1

 

Statistical code: 10625790-1920-114-01

Company registration number: 01-10-041683

 

 

 

 

 

 

MOL HUNGARIAN OIL AND GAS PUBLIC LIMITED COMPANY

 

1117 Budapest, Október huszonharmadika u. 18.

 

 

 

2021

Financial StatementS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Budapest, 22 March 2022

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MOL Plc. Financial Statements 31/12/2021

2

Financial Statements

Introduction

General information

MOL Hungarian Oil and Gas Public Limited Company (hereinafter referred to as MOL Plc. or Company) was incorporated on 1 October 1991 in Hungary on the transformation of its legal predecessor, the Országos Kőolaj- és Gázipari Tröszt (OKGT). In accordance with the law on the transformation of unincorporated state-owned enterprises, the assets and liabilities of OKGT were revalued as at that date. MOL Plc. is involved in the exploration and production of crude oil, natural gas and other gas products, refining, transportation and storage of crude oil and wholesale and retail marketing of crude oil products. The registered office address of the Company is 1117 – Budapest, Október huszonharmadika u. 18., Hungary.

The shares of the Company are listed on the Budapest and the Warsaw Stock Exchange. Depositary Receipts (DRs) are traded Over The Counter (OTC) market in the USA. There is no single ultimate controlling party of Mol Plc.

Authorisation and Statement of Compliance

These separate financial statements have been approved and authorised for issue by the Board of Directors on 22 March 2022.

These separate financial statements have been prepared in accordance with International Financial Reporting Standards that have been adopted by the European Union (EU). IFRS comprise standards and interpretations approved by the International Accounting Standards Board (IASB) and the IFRS Interpretations Committee (IFRS IC). Notes to the financial statements also contains disclosures required by Hungarian Accounting Law.

Mol Plc. complies with the requirements of European Securities and Markets Authority (ESMA) and publishes its annual financial statements in XHTML format from 1 January 2021.

ImageAlt1

 



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MOL Plc. Financial Statements 31/12/2021

3

Independent auditor’s reporT

 

Mol Plc. complies with the requirements of European Securities and Markets Authority (ESMA) and publishes its annual financial statements in XHTML format from 1 January 2021. The independent auditor’s report is a separate document.

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MOL Plc. Financial Statements 31/12/2021

4

Statement of profit or loss

 

Notes

2021

2020

Restated

 

HUF million

HUF million

Net sales

 

2,183,827

1,457,393

Other operating income

 

5,987

36,436

Total operating income

3

2,189,814

1,493,829

Raw materials and consumables used

 

1,736,406

1,179,861

Employee benefits expense

 

73,207

64,146

Depreciation, depletion, amortisation and impairment

 

100,027

96,488

Other operating expenses

 

207,116

99,114

Change in inventory of finished goods & work in progress

 

(59,579)

22,534

Work performed by the enterprise and capitalised

 

(12,778)

(12,192)

Total operating expenses

4

2,044,399

1,449,951

Profit from operation

 

145,415

43,878

Finance income

 

371,117

112,179

Finance expense

 

111,422

214,274

Total finance income/(expense), net

5

259,695

(102,095)

Profit/(Loss) before tax

 

405,110

(58,217)

Income tax expense/(benefit)

6

(4,030)

11,423

PROFIT/(LOSS) FOR THE YEAR

 

409,140

(69,640)

 

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MOL Plc. Financial Statements 31/12/2021

5

Notes

2021

2020

Restated

 

HUF million

HUF million

Profit/(loss) for the year

 

409,140

(69,640)

Other comprehensive income

 

 

 

Other comprehensive income to be reclassified to profit/(loss) in subsequent periods:

 

 

 

Changes in fair value of debt instruments at fair value through other comprehensive income, net of tax

7

(132)

(495)

Other comprehensive income/(loss) to be reclassified

to profit/(loss) in subsequent periods

 

(132)

(495)

Other comprehensive income not to be reclassified to profit/(loss) in subsequent periods:

 

 

 

Remeasurement of post-employment benefit obligations

7

(892)

(742)

Other comprehensive income/(loss) not to be reclassified

to profit/(loss) in subsequent periods

 

