of the issue of EUR 600
million. The parameters of the third issue of Eurobonds placed by BEH EAD are as follows:
- amount of the bond issue – EUR 600 million;
- a fixed interest rate of 3.5% per annum;
- the interest is payable once a year on 28 June, with the first payment due on 28 June 2019;
- maturity 28 June 2025;
Bulgarian Energy Holding EAD
Annual Separate Activity Report
31 December 2021
13
- ISIN code XS1839682116 of the bond issue, which is admitted to trading on the Main Securities Market of
the Irish Stock Exchange (Euronext Dublin).
The third Bond Issue of BEH EAD was entered by the Financial Supervision Commission in the Registry for Trading
on a Regulated Market and was admitted to trading on the BSE Main Market, the Bonds Segment of the Bulgarian
Stock Exchange. The issue is assigned the 04HA stock exchange code (the first character to be read as a digit).
In connection with the third bond issue, BEH EAD shall observe certain covenants as follows:
• the Issuer undertakes not to accept and to prevent (to the extent permitted by law) its subsidiaries from assuming,
directly or indirectly, financial obligations unless, after assessing the effects of the assumption of such obligations and
the proceeds thereof:
(1) no grounds exist, occur or arise for the occurrence of a default,
(2) the EBITDA Coverage Ratio, calculated as the consolidated EBITDA for the last period prior to the date of the
transactions for which the Issuer's consolidated financial statements have been prepared, divided by the financial costs
for the same period, is not less than 4.0:1.0, and
(3) the Consolidated Leverage Ratio, calculated as the Issuer's consolidated debt for the last period prior to the date
of the transactions for which consolidated financial statements have been prepared, less the carrying amount of the
Issuer's cash for the same period, divided by the consolidated EBITDA for the same period, is not more than 4.5:1.0.
• In case that NEK EAD has been declared by a Bulgarian court to be over-indebted within the meaning of Bulgarian
Commerce Act, the Issuer undertakes not to accept or allow (to the extent permitted by law) its subsidiaries to assume,
directly or indirectly, financial obligations.
Most of the proceeds from the bond issue were used to refinance the first unsecured bond issue of the Holding with a
nominal value of EUR 500 million placed in 2013. In this connection, and in order to optimize the financial costs,
along with the placement process of the third bond issue, BEH EAD conducted a procedure for redemption of bonds
of the first issue. As a result, bonds with a nominal value of EUR 16,668 thousand were redeemed, while the interest
due on them in the amount of EUR 452 thousand was paid. With the redemption of the bonds, interest costs amounting
to EUR 256 thousand were saved. On the maturity date of 7 November 2018, the remainder of the principal of the
bond placed in 2013, amounting to EUR 483,332 thousand, was repaid.
On June 27, 2019 the first interest payment was made, on June 24, 2020 - the second interest payment, and on June
25, 2021 BEH EAD made the third interest payment in the amount of EUR 21,000 thousand (41,072 thousand). BGN).
Bond issue 2021
On July 15, 2021, BEH successfully placed its fourth bond issue in the amount of EUR 600 million at an annual
interest rate of 2.45%. Given the extremely strong interest from investors, the bond was re-subscribed 2.3 times, and
the interest rate is the lowest achieved by Bulgarian Energy Holding EAD since the company participated in the
international capital markets. The parameters of the Eurobond are the following:
- amount of the bond issue EUR 600 million;
- maturity July 22, 2028;
- fixed interest rate 2.45% per annum;
- the interest is payable once a year on July 22, with the first payment due on July 22, 2022;
- ISIN code XS2367164576 of the bond issue, which is listed on the Irish Stock Exchange's main securities market
(Euronext Dublin);
- BEH EAD should comply with certain covenants:
• As long as there are obligations under issued bonds, the Issuer will not and will not allow the larger subsidiaries,
directly or indirectly, to assume financial obligations, except when the Issuer and one of the larger subsidiaries may
assume a financial obligation, if, after the assumption of such a financial obligation and the receipt and application of
the proceeds from it: (1) there is no or would not occur and does not continue or would not continue a case of default;
Bulgarian Energy Holding EAD
Annual Separate Activity Report
31 December 2021
14
(2) the EBITDA coverage ratio is not less than 4.0 to 1.0; and (3) The consolidated leverage ratio is no more than 4.5
to 1.0.
• As long as there are obligations under issued bonds, in case NEK EAD is declared by a Bulgarian court as over-
indebted within the meaning of the Bulgarian Commercial Law, the Issuer will not and will not allow (as permitted
by law) its larger subsidiaries, directly or indirectly, to incur financial obligations.
Proceeds from the bond issue were used to refinance the Holding's second bond issue with a face value of EUR 550
million, placed in 2016, at an annual interest rate of 4.875% and maturing on August 2, 2021, as well as for general
corporate purposes, with except for coal-related activities.
2.4. Financial Policy
In 2021, the financial policy of Bulgarian Energy Holding EAD to stabilize the financial position and to alleviate the
cash balances of the subsidiaries was implemented through the following actions:
• In continuation of the short-term goals for stabilizing the financial condition of TPP Maritza East 2 EAD and
pursuant to a decision of the National Assembly of 31 January 2020 to prevent long-term cessation of operation
and / or limiting the production capacity of the plant , in 2021 BEH EAD started the process of current purchase
of the necessary carbon allowances. Pursuant to a framework agreement for purchase and sale of greenhouse
gas emission allowances between the parties from 16.07.2021 during the period 19.07.-31.12.2021, BEH EAD
purchased a total of 8,237,346 tons of greenhouse gas emissions, including 6,582,964 tons for the fulfillment
of the commitment of the plant for 2021 and 1,654,382 tons for the fulfillment of the commitment for 2022, at
a total value of EUR 551,917 thousand. Competitive prices of electricity produced by TPP Maritza East 2 EAD
in 2021 allowed the plant to currently pay the greenhouse gas emission allowances provided by BEH EAD
under the framework agreement.
• In view of the lower interest expenses achieved by BEH EAD as a result of the bond issue placed in 2021, with
a decision under Protocol №41-2021 / 30.07.2021 of the Board of Directors of the holding the previously
referenced interest rate of the intragroup loans already granted by BEH EAD was reduced. As a result of the
decision, new contracts and agreements were concluded with some of the subsidiaries under loan agreements,
as follows:
- Agreement of 6 December 2021 for consolidation and renewal of liabilities of TPP Maritza East 2 EAD to
BEH EAD, arising from two loan agreements and a contract for purchase and sale of allowances for greenhouse gas
emissions in a new loan agreement in the amount of BGN 1,048,161 thousand, with a repayment period of July 31,
2028 and a grace period on the principal for the first year
- Supplementary agreement №1 of 8 February 2022 to the loan agreement between BEH EAD and NEK EAD
of 2014 for consolidation of old liabilities of NEK EAD to the holding. In view of the payments made by NEK EAD
for the period 17.09-05.10.2021 in the total amount of BGN 200 million, the additional agreement rescheduled the
remaining loan obligation in the amount of BGN 773,778 thousand with a repayment period of July 28 2031
- Supplementary agreement №2 of February 8, 2022 to the contract for granting a targeted loan between BEH
EAD and NEK EAD, signed in 2016 for repayment of overdue amounts due from NEK EAD to AES 3C Maritsa East
1 EOOD and ContourGlobal Maritsa East 3 AD. The additional agreement rescheduled the remaining principal in the
amount of BGN 1,047,684 thousand with a maturity of July 28, 2028.
The overdue interest under the above-mentioned additional agreements between BEH EAD and NEK EAD in the total
amount of BGN 550,720 thousand as of July 28, 2021 are consolidated in a rescheduling agreement between the
parties dated February 8, 2021, with a maturity date of July 28, 2031.
o In order to protect the public interest and energy security of the country, in conditions of progressive increase
of liabilities of Toplofikacia Sofia EAD to Bulgargaz EAD, in order to ensure continuous and quality supply of natural
gas to customers in the country, BEH EAD entered into an assignment agreement with Bulgargaz EAD on October
Bulgarian Energy Holding EAD
Annual Separate Activity Report
31 December 2021
15
28, 2021, through which receivables of Bulgargaz EAD were transferred from Toplofikacia Sofia EAD in connection
with unpaid natural gas supplies during the period June 2021 - October 2021 at a nominal value as of October 27,
2021 of BGN 121,119,978.28.
o Given the deteriorated liquidity position of Bulgargaz EAD, the urgent deadlines for payment of the
company's supplies to its counterparties and the outstanding liabilities of Toplofikacia Sofia EAD for natural gas
supplied in November 2021, on November 18, 2021 it was another contract for cession was concluded between BEH
EAD and Bulgargaz EAD with a nominal value of receivables as of November 18, 2021 in the amount of BGN
85,206,702.83.
As of December 31, 2021 the receivables of BEH EAD on loans to related parties amount to BGN 2,368,423 thousand,
of which the non-current ones are BGN 2,279,532 thousand and current ones amount to BGN 88,891 thousand.
2.5. Information on transactions with related parties
In 2021 and 2020, the following business transactions were carried out between BEH EAD and its subsidiaries:
In thousand BGN
31 December 2021
31 December 2020
Purchases
206,617
299,116
Sales
1,168,452
909,815
Trade receivables
47,167
16,540
Trade payables
68,564
3,296
2.6. Commitments, contingent liabilities and other significant events
In the normal course of business for the Company, litigation and claims arise. According to the Company's
management, the costs necessary to resolve these disputes and claims will not have a material effect on the financial
position and cash flows in future financial periods.
Loan from the European Investment Bank
In October 2019, Bulgarian Energy Holding EAD and the European Investment Bank signed a Financing Agreement
for the construction of the IGB gas pipeline worth EUR 109.9 million secured by a state financial guarantee from the
Republic of Bulgaria, the Guarantee Agreement ratified by the National Assembly. The loan is provided to Bulgarian
Energy Holding EAD as a shareholder in ICGB AD. For its part, BEH EAD transfers the loan financing of the project
company through a Shareholder Loan Agreement in the same amount, under the same financial conditions set in the
agreement with the European Investment Bank and without additional margin for Bulgarian Energy Holding EAD.
The repayment of the loan from the European Investment Bank will be carried out using a grace period for repayment
of the principal of the disbursed tranches, which according to the Agreement concluded with the bank may last up to
7 years from the date of disbursement of the tranche.
On 17 August 2020, the first tranche of EUR 30 million was disbursed under the following conditions: payment of
interest every six months at an annual interest rate of 0.259%, five-year grace period for principal payments, payment
of principal twice per annum, the last installment being due on 17 August 2045.
On 18 January 2021, a second tranche of EUR 30 million was disbursed under the following conditions: payment of
interest every six months at an annual interest rate of 0.237%, five-year grace period for principal payments, payment
of principal twice per annum, the last installment being due on 18 January 2046.
On 1 December 2021, a third tranche of EUR 30 million was disbursed under the following conditions: payment of
interest every six months at an annual interest rate of 0.612%, five-year grace period for principal payments, payment
of principal twice per annum, the last installment being due on 1 December 2046.
Proceedings by the European Commission against Bulgarian Energy Holding EAD
Bulgarian Energy Holding EAD
Annual Separate Activity Report
31 December 2021
16
Two proceedings against Bulgarian Energy Holding EAD and its subsidiaries were instituted by the European
Commission, for possible abuse of a dominant position – Case АТ.39767 – BEH Electricity, and Case АТ.39849 –
BEH Gas.
Case COMP/B1/АТ.39767 BEH Electricity
The case concerns an alleged infringement of Art. 102 of the TFEU in connection with the inclusion of territorial
restrictions in the supply contracts concluded by subsidiaries of Bulgarian Energy Holding EAD – Natsionalna
Elektricheska Kompania EAD, NPP Kozloduy EAD and TPP Maritsa East 2 EAD, on the market for wholesale
electricity in Bulgaria, between September 2008 and March 2013.
The proceedings were initiated in 2012 with a view to the adoption of a decision under Chapter 3 (Articles 7 to 10) of
Council Regulation 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in
Articles 81 and 82 of the EC Treaty (Articles 101 and 102 TFEU).
By Decision C (2015) 8860 of 10 December 2015 on Case AT.39767 BEH-Electricity, the EC established as legally
binding the Commitments proposed by Bulgarian Energy Holding EAD, Natsionalna Elektricheska Kompania EAD,
TPP Maritsa East 2 EAD, NPP Kozloduy EAD and Independent Bulgarian Energy Exchange EAD for a period of
five years from the start date of Day-ahead market operations and terminated the proceedings.
By decision of the European Commission C (2016) 2246 dated 12 April 2016 a Monitoring Trustee – ADVOLIS was
approved, which controls the current management of Independent Bulgarian Energy Exchange EAD and the operation
of the “day ahead” market under the terms and conditions related to the EC Decision. On 22 April 2016, a Mandate
for the Monitoring Trustee was concluded between Bulgarian Energy Holding EAD and ADVOLIS in compliance
with the commitments under Case АТ.39767 BEH-Electricity for a period of 5 years from the date of commissioning
of the Day-ahead platform (19 January 2016).
Pursuant to the commitments, Bulgarian Energy Holding EAD undertakes to separate Independent Bulgarian Energy
Exchange EAD from its structure and to transfer the ownership of the capital of Independent Bulgarian Energy
Exchange EAD. The deadline for the transfer of the ownership of Independent Bulgarian Energy Exchange EAD was
extended by the EC until 31 January 2018.
The change of ownership of Independent Bulgarian Energy Exchange EAD was registered in the Commercial Register
on 15 February 2018.
In the period since the establishment of Independent Bulgarian Energy Exchange EAD until the transfer of its
ownership, the company became a key participant in the electricity market of the country. The important role of the
electricity exchange and its efficient operation and management have laid the foundation of the reform for
liberalization of the electricity market in the country.
The aim is to integrate “Day-ahead” on the Bulgarian power exchange market with the Price Coupling of Regions
mechanism adopted at European level.
At the end of January 2021, the Monitoring Trustee ADVOLIS submitted a final report under Case АТ.39767 BEH-
Electricity to the attention of the European Commission, which states that the Commitments under the case have been
fulfilled by BEH and its subsidiaries.
The European Commission has adopted the final report of the Monitoring Trustee without any recommendations
thereto, and has discharged ADVOLIS from its duties as a Monitoring Trustee under the case by official letter of 22
March 2021.
Case COMP/B1/АТ.39849 – BEH gas
The case concerns an alleged infringement of Article 102 TFEU in relation to alleged actions of BEH EAD and its
subsidiaries – Bulgargaz EAD and Bulgartransgaz EAD, aimed at:
• preventing their competitors from access to key gas infrastructure (gas transmission network and natural gas
storage facility) in Bulgaria, explicitly or implicitly denying access to third parties or delaying;
• preventing competitors from gaining access to a main import pipeline by reserving capacity that remains
unused.
Bulgarian Energy Holding EAD
Annual Separate Activity Report
31 December 2021
17
The proceedings were initiated in 2013 with a view to the adoption of a decision under Chapter 3 (Articles 7 to 10) of
Regulation 1/2003.
On 23 March 2015, the EC issued a Statement of Objections. Bulgarian Energy Holding EAD and its gas subsidiaries
submitted their respective responses to the European Commission on 9 July 2015 (Bulgargaz EAD), 10 July 2015
(Bulgarian Energy Holding EAD) and 17 July 2015 (Bulgartransgaz EAD).
On 24 November 2017, a decision was taken by the 44th National Assembly of the Republic of Bulgaria to take the
necessary action for the termination of Case COMP/B1/AT.39849 – BEH Gas, by which the National Assembly
supports the termination of the case under the procedure of Art. 7 of Regulation (EU) No. 1/2003 without admission
of the alleged infringements and without taking responsibility for them, fulfilling the obligations resulting from any
prohibitive decision, including any financial penalties. Currently, the European Commission has not taken an official
resolution to close the case, including regarding the possible amount of the financial sanction.
On 26 July 2018, a decision was made by the 44th National Assembly (NA) of the Republic of Bulgaria to take actions
for the completion of Case COMP/B1/AT.39849 - BEH Gas pursuant to Art. 9 of Regulation (EC) No 1/2003 by
undertaking commitments from the Bulgarian side and reaching an agreement with the European Commission. The
second decision of the NA comes as a result of the development of case COMP/B1/AT.39816 between the EC and
Gazprom, under which on 24 May 2018 the Commission announced that a settlement had been reached and that it
was terminated under Art. 9 of Regulation (EC) No. 1/2003 without any financial penalty.
On 17 December 2018, the European Commission notified the rendering of Decision C (2018) 8806 under Case
AT.39849 BEH-Gas, by which the European Commission imposed a fine on Bulgarian Energy Holding EAD (BEH),
its subsidiary for gas supply Bulgargaz EAD, and its subsidiary for gas infrastructure Bulgartransgaz EAD (“BEH
Group”) in the amount of EUR 77,068,000 for hindering access of competitors to key gas infrastructure in Bulgaria
in violation of EU antitrust rules. The decision was received in the offices of the three companies on 19.12.2018,
which set the start of the appeal period of the EC Decision (two months and ten days after notification of the Decision
to the parties), and for payment of the fine (three months after the notification of the Decision to the parties) set therein.
The appeal against the decision does not delay the payment of the fine.
On 18 March 2019, ING Bank NV issued two unsecured bank guarantees in favor of the EU with a total amount equal
to the amount of the fine of EUR 77,068,000, as follows:
- a bank guarantee in the amount of EUR 51,379 thousand, covering 2/3 of the total amount of the fine,
securing the liabilities of Bulgarian Energy Holding EAD and Bulgargaz EAD;
- a bank guarantee in the amount of EUR 25,689 thousand, securing the liability of Bulgartransgaz EAD under
the imposed sanction.
On 4 July 2019, the Bulgarian State, through the Ministry of Foreign Affairs, filed a petition to intervene in the case
in support of BEH EAD and its gas subsidiaries.
On 26 August 2019, the European Commission presented before the General Court its Defence in response to the
complaint lodged by Bulgarian Energy Holding EAD, Bulgargaz EAD and Bulgartransgaz EAD.
On 29 November 2019, Bulgarian Energy Holding EAD, Bulgargaz EAD and Bulgartransgaz EAD filed an
Opposition against the European Commission Defence.
On 20 February 2020, the Republic of Bulgaria filed through the Ministry of Foreign Affairs, within the period
specified by the General Court of the European Union, the official position of the Republic of Bulgaria on Case Т-
136/19, submitted by the Ministry of Energy and the Ministry Foreign Affairs, whereby the State intervened in support
of Bulgarian Energy Holding EAD, Bulgargaz EAD and Bulgartransgaz EAD against the European Commission,
before the General Court of the European Union. The General Court examined additional documents and requested
information in order to clarify all the circumstances attached to the case. By letter of 14 March 2022, the Court
requested the European Commission to provide non-confidential versions of the documents listed by the Court. A
response from the European Commission is expected.
It should be borne in mind that if the General Court decides to open the oral phase of the proceedings, the President
of the General Court of the EU sets the date of the hearing for the oral proceedings. As of 31.12.2021, no date has
been set for an oral hearing of the parties.
In 2018 the Company recognized a provision in connection with the case COMP / B1 / AT.39849 - BEH gas in the
amount of BGN 50,244 thousand. In 2021, the accrued provision in the case amounted to BGN 754 thousand (for
2020: BGN 756 thousand).The total value of the liability under the accrued provision as of December 31, 2021 is
BGN 52,346 thousand (as of December 31, 2020: BGN 51,592 thousand).
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Legal claims
There are no significant legal claims brought against the Company.
Lease contracts
The lease liabilities of the Company are as follows:
31 December 2021
31 December 2020
Minimum
lease
payments
Discounting
Present
value of
installments
Minimum
lease
payments
Discounting
Present
value of
installments
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
Within one year
325
(106)
219
329
(113)
216
Between one and five
years
1,164
(357)
807
1,204
(384)
820
Over five years
2,471
(342)
2,129
2,757
(421)
2,336
Total minimum lease
payments under lease
contracts
3,960
(805)
3,155
4,290
(918)
3,372
The Company has concluded the following lease contracts:
Bulgarian Energy Holding EAD concluded a contract with NPP Kozloduy EAD on 1 September 2015 for the rental
of an administrative building in Sofia, 16 Veslets Str. The contract period is 10 years, with an option for extension.
The monthly installment under the contract amounts to BGN 24 thousand, VAT excluded. To find the present value
of the lease liability, Bulgarian Energy Holding EAD has used a discount percentage of 3.50 %, which is an interest
rate derived by the Company in financing its own activities during the last year, and corresponding to the market
levels. As at 31 December 2021, the present value of the liability was BGN 3,094 thousand.
Bulgarian Energy Holding EAD has been renting 4 new multifunctional devices. The contract was signed in 2017 and
has a 60-month validity period. The rental fee is BGN 380 per month for all devices. After the contract expiry date,
the parties may negotiate conditions for acquisition of the devices by the lessee. The present value of the lease liability
is the market value of the devices at the time of conclusion of the lease contract with direct sale by the same supplier,
without funding. The calculated leasing interest rate is 1.41%. As at 31 December 2021, the present value of the
liability was BGN 1 thousand.
Bulgarian Energy Holding EAD has been renting 3 motor vehicles for a period of four years. The present value of the
lease liability is the market value of the vehicle at the time of the lease contract conclusion in a direct sale from the
same supplier, with no financing. The calculated interest rate for the leasing of two of the vehicles is 1.31%, and for
the third vehicle it is 2.27%. As at 31 December 2021, the present value of the liability was BGN 61 thousand.
Assets are used only by the Company and there are no sublease contracts.
• Amounts recognized in the profit or loss statement
- Depreciation costs amounting to BGN 268 thousand;
- Interest expenses amounting to BGN 115 thousand.
• The total leasing cash flow in 2021 was as follows:
- Payments related to lease contracts – BGN 395 thousand.
Credit rating
Moody's rating agency
On December 21, 2020, Moody’s reaffirmed the long-term credit rating of BEH EAD Ba1 with a stable outlook.
According to the rating report of 21.12.2020, the Agency considers that the credit profile of BEH reflects: (1) the
increased revenues from the liberalized electricity market; (2) a significant share of the profit from a regulated market
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in the EBITDA indicator; (3) moderate capital expenditures and low dividend payments that lead to a stable liquidity
position; (4) predominant production of electricity from low-carbon hydro and nuclear power plants. The same report
also confirmed the rating of unsecured bond issues - "Ba2".
On July 12, 2021, Moody's awarded Ba2 with a stable outlook on the long-term credit rating of an unsecured and non-
subordinated bond issue worth EUR 600 million with a 7-year maturity, issued on July 15, 2021 by Bulgarian Energy
Holding EAD.
Factors that could lead to improvement / increase of the credit rating of BEH EAD by Moody’s credit agency:
✓ The process of liberalization of the electricity market in Bulgaria to be completed and continue to be of
benefit to BEH EAD;
✓ The creditworthiness of the company and the expectations of Moody’s for support from the Government of
Bulgaria to BEH EAD to remain at least at the same level.
Factors that could lead to deterioration / downgrade of the credit rating of BEH EAD by Moody’s credit agency:
✓ Continued deterioration of the financial profile of BEH EAD below the levels set by Moody's, as a result,
but not only, of adverse changes in the operating environment, including significant delays in the
liberalization of the electricity market in Bulgaria and / or adverse regulatory changes;
✓ Downgrade of Bulgaria's credit rating or reassessment in the negative direction of the expected strong support
from the Bulgarian government.
Fitch Ratings rating agency
On February 26, 2021, Fitch Ratings reaffirmed BB's long-term foreign and local currency credit rating, raising its
outlook from stable to positive. The change is a result of the increase of the outlook of the credit rating of the Republic
of Bulgaria from stable to positive.
On May 10, 2021, the credit rating of the unsecured and non-subordinated bonds of Bulgarian Energy Holding EAD
was raised to the BB level of BB-. The change reflects the application of the updated "Criteria for restoration of the
corporate rating and the rating of financial instruments" of Fitch to the unsecured and unsubordinated rating of
"Bulgarian Energy Holding" EAD, which was placed, together with the corporate rating of the Issuer, in "Supervisory
Criteria". after the publication of the updated criteria on April 9, 2021. Another factor that favors the increase of the
credit rating is the expected reduction of the liabilities of the subsidiaries in the structure of Bulgarian Energy Holding
EAD.
On 12.07.2021 Fitch Ratings assigned “BB” to the long-term credit rating of an issue of unsecured and non-
subordinated bonds worth EUR 600 million with a 7-year maturity, issued on 15.07.2021 by Bulgarian Energy
Holding EAD. The same report also confirmed the long-term credit rating of the Company in foreign and local
currency - "BB" with a positive outlook.
Factors that, individually or collectively, could lead to an improvement / increase in the credit rating of BEH EAD by
the credit agency Fitch Ratings:
✓ Increasing the credit rating of Bulgaria;
✓ Further tangible government support for BEH EAD, including additional government guarantees that would
significantly increase the share of government-guaranteed debt, or cash injections that would link BEH's
credit profile more closely with Bulgaria's stronger credit profile;
✓ Stronger Independent Credit Profile (SPC) as a result of: sustainable reduction of the ratio of net leverage to
operating funds (FFO net leverage) below 4x, lower regulatory and political risk, higher predictability of
profits and better corporate management.
Factors that, individually or collectively, could lead to a deterioration / downgrade of the credit rating of BEH EAD
by the credit agency Fitch Ratings:
✓ Negative effect regarding the credit rating of Bulgaria;
✓ Weaker ties with the Bulgarian state;
✓ Deteriorating Independent Credit Profile (SPC) as a result of: steady increase in the ratio of net leverage to
operating assets (FFO net leverage) above 6x, escalation of regulatory and political risk or insufficient
liquidity.
Assigned rating of Environmental, Social and Governing aspects (ESG rating)
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For a public company actively involved in raising funds through the capital markets, such as BEH EAD, attracting
investor interest is associated with strict compliance with the social, management and environmental aspects of the
activities within the Holding. The ESG rating is assigned after an in-depth analysis of a company's rules and policies
related to the environmental, social and management aspects of its business; after assessing the overall impact and the
impact on the environment that the company remains in carrying out its business activities; as well as after a thorough
review of the available public information from the corporate website, articles and news about the company.
On 16 December 2021, the BEH Group was awarded an ESG rating of 34.2 points ("high risk"). The rating was
assigned by Sustainalytics, a company within Morningstar that is a world-renowned provider of ESG research, ratings
and data. The corporate ESG assessment provided to Bulgarian Energy Holding EAD is a one-time assessment valid
at the time of its award and has been prepared on the basis of the information provided by BEH EAD. The ESG risk
assessment report includes an overall ESG risk rating, an assessment of the Company's exposure and an assessment
of its management. Exposure refers to the extent to which a company is exposed to various material risks related to
environmental, social, and managerial aspects. The management assessment shows how well the company manages
these aspects. The BEH exposure assessment is 54.3 points ("medium risk") and the management assessment is 39.9
points ("average performance"),
The assessment is published on the websites of Sustainalytics and BEH EAD.
Others
The latest tax inspections of the Company were carried out by the tax administration as follows:
• Corporate tax - until December 31, 2020;
• VAT - until December 31, 2020;
• Personal income tax - until December 31, 2008;
• Social security - until December 31, 2008.
The management of the Company does not consider that there are significant risks as a result of the dynamic fiscal
and regulatory environment in Bulgaria, which would require adjustments in the financial statements for the year
ended 31 December 2021.
3. Risk factors
The main elements that pose a risk in the activity of the Company are trade and other receivables and payables, trade
and financial balances with related parties, cash and financial assets available for sale. The types of risks to which the
Company is exposed in the course of its business activity are:
Currency risk
The Company's currency risk is related to the potential negative effect of a change in foreign exchange rates on the
realization of gains or losses from revaluation of assets and liabilities denominated in foreign currencies.
BEH EAD holds EUR securities of Transgaz SA, Romania, which were purchased at the initial public offering of
securities of the Romanian company and are presented in the statement of financial position of BEH EAD as available
for sale financial assets. The Company recognizes the assets at fair value measured at quoted prices on an active
market.
The coupon payments to the bondholders of BEH EAD on the bond issues issued in 2016, in 2018 and in 2021 are
payable in euros.
Given the fact that the Republic of Bulgaria is in the conditions of the Currency Board and the BGN lev is fixed to
the European currency - the euro, the currency risk may be mainly affected by fluctuations in the US dollar. In 2021
BEH EAD has no significant transactions in currencies other than BGN and EUR.
Liquidity risk
Liquidity risk, or the risk of financing, is related both to the possibility of difficulties in obtaining funds to meet
commitments and to the inability to quickly sell a financial asset at a value close to its fair value to cover short-term
liabilities.
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In relation to liquidity risk management, the Company performs cash flow estimates and forecasts receivables and
payables and monitors its liquidity position on a daily basis in order to provide the necessary cash resources to meet
its current and non-current liabilities.
Credit risk
Credit risk includes the risk of financial loss due to non-payment of the liabilities of the debtor under a contract or а
financial instrument.
To minimize the credit risk, the Company carries out ongoing monitoring of its receivables, monitors the behavior of
its counterparties and reviews in detail the operations of its larger debtors.
The trade and financial relations of BEH EAD are mainly related to its subsidiaries. Accordingly, the credit risk for
the Company is related to the risk that any of the debtor companies will be unable to cover its liabilities and therefore
realize a financial loss. In this regard, control over the revenues, expenses and implementation of the business program
of the subsidiaries is carried out on a monthly basis.
With regard to receivables from third parties, the Company carries out ongoing monitoring of their size and their
maturity so that the Company can take timely actions to collect them.
Business risk
The business risk is determined by the specificity of the Holding's business and concerns the uncertainty associated
with generating sufficient revenue. There is no business risk for the Company's activity as a whole since the revenue
generated by the Company is mainly from loans and services provided to subsidiaries and dividends.
Cash flow risk
The cash flow risk is related to the uncertainty of cash inflows from an investment and is interrelated to currency risk.
The cash flows of the Company are subject to fluctuations in the amount of expected future cash flows associated with
a monetary financial instrument.
In order to reduce this risk, the Company regularly plans its cash flows and floating rate financial instruments have a
short-term nature with a period of less than one year. In order to achieve greater predictability of the expected cash
inflows, the majority of the loans granted to the companies are with fixed interest rates and annuity installments.
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4. Future development, investments, forthcoming significant transactions and other
information under Art. 247 of the Commerce Act
4.1. Future development of Bulgarian Energy Holding EAD
BEH EAD is one of the leading energy companies in the region, with modern management and striving to reap the
benefits of bringing together different in their essence state-owned companies in the energy sector.
Independent transmission operators
In implementation of the requirements of the European Union (EU), full compliance with the requirements of the
Third Energy Liberalization Package on the Independent Transmission Operator model has been achieved. In 2014
the restructuring of NEK EAD and ESO EAD was successfully completed. The Energy Act endorsed the separation
of the gas and electricity transmission and distribution system operators and their differentiation into operationally
independent companies. There was expansion of the controlling powers of the Energy and Water Regulatory
Commission (EWRC), which certifies the gas and electricity transmission system operators for compliance with the
independence requirements, monitors their compliance and sends the relevant notifications to the European
Commission.
In 2015 the two transmission operators of BEH EAD, respectively for electricity – ESO EAD, and for natural gas –
Bulgartransgaz EAD, were certified by EWRC as independent transmission operators. The Commission concluded
that the companies have fulfilled all the criteria and have responded to all the requirements reflected in Chapter Eight
“a” of the Energy Act of the Republic of Bulgaria, Directive 2009/72/EC of the European Parliament and of the
Council of 13 July 2009 concerning common rules for the internal market in electricity and repealing Directive
2003/54/EC, and Regulation (EC) No 714/2009 of the European Parliament and of the Council of 13 July 2009 on
conditions for access to the network for cross-border exchanges in electricity and repealing Regulation (EC) No
1228/2003, and Directive 2009/73/EC of the European Parliament and of the Council of 13 July 2009 concerning
common rules for the internal market in natural gas, Regulation (EC) No 715/2009 of the European Parliament and of
the Council of 13 July 2009 on conditions for access to the natural gas transmission networks.
The certification of the transmission companies as independent transmission operators establishes the companies as
reliable and stable partners in the integrated European energy market. This in turn helps to increase their opportunities
for applying and receiving approval for the Bulgarian project proposals for financial assistance under the Connecting
Europe Facility (CEF), as part of the Projects of common interest.
Electricity market reform
Due to their specific nature, the majority of the subsidiaries of BEH EAD perform their activities under the conditions
of a hybrid energy market, consisting of a regulated and unregulated (free) market segment. In the period 2012-2015,
the financial position of the companies of the group has been negatively affected by the imperfections of the
established regulatory framework, which determines the operating conditions of the regulated market segment,
resulting in a substantial amount of tariff deficit accumulated in the public electricity supplier NEK EAD. Since 2015,
a number of legislative and regulatory changes were undertaken to improve NEK EAD's financial position and, on
the other hand, to achieve gradual liberalization of the Bulgarian electricity market. The state constituted the Electricity
System Security Fund, whose main function is related to the accumulation of funds from the introduced 5%
contribution from the revenues of electricity producers and transmission operators, the revenues from the Public
Obligation fee and from the sales of carbon allowances. Initially, the revenues were used to cover the non-reimbursable
expenses incurred by NEK EAD in the performance of its functions as a public supplier, related to mandatory purchase
of electricity from power plants with long-term contracts for purchase of electricity, RES and HEC with preferential
prices. Subsequently, with a series of legislative changes, most of the producers with preferential prices were listed
on the electricity exchange, concluding "premium contracts" with the Electricity System Security Fund, according to
which the Fund compensates them by paying a premium which is calculated as the difference between the preferential
price of the specific producer and the estimated market price determined by EWRC for the respective price period.
Thus, NEK EAD's commitments for mandatory purchase of electricity have been steadily declining over the years.
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At the end of 2017, an amendment to the Energy Act introduced an obligation according to which, as of 1 January
2018, transactions with electricity at freely negotiated prices, concluded by electricity producers with a total installed
capacity above 5 MW, shall be carried out at the organized power exchange electricity market. Thus, steps have been
taken to (i) ensure equal treatment of market participants; (ii) increase the liquidity of the power exchange market in
the country as a prerequisite for achieving a fair market price and the development of competition towards full
liberalization of the electricity market in Bulgaria.
With amendments to the Energy Act, a number of legislative changes were introduced in 2018 to support the state's
efforts to fully liberalize the electricity market in the country, and the measures adopted relate to:
- an obligation of the electricity transmission system operator and the electricity distribution operators to buy the
electricity for technological losses on a market principle. This approach is implemented in many European countries
and provides a prerequisite for liquidity on the power exchange, while at the same time it provides incentives to
decrease losses;
- integration on the free market of the RES and HEC electricity producers, whose electricity is purchased at preferential
prices by the public supplier on the free market. These producers will sell their electricity at market prices and will
receive a premium for each megawatt-hour sold until they reach the net specific generation with indicators for HEC.
Through the introduced mechanism, plants with a total installed capacity of 4 MW and above 4 MW, producing
electricity from renewable sources and HEC, are compensated by a "premium contract", which is a premium calculated
as the difference between the preferential price of the specific producer and the forecasted EWRC market price for
the relevant price period. Parties to the "premium contract" are the specific producer and the Electricity System
Security Fund, as the institution administering the implementation of the mechanism.
- the functions for administration of the price “Public Obligations” were transferred by NEK EAD to the Electricity
Security System Fund.
With the amendments to the Energy Act which were adopted in 2019, the gradual integration of RES and HEC
electricity producers was continued, and the plants with total installed capacity of 1 MW and above 1 MW should sell
the electricity they generate to the power exchange, and the public supplier’s commitment to buy the amount of
electricity produced by them was cancelled.
In 2020, the ongoing reform in the energy sector was continued in order to introduce full liberalization of the wholesale
market and integration of the national market into the common European energy market.
The other goal of the amendments to the Energy Act of 2020 was related to the continuation of the liberalization of
the wholesale electricity market and the increase of its liquidity. With the amendments to the Energy Act of 2020, all
producers, with the exception of sites with a total installed electrical capacity of less than 500 kW, should offer the
electricity they produce at freely negotiated prices. This provided additional amounts of electricity in order to achieve
a stable and predictable market.
With the legislative changes, these producers entered the free market on July 1, 2021 through a "premium contract"
with the Electricity System Security Fund, which does not envisage the public supplier to continue to buy the energy
produced by them at preferential prices. .
An important step in the process of full liberalization is the elimination of the regulated market segment and the
introduction of household consumers on the free market. The electricity market in Bulgaria is partially liberalized,
with the regulated segment accounting for 40% of total electricity consumption. In accordance with the Third
Liberalization Package of the European Commission, Bulgaria has taken steps towards full liberalization of the
electricity market. It is envisaged that the retail market will be liberalized by 31.12.2024, and to this end it is necessary
to take steps to define energy-poor consumers and develop adequate mechanisms to support them.
With the amendments to the Amendments and Supplements to the EA, prom. SG, no. 9 of 2021 the necessary
regulatory prerequisites were created for the actual participation of RES and CHP electricity producers with sites with
a total installed electrical capacity of 500 kW to 1 MW on an organized exchange and balancing electricity market.
The amendments to the Rules for Electricity Trade (RET) (amended and supplemented, SG No. 110 of 24 December
2021) regulated clear rules and conditions for the participation of these producers in the electricity exchange. Another
Bulgarian Energy Holding EAD
Annual Separate Activity Report
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24
important change adapted to the RET was the abolition of merging standard and / or combined balancing groups
through a common financial settlement. This aims to facilitate and simplify the work of the independent transmission
operator in the administration of balancing groups, as well as to overcome the complex and often controversial
relationships within such associations. The amendments to the RET eliminate the existing in practice controversial
points and ambiguities regarding the rules for supply from a supplier of last resort, regulating the conditions and
manner of initial registration on the market at freely negotiated producer prices, as well as the transfer of balancing
group members from an existing coordinator to a new one, in the case of transformation and transfer of a commercial
enterprise to an existing coordinator.