(892)

(742)

Other comprehensive income/(loss) for the year

 

(1,024)

(1,237)

Total comprehensive income/(loss) for the year

 

408,116

(70,877)

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MOL Plc. Financial Statements 31/12/2021

6

Notes

12/31/2021

12/31/2020

Restated

1/1/2020

Restated

 

HUF million

HUF million

HUF million

NON-CURRENT ASSETS

 

 

 

 

Property, plant and equipment

8

415,327

390,266

397,606

Intangible assets

8

51,372

45,120

39,662

Investments

9

2,810,130

2,221,115

2,023,716

Other non-current financial assets

18

51,611

16,382

191,519

Deferred tax asset

6

80,803

56,497

58,638

Other non-current assets

10

2,437

1,578

1,405

Total non-current assets

 

3,411,680

2,730,958

2,712,546

CURRENT ASSETS

 

 

 

 

Inventories

11

296,786

200,061

231,216

Trade and other receivables

20

384,542

187,713

225,350

Securities

18

26

10,685

24,275

Other current financial assets

18

16,681

15,568

104,600

Income tax receivable

6

 -

1,842

 -

Cash and cash equivalents

21

184,435

78,375

64,117

Other current assets

12

12,290

53,905

18,749

Assets classified as held for sale

16

1,121

 -

 -

Total current assets

 

895,881

548,149

668,307

Total assets

 

4,307,561

3,279,107

3,380,853

 

 

 

 

 

EQUITY

 

 

 

 

Share capital

 

80,992

80,972

80,939

Retained earnings and other reserves

 

1,667,595

1,799,998

1,798,896

Profit/(Loss) for the year

 

409,140

(69,640)

 -

Total equity

 

2,157,727

1,811,330

1,879,835

 

 

NON-CURRENT LIABILITIES

 

 

 

 

Long-term debt

18

1,182,058

752,259

370,956

Other non-current financial liabilities

18

681

1,182

589

Non-current provisions

13

216,428

181,783

184,878

Other non-current liabilities

14

1,646

708

899

Total non-current liabilities

 

1,400,813

935,932

557,322

CURRENT LIABILITIES

 

 

 

 

Short-term debt

18

67,348

60,592

84,130

Trade and other payables

18

355,919

192,595

259,664

Other current financial liabilities

18

218,769

211,483

529,976

Current provisions

13

16,002

11,001

5,829

Income tax payable

6

9,652

 -

1,190

Other current liabilities

15

81,331

56,174

62,907

Total current liabilities

 

749,021

531,845

943,696

Total liabilities

 

2,149,834

1,467,777

1,501,018

Total equity and liabilities

 

4,307,561

3,279,107

3,380,853

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MOL Plc. Financial Statements 31/12/2021

7

Statement of changes in equity

Issued share capital

Treasury

shares
1

Share capital

Share

premium

Fair valuation reserve

Retained earnings

Retained earnings and other reserves

Profit/(loss)

for the year

Total

equity

 

Notes

HUF million

HUF million

HUF million

HUF million

HUF million

HUF million

HUF million

HUF million

HUF million

Opening balance

1 January 2020

 

102,429

(21,490)

80,939

219,389

683

1,432,896

1,652,968

151,013

1,884,920

Correction of error

 -

 -

 -

 -

 -

(4,141)

(4,141)

(944)

(5,085)

Restated opening balance

1 January 2020

 

102,429

(21,490)

80,939

219,389

683

1,428,755

1,648,827

150,069

1,879,835

Profit/(loss) for the year (restated)

 -

 -

 -

 -

 -

 -

 -

(69,640)

(69,640)

Other comprehensive income/(loss) for the year

 

 -

 -

 -

 -

(495)

(742)

(1,237)

 -

(1,237)

Total comprehensive income/(loss) for the year

 

 -

 -

 -

 -

(495)

(742)

(1,237)

(69,640)

(70,877)

Transfer to reserves (restated)

 

 -

 -

 -

 -

 -

150,069

150,069

(150,069)

 -

Equity recorded for share-based payments

 