With amendments to the Energy Act (promulgated in the State Gazette, issue 9 of 2021, in force as of 02.02.2021),
the transactions for the purchase of cold reserve to ensure the security of the electricity system were dropped. This
objective will be achieved through the conclusion of competitive bidding deals for the availability of additional
services, namely participation in primary frequency regulation, automatic secondary regulation and manual secondary
regulation of frequency and exchange capacity in accordance with the provisions of Regulation (EU) Commission
Regulation (EC) No 2017/1485 of 2 August 2017 establishing guidelines for the operation of the electricity
transmission system, to the extent specified in this Regulation. According to the cited Regulation, each transmission
system operator manages its control area with sufficient reserves to increase and decrease active power so that it can
deal with imbalances in its control area caused by supply and demand mismatches and emergencies. The legal changes
were brought in line with the Regulation, explicitly stipulating that the operator provides the necessary reserves by
concluding contracts for additional services on a market basis - after a tender. The abolition of cold reserve availability
transactions is another step towards the introduction of a capacity-providing mechanism. The changes are aimed at
settling market relations in the transition period before the full liberalization of the wholesale electricity market and
creating a predictable environment for all market participants. Full liberalization of the wholesale electricity market
and the introduction of a capacity mechanism will allow all producers to take part in a competitive procedure, which
in turn will increase the liquidity of the free electricity market.
As a result of creating the necessary conditions for the actual participation of producers of renewable energy (RE) and
High-Efficient Combined Production (HECP) with sites with a total installed capacity of 500 kW to 1 MW on the
organized electricity exchange is expected to increase its liquidity and stability. Higher traded volumes will lead to
the demand / supply of a larger number and variety of exchange products, which correspond to the greatest extent to
the portfolio of the respective trading participant, thus encouraging competition between them. By eliminating the
possibility of merging standard and / or combined balancing groups through a common financial settlement, the aim
is to optimize balancing costs. The amendments to the supply rules by a last resort supplier have clarified the
relationship between the main supplier / balancing group coordinator, the last resort supplier, the end customer and
the transmission or distribution system operator.
The change in the functioning of the electricity market and the elimination of the figure of the public provider will
lead to a complete transformation of the profile of Natsionalna Electricheska Kompania EAD and the company will
participate in the market as a producer and trader.
With the projected growth of RES capacity, the need to obtain balancing energy to cover the dynamics of their
production in the process of managing the electricity balance in the country, Natsionalna Electricheska Kompania
EAD will be increasingly important to ensure security of the electricity system, through the 31 hydroelectric power
plants operated by the company and the only PHPP in the country. In addition, the Company will be a key player in
each of the exchange trading platforms by offering attractive products at competitive prices. The technical
characteristics of the production units of TPP Maritza East 2 EAD enable the plant to offer both basic and modulated
electricity at peak hours, which is traditionally traded at a higher price, however, the main challenge for the plant
remains the high prices of carbon allowances, which limit the company's ability to actively participate in the market
due to the high cost of electricity produced.
On October 28, 2021, the Bulgarian Independent Energy Exchange (IBEX) successfully started working in the
conditions of market unification on the border with Romania as part of the single European market "Day Ahead". The
successful unification is the result of close cooperation between Bulgarian and Romanian electricity exchange
operators and electricity system operators, as well as the energy regulators of the two countries. With the inclusion of
Bulgarian Energy Holding EAD
Annual Separate Activity Report
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the Bulgarian-Romanian border, the region of Southeast Europe (SEE) is now fully integrated into the Day Ahead
market within the European Union.
The realized market integration allows the simultaneous calculation of electricity prices and cross-border flows in
Europe. Efficient use of the energy system and cross-border interconnectors as a result of greater coordination between
energy markets adds value to the benefit of all market participants. The integration of the border between the market
zones of Bulgaria and Romania into the single day market is another significant achievement in the implementation
of the European target model. Apart from the interconnector between Greece and Italy, the Day Ahead markets in
Greece and Bulgaria are already connected to the European market and to the north via the Bulgarian-Romanian
border.
The full liberalization of the market and especially the unification of the Bulgarian electricity market with the single
European market will lead to a partial convergence of prices in Bulgaria with those of neighboring countries. The
expected introduction of "green tariffs" on the production of countries outside the EU and therefore do not apply the
high environmental standards of the community will have a positive impact on the activities of companies, which will
limit the process of carbon leakage. This, in turn, implies higher revenues for producers in the country, increased
demand for electricity in the country and respectively growth in electricity sales by subsidiaries, producers of
electricity from the BEH Group.
In order to ensure the adequacy of national resources, the EU has adopted Regulation (EU) 2019/943 on the internal
market in electricity, which allows Member States to put in place a capacity- mechanism in case of concerns about
the adequacy of electricity supply which to operate on a market basis.
In the coming years, the Bulgarian electricity market is expected to face challenges arising from the new European
legislative framework, which requires a transition to a new low-carbon market model. Given the energy mix of the
country, in which coal-fired power plants have a significant share of production and provision of additional services,
taking into account enhanced decarbonisation measures and European practices, to ensure a smooth transition to the
new market model, the Capacity Mechanism needs to be introduced.
The measure is expected to help ensure the necessary level of resource adequacy, both in the medium term, by
supporting existing capacity, and in the long term, by stimulating investment in low-emission production.
Current legislation considers the Capacity Mechanisms as a temporary measure, which should be preceded by clear
commitments to address the identified market imperfections. To this end, as part of the State aid procedure, Member
States are required to adopt measures to remedy the identified irregularities by drawing up an Implementation Plan
with a timetable for the adoption of measures.
In connection with the initiated procedure for prior notification of the capacity mechanism, pursuant to Article 20 (4)
of Regulation 2019/943, the Bulgarian state through the Ministry of Energy sent an implementation plan containing a
timetable for adopting measures for market reforms in the electricity sector, as part of the process of notifying state
aid. The plan has been prepared in accordance with Article 20 (3) of Regulation 2019/943 and includes: analysis of
the electricity market in Bulgaria; identification of regulatory and market distortions; analysis of the necessary market
reforms and the Member State Implementation Plan. Following the submission to the EC of the National
Implementation Plan with a timetable for the adoption of measures, within four months, the Commission should issue
an opinion on whether the measures are sufficient to address the identified regulatory deviations or market failures.
In January 2021, the Ministry of Energy officially presented to the European Commission the Implementation Plan,
from which the formal deadline for submitting an opinion by the European Commission began to run.
With an opinion of the EC of May 20, 2021, its recommendations on the Implementation Plan of Bulgaria were
expressed. The Commission considers that the purchase of electricity by NEK is not conditioned by the market, but
instead is governed by minimum purchase obligations (in the case of long-term power purchase contracts between
NEK of MI1 and MI3), as well as by decisions of the regulatory body on regulated prices and allowances which, in
the Commission's view, distort competition in the electricity market. The Commission recognizes that the regulated
prices at which NEK purchases electricity may be so low as to lead to the elimination of free market suppliers who
purchase electricity from producers at market prices. On the other hand, the Commission has expressed as a positive
signal the in-depth reform of the Bulgarian wholesale electricity market, in which all Bulgarian electricity generation
Bulgarian Energy Holding EAD
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should be able to compete for all demand in the country at free prices. This would mean that all electricity producers
from BEH Group will be released from their quota or similar obligations to NEK when servicing the regulated market.
According to the Commission, in view of the termination of long-term power purchase contracts and the elimination
of quota purchase obligations and the role of NEK as a public provider, Bulgaria should consider the potential
consequences of such termination for the proper functioning of the market and take measures to ensure that in Bulgaria
there is a liquid forward market, a day-ahead market and an intraday market. The offering of forward products should
be done through transparent and specialized auctions organized periodically (at least four times a calendar year).
Forward products should include different maturities, including products for at least a quarter and a year ahead, for a
constant supply of both base and peak loads. Auction conditions should be non-discriminatory and ensure equal access
for all market participants. There should be no restrictions on the use of the electricity offered, including any
restrictions on resale or export. The Commission considers that it is crucial for competition to increase the balancing
period. It invites Bulgaria to take steps to include more balancing service providers, reviewing the requirements for
pre-ranking and monitoring, allowing the participation of as many technologies as possible.
The Commission invites Bulgaria to define the concept of "vulnerable customers" and to introduce concrete measures
to protect them in times of crisis as soon as possible. The country should assess the number of households in energy
poverty and set an indicative target for reducing energy poverty.
Bulgaria should amend its Implementation Plan to take the utmost account of the Commission's comments, after which
the country should publish its amended plan and inform the Commission.
Given the EU's policy of transition to a low-carbon economy and the high share of coal in Bulgaria's energy mix, this
transition will require higher levels of investment and active measures in the social sphere. In this regard, it is essential
to provide the necessary financial support and flexibility to ensure the transition at EU level. In order to achieve a fair
transition, the citizens and regions most affected by its transition will be actively involved. Providing incentives for
the active participation of these regions and society in the reforms is a guarantee of their success.
The impact on the energy system of the transition to a carbon-neutral economy will be analyzed for the potential for
replacement capacity, while ensuring the country's energy security. In this regard, the draft of Recovery and
Resiliance Plan of Bulgaria provides for the establishment of a Commission for Energy Transition with broad
stakeholder participation, which will develop scenarios for decarbonization and a roadmap to climate neutrality.
The draft of Recovery and Resilience Plan envisages the construction of a 6000 MWh storage facility, infrastructure,
funding for geophysical research in six regions for the construction of geothermal power plants, as well as investment
in the project for “Digital Transformation and Development of Information systems of ESO and real-time systems in
a low-carbon economy”.
Reform of the natural gas market
In January 2019, Bulgartransgaz EAD established its subsidiary Balkan Gas Hub EAD (BGH EAD) as the first step
in the process of implementation of the concept for the construction of a gas distribution center on the territory of
Bulgaria. Balkan Gas Hub EAD operates trading platforms for the needs of the natural gas markets within the Balkan
Gas Hub. In synergy with the physical infrastructure of the gas distribution center, the company provides the necessary
prerequisites for the construction of the first liquid physical and commercial gas hub in the Southeast Europe region,
based in Bulgaria.
Amendments to the Energy Act were adopted in 2019 aimed at creating conditions for market demonopolisation and
establishing a liquid natural gas exchange market, including measures to overcome the low current liquidity. The
changes enable natural gas traders to conclude transactions in one place, thus providing benefits to all market
participants. The introduction of electricity exchange trading is one of the first and main prerequisites for creating a
competitive environment for mining companies, traders and consumers of natural gas. Market opportunities for market
makers and liquidity providers are being created.
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Bulgargaz EAD will have the main role in this process. The Energy Act also envisages a gradual increase in the
quantities of natural gas that the public provider Bulgargaz EAD should sell on the organized electricity exchange,
which may not be less than:
1. 2,220 GWh in 2020;
2. 4,281 GWh in 2021;
3. 6,342 GWh in 2022;
4. 8,720 GWh in 2023;
5. 11,099 GWh in 2024.
These quantities are offered for sale by Bulgargaz EAD in compliance with the terms and conditions of an agreement
approved by the EWRC for the implementation of a natural gas release program concluded between the operator of
the organized natural gas exchange market (Balkan Gas Hub EAD – a subsidiary of Bulgartransgaz EAD) and the
public supplier (Bulgargaz EAD). The agreement also specifies the procedure for conducting the tenders for release,
the price mechanisms for the release, including the starting price of the tender, the duration of the agreement, the types
of products offered and the periods of their offering.
The quantities traded on the gas exchange will be available for realization as follows:
• To cover Bulgaria's domestic consumption;
• In the neighboring markets – Greece, Turkey, Romania, Macedonia and Serbia;
• By hub interconnections: via Serbia / Hungary / Austria to Central Europe; via Romania / Hungary to
Central Europe; via Romania / Moldova to Ukraine (Reverse of the Trans-Balkan gas pipeline), etc.
• Through swaps and spread products, including options and futures
An important step in the direction of achieving effective liberalization of the natural gas market in the Republic of
Bulgaria are the amendments made in 2021 in the Energy Act (promulgated in the State Gazette, issue 9 of 2021, in
force since 02.02.2021) and through the Law on Amendments to the Energy Efficiency Act (promulgated in SG, issue
21 of 2021). They introduced the concept of "closed gas distribution network", defining the obligations of the operators
of this type of network to apply prices for access and / or transmission of natural gas, not higher than the prices for
access and / or transmission through the gas distribution network. of the operator, from whose licensed territory the
territory for which a license has been issued for the activity "distribution of natural gas in a closed gas distribution
network" is excluded. In view of the possibilities for construction of a large new gas infrastructure, as well as a
significant increase in the capacity of the existing one, its reconstruction and modernization, which would allow for
the development of new sources of gas supplies in the country. EWRC for temporary exemption from its licensing
obligations in respect of such projects in the conditions of maintaining competition in the respective markets, which
are likely to be affected by the investment or to affect the effective functioning of the relevant regulated systems or
security of natural supply gas in the European Union. In line with European initiatives to achieve full carbon neutrality
in 2050, the amendments to the Energy Act introduced the concept of "green hydrogen" and the obligation of the
transmission system operator to connect facilities for the production of this type of gas from renewable sources.
The objectives of BEH EAD are focused in the following main directions and priority areas:
Financial sustainability of BEH Group and the electricity sector in the country
•
Providing funding for key activities and projects:
✓ Effective management of financial assets and instruments;
✓ Participation in the capital markets in order to attract external financing from international financial
institutions under competitive terms;
✓ Utilization of the advantages arising from the scale of the holding structure (economies of scale);
✓ Support to independent transmission operators in the process of negotiating the necessary credit resources
to finance projects of particular importance to companies, in the context of climate change mitigation and
sustainable development of the low-carbon economy
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•
Cost optimization in BEH Group:
✓ Forecasting and planning the costs of BEH Group;
✓ Transparency and predictability of costs;
✓ Increasing the efficiency of the activity;
•
Elimination of deficits in BEH Group:
✓ Current monitoring and control over the amount of the generated tariff deficit;
✓ Rendering cooperation and support to the Ministry of Energy, EWRC and the Energy Commission
in the development of normative and regulatory changes related to the reform of the sector and the
compensation of the generated tariff deficits in the system;
Ensuring the security of the energy system
Projects
•
Diversification of sources:
✓ Projects aimed at guaranteeing the supply of natural gas through new sources. The goal is independence by
providing more than one source of natural gas.
✓ Main current investment projects in this area – Gas Interconnector Greece-Bulgaria.
•
Diversification of routes:
✓ Projects aimed at eliminating the risk of a single route for natural gas imports and for optimal use of
existing gas transmission routes
✓ Implementation of the concept for development of a regional gas hub on the territory of Bulgaria
✓ Bulgaria shareholding through Bulgartransgaz EAD in the new FSRU liquefied natural gas terminal (LNG
terminal) near Alexandroupolis, Greece
✓ Reservation by Bulgargaz EAD of capacity from the liquefied natural gas terminal to the city of
Alexandroupolis, Greece.
•
Security, reliability and continuity of gas supplies
✓ Extension of Chiren Underground Gas Storage (UGS)
•
Extending the life of the capacities guaranteeing the security of the system, combined with ensuring long-
term profitability.
✓ Projects to extend the useful life of a number of key capacities for the energy system, contributing to the
security of electricity supply, the balance of the energy system and increasing the value of the services
offered.
✓ Main current projects in this direction – ensuring the long-term operation of the 5th and 6th nuclear power
units over their design resource in the next 30 years and the implementation of measures ensuring the
operation of the units at increased capacity; rehabilitation of hydropower capacities, expansion of the
production capacity and modernization of the capacities in order to guarantee the long-term and efficient
operation of the hydropower resource of our country;
✓ Diversification of fresh nuclear fuel supplies
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•
Regional and European interconnection of systems.
✓ Projects aimed at optimally connecting the Bulgarian market with the regional and European markets, thus
fulfilling one of the basic European goals – unification of the markets, on the one hand, and increasing
energy security, on the other.
✓ Main ongoing projects in this area - gas interconnectors connecting Bulgaria with neighboring countries,
which will contribute to increasing regional connectivity of the systems, such as interconnector Bulgaria-
Serbia, interconnector Bulgaria-Northern Macedonia, and the possibility of a second one in this regard
direction. Expansion and increase of the capacity of the electricity transmission network, increase of the
cross-border capacity between the countries in the region, digital transformation of the management
systems of the electricity transmission network.
•
Liberalization of the electricity market:
✓ Active participation on:
o electricity exchange market, segment Day-ahead market
o electricity exchange market, segment for bilateral contracts
o intraday market
o balancing market
✓ Implementation of projects for market mergers in the segments "Day-ahead" and "Intraday" with
neighboring countries, which will lead to increased liquidity and competition in the electricity exchange
market, limiting price volatility and automatic access to markets across Europe.
o Local project for market unification "day ahead" on the Bulgarian-Romanian border: on October 28,
2021 the successful unification was carried out as a result of close cooperation between the
Bulgarian and Romanian electricity exchange operators and electricity system operators and energy
regulators of both countries. With the inclusion of the Bulgarian-Romanian border, the region of
Southeast Europe (SEE) is now fully integrated into the Day Ahead market within the European
Union.
o Within the Intraday market unification project on the Bulgarian-Greek border, implemented within
the framework of Local Implementation Project 14 (LIP 14): the project is planned to be
implemented at the end of 2022, in parallel with the market coupling within the Slovak Intraday,
carried out in the framework of Local Project 17 (LIP 17). The joint tests of the two projects are
scheduled to start in April / May 2022.
✓ Implementation of Projects envisaged in the draft of the Recovery and Resilience Plan:
o “Digital transformation and development of information systems and real-time systems of the
Electricity System Operator in a low-carbon economy.” The aim of the project is complete
modernization of the activities for planning, management and maintenance of the electricity
transmission network of the country through the introduction of modern digital tools and methods
to ensure the necessary maneuverability, security, reliability and speed in managing the power
system in low carbon production. , as a result of the tendency to build renewable sources and
intermittent generation, increase the flexibility of operational management and monitoring of the
electricity system. The total value of the investment is 311 million euros, of which 189 million euros,
or 60%, is planned to be financed with European funds provided by the Instrument for Recovery
and Resilience.
✓ Introduction of the reforms envisaged in the draft Recovery and Resilience Plan:
o liberalization of the wholesale market - elimination of the role of public provider and elimination
of quotas for the regulated market. The long-term electricity purchase agreements for Maritza East
1 (AES) and Maritza East 3 (Contour Global) expire in 2024 and 2026, respectively, and are not
expected to be renewed.
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o reforms of the balancing market by shortening the deadlines for netting imbalances between
participants and removing price restrictions for activating balancing energy, as well as those in case
of shortage and surplus.
o liberalization of the wholesale electricity market, according to the set deadline of 30.06.2022;
o liberalization of the retail electricity market - by 31.12.2025. The criteria for identifying households
in a situation of energy poverty and vulnerable consumers should be defined in the national
legislation of the country. Another important point is the gradual transition to a liberalized market
by gradually eliminating regulated prices for household customers, in the conditions of a liberalized
wholesale electricity market in two successive stages (in 2023 and 2025) and ending the definition
of energy quotas for supply on a regulated market by EWRC.
•
Liberalization of the gas market:
✓ Development of a competitive natural gas market in the context of the European goals for building an
interconnected and single pan-European gas market by building a gas distribution center (hub) on the
territory of Bulgaria, which will contribute to:
o maintaining the role of Bulgaria as a major country providing input quantities and trade in natural
gas, as well as cross-border transmission to the region and the EU
o ensuring security of natural gas supply not only for Bulgaria, but also for Europe and the region
o development of the natural gas market in Bulgaria and the region
o providing a suitable market environment for organized trade in natural gas on a market basis
4.2. Expected investments
Currently, the investment priorities of Bulgarian Energy Holding EAD are focused on the successful implementation
of the project for construction of the Greece-Bulgaria interconnection. The project is implemented by a joint
investment company, ICGB AD, having equal shareholding of IGI Poseidon and BEH EAD. IGI Poseidon is an
investment company with equal shareholding of DEPA S.A. and Edison International Holding N.V. It is envisaged
that the joint venture will build and hold the ownership of the gas pipeline, allocate its capacity, and receive income
from the transmission of natural gas.
The total estimated value of the project from the beginning of its implementation, including the design phase, to the
completion of the construction and commissioning phase, is about EUR 240 million.
In the beginning of 2022 the procedure for certification of the company as an independent gas transmission system
operator according to the ITO (NGO) model, set in Directive 2009/73, will be launched by ICGB AD, in order to issue
decisions for certification by energy regulators in Bulgaria and Greece before the date of commercial operation. The
company is preparing a Compliance Program for approval by regulators, which will be included in the certification
procedure to confirm functional unbundling and implement measures for independent operation by shareholders.
These obligations are reflected in the Decision of the regulatory bodies EWRC and RAE from 2018 to grant an
exception under Art. 36 of Directive 2009/73. The company has received a license for transmission of natural gas
under the Energy Act on the territory of Bulgaria. Actions will be taken to conclude interconnection agreements with
IGB's neighboring operators - Bulgartransgaz EAD, the Trans-Adriatic Gas Pipeline and DESFA.
The EU grants approved for the implementation of the project are in the process of utilisation - a grant under the
European Energy Recovery Program worth EUR 45 million and a grant from OPIC 2014-2020 worth EUR 39 million.
In August 2020, EUR 30 million of the EIB loan in the form of the first tranche was disbursed. In January 2021, EUR
30 million of the loan in the form of a second tranche were disbursed. In December 2021, a third tranche worth EUR
30 million was disbursed. The remaining part of the loan is expected to be disbursed through a fourth tranche worth
EUR 19.9 million in the first half of 2022.
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Completion of construction and installation works, testing of the gas transmission system, implementation of the
procedures for obtaining the necessary permits for the use of the gas transmission infrastructure by the authorities in
Bulgaria and Greece, and commissioning are planned in the second quarter of 2022.
4.3. Upcoming significant transactions
In 2022, Bulgarian Energy Holding EAD will continue to implement the adopted policy for the current purchase of
greenhouse gas emission allowances to cover the liabilities of TPP Maritza East 2 EAD in connection with the
greenhouse gas emissions emitted by the plant. The quantities of carbon allowances that BEH EAD is in the process
of purchasing in 2022 should cover the subsidiary's liability for greenhouse gas emissions for the current year.
In connection with Resolution No. 11 of 07.02.2020 of the National Assembly in connection with the discussions on
the inquiry by MPs Tasko Ermenkov, Zhelyo Boychev, Violeta Zheleva and Atanas Kostadinov to the Minister of
Energy, Temenuzhka Petkova, on the policy of the Ministry of Energy regarding the future of coal-fired power plants
in Bulgaria and the implied obligations of the Minister of Energy to take all necessary measures to prevent long-term
cessation of the operation and/or limitation of the production capacity of coal-fired power plants from the group of
Bulgarian Energy Holding EAD, the holding will provide the necessary assistance to implement the decision of the
National Assembly of the Republic Bulgaria.
By Decree №28 of 10 March 2022 and Decision №142 / 10.03.2022 of the Council of Ministers of the Republic of
Bulgaria it was decided to adopt the relevant amendments and supplements to the Agreement approved by Decision
№1024 of the Council of Ministers of 2016 between the Minister of Energy and Natsionalna Electricheska Kompania
EAD for the provision of remunerative financial assistance for the payment of the amounts awarded in the arbitration
case ICC Case 18086 / GZ / MHM, providing for early reimbursement in full of the provided remuneration.
For this purpose, after receiving approval from the EWRC, BEH EAD will sign a loan agreement with NEK EAD in
the amount of BGN 700 million. Half of the funds will be provided by the holding and the other half will be provided
as a loan from Kozloduy NPP EAD to BEH EAD. The rest of the amount will be financed with own funds of NEK
EAD. The loan agreements between the parties will be signed after approval by the Council of Ministers of an annex
to the agreement between the Minister of Energy and the Natsionalna Electricheska Kompania EAD for the provision
of reimbursable financial assistance for the payment of the amounts awarded in ICC Arbitration Case 18086 / GZ /
MHM.
5. Events following the balance sheet date
No adjusting events or significant non-adjusting events occurred between the reporting date of the financial statements
and the date of their approval for publication, except for the following:
Moratorium on the price of electricity, water and sewerage services and heat on a regulated market
By Decision of the 47th National Assembly of the Republic of Bulgaria (Promulgated SG No. 108 of 17 December
2021, amended and supplemented, SG No. 108 of 17 December 2021, effective 17.12.2021) A moratorium was
imposed on the price of electricity, water and sewerage services and heat on a regulated market at the levels of 16
December 2021, valid until 31 March 2022.
Military conflict between Russia and Ukraine
In the early hours of February 24, 2022, Russia took military action in neighboring Ukraine. This conflict is growing
rapidly and is considered the most serious military situation in Europe since the end of World War II. Although the
Russian military may have planned the attack on Ukraine and mobilized in the year ending December 31, 2021, this
should not be considered a critical event to suggest that the conflict was obvious at the time. Given this fact, the
Company does not consider it necessary to take into account additional adjustments to the separate financial statements
as of 31.12.2021 and the current conflict is considered a non-corrective event.
Some countries have announced new packages of sanctions against the state debt of the Russian Federation and a
number of Russian banks, as well as personal sanctions against a number of individuals. At a later stage, sanctions
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were imposed on Belarus as well. As of the date of the report, individual countries and the EU have imposed four
categories of sanctions on Russia and Belarus:
• sanctions against individuals and enterprises / organizations
• restrictions on business
• diplomatic measures
• restriction of economic cooperation
Due to the growing geopolitical tensions since February 2022, there has been a significant increase in the volatility of
securities and currency markets, fluctuations in energy and gasoline prices, a significant depreciation of the ruble
against the US dollar and the euro. The international situation related to the conflict between Russia and Ukraine has
led to changes in the economic aspect and market conditions associated with rising inflation, a dynamic rise in prices
for basic raw materials.
On April 26, 2022, the Russian company Gazprom Export notified its subsidiary Bulgargaz EAD that as of April 27,
2022, it would suspend natural gas supplies to Bulgaria. At the time of preparation of these financial statements, the
supply of natural gas from Gazprom Export to Bulgaria has been suspended, but no restrictive measures are required
for consumption in Bulgaria, as the satisfaction of local consumption is ensured by supplying natural gas from
alternative sources.
Given the complex international political situation and the extraordinary events related to the development of the
military conflict in Ukraine and the disruption of natural gas supplies from Gazprom Export to Bulgaria, the
Government of Bulgaria is making the necessary efforts to protect the national interest, part of which is to ensure
security of natural gas supply needed to meet local consumption. The importance of guaranteeing the supply of natural
gas is of key importance for the state and future development of the country's economy. Therefore, a commitment has
been made at intergovernmental and pan-European level to provide the necessary amount of natural gas needed to
meet local consumption, including by concluding contracts for centralized natural gas supply at EU level.
Execution of orders of the Minister of Energy and conclusion of a credit line agreement with Bulgartransgaz EAD
By Order №Е-РД-16-113 / 24.02.2022 of the Minister of Energy on the grounds of Art. 70, para. 1, para. 2, item 1,
para. 3 and para. 4 and Art. 71 of the Energy Act, Bulgargaz EAD and Bulgartransgaz EAD imposed additional
obligations for public services in connection with the escalation of tensions on the border between the Russian
Federation and Ukraine. In connection with the need to ensure the continuity of natural gas supplies on the territory
of the Republic of Bulgaria by injecting additional quantities of natural gas in the underground gas storage Chiren,
Bulgartransgaz EAD should take all necessary actions to purchase natural gas in the amount of 10 million cubic meters
(105,500 MWh) in implementation of the Emergency Action Plan.
Order №Е-РД-16-129 / 28.02.2022 amended and supplemented the previous Order №Е-РД-16-113 / 24.02.2022, in
which additional service obligations were imposed on Bulgargaz EAD of the public, for the purchase of additional
quantities of natural gas, in the period from 28.02.2022 to 31.03.2022, in the amount of 248 000 MWh, to be pumped
into the Chiren UGS. According to the above-mentioned orders, Bulgarian Energy Holding EAD should provide the
necessary financial resources by providing funds to Bulgargaz EAD for the purchase of the above quantity.
With a protocol decision of March 9, 2022 of the Board of Directors of Bulgarian Energy Holding EAD and a protocol
decision of March 9, 2022, the Minister of Energy was granted permission to conclude a loan agreement between
Bulgarian Energy Holding EAD and Bulgartransgaz EAD in the form of a credit line, in order to fulfill the imposed
additional obligations of Bulgartransgaz EAD for public services by order №E-RD-16-168 of 17.03.2022 for
amendments and supplements to order №E - RD-16-129 of 28.02.2022 and Order №E-RD-16-113 of 24.02.2022 of
the Minister of Energy, under the following conditions:
- Limit: BGN 20,000,000 (in words: twenty million);
- Term of validity: without term;
- Interest rate: 3.23% per annum on the utilized amount, according to the interest rates for intragroup loans adopted
by the Board of Directors of BEH EAD with a decision under item I.1 of Protocol №41-2021 / 30.07.2021;
The contract will be concluded after obtaining permission from the Energy and Water Regulatory Commission, in
accordance with the requirements of the Energy Act, in connection with Ordinance №3 of 21 March 2013 on licensing
of energy activities.
Agreement for the provision of a short-term credit line by Bulgarian Energy Holding EAD to Bulgargaz EAD in the
amount of BGN 200 million
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On February 25, 2022, based on a protocol decision of February 23, 2022 of the Board of Directors of Bulgarian
Energy Holding EAD and a protocol decision of February 25, 2022 of the Minister of Energy, a loan agreement was
concluded between Bulgarian Energy Holding EAD and Bulgargaz EAD in the form of a credit line in order to ensure
the servicing of the company's commitments under the contract with Gazprom Export for the supply of natural gas to
Bulgaria, under the following conditions:
- Limit: BGN 200,000,000 (two hundred million);
- Validity period: 12 months from the date of concluding a short-term credit line agreement;
- Interest rate: 3.23% per annum on the utilized amount, according to the interest rates for intragroup loans adopted
by the Board of Directors of BEH EAD with a decision under item I.1 of Protocol №41-2021 / 30.07.2021.
Agreement for the provision of a short-term credit line by Bulgarian Energy Holding EAD to Bulgargaz EAD in the
amount of BGN 40 million
With a protocol decision of March 23, 2022 of the Board of Directors of Bulgarian Energy Holding EAD and a
protocol decision of April 5, 2022, the Minister of Energy was granted permission to conclude a loan agreement
between Bulgarian Energy Holding EAD and Bulgargaz EAD in the form of a credit line, in order to fulfill the imposed
additional obligations of Bulgargaz EAD for public service with order № Е-РД-16-168 of 17.03.2022 for amendments
and supplements to order № Е - RD-16-129 of 28.02.2022 and Order № Е-RD-16-113 of 24.02.2022 of the Minister
of Energy, under the following conditions:
- Limit: BGN 40,000,000 (forty million);
- Validity period: 12 months from the date of concluding a short-term credit line agreement;
- Interest rate: 3.23% per annum on the utilized amount, according to the interest rates for intragroup loans adopted
by the Board of Directors of BEH EAD with a decision under item I.1 of Protocol №41-2021 / 30.07.2021.
The contract will be concluded after obtaining permission from the Energy and Water Regulatory Commission, in
accordance with the requirements of the Energy Act, in connection with Ordinance №3 of 21 March 2013 on licensing
of energy activities.
Loan agreement between Kozloduy NPP EAD and Bulgarian Energy Holding EAD pursuant to Decree №28 /
10.03.2022, as amended. with Resolution №52 / 13.04.2022 and Decision №142 / 10.03.2022, as amended. with
Decision №224 / 13.04.2022 of the Council of Ministers
By an Agreement for the provision of remunerative financial assistance signed on December 5, 2016 between the
Ministry of Energy and NEK EAD, the Ministry of Energy provided NEK EAD with a grant in the amount of EUR
601,617,133 (BGN 1,176,660,837) in order to pay the amounts awarded in the arbitration case №ICC Case 18086 /
GZ / MHM with ACE. Pursuant to the terms of the Agreement, NEK EAD is obliged to reimburse the one-time
financial assistance received within the budget of the Ministry of Energy by December 6, 2023.
With Resolution №28 / 10.03.2022, amended with Resolution №52 / 13.04.2022 and Decision №142 / 10.03.2022, as
amended. with Decision №224 / 13.04.2022 of the Council of Ministers of the Republic of Bulgaria a decision was
made to adopt the relevant amendments to the Agreement between the Minister of Energy and the Natsionalna
Electricheska Kompania EAD approved by Decision № 1024 of the Council of Ministers of 2016. SAD for the
provision of financial assistance for the payment of the amounts awarded in the arbitration case ICC Case 18086 / GZ
/ MHM, providing for early repayment in full of the awarded assistance. The Annex to the Agreement between the
Minister of Energy and the Natsionalna Electricheska Kompania EAD was approved by Decision №224 / 13.04.2022
of the Council of Ministers of the Republic of Bulgaria and the remunerated financial assistance provided to NEK
EAD should be paid by April 15, 2022.
On April 14, 2022, on the basis of a protocol decision of March 21, 2022 of the Board of Directors of Bulgarian
Energy Holding EAD and a protocol decision of March 24, 2022 of the Minister of Energy, a loan agreement was
concluded (credit) between Kozloduy NPP EAD as a lender and Bulgarian Energy Holding EAD as a borrower, under
the following conditions:
- Amount of the loan - up to BGN 350,000,000.00 (three hundred and fifty million BGN);
- Market interest rate - 1.66% annual interest rate;
- Term of validity - 12 months from the date of concluding the contract;
- Grace period for principal payments - 6 months from the date of concluding the contract;
- Term for repayment of the utilized amount - 6 months after the expiration of the grace period for payments on the
principal;
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Loan agreement between Bulgarian Energy Holding EAD and Natsionalna Electricheska Kompania EAD pursuant
to Decree №28 / 10.03.2022, as amended. with Resolution №52 / 13.04.2022 and Decision №142 / 10.03.2022, as
amended with Decision №224 / 13.04.2022 of the Council of Ministers
Pursuant to Decree №28 / 10.03.2022, amended. with Resolution №52 / 13.04.2022 and Decision №142 / 10.03.2022,
as amended. with Decision №224 / 13.04.2022 of the Council of Ministers, on April 14, 2022, based on a protocol
decision of March 21, 2022 of the Board of Directors of Bulgarian Energy Holding EAD and a protocol decision of
March 24, 2022 The Minister of Energy concluded a loan agreement between BEH EAD as a lender and NEK EAD
as a borrower, under the following conditions:
- Amount of the loan - up to BGN 700,000,000.00 (seven hundred million BGN);
- Market interest rate - 2.44% annual interest rate;
- Term of validity - 33 months from the date of concluding the contract;
- Grace period for payments on the principal - 12 months from the date of concluding the contract;
- Term for repayment of the utilized amount - 21 months after the expiration of the grace period for payments on the
principal.
Change in the management of Bulgarian Energy Holding EAD
With a protocol decision of December 31, 2021 of the Minister of Energy, the number of members of the Board of
Directors was reduced from 9 to 7 members, and Valentin Alexiev Nikolov and Alexander Plamenov Tsarnorechki
were released. The change was entered in the Commercial Register and the Register of Non-Profit Legal Entities on
January 7, 2022.
By a protocol decision of March 22, 2022, Plamen Dilkov Dilkov was released by the Minister of Energy and Angel
Emilov Yankov was elected a member of the Board of Directors until a new tender procedure is conducted. The
change was entered in the Commercial Register and the Register of Non-Profit Legal Entities on March 28, 2022.
Dividend obligation to the sole owner of the capital
According to Order №5 of April 27, 2022 of the Council of Ministers, Bulgarian Energy Holding EAD has an
obligation to distribute a dividend from the profit for 2021 in the amount of BGN 190,710,764. The dividend is due
until May 15, 2022.
IVAN ANDREEV
EXECUTIVE DIRECTOR
Sofia, 29 April 2022
BULGARIAN ENERGY HOLDING EAD
CORPORATE GOVERNANCE DECLARATION
31 December 2021
Bulgarian Energy Holding EAD
Corporate Governance Declaration
31 December 2021
2
1. GENERAL PROVISIONS
This Corporate Governance Declaration was prepared in compliance with the requirements of Art. 40 para. 1 of the
Accountancy Act and according to Art. 100n, para. 8 in relation to para.7, item 1 of the Public Offering of Securities
Act (POSA).
Bulgarian Energy Holding EAD (BEH EAD, the Company) is a public interest entity under §1, item 22 of the
additional provisions of the Accountancy Act and Art. 2 of Directive 2013/34/EU of the European Parliament and of
the Council whose transferable securities are admitted to trading on a regulated market in a Member State of the
European Union.
BEH EAD is a separate legal entity under Bulgarian law, a sole-owner joint stock company acting in accordance with
the provisions of the Commerce Act, the Public Enterprises Act, the Rules on the application of the Public Enterprises
Act (the Rules) and the other legislative acts of the Republic of Bulgaria. The Sole Owner of the Capital, who has all
the rights of a shareholder under the law and the statutes, is the Bulgarian state through the Minister of Energy.
The Company is managed by a one-tier management system. The Board of Directors has management, representation
and control functions.
Regardless of the statutory requirement for the implementation of the Corporate Governance Code, the adoption of
such a standard is a result of the management's desire to continuously improve the principles and practices of corporate
governance adopted by BEH EAD. The efforts of the executive management are focused on work transparency by
presenting timely and complete information, stakeholder consideration, independence, and prevention of conflict of
interest.
The Company complies with the established principles and rules of corporate governance embedded in the current
regulations applicable to its business. The Company will continue to strictly observe these norms and principles.
The Corporate Governance Declaration is a separate report, which is published together with the activity report.
Information on the implementation of the Corporate Governance Code is also available on the Company's website
www.bgenh.com.
Bulgarian Energy Holding EAD
Corporate Governance Declaration
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2. INFORMATION PURSUANT TO ARTICLE 100n, paragraph 8, item 1 of POSA
Bulgarian Energy Holding EAD adheres, as appropriate, to the National Corporate Governance Code, as amended in
April 2016, approved by the Deputy Chairperson of the Financial Supervision Commission under Art. 100n, para. 7,
item 1 of the Public Offering of Securities Act by decision No. 461-ККУ dated 30.06.2016 and adopted by the National
Commission for Corporate Governance.
The Code is applied on a "comply or explain" principle, i.e. in case of deviation, the management clarifies the reasons
for this.
3. INFORMATION PURSUANT TO ARTICLE 100n, paragraph 8, item 2 of POSA
The number of the companies in which the members of the Board of Directors can hold managerial positions and the
number of successive mandates of the independent members of the Board of Directors is not defined in the regulatory
acts of BEH EAD. However, the Company complies with the good practices, without a formal regulatory requirement
for prevention of a high concentration of control functions in individual companies by one single person.
The remuneration of the Board of Directors shall be determined in accordance with the terms and conditions of the
Rules on the application of the Public Enterprises Act. No remuneration other than that specified in the Rules is
allowed.
BEH EAD protects the rights of the shareholders described in Chapter three of the National Corporate Governance
Code, as long as there are no restrictions on their application in relation to the presence of one shareholder - the
Bulgarian State.
BEH EAD has no validated information disclosure policy. The Company strictly complies with the requirements for
information disclosure regarding the term of disclosure and completeness of information according to the Bulgarian
legislation and the instructions of the Minister of Energy. Information on annual, semi-annual and quarterly financial
statements and activity reports is available in a timely manner on the Company's website, on the website of the
Ministry of Finance and through the web-based electronic information system for public enterprises of the Public
Enterprises and Control Agency.
The Company regularly publishes on its website important and essential information for its business activities.
BEH EAD does not have approved rules for taking into account the interests of the stakeholders but on all matters
that directly or indirectly concern them the appropriate coordination procedures are made.
Bulgarian Energy Holding EAD has issued two bond emissions that are traded on the Irish Stock Exchange and are
outstanding as of 31.12.2021. The first one was issued in 2018 and the other one in 2021. The emission issued in 2018
was admitted to trading on Bulgarian Stock Exchange as well. The communication between the bondholders and
BEH EAD is performed through an Investor Relations Director. The information required by Bulgarian law and other
important information at the discretion of the issuer is published on the website of the Company, the website of the
Irish Stock Exchange, the Bulgarian Stock Exchange and the website of Bulgarian Financial Supervision Commission.
INFORMATION PURSUANT TO ARTICLE 100n, paragraph 8, item 3 of POSA
By decision of the Board of Directors dated 28 February 2017, an Internal Audit Unit was established at BEH EAD,
which is a separate department of direct subordination to the Executive Director. The internal audit activity is carried
out in compliance with the requirements of the Internal Audit in the Public Sector Act. The Status of Internal Audit
Department is approved by the decision of the BD of BEH EAD under item I.2.1. of Record No. 68-2017/31.10.2017.
Audit engagements for assurance and consultation are carried out at BEH EAD and its subsidiaries, except for the
independent transmission operators.
The internal audit assists BEH EAD's management and employees to achieve their objectives by:
- Identifying and evaluating the risks in BEH EAD with a view to allocating audit resources to
maximize coverage of the audit environment;
- Assessing the adequacy and effectiveness of the financial management and control system in
relation to:
а) identification, assessment and risk management by BEH EAD's management;
b) compliance with legislation, internal acts and contracts;
c) reliability and comprehensiveness of financial and operational information;
Bulgarian Energy Holding EAD
Corporate Governance Declaration
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d) the effectiveness, efficiency and cost-effectiveness of the activities;
e) safeguarding of assets and information;
f) performing tasks and achieving goals.
- Providing recommendations for improvement of BEH EAD's activities.
On 2 April 2014, the Financial Management and Control System of BEH EAD was approved and entered into force
on 14 April 2014.
The purpose of the system is to provide reasonable assurance that the objectives of the holding are achieved through:
− compliance with the legislation, the internal acts of the holding and the contracts concluded;
− reliability and comprehensiveness of financial and operational information;
− economy, efficiency and effectiveness of the activities;
− safeguarding of assets and information.
The control environment includes:
− personal integrity and professional ethics of the employees of the holding;
− management philosophy and work style;
− an organizational structure ensuring separation of responsibilities, hierarchy and clear rules, rights, obligations
and reporting levels;
− human resources management policy;
− competence of staff.
The Risk Management Strategy of BEH EAD for 2019-2021 was adopted by decision under item I.2.3 of Protocol No
71-2018/04.12.2018 of the Board of Directors of BEH EAD.
With the Decision under item I.3. of Protocol №21-2022 / 06.04.2022 of the Board of Directors of BEH EAD, an
Updated Risk Management Policy has been adopted at BEH EAD in accordance with the Guidelines of the Ministry
of Finance for risk management in public sector organizations. An integral part of it are the rules and procedures for
risk management in BEH EAD.
With the Decision under item I.4. of Protocol №21-2022 / 06.04.2022 of the Board of Directors of BEH EAD, a Risk
Management Strategy was adopted at BEH EAD for the period 2022 - 2024.
The risk management policy aims to regulate the general framework of risk management processes. In general, it is a
set of measures designed to reduce the risk of errors at the stage of taking management decisions and minimizing
potential negative consequences of the decision adopted in later stages. In addition, the policy sets out the basic
principles and practices of implementing risk management processes. Risk management policy identifies, assesses
and manages risks in the Company, measures the adequacy and effectiveness of the financial management and control
systems of the holding. The risk management strategy ensures:
− Systematic and consistent implementation of a single risk management model in BEH EAD with common
terminology, rules and procedures;
− Creating the necessary prerequisites for the successful running of the risk management process;
− Raising awareness of risk management and focusing on the key risk areas in conducting management functions;
− Stimulating the introduction and implementation of adequate and effective control mechanisms;
− Focusing the attention of the managers of the Holding and the subsidiaries on the potential events, which may
adversely affect the achievement of the strategic and operational objectives, the measures to mitigate their
negative impact and the probability of their occurrence;
− Providing the information on potential events, possible ways to mitigate their negative impact and probability
of occurrence;
− Identification of the risks that may affect the legitimate, effective, efficient and cost-effective operation of the
Holding and its subsidiaries;
− Optimal use of the resources needed to carry out the activity of the Holding;
− Protection of the institutional image and reputation of BEH EAD.
Control activities include written policies and procedures designed to provide reasonable assurance that risks are
limited to the acceptable limits set in the risk management process. Control activities include:
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Corporate Governance Declaration
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5
− authorization and approval procedures;
− segregation of responsibilities in a way that prevents an employee from being simultaneously responsible for
approval, execution, accounting and control;
− a double signature system that does not allow for a financial commitment or payment to be made without the
signatures of the Executive Director and the person responsible for accounting entries;
− rules on access to assets and information;
− procedures for the complete, correct, accurate and timely booking of all transactions;
− reporting and verification of activities - assessment of the efficiency and effectiveness of operations;
− monitoring procedures;
− human resources management rules;
− rules for the documentation of all operations and transactions related to the holding's activity;
− rules for compliance with personal integrity and professional ethics;
− the financial controller performs preliminary control over the legality before undertaking an obligation and
incurring expenses in BEH EAD.
4. INFORMATION PURSUANT TO ARTICLE 100n, paragraph 8, item 4 of POSA
4.1. Information under Art. 10, paragraph 1 (c) of Directive 2004/25/EC of the European Parliament and
of the Council of 21 April 2004
Bulgarian Energy Holding EAD is the owner of an economically related group, which includes the following direct
subsidiaries and joint ventures as at 31 December 2021:
31 December 2021
Country of
incorporation
Share
Value of investments
thousand BGN
Subsidiaries
Bulgartransgaz EAD
Bulgaria
100%
734,569
Bulgargaz EAD
Bulgaria
100%
325,391
NEK EAD
Bulgaria
100%
1,051,427
NPP Kozloduy EAD
Bulgaria
100%
101,716
TPP Maritsa East 2 EAD
Bulgaria
100%
673,916
Mini Maritsa Iztok EAD
Bulgaria
100%
65,000
ESO EAD
Bulgaria
100%
61,103
3,013,122
Joint ventures
ICGB AD
Bulgaria
50%
57,991
South Streаm Bulgaria AD
34,372
Impairment
(23,889)
South Streаm Bulgaria AD, net
Bulgaria
50%
10,483
68,474
Affiliated company
ZAD Energy
Bulgaria
0.32%
21
21
3,081,617
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Corporate Governance Declaration
31 December 2021
6
4.2. Information under Art. 10, paragraph 1 (d) of Directive 2004/25/EC of the European Parliament and
of the Council of 21 April 2004
BEH EAD has no issued securities with special rights of control.
4.3. Information under Art. 10, paragraph 1 (f) of Directive 2004/25/EC of the European Parliament and
of the Council of 21 April 2004
There are no restrictions on voting rights.
4.4. Information under Art. 10, paragraph 1 (h) of Directive 2004/25/EC of the European Parliament and
of the Council of 21 April 2004
The rules that regulate the appointment and replacement of board members are described in item 5.
The Sole Owner of the Capital amends and supplements the Company’s Statute.
4.5. Information under Art. 10, paragraph 1 (i) of Directive 2004/25/EC of the European Parliament and
of the Council of 21 April 2004
The powers of the members of the Board of Directors are described in item 5.
5. INFORMATION PURSUANT TO ARTICLE 100n, paragraph 8, item 5 of POSA
The management bodies of BEH EAD are:
- Sole Owner of the Capital;
- Board of Directors.
The Company has an Audit Committee appointed under Art. 107 of the Independent Financial Audit Act.
5.1. Sole Owner of the Capital
5.1.1. Status
The sole owner of the Company's capital is the Republic of Bulgaria. The rights of the State as the Sole Owner of the
Capital in the Company are exercised by the Minister of Energy who is the principal of the Company and is the body
empowered to take all decisions within the competency of the Sole Owner of the Capital under the law or the statutes.
5.1.2. Competence
(1) The Sole Owner of the Capital has all the rights of a shareholder of the Company in accordance with the law
and the statutes. The Sole Owner of the Capital has the power to decide on all matters that the law places in the
competence of the General Meeting of Shareholders.
(2) The Sole Owner of the Capital:
- amends and supplements the Statute of the Company;
- increases and decreases the Company's capital;
- transforms and terminates the Company;
- elects and dismisses the members of the Board of Directors and determines their remuneration;
- elects and dismisses the chartered expert accountant;
- approves the annual financial statements after verification by the appointed chartered expert accountant;
- decides to issue bonds, to distribute the profit, to replenish the Reserve Fund and for payment of
dividend;
- appoints the liquidators upon termination of the Company, except in case of insolvency, and concludes
a contract with them;
- dismisses the members of the Board of Directors;
- makes decisions to open, transfer or close branches of the Company;
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Corporate Governance Declaration
31 December 2021
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- determines the amount of compensation to owners of nationalized property, which they receive in cases
under Article 18 of the Transformation and Privatization of State and Municipal Enterprises Act
(repealed) and the Compensation of Owners of Nationalized Property Act;
- approves decisions of the Board of Directors for: disposition transactions with fixed assets and for
establishment of real rights over real estate; the value of which exceeds the lower value of BGN 500
thousand or 5% of the total book value of fixed assets to December 31 of the previous year; for use or
rental of real estate or assets, the book value of which exceeds 5% of the total book value of fixed assets
as of December 31 of the previous year; for acquisition of shares and / or stocks in other companies, as
well as for disposal of shares and / or stocks - property of the Company in other companies; to obtain
loans or credit; lending; for concluding contracts for joint activity (the so-called joint venture); to
assume bill of exchange obligations; to secure the obligations of the Company by establishing a
mortgage or pledge on fixed assets of the Company; to provide collateral in favor of third parties; for
the conclusion of a court or out-of-court agreement, which recognizes the obligations of the Company
or forgives the receivables of the Company from third parties; for significant change in the activity of
the Company; for significant organizational changes, for long-term cooperation of essential importance
for the Company, as well as for the termination of such cooperation;
- approves the choice of an insurer when concluding compulsory insurance contracts;
- authorizes the conclusion of contracts for the sale, exchange and rental of fixed assets, regardless of
their book value, by direct negotiation, as the starting price is determined by an independent evaluator;
- authorizes the sale and replacement of homes, studios, offices and garages of employees of the
Company;
- approves the business program of the Company prepared by the Board of Directors;
- makes a decision on the distribution of the Company's profits and its payment and on the payment of
royalties to the members of the Board of Directors and determines their size;
- decides on other matters provided in its competence by the law and the statute.
5.1.3. Decision-making
(1) The Sole Owner of the Capital makes decisions in the competence of a regular Annual General Meeting
once a year, and in the competence of an Extraordinary General Meeting – as required. The Sole Owner
of the Capital shall not announce an invitation in the Commercial Register and the Register of Non-
profit Legal Entities for the exercise of the competence of a General Meeting. The Sole Owner of the
Capital may make decisions within the competence of a General Meeting at any time in writing.
(2) The Board of Directors fulfills its obligations under Art. 223, respectively under Art. 251 of the
Commerce Act, by sending a written application to the Sole Owner of the Capital regarding the
necessity, respectively the readiness, to make decisions by the Sole Owner of the Capital. The written
application contains suggestions on the matters on which the Board of Directors proposes to the Sole
Owner of the Capital to make decisions. Proposals do not bind the Sole Owner of the Capital to
consider and decide on the questions raised, nor limit him/her with respect to the range of matters they
can decide on.
(3) For their decisions, the Sole Owner of the Capital shall prepare a record in writing, signed by the
Principal of the Company.
(4) If the Sole Owner of the Capital wishes the members of the Board of Directors to be present during the
decision-making process, they are obliged to do so. The Sole Owner of the Capital may require the
members of the Board of Directors present or other persons invited by them to re-sign the record
containing the decisions taken.
(5) The application for registration of the decisions of the Sole owner of the capital, when these decisions
are subject to registration shall be assigned to the Executive Director, who in such case has the right to
solely represent the Company or to authorize a person.
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Corporate Governance Declaration
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5.2. Board of Directors
5.2.1. Composition
As of 31.12.2021 the Company was managed by a Board of Directors consisting of:
Vesselina Lachezarova Kanatova-Buchkova
Plamen Dilkov Dilkov
Ivan Todorov Andreev
Zheko Mihailov Zhekov
Anton Georgiev Simeonov
Stelian Penchev Koev
Diyan Stanimirov Dimitrov
Valentin Aleksiev Nikolov
Alexander Plamenov Tsarnorechki
Veselina Lachezarova Kanatova-Buchkova was elected Chairman of the Board of Directors, and Ivan Todorov
Andreev was elected Representative of the Company, who was appointed Executive Director at a meeting of the Board
of Directors.
As of the date of issuance of the Corporate Governance Declaration, the current Board of Directors of the company,
appointed by the relevant protocol decisions of the Minister of Energy, is as follows:
By protocol decision №E-RD-21-15 / 19.04.2021 of the Minister of Energy are appointed:
Ivan Todorov Andreev
Stelian Penchev Koev
Diyan Stanimirov Dimitrov
The term of office of the Board of Directors is until May 31, 2026.
By Protocol Decision №Е-RD-21-36 / 05.11.2021 of the Minister of Energy are appointed:
Zheko Mihailov Zhekov
Vesselina Lachezarova Kanatova-Buchkova
Anton Georgiev Simeonov
The term for which the members of the Board of Directors are appointed is until a new competition procedure is held.
By Protocol Decision №Е-RD-21-9 / 22.03.2022 of the Minister of Energy was appointed:
Angel Emilov Yankov with a deadline until a new tender procedure.
Vesselina Lachezarova Kanatova-Buchkova was elected Chairman of the Board of Directors, and Ivan Todorov
Andreev was elected Representative of the Company, who was appointed Executive Director at a meeting of the Board
of Directors.
5.2.2. Status
(1) The Board of Directors reports to the Sole Owner of the Capital for the management of the Company.
The Board of Directors holds meetings as necessary but not less than once every three months.
(2) The Board of Directors shall consist of at least five members - natural persons, who shall be elected
and appointed after holding a competition, under conditions and by the order, regulated in the Regulations
for application of the Public Enterprises Act.
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Corporate Governance Declaration
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(3) The Board of Directors shall elect one or two of its members as executive members, and the others
shall be non-executive members. The term of the Board of Directors is for a period of 3 years from the
registration of the Board of Directors in the Commercial Register and the Register of Non-profit Legal
Entities, where the Board of Directors continues to exercise its jurisdiction until the registration of a new
Board of Directors even after the expiry of its term.
(4) A member of the Board of Directors cannot be any individual who:
- on their own behalf or on the behalf of a third party performs commercial transactions similar to those
of the Company;
- is a partner in an unlimited partnership, limited partnership or limited liability company when it carries
out activities similar to those of the Company;
- has been a member of a management or supervisory body of a company discontinued due to bankruptcy
in the last two years preceding the date of the bankruptcy where there are unsatisfied creditors;
- is a spouse or relative up to third degree in a straight or collateral line, including by marriage, of another
member of the Board of Directors;
- has been convicted of a criminal offense of a general nature, including being deprived of the right to
hold a substantive reporting function by a sentence or administrative penalty;
- is a manager or a member of an executive or control body of another public enterprise;
- holds a senior public office position under Article 6, paragraph 1, items 1 - 38 and 41 - 45 of the Anti-
Corruption and Confiscation of Illegally Acquired Property Act, is a member of a political cabinet and
secretary of a municipality;
- owes public receivables to the state or municipality;
- has no university degree or fails to meet other requirements provided by law.
(5) The Company may have one or two procurators; eligible persons for this position shall be those who
meet the aforesaid requirements. The procurators are appointed and authorized by the Sole owner of the
company's capital.
5.2.3. Functions
The Board of Directors carries out the operational management of the Company and controls the activities of the
Executive Director, including compliance with the Policies. It performs all the functions and decides on all matters
that are not within the exclusive competence of the Sole Owner of the Capital by virtue of the law or the Company
statute. The Board of Directors adopts its Rules of Procedure.
5.2.4. Competence
(1) The Board of Directors shall exercise all powers of the Board of Directors in accordance with the law
and the Company statute.
(2) The Board of Directors:
- organizes, manages and controls the overall activity of the Company;
- prepares a business plan of the Company for the whole term and for each year separately and ensures
its implementation;
- implements the investment policy of the Company and decides on the acquisition of property and other
real estate rights;
- resolves issues related to the movement and marketing of the Company's capital securities, bonds and
securities in civil turnover that are not within the exclusive competence of the Sole Owner of the Capital
or which are delegated to it by the Principal;
- elects one or two of its members as executive directors and authorizes him to manage and represent the
Company before third parties. In case two executive directors are elected, they represent the Company
in a manner determined by the board of directors;
- takes unanimous decisions on all transactions provided for in Art. 236, para. 2 of the Commerce Act;
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Corporate Governance Declaration
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- adopts Corporate Governance Policy, Financial and Accounting Policy, Information Technology
Policy, Human Resource Management Policy, Investment Management and Projects Policy, Public
Procurement Policy (including Policy for conducting tenders, competitions and direct contracts for the
supply of goods and delivery of works and services), policy on tenders, competitions and direct contracts
for sale, exchange and leasing of fixed assets, Risk management and internal audit policy, and other
policies that are mandatory for the Company and its subsidiaries; it is also responsible for implementing
those Policies;
- makes proposals to the principal to resolve the issues that are within the competence of the Sole Owner
of the Capital and decides on any matters provided for resolution by the Board of Directors in this
Statute.
(3) With the prior written approval of the Principal, the Board of Directors may change the Executive
Director at any time and replace him/her with another member of the Board of Directors.
5.2.5. Contracts with members of the Board of Directors, Remuneration and Expenses
(1) Each member of the Board of Directors concludes a management contract with the Sole Owner of the
Capital. The contract is concluded for a period until the end of the term of the Board of Directors and
contains the rights and obligations of the parties, the amount of remuneration and payment terms, the
liability of the parties in case of default, the grounds for termination of the contract and the type and amount
of the guarantee that members provide for their management and the amount of the penalty for early
termination of the contract not by the fault of the member of the Board of Directors.
(2) Members of the Board of Directors receive remuneration determined by the terms and conditions of the
Rules on the application of the Public Enterprises Act.
(3) The members of the Board of Directors must guarantee their management with the amount of three
monthly remunerations determined by the Sole Owner of the Capital. The guarantee is returned after
termination of the contract and after the decision of the Sole owner of the Company for discharge.
(4) In case of need for business trips, the members of the Board of Directors are seconded abroad by the
Minister of Energy according to the terms and conditions determined by him/her in compliance with current
legislation and in case of business trips in the country - by the Executive Director. The Executive Director
shall be seconded by himself on behalf of the Company. When conducting meetings of the bodies of the
Company, the expenses for holding the meeting and for seconding the members of the Board of Directors,
if the venue differs from the place of residence of a member of the Board of Directors, shall be borne by
the Company.
5.2.6. Status of the executive member of the Board of Directors
(1) The Board of Directors assigns the Executive Director/s to manage and represent the Company. The
non-executive members of the Board of Directors control the activities of the Executive Director/s.
(2) The Executive Director represents the Company independently and is entitled to carry out all actions
and transactions related to the Company's activity, as well as to prepare and sign documents on behalf of
the Company and to authorize other persons to perform standalone actions and transactions. With the
election of two Executive Directors, the Chief Executive Member of the Board of Directors represents the
Company jointly with the other executive member or any of the Procurators of the Company (if elected)
and is entitled under the terms of such joint representation to carry out all actions and transactions related
to the activity of the Company, as well as to draw up and sign documents on behalf of the Company and to
authorize other persons to perform standalone actions and transactions (they may jointly authorize one
person).
(3) The Executive Director organizes the activity of the Company in compliance with the law, the Statute,
the decisions of the Sole Owner of the Capital, the Policies and the Decisions of the Board of Directors.
He/she undertakes the operational management of the Company's activities, concludes and terminates the
labor and other contracts of the employees and the partners of the Company and is responsible for the
Company's records and archives. The Executive Director shall also resolve all other matters which are not
in the exclusive competence of the Sole Owner of the Capital or of the Board of Directors according to the
law, the Company Statute, or which assigned to it by decision of the Sole Owner of the Capital.
(4) The management contract with the Executive Director, a member of the Board of Directors, is signed
by the Chairman or, respectively, by the Deputy Chairman of the Board of Directors. The Executive
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Corporate Governance Declaration
31 December 2021
11
Director signs the contracts with other members of the Board of Directors unless the representative of the
Sole Owner of the Capital signs these contracts himself/herself.
(5) The Deputy Executive Director responsible for the IGB Project carries out, independently, without any
decision or approval of the Board of Directors, all actions and activities related to the IGB Project, such as:
1. Prepares and submits for approval/permission by the Minister of Energy all issues under Art. 20,
para. 2, item 12a of the Company’s Statute;
2. Performs all operational activities necessary for the day-to-day operation and operational
management of the IGB Project and for the preparation of the documents to be submitted for
approval/permission by the Minister of Energy;
3. May independently request expert assistance on the IGB Project from all units of the Holding;
4. Carries out communication and approves the work and expenses of all external consultants of the
Company under the IGB Project;
5. Represents the Holding before third parties and signs documents, contracts, agreements, including
commitments on behalf of the Holding on all issues of the IGB Project, upon authorization by the Executive
Director and subject to the prior approval of the Minister of Energy.
5.2.7. Company Representation
The Company is represented before third parties by the sole Executive Director independently (even if
a procurator is appointed) and in all matters related to the implementation of the IGB Project, including
the state-guaranteed Loan agreement between BEH EAD and the European Investment Bank that has
been concluded for the purposes of financing the IGB Project and the Loan Agreement between BEH
EAD and ICGB AD, which has been concluded on the basis of the Loan Agreement between BEH EAD
and the European Investment Bank, by an authorized Deputy Executive Director, at the discretion of the
Sole Owner of the Capital.
5.3. Audit Committee
5.3.1. Composition
As of 31.12.2021 the composition of the Audit Committee of BEH EAD, appointed by a decision under Protocol №E-
RD-21-18 / 28.06.2018 of the Minister of Energy is as follows:
Nadezhda Dimitrova Sandolova-Hristova – Chairperson
Vanya Doneva Georgieva – Member
Magdalena Georgieva Lateva – Member
Based on Protocol Decision №Е-RD-21-8 / 22.03.2022 of the Minister of Energy, Nadezhda Dimitrova Sandolova-
Hristova was dismissed as a member of the Audit Committee, as of the date of the Protocol Decision, and Antoaneta
Rangelova Mincheva was elected as a member of the Audit Committee with the mandate of the other members -
February 26, 2024.
5.3.2. Status
The Committee is a specialized, supervisory and advisory body. Members of the Committee are appointed by the
Minister of Energy of the Republic of Bulgaria in his/her capacity of the Sole Owner of the Capital of BEH EAD at
the proposal of BEH EAD's Board of Directors. It consists of 3 to 5 members, one of which is appointed as chairperson.
5.3.3. Remuneration
The remuneration of the members of the audit committee is determined by the Minister of Energy and is at the expense
of BEH EAD. By Protocol №Е-РД-21-7 of 26.02.2021, the Minister of Energy determines the remuneration of the
members of the Audit Committee as follows:
- to a member of the Audit Committee in the amount of 80 per cent of the monthly remuneration of a member of the
board of directors of the company.
- to the Chairman of the Audit Committee in the amount of 85 per cent of the monthly remuneration of a member of
the Board of Directors of the company.
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Corporate Governance Declaration
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With Protocol №E-RD-21-25 dated 29.08.2017, the Minister of Energy has approved the Statute of the Audit
Committee of BEH EAD.
5.3.4. Duties and powers
(1) The Audit Committee carries out its work under the requirements of the Independent Financial Audit
Act, Regulation (EU) No 537/2014 of the European Parliament and the Council of 16 April 2014 on specific
requirements regarding statutory audit of public-interest entities and repealing Decision 2005/909/EC of
the Commission (Regulation (EU) No 537/2014), Directive 2014/56 and Directive 2006/43 of the European
Parliament and of the Council and this statute.
(2) The Committee has the following powers:
- to monitor the financial reporting process and make recommendations or suggestions to ensure its
effectiveness;
- to review and, at its discretion, express an opinion on the accounting policy of the holding and its
application to financial reporting.
- to monitor the effectiveness of the adopted current controls in the monthly review of the financial
condition of BEH EAD;
- to monitor the timely and reliable provision of financial information by the subsidiaries in preparation
of the annual consolidated financial statement of BEH EAD;
- to monitor the effectiveness of the internal control system, the risk management system and the internal
audit activity with respect to financial reporting in BEH EAD;
- to review and express an opinion on the risk management strategy, the holding's risk register and the
annual report on the condition of the financial management and control system;
- to express an opinion on the status and the numbers of the internal audit unit and on the strategic and
annual plans for the internal audit activity;
- discusses and approves the Annual Report on Internal Audit Activities and, where necessary, takes note
and gives opinions on individual audit reports from audit engagements, as well as on all relevant internal
audit matters;
- to be responsible for the selection procedure of the registered auditor, except where the audited entity
has a selection board, and to recommend its appointment;
- to verify and monitor the independence of the statutory auditor and to take decisions in the cases
provided by the law, in accordance with the requirements of Chapters 6 and 7 of the Independent
Financial Audit Act, and with Art. 6 of Regulation (EU) No 537/2014, including the advisability of
providing services outside the audit under Art. 5 of the same Regulation;
- to supervise the statutory audit of annual and consolidated financial statements, including its
performance, taking into account the findings and conclusions of the Commission for Public Oversight
on Statutory Auditors regarding the application of Art. 26, para. 6 of Regulation (EU) No 537/2014;
- becomes familiar with the audit strategy and audit plan of the statutory audit and gives an opinion on
them, evaluating the arguments in favor of important decisions and making choices at the planning
stage;
- to monitor the implementation of the audit plan, making recommendations to the management of the
Holding and the auditors for elimination of any difficulties;
- reviews the draft audit reports under Art. 59 and Art. 60 of the Independent Financial Audit Act and the
identified key audit issues, the findings and the auditor's opinion, as well as forms an opinion on the
annual work of the statutory auditor, which includes: independence of the auditor; objectivity and
professional skepticism; composition of the audit team; findings from audits by the Commission for
Public Oversight on Statutory Auditors; communication and relationships with BEH EAD's
management. The annual opinion is formed on the basis of criteria adopted by the Audit Committee
and communicated in advance with the auditor;
Bulgarian Energy Holding EAD
Corporate Governance Declaration
31 December 2021
13
- to discuss the auditor's additional report (prepared pursuant to Art. 11, p. 2 of Regulation (EU) No
537/2014) and to make recommendations to the management of BEH EAD for removal of the
significant weaknesses and deficiencies identified in the report;
- For the purposes of coordinating the relations with the audit committees of the subsidiaries of the
Holding, the Committee is entitled, following the approval of the Board of Directors of BEH EAD:
- to request information from the Audit Committees of the subsidiaries in connection with the
performance of its activities and, if necessary, to inform the Board of Directors of BEH EAD
when it considers that there are facts and circumstances that are relevant for the activity of the
respective subsidiary;
- to carry out investigations within its powers in the respective subsidiaries of BEH EAD after
informing the management of BEH EAD and the management of the respective subsidiary. The
investigations may be carried out at the proposal of any member of the Committee. The decision
to conduct the investigation shall determine its term and subject, as well as the persons to conduct
it.
6. INFORMATION PURSUANT TO ARTICLE 100n, paragraph 8, item 6 of POSA
The Board of Directors is appointed by a protocol decision of the Minister of Energy after holding a competition,
under the conditions and by the order, regulated in the Regulations for application of the Law for the public
enterprises.
IVAN ANDREEV
EXECUTIVE DIRECTOR
BULGARIAN ENERGY HOLDING EAD
1
INDEPENDENT AUDITORS’ REPORT
To the sole shareholder of
Bulgarian Energy Holding EAD
16 Veslets Str., Sofia
Report on the Audit of the Separate Financial Statements
Qualified Opinion
We have audited the separate financial statements of Bulgarian Energy Holding EAD („the
Company“, „BEH EAD“), which comprise the separate statement of financial position as of 31
December 2021 and separate statement of profit or loss, separate statement of comprehensive
income, separate statement of changes in equity and separate statement of cash flows for the year
then ended, and notes to the separate financial statements, including a summary of significant
accounting policies.
In our opinion, except for the possible effect of the matters described in the “Basis for Qualified
Opinion” section of our report, the accompanying separate financial statements give a true and fair
view of the financial position of the Company as of 31 December 2021 and of its financial
performance and its cash flows for the year then ended in accordance with International Financial
Reporting Standards (IFRS), as adopted by the EU and Bulgarian legislation.
Basis for Qualified Opinion
In the separate statement of financial position as of 31 December 2021 the investments in the
subsidiaries Natsionalna Electrichecksa Kompaniya EAD (NEK EAD) and TPP Maritza Iztok 2 EAD
are presented at historical cost, with carrying values of BGN 1,051,427 thousand and BGN 673,916
thousand, respectively. BEH EAD’s receivables from these subsidiaries, consisting of trade
receivables and loans granted, net of provided advances, have carrying amount as of 31 December
2021 of BGN 1,318,007 BGN thousand from NEK EAD, and BGN 831,007 thousand from TPP
Maritza Iztok 2 EAD. As of 31 December 2021 the net exposures, including the book value of the
investment and the net receivable from NEK EAD and TPP Maritza Iztok 2 EAD, exceed the net
assets of the subsidiaries by BGN 409,023 thousand and BGN 1,136,398 thousand, respectively. In
2021 the companies improved their liquidity ratios compared to the prior year, but the repayment of
liabilities on loans received from BEH EAD is associated with uncertain future forecasts and events.
The latest test for indications of impairment of investments in these subsidiaries was performed as
of 31 December 2021. The managements of NEK EAD and TPP Maritza Iztok 2 EAD have
developed and adopted five-year business programs, which set a number of indicators, based on
assumptions related to the improvement of the financial condition of companies. As these
assumptions are directly related to circumstances and future decisions outside the remit of
management, we were not able to obtain reasonable assurance regarding the assumptions and
their possible effects on the financial condition and operations of these subsidiaries. Accordingly,
we were not able to obtain sufficient appropriate audit evidence to determine whether and to what
extent the impairment of investments in NEK EAD and TPP Maritza Iztok 2 EAD is required, and
what is the recoverable amount of the investments in these companies as of 31 December 2021, as
well as the possible effect on the financial result for the year. The auditor's opinion on the separate
financial statements of the Company for the year ended 31 December 2020 was also qualified in
respect of this matter.
We conducted our audit in accordance with International Standards on Auditing (ISA). Our
responsibilities under these standards are further described in the section "Auditor's Responsibilities
2
for the Audit of the Separate Financial Statements". We are independent of the Company 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 qualified opinion.
Emphasis of Matter
We draw attention to note 23 "Receivables from Toplofikatsia Sofia EAD" to the separate financial
statements, which discloses information about cession agreements between BEH EAD and
Bulgargaz EAD dated 11 December 2015, 1 April 2019, 23 December 2020, 28 October 2021 and
18 November 2021 for the transfer of receivables of Bulgargaz EAD from Toplofikatsia Sofia EAD to
BEH EAD with a total gross value of BGN 934,248 thousand and a net value of BGN 287,175
thousand. Given the significant amount, long-term nature of receivables and the financial condition
of the debtor there is a high credit risk related with these receivables and these are therefore
classified as stage 3 financial assets according to the impairment model applied by the Company in
connection with IFRS 9 “Financial Instruments”. Their recoverable amount is calculated based on
judgments and assumptions made by management and using the most reliable information
available as of the date of the estimates. Management is in the process of finalizing the negotiations
with the debtor regarding a repayment schedule for the amounts of the last three cession contracts.
Our opinion is not modified in respect of this matter.
We draw attention to note 37 "Events after the end of the reporting period" to the separate financial
statements, which discloses information about the occurrence of the following non-adjusting event:
the military invasion of the Russian Federation to Ukraine on 24 February 2022. Management’s
plans are to take all necessary measures to limit the potential future negative effects of the
sanctions against the Russian Federation, which may have indirect effect on all spheres of
economic activity worldwide and in Bulgaria, but it does not rule out the possibility of any future
negative impact. This, in turn, could lead to a change in the carrying amounts of the Company's
assets, which are determined in the separate financial statements by using a number of judgments
and assumptions by management and the most reliable information available at the date of
estimates. Our opinion is not modified in respect of this matter.
Key Audit Matters
Key audit issues are those issues that, in our professional judgment, were of the greatest
importance in the audit of the separate financial statements for the current period. These issues are
considered as part of our audit of the separate financial statements as a whole and the formation of
our opinion on it, and we do not provide a separate opinion on these issues.
With the exception of the issues described in the “Basis for Qualified Opinion” section of this report,
we decided that there were no other key audit issues to be communicated in our auditors’ report.
3
Other matter
The annual separate financial statements of the Company for the year ended 31 December 2020
were audited by another auditor, who issued a qualified opinion on these statements on 28 May
2021.
Information Other than the Separate Financial Statements and Auditors’ Report Thereon
Management is responsible for other information. Other information consists of the separate activity
report and the corporate governance statement prepared by management in accordance with the
Accountancy Act and the Public Offering of Securities Act, but does not include the separate
financial statements and our auditors’ report thereon.
Our opinion on the separate 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 separate
financial statements, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the 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.
As described in the "Basis for Qualified Opinion" section of this report, we are not able to obtain
sufficient appropriate audit evidence on the issues identified in this section. Accordingly, we are
unable to conclude whether the other information does not contain material misstatement in relation
to these matters.
Responsibilities of Management and Those Charged with Governance for the Separate
Financial Statements
Management is responsible for the preparation and fair presentation of these separate financial
statements in accordance with IFRS, adopted by the EU and Bulgarian law, as well as for such
internal control system as management deems necessary to ensure the preparation of separate
financial statements that do not contain material misstatements, whether due to fraud or error.
In preparing the separate financial statements, management is responsible for assessing the
Company’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 Company or to cease operations, or has no realistic alternative but to do so..
Those charged with governance are responsible for overseeing the Company’s financial reporting
process.
Auditors’ Responsibilities for the Audit of the Separate Financial Statements
Our objectives are to obtain reasonable assurance about whether the 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 financial
statements.
As part of our audit in accordance with ISAs, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also:
4
− identify and assess the risks of material misstatement of the 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 Company’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 Company’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 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 Company to cease to continue as a going concern;
− evaluate the overall presentation, structure and content of the financial statements, including
the disclosures, and whether the financial statements represent the underlying transactions
and events in a manner that achieves fair presentation.
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 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.
We are jointly liable for the performance of our joint audit and the issued joint auditors’ opinion in
accordance with the requirements of Bulgarian Independent Financial Audit Act. Upon acceptance
and performance of the joint audit engagement on which we report, we have complied with the
“Guidelines on performance of joint audit“ issued by Bulgarian Institute of Certified Public
Accountants and Bulgarian Commission for Public Oversight of Statutory Auditors.