 -

33

33

 -

 -

912

912

 -

945

Other

 

 -

 -

 -

 -

 -

1,427

1,427

 -

1,427

Closing balance

31 December 2020

 

102,429

(21,457)

80,972

219,389

188

1,580,421

1,799,998

(69,640)

1,811,330

Restated opening balance

1 January 2021

 

102,429

(21,457)

80,972

219,389

188

1,580,421

1,799,998

(69,640)

1,811,330

Profit/(loss) for the year

 -

 -

 -

 -

 -

 -

 -

409,140

409,140

Other comprehensive income/(loss) for the year

 

 -

 -

 -

 -

(132)

(892)

(1,024)

 -

(1,024)

Total comprehensive income/(loss) for the year

 

 -

 -

 -

 -

(132)

(892)

(1,024)

409,140

408,116

Transfer to reserves (restated)

 

 -

 -

 -

 -

 -

(69,640)

(69,640)

69,640

 -

Dividends

17

 -

 -

 -

 -

 -

(63,226)

(63,226)

 -

(63,226)

Equity recorded for share-based payments

 

 -

20

20

 -

 -

1,487

1,487

 -

1,507

Closing balance

31 December 2021

 

102,429

(21,437)

80,992

219,389

56

1,448,150

1,667,595

409,140

2,157,727

 

1 Including shares under repurchase obligation

 



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MOL Plc. Financial Statements 31/12/2021

8

 

2021

2020

Restated

 

 

Notes

HUF million

HUF million

Profit/(Loss) before tax

 

405,110

(58,217)

Adjustments to reconcile profit before tax to net cash provided by operating activities

 

 

 

Depreciation, depletion, amortisation and impairment

4

100,027

96,488

Increase / (decrease) in provisions

13

5,025

(6,154)

Net (gain) / loss on asset disposal and divestments

 

2,778

11,694

Net interest expense / (income)

5

30,981

15,775

Other finance expense / (income)

5

(290,727)

85,735

Other items

23

65,677

(68,975)

Income taxes paid

6

(9,227)

(12,387)

Cash flows from operations before changes in working capital

 

309,644

63,959

Change in working capital

 

(163,064)

(14,515)

(Increase) / decrease in inventories

11

(99,540)

30,874

(Increase) / decrease in trade and other receivables

20

(105,522)

51,593

Increase / (decrease) in trade and other payables

18

97,047

(81,034)

(Increase)/decrease in other assets and liabilities

12,15

(55,049)

(15,948)

Cash flows from operations

 

146,580

49,444

Capital expenditures

2

(98,854)

(98,073)

Proceeds from disposal of fixed assets

 

578

662

Acquisition of businesses (net of cash)

 

 -

(285,898)

Increase / (Decrease) in other finance assets

 

29,994

(3,446)

Interest received and other financial income

5

2,136

5,847

Dividends received

5

200,799

51,470

Cash flows from investing activities

 

134,653

(329,438)

Proceeds from issue of bonds, notes and debentures

 

35,422

264,444

Proceeds from borrowings

 

302,480

330,161

Repayments of borrowings

 

(425,558)

(300,041)

Interest paid and other finance expense

5

(27,022)

(18,547)

Dividends paid to owners of parent

17

(63,213)

(1)

Other changes in equity

 -

1,427

Cash flows from financing activities

 

(177,891)

277,443

Currency translation differences relating to cash and cash equivalents

 

2,975

17,265

Increase/(decrease) in cash and cash equivalents

 

106,317

14,714

 

Cash and cash equivalents at the beginning of the year

 

78,375

64,117

Cash and cash equivalents at the end of the year

 

184,435

78,375

Change in Cash and cash equivalents

 

106,060

14,258

Change in Overdraft

 

257

456

Increase / (decrease) in cash and cash equivalents

 

106,317

14,714

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MOL Plc. Financial Statements 31/12/2021

9

Notes to the financial statements - Accounting information, policies and significant estimates



This section describes the basis of preparation of the financial statements and MOL Plc.’s applicable accounting policies. Accounting policies, critical accounting estimates and judgements that are specific to a given area are set out in detail in the relevant notes. This section also provides a brief summary of new accounting standards, amendments and interpretations that have already been adopted in the current financial year or will be adopted as those will be in force in the forthcoming years.