Report on Other Legal and Regulatory Requirements
In addition to our responsibilities for reporting under ISAs, described above in section “Information
Other than the Separate Financial Statements and Auditors’ Report Thereon” regarding the
separate activity report and the corporate governance statement, we have performed the additional
procedures contained in the Guidelines of the professional organisation of certified public
accountants and registered auditors in Bulgaria - Institute of Certified Public Accountants (ICPA).
5
The procedures on the existence, form and contents of the other information have been carried out
in order to state whether the other information includes the elements and disclosures in accordance
with Chapter Seven of Bulgarian Accountancy Act and Bulgarian Public Offering of Securities Act,
(article 100n, paragraph 10 of POSA in connection with Art. 100n, paragraph 8, items 3 and 4 and
paragraph 4, item 3 of POSA).
Statement Pursuant to Article 37, Paragraph (6) of Bulgarian Accountancy Act
Based on the procedures performed, our opinion is that:
(a) the information included in the separate activity report for the year ended 31 December
2021, for which the separate financial statements have been prepared, corresponds to the
report on which we have expressed a qualified opinion in the “Report on the Audit of the
Separate Financial Statements” section above;
(b) the separate activity report has been prepared in accordance with Chapter Seven of the
Accounting Act and with Art. 100 (n), para. 7 of the Public Offering of Securities Act.
(c) The corporate governance declaration for the financial year for which the separate financial
statements have been prepared meets the requirements of Chapter Seven of the
Accounting Act and Art. 100 (n), para. 8 of the Law on Public Offering of Securities
Information.
(d) As a result of the acquired knowledge and understanding of the Company's activities and
the environment in which it operates, we have not identified any cases of material
misstatement in the separate activity report, except for the possible effect of the issues
described in the section "Other Information other than Separate Financial Statement and
the Auditors’ Report Thereon" in "Report on the Audit of the Separate Financial
Statements".
Statement Pursuant to Article 100m, Paragraph (10) of Bulgarian Public Offering of
Securities Act
Based on the procedures performed and our knowledge of the Company 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 Company 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 included in the corporate governance
statement, being a component of the annual management report.
Additional reporting concerning the audit of financial statements in connection with Article
100m, paragraph (4), subparagraph (3) of Bulgarian Public Offering of Securities Act
− Statement on Article 100m, paragraph 4, subparagraph (3), item "b" of Public Offering of
Securities Act
Related party transactions are disclosed in note 31 to the separate financial statements. Based on
the performed audit procedures on related party transactions as part of our audit of financial
statements as a whole, no facts, circumstances or other information have come to our attention that
caused us to conclude that the related party transactions are not disclosed in the accompanying
financial statements for the year ended on 31 December 2021, in all material respects, in
accordance with the requirements of IAS 24 „Related Party Disclosures“. The results of our audit
procedures on related party transactions were taken into consideration for the purposes of issuing
an auditor’s opinion on the financial statements as a whole, not for issuing a separate opinion only
on related party transactions.
6
− Statement on Article 100m, paragraph (4), subparagraph 3, item "c" of Public Offering of
Securities Act
Our responsibilities for audit of the financial statements as a whole, described in our report in
section „Responsibilities of the Auditor for the Audit of Separate Financial Statements“, include
assessment whether the financial statements present fairly the significant transactions and events.
Based on the performed audit procedures on the significant transactions, which are fundamental to
the financial statements for the year ended on 31 December 2021, no facts, circumstances or other
information have come to our attention that caused us to conclude that there are instances of unfair
presentation and disclosure in accordance with the requirements of IFRS, as adopted by the
European Union. The results of our audit procedures on the significant transactions and events of
the Company, which are material to the financial statements, were taken into consideration for the
purposes of issuing an auditor’s opinion on the separate financial statements as a whole, not for
issuing a separate opinion only on the significant transactions.
Reporting on compliance of the electronic format of the separate financial statements
included in the annual separate financial report on the activity under Art. 100n, para 4 of
Bulgarian Public Offering of Securities Act with the requirements of ESEF Regulation
In addition to our responsibilities and reporting under ISA, described above in the section "Auditors’
Responsibilities for the Audit of the Separate Financial Statements", we have followed the
procedures in accordance with the Guidelines on Issuing of Audit Opinion regarding the
Implementation of the European Single Electronic Format ( ESEF) for the financial statements of
companies whose securities are admitted to trading on a regulated market in the European Union
(EU)" of Bulgarian Institute of Chartered Accountants (ICPA) in Bulgaria". These procedures include
verifying the electronic file format and whether the human readable part of it corresponds to the
audited separate financial statements and expressing an opinion regarding the compliance of the
electronic format of the separate financial statements of Bulgarian Energy Holding EAD for the year
ending 31 December 2021, contained in the electronic file „635400E1RWKJXPSBCV07-20211231-
BG-SEP.xhtml“, 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”). Based on these requirements, the electronic format of the
separate financial statements included in the annual separate financial report on the activity under
Art. 100n, para. 4 of Bulgarian Public Offering of Securities Act, must be submitted in XHTML
format.
The management of the Company is responsible for the application of the requirements of ESEF
Regulation when preparing the electronic format of the separate financial statements in XHTML.
Our opinion is only regarding the electronic format of the separate financial statements included in
the electronic file „635400E1RWKJXPSBCV07-20211231-BG-SEP.xhtml“ and does not include the
other information contained in the annual separate financial report on the activity under art. 100n,
para. 4 of Bulgarian Public Offering of Securities Act.
Based on the performed procedures, our opinion is that the electronic format of the separate
financial statements of the Company for the year ended 31 December 2021, contained in the
attached electronic file „635400E1RWKJXPSBCV07-20211231-BG-SEP.xhtml“, on which we are
issuing a qualified audit opinion, has been prepared in all material respects in accordance with the
requirements of the ESEF Regulation.
7
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 (ЕС) № 537/2014, we report additionally the information as follows:
− Grant Thornton OOD and Zaharinova Nexia EOOD, as participants in the consortium DZZD
"AUDIT BEH" were appointed as statutory auditors of the separate financial statements of
Bulgarian Energy Holding EAD for the year ending 31 December 2021 with Decision № E-RD-
21-22 by the Minister of Energy dated 4 December 2020 for a period of three years.
− The audit of the separate financial statements of the Company for the year ended on 31
December 2021 has been performed for the first consecutive year by Grant Thornton OOD and
for the first consecutive year by Zaharinova Nexia EOOD.
− We confirm that our joint audit opinion is consistent with the additional report to the audit
committee, which was provided 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 performing the audit.
− For the period for which we were engaged as statutory auditors, we have not provided any
other services to the Company and its controlled undertakings in addition to the statutory audit,
which have not been disclosed in the separate activity report or the separate financial
statements,
29 April 2022
Grant Thornton OOD
Zaharinova Nexia EOOD
Audit firm with reg. № 032
Audit firm with reg. № 138
Silvia Dinova
Stoicho Milev
Registered auditor, responsible for the audit
Registered auditor, responsible for the audit
Mariy Apostolov, Managing Partner
Dimitrina Zaharinova, Manager
Bulgaria, Sofia, 1421
Bulgaria, Sofia, 1309
26, Cherni Vrah Blvd.
157-159 Konstantin Velichkov Blvd., fl. 1, office 3
Annual Separate Financial Statements
Bulgarian Energy Holding EAD
31 December 2021
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
1
Separate Statement of Profit or Loss
for the year ended on 31 December
Notes
2021
2020
BGN’000
BGN’000
Dividend income
5
762,748
168,319
Revenue from contracts with customers
6
1,056
1,590
Revenue
763,804
169,909
Other income
7
2,966
49
Expenses for impairment
8
(527,058)
(217,709)
Expenses for materials
9
(99)
(78)
Hired services expenses
10
(2,631)
(4,096)
Depreciation and amortisation expenses for non-financial assets
19, 20
(455)
(489)
Employee benefits expenses
12
(5,343)
(4,668)
Expenses for provisions
33
(754)
(756)
Other expenses
13
(394)
(1,698)
Profit / (loss) from operating activities
230,036
(59,536)
Financial income
14
216,297
144,434
Financial expenses
15
(174,456)
(100,128)
Profit / (loss) before taxes
271,877
(15,230)
Income tax income
16
48,951
18,237
Net profit for the year
320,828
3,007
BGN
BGN
Earnings per share
17
0.0926
0.0009
Ivan Andreev
Marieta Velikova
Executive Director
Chief Accountant
Prepared on: 29 April 2022
The separate financial statements were approved for issue via decision of the Board of Directors dated 29 April 2022.
The accompanying notes from page 8 to page 69 are an integral part of these separate financial statements.
Independent auditors’ report was issued by:
Grant Thornton OOD
Zaharinova Nexia EOOD
Audit company with reg. № 032
Audit company with reg. № 138
Mariy Apostolov
Silvia Dinova
Dimitrina Zaharinova
Stoycho Milev
Manager
Registered Auditor
Manager
Registered Auditor
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
2
Separate Statement of Comprehensive Income
for the year ended on 31 December
Notes
2021
2020
BGN’000
BGN’000
Profit for the year
320,828
3,007
Other comprehensive income:
Components not reclassified in profit or loss:
Revaluation of property, plant and equipment
19
136
-
Income tax relating to components not reclassified in profit
or loss
(14)
-
122
-
Net change in fair value of equity instruments
24
(127)
(190)
Income tax relating to components not reclassified in profit
or loss
13
19
(114)
(171)
Revaluation of liabilities under defined benefit plans
29
(33)
(28)
Income tax relating to components not reclassified in profit
or loss
3
3
(30)
(25)
Other comprehensive loss for the year, net of taxes
(22)
(196)
Total comprehensive income for the year, net of taxes
320,806
2,811
Ivan Andreev
Marieta Velikova
Executive Director
Chief Accountant
Prepared on: 29 April 2022
The separate financial statements were approved for issue via decision of the Board of Directors dated 29 April 2022.
The accompanying notes from page 8 to page 69 are an integral part of these separate financial statements.
Independent auditors’ report was issued by:
Grant Thornton OOD
Zaharinova Nexia EOOD
Audit company with reg. № 032
Audit company with reg. № 138
Mariy Apostolov
Silvia Dinova
Dimitrina Zaharinova
Stoycho Milev
Manager
Registered Auditor
Manager
Registered Auditor
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
3
Separate Statement of Financial Position
as at 31 December
Notes
31 December
2021
31 December
2020
BGN’000
BGN’000
ASSETS
Non-current assets
Investments in subsidiaries, associates and joint ventures
18
3,081,617
3,081,760
Related party loans granted
31.1
2,279,532
840,614
Trade receivables from related parties
31.2
25,880
-
Receivables from "Toplofikatsia Sofia" EAD
23
51,305
380,604
Property, plant and equipment
19
5,500
5,756
Intangible assets
20
299
306
Deferred tax assets
21
170,919
121,966
Trade and other receivables
22
1
1
5,615,053
4,431,007
Current assets
Receivables from "Toplofikatsia Sofia" EAD
23
235,870
129,834
Related party loans granted
31.1
88,891
1,423,392
Trade receivables from related parties
31.2
21,287
16,540
Trade and other receivables
22
49,769
291
Greenhouse gas emission allowances
6
22,339
-
Receivables on overpaid income tax
4,600
-
Financial assets at fair value
24
568
694
Inventories
3
2
Cash and cash equivalents
25
730,011
173,465
1,153,338
1,744,218
TOTAL ASSETS
6,768,391
6,175,225
Ivan Andreev
Marieta Velikova
Executive Director
Chief Accountant
Prepared on: 29 April 2022
The separate financial statements were approved for issue via decision of the Board of Directors dated 29 April 2022.
The accompanying notes from page 8 to page 69 are an integral part of these separate financial statements.
Independent auditors’ report was issued by:
Grant Thornton OOD
Zaharinova Nexia EOOD
Audit company with reg. № 032
Audit company with reg. № 138
Mariy Apostolov
Silvia Dinova
Dimitrina Zaharinova
Stoycho Milev
Manager
Registered Auditor
Manager
Registered Auditor
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
4
Separate Statement of Financial Position as at 31 December (continued)
Notes
31 December
2021
31 December
2020
BGN’000
BGN’000
EQUITY AND LIABILITIES
Equity
Share capital
26.1
3,462,942
3,462,942
Other reserves
26.2
380,491
380,491
Reserve from revaluation of financial assets at fair value
through other comprehensive income
26.3
188
302
Revaluation reserve of non-financial assets
26.4
770
648
Reserve from remeasurement of defined benefit plans
26.5
(296)
(266)
Retained earnings / (аccumulated loss)
248,509
(72,319)
Total equity
4,092,604
3,771,798
Non-Current liabilities
Bonds issued
27
2,340,556
1,169,530
Loans
28
176,025
58,675
Trade and other liabilities to related parties
31.2
2,914
3,094
Trade and other liabilities
30
23
62
Employee retirement benefits liabilities
29
721
669
Provisions
33
52,346
51,592
2,572,585
1,283,622
Current liabilities
Bonds issued
27
33,691
1,115,398
Loans
28
149
56
Trade and other liabilities
30
3,519
3,753
Trade liabilities to related parties
31.2
65,650
202
Employee retirement benefits liabilities
29
193
142
Income tax liabilities
-
254
103,202
1,119,805
Total liabilities
2,675,787
2,403,427
TOTAL EQUITY AND LIABILITIES
6,768,391
6,175,225
Ivan Andreev
Marieta Velikova
Executive Director
Chief Accountant
Prepared on: 29 April 2022
The separate financial statements were approved for issue via decision of the Board of Directors dated 29 April 2022.
The accompanying notes from page 8 to page 69 are an integral part of these separate financial statements.
Independent auditors’ report was issued by:
Grant Thornton OOD
Zaharinova Nexia EOOD
Audit company with reg. № 032
Audit company with reg. № 138
Mariy Apostolov
Silvia Dinova
Dimitrina Zaharinova
Stoycho Milev
Manager
Registered Auditor
Manager
Registered Auditor
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
5
Separate Statement of Changes in Equity
for the year ended on 31 December
Ivan Andreev
Marieta Velikova
Executive Director
Chief Accountant
Prepared on: 29 April 2022
The separate financial statements were approved for issue via decision of the Board of Directors dated 29 April 2022.
The accompanying notes from page 8 to page 69 are an integral part of these separate financial statements.
Independent auditors’ report was issued by:
Grant Thornton OOD
Zaharinova Nexia EOOD
Audit company with reg. № 032
Audit company with reg. № 138
Mariy Apostolov
Silvia Dinova
Dimitrina Zaharinova
Stoycho Milev
Manager
Registered Auditor
Manager
Registered Auditor
Share
capital
Other
reserves
Reserve from
revaluation of
financial assets at fair
value through other
comprehensive
income
Revaluation
reserve of
non-financial
assets
Reserve of
revaluation
of defined
benefit plans
Retained
earnings
/(accumulated
loss)
Total equity
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
Balance at 1 January 2021
3,462,942
380,491
302
648
(266)
(72,319)
3,771,798
Profit for the year
-
-
-
-
-
320,828
320,828
Other comprehensive loss
-
-
(114)
122
(30)
-
(22)
Total comprehensive
income for the year
-
-
(114)
122
(30)
320,828
320,806
Balance sheet as at 31
December 2021
3,462,942
380,491
188
770
(296)
248,509
4,092,604
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
6
Separate Statement of Changes in Equity
for the year ended on 31 December (continued)
Share
capital
Other
reserves
Reserve from
revaluation of financial
assets at fair value
through other
comprehensive income
Revaluation
reserve of
non-financial
assets
Reserve
from
remeasurem
ent of
defined
benefit plans
(Uncovered
loss)/
Retained
earnings
Total equity
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
Balance as at 1 January 2020
3,462,942
329,668
473
648
(241)
(24,503)
3,768,987
Profit for the year
-
-
-
-
-
3,007
3,007
-
-
(171)
-
(25)
-
(196)
Other comprehensive income
-
-
(171)
-
(25)
3,007
2,811
Total comprehensive income for the year
Transfer to reserves
-
50,823
-
-
-
(50,823)
-
Balance as at 31 December 2020
3,462,942
380,491
302
648
(266)
(72,319)
3,771,798
Ivan Andreev
Marieta Velikova
Executive Director
Chief Accountant
Prepared on: 29 April 2022
The separate financial statements were approved for issue via decision of the Board of Directors dated 29 April 2022.
The accompanying notes from page 8 to page 69 are an integral part of these separate financial statements.
Independent auditors’ report was issued by:
Grant Thornton OOD
Zaharinova Nexia EOOD
Audit company with reg. № 032
Audit company with reg. № 138
Mariy Apostolov
Silvia Dinova
Dimitrina Zaharinova
Stoycho Milev
Manager
Registered Auditor
Manager
Registered Auditor
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
7
Separate Statement of Cash Flows
for the year ended on 31 December
Notes
2021
2020
BGN’000
BGN’000
Cash flows from operating activities
Dividends received
727,283
168,281
Cash paid to suppliers
6
(1,242,396)
(309,403)
Cash paid to employees and social security
(5,173)
(4,435)
Proceeds from related parties, net
826,972
2,434
Purchased receivables from Toplofikatsia Sofia EAD from
related parties
(206,327)
(109,946)
Loans granted to related parties
(137,350)
(58,675)
Proceeds from loans granted to related parties
337,888
45,000
Interests received on loans granted to related parties
102,378
38,550
Proceeds from Toplofikatsia Sofia EAD
41,090
25,614
Cash proceeds from clients
-
2
Cash flows from main activity
444,365
(202,578)
Interest received on current and deposit accounts
76
113
Fees and commissions paid
(1,128)
(5)
Exchange rates loss
(28)
(17)
Income tax paid
(4,854)
(3,300)
Other taxes paid, net
(659)
(185)
Other cash inflows from operating activities
752
1,275
Net cash flows from operating activities
438,524
(204,697)
Cash flows from investing activities
Purchase of property, plant and equipment
(55)
(51)
Net cash flows from investing activities
(55)
(51)
Cash flows from financing activities
Bonds issued
27, 28
1,173,498
-
Payments on bonds
28
(1,075,707)
-
Proceeds from loans
28
117,350
58,675
Interest paid on bonds issued
27, 28
(93,513)
(93,513)
Interest paid on loans
(221)
-
Payments on issued bank guarantee
28
(1,044)
(1,029)
Lease payments to related parties
(342)
(342)
Lease payments
(53)
(52)
Net cash flows from financing activities
119,968
(36,261)
Net change in cash and cash equivalents
558,437
(241,009)
Gross amount of cash and cash equivalents on 1 January
174,006
415,015
Gross amount of cash and cash equivalents at the end of the year
732,443
174,006
Effect of expected credit losses
(2,432)
(541)
Cash and cash equivalents as at 31 December
730,011
173,465
Ivan Andreev
Marieta Velikova
Executive Director
Chief Accountant
Prepared on: 29 April 2022
The separate financial statements were approved for issue via decision of the Board of Directors dated 29 April 2022.
The accompanying notes from page 8 to page 69 are an integral part of these separate financial statements.
Independent auditors’ report was issued by:
Grant Thornton OOD
Zaharinova Nexia EOOD
Audit company with reg. № 032
Audit company with reg. № 138
Mariy Apostolov
Silvia Dinova
Dimitrina Zaharinova
Stoycho Milev
Manager
Registered Auditor
Manager
Registered Auditor
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
8
Notes to the Separate Financial Statements
1.Scope of activity
Bulgarian Energy Holding EAD is a sole-owner joint-stock company registered in Bulgaria, Unified Identification
Code 831373560. The Company is the successor to the State company Oil and Gas, founded in 1973, renamed
“Gasosnabdyavane” in December 1975. At the beginning of 1990, the Company was renamed Bulgargaz in
accordance with the Business Activity Decree. Bulgargaz was transformed into a sole-owner joint-stock company by
order of the Council of Ministers of 12 May 1993. With a transformation plan dated 27 October 2006 and the annexes
thereto, Bulgargaz EAD was transformed into Bulgargaz Holding EAD through the splitting into two sole-owner joint-
stock companies – Bulgartransgaz EAD and Bulgargaz EAD under the conditions of Article 262 (d) of the Commerce
Act. Bulgartransgaz EAD and Bulgargaz EAD are the successors of the respective parts of the property (rights and
obligations) of Bulgargaz Holding EAD. The transformation was registered in the court by decision No. 45 of 15
January 2007 of the Sofia City Court.
With protocol No. РД-21-305 dated 18.09.2008 the Minister of Economy and Energy changed the company name
from Bulgargaz Holding EAD to Bulgarian Energy Holding EAD, and increased the capital with assets at par value
of all shares of the capital of Natsionalna Elektricheska Kompania EAD, NPP Kozloduy EAD, TPP Maritsa East 2
EAD, and Mini Maritsa Iztok EAD.
The Company’s registered office and headquarters are in Sofia – 1000, Oborishte district, 16 Veslets Str.
Bulgarian Energy Holding EAD has scope of business activity as follows: acquisition, evaluation and sale of
participations in trading companies operating in the fields of production, extraction, transmission, transit, storage,
management, distribution, sale and/or purchase of natural gas, electricity, thermal power, coals, as well as any other
types of energy and raw materials for the production and participation in the management of such companies, their
financing, acquisition, evaluation, issuance and sale of bonds, acquisition, evaluation and sale of patents, concession
of licenses for use of the above companies as well as performance of own production or trade activity.
As of December 31, 2021, Bulgarian Energy Holding EAD is managed by a Board of Directors (BD), which consists
of the following members: Veselina Lachezarova Kanatova-Buchkova - Chairman of the Board of Directors, Plamen
Dilkov Dilkov - Deputy Chairman of the Board of Directors, Ivan Todorov Andreev - Executive Member, Valentin
Alexiev Nikolov - Member of the Board of Directors, Diyan Stanimirov Dimitrov - Member of the Board of Directors,
Alexander Plamenov Tsarnorechki - Member of the Board of Directors, Anton Georgiev Simeonov - Member of the
Board of Directors, Zheko Mihailov Zhekov - Member of the Board of Directors and Stelian Penchev Koev - Member
of the Board of Directors.
The sole and ultimate owner of the Company is the Bulgarian State through the Minister of Energy.
As of December 31, 2021, the average number of employees working under labour contract is 80 people (December
31, 2020: 76 people).
2.Basis for the preparation of the separate financial statements
The separate financial statements have been prepared on a historical cost basis, except for property, plant and
equipment that is presented at revalued amount, and also equity instruments, designated for fair value measurement
through other comprehensive income.
The separate financial statements are presented in Bulgarian Lev (BGN), which is the functional and presentation
currency of the Company, and all items are rounded to the nearest thousand Bulgarian Lev (BGN thousand), unless
otherwise stated.
The Company maintains its current accounting and prepares its financial statements in accordance with the
requirements of all the International Financial Reporting Standards (IFRS) which consist of: Financial Reporting
Standards, and of interpretations by the International Financial Reporting Interpretations Committee (IFRIC),
approved by the International Accounting Standards Board (IASB) and the International Accounting Standards and
the interpretations thereto of the Standing Interpretations Committee (SIC), approved by the International Accounting
Standards Board (IASB), which have been effectively in force since 1 January 2021 and have been adopted by the
European Commission.
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
9
These financial statements are the separate financial statements of Bulgarian Energy Holding EAD, where investments
in subsidiaries and jointly controlled entities are presented at acquisition price. In compliance with the requirements
of IFRS 10 Consolidated Financial Statements and the Accountancy Act, the Company also prepares and presents
consolidated financial statements.
For the period from April 2020 to March 2022 in the Republic of Bulgaria an emergency epidemic situation was
introduced to prevent the spread of coronavirus COVID-19. This led to a number of measures related to the
organization of the Company's work, such as remote organization of work, special access regime in the Company's
building and other measures in accordance with the epidemiological situation and orders of the Minister of Health and
other competent authorities. As of the date of compiling the report, the normal mode of operation of Bulgarian Energy
Holding EAD has been restored.
The separate financial statements of Bulgarian Energy Holding EAD (the Company) for the year ended on 31
December 2021, were approved for issue by decision of the Board of Directors №29-2022 dated 29 April 2022.
The separate financial statements have been prepared in accordance with the principle of an acting company. At the
date of preparation of these separate financial statements, management has assessed the Company's ability to continue
as an acing company based on available information about the foreseeable future, the long-term impact of the COVID-
19 pandemic, the military conflict between the Russian Federation and the Republic of Ukraine, the Recovery and
Sustainability Plan of Bulgaria, approved by the EU and the dynamics of the energy market worldwide and in Bulgaria.
Following the review of the activity, the Board of Directors expects that the Company will have sufficient financial
resources to continue its operational activities in the near future and will continue to apply the principle of an acting
company in preparing the separate financial statements.
3.Changes in the accounting policy
3.1. General provisions
For the current financial year, the Company has adopted all new and/or revised standards and interpretations issued
by the International Accounting Standards Board (IASB) and adopted by the EU and respectively by the International
Financial Reporting Interpretations Committee (IFRIC), which enter into force on 1 January 2021, but they do not
have a significant effect on the separate financial statements of the Company. The Company has not adopted any
standards, interpretations or amendments that have been published but have not yet entered into force.
3.2. New standards, amendments and interpretations to IFRS, which came into force on 1 January 2021.
The Company applies the following new standards, amendments and interpretations to IFRS, developed and published
by the International Accounting Standards Board, which have an effect on the financial statements of the Company
and are mandatory for application from the annual period beginning on 1 January 2021.
‒ IFRS 4 Insurance Contracts - Postponement of IFRS 9 effective from 1 January 2021, adopted by the EU
‒ IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Reform of the Reference Interest Rate - Phase 2 effective from 1
January 2021, adopted by the EU
‒ IFRS 16 Leasing: Reduction of Covid-19 Rental Leases after 30 June 2021, effective from 1 April 2021, adopted
by the EU.
3.3. Standards, amendments and clarifications that have not yet entered into force and are not applied from an
earlier date by the Company
The following standards and interpretations have been issued but are not mandatory for annual periods ending on 31
December 2021.
‒ 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
‒ Annual improvements 2018-2020 in force from 1 January 2022, adopted by the EU
‒ Amendments to IFRS 17 Insurance Contracts effective from 1 January 2013, adopted by the EU
‒ Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current and Non-
Current, effective from 1 January 2023, not yet adopted by the EU
‒ Amendments to IAS 1 Presentation of Financial Statements, IFRS Statements of Annex 2: Disclosure of
Accounting Policies, effective from 1 January 2023, not yet adopted by the EU
‒ 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
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
10
‒ Amendments to IAS 12 Income Taxes: Deferred Taxes on Assets and Liabilities Arising from Single Transactions
Effective January 1, 2023 Not yet Adopted by the EU
‒ 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.
‒ Amendments to IFRS 14 “Deferred Accounts at Regulated Prices” effective from 1 January 2016 have not yet
been adopted by the EU.
They are not expected to have a material impact on the Company's financial statements. Management expects all
standards and amendments to be adopted in the Company's accounting policy in the first period beginning after the
date of their entry into force.
4.Accounting policy
4.1 General provisions
The most significant accounting policies applied in the preparation of these separate financial statements, are presented
below.
The separate financial statements were prepared in accordance with the principles for evaluation of all types of assets,
liabilities, income and expenses under the IFRS. The evaluation bases are disclosed in detail further in the accounting
policies to the the separate financial statements.
It should be noted that accounting estimates and assumptions were used to prepare the presented separate financial
statements. Although they are based on information provided to the management at the date of preparation of the
separate financial statements, the actual results may differ from the estimates and assumptions made.
The presentation of the separate financial statements in accordance with International Financial Reporting Standards
requires management to make the best estimates, accruals and reasonable assumptions that affect the reported amounts
of assets and liabilities, income and expenses, and the disclosure of contingent receivables and liabilities at the end of
the reporting period. These estimates, accruals and assumptions are based on information available at the end of the
reporting period, so future actual results may differ. Items that involve a higher degree of subjective judgment or
complexity of calculations, or where assumptions and estimates are material to the financial statements are disclosed
in note 4.22.
4.2 Presentation of the separate financial statements, comparative information
The separate financial statements are presented in accordance with IAS 1 Presentation of Financial Statements. The
Company agreed to present the profit or loss and the other comprehensive income in two separate statements: a profit
or loss statement and a statement of comprehensive income.
Two comparative periods are presented in the statement of financial position, when the Company applies accounting
policies retrospectively, restates retrospectively positions in the financial statements, or reclassifies positions in the
financial statements, and it has a significant effect on the information in the statement of financial position at the
beginning of the previous period.
4.3 Consolidated Financial Statements
The Company has begun the process of preparing its consolidated annual financial statements for 2021 in accordance
with the IFRS effective for 2021, which will include the current separate financial statements as well. According to
the planned dates, the management expects the consolidated financial statements to be approved for issue by the
Company’s Board of Directors not later than 30 June 2022, and after that will be made available to third parties.
4.4 Transactions in foreign currency
Transactions in foreign currency are reported in the functional currency of the Company at the official exchange rate
at the date of the transaction (the Bulgarian National Bank’s fixed exchange rate). The profits and losses from foreign
exchange rate variations, arising in the settlement of those transactions and the revaluation of foreign currency
monetary items at the end of the reporting period, are recognized in the profit or loss.
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
11
Non-monetary items valued at historical cost in foreign currency are reported at the exchange rate at the date of the
transaction (they are not revalued). Non-monetary items valued at fair value in foreign currency are reported at the
exchange rate at the date when the fair value is determined.
4.5 Revenue recognition
Recognizing and evaluating revenue from customer contracts
Revenue from contracts with customers is recognized when the control of the goods and / or services promised in the
contract, is transferred to the customer in an amount that reflects the remuneration the Company expects to be entitled
to in exchange for those goods or services.
Control is transferred to the customer when (or as) the customer meets the obligation to perform, under the terms of
the contract, by transferring the promised product or service to the customer. An asset (product or service) is
transferred when (or as) a customer has control over such asset.
In the initial evaluation of its contracts with customers, the Company assesses whether two or more contracts must be
considered in their combination and accounted for as one, and whether the promised goods and / or services in each
separate and / or combined contract have to be accounted for as one and / or more performance obligations.
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 Company recognizes revenue for each separate performance obligation at the level of an individual contract with
a customer by analyzing the type, timing and terms of each particular contract. For contracts with similar
characteristics, revenues are recognized on a portfolio basis only if their grouping in a portfolio would not have a
materially different effect on the financial statements.
Contracts with customers typically include a single performance obligation.
Assessment
Revenue is measured on the basis of the transaction price specified for each contract.
In determining the transaction price, the Company takes into account the terms and conditions of the contract and its
usual business practices.
The transaction price is the amount of the remuneration the Company expects to be entitled to in exchange for the
transfer of the promised goods or services to the customer, except for amounts collected on behalf of third parties (e.g.
value added tax). The remuneration promised in the contract with the customer may include fixed amounts, variable
amounts, or both.
When (or as) a performance obligation is met, the Company recognizes as income the cost of the transaction (which
excludes estimates of variable remuneration containing limitations), that is attributable to that obligation to perform.
The Company examines whether there are other promises in the contract that are separate performance obligations,
for which part 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 components of funding, non-monetary remuneration, and remuneration owed to the customer (if any).
Performance obligations and recognition approach of main types of revenue under contracts with customers
Revenue from services
Revenue from provision of services is recognized in the accounting period in which the services are provided. The
Company transfers control of the services over time and therefore satisfies the obligation to perform and recognizes
revenue over time. If, as at the end of the reporting period, the service under the contract has not been fully performed,
revenue is recognized on the basis of the actual service provided until the end of the reporting period, as a proportion
of the total services to be provided, since the customer receives and consumes the benefits simultaneously. This is
determined on the basis of actual time spent on work, in relation to the total expected time of service performance.
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
12
The customer pays for the services provided on the basis of the clauses stipulated in the specific contract. The ordinary
credit period is from 10 to 30 days after the provision of the services. In cases where the services provided by the
Company exceed the payment, an asset under the contract is recognized. If payments exceed the services provided, a
liability under a contract is recognized.
Revenue from sales of short-term assets
Revenues from sales of short-term assets and materials are recognized when the control of the assets sold is transferred.
Delivery occurs when the assets have been shipped to the customer, the risks of potential losses are passed on to the
buyer, and/or they have accepted the assets in accordance with the sales contract. The usual payment term is within
30 days after delivery.
Principal or agent
When a third party participates in the provision of goods or services to a customer, the Company determines whether
the nature of their promise is an obligation to perform, related to the provision of the particular goods or services
(principal), or to arrange for the third party to provide those goods or services (agent).
The Company is the principal when it controls the promised commodity or service before transferring it to the
customer. Nevertheless, the Company does not necessarily act as the principal if it receives the ownership of an asset
only temporarily, before the ownership right is transferred to the customer.
The Company is an agent if the Company’s obligation to perform is to arrange the delivery of the goods or services
from a third party. When an agent company fulfils an obligation to perform, it recognizes revenue at the amount of a
fee or commission it expects to be entitled to in exchange for arranging for the goods and services to be provided by
another party. The fee or commission of the Company may be the net amount of remuneration the Company retains
after paying to the other party the consideration received in exchange for the goods or services to be provided by that
party.
The Company is an agent in its contracts for the sale of greenhouse gas emission allowances with the subsidiary TPP
Maritsa East 2 EAD.
Significant accounting assessments, estimates and assumptions relating to income from contracts with customers, are
presented in note 4.22.
Contractual balances
Trade receivables and assets under contracts
The receivable is the right of the Company to receive remuneration of a certain amount, which is unconditional (i.e.
before the payment of the remuneration becomes due, it is only necessary that a certain period of time expires).
The asset under a contract is the right of the company to receive remuneration in return for the goods or services it
has transferred to the customer, but which is not unconditional (the accrual of the receivable). If, through the transfer
of the goods and / or the provision of the services, the Company fulfils its obligation before the customer pays the
relevant remuneration 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.
Liabilities under contracts
As a liability under a contract, the Company presents the payments received from the customer and / or an
unconditional right to receive a payment before fulfilling its contractual obligations. Contract liabilities are recognized
as income when (or as) the obligations to perform have been met.
Assets and liabilities arising from a contract are presented net in the statement of financial position, even if they are
the result of different contractual obligations for performance of the contract.
After initial recognition, trade receivables and contract assets are subject to impairment testing in accordance with
IFRS 9 Financial Instruments.
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
13
Dividend income
Dividend income is recognized when the right to receive it is recognized.
Interest income
Interest income is calculated by applying the effective interest rate on the gross carrying amount of financial assets
except for financial assets which are impaired (Phase 3) for which interest income is calculated by applying the
effective interest rate on their amortized value (i.e. the gross book value adjusted for the loss provision).
Net profit from the sale of property, plant and equipment
Profit or losses arising upon the disposal of a property, plant, equipment or intangible asset as a result of a sale, are
included in profit or loss when the asset is derecognized. The asset is derecognized at the time the control of the asset
that is being sold is transferred.
4.6 Expenses
Expenses are recognized as they are incurred and based on accrual and comparability principles and to the extent that
it would not result in the recognition of assets / liabilities that do not qualify under the IFRS.
Prepayments for future periods are deferred for recognition as current expense for the period to which they refer.
4.7 Taxes
Current income tax
Current taxes on Company profits are determined in accordance with the requirements of the Bulgarian tax legislation
– the Corporate Income Tax Act. The nominal tax rate in Bulgaria for 2021 is 10% (2020: 10%). Current tax assets
and liabilities for the current and prior periods are recognized as per the amount expected to be recovered from or paid
to the tax authorities.
Deferred tax
Deferred tax is recognized using the balance sheet method for all temporary differences as at the reporting date that
arise between the tax bases of assets and liabilities and their carrying amounts.
Deferred tax liabilities are recognized for all taxable temporary differences:
• except to the extent that a deferred tax liability arises from the initial recognition of an asset or liability in a
transaction that is not a business combination and does not affect either the accounting profit or tax profit or
loss at the time of the transaction; and
• for taxable temporary differences related to investments in subsidiaries, associates and interests in joint
ventures, except to the extent that the Company is able to control the timing of the reversal of the temporary
difference and the temporary difference is unlikely to reverse in the foreseeable future.
Deferred tax assets are recognized for all deductible temporary differences, unused tax credits and unused tax losses
carried forward to the extent that it is probable that taxable profit will be available against which deductible temporary
differences, unused tax credits carried forward and unused tax losses will be used:
• unless the deferred tax asset arises from the initial recognition of an asset or liability in a transaction that is
not a business combination and does not affect either the accounting profit or the tax profit or loss at the
time of the transaction; and
• for deductible temporary differences related to investments in subsidiaries, associates and interests in joint
ventures, a deferred tax asset is recognized only to the extent that it is probable that the temporary difference
will reverse for the foreseeable future, and the taxable profit will be realized against which the temporary
difference can be utilized.
The Company reviews the carrying amount of deferred tax assets at each reporting date and reduces it to the extent
that it is no longer probable that sufficient taxable profit will be available allowing for all or part of the deferred tax
asset to be recovered. Unrecognized deferred tax assets are reviewed at each reporting date and recognized to the
extent that future taxable profit is likely to be realized to allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to be in force for the period in which
the asset is realized or the liability is settled, based on the tax rates (and tax laws) that are in force or enacted, to a
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significant extent, at the date of the statement of financial position. As at 31 December 2021, the deferred taxes on the
Company’s profit are measured at a rate valid for 2021 which is 10% (2020: 10%).
Deferred tax relating to items that are accounted for as other components of the comprehensive income or equity
position in the statement of financial position, is also reported directly to the relevant component of the comprehensive
income or the balance sheet equity position.
The Company offsets deferred tax assets and liabilities only when it has the legal right to deduct current tax assets
from current tax liabilities and the deferred tax assets and liabilities relate to income taxes levied by the same tax
authority on the same taxable entity.
Value added tax (VAT)
Revenue, expenses and assets are recognized net of VAT, except when:
• VAT arising from the purchase of assets or services is not refundable by the tax authorities, in which case
VAT is recognized as part of the cost of acquisition of the asset or as part of the relevant item of expenditure,
as appropriate; and
• receivables and payables are reported with VAT included.
The net amount of VAT recoverable from or payable to the taxation authority, is included as part of receivables or
payables in the statement of financial position.
4.8 Pension and other liabilities to employees
Short-term compensation
Short-term compensation for employees in the form of remunerations, bonuses and social payments and benefits (due
for settlement within 12 months of the end of the period in which the employees have worked for them or have fulfilled
the necessary conditions) are recognized as an expense in the statement of profit or loss unless the IFRS require that
amount to be capitalized in the cost of an asset for the period in which the work is done for them and/or the
requirements for receiving them as a current liability are met (after deducting all amounts already paid and deductions
due).
The Company recognizes short-term liabilities on paid leaves based on unused paid annual leave in cases where the
leave is expected to occur within 12 months following the date of the reporting period during which the employees
have performed the work related to those leaves. At each date of the financial statements, the Company measures the
expected cost of accumulating paid leaves, which is expected to be paid as a result of the unused entitlement to paid
leave. The assessment shall include an approximate estimate of the amounts of remuneration and statutory public and
health insurance contributions that the employer owes on these amounts.
Long-term retirement benefits
The Company owes retirement benefits to its employees under defined benefit plans and defined contribution plans.
Defined contribution plans
Defined contribution plans are retirement plans under which the Company pays fixed contributions into state funds.
The main obligation of the employer is to provide mandatory insurance to the employees for the Pensions Fund,
Supplementary Mandatory Pension Insurance (SMPI), General Sickness and Maternity (GSM) Fund, Unemployment
Fund, Labour Accident and Occupational Disease (LAOD) Fund and Health Insurance (HI).
The amounts of the social security contributions are approved in particular by the Budget of State Social Security Act
and the Budget of the National Health Insurance Fund Act for the respective year. Contributions are distributed
between the employer and the insured person in accordance with the rules of the Social Security Code (SSC).
These retirement benefit plans applied by the Company as an employer are defined contribution plans. Employers pay
monthly contributions to state funds as well as to universal and professional pension funds – based on statutory rates
– and there is no legal or constructive obligation to make additional contributions to the funds in cases where they
have insufficient funds to pay to the persons who have earned them during the period of their service. The obligations
in relation to health insurance are similar.
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The Company’s obligations under defined contribution plans for social and health insurance are recognized as a
current expense in the statement of profit or loss unless certain IFRS require that amount to be capitalized in the cost
of an asset also as a current liability.
Defined benefit plans
Under the Bulgarian labour legislation and the Internal Rules for the determination of the salary, the Company as an
employer is obliged to pay from five to ten gross monthly salaries to its employees upon retirement, depending on the
length of service. If the employee has worked with the same employer for the past 10 years of their service, they are
to receive ten gross monthly salaries on retirement, and if they have worked for less than 10 years with the same
employer, five gross monthly salaries. The retirement benefit plan is not funded.
The Company determines its retirement benefit obligations by using an actuarial valuation method. The management
of the Company assesses the defined benefit obligation once a year with the assistance of an independent actuary. The
assessment of liabilities is based on standard rates of inflation, expected changes in medical service costs and
mortality. Future salary increases are also taken into account. Discount factors are determined at the end of each year,
taking into account the yield of high-quality corporate bonds denominated in the currency in which the earnings will
be paid and maturing close to that of the respective pension liabilities.
The cost of retirement benefits to employees associated with the current service, are included in “Employee expenses”
and the amount of discounting the liabilities is included as interest expense in the “Financial expenses”. The effects
of subsequent estimates of liabilities that are, in essence, actuarial gains and losses, are recognized immediately in the
period in which they arise and are presented under other components of comprehensive income in the item
“Revaluation of liabilities under defined benefit plans”.
The retirement benefit obligation presented in the indidvidual statement of financial position consists of the present
value of the obligation to pay that benefit.
4.9 Financial instruments
A financial instrument is any contract that generates a financial asset of an entity and a financial liability or an equity
instrument of another entity.
A financial asset is any asset that is: cash, an equity instrument of another entity, a contractual right to acquire or
exchange cash or financial instruments with another entity under potentially favourable terms, and a contract that will
be settled by the equity of the Company and is a non-derivative in which it may or will receive a variable number of
its equity instruments, or a derivative that can or will be settled by exchanging a fixed amount of cash or another
financial asset, for a fixed number of equity instruments.
A financial liability is any liability that is: a contractual right to provide or exchange cash or financial instruments
with another entity under potentially unfavourable terms, as well as a contract that will be settled by equity instruments
of the issuer and is a non-derivative one in which the Company may or will obtain a variable number of an entity’s
equity instruments, or a derivative that may or will be settled in a manner different from the exchange of a fixed
amount of cash or other financial assets, against a fixed number of equity instruments of the entity.
4.9.1. Financial assets
Initial recognition and classification
The Company initially recognizes a financial asset at the time it becomes a party to a contractual agreement, and
classifies it according to the business model for managing financial assets and the characteristics of the contracted
cash flows.
The Company classifies its financial assets according to their subsequent measurement in three categories: “financial
assets measured at amortized cost”, “financial assets measured at fair value through other comprehensive income”, or
“financial assets at fair value through profit or loss”, as appropriate, under the contractual terms of the instruments
and established business models in the Company in accordance with IFRS 9.
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The business model of the Company for management of financial assets refers to the way in which it manages its
financial assets to generate cash flows. The business model determines whether cash flows will result from the
collection of contractual cash flows, the sale of financial assets, or both.
The management of the Company has determined that the financial assets which are cash in banks, trade receivables,
other receivables, judicial and adjudicated receivables and receivables from related parties, are held by the Company
in order to obtain the agreed cash flows and are expected to generate cash flows, which are only payments of principal
and interest (applied business model). These financial assets are classified and subsequently measured at amortized
cost.
Initial evaluation
Initially, all financial assets, with the exception of trade receivables, are measured at their fair value plus direct
transaction costs if they are not carried at fair value through profit or loss when initially recognized as net of transaction
costs. Trade receivables that do not have a significant component of financing, and for which the Company applies
the practically feasible measure under IFRS 15 in this respect, are initially measured at the transaction price in
accordance with IFRS 15 (note 0).
Subsequent evaluation and presentation
For the purposes of subsequent measurement and presentation, financial assets are classified in one of the following
categories: “financial assets measured at amortized cost” (debt instruments), “financial assets measured at fair value
through other comprehensive income with reclassification of accrued profit and losses” (debt instruments), “financial
assets assessed at fair value through other comprehensive income, without reclassifying accumulated profit and loss
upon derecognition” (equity instruments) or “financial assets measured at fair value through profit or loss” (debt and
equity instruments).
Financial assets at amortized cost (debt instruments)
This category includes cash in banks, trade receivables, other receivables, judicial and adjudicated receivables and
related party receivables and loans granted. This category of financial assets is the most significant for the Company.
The Company evaluates and measures financial assets at amortized cost if both of the following conditions are met:
• The financial asset is held within a business model in order to hold financial assets for the purpose of
collecting contractual cash flows;
• The agreed terms of the financial asset result in certain dates of cash flows, which are only principal payments
and interest on the outstanding principal.
Subsequent measurement is carried out using the “effective interest” method, through which interest income is
calculated using the effective interest rate applied to the gross carrying amount of the instruments. For purchased or
created assets with initial credit impairment and those with a subsequently recognized credit impairment, the effective
interest rate adjusted for credit losses is respectively applied and the effective interest rate but as per the amortized
cost of the asset.
Financial assets in this category are subject to impairment testing at the date of each financial statement of the
Company, the changes being reflected in profit or loss.
Profit and losses are recognized in profit or loss when the asset is derecognized, changed or impaired.
Financial assets measured at fair value through other comprehensive income (equity instruments)
Upon initial recognition, the Company classifies the investments in equity instruments in this category when they
meet the definition of equity under IAS 32 Financial Instruments: Presentation and are not held for trading.
Subsequent valuation of this instrument category is carried out at fair value and changes are recognized in another
comprehensive income. Fair values are determined on the basis of quoted prices in an active market, and when there
is no such market, based on valuation techniques, usually a discounted cash flow analysis.
Profit and losses on these financial assets are never reclassified to profit or loss. Dividends are recognized in the item
“financial income” in the statement of profit or loss and the other comprehensive income when the payment
entitlement is established.
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The Company has made an irrevocable choice to classify in this category its minority equity investments that it holds
in the long term and in relation to its business interests in these companies. They are traded on capital markets.
Financial assets at fair value through profit or loss
The Company estimates all other financial assets other than those that are measured at amortized cost or at fair value
through other comprehensive income at fair value through profit or loss.
If this eliminates or reduces significantly the inconsistency in the measurement or recognition of a financial asset, that
would result from recognition of results and changes by virtue of different bases, the Company may apply the
exceptions, in accordance with IFRS 9 and, upon initial recognition, irrevocably designate a financial asset as
measured at fair value through profit or loss, including contracts for delivery of a non-financial item. Such financial
assets are presented in the explanatory notes to the financial statements separately from the other instruments for
which this valuation approach is mandatory.
Derecognition
A financial asset (or, where applicable, part of a financial asset or part of a group of similar financial assets) is
derecognized when the contractual rights to the cash flows of the asset have expired, or the Company has transferred
its rights to receive cash flows from the asset or it has undertaken to pay all the cash flows received without significant
delay to a third party under a “transfer” arrangement.
When a financial asset is derecognized in its entirety, the difference between (1) the carrying amount (measured at the
date of derecognition) and (2) the consideration received (including any new asset received without the new
assumption of a new liability) is recognized in profit or loss.
When the Company has transferred its rights to receive cash flows from an asset, or has entered into a transfer
agreement, it assesses whether and to what extent the risks and rewards of ownership are preserved. When the
Company neither transfers nor substantially retains all the risks and rewards of the asset, nor transfers control over the
asset, it continues to recognize the transferred asset to the extent of its continuing involvement. In this case the
Company recognizes a related liability. The transferred asset and the related liability are measured on a basis that
reflects the rights and obligations that the Company has retained.
Impairment of financial assets
The Company recognizes provisions for expected credit losses for all debt instruments that are not carried at fair value
through profit or loss, using the approach presented in the table below:
Type of financial asset
Category under IFRS 9
Impairment approach
1
Short-term trade receivables
Debt instruments measured at
amortized cost
Simplified approach
2
Trade receivables with a financing
component
Debt instruments measured at
amortized cost
Standardized approach
3
Short-term receivables from related
parties
Debt instruments measured at
amortized cost
Simplified approach
4
Receivables from related parties
with a financing component
Debt instruments measured at
amortized cost
Standardized approach
5
Loans receivable
Debt instruments measured at
amortized cost
Standardized approach
6
Cash and cash equivalents
Debt instruments measured at
amortized cost
Standardized approach
7
Other financial, judicial and
adjudicated claims
Debt instruments measured at
amortized cost
Simplified approach
Expected credit losses are a probability-weighted estimate of credit losses (i.e. the present value of each shortage of
money) over the expected term of the financial instrument. Cash deficit is the difference between the cash flows
payable to the Company in accordance with the contract, and the cash flows that the Company expects to receive.
Because the expected credit losses account for the amount and timing of payments, an expected credit loss is
recognized even if the Company expects the asset to be fully paid, but later than the due date.
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Impairment and losses on financial instruments are dealt with in three stages, the first two being the expected credit
losses for losses that may arise as a result of a default, and the third – as credit impairment (loss), based on evidence
of potential or actual default under the instruments.
Estimated credit losses for exposures for which there is no significant increase in credit risk relative to initial
recognition, are recognized as credit losses that may arise as a result of events of default over the next 12 months. For
credit exposures for which there is a significant increase in credit risk after initial recognition, a loss adjustment for
the expected credit losses over the remaining life of the exposure is required, regardless of the time of default
(estimated credit losses over the lifetime of the instrument).
Receivables from loans to related parties and receivables with a financing element – For the calculation of the
expected credit losses on loans granted to related parties and long-term receivables with a financing element, the
Company applies a standardized approach for impairment. Under this approach, the Company applies a “three-tier”
impairment model based on changes from the initial recognition of the credit quality of the financial instrument (asset).
Expected credit losses are recognized in three stages:
а. A financial asset that is not impaired at its initial origination / acquisition is classified in Phase 1. Since its initial
recognition, its credit risk and qualities have been subject to continuous monitoring and analyses. Expected credit
losses on financial assets classified in Phase 1, are determined on the basis of credit losses that are the result of possible
events of default, which could occur within the next 12 months of the life of the asset (12-month expected credit loss
for the instrument).
b. In cases where after the initial recognition of a financial asset its credit risk increases significantly and, as a result,
its performance deteriorates, it is classified in Phase 2. The expected credit losses of the financial assets classified in
Phase 2 are determined over the remaining life (term) of the asset, regardless of the time of the default (expected credit
losses over the lifetime (term) of the instrument).
c. In cases where the credit risk of a financial asset increases to a level that indicates that an event of default has
occurred, the financial asset is considered impaired and is classified in Phase 3. At this stage the losses incurred under
the relevant asset for all of its remaining life (term) are established and calculated.
The management of the Company has developed a policy and a set of criteria for analyzing, identifying and assessing
the occurrence of a “significant increase in credit risk”.
For trade receivables and contract assets arising from transactions in the scope of IFRS 15 that do not contain a
significant financing component, the Company applies a simplified approach in accordance with IFRS 9, by
recognizing an impairment loss for expected credit losses based on the expected credit loss for the entire term of the
receivables at each reporting date. The Company applies a matrix that calculates the expected credit losses on trade
receivables. Receivables are classified as per the time they are overdue and are grouped by type and client segments
with different credit loss models.
For baseline data on trade receivables, the Company uses its accumulated experience of credit losses on such
instruments to measure expected credit losses. The historical data used is for periods of 3 to 5 years back, grouped by
type and corresponding client segment models, and adjusted by estimated factors specific to debtors and the industry
concerned.
For cash at banks, the Company recognizes impairment for expected credit losses by applying the standardized
approach, and the credit rating of the financial institutions in which the Company has deposited its cash is used to
determine the loss from default in the model parameters.
At each reporting date, the Company evaluates the impairment for each instrument at an amount equal to the expected
lifetime losses, if the credit risk for that instrument has increased significantly since the initial recognition.
In the event that, at the reporting date, the credit risk on a financial instrument has not increased significantly from the
time of initial recognition, the impairment for that financial instrument is equal to the expected 12-month credit losses.
Additional disclosures relating to the impairment of financial assets are also disclosed in the following notes:
➢ Disclosure of significant estimates and assumptions, note 4.22
➢ Trade and other receivables, note 22
➢ Receivables from related parties, note 31
➢ Cash, note 25
➢ Credit risk note, 34.5
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4.9.2. Financial liabilities
Initial recognition, classification and evaluation
The Company recognizes a financial liability in the statement of financial position only when it becomes a party to
the contractual terms of the financial instrument.
Upon initial recognition, financial liabilities are classified as “financial liabilities subsequently measured at amortized
cost” (loans and borrowings, trade and other payables), or “financial liabilities at fair value through profit or loss”.
Initial recognition occurs at the settlement date and is carried out at fair value plus, in the case of financial liabilities
that are not carried at fair value through profit or loss, costs directly attributable to the acquisition or issue of the
financial liability. Loan management fees are deferred over the borrowing period using the effective interest method,
and are included in the amortized cost of the loans.
The financial liabilities of the Company include bank loans, trade and other payables and finance lease liabilities.
According to their repayment term, financial liabilities are classified as long-term and short-term ones.
Subsequent measurement
The subsequent measurement of financial liabilities depends on their classification as described below:
Financial liabilities measured at fair value in the profit or loss
Financial liabilities measured at fair value in the profit or loss, include financial liabilities held for trading, and
financial liabilities determined at their initial recognition at fair value through profit or loss.
Financial liabilities are classified as held for trading if they are incurred for redemption purposes in the near future.
Profit or losses on liabilities held for trading are recognized in profit or loss and other comprehensive income.
Financial liabilities determined at their initial recognition at fair value through profit or loss, are determined at the
initial recognition date and only if the criteria in IFRS 9 are met.
The Company has not designated financial liabilities as measured at fair value through profit or loss.
Financial liabilities evaluated at amortized cost
The category of “financial liabilities reported at amortized cost” includes borrowings, trade payables and other
payables where the Company has become a party to a contract or arrangement and which should be settled in net cash.
This category has the most significant share for the Company’s financial instruments and for it as a whole.
Granted loans are temporarily attracted funds against consideration from Bulgarian or foreign banks and other
financial institutions, commercial loans, etc.
Bank loans are taken to provide long-term support to the Company’s business. They are reflected in the statement of
financial position of the Company, net of loan costs. Direct transaction costs are reported in the profit or loss and other
comprehensive income on the accrual basis, using the effective interest method and added to the carrying amount of
the financial liability to the extent that they are not settled at the end of the period in which they occurred.
Financial liabilities are subsequently evaluated at amortized cost using the effective interest method. The amortized
cost is calculated taking into account any discount or premium on acquisition, also charges or expenses that are an
integral part of the effective interest rate. Expenses (calculated using the effective interest method) are included as
financial expense in the profit or loss statement and other comprehensive income in the line “Financial expenses”.
For financial liabilities that are measured at amortized cost, profit or loss is recognized in profit or loss for the period
when the financial asset or financial liability is derecognized or impaired also through the amortization process.
Trade payables are initially recognized at their nominal value and are subsequently measured at amortized cost less
payments to settle the liability.
Dividends payable to the sole shareholder are recognized when the dividends are approved at the General Meeting.
Derecognition
The Company derecognizes a financial liability only when the liability is settled (fulfilled), the liability expires, or the
creditor waives their rights.
Where an existing financial liability has been replaced by another one by the same lender under substantially different
conditions, or the terms of an existing payable have been materially changed, such an exchange or change is treated
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as a write-off of the original liability and recognition of a new liability. The difference in the appropriate carrying
amounts is recognized in the profit or loss.
The difference between the carrying amount of the financial liability settled or transferred to another party and the
consideration paid for the settlement, including money and the transfer of non-monetary assets, is recognized in profit
or loss for the period.
4.9.3 Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is presented in the statement of financial position
when there is a legally enforceable right to offset the amounts recognized and the Company intends to settle on a net
basis or to simultaneously realize the assets and settle the liabilities.
4.9.4 Fair value of financial instruments
At each reporting date, the fair value of financial instruments that are actively traded on the markets, is determined on
the basis of quoted market prices or dealer quotations (purchase prices for long positions and sale prices for short
positions) without deducting transaction costs.
The fair value of financial instruments for which there is no active market, is determined using measurement
techniques. These techniques include the use of recent direct market transactions; references to the current fair value
of another instrument that is substantially the same; discounted cash flow analysis and other measurement models.
Analysis of the fair values of the financial instruments and further details of how they are measured is given in note
35.
4.10 Equity, reserves and dividend payments
The registered capital of the Company reflects the nominal value of the issued shares. Other reserves include general
reserves and additional reserves. Revaluation reserves include a revaluation reserve of property, plant and equipment,
a revaluation reserve for available-for-sale financial assets, and a revaluation reserve for defined benefit plans.
Retained earnings include the current financial result and accumulated profits and uncovered losses from previous
years.
Dividend liabilities of the sole shareholder are included in the line “Payables to related parties” in the statement of
financial position, when the dividends are approved for distribution by the General Meeting before the end of the
reporting period.
All transactions with the Company’s sole shareholder are presented separately in the statement of equity.
4.11 Property, plant and equipment
Property, plant and equipment is initially measured at cost, including the purchase price and all direct costs of bringing
the asset to working condition. Their subsequent measurement after initial recognition is applied to the entire class of
identical assets as follows:
No.
Class of property, plant and equipment
Subsequent evaluation model
1
Land
Revaluation model
2
Improvements on land and plots
Revaluation model
3
Buildings and constructions
• massive
Revaluation model
• non-massive
Acquisition price
4
Machinery, plant and equipment
Revaluation model
5
Computer Systems
Acquisition price
6
Vehicles
• freight vehicles
Revaluation model
• passenger cars
Acquisition price
• specialized motor vehicles
Revaluation model
7
Furniture and fixtures and fittings
Acquisition price
8
Spare parts reported as property, plant and equipment
Revaluation model
9
Other property, plant and equipment
Acquisition price
Property, plant and equipment that is reported under the revaluation model, is subsequently measured at a revalued
amount equal to fair value at the revaluation date, less subsequently accumulated depreciation and impairment losses.
The revaluations made are presented in the statement of comprehensive income and are recognized in equity
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(revaluation reserve) if they are not preceded by previously recognized expenses. Upon sale or derecognition of the
revalued asset, the remaining revaluation reserve is recognized in retained earnings.
The revaluations are performed in the following time intervals:
• when the fair value of assets undergoes only minor changes, the revaluation is made every three years;
• when the fair value of property, plant and equipment changes substantially in shorter time intervals, the revaluation
is carried out at shorter time intervals so that the carrying amount of the asset does not differ materially from its
fair value.
The frequency of subsequent revaluation of property, plant and equipment when applying the revaluation model,
depends on whether the carrying amount materially differs from the fair value of a revalued asset at the end of the
reporting period.
In this regard, when performing the annual stock-taking at the end of the reporting period (end of the financial year),
the Company reviews property, plant and equipment for indications whether their carrying amount is significantly
different from their fair value. A significant deviation is considered a deviation of the carrying amount from the fair
value of the asset by the date of preparation of the financial statement by more than 5%. The deviation is significant
also if it is below 5%, but the difference between the carrying amount and the fair value as a cumulative amount of
property, plant and equipment, is significant for the purpose of preparation of the financial statements.
Property, plant and equipment reported using the acquisition price model is subsequently measured at cost less
accumulated depreciation and impairment losses. Impairments are reported as an expense and recognized in the
statement of profit or loss for the period.
Subsequent costs associated with certain property, plant and equipment are added to the carrying amount of the asset,
when it is probable that the Company will have economic benefits that exceed the initially estimated effectiveness of
an existing asset. All other subsequent costs are recognized as an expense for the period in which they are incurred.
Depreciation of property, plant and equipment is calculated using the straight-line method over the estimated useful
lives of the individual asset groups as follows:
Machinery, plant and equipment
3-30 years
Vehicles
2-12 years
Fixtures and fittings
5-10 years
Property, plant and equipment is derecognized upon sale or when no future economic benefits are expected from its
use or at its disposal. Profit or losses arising on derecognition of the asset, representing the difference between the net
sales proceeds, if any, and the carrying amount of the asset, are recognized in the statement of profit or loss when the
asset is derecognized.
At the end of each financial year, residual values, useful lives and depreciation methods are reviewed and if
expectations differ from previous estimates, they are revised in future periods.
The materiality threshold chosen for the Company’s property, plant and equipment amounts to BGN 500.
4.12 Leasing
The Company as a lessee
The Company estimates whether the contract is or contains a lease. Lease is defined as “a contract or a part thereof,
which bears the right to use an asset (the main asset) for a period of time in return for payment”. The Company, in
order to apply this definition, estimates whether the contract complies with three key evaluations, which are whether:
‒ The contract comprises a certain asset that is either explicitly identified in the contract, or is indicated implicitly,
which will be identified when the asset is made available to the Company;
‒ The Company is entitled to obtain essentially all economic benefits derived from the use of such an asset during
the entire period of use, taking into consideration its rights within the defined scope of the contract;
‒ The Company is entitled to guide the use of the asset in question during the whole period of use. The Company
judges whether it has the right to direct “how and with what purpose” the asset should be used throughout the
whole period of utilization.
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Assessment and recognition of leasing as a lessee
On the date when the lease starts, the Company recognizes a right-of-use asset and lease obligation in the balance
sheet. The right-of-use asset is valued at cost, which consists of the initial assessment of the lease liability, all initial
direct costs incurred by the Company, assessment of all costs of dismantling and removal of the asset at the end of the
lease, and any kind of lease payments made before the commencement date of the lease (without any incentives
received).
The Company amortizes the assets with the right to use by linear base from the lease commencement date to the earlier
one of either the end of the useful life of the right-of-use asset, or the end of the lease term. The Company also conducts
a right-of-use asset impairment review, when it has such indicators.
On the starting date the Company assesses the lease obligation under the current value of the outstanding lease
payments by such date, discounted, using the interest rate that is included in the lease contract. If that percentage
cannot be determined directly, the Company uses the interest rate which it would have to pay in order to borrow for a
similar period of time with a similar collateral, the funds required to obtain an asset with a similar value in a similar
economic environment.
The lease payments included in the assessment of the leasing obligation, consist of fixed payments, variable payments
based on an index or percentage, amounts that are expected to be payable according to a residual value guarantee, and
payments stemming from options, reasonably secure to be possible to be exercised.
After the starting date the Company assesses the lease liability by increasing the balance sheet value, in order to record
the interest on the lease liability and reduce the balance sheet value, in order to reflect the lease payments made, and
revalues the balance sheet value of the liability, in order to reflect the revaluations or amendments of the lease contract,
or record the adjusted in-substance fixed lease payments.
The Company is facing potential future increases in the variable lease payments based on an index or interest rate,
which are not included in the lease liability until their entry into force. When the lease payment adjustments take
effect, based on an index or interest, the leasing obligation is revalued or adjusted in relation to the asset with the right
to use.
When the lease liability is revalued, the respective adjustment is recorded in the liability with the right to use, or in
the profit and loss, if the right-of-use asset has already been reduced to zero.
The Company has chosen to take into account the short-term leases, and lease contracts whose main asset has a low
value, using exemptions from the recognition requirements. Instead of recognition of an asset with the right to use and
a leasing obligation, payments in connection with them are recognized as an expense in profit or loss of a linear line
during the lease term.
In the separate statement of financial position the right-of-use assets are included in property, plant and equipment,
while the leasing obligations are included in commercial and other obligations.
The Company as a lessor
The Group’s accounting policy under the IFRS 16 has not changed from the comparative period.
As a lessor, the Company classifies its lease contracts as operating or financial lease.
Leasing is classified as financial lease, if it transfers essentially all risks and benefits related to the ownership of the
main asset, and is classified as operating lease if it does not do it.
4.13 Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a
substantial period of time to get ready for its intended use or sale, are capitalized as part of the acquisition price thereof.
All other borrowing costs are recognized as an expense in the period to which they relate. Borrowing costs include
interest and other costs that the Company incurs in connection with the borrowing of funds.
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
23
4.14 Intangible assets
Intangible assets that are separately acquired are initially measured at acquisition price. After initial recognition
intangible assets are evaluated at cost less accumulated amortization and accumulated impairment losses.
The useful life of intangible assets is defined as limited to the following periods:
Patents, licenses
5-10 years
Software
2-8 years
Other intangible assets
2 years
Intangible assets with finite useful lives are depreciated over their useful lives and tested for impairment when there
are indications that their value may be impaired. The amortization period and the amortization method for intangible
assets with a finite useful life are reviewed at least at the end of each financial year. Changes in the expected useful
life or the model for utilizing the future economic benefits of the intangible asset are reported by a change in the
amortization period or method and are treated as a change in the accounting estimates.
Profit or losses arising on derecognition of an intangible asset, representing the difference between the net sales
proceeds and the carrying amount of the asset, are recognized in the statement of profit or loss when the asset is
derecognized.
4.15 Investments in subsidiaries
Subsidiaries are all entities that are controlled by the Company. Control of a subsidiary is the right to manage and
determine the financial and operating policies of an entity in order to obtain benefits from its activities. In the separate
financial statements of the Company, investments in subsidiaries are reported at cost.
Long-term investments in subsidiaries are presented in the financial statements at cost (prime cost), which is the fair
value of the consideration paid, including the direct costs of acquiring the investment less the accumulated impairment.
When impairment conditions are established, it is recognized in the profit or loss.
Upon purchase and sale of investments in subsidiaries and associates, the “date of conclusion” of the transaction is
applied.
Investments are derecognized when the rights that result from them are transferred to other entities upon the
occurrence of the legal basis and thus the control of the economic benefits of the investment is lost. Profit / (loss) from
sale is presented on the face of the profit or loss statement respectively.
The Company recognizes a dividend from a subsidiary in profit or loss in its separate financial statements, when its
right to receive the dividend is established.
4.16 Investments in associates and joint ventures
A joint venture is a contractual arrangement whereby the Company and other independent parties undertake an
economic activity subject to joint control and the parties holding joint control of the entity are entitled to the net assets
of the entity. Investments in joint ventures are reported at cost.
Associates are those entities over which the Company is able to exercise significant influence, but which are neither
subsidiaries nor joint ventures. Investments in associates are reported at cost.
The Company recognizes dividend income from a joint venture or associate in profit or loss in its separate financial
statements, when its right to receive the dividend is established.
4.17 Inventories
Inventories include materials. The cost of inventories includes direct purchase costs and other direct costs related to
their delivery. At the end of each reporting period inventories are evaluated at the lower one of their cost price or net
realizable value. Net realizable value is the estimated selling price of the inventory, less the expected selling costs.
The amount of any impairment of inventories up to their net realizable value, is recognized as an expense for the
period of impairment. The Company determines the cost of inventories using the weighted average cost method.
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
24
4.18 Impairment of non-financial assets and investments in subsidiaries, joint ventures and associates
At each reporting date, the Company assesses whether there are indications that an asset is impaired. In the case of
such indications, or when an annual impairment test of an asset is required, the Company determines the recoverable
amount of that asset. The recoverable amount of the asset is the higher one of the fair value less costs to sell the asset
or cash-generating unit (CGU) and its value in use. The recoverable amount is determined for a separate asset unless
the use of the asset does not generate cash flows that are substantially independent of the cash flows generated by
other assets or groups of assets. When the carrying amount of an asset or CGU is higher than its recoverable amount,
the asset is considered to be impaired and its carrying amount is reduced to its recoverable amount.
In determining the value in use of an asset, the expected future cash flows are discounted to their present value, using
a pre-tax discounted rate that reflects current market valuation of money in time and asset-specific risks. The fair value
less costs to sell is determined using the appropriate evaluation model. The calculations made are confirmed using
other evaluation models or other available sources of information about the fair value of an asset or a cash-generating
unit. Impairment losses are recognized as an expense in the Statement of Profit or Loss except for non-current assets
that were revalued in prior periods and the revaluation increase is recognized in the other comprehensive income. In
this case, the impairment loss is also recognized in other comprehensive income to the extent of the previously
recognized revaluation of the asset.
At each reporting date, the Company assesses whether there are indications that the impairment loss of an asset
recognized in prior periods may no longer exist or may have decreased. If such indications exist, the Company
determines the recoverable amount of the asset or cash-generating unit. An impairment loss is reversed only when
there has been a change in the estimates used to determine the recoverable amount of the asset after recognition of the
last impairment loss. The reversal of an impairment loss is limited so that the carrying amount of the asset does not
exceed its recoverable amount, nor exceed the carrying amount (after deduction of depreciation or amortization), that
would have been determined had no impairment loss been recognized for the asset in previous years. The reversal of
an impairment loss is recognized in the statement of profit or loss unless the asset is carried at revalued amount, in
which case the reversal is treated as an increase from revaluation.
4.19 Cash and cash equivalents
Cash and cash equivalents in the statement of financial position include cash in bank accounts, cash and short-term
deposits with an initial maturity of three months or less.
Subsequent measurement
Cash and cash equivalents in banks are subsequently presented at amortized cost less accumulated impairment for
expected credit losses.
4.20 Provisions
Provisions are recognized when the Company has a present obligation (either legal or constructive) as a result of past
events, the obligation will probably lead to an outflow of economic resources from the Company, and amounts can be
estimated reliably. When the Company expects that some or all of the expenses necessary to settle the provision will
be recovered, for example under an insurance contract, the reimbursement is recognized as a separate asset, but only
when it is practically certain that these costs will be recovered. Provisioning costs are recognized net of the amount
of reimbursement in the statement of profit or loss. When the effect of time differences in the value of money is
significant, provisions are discounted using a current pre-tax discounted rate that reflects, where appropriate, the risks
specific to the liability. When discounting is used, the increase in the provision as a result of the elapsed time is
presented as a financial expense.
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
25
4.21 Funding (government grants)
Government grants are recognized when there is reasonable certainty that the grant will be received and that all
attached conditions will be complied with. When the grant relates to a cost item, it is recognized as revenue for the
periods necessary to compare the grant on a systematic basis with the costs it is intended to compensate. When the
grant relates to an asset, it is presented as deferred income and is included in the income at equal amounts over the
estimated useful life of the related asset.
When the Company receives non-cash government grants, the grant and the asset are reported at face value, and the
grant is recognized as income in the Statement of Profit or Loss in equal parts each year over the useful life of the
asset.
4.22 Significant management judgment in applying the accounting policy. Uncertainty of the accounting
estimates
The preparation of the financial statements necessitates that the management should make approximate accounting
estimates, judgements and assumptions, which affect the accounting policy application and the reported amounts of
assets, liabilities, income and expenses. The actual results may differ from the conjectures, assessments and
assumptions of the management and in rare cases totally comply with the pre-evaluated results.
The approximate accounting estimates and the respective substantial assumptions are checked currently. The results
from the change in the approximate accounting estimates are recognized in the period in which the change was made
as well as in any future period concerned.
Information on the substantial conjectures, assessments and assumptions as well as major sources of uncertainty in
the use of approximate accounting estimates which exercise the highest influence on the recognition and evaluation
of assets, liabilities, income and expenses, is presented herein below.
Recognition and valuation of expected credit losses of debt instruments at amortized cost (note 4.9)
The valuation of the expected credit loss of financial assets at amortized cost (loans, receivables, cash and cash
equivalents) requires the use of models and material assumptions about future economic conditions and credit
behaviour of customers and debtors. For the application of these requirements the Company’s management makes a
number of significant judgments setting criteria for identifying and assessing significant credit risk increases,
appropriate models and assumptions to measure expected credit losses, identifying and assessing the dependence
between historical default rates and the behaviour of certain macro indicators to reflect the future effects of the
estimated credit losses.
Approach for impairment of cash at banks
Cash and cash equivalents are the most liquid financial instruments. They do not hold settlement risk, and the liquidity
risk they carry is limited to the technical possibility that a disposal of them will not be made. However cash deposited
with banks is a counterparty credit risk (risk of default). Counterparty risk is the likelihood that the counterparty in a
financial transaction will not fulfil its contractual obligations. The Company applies the standardized approach for
calculating the expected credit losses of cash at banks, and the credit rating of the financial institutions in which the
Company has deposited its cash is used to determine the default loss in the model parameters. As of December 31,
2021, the management's best estimate of expected credit losses in banks amounts to BGN 2,432 thousand (December
31, 2020: BGN 541 thousand) (note 25).
Approach for impairment of short-term trade and other receivables and receivables from related parties
The Company applies a simplified approach to calculate the expected credit losses for trade receivables that do not
contain a financing element.
For the purpose of determining the expected credit losses, modelling at the client’s level is done. Modelling is the
inherent removal of financial risk that customers bring to companies in the Company.
Expected credit losses are calculated for each single receivable (invoice, interest rate, etc.) adjusted on the basis of
past due dates and the standard counterparty payment cycle. The average number of days of customer’s delay is
determined on the basis of historical information about the period of payment of customers payables. The retrospective
review is for a period of 3 to 5 years.
Additional risk has been identified based on historical experience in collecting receivables, including deteriorated
financial condition, liquidity problems, and other difficulties.
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
26
The assessment of the ratio between observed historical default data, estimated economic conditions, industry risk
rating, and the amount of expected credit losses, is a significant estimate. Information on impairment of expected
credit losses of the Company is presented in notes 22, 31.2.
Approach for impairment of granted loans, trade receivables and receivables from related parties with a financing
element
The Company applies an individual approach for impairment of receivables with an element of financing and granted
loans. The impairment model is based on the cash flows agreed in the financial instrument, as well as the assumptions
and estimates of expected cash flows and the realization of the financial asset adopted by the management in the
preparation of the financial statements.
Expected credit losses are a probability-weighted estimate of credit losses (i.e. the present value of each shortage of
money) over the expected term of the financial instrument. Cash deficit is the difference between the cash flows
payable to the Company in accordance with the contract, and the cash flows that the Company expects to receive.
Because the expected credit losses account for the amount and timing of payments, an expected credit loss is
recognized even if the Company expects the asset to be fully paid, but later than the due date.
Depending on the characteristics of the asset and the counterparty, the expected future cash flows from the asset may
materially differ from the contracted assets. This would also lead to significant levels of expected credit losses on the
asset.
Revision of expected future cash flows for each specific asset is made as of each reporting date.
Information on impairment of the Company’s expected credit losses on loans granted to related parties is presented in
note 31.1, and on the expected credit losses of receivables with a funding element in note 34.5.
Approach for impairment of court receivables
In cases where the Company has taken legal action to satisfy its receivables, they are classified as court receivables.
This type of receivable is characterized by a total default – i.e. reluctance or inability of the client to settle his / her
obligation. For this reason, irrespective of the existence of judgments of the judiciary and the enforcement procedures
launched, the rate of collection of these receivables and resp. expected future cash inflows are low, and the probability
of default has already occurred with respect to the original asset, i.e. it is equal to 100%.
Expected credit losses are the sum of the expected credit losses for each court and awarded receivable based on the
historical rate of collection of this asset class. Further information is also provided in note 22.
Impairment of non-financial assets
The amount by which the carrying amount of an asset or cash-generating unit exceeds its recoverable amount that is
the higher of the fair value less costs to sell an asset and its value in use, is recognized as impairment loss. In order to
determine the value in use, the Company’s management calculates the expected future cash flows for each cash-
generating unit, and determines the appropriate discount factor to calculate the present value of those cash flows (see
note 4.18). When calculating expected future cash flows, the management makes assumptions about future gross
profits. These assumptions are related to future events and circumstances. Actual results may differ and lead to
significant adjustments to the Company’s assets in the next accounting year.
In most cases, the appropriate adjustments in relation to market risk and risk factors that are specific to individual
assets are assessed in determining the applicable discount factor.
Investments in associates
BEH EAD owns directly 0.32% of the share capital of ZAD Energy. The equity investment is accounted for as an
investment in an associate due to additional indirect participation in the capital of ZAD Energy through other
subsidiaries, resulting in a total direct and indirect equity participation of 48.08%.
Principle – assumption of a going concern
The sole shareholder of the Company is the Bulgarian state through the Minister of Energy, in their capacity as
principal. The functioning and the future development of the Company is entirely dependent on the future intentions
and strategy of the state regarding the continuation of its functions and activities within the energy sector in Bulgaria.
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
27
The management has analyzed the validity of the going concern assumption, taking into account the principal’s
intentions in the short and medium term. As a result, it has come to the conclusion that the use of the going concern
assumption is appropriate.
Revenue from contracts with customers
When recognizing revenues under contracts with customers, the management makes various estimates,
approximations and assumptions that affect the reported revenue, expense, assets and contingent liabilities. The key
estimates and assumptions that have a material impact on the amount and timing of recognizing revenue from customer
contracts are disclosed in note 4.5 Revenue Recognition, Performance obligations and approach to recognition of main
types of revenue from contracts with customers.
Assets with the right to use and liabilities under lease contracts
The Company makes estimates based on its assessments concerning the identification of leasing elements in the
contracts, the likely terms of validity of the lease contracts, the extension and termination options, determining the
differential interest rate, etc., in recognizing “assets with the right to use” and liabilities under lease contracts. Such
estimates have an effect on the reported income, expenses, assets and liabilities under lease contracts, and the
respective disclosures.
As a result of the uncertainty regarding these assumptions and estimates it is possible that changes will arise in the
balance sheet value of assets with the right to use, liabilities under lease contracts and the reported expenses and
revenue due to changes from revaluations or changes in the lease contracts.
Employee retirement benefits
The retirement benefit obligation for employees is determined by actuarial valuation. This valuation requires making
assumptions about discount rates, future salary increases, staff turnover and mortality rates. Due to the long-term
nature of employee retirement benefits, these assumptions are subject to significant uncertainty. As of December 31,
2021, the Company's liability for retirement benefits recognized in the separate statement of financial position amounts
to BGN 913 thousand (31 December 2020: BGN 811 thousand). Additional information on staff benefits at retirement
is provided in note 29.
Useful life of property, plant and equipment and intangible assets
Financial reporting of property, plant and equipment and intangible assets includes the use of estimates for their
expected useful lives and residual values that are based on the Company’s management judgment. Information on the
useful life of property, plant and equipment is presented in note 4.11, and intangible assets – note 0.
Fair value of property, plant and equipment
The Company subsequently recognizes land and buildings at revalued amount using independent external appraisers’
reports to determine their fair value. Detailed information for the revaluation, valuation methods used, assumptions
and fair value estimates, is presented in note 19.
5.Dividend income
2021
2020
BGN’000
BGN’000
NPP Kozloduy EAD
607,905
162,446
Bulgartransgaz EAD
79,601
-
Electricity system operator EAD
60,368
5,778
Bulgargaz EAD
14,275
-
Mini Maritsa East EAD
-
28
ZAD Energy
32
25
Transgaz S.A. Romania
19
38
Balkangaz 2000 AD
-
4
Interest income for arrears related dividends
Bulgartransgaz EAD
548
-
762,748
168,319
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
28
6.Revenues from contracts with customers
2021
2020
BGN’000
BGN’000
Income from holding agreements services
802
805
Agent service from the sale of
CO2
emissions
253
29
Revenue from project activities
-
756
Other service income
1
-
1,056
1,590
In connection with the adopted policy for the purchase of greenhouse gas emission allowances, BEH EAD purchased
emission allowances of the EUA type to cover the obligations of TPP Maritsa East 2 EAD related to securing the
production activity of the plant in 2020 and 2021. The objective is to optimize the cost of carbon emissions at the
holding level by applying a competitive principle when purchasing them. As a result, the cost of the purchased
allowances is reduced by minimizing the burden of brokerage commissions. The Company has determined that it acts
as an agent in the purchase of emission allowances of the EUA type to cover the liabilities of TPP Maritsa East 2 EAD
as it acquires title to the asset only temporarily before the ownership right is transferred to the customer.
In April 2021, a contract was concluded with TPP Maritza East 2 EAD for the purchase and sale of 4,280,000 tonnes
of European allowances for greenhouse gas emissions of the EUA type for greenhouse gases emitted by the buyer in
the calendar year 2020. The quotas were purchased by the holding in the beginning of 2021.
In July 2021, a framework agreement was concluded with TPP Maritza East 2 EAD for the purchase and sale of
European allowances for greenhouse gas emissions of the EUA type for a period of one year. With the undertaken
obligation the Company undertakes to buy current allowances for greenhouse gas emissions after a order made by the
buyer. The purchased allowances are transferred to the buyer's account after they have been paid in full by him. For
2021, the allowances purchased and transferred to the buyer's account amount to 6,538,807 tons. As of December 31,
2021 the Company has purchased, but not yet transferred on account of TPP Maritza East 2 EAD in the National
Register of Greenhouse Gas Emissions Trading allowances quotas in the amount of 150,094 tons for the amount of
BGN 22,339 thousand.
In 2020, the Company entered into a contract with TPP Maritza East 2 EAD for the purchase and sale of 7,255,000
tons of European allowances for greenhouse gas emissions of the EUA type for greenhouse gases emitted by the buyer
in the 2019 calendar year. The quotas were purchased by the holding in the beginning of 2020.
According to holding agreements signed with Bulgargaz EAD, NEK EAD, TPP Maritsa East 2 EAD, Mini Maritsa
Iztok EAD and NPP Kozloduy EAD, BEH EAD provides billable services to its subsidiaries in the field of financial
management, project and investment management, corporate governance and business planning, legal and regulatory
issues and public relations. Revenues are calculated based on actual hours spent for the respective companies.
7.Other income
2021
2020
BGN’000
BGN’000
Interest income overdue receivables from the sale of CO2 emissions
2,912
-
Interest income overdue receivables under holding agreements
43
39
Funding revenues for electricity consumed
6
-
Gain on sale of assets
-
9
Other
5
1
2,966
49
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
29
8.Expenses for impairment
2021
2020
BGN’000
BGN’000
Expenses for investment impairment
(143)
(193)
Impairment of expected credit losses of debt instruments at amortized cost
Impairment of loans to related parties
(60,377)
(181,580)
Impairment of trade receivables from related parties
(45,576)
(13)
Impairment of other receivables from related parties
(2,133)
(1,666)
Impairment of receivables from Toplofikatsia Sofia EAD
(423,665)
(59,225)
Impairment of receivables under litigation
(3)
(384)
Impairment of other receivables
-
(1)
Impairment of cash
(2,181)
(94)
Reversal of impairment of loans granted to related parties
5,324
19,646
Reversal of impairment of trade receivables from related parties
26
1
Reversal of impairment of other receivables from related parties
627
-
Reversal of impairment of receivables from Toplofikatsia Sofia EAD
-
2,738
Reversal of impairment of receivables under litigation
1
1,054
Reversal of impairment of other receivables
752
1,275
Reversal of impairment of cash
290
733
(527,058)
(217,709)
9.Expenses for materials
2021
2020
BGN’000
BGN’000
Office supplies and consumables
(42)
(44)
Car maintenance costs
(41)
(21)
Cost of assets below the recognition threshold
(16)
(4)
Others
-
(9)
(99)
(78)
10.Expenses for external services
2021
2020
BGN’000
BGN’000
Consulting services
(2,254)
(2,981)
Protection
(67)
(63)
Heat, electricity and water
(61)
(36)
Insurance
(59)
(68)
Subscription service
(57)
(70)
Cleansing
(40)
(40)
Communications
(26)
(24)
Car maintenance
(24)
(24)
Translation services
(28)
(14)
Miscellaneous fees
(6)
(7)
Labor safety
(4)
(2)
Rentals
(3)
(3)
Repairs
(1)
-
Project costs
-
(756)
Advertisements and notices
-
(5)
Others
(1)
(3)
(2,631)
(4,096)
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
30
11.Audit services remuneration
These separate financial statements have been audited by Consortium AUDIT BEH with participants in it, audit firms
Grant Thornton OOD and Zaharinova Nexia EOOD on the basis of a contract concluded between Bulgarian Energy
Holding EAD and Consortium AUDIT BEH.
The remuneration of the registered auditors amounts to BGN 854 thousand and includes an independent financial
audit of the annual and interim separate financial statements of BEH EAD, NEK EAD, Kozloduy NPP EAD, TPP
Maritsa Iztok 2 EAD, Mini Maritsa East EAD , Bulgargaz EAD, Kozloduy NPP - New Power EAD, Kozloduy HPP
EAD, Interpriborservice OOD, PFC Beroe - Stara Zagora EAD and the annual and interim consolidated financial
statements of BEH EAD, NPP Kozloduy EAD and TPP Maritsa Iztok 2 EAD. In 2021, the registered auditors did not
receive any other remuneration or performed any other services, except for the remuneration of BGN 256 thousand
for audit procedures performed by Grant Thornton OOD in connection with the prospectus for a new bond issue in
July 2021.
12.Employee expenses
2021
2020
BGN’000
BGN’000
Remuneration
(3,593)
(3,200)
Social security
(698)
(502)
Social costs
(806)
(671)
Accrued retirement benefits
(96)
(83)
Unused annual leave and related social security expenses
(150)
(212)
(5,343)
(4,668)
13.Other expenses
2021
2020
BGN’000
BGN’000
Donations
(200)
(376)
Adjustment of tax credit
(116)
(212)
Taxes on expenses
(36)
(29)
Business trips and entertainment expenses
(29)
(14)
Trainings, qualifications, seminars
(12)
(7)
Costs of litigation
-
(1,053)
Interest and non-deductions to counterparties
-
(7)
Other
(1)
-
(394)
(1,698)
14.Finance income
2021
2020
BGN’000
BGN’000
Interest income on loans granted at amortised cost
176,836
117,361
Finance income on loans granted at amortised cost
4,221
5,832
Interest income on receivable from "Toplofikatsia Sofia" EAD
35,165
21,128
Interest income on bank current accounts
75
113
Total interest income on financial assets that are not accounted for at fair value in
profit or loss
216,297
144,434
216,297
144,434
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
31
15.Finance costs
2021
2020
BGN’000
BGN’000
Interest expense on bond issues
(88,550)
(99,391)
Interest expense – discounting of non-current receivable
(83,525)
-
Interest expense on a loan received
(314)
(57)
Lease interest expense
(115)
(122)
Interest expense on staff benefits in retirement
(4)
(5)
Total interest expense on financial liabilities not accounted for at fair value in
profit or loss
(172,508)
(99,575)
Loss from modification
(95)
-
Bank fees
(1,300)
(4)
Fees for issued bank guarantee
(522)
(512)
Loss on exchange rate differences, net
(31)
(37)
(174,456)
(100,128)
16.Income tax expense
The reconciliation between the income tax expense and the accounting profit multiplied by the applicable tax rate for
the years ending 31 December 2021 and 31 December 2020, is presented below:
2021
2020
BGN’000
BGN’000
Accounting profit before taxes
271,877
(15,230)
Tax rate
10%
10%
Tax expense at the applicable tax rate
(27,188)
1,523
Tax effect of:
Expenses not recognised for tax purposes
(53,578)
(24,521)
Non-taxable income
83,936
19,444
3,170
(3,554)
Deferred tax expense, net
45,781
21,791
Income tax expense
48,951
18,237
Note 21 provides information on deferred tax assets and liabilities, including the amounts recognized in other
comprehensive income.
17. Earnings per share and dividends
17.1 Earnings per share
The basic earning per share is calculated using the net profit to be distributed as a numerator.The weighted average
number of shares used for the calculation of basic earnings per share and the net profit attributable to the ordinary
shareholder, are as follows:
2021
2020
Net profit attributable to the shareholders (in BGN)
320,828,238.43
3,006,521.82
Weighted average number of shares
3,462,941,744
3,462,941,744
Earnings per share (in BGN per share)
0.0926
0.0009
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
32
17.2 Dividends
The distribution of profit is made pursuant to a decision of the sole shareholder of the capital, in compliance with the
following order:
• at least 10% of the profit is allocated to the Reserve Fund;
• a dividend determined on the basis of a decision of the Council of Ministers in compliance with the State
Budget Act;
• based on a proposal of the Board of Directors it is possible to allocate part of the profit, subject to distribution,
to certain funds of the Company.
The Company did not have an obligation in 2021 to pay a dividend to the Republican budget.
18.Investments in subsidiaries, associates and joint ventures
31 December 2021
31 December 2020
Country of
incorporation
Share
Value of
investments
Share
Value of
investments
BGN’000
BGN’000
Subsidiaries
Bulgartransgaz EAD
Bulgaria
100%
734,569
100%
734,569
Bulgargaz EAD
Bulgaria
100%
325,391
100%
325,391
NEK EAD
Bulgaria
100%
1,051,427
100%
1,051,427
NPP Kozloduy EAD
Bulgaria
100%
101,716
100%
101,716
TPP Maritsa East 2 EAD
Bulgaria
100%
673,916
100%
673,916
Mini Maritsa Iztok EAD
Bulgaria
100%
65,000
100%
65,000
ESO EAD
Bulgaria
100%
61,103
100%
61,103
3,013,122
3,013,122
Joint ventures
ICGB AD
Bulgaria
50%
57,991
50%
57,991
South Streаm Bulgaria AD
34,372
34,372
Impairment
(23,889)
(23,746)
South Streаm Bulgaria AD, net
Bulgaria
50%
10,483
50%
10,626
68,474
68,617
Affiliated company
ZAD Energy
Bulgaria
0.32%
21
0.32%
21
21
21
3,081,617
3,081,760
Summarized financial information on associates and joint ventures
The tables contain summarized information on the basis of BEH EAD's associate’ and joint ventures’ financial
statements.
31 December 2021
Total assets
Total
liabilities
Income
Net
income /
(loss)
BGN’000
BGN’000
BGN’000
BGN’000
ICGB AD
427,668
325,163
-
(5,029)
South Streаm Bulgaria AD*
21,097
166
79
(331)
ZAD Energy
50,985
20,457
15,219
9,737
499,750
345,786
15,298
4,377
*not audited
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
33
31 December 2020
Total assets
Total
liabilities
Income
Net
income /
(loss)
BGN’000
BGN’000
BGN’000
BGN’000
ICGB AD
218,355
110,821
1,298
(2,451)
South Streаm Bulgaria AD
21,452
195
-
(258)
ZAD Energy
50,985
20,457
15,219
9,737
290,792
131,473
16,517
7,028
Joint venture ICGB AD
BEH EAD is a partner in ICGB AD – the joint investment company with equal participation of BEH EAD and IGI
Poseidon (joint venture company with equal participation of DEPA SA and Edison International Holding N.V.). The
project company will build a gas interconnector between Greece and Bulgaria with a capacity of up to 3 billion
m3/year from the town of Komotini to the town of Stara Zagora, with a length of 182 km. The implementation of the
project is related to the policy of the Republic of Bulgaria, aimed at providing infrastructure for access to alternative
sources and routes for import of natural gas and ensuring the physical connectivity of the country to the Southern Gas
Corridor.
It is envisaged that the joint venture will build, hold the ownership of the gas pipeline, to be licensed as its operator,
to allocate its capacity, and receive income from the transit of natural gas.
In 2019, contracts were concluded with the selected Consulting Engineer (the TIBEI consortium), the pipe supply
Contractor (Corinth Pipeworks Pipe Industry S.A.), the Contractor for the working project, supply of materials and
civil works – EPC (AVAX S.A.), and the Construction Supervisors (Company under the Obligations and Contracts
Act “Eko Bul Kontrol”) and the construction phase of the project was commenced.
The General Meeting of the ICGB AD shareholders made a decision on 10 October 2019 to increase the ICGB AD
capital from BGN 33,053,560 to BGN 115,980,740 by issuing 8,292,718 new ordinary, registered shares of Class A,
with a nominal value of BGN 10 each, which will be subscribed by the shareholders owning Class A shares,
proportionally to the shares owned by them prior to the increase.
Bulgarian Energy Holding EAD made a cash contribution to the capital of ICGB AD on 23 October 2019 in the
amount of BGN 41,463,590, being 50% of the contribution according to the General Meeting’s decision.
In 2020, construction and installation works have been carried out on the construction of the gas pipeline in the
conditions of a pandemic by COVID 19 and relevant restrictions imposed by the legislation in Bulgaria and Greece.
In 2021, the construction and installation activities have been in an advanced phase. The linear part of the territory of
the Hellenic Republic has been completed, and hydro tests have been performed.
On the territory of the Republic of Bulgaria at the end of December 2021 the linear part was about 95% complete, and
three sections were hydraulically tested.
The construction and installation activities of ground facilities (2 GIS, Dispatch Center in Haskovo) have been carried
out, and the construction of the crane units has not started due to delays in material deliveries.
Due to the global pandemic of COVID-19, during the phase of active construction there have been violations in the
planned rhythm of work activities and the expected delivery times of equipment, materials and machinery.
According to the second amendment of May 2021 of the Final Joint Decision of 2018 of the energy regulators in the
Republic of Bulgaria and the Hellenic Republic on the Application for exemption of ICGB AD under Art. 36 of
Directive 2009/73, the date of putting the facility into commercial operation has been set no later than 1 July 2022.
In November 2021, with a decision of the Energy and Water Regulatory Commission, the project company ICGB AD
received a license for transmission of natural gas on the territory of Bulgaria for a period of 35 years.
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
34
Joint venture South Stream Bulgaria AD
In June 2014, with the permission of the Minister of Economy and Energy, an agreement was signed for the receipt
of funds from Gazprom EP International BV, which will be used to finance the participation of BEH EAD in the
project company South Stream Bulgaria AD. Repayment of the funds under the agreement will only be made from
BEH EAD’s proceeds from the project company’s dividends. On 11 August 2014 the Company received a tranche
amounting to BGN 191,009 thousand, being the contribution from BEH EAD, by which on 18 August 2014 the share
capital of the project company was increased by BGN 382,018 thousand by the two shareholders BEH EAD and PAO
Gazprom.
In December 2014 representatives of the Russian shareholder in South Stream Bulgaria AD, PAO Gazprom, publicly
announced their intentions to terminate the project.
In September 2015 the shareholder PAO Gazprom informed Bulgarian Energy Holding EAD that it considers the
project South Stream terminated, and in this regard the shareholders have begun settling their relations under the
project.
An agreement dated 27 December 2019 (Deed of settlement) made the complete settlement of the project relations.
On 11 May 2020, a reduction of the capital of the project company South Stream Bulgaria AD was entered in the
Commercial Register in the amount of BGN 377,726,000. The amount reduced from the capital which is due to
Bulgarian Energy Holding EAD, amounting to BGN 188,863,000 (EUR 96,560,662.61), was used to settle the
majority of the holding’s loan from Gazprom EP International BV. The remainder of the loan in the amount of EUR
1,107,149.39 will be settled by the liquidation quota of Bulgarian Energy Holding EAD upon liquidation of the project
company. The parties to the project shall not have any claims to each other after that.
In 2021, no further action was taken by the shareholders.
For 2021, an impairment of the investment on a liquidation basis in the amount of BGN 143 thousand has been accrued
(for 2020: BGN 193 thousand). The total value of accrued impairment of the investment as of December 31, 2021 is
BGN 23,889 thousand (as of December 31, 2020: BGN 23,746 thousand).
19.Property, plant and equipment
For the year ending on
31 December 2021
Land and
buildings
Machines and
equipment
Vehicles
Equipment
and other
assets
Rights-of-
use assets
Total
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
Gross carrying amount
Balance at 1 January 2021
2,026
44
1,198
878
3,820
7,966
Newly acquired assets
-
-
-
19
-
19
Derecognized assets
-
(16)
-
(5)
-
(21)
Revaluation
134
2
-
-
-
136
Balance at 31 December 2021
2,160
30
1,198
892
3,820
8,100
Depreciation
Balance at 1 January 2021
-
(13)
(1,114)
(577)
(506)
(2,210)
Annual depreciation quota
-
(7)
(38)
(105)
(268)
(418)
Depreciated depreciation
-
-
-
12
-
12
Revaluation
-
16
-
-
-
16
Balance at 31 December 2021
-
(4)
(1,152)
(670)
(774)
(2,600)
Carrying amount
as at 31 December 2021
2,160
26
46
222
3,046
5,500
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
35
For the year ending on
31 December 2020
Land and
buildings
Machines and
equipment
Vehicles
Equipment
and other
assets
Rights-of-
use assets
Total
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
Gross carrying amount
Balance at 1 January 2020
2,026
38
1,198
864
3,820
7,946
Newly acquired assets
-
6
-
19
-
25
Derecognized assets
-
-
-
(5)
-
(5)
Balance at 31 December 2020
2,026
44
1,198
878
3,820
7,966
Depreciation
Balance at 1 January 2020
-
(6)
(1,035)
(477)
(238)
(1,756)
Annual depreciation quota
-
(7)
(79)
(105)
(268)
(459)
Depreciated depreciation
-
-
-
5
-
5
Balance at 31 December 2020
-
(13)
(1,114)
(577)
(506)
(2,210)
Carrying amount
as at 31 December 2020
2,026
31
84
301
3,314
5,756
Revaluation of property, plant and equipment
As at 31 December 2021, the carrying amount of property, plant and equipment was revalued for impairment
indications. Under the Company’s accounting policy, property, plant and equipment is revalued every 3 years or at
shorter periods.
The revaluation of property, plant and equipment for subsequent revaluation are carried out by an independent licensed
appraiser in accordance with the Bulgarian Valuation Standards, the Accounting Act, IAS 16 Property, Plant and
Equipment and IFRS 13 Fair Value Measurement. As a result of the revaluation made, the revaluation reserve was
increased by BGN 136 thousand.
The Company has reviewed the tangible assets for impairment indications as at 31 December 2021. No indications
were found to the effect that the carrying amount of the assets exceeds their recoverable amount, furthermore there is
no need to make changes in the residual useful life of the assets. As a result, no impairment loss is recognized in the
separate financial statements.
On 1 January 2019, the Company has recognized an asset with the right to use in the amount of BGN 3,597 thousand
under a contract from 2015 with NPP Kozloduy EAD, to rent an administrative building for a period of ten years, with
the tenant being in a position to go on using the building also after such period. To determine the present value of the
lease liability, the Bulgarian Energy Holding EAD has used a discount percentage of 3.50%, which is an interest rate
obtained by the Company in financing its own activities during the last year, and corresponding to the market levels.
The Company has recognized assets with the right to use in the amount of BGN 152 thousand under a contract for the
operating lease of 3 motor vehicles for a period of four years. The present value of the lease liability is the market
value of the vehicle at the time of the lease contract conclusion in a direct sale from the same supplier, with no
financing. The calculated interest rate for the leasing of two of the vehicles is 1.31%, and for the third vehicle it is
2.27%.
The company has recognized as an asset with the right to use BGN 71 thousand resources in the cloud environment
for a period of five years.The entire contract amount was paid at the beginning of the contract. To determine the
present value of the lease liability, the Bulgarian Energy Holding EAD has used a discount percentage of 3.50%,
which is an interest rate obtained by the Company in financing its own activities during the last year, and
corresponding to the market levels.
As at 31 December 2021 and on 31 December 2020, the Company had no commitments assumed to buy property,
plant and equipment, and had not provided collaterals related to them.
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
36
All depreciation costs are included in the separate statement of profit or loss under “Amortization costs of non-
financial assets”.
20.Intangible assets
For the year ending on
31 December 2021
Software
Patents and
licences
Acquisition
costs
Total
BGN’000
BGN’000
BGN’000
BGN’000
Gross carrying amount
Balance at 1 January 2021
310
67
195
572
Newly acquired assets
30
-
-
30
Derecognized assets
(2)
-
-
(2)
Balance at 31 December 2021
338
67
195
600
Depreciation
Balance at 1 January 2021
(225)
(41)
-
(266)
Annual depreciation quota
(32)
(5)
-
(37)
Derecognized assets
2
-
-
2
Balance at 31 December 2021
(255)
(46)
-
(301)
Carrying amount
as at 31 December 2021
83
21
195
299
For the year ending on
31 December 2020
Software
Patents and
licenses
Acquisition
costs
Total
BGN’000
BGN’000
BGN’000
BGN’000
Gross carrying amount
Balance as at 1 January 2020
310
44
195
549
Newly acquired assets
-
23
6
29
Derecognized assets
-
-
(6)
(6)
Balance as at 31 December 2020
310
67
195
572
Depreciation
Balance as at 1 January 2020
(197)
(39)
-
(236)
Annual depreciation quota
(28)
(2)
-
(30)
Derecognized assets
-
-
-
-
Balance as at 31 December 2020
(225)
(41)
-
(266)
Carrying amount
as at 31 December 2020
85
26
195
306
Impairment of intangible assets
The Company has reviewed the intangible assets for impairment indications as at 31 December 2021. No indications
were found to the effect that the carrying amount of the assets exceeds their recoverable amount, furthermore there is
no need to make changes in the residual useful life of the assets. As a result, no impairment loss is recognized in the
separate financial statements.
All amortization costs are included in the profit or loss statement under “Amortization costs of non-financial assets”.
As at 31 December 2021 and on 31 December 2020, the Company had no commitments assumed to buy intangible
assets, and had not provided collaterals related to them.
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
37
21.Deferred tax assets
Deferred tax assets/(liabilities)
1 January
2021
Recognized
in profit or
loss
Recognized
in other
comprehens
ive income
31 December
2021
BGN’000
BGN’000
BGN’000
BGN’000
Property, plant and equipment
(101)
5
(14)
(110)
Impairment of debt instruments at
amortised cost
119,589
45,762
-
165,351
Investment
2,374
14
-
2,388
Pension and other liabilities to staff
82
7
3
92
Unused staff leave
25
(7)
-
18
Financial assets at fair value through
other comprehensive income
(3)
-
13
10
Tax loss carried forward
-
3,170
-
3,170
121,966
48,951
2
170,919
Recognised as:
Deferred tax assets
122,070
171,029
Deferred tax liabilities
(104)
(110)
Net deferred tax assets
121,966
170,919
Deferred tax assets/(liabilities)
1 January
2020
Recognized
in profit or
loss
Recognized
in other
comprehens
ive income
31 December
2020
BGN’000
BGN’000
BGN’000
BGN’000
Property, plant and equipment
(102)
1
-
(101)
Impairment of debt instruments at
amortized cost
97,837
21,752
-
119,589
Investments
2,355
19
-
2,374
Pension and other liabilities to
employees
70
9
3
82
Unused employee leaves
15
10
-
25
Financial assets at fair value through
other comprehensive income
(22)
-
19
(3)
100,153
21,791
22
121,966
Recognized as:
Deferred tax assets
100,277
122,070
Deferred tax liabilities
(124)
(104)
Net deferred tax assets
100,153
121,966
Deferred tax assets and liabilities are recognized in the Statement of Financial Position, except for a deferred tax asset
in the amount of BGN 14 thousand in relation to reported costs under operational lease contracts.
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
38
22.Trade and other receivables
31 December
2021
31 December
2020
BGN’000
BGN’000
Non-current receivables
Advances paid and prepaid expenses
1
1
1
1
Current receivables
Receivables from litigation
8
7
Impairment of receivables under litigation
(8)
(5)
Receivables from litigation, net
-
2
Advances paid and prepaid expenses
49,616
198
State budget receivables
142
-
Other receivables
11,041
11,877
Impairment of other receivables
(11,030)
(11,786)
Other receivables, net
11
91
49,769
291
49,770
292
As at 31 December 2021 the Company has paid advances to suppliers of greenhouse gas emission allowances in the
amount of BGN 49,411 thousand (31 December 2020: BGN 0) (note 6).
23.Receivables from Toplofikatsia Sofia EAD
On 11 December 2015 between Bulgarian Energy Holding EAD and Toplofikatsia Sofia EAD was signed a contract
according to which the payables of the district heating plant to Bulgarian Energy Holding EAD are merged and
novated. The debtor acknowledges fully and unconditionally liabilities of BGN 500,465 thousand, which are to be
paid for a period of twenty years, with a five-year grace period and interest accrued on the principal amount at the rate
of 3.25%. The contract provides that upon the conclusion of a concession contract between Sofia Municipality and a
third party, the third party undertakes to effect to BEH EAD an initial payment of not less than BGN 200,000 thousand,
within 120 days from the date when the concession contract enters into force, and the remainder will be paid in a way
agreed by the parties.
Liabilities amounting to BGN 52,311 thousand were challenged by the debtor in 2015 by the submission of six claims.
In 2019 court proceedings were closed, and receivables in the amount of BGN 3,339 thousand were recognized. The
due amounts were settled by Toplofikatsia Sofia EAD in accordance with the agreement of 2020. For the unrecognized
liabilities amounting to BGN 48,972 thousand, the Company has recognized an impairment in full.
As of December 31, 2021 from Toplofikacia Sofia EAD under an agreement dated December 11, 2015 there are due
amounts under a repayment schedule in the amount of BGN 35,917 thousand and default interest in the amount of
BGN 709 thousand.
A contract was concluded with Bulgargaz EAD on 28 August 2018 for the transfer of receivables from Toplofikatsia
Sofia EAD for consumed natural gas in the total amount on the date of contract conclusion, of BGN 99,193 thousand,
including a principal amounting to BGN 94,967 thousand and an interest amounting to BGN 4,226 thousand. The
receivables are fully overdue. An agreement was concluded with Toplofikatsia Sofia EAD on 1 April 2019, whereby
the debtor agreed that the debt would be paid by the debtor by 31 August 2025, and it would not pay principal
installments until 31 August 2019. The stipulated interest on the principal is at the rate of 4.66%, as of 28 August
2018. At a failure to pay any installment, an interest is due from the debtor for every day of default to the extent of
the base interest rate, fixed by the Bulgarian National Bank, plus a 10-point margin. The obligations under the
agreement are regularly served, according to the repayment schedule.
As at 31 December 2020, by virtue of the agreement of 28 August 2018, the overdue amounts payable by Toplofikatsia
Sofia EAD under the payment scheme are BGN 5,997 thousand, and interest for delay in the amount of BGN 343
thousand.
A contract was concluded with Bulgargaz EAD on 23 December 2020 for a remunerative transfer of receivables from
Toplofikatsia Sofia EAD for consumed natural gas in the total amount on the date of contract conclusion, of BGN
109,946 thousand, including a principal amounting to BGN 104,639 thousand and an interest amounting to BGN
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
39
5,307 thousand. The receivables are fully overdue. As at December 31, 2021 the amounts due from Toplofikacia Sofia
EAD on the newly acquired receivables amounted to a total of BGN 120,788 thousand.
On October 28, 2021 a contract was concluded with Bulgargaz EAD for remunerative transfer of receivables from
Toplofikacia Sofia EAD for consumed natural gas of the total value as of the date of concluding the contract BGN
121,120 thousand, including principal in the amount of BGN 119,407 thousand and interest in the amount of BGN
1,713 thousand. The receivables are fully overdue. As of December 31, 2021 the amounts due from Toplofikacia Sofia
EAD on the newly acquired receivables amounted to a total of BGN 123,276 thousand.
On December 18, 2021 a contract was concluded with Bulgargaz EAD for remunerative transfer of receivables from
Toplofikacia Sofia EAD for consumed natural gas at a total value as of the date of concluding the contract of BGN
85,207 thousand, including principal in the amount of BGN 85,066 thousand and interest in the amount of BGN 140
thousand. The receivables are completely overdue. As of December 31, 2021 the amounts due from Toplofikacia Sofia
EAD on the newly acquired receivables amounted to a total of BGN 86,223 thousand.
The management is in the process of finalizing the negotiations with the debtor and negotiating a plan for repayment
of the amounts of the last three assignments from 2020 and 2021.
As at 31 December, the movement of receivables is as follows:
2021
2020
BGN’000
BGN’000
Balance at 1 January
Gross Receivables Amount
733,846
628,473
Impairment
(223,408)
(166,921)
Net receivables amount
510,438
461,552
Acquired receivable
206,327
109,946
Accrued interest
35,165
21,041
Interest paid
(20,425)
(18,726)
Principal paid
(20,665)
(6,888)
Accrued impairment
(423,665)
(59,225)
Reversal of impairment
-
2,738
Balance at 31 December
Gross Receivables Amount
934,248
733,846
Impairment
(647,073)
(223,408)
Net receivables amount
287,175
510,438
24.Financial assets at fair value through other comprehensive income
Investment in shares of TRANSGAZ S.A., Romania
On 17 December 2007, Bulgarian Energy Holding EAD participated in the initial public offering of securities of
TRANSGAZ S.A., Romania, from an increase in the company’s capital by acquiring 6,041 shares. The fair value of
this investment as of December 31, 2021 is BGN 566 thousand (December 31, 2020: BGN 692 thousand) and is
determined on the basis of published quotations of prices on an active market as of December 30, 2021. All effects of
revaluation of the investment for 2021 are reported in the reserve for revaluation of financial assets at fair value
through other comprehensive income.
In 2021 a dividend of BGN 19,000 was received (for 2020: BGN 38,000).
Investment in shares of Balkangaz 2000 AD, Botevgrad
The Company holds 10,000 registered shares in Balkangaz 2000 AD, Botevgrad, with nominal value of BGN 1 (one)
each. The company has a subscribed and paid-in capital in the amount of BGN 903 thousand. Bulgarian Energy
Holding EAD (previously, Bulgargaz EAD) is a shareholder since the incorporation of the company in 2000. The
investment of Bulgarian Energy Holding EAD in Balkangaz 2000 AD was impaired and derecognized from the
financial statements prepared prior to 2007 due to the company's deteriorated financial position.
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
40
The fair value of this investment as at 31 December 2021 is BGN 2 thousand (31 December 2020: BGN 2 thousand)
and is determined in accordance with IFRS 13 using the third level of fair value hierarchy. This is the situation where
there is no active market for similar assets and valuation methods based on significant observable information are
used. A model prepared by GTFZP consortium was used to determine the fair value of assets of companies which are
not traded on an active market, applying the relevant reference values. All effects of the revaluation of the 2021
investment are reported in a reserve from revaluation of financial assets at fair value through other comprehensive
income.
In 2021 dividend of BGN 441.15 was received (for 2020: BGN 4 thousand).
25.Cash and cash equivalents
31 December
2021
31 December
2020
BGN’000
BGN’000
Cash at bank
732,429
173,988
Cash in hand
14
18
732,443
174,006
Effect of expected credit losses
(2,432)
(541)
730,011
173,465
The cash at bank accounts, where the Company has concluded bank service contracts following a procedure for the
selection of credit institutions, accumulate interest at interest rates determined according to price offers by the credit
institutions.
As at 31 December, cash is allocated in the following currencies:
31 December
2021
31 December
2020
BGN’000
BGN’000
BGN
704,556
166,335
EUR
27,664
7,511
USD
168
159
Others
55
1
732,443
174,006
26.Share capital and reserves
26.1 Share capital
The registered capital of the Company consists of 3,462,941,744 ordinary shares with a par value of BGN 1 each as
at 31 December 2021 (31 December 2020: 3,462,941,744). The Company‘s shares are ordinary, registered, non-
privileged, with voting rights. All ordinary shares are fully paid. Each share gives the right to one vote, a right to
dividend and to a liquidation quota in the Company‘s property. The sole shareholder in the capital of Bulgarian Energy
Holding EAD is the Bulgarian State through the Minister of Energy.
Shares issued and authorized for the reporting periods can be presented as follows:
2021
2020
Number of shares
Number of shares
Number of issued and fully paid shares:
At the beginning of the year
3,462,941,744
3,462,941,744
Total number of shares authorized at the end of the year
3,462,941,744
3,462,941,744
26.2 Other reserves
The other reserves are formed by profit distribution according to the Commercial Law and the Articles of Association
of the Company or from other sources by decision of the sole shareholder. These include statutory reserves and general
reserves. The statutory reserves are set aside until they reach one tenth or more of the registered capital. Sources for
funding statutory reserves are at least one tenth of the net profit, share premiums and the funds provided in the statutes
or decision of the sole shareholder. Statutory reserves can only be used to cover losses from current and prior reporting
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
41
periods. General reserves are formed as proposed by the Board of Directors and may be used to cover losses from
prior years and for other purposes. As at 31 December 2021, the statutory reserves amounted to BGN 346,294
thousand (31 December 2020: BGN 346,294 thousand), provisions for merger and replacement of shares of
subsidiaries amounted to BGN 102 thousand (31 December 2020: BGN 102 thousand), and general reserves amounted
to BGN 34,095 thousand (31 December 2020: BGN 34,095 thousand).
26.3 Reserve from revaluation of financial assets at fair value through other comprehensive income
In a revaluation reserve at fair value through another comprehensive income, were reported the revaluations of shares
of Transgaz S.A., Romania, and Balkangaz 2000 AD, Botevgrad, classified as financial assets at fair value through
another comprehensive income.
26.4 Revaluation reserve of non-financial assets
The revaluation reserve of non-financial assets includes increases in the fair value of property, plant and equipment
and decreases to the extent that those reductions are related to an increase in the same asset previously recognized in
other comprehensive income. Reserves can be used to cover losses and pay dividends only in limited types of
circumstances.
26.5 Reserve from remeasurement of defined benefit plans
The revaluation reserve of defined benefit plans includes actuarial gains and losses as a result of the revaluation of
defined benefit plans.
27.Issued bonds
31 December
2021
31 December
2020
BGN’000
BGN’000
Bond issue 2021
Non-current part
1,170,194
-
Current Part
12,761
-
Bond issue 2018
Non-current part
1,170,362
1,169,530
Current Part
20,930
20,930
Bond issue 2016
Current Part
-
1,094,468
2,374,247
2,284,928
Bond Issue 2016
On 2 August 2016, Bulgarian Energy Holding EAD successfully placed its second issue of Eurobonds of EUR 550
million. With increased investor interest, the issue was oversubscribed to in excess of EUR 2 billion. The parameters
of the second bond issue of Bulgarian Energy Holding EAD are as follows:
- the amount of the bond issue (nominal value) EUR 550 million;
- issue value – 98.921%;
- fixed interest rate 4.875% per annum;
- the interest is payable once a year on 2 August, with the first payment on 2 August 2017;
- maturity 2 August 2021;
- ISIN code XS1405778041 of the bond issue, quoted on the Irish Stock Exchange’s Main Market;
- BEH EAD shall observe certain Covenants as follows:
• the Issuer undertakes not to accept and to prevent its subsidiaries from assuming, directly or indirectly,
financial obligations if, after assessing the effects of the assumption of such liabilities and their proceeds
(1) there are, arise or exist grounds for the occurrence of a default, (2) the EBITDA Coverage Ratio
calculated as the consolidated EBITDA for the last period prior to the date of the transactions for which
the Issuer’s Consolidated Financial Statements have been prepared divided by the financial expenses
for the same period is less than 4:1 and (3) the Consolidated Leverage Ratio calculated as the
Consolidated Issuer’s debt for the last period prior to the date of the transactions for which consolidated
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
42
financial statements have been prepared, less the carrying amount of the Issuer’s cash holdings for the
same period, of the consolidated EBITDA for the same period, is more than 4.5:1.
• In case that NEK EAD has been declared by a Bulgarian court to be over-indebted, the Issuer undertakes
not to accept or allow (to the extent permitted by law) its subsidiaries to assume, directly or indirectly,
financial obligations.
The proceeds from the bond issue were used to repay the bridge loan of EUR 535 million provided by Banca IMI
S.p.A., London Branch, Bank of China (Luxembourg) S.A., and J.P. Morgan Limited, according to an agreement
sighed on 21 April 2016.
On 1 August 2017, the first interest payment was made, respectively on 30 July 2018 the second interest payment, on
1 August 2019 the third interest payment, and on 29 July 2020 – fourth interest payment. The annual interest payable
is EUR 26,813 thousand (BGN 52,441 thousand).
On July 30, 2021 the principal obligation in the amount of BGN 1,075,707 thousand under the bond issue was repaid.
Bond Issue 2018
On 28 June 2018, in the context of highly volatile financial markets as a result of a number of negative news from the
international political scene, Bulgarian Energy Holding EAD successfully placed its third Eurobond issue of EUR 400
million on the Irish Stock Exchange. The Eurobond parameters are as follows:
- amount of the bond issue of EUR 400 million;
- maturity 28 June 2025;
- a fixed interest rate of 3.5% per annum;
- the interest is payable once a year on 28 June, with a first payment due on 28 June 2019;
- ISIN code XS1839682116 of the bond issue quoted on the Irish Stock Exchange (Euronext Dublin);
- BEH EAD should observe certain covenants as follows:
• For so long as any Bond remains outstanding, the Issuer shall not, and shall not permit any of its Material
Subsidiaries to, directly or indirectly incur any Financial Indebtedness, provided, however that the
Issuer and any Material Subsidiary may incur Financial Indebtedness, if, after giving effect to the
incurrence of such Financial Indebtedness and the receipt and application of the proceeds therefrom:
(1) no Event of Default has or would have occurred and is or would be continuing; (2) the EBITDA
Coverage Ratio would be not less than 4.0 to 1.0; and (3) the Consolidated Leverage Ratio would not
be more than 4.5 to 1.0.
• For so long as any Bond remains outstanding, in the event that NEK is declared by a Bulgarian court to
be overindebted within the meaning of the Bulgarian Commerce Act, then the Issuer shall not, and shall
not permit (to the extent permitted by law) any of its Material Subsidiaries to, directly or indirectly,
incur any Financial Indebtedness.
On 31 July 2018, Bulgarian Energy Holding EAD successfully increased the third Eurobond issue listed on the Irish
Stock Exchange (Euronext Dublin) from EUR 400 million to EUR 550 million.
On 12 October 2018, Bulgarian Energy Holding EAD recorded a second increase of its third Eurobond issue, listed
on the Irish Stock Exchange (Euronext Dublin) from EUR 550 million to EUR 600 million.
The proceeds received from the issue are intended for general corporate purposes and for the refinancing of Eurobonds
issued by the Company in 2013 with maturity in November 2018.
On 27 June 2019 was effected the first interest payment, and on 24 June 2020 – the second and on 25 June 2021 – the
third interest payment. The annual interest payable amounts to EUR 21,000 thousand (BGN 41,072 thousand).
Bond issue 2021
On July 15, 2021, BEH successfully placed its fourth bond issue in the amount of EUR 600 million at an annual
interest rate of 2.45%. Given the extremely strong interest from investors, the bond was re-subscribed 2.3 times, and
the interest rate is the lowest achieved by Bulgarian Energy Holding EAD since the company participated in the
international financial markets. The parameters of the Eurobond are the following:
- amount of the bond issue EUR 600 million;
- maturity July 22, 2028;
- fixed interest rate 2.45% per annum;
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
43
- the interest is payable once a year on July 22, with the first payment due on July 22, 2022;
- ISIN code XS2367164576 of the bond issue, which is listed on the Irish Stock Exchange's main securities
market (Euronext Dublin);
- BEH EAD should comply with certain covenants as follows:
• As long as there are obligations under issued bonds, the Issuer will not and will not allow the larger
subsidiaries, directly or indirectly, to assume financial obligations, unless the Issuer and one of the
larger subsidiaries may assume a financial obligation, if, after the assumption of such a financial
obligation and the receipt and application of the proceeds from it: (1) there is no or would not occur
and does not continue or would not continue a case of default; (2) the EBITDA coverage ratio is not
less than 4.0 to 1.0; and (3) The consolidated leverage ratio is no more than 4.5 to 1.0.
• As long as there are obligations under issued bonds, in case NEK EAD is declared by a Bulgarian
court as over-indebted within the meaning of the Bulgarian Commercial Law, the Issuer will not
and will not allow (as permitted by law) its larger subsidiaries, directly or indirectly, to incur
financial obligations.
Proceeds from the newly issued bonds were used to refinance the second bond issue of the Company with a nominal
value of EUR 550 million, placed in 2016 at an annual interest rate of 4.875%, maturing on August 2, 2021, as well
as for general corporate purposes, except of coal-related activities.
Credit rating
• Moody's Rating Agency
On 8 June 2018, the rating agency Moody`s awarded “Ba1” rating to the group of Bulgarian Energy Holding EAD
with a stable outlook, and “Ba2” to the unsecured bonds issued by the Company.
On July 12, 2021, a credit rating of “Ba2” was assigned to an unsecured and non-subordinated bond of “Bulgarian
Energy Holding” EAD, issued on July 15, 2021, maturing on July 22, 2028.
As of December 31, 2021 the assigned long-term credit rating remains unchanged - "Ba1" with a stable outlook for
the group of "Bulgarian Energy Holding" EAD and "Ba2" for unsecured bonds of the company maturing in 2025 and
2028.
• Fitch Ratings Rating agency
On December 22, 2020 the rating agency confirmed the long-term credit rating "BB" in foreign and local currency of
"Bulgarian Energy Holding" EAD with a stable outlook and "BB-" of unsecured bonds of the company maturing in
2021 and 2025.
On February 26, 2021, the long-term credit rating "BB" in foreign and local currency was confirmed, raising the
outlook from stable to positive. The change is a result of the change from a stable outlook to a positive outlook of the
credit rating of the Republic of Bulgaria.
On May 10, 2021, the credit rating of the unsecured and unsubordinated bonds of Bulgarian Energy Holding EAD
was raised to the level of BB from BB-. The change reflects the application of the updated "Criteria for restoration of
the corporate rating and the rating of financial instruments" of Fitch to the unsecured and unsubordinated rating of
"Bulgarian Energy Holding" EAD, which was placed, together with the corporate rating of the Issuer, in "Supervisory
Criteria". after the publication of the updated criteria on April 9, 2021. Another factor that favors the increase of the
credit rating is the expected reduction of the liabilities of the subsidiaries in the structure of Bulgarian Energy Holding
EAD.
On July 12, 2021, the expected credit rating of BB (EXP) was assigned to an unsecured and unsubordinated bond of
Bulgarian Energy Holding EAD, issued on July 15, 2021, maturing on July 22, 2028. On July 23, 2021 the rating
agency has assigned a "BB" credit rating to the bond.
Rating of environmental, social and governance aspects (ESG rating)
For a public company actively involved in raising funds through capital markets, such as Bulgarian Energy Holding
EAD, attracting investor interest is associated with strict compliance with social, managerial and environmental
aspects of activities within the holding. The ESG rating is awarded after an in-depth analysis of a company's rules and
policies related to the environmental, social, and management aspects of its business; after assessing the overall impact
and the impact on the environment that the company remains in carrying out its business activities; as well as after a
thorough review of the available public information from the corporate website, articles and news about the company.
On December 16, 2021, BEH Group was assigned an ESG rating of 34.2 points ("high risk"). The rating was awarded
by Sustainalytics, a company within Morningstar that is a world-renowned provider of ESG research, ratings and data.
The corporate ESG assessment provided to Bulgarian Energy Holding EAD is a one-time assessment valid at the time
of its award and has been prepared on the basis of the information provided by Bulgarian Energy Holding EAD. The
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
44
ESG risk assessment report includes an overall ESG risk rating, an assessment of the Company's exposure and an
assessment of its management. Exposure refers to the extent to which a company is exposed to various material risks
related to environmental, social, and managerial aspects. The management assessment shows how well the company
manages these aspects. The BEH exposure rating is 54.3 points (“medium risk”) and the management rating is 39.9
points (“average performance”).
28.Loan from the European Investment Bank
In October 2019, Bulgarian Energy Holding EAD and the European Investment Bank concluded a Financing
Agreement for the construction of the IGB gas pipeline worth EUR 109.9 million with a state financial guarantee
security from the Republic of Bulgaria, the Guarantee Agreement for which is ratified by the National Assembly. The
loan is provided to Bulgarian Energy Holding EAD as a shareholder in ICGB AD. On its part, BEH EAD transfers
the loan financing to the project company through a Shareholder Loan Agreement in the same amount, under the same
financial conditions set in the agreement with the European Investment Bank and without additional margin for
Bulgarian Energy Holding EAD. The repayment of the loan granted by the European Investment Bank will be carried
out using a grace period for repayment of the principal of the utilized tranches, which, according to the Agreement
concluded with the bank, may last up to 7 years from the date of utilization of a tranche.
On 17 August 2020, the first tranche of EUR 30 million was utilized under the following conditions: payment of
interest at the rate of six monthly interest rate 0.259%, five-year grace period for principal payments, payment of
principal twice a year, the last installment being due on 17 August 2045.
On January 18, 2021, the second tranche of the Financing Agreement for the construction of the IGB gas pipeline with
the European Investment Bank in the amount of EUR 30 million was disbursed and the amount was provided to ICGB
AD under a Shareholder Loan Agreement. The interest is 0.237% payable twice a year, and the deadline for repayment
is January 18, 2046.
On December 1, 2021, the third tranche of the Financing Agreement for the construction of the IGB gas pipeline with
the European Investment Bank in the amount of EUR 30 million was disbursed and the amount was provided to ICGB
AD under a Shareholder Loan Agreement. The interest is 0.612% payable twice a year, and the deadline for repayment
is December 1, 2046.
As of December 31, 2021 the liability to the European Investment Bank amounts to BGN 176,174 thousand, including
BGN 176,025 thousand principal and BGN 149 thousand interest (December 31, 2020: BGN 58,731 thousand .).
Reconciliation between the opening and closing balances in the indiwidual statement of financial position of the
liabilities arising from financial activities
Modification of liabilities
from:
Liabilities arising from financial activities
Total liabilities
from financial
activities
Bond issue
2016
Bond issue
2018
Bond issue
2021
Loan
On 1 January 2021
1,094,468
1,190,460
-
58,731
2,343,659
Cash flows from financial
activities, net
(1,128,148)
(41,072)
1,173,498
117,129
121,407
Proceeds
-
-
1,173,498
117,350
1,290,848
Principal payments
(1,075,707)
-
-
(1,075,707)
Interest payments
(52,441)
(41,072)
-
(221)
(93,734)
Non-monetary changes,
dematerialised
33,680
41,904
9,457
314
85,355
Interest expense
30,590
41,072
12,761
314
84,737
Discount and amortization
of expenses
3,090
832
(3,304)
-
618
On 31 December 2021
-
1,191,292
1,182,955
176,174
2,550,421
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
45
Modification of liabilities from:
Liabilities arising from financial activities
Total liabilities
from financial
activities
Bond issue 2016
Bond issue 2018
Loan
On 1 January 2020
1,089,393
1,189,657
-
2,279,050
Cash flows from financial activities,
net
(52,441)
(41,072)
58,675
(34,838)
Proceeds
-
-
58,675
58,675
Principal payments
(52,441)
(41,072)
-
(93,513)
Non-monetary changes,
dematerialised
57,516
41,875
56
99,447
Accrued interest (increases)
52,441
41,072
56
93,569
Discount and amortization of expenses
5,075
803
-
5,878
On 31 December 2020
1,094,468
1,190,460
58,731
2,343,659
29.Employee retirement benefits liabilities
Employee retirement benefit liabilities to the personnel include the present value of the company’s liability as at the
end of the reporting period to pay benefits to employees upon retirement.
Under the Bulgarian Labour Code and the Internal Rules for setting the salary, the Company is obliged to pay from
five to ten gross monthly salaries to its employees upon retirement, depending on the length of service in the Company.
If the employee has worked at BEH EAD for the past 10 years, he/she is to receive ten gross monthly salaries on
retirement, and if he/she has worked for less than 10 years - five gross monthly salaries. The retirement benefit plan
is not funded. For setting the amount of the liabilities the Company performed an actuarial valuation as at 31 December
2020, using the services of a certified actuary.
31 December
2021
31 December
2020
BGN’000
BGN’000
Present value of the retirement benefit payable:
Non-current part
721
669
Current part
193
142
Total retirement benefit payables recognized in the statement of financial
position
914
811
The change in the present value of Employee retirement benefit liabilities is as follows:
2021
2020
BGN’000
BGN’000
Employee retirement benefits liabilities
at the beginning of the year
811
695
Current services cost
96
88
Interest expenses
4
5
Payments made
(30)
-
Actuarial (profit) / loss
33
23
Retirement benefit payables at the end of the year
914
811
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
46
The main assumptions used to set the retirement benefit payables are presented below:
2021
2020
Discount rate
0.6%
0.5%
Future increase of remuneration for the next year
9.0%
7.0%
Future increase of remuneration for the years after next year
9.0%
7.0%
Staff turnover: 18-30 years
5.0%
5.0%
31-40 years
3.0%
3.0%
41-50 years
2.0%
2.0%
51-60 years
1.0%
1.0%
Over 60 years
0.0%
0.0%
The management of the Company has made these assumptions with the help of an independent appraiser actuary.
These assumptions have been used in setting the amount of payables for employee benefits upon retirement for the
reporting periods, and are considered the best estimate of the management.
The total expenses of defined benefit plans of the Company recognized in profit or loss, may be presented as follows:
2021
2020
BGN’000
BGN’000
Current services cost
95
88
Interest expenses
4
5
Net actuarial loss recognized during the period
1
(5)
Total expenses recognized in the Statement of Profit or Loss
100
88
The total amount of defined benefit plan expenses of the Company recognized in other comprehensive income, can
be presented as follows:
2021
2020
BGN’000
BGN’000
Revaluation of defined benefit payments – actuarial loss
33
28
Total expenses recognized in other comprehensive income
33
28
The weighted average duration of the defined benefit obligation as at 31 December 2021 is 11 years (2020: 13 years).
The significant actuarial assumptions in setting the payables of defined benefit plans are related to the discount rate
and expected rate of salary increases.
The following table presents a sensitivity analysis and summarizes the effects of changes in these actuarial
assumptions on defined benefit payables as of 31 December 2021.
Increase
by 1%
Reduction
by 1%
BGN’000
BGN’000
Salary growth
124
(104)
Change in interest rate
(100)
121
Change in average life expectancy
12
(13)
The sensitivity analysis is based on a change in only one of the assumptions. It may differ from the actual change in
defined benefit obligations, as changes in assumptions are often interrelated.
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
47
The plan exposes the Company to actuarial risks such as interest rate risk, risk from changes in life expectancy, and
inflation risk:
• Interest rate risk – the present value of the defined benefit payable is calculated at a discount rate, determined
on the basis of the yield on government securities issues (with 10-year maturity). Given that the average
retirement age is longer than 10 years, it is necessary that the effective annual discount rate be determined
by extrapolation, following the requirements of §86 of IAS 19. A decline in the market yield of government
securities will lead to increase of the liabilities under plans with defined incomes of the Company.
• Risk of change in life expectancy – an increase in employee life expectancy would lead to an increase in
defined benefit payables.
• Inflation risk – an increase in inflation would lead to an increase in defined benefit payables.
30.Trade and other liabilities
31 December
2021
31 December
2020
BGN’000
BGN’000
Non-current liabilities
Leasing
23
62
Financial liabilities, non-current
23
62
Current liabilities
Amounts received in connection with project activity
2,165
2,165
Liabilities to suppliers
891
1,197
Retained guarantees under contracts
43
24
Leasing
39
42
Financial liabilities, current
3,138
3,428
Liabilities to staff
182
252
Liabilities to the state budget
146
48
Other liabilities
53
25
381
325
Non-financial liabilities, current
3,519
3,753
Total trade and other receivables, current
3,542
3,815
The terms of trade and other liabilities are as follows:
- Trade liabilities are not interest-bearing and are usually settled within ten days;
- Tax liabilities are not interest-bearing and are settled within the statutory terms;
- Other liabilities are not interest-bearing and are usually settled within a ten-day period.
31.Related party disclosures
Related parties of the Company include the sole shareholder – the Ministry of Energy, subsidiaries, associates and
joint ventures, key management personnel.
The Company discloses the following related parties:
Sole shareholder of the capital:
The Bulgarian State through the Minister of Energy
Subsidiaries and entities that are under common control:
Natsionalna Elektricheska Kompania EAD
NPP Kozloduy EAD
TPP Maritsa East 2 EAD
Mini Maritsa Iztok EAD
Bulgargaz EAD
Bulgartransgaz EAD
Electricity System Operator EAD
Bulgartel AD
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
48
NPP Kozloduy – New Builds EAD
HPP Kozloduy EAD
Interpriborservice OOD
PFC Beroe Stara Zagora EAD
Bulgartel Skopje DOOEL
Balkan Gas Hub EAD
ESO Engineering EOOD
NPP Construction Supervision EOOD
Associated and joint ventures of BEH Group
ICGB AD
South Stream Bulgaria AD
ContourGlobal Maritsa East 3 AD
ContourGlobal Operations BulgariaAD
ZAD Energy
POD Allianz BulgariaAD
HPC Gorna Arda AD
Transbalkan Electric Power Trading S.A. – NECO S.A., Greece
Gastrade SA, Greece
Southeast Electricity Network Coordination Center (SEleNe CC), Greece
Key management staff of the entity as of December 31, 2021
Vesselina Lachezarova Kanatova-Buchkova - Chairperson of the Board of Directors
Plamen Dilkov Dilkov - Deputy Chairperson of the Board of Directors
Ivan Todorov Andreev - Executive member
Valentin Alexiev Nikolov - Member of the Board of Directors
Diyan Stanimirov Dimitrov - Member of the Board of Directors
Alexander Plamenov Tsarnorechki - Member of the Board of Directors
Anton Georgiev Simeonov - Member of the Board of Directors
Zheko Mihailov Zhekov - Member of the Board of Directors
Stelian Penchev Koev - Member of the Board of Directors
Terms of transactions with related parties
Sales and purchases from related parties are made under market conditions. End-of-year outstanding balances are
unsecured (excluding part of the loans), interest-free (excluding loans) and settled with cash. The Company has not
taken/provided guarantees for receivables from or liabilities to related parties.
As at 31 December 2021 the Company has accrued impairment losses for expected credit losses on receivables from
related parties in the amount of BGN 1,249,272 thousand (31 December 2020: BGN 1,128,286 thousand).
An impairment review is carried out every financial year based on an analysis of the financial position of the related
party and the market in which it operates.
31.1 Loans granted to related parties
In 2021 and the comparative period, the receivables under the loans granted to related parties are as follows:
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
49
Receivables on loans
granted to related
parties
Receivables
on loans
granted
Fair value
and discount
corrective
Loss from
modification
Interest
Correction
Impairment
Receivables
on loans
granted, net
of impairment
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
Subsidiaries
NAK EAD
31 December 2021
2,373,521
(1,054,793)
-
-
(746)
1,317,982
31 December 2020
2,599,421
-
-
(143,690)
(831,607)
1,624,124
TPP Maritza East 2 EAD
31 December 2021
1,048,161
(162,068)
-
-
-
886,093
31 December 2020
698,863
-
(723)
(116,095)
582,045
Bulgartel EAD
31 December 2021
2,210
-
(86)
-
(1,862)
262
31 December 2020
2,249
-
-
-
(211)
2,038
Mini Maritsa East EAD
31 December 2021
-
-
-
-
-
-
31 December 2020
-
-
-
-
-
-
Joint ventures
ICGB AD
31 December 2021
176,174
-
-
-
(12,088)
164,086
31 December 2020
58,731
-
-
-
(2,932)
55,799
31 December 2021
3,600,066
(1,216,861)
(86)
-
(14,696)
2,368,423
31 December 2020
3,359,264
-
-
(144,413)
(950,845)
2,264,006
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
50
In 2021 and the comparative period, the movements under the loans granted to related parties are as follows:
Movement of loans granted to related
parties for the period
Loans granted
Notated
liabilities
Capitalizedliabilities
Loans repaid
Interest income
Interest income
corrective
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
Subsidiaries
NEK EAD
2021
-
-
-
328,273
73,825
28,548
2020
-
-
-
38,454
84,383
45,580
Mini Maritsa East EAD
2021
20,000
-
-
20,645
645
-
2020
-
-
-
-
-
-
Maritza East 2 EAD TPP
2021
-
407,622
-
90,709
29,533
2,852
2020
-
309,736
586,476
45,000
27,512
1,452
Bulgartel EAD
2021
-
-
-
157
84
34
2020
-
-
-
96
108
-
Joint ventures
ICGB AD
2021
117,350
-
-
221
314
-
2020
58,675
-
-
-
56
-
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
51
Terms of the loans granted to related parties
Natsionalna Elektricheska Kompania EAD
On 21 August 2014, a loan agreement was signed, consolidating the loans of NEK EAD to BEH EAD and the
transferred receivable from NPP Kozloduy EAD as of 1 April 2014, in the total amount of BGN 1,209,148 thousand.
The term of the new loan is 10 years, with a four-month grace period and an annual interest rate of 4.49%. Part of the
receivable amounting to BGN 170,784 thousand was rescheduled with an agreement in 2018. On July 28, 2021, the
obligation was renegotiated under the following conditions:
- Loan amount - BGN 973,777,456.64;
- Term for repayment - 10 years, as of July 28, 2021;
- Repayment of the loan - monthly annuity installments
- Interest - 3.225% per annum;
- Legal interest for overdue principal - BIR of the BNB + 10%.
As of December 31, 2021 the receivable amounts to BGN 762,625 thousand and there are no overdue receivables.
On 25 April 2016, a contract was signed for the provision of a target loan amounting to EUR 521,625 thousand (BGN
1,020,210 thousand) for the repayment of NEK EAD’s liabilities to AES-3C Maritsa East 1 EOOD and ContourGlobal
Maritsa East 3 AD, which is a prerequisite for effectiveness of the signed agreements to amend the long-term contracts
for the purchase of electricity from the two plants. The term of the loan is twelve months and at an annual interest rate
of 6.65%. The contract contains a clause to renegotiate the terms in the event of a successful placement of the bond
issue. On 20 December 2016, the terms of the contract for the provision of a target loan to NEK EAD dated 25 April
2016 were changed as follows:
• Amount of principal – EUR 535,672,538 (BGN 1,047,684,419);
• Interest rate on the loan - 5.575% on an annual basis;
• Duration of the contract – 59 months and 26 days;
• Maturity of the principal - 28 July 2021;
• Date of entry into force - 2 August 2016.
On July 28, 2021, the obligation was renegotiated under the following conditions:
- Loan amount - BGN 1,047,684,419.40;
- Term for repayment - 7 years, as of July 28, 2021;
- Repayment of the loan - monthly installments for interest and one-time payment of principal on 28.07.2021;
- Interest - 3.225% per annum.
As of December 31, 2021 the receivable amounts to BGN 1,047,872 thousand and there are no overdue receivables.
On 22 January 2018 an agreement for rescheduling interest was signed, whereby unpaid interest payables were
consolidated and rescheduled in the total amount of BGN 192,272 thousand, including under a contract of 21 August
2014 – BGN 170,784 thousand, and under a contract dated April 25, 2016 - BGN 309,108 thousand. As of December
31, 2021 the amount of the receivable is BGN 35,250 thousand, and the payments are made on time.
On July 28, 2021 it was agreed to reschedule interest liabilities in the total amount of BGN 550,720 thousand,
including under a contract dated August 21, 2014 - BGN 241,613 thousand and under an agreement dated April 22,
2015. - BGN 21,488 thousand. As of December 31, 2021 the amount of the receivable is BGN 527,774 thousand, and
the payments are made on time.
TPP Maritsa East 2 EAD
On October 16, 2019, a loan agreement merged and renewed liabilities under a 2019 contract for the purchase of
greenhouse gas emission allowances in the amount of BGN 398,025,460.71. The terms of the loan agreement are as
follows:
• Loan amount - BGN 398,025,450.71;
• Date of entry into force of the loan agreement - July 1, 2019;
• Term for repayment of the loan - until 30.06.2024, including:
- grace period for payments on the principal - from 01.07.2019 to 30.06.2020;
- term for repayment of the principal - from 01.07.2020 to 30.06.2024.
• Interest rate on the loan - according to the interest rates for intragroup loans accepted by BEH EAD (4.31% + 0.30
bps = 4.61% per annum);
• The loan is unsecured;
• Repayment plan - annuity installments for the principal and interest, made once a month on the last day of each
calendar month.
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
52
The receivable was renegotiated with a new loan agreement dated December 6, 2021.
On December 31, 2020, a loan agreement merged and renewed the liabilities of the 2020 contract for the purchase of
greenhouse gas emission allowances in the amount of BGN 309,736 thousand and outstanding interest liabilities under
loan agreements in the amount of BGN 40,335 thousand. The term of the new loan is 5 years, with a one-year grace
period for the principal and an annual interest rate of 4.61%. The repayment plan is effective from July 1, 2020. The
receivable is renegotiated with a new loan agreement dated December 6, 2021.
On December 6, 2021 a loan agreement was concluded, which renegotiated obligations under a loan agreement dated
16.10.2019 - principal in the amount of BGN 323,025 thousand and interest in the amount of BGN 16,537 thousand,
liabilities under loan agreement dated 31.12.2020 - principal in the amount of BGN 350.091 thousand and interest in
the amount of BGN 17.484 thousand, liabilities for purchase and sale of greenhouse gas emission allowances from
20.04.2021 - principal in the amount of BGN 338,112 thousand and interest in the amount of BGN 2,911 thousand.
The terms of the loan agreement are:
- Amount of the loan - BGN 1,048,160,934.24;
- Repayment period - until 31.07.2028 with 12 months grace period of the principal;
- Interest - 3.225% per annum;
- Method of repayment - annuity installments.
As of December 31, 2021 the receivable amounts to BGN 1,048,161 thousand and there are no overdue receivables.
On November 22, 2022, a contract was concluded for the provision of a credit line to TPP Maritza East 2 EAD in the
amount of BGN 100 million for working capital in order to repay obligations under applications for the purchase of
greenhouse gas emission allowances, issued during the period January 1, 2021 - June 30, 2021. The term of the
contract is 12 months, and the credit limit is provided for a period of 12 months without one day. The interest rate is
3.225% annual interest on the utilized funds. As of December 31, 2021, no funds have been disbursed under the credit
line.
Bulgartel AD
On 21 December 2016 liabilities amounting to BGN 2,882 thousand related to loan agreements of Bulgartel EAD
were consolidated and novated, including principal amounting to BGN 2,492 thousand and interest amounting to BGN
390 thousand. As of December 31, 2021, nine additional extension agreements have been signed. The repayment
period of the new debts is until August 1, 2025. The annual interest rate is 3,225%, and the interest rate for late
payment on the principal is BIR + 10%. As of December 31, 2021 the amount of the receivable is BGN 2,210 thousand
and there are no overdue receivables.
ICGB AD
In October 2019, Bulgarian Energy Holding EAD and the European Investment Bank signed a Financing Agreement
for the construction of the IGB gas pipeline worth EUR 109.9 million with a state financial guarantee from the
Republic of Bulgaria, the Guarantee Agreement ratified by the National Assembly. The loan is provided to Bulgarian
Energy Holding EAD as a shareholder in ICGB AD. For its part, BEH EAD transferred the loan financing of the
project company through a Shareholder Loan Agreement from October 2019 in the same amount, under the same
financial conditions set in the agreement with the European Investment Bank and without additional margin for
Bulgarian Energy Holding EAD. On 17 August 2020, the first tranche of EUR 30 million was disbursed under the
following conditions: payment of interest twice a year in the amount of 0.259%, five-year grace period for principal
payments, payment of principal twice a year, as the last installment is due on August 17, 2045. On January 18, 2021,
the second tranche of the Financing Agreement for the construction of the IGB gas pipeline with the European
Investment Bank in the amount of EUR 30 million was utilized and the amount was provided to ICGB “AD under
Shareholder Loan Agreement. The interest is 0.237% payable twice a year, and the deadline for repayment is January
18, 2046. On December 1, 2021, the third tranche of the Financing Agreement for the construction of the IGB gas
pipeline with the European Investment Bank in the amount of EUR 30 million and the amount was provided to ICGB
AD under a Shareholder Loan Agreement. The interest is in the amount of 0.612% payable twice a year, and the term
for repayment of the amount is until December 1, 2046. As of December 31, 2021 the receivable amounts to BGN
176,174 thousand and there are no overdue receivables.
Mini Maritsa Iztok EAD
On 15 September 2020, a loan was granted to Mini Maritsa Iztok EAD, amounting to BGN 55,000 thousand to finance
the company’s activity. The loan utilization is for a period of 10 months as of the date of signing the agreement against
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
53
a written request by the borrower. After utilizing the amount, the repayment term is 96 months after a 12-month grace
period, with an annual interest rate of 4.61%. In 2021 for utilized and repaid funds in the amount of BGN 20 million.
As of December 31, 2021 there is no obligation under the contract.
31.2 Trade receivables from and payables to related parties
The total amount of outstanding balances with related parties for the current and prior reporting periods is presented
in the table below.
Trade receivables
31 December
2021
31 December
2020
BGN’000
BGN’000
Subsidiaries and companies under common joint control
NPP Kozloduy EAD
24
34
ESO EAD
32,367
-
ESO EAD - impairment
(1)
-
32,366
-
Bulgargaz EAD
16
31
Bulgartransgaz EAD
285
-
Bulgartransgaz EAD - impairment
(1)
-
284
-
Mini Maritsa Iztok EAD
8,344
8,367
Mini Maritsa Iztok EAD - impairment
(4,247)
(3,820)
4,097
4,547
NEK EAD
25
16
TPP Maritza East 2 EAD
21,104
21,595
Maritza East 2 EAD TPP - impairment
(10,749)
(9,683)
10,355
11,912
47,167
16,540
31 December
31 December
Trade payables
2021
2020
BGN’000
BGN’000
Subsidiaries and companies under common joint control
TPP Maritza East 2 EAD
65,441
-
NPP Kozloduy EAD
3,123
3,296
68,564
3,296
The liability in the amount of BGN 3,094 thousand represents a leasing liability. Information on terms and minimum
lease payments is provided in note 33. Commitments, leases and contingent liabilities.
Liabilities in the amount of BGN 65,411 thousand represent presented advances from TPP Maritza East 2 EAD for
the purchase of allowances for greenhouse gas emissions. Explanatory information is provided in note 6.
31.3 Related party transactions
The total amount of related party transactions for the current and prior reporting periods is presented in the tables
below. Accrued income from dividends and accrued interest on overdue dividend payables are shown in note 5.
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
54
Sales to Related Party
Type of transactions
2021
2020
BGN’000
BGN’000
Sole owner
Ministry of Energy
vehicle costs
1
2
Subsidiaries and companies under common joint control
NPP Kozloduy EAD
holding agreement services
351
311
other commercial
-
4
Bulgargaz EAD
holding agreement services
62
95
bank guarantee fees
522
515
other commercial
1
-
Mini Maritsa East EAD
holding agreement services
111
157
NEK EAD
holding agreement services
89
62
other commercial
-
5
TPP Maritza East 2 EAD
greenhouse gas emission allowances
1,164,168
309,736
interest on greenhouse gas emission
allowances
2,912
-
holding agreement services
189
180
interest late payment of holding
agreement services
43
39
capital increase
-
597,955
ICGB AD
re-invoiced loan costs and other
commercial expenses
3
754
1,168,452
909,815
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
55
Purchases from Related
party
Type of transactions
2021
2020
BGN’000
BGN’000
Subsidiaries and companies under common joint control
NPP Kozloduy EAD
leased assets
285
285
Bulgargaz EAD
receivables from "Toplofikatsia Sofia"
EAD
206,327
109,946
Bulgartel EAD
rent of fiber optic line and internet
5
5
South Stream AD
reduction of capital
-
188,863
Affiliated company
ZAD Energy
Insurance
-
17
206,617
299,116
31.4 Remuneration of key management staff
2021
2020
BGN’000
BGN’000
Remuneration
(317)
(195)
Social security costs
(6)
-
Social costs
(47)
(28)
Unused annual leave and related social security expenses
(5)
(8)
(375)
(231)
32.Non-cash transactions
During the reporting period, the Company carried out the following investment and financial transactions, in which
cash and cash equivalents were not used, and which are not reflected in the cash flow statements:
• Bulgarian Energy Holding EAD has offset commercial liabilities against interest under a loan agreement
with Bulgartel AD in the amount of BGN 3 thousand.
33.Commitments, leases and contingent liabilities
Litigation and claims arise in the Company’s normal course of activity. According to the Company’s management,
the costs necessary to resolve these litigations and claims will not materially affect the financial position and cash
flows in future financial periods.
Proceedings by the European Commission against Bulgarian Energy Holding EAD
Two proceedings against Bulgarian Energy Holding EAD and its subsidiaries were instituted by the European
Commission, for possible abuse of a dominant position – Case АТ.39767 – BEH Electricity, and Case АТ.39849 –
BEH Gas.
Case COMP/B1/АТ.39767 BEH Electricity
The case concerns an alleged infringement of Art. 102 of the TFEU in connection with the inclusion of territorial
restrictions in the supply contracts concluded by subsidiaries of Bulgarian Energy Holding EAD – Natsionalna
Elektricheska Kompania EAD, NPP Kozloduy EAD and TPP Maritsa East 2 EAD, on the market for wholesale
electricity in Bulgaria, between September 2008 and March 2013.
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
56
The proceedings were initiated in 2012 with a view to the adoption of a decision under Chapter 3 (Articles 7 to 10) of
Council Regulation 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in
Articles 81 and 82 of the EC Treaty (Articles 101 and 102 TFEU).
By Decision C (2015) 8860 of 10 December 2015 on Case AT.39767 BEH-Electricity, the EC established as legally
binding the Commitments proposed by Bulgarian Energy Holding EAD, Natsionalna Elektricheska Kompania EAD,
TPP Maritsa East 2 EAD, NPP Kozloduy EAD and Independent Bulgarian Energy Exchange EAD for a period of
five years from the start date of Day-ahead market operations and terminated the proceedings.
By decision of the European Commission C (2016) 2246 dated 12 April 2016 a Monitoring Trustee – ADVOLIS was
approved, which controls the current management of Independent Bulgarian Energy Exchange EAD and the operation
of the “day ahead” market under the terms and conditions related to the EC Decision.
On 22 April 2016, a Mandate for the Monitoring Trustee was concluded between Bulgarian Energy Holding EAD and
ADVOLIS in compliance with the commitments under Case АТ.39767 BEH-Electricity for a period of 5 years from
the date of commissioning of the Day-ahead platform (19 January 2016).
Pursuant to the commitments, Bulgarian Energy Holding EAD undertakes to separate Independent Bulgarian Energy
Exchange EAD from its structure and to transfer the ownership of the capital of Independent Bulgarian Energy
Exchange EAD. The deadline for the transfer of the ownership of Independent Bulgarian Energy Exchange EAD was
extended by the EC until 31 January 2018.
The change of ownership of Independent Bulgarian Energy Exchange EAD was registered in the Commercial Register
on 15 February 2018.
In the period since the establishment of Independent Bulgarian Energy Exchange EAD until the transfer of its
ownership, the company became a key participant in the electricity market of the country. The important role of the
electricity exchange, the confidence of the Bulgarian government and market participants and its efficient operation
and management, have laid the foundation of the reform for liberalization of the electricity market in the country.
The aim is to integrate “Day-ahead” on the Bulgarian power exchange market with the Price Coupling of Regions
mechanism adopted at European level.
At the end of January 2021, the Monitoring Trustee ADVOLIS submitted a final report under Case АТ.39767 BEH-
Electricity to the attention of the European Commission, which states that the Commitments under the case have been
fulfilled by BEH and its subsidiaries.
The European Commission has adopted the final report of the Monitoring Trustee without any recommendations
thereto, and has discharged ADVOLIS from its duties as a Monitoring Trustee under the case by official letter of 22
March 2021.
Case COMP/B1/АТ.39849 – BEH gas
The case concerns an alleged infringement of Article 102 TFEU in relation to alleged actions of BEH EAD and its
subsidiaries – Bulgargaz EAD and Bulgartransgaz EAD, aimed at:
• preventing their competitors from access to key gas infrastructure (gas transmission network and natural gas
storage facility) in Bulgaria, explicitly or implicitly denying access to third parties or delaying;
• preventing competitors from gaining access to a main import pipeline by reserving capacity that remains
unused.
The proceedings were initiated in 2013 with a view to the adoption of a decision under Chapter 3 (Articles 7 to 10) of
Regulation 1/2003.
On 23 March 2015, the EC issued a Statement of Objections. Bulgarian Energy Holding EAD and its gas subsidiaries
submitted their respective responses to the European Commission on 9 July 2015 (Bulgargaz EAD), 10 July 2015
(Bulgarian Energy Holding EAD) and 17 July 2015 (Bulgartransgaz EAD).
On 24 November 2017, a decision was taken by the 44th National Assembly of the Republic of Bulgaria to take the
necessary action for the termination of Case COMP/B1/AT.39849 – BEH Gas, by which the National Assembly
supports the termination of the case under the procedure of Art. 7 of Regulation (EU) No. 1/2003 without admission
of the alleged infringements and without taking responsibility for them, fulfilling the obligations resulting from any
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
57
prohibitive decision, including any financial penalties. Thus far EC has not taken a official decision to close the case,
including an eventual amount of financial penalty.
On 26 July 2018, a decision was taken by the 44th National Assembly (NA) of the Republic of Bulgaria to take action
for termination of Case COMP/B1/AT.39849 - BEH Gas pursuant to Art. 9 of Regulation (EC) No. 1/2003 by entering
into commitments by the Bulgarian side, and reaching settlement with the European Commission. The second decision
of the NA comes as a result of the development of case COMP/B1/AT.39816 between the EC and Gazprom, under
which on 24 May 2018 the Commission announced that a settlement had been reached and that it was terminated
under Art. 9 of Regulation (EC) No. 1/2003 without any financial penalty.
On 17 December 2018, the European Commission notified the rendering of Decision C (2018) 8806 under Case
AT.39849 BEH-Gas, by which the European Commission imposed a fine on Bulgarian Energy Holding EAD (BEH),
its subsidiary for gas supply Bulgargaz EAD, and its subsidiary for gas infrastructure Bulgartransgaz EAD (“BEH
Group”) in the amount of EUR 77,068,000 for hindering access of competitors to key gas infrastructure in Bulgaria
in violation of EU antitrust rules. The decision was received in the offices of the three companies on 19.12.2018,
which set the start of the appeal period of the EC Decision (two months and ten days after notification of the Decision
to the parties), and for payment of the fine (three months after the notification of the Decision to the parties) set therein.
The appeal against the decision does not delay the payment of the fine.
On 18 March 2019, ING Bank NV issued two unsecured bank guarantees in favor of the EU with a total amount equal
to the amount of the fine of EUR 77,068,000, as follows:
- a bank guarantee in the amount of EUR 51,379 thousand, covering 2/3 of the total amount of the fine,
securing the liabilities of Bulgarian Energy Holding EAD and Bulgargaz EAD;
- a bank guarantee in the amount of EUR 25,689 thousand, securing the liability of Bulgartransgaz EAD under
the imposed sanction.
On 4 July 2019, the Bulgarian State, through the Ministry of Foreign Affairs, filed a petition to intervene in the case
in support of BEH EAD and its gas subsidiaries.
On 26 August 2019, the European Commission presented before the General Court its Defence in response to the
complaint lodged by Bulgarian Energy Holding EAD, Bulgargaz EAD and Bulgartransgaz EAD.
On 29 November 2019, Bulgarian Energy Holding EAD, Bulgargaz EAD and Bulgartransgaz EAD filed an
Opposition against the European Commission Defence.
On 20 February 2020, the Republic of Bulgaria filed through the Ministry of Foreign Affairs, within the period
specified by the General Court of the European Union, the official position of the Republic of Bulgaria on Case Т-
136/19, submitted by the Ministry of Energy and the Ministry Foreign Affairs, whereby the State intervened in support
of Bulgarian Energy Holding EAD, Bulgargaz EAD and Bulgartransgaz EAD against the European Commission,
before the General Court of the European Union.
The General Court examined additional documents and requested information in order to clarify all the circumstances
attached to the case. By letter of 14 March 2022, the Court requested the European Commission to provide non-
confidential versions of the documents listed by the Court. A response from the European Commission is expected.
It should be borne in mind that if the General Court decides to open the oral procedure, the President of the General
Court of the EU sets the date of the hearing for the oral proceedings. As of December 31, 2021, there is no set date
for an oral hearing of the parties.
In 2018 the Company recognized a provision in connection with the case COMP / B1 / AT.39849 - BEH gas in the
amount of BGN 50,244 thousand. 2020: BGN 756 thousand). The total value of the liability under the accrued
provision as of December 31, 2021 is BGN 52,346 thousand (as of December 31, 2020: BGN 51,592 thousand).
Legal claims
There are no significant legal claims brought against the Company.
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
58
Lease contracts
The lease liabilities of the Company are as follows:
31 December 2021
31 December 2020
Minimum
lease
payments
Discounting
Present
value of
installments
Minimum
lease
payments
Discounting
Present
value of
installments
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
Within one year
325
(106)
219
329
(113)
216
Between one and five
years
1,164
(357)
807
1,204
(384)
820
Over five years
2,471
(342)
2,129
2,757
(421)
2,336
Total minimum lease
payments under lease
contracts
3,960
(805)
3,155
4,290
(918)
3,372
The Company has concluded the following lease contracts:
Bulgarian Energy Holding EAD concluded a contract with NPP Kozloduy EAD on 1 September 2015 for the rental
of an administrative building in Sofia, 16 Veslets Str. The contract period is 10 years, with an option for extension.
The monthly installment under the contract amounts to BGN 24 thousand, VAT excluded. To find the present value
of the lease liability, Bulgarian Energy Holding EAD has used a discount percentage of 3.50%, which is an interest
rate derived by the Company in financing its own activities during the last year, and corresponding to the market
levels. As of December 31, 2021 the present value of the liability is BGN 3,094 thousand.
Bulgarian Energy Holding EAD has been renting 4 new multifunctional devices. The contract was signed in 2017 and
has a 60-month validity period. The rental fee is BGN 380 per month for all devices. After the contract expiry date,
the parties may negotiate conditions for acquisition of the devices by the lessee. The present value of the lease liability
is the market value of the devices at the time of conclusion of the lease contract with direct sale by the same supplier,
without funding. The calculated interest rate for the lease is 1.41%. As of December 31, 2021, the current value of the
liability is BGN 1,000.
Bulgarian Energy Holding EAD has been renting 3 motor vehicles for a period of four years. The present value of the
lease liability is the market value of the vehicle at the time of the lease contract conclusion in a direct sale from the
same supplier, with no financing. The calculated interest rate for the leasing of two of the vehicles is 1.31%, and for
the third vehicle it is 2.27%. As of December 31, 2021, the current value of the liability is BGN 61 thousand.
Assets are used only by the Company and there are no sublease contracts.
• Amounts recognized in the profit or loss statement
- Depreciation costs amounting to BGN 268 thousand;
- Interest expenses amounting to BGN 115 thousand.
• The total lease cash flow in 2021 was as follows:
- Payments related to lease contracts – BGN 395 thousand.
Others
The latest tax inspections of the Company were carried out by the tax administration as follows:
• Corporate tax - until December 31, 2020;
• VAT - until December 31, 2020;
• Personal income tax - until December 31, 2008;
• Social security - until December 31, 2008.
The Company’s management does not deem that there are significant risks resulting from the dynamic fiscal and
regulatory environment in Bulgaria that would require adjustments to the financial statements for the year ended on
31 December 2020.
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
59
34.Financial risk management objectives and policy
The Company owns financial assets consisting of trade receivables, loans granted to subsidiaries, cash and short-term
deposits that arise directly from the activity.
The financial liabilities of the Company include bond issues, related-party loans and trade payables. The main purpose
of the loans is to provide financing to the Company activity.
In 2021 as well as in 2020, the Company did not own or trade with derivative financial instruments.
The main risks arising from the Company’s financial instruments are liquidity risk, currency risk and credit risk.
Current risks are identified, measured and monitored using various control mechanisms introduced to determine
adequate prices for the services offered by the Company, as well as to adequately assess the market circumstances of
the investments made by it and the forms of maintenance of the free liquidity, without allowing an unjustified
concentration of risk and others. The Company’s risk management is currently conducted by the management and the
relevant structural units, depending on the type and specificity of the different kind of risk to which the Company is
exposed in its activities.
34.1 Categories of financial instruments
The carrying amounts of financial assets and liabilities of the Company may be presented in the following categories:
Financial assets
31 December
2021
31 December
2020
BGN’000
BGN’000
Financial assets at fair value through other comprehensive income:
Publicly traded shares
568
694
Debt instruments at amortized cost
Loans granted to related parties
2,368,423
2,264,006
Trade receivables from related parties
47,167
16,540
Trade and other receivables, including from Toplofikatsia Sofia EAD
287,186
510,531
2,702,776
2,791,077
Cash and cash equivalents
730,011
173,465
3,433,355
2,965,236
Financial liabilities
31 December
2021
31 December
2020
BGN’000
BGN’000
Financial liabilities reported at amortized cost:
Bond issues
2,374,247
2,284,928
Loan from the European Investment Bank
176,174
58,731
Trade and other liabilities
3,161
3,490
Trade liabilities to related parties
3,123
3,296
2,556,705
2,350,445
See note 4.9 for information on the accounting policy for each class of financial instruments. The methods used to
evaluate the fair values of financial assets and liabilities at fair value are disclosed in notes 4.9 and 35.1. A description
of the Company’s risk management policy and objectives for financial instruments is presented below.
34.2 Liquidity risk
Liquidity risk arises if the Company fails to meet its obligations when they become due. The Company applies an
approach that provides the necessary liquidity to meet the obligations under normal or stressful conditions, without
incurring unacceptable losses.
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
60
One of the objectives of the holding is to provide, if necessary, financial resources to the subsidiaries to maintain their
operating activities, as well as to implement strategic projects.
The Company finances the operating activities of the companies in the group in two ways:
• Internal financing, within the economic group, by redistribution of the free cash resource. Bulgarian Energy
Holding EAD acts as an intermediary between the companies by coordinating the relations between them, or
accepting free-cash resources and granting such to the company in need by monitoring the transactions at
market levels. Granting cash (loans) to companies is made under the same conditions under which the resources
have been received from the subsidiaries plus, a relevant spread.
Interest rates on money loans and deposits are based on market levels. The interest rate conditions of currency
loans and deposits are tied to a percentage that is the market rate for similar transactions in the transaction
period (floating or fixed).
• External financing – in case of shortage of funds in the economic group, Bulgarian Energy Holding EAD may
undertake external financing actions. This is a preferred way to raise funds for the implementation of investment
projects. For the period 2013 - 2021, the Company successfully placed four bond issues on the Irish Stock
Exchange and the funds were used to finance investment costs and refinancing liabilities.
As at 31 December 2021, the maturity structure of the financial liabilities of the Company, based on the agreed
undiscounted payments, is presented below:
As at 31 December
2021
Carrying
amount
Agreed
cash flows
6 months
or less
6-12
months
1-2 years
2-5 years
over 5
years
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
Bond issue
2,374,247
2,856,295
41,072
28,751
69,823
1,514,400
1,202,249
Loan from EIB
176,174
61,452
325
325
152
1,887
58,763
Trade and other
liabilities
3,161
194,527
926
2,197
650
1,950
188,804
Trade liabilities to
related parties
3,123
3,956
172
143
285
855
2,472
2,556,705
3,116,230
42,495
31,416
70,910
1,519,092
1,452,288
As at 31 December
2020
Carrying
amount
Agreed
cash flows
6 months
or less
6-12
months
1-2 years
2-5 years
over 5
years
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
Bond issue
2,284,928
2,507,005
41,072
1,128,147
41,072
1,296,714
-
Loan from EIB
58,731
60,954
76
76
152
1,887
58,763
Trade and other
liabilities
3,490
3,487
1,224
2,190
51
22
-
Trade liabilities to
related parties
3,296
4,212
172
143
285
855
2,757
2,350,445
2,575,658
42,544
1,130,556
41,560
1,299,478
61,520
34.3 Interest rate risk
The Company is exposed to risks from changes in market interest rates primarily on financial assets and liabilities
with variable (floating) interest rate.
In the structure of the Company’s assets, interest-bearing assets are represented by cash, bank deposits and loans
granted, the majority of which have a fixed interest rate. The Company also has loans with a combined structure of
interest rates on loans, which contains two components – fixed and variable. The policy of the Company is to grant
cash at a fixed interest rate higher than that of the borrowed funds, including renegotiation of interest rates on existing
loans. This also minimizes the likelihood of an unfavourable change in cash flows.
The borrowed funds of the Company are in the form of long-term and short-term loans, and have a fixed interest rate.
The following table illustrates the sensitivity of the annual net financial result after tax and of equity to a possible
change in interest rates on loans with a floating rate based on BIR in Bulgaria, amounting to +/- 0.01% (for 2019 +/-
0.01 %). These changes are considered probable based on observations of current market conditions. The calculations
are based on the change in the average market interest rate and the financial instruments held by the Company at the
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
61
end of the reporting period, which are sensitive to changes in the interest rate. All other parameters are accepted as
constant. There is no effect on other components of the Company’s equity.
Effect on net financial result after taxes
Interest rate increase
Interest rate decrease
BGN’000
BGN’000
2021
Receivables from Toplofikatsia Sofia EAD,
bound by the BIR
35
(35)
2020
Loans granted tied to the GIP
47
(47)
Receivables from Toplofikatsia Sofia EAD,
bound by the BIR
10
(10)
34.4 Currency risk
As at 31 December 2021, the Company has liabilities in currencies, other than BGN. During the year, the Company
also performed transactions in EUR in connection with absorbed bond issues, purchase of greenhouse gas emission
allowances, technical and other services received. The currency risk for these transactions related to possible
fluctuations in the foreign exchange rate is minimal due to the existence of a fixed exchange rate of the EUR to the
BGN, set by BNB. Bulgarian Energy Holding EAD also owns financial assets at fair value through other
comprehensive income, including stock exchange traded shares of a Romanian company, but due to the amount of the
capital investment, the management believes that currency risk is insignificant.
34.5 Credit risk
In performing its activities, the Company is exposed to credit risk, which is related to the risk that some of its
counterparties will not be able to fully meet their obligations in the usual timeframe. The receivables of the Company
are presented in the statement of financial position in net amount, after deduction of the accrued impairment. Such
impairments are made for those receivables where and when there were events identifying losses from uncollectibility
based on previous experience.
The Company has a significant concentration of credit risk associated with receivables from related companies and
commercial counterparties under cession contracts. The Company undertakes the following precautionary measures:
• on the loan contracts - lien of machinery and equipment, mortgages on property and others;
• for commercial and other receivables that are overdue and when they arose they were not secured, deferred
payment arrangements are concluded and collateral is agreed at an amount not less than the initially
recognized amount of the receivable;
• on the other contracts that were not previously secured, the following usual actions are taken in case of
overdue payment – offsetting of liabilities to the Company against overdue receivables from the same, and
if the amount of the debts does not cover the receivable, other out-of-court opportunities to settle the
receivables are sought.
The Company is currently monitoring and analyzing the servicing of the receivables, the reasons for the defaults and
the changes in the financial capacity of debtor companies, and the status and quality of the collaterals received is
controlled.
Exposure to credit risk
The Company’s maximum credit exposure for recognized financial assets amounts to their respective carrying amount
in the statement of financial position as at 31 December 2021:
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
62
31 December
31 December
Financial assets
2021
2020
BGN’000
BGN’000
Financial assets at fair value through other comprehensive income
568
694
Debt instruments at amortised cost that are not purchased or originally
created assets with credit impairment
533,205
2,791,077
Debt instruments at amortised cost that are purchased or originally
created assets with credit impairment
2,169,571
-
Cash
730,011
173,465
3,433,355
2,965,236
The Company has a significant concentration of credit risk due to receivables from loans granted to related entities
and receivables from Toplofikatsia Sofia EAD under long-term cession contracts.
The following table contains information about the exposure to credit risk for trade loans receivables from related and
unrelated parties of the Company, as at 31 December 2021 and 31 December 2020 respectively:
31 December 2021
Gross
exposure to
credit risk
Impairment of
expected credit
loss and
corrective
interest
Net
exposure
Impairment
rate for
credit losses
BGN’000
BGN’000
BGN’000
BGN’000
Loans granted to related parties that are not
originally created credit impairment assets
213,634
(14,782)
198,852
6.92%
Receivables from Toplofikatsia Sofia EAD
950,787
(663,612)
287,175
69.80%
31 December 2021
Nominal
exposure to
credit risk
Fair value and
discount
corrective
Net
exposure
Fair value
correction
rate and
discount
BGN’000
BGN’000
BGN’000
BGN’000
Loans granted to related parties that were
originally created assets with credit
impairment
3,386,432
(1,216,861)
2,169,571
35.93%
31 December 2020
Gross
exposure to
credit risk
Impairment
of expected
credit loss
Net
exposure
Impairment
rate for credit
losses
BGN’000
BGN’000
BGN’000
BGN’000
Related party loans granted
3,355,043
(1,091,037)
2,264,006
32.52%
Receivables from Toplofikatsia Sofia EAD
733,846
(223,408)
510,438
30.44%
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
63
As of December 31, 2021, the Company has a significant concentration of trade receivables and loans to the following
counterparties:
As at 31 December 2021
Internal credit risk
categorisation
Expected credit
losses (IFRS 9)
Relative share of the
claim to the carrying
amount of all
receivables, %
Natsionalna Elektricheska Kompania EAD
Phase 3
For the whole life
1%
Natsionalna Elektricheska Kompania EAD
Assets originally created with
credit impairment
For the whole life
47%
TPP Maritza East 2 EAD
Assets originally created with
credit impairment
For the whole life
33%
Toplofikatsia Sofia EAD
Phase 3
For the whole life
11%
As at 31 December 2020
Internal categorization of
credit risk
Expected credit
losses (IFRS 9)
Relative share of the
receivable to the
carrying amount of
all receivables, %
Natsionalna Elektricheska Kompania EAD
Phase 3
For the whole life
58%
TPP Maritsa East 2 EAD
Phase 3
For the whole life
21%
Toplofikatsia Sofia EAD
Phase 3
For the whole life
18%
The high concentration of trade receivables and loans to Natsionalna Elektricheska Kompania EAD and TPP Maritsa
East 2 EAD is due to the support provided by BEH EAD in its capacity as a parent company and financial holding
engaged in stabilizing the financial position of the two companies, in view of their key position in the security and
stability of the Bulgarian power system. Given the importance and strategic significance of the activities performed
by Natsionalna Elektricheska Kompania EAD and TPP Maritsa East 2 EAD, Bulgarian Energy Holding will continue
its actions aimed at stabilizing their financial condition.
Age analysis of the debt instruments at amortized cost on 31 December is presented below:
31 December 2021
Not due
From 0-180
days
From 180-
360 days
Over 360
days
Total
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
Gross value of related party loans granted
3,600,066
-
-
-
3,600,066
Fair value and discount corrective
(1,216,861)
-
-
-
(1,216,861)
Loss from modification
(86)
-
-
-
(86)
Impairment
(14,696)
-
-
-
(14,696)
2,368,423
-
-
-
2,368,423
Gross value of related party trade receivables
64,798
-
-
-
64,798
Discount
(2,633)
-
-
-
(2,633)
Impairment
(14,998)
-
-
-
(14,998)
47,167
-
-
-
47,167
Gross value of trade and other receivables
11,049
-
-
-
11,049
Impairment
(11,038)
-
-
-
(11,038)
11
-
-
-
11
Gross value of receivables from Toplofikatsia
Sofia EAD
577,534
231,171
31,903
110,179
950,787
Interest Correction
-
(2,343)
-
-
(2,343)
Fair value corrective
(14,196)
(14,196)
Impairment
(276,163)
(228,828)
(31,903)
(110,179)
(647,073)
287,175
-
-
-
287,175
-
Net value of loans and receivables
2,702,776
-
-
-
2,702,776
31 December 2020
Not due
From 0-180
days
From 180-
360 days
Over 360
days
Total
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
64
Gross value of loans granted to related parties
2,361,017
144,716
127,920
725,611
3,359,264
Deferred revenue
(4,221)
-
-
-
(4,221)
Adjustment
(4,275)
(26,044)
(21,060)
(93,033)
(144,412)
Impairment
(435,763)
(63,489)
(53,239)
(394,134)
(946,625)
1,916,758
55,183
53,621
238,444
2,264,006
Gross value of trade receivables from related
parties
29,586
96
193
168
30,043
Impairment
(13,489)
-
(5)
(9)
(13,503)
16,097
96
188
159
16,540
Gross value of trade and other receivables
11,884
-
-
-
11,884
Impairment
(11,791)
-
-
-
(11,791)
93
-
-
-
93
Gross value of receivables from Toplofikatsia
Sofia EAD
613,713
52,391
67,742
-
733,846
Impairment
(212,594)
(5,855)
(4,959)
-
(223,408)
401,119
46,536
62,783
-
510,438
Net value of loans and receivables
2,334,067
101,815
116,592
238,603
2,791,077
The change in impairment of expected credit losses of the loans and receivables during the year is as follows:
31 December
2021
31 December
2020
BGN’000
BGN’000
Impairment as at 1 January
1,195,327
977,172
Reintegration of impairments (note 8)
(6,730)
(24,714)
Impairment charge (note 8)
531,754
242,869
Write-off impairment
(1,032,546)
-
Impairment as at 31 December
687,805
1,195,327
35.Fair value measurement
The Company classifies assets and liabilities at fair value into three levels based on the significance of the inputs used
in determining the fair value of financial assets and liabilities. The hierarchy of fair value includes the following levels:
- Level 1: quoted prices (unadjusted) on active markets for identical assets or liabilities;
- Level 2: input other than quoted prices included in Level 1 that can be monitored in respect of an asset or liability,
either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
- Level 3: input for an asset or liability that is not based on observable market data.
An asset or liability is classified to the lowest level of significant input used to determine its fair value.
35.1 Fair value measurement of financial instruments
Financial assets measured at fair value in the statement of financial position are grouped into the following categories
according to the fair value hierarchy:
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
65
Level 1
31 December
2021
31 December
2020
BGN’000
BGN’000
Financial assets at fair value
through other comprehensive income
Publicly traded shares
566
692
The measurement methods and techniques used in determining fair value have not changed compared to the previous
reporting period. The Company owns 6,041 shares of Transgaz S.A., Romania, which are traded on the Romanian
Stock Exchange. The investment is classified as a financial asset at fair value through other comprehensive income,
and is presented in BGN. The fair values as at 31 December 2021 and 31 December 2020 were determined on the
basis of published quotes of active market prices.
Level 3
31 December
2021
31 December
2020
BGN’000
BGN’000
Financial assets at fair value
through other comprehensive income
Shares which are not traded on the stock exchange and are not
based on observed market prices
2
2
The Company holds 10,000 registered shares in Balkangaz 2000 AD, Botevgrad, with nominal value of BGN 1 (one)
each. The company has a subscribed and paid-in capital in the amount of BGN 903 thousand. Bulgarian Energy
Holding EAD (previously, Bulgargaz EAD) is a shareholder since the incorporation of the company in 2000. The
investment of Bulgarian Energy Holding EAD in Balkangaz 2000 AD was impaired and derecognized from the
financial statements prepared prior to 2007 due to the company's deteriorated financial position.
As of December 31, 2020 and December 31, 2021 the investment in the shares of Balkangaz 2000 AD is presented in
the financial statements in accordance with IFRS 13 using level 3 of the fair value hierarchy.
35.2 Fair value measurement of non-financial instruments
The following table presents the levels of the non-financial asset hierarchy at 31 December that are periodically
measured at fair value:
31 December
2021
31 December
2020
Level 3
Level 3
BGN’000
BGN’000
Property, plant and equipment:
- land
2,160
2,026
2,160
2,026
The fair value of the Company’s immovable property is determined on the basis of reports from independent licensed
appraisers (see note 19).
Land (Level 3)
Land is measured using the market analogy method, with adjustments on derived comparable market prices. The
comparable unit market prices are adjusted to the valued sites by adjustments for the differences in their functional
and technical parameters and in the possibility of future development. Functional parameters take into account the
purpose, status, location, engineering infrastructure and transport accessibility. The technical parameters mainly take
into account the possible intensity of construction, terrain and geological features of land. The degree of development
is conditioned by the construction of the necessary technical infrastructure.
As of December 31, 2021, a fair appraisal report prepared by an independent appraiser in the amount of BGN 2,160
thousand has been determined as a fair value of the land (two properties).
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
66
36.Capital management policy and procedures
The Board of Directors’ policy is to keep a strong capital base so as to maintain the trust of customers, creditors and
the market as a whole, and to provide the grounds for business development in the future. The aim of the management
is to provide balance between higher return that may be possible with higher levels of indebtedness, and its benefits
from a strong capital position. The Company’s objective is to achieve a return on equity of more than 5%. As of
December 31, 2021, the return on equity is 6.64% (December 31, 2020: -0.40%). During the year there were no
changes in the capital management of the Company.
37.Events after the reporting period
No adjusting events or significant non-adjusting events occurred between the reporting date of the financial statements
and the date of their approval for publication, except for the following:
Moratorium on the price of electricity, plumbing and heat on a regulated market
By Decision of the 47th National Assembly of the Republic of Bulgaria (Promulgated SG No. 108 of 17 December
2021, amended and supplemented, SG No. 108 of 17 December 2021, effective 17.12.2021) a moratorium was
imposed on the price of electricity, water and sewerage services and heat on a regulated market at the levels of 16
December 2021, valid until 31 March 2022.
Military conflict between Russia and Ukraine
In the early hours of February 24, 2022, Russia took military action in neighboring Ukraine. This conflict is growing
rapidly and is considered the most serious military situation in Europe since the end of World War II. Although the
Russian military may have planned the attack on Ukraine and mobilized in the year ending December 31, 2021, this
should not be considered a critical event to suggest that the conflict was obvious at the time. Given this fact, the
Company does not consider it necessary to take into account additional adjustments to the separate financial statements
as of 31.12.2021 and the current conflict is considered a non-corrective event.
Some countries have announced new packages of sanctions against the state debt of the Russian Federation and a
number of Russian banks, as well as personal sanctions against a number of individuals. At a later stage, sanctions
were imposed on Belarus as well. As of the date of the report, individual countries and the EU have imposed four
categories of sanctions on Russia and Belarus:
• sanctions against individuals and enterprises / organizations
• restrictions on business
• diplomatic measures
• restriction of economic cooperation
Due to the growing geopolitical tensions since February 2022, there has been a significant increase in the volatility of
securities and currency markets, fluctuations in energy and gasoline prices, a significant descent of the ruble against
the US dollar and the euro. The international situation related to the conflict between Russia and Ukraine has led to
changes in the economic aspect and market conditions associated with rising inflation, a dynamic rise in prices for
basic raw materials.
On April 26, 2022, the Russian company Gazprom Export notified its subsidiary Bulgargaz EAD that as of April 27,
2022, it would suspend natural gas supplies to Bulgaria. At the time of preparation of these financial statements, the
supply of natural gas from Gazprom Export to Bulgaria has been suspended, but no restrictive measures are required
for consumption in Bulgaria, as the satisfaction of local consumption is ensured by supplying natural gas from
alternative sources.
Given the complex international political situation and the extraordinary events related to the development of the
military conflict in Ukraine and the disruption of natural gas supplies from Gazprom Export to Bulgaria, the
Government of Bulgaria is making the necessary efforts to protect the national interest, part of which is to ensure
security of natural gas supply needed to meet local consumption. The importance of guaranteeing the supply of natural
gas is of key importance for the state and future development of the country's economy. Therefore, a commitment has
been made at intergovernmental and pan-European level to provide the necessary amount of natural gas needed to
meet local consumption, including by concluding contracts for centralized natural gas supply at EU level.
Execution of orders of the Minister of Energy and conclusion of a credit line agreement with Bulgartransgaz EAD
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
67
By Order №Е-РД-16-113 / 24.02.2022 of the Minister of Energy on the grounds of Art. 70, para. 1, para. 2, item 1,
para. 3 and para. 4 and Art. 71 of the Energy Act, Bulgargaz EAD and Bulgartransgaz EAD imposed additional
obligations to serve the public in connection with the escalation of tensions on the border between the Russian
Federation and Ukraine. In connection with the need to ensure the continuity of natural gas supplies on the territory
of the Republic of Bulgaria by injecting additional quantities of natural gas in the underground gas storage Chiren,
Bulgartransgaz EAD should take all necessary actions to purchase natural gas in the amount of of 10 million cubic
meters (105,500 MWh) in implementation of the Emergency Action Plan.
Order №Е-РД-16-129 / 28.02.2022 amended and supplemented the previous Order №Е-РД-16-113 / 24.02.2022, in
which additional service obligations were imposed on Bulgargaz EAD of the public, for the purchase of additional
quantities of natural gas, in the period from 28.02.2022 to 31.03.2022, in the amount of 248 000 MWh, to be pumped
into the Chiren UGS. According to the above-mentioned orders, Bulgarian Energy Holding EAD should provide the
necessary financial resources by providing funds to Bulgargaz EAD for the purchase of the above quantity.
With a protocol decision of March 9, 2022 of the Board of Directors of Bulgarian Energy Holding EAD and a protocol
decision of March 9, 2022, the Minister of Energy was granted permission to conclude a loan agreement between
Bulgarian Energy Holding EAD and Bulgartransgaz EAD in the form of a credit line, in order to fulfill the imposed
additional obligations of Bulgartransgaz EAD for public services by order №E-РД-16-168 of 17.03.2022 for
amendments and supplements to order №–Е-РД-16-129 of 28.02.2022 and Order №Е-РД-16-113 of 24.02.2022 of
the Minister of Energy, under the following conditions:
- Limit: BGN 20,000,000 (in words: twenty million);
- Term of validity: without term;
- Interest rate: 3.23% per annum on the utilized amount, according to the interest rates for intragroup loans adopted
by the Board of Directors of BEH EAD with a decision under item I.1 of Protocol №41-2021 / 30.07.2021;
The contract will be concluded after obtaining permission from the Energy and Water Regulatory Commission, in
accordance with the requirements of the Energy Act, in connection with Ordinance №3 of 21 March 2013 on licensing
of energy activities.
Agreement for the provision of a short-term credit line by Bulgarian Energy Holding EAD to Bulgargaz EAD in the
amount of BGN 200 million.
On February 25, 2022, based on a protocol decision of February 23, 2022 of the Board of Directors of Bulgarian
Energy Holding EAD and a protocol decision of February 25, 2022 of the Minister of Energy, a loan agreement was
concluded between Bulgarian Energy Holding EAD and Bulgargaz EAD in the form of a credit line in order to ensure
the servicing of the company's commitments under the contract with Gazprom Export for the supply of natural gas to
Bulgaria, under the following conditions:
- Limit: BGN 200,000,000 (two hundred million);
- Validity period: 12 months from the date of concluding a short-term credit line agreement;
- Interest rate: 3.23% per annum on the utilized amount, according to the interest rates for intragroup loans adopted
by the Board of Directors of BEH EAD with a decision under item I.1 of Protocol №41-2021 / 30.07.2021.
Agreement for the provision of a short-term credit line by Bulgarian Energy Holding EAD to Bulgargaz EAD in the
amount of BGN 40 million.
With a protocol decision of March 23, 2022 of the Board of Directors of Bulgarian Energy Holding EAD and a
protocol decision of April 5, 2022, the Minister of Energy was granted permission to conclude a loan agreement
between Bulgarian Energy Holding EAD and Bulgargaz EAD in the form of a credit line, in order to fulfill the imposed
additional obligations of Bulgargaz EAD for public service with order № Е-РД-16-168 of 17.03.2022 for amendments
and supplements to order № Е - RD-16-129 of 28.02.2022 and Order № Е-RD-16-113 of 24.02.2022 of the Minister
of Energy, under the following conditions:
- Limit: BGN 40,000,000 (forty million);
- Validity period: 12 months from the date of concluding a short-term credit line agreement;
- Interest rate: 3.23% per annum on the utilized amount, according to the interest rates for intragroup loans adopted
by the Board of Directors of BEH EAD with a decision under item I.1 of Protocol №41-2021 / 30.07.2021.
The contract will be concluded after obtaining permission from the Energy and Water Regulatory Commission, in
accordance with the requirements of the Energy Act, in connection with Ordinance №3 of 21 March 2013 on licensing
of energy activities.
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
68
Loan agreement between Kozloduy NPP EAD and Bulgarian Energy Holding EAD pursuant to Decree №28 /
10.03.2022, as amended. with Decree №52 / 13.04.2022 and Decision №142 / 10.03.2022, as amended. with Decision
№224 / 13.04.2022 of the Council of Ministers
By an Agreement on Grant Financial Assistance signed on December 5, 2016 between the Ministry of Energy and
NEK EAD, the Ministry of Energy provided NEK EAD with a grant in the amount of EUR 601,617,133 (BGN
1,176,660,837) in order to pay the amounts awarded in the arbitration case №ICC Case 18086 / GZ / MHM with ACE.
Pursuant to the terms of the Agreement, NEK EAD is obliged to reimburse the one-time financial assistance received
within the budget of the Ministry of Energy by December 6, 2023.
With Decree №28 / 10.03.2022, amended with Decree №52 / 13.04.2022 and Decision №142 / 10.03.2022, amended
with Decision №224 / 13.04.2022 of the Council of Ministers of the Republic of Bulgaria a decision was made to
adopt the relevant amendments approved by Decision № 1024 of the Council of Ministers of 2016. The agreement
between the Minister of Energy and the National Electric Company for the provision of financial assistance for the
payment of the amounts awarded in the arbitration case ICC Case 18086 / GZ / MHM, providing for early
reimbursement in full of the awarded assistance. The Annex to the Agreement between the Minister of Energy and
the National Electric Company EAD was approved by Decision №224 / 13.04.2022 of the Council of Ministers of the
Republic of Bulgaria and the remunerative financial assistance provided to NEK EAD should be paid by April 15,
2022.
On April 14, 2022, on the basis of a protocol decision of March 21, 2022 of the Board of Directors of Bulgarian
Energy Holding EAD and a protocol decision of March 24, 2022 of the Minister of Energy, a loan agreement was
concluded (credit) between Kozloduy NPP EAD as a lender and Bulgarian Energy Holding EAD as a borrower, under
the following conditions:
- Amount of the loan - up to BGN 350,000,000.00 (three hundred and fifty million BGN);
- Market interest rate - 1.66% annual interest rate;
- Term of validity - 12 months from the date of concluding the contract;
- Grace period for principal payments - 6 months from the date of concluding the contract;
- Term for repayment of the utilized amount - 6 months after the expiration of the grace period for payments on the
principal;
Loan agreement between Bulgarian Energy Holding EAD and National Electric Company EAD pursuant to Decree
№28 / 10.03.2022, amended with Resolution №52 / 13.04.2022 and Decision №142 / 10.03.2022, amended with
Decision №224 / 13.04.2022 of the Council of Ministers
Pursuant to Decree №28 / 10.03.2022, amended with Decree №52 / 13.04.2022 and Decision №142 / 10.03.2022,
amended with Decision №224 / 13.04.2022 of the Council of Ministers, on April 14, 2022, based on a protocol
decision of March 21, 2022 of the Board of Directors of Bulgarian Energy Holding EAD and a protocol decision of
March 24, 2022 The Minister of Energy concluded a loan agreement between BEH EAD as a lender and NEK EAD
as a borrower, under the following conditions:
- Amount of the loan - up to BGN 700,000,000.00 (seven hundred million BGN);
- Market interest rate - 2.44% annual interest rate;
- Term of validity - 33 months from the date of concluding the contract;
- Grace period for payments on the principal - 12 months from the date of concluding the contract;
- Term for repayment of the utilized amount - 21 months after the expiration of the grace period for payments on the
principal.
Change in the management of Bulgarian Energy Holding EAD
With a protocol decision of December 31, 2021 of the Minister of Energy, the number of members of the Board of
Directors was reduced from 9 to 7 members, and Valentin Alexiev Nikolov and Alexander Plamenov Tsarnorechki
were released. The change was entered in the Commercial Register and the Register of Non-Profit Legal Entities on
January 7, 2022.
By a protocol decision of March 22, 2022, Plamen Dilkov Dilkov was released by the Minister of Energy and Angel
Emilov Yankov was elected a member of the Board of Directors until a new tender procedure is conducted. The
change was entered in the Commercial Register and the Register of Non-Profit Legal Entities on March 28, 2022.
Bulgarian Energy Holding EAD
Separate Financial Statements
31 December 2021
69
Dividend obligation to the sole owner of the capital
According to Order №5 of April 27, 2022 of the Council of Ministers, Bulgarian Energy Holding EAD has an
obligation to distribute a dividend from the profit for 2021 in the amount of BGN 190,710,764. The dividend is due
until May 15, 2022.