1.       Accounting information, policies and significant estimates

Basis of preparation

These separate financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board and interpretations issued by IFRS Interpretations Committee as adopted by the EU and effective on 31 December 2021. Notes to the financial statements also contains disclosures required by Hungarian Accounting Law.

The separate financial statements are prepared on a going concern basis. For the purposes of the application of the historical cost convention, the separate financial statements treat the Company as having come into existence as of 1 October 1991, at the carrying values of assets and liabilities determined at that date, subject to the IFRS adjustments.

 

New and amended standards adopted by MOL Plc.

MOL Plc. has applied the following amendments for the first time for the annual reporting period commencing 1 January 2021:

         Amendment to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Interest Rate Benchmark Reform- Phase 2

         Amendment to IFRS 4 Insurance contracts- deferral of IFRS 9

 

The above-mentioned amendments do not impact significantly the Company’s separate results, financial position or disclosures.

MOL Plc. is continuously following the market developments in relation to the IBOR reform because majority of its loan agreements include LIBOR and/or EURIBOR screen rates as reference rates. The effected agreements include fallback options to be used in case any of the screen rates are unavailable. In 2021, MOL Plc. continued to be engaged in discussions with banking partners and data providers on the potential fallback options and alternative rates to be used, and initial steps regarding replacement of USD LIBOR have been agreed on. MOL Plc. intends to implement the necessary changes to all loan documentation before relevant IBOR reform becomes effective.  MOL Plc. has no drawdowns and outstanding loan balance directly affected by the reform at 31.12.2021 and has not engaged in any hedging relations effected by the IBOR Reform. The reform is not considered to have any major impact on the Company’s hedging strategy.

 

MOL Plc. has applied the following amendment for the first time for the annual reporting period commencing 1 April 2021:

         Amendment to IFRS 16 Leases COVID-19 Related Rent Concessions beyond 30 June 2021

The above-mentioned amendment does not impact the Company’s separate results, financial position or disclosures.

 

Issued but not yet effective International Financial Reporting Standards

Issued but not yet effective International Financial Reporting Standards are disclosed in the Appendix I.

Summary of significant accounting policies

The accounting policies are detailed in the respective notes.

Functional and presentation currency

Based on the economic substance of the underlying events and circumstances the functional currency and presentation currency of MOL Plc. have been determined to be the Hungarian Forint (HUF).

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MOL Plc. Financial Statements 31/12/2021

10

Financial statement data is presented in millions of HUF, rounded to the nearest million HUF.

Foreign Currency Transactions

Foreign currency transactions are recorded initially at the rate of exchange at the date of the transaction, except for advanced payments for non-monetary items for which the date of transaction is the date of initial recognition of the prepayment. Exchange differences arising when monetary items are settled or when monetary items are translated at rates different from those at which they were translated when initially recognised or in previous financial statements are reported in profit or loss in the period. Monetary items denominated in foreign currencies are retranslated at exchange rate prevailing at the balance sheet date.

Foreign exchange differences on monetary items with a foreign operation are recognised in other comprehensive income if settlement of these items is neither planned nor likely to occur in the foreseeable future.

Financial statements of foreign entities are translated at year-end exchange rates with respect to the statement of financial position and at the weighted average exchange rates for the year with respect to the statement of profit or loss. All resulting translation differences are included in the translation reserve in other comprehensive income.

Currency translation differences are recycled to profit or loss when disposal or partial disposal of the given foreign operation occurs.

 

Significant accounting estimates and judgements

In the process of applying the accounting policies, management has made certain judgements that have significant effect on the amounts recognised in the financial statements which are set out in detail in the respective notes.

The preparation of separate financial statements in conformity with IFRS requires the use of estimates and assumptions that affect the amounts reported in the financial statements and the notes thereto. Although these estimates are based on the management’s best knowledge of current events and actions, actual results may differ from those estimates. These are set out in detail in the respective notes.

In 2021, the Covid-19 pandemic had no significant impact on operations and financial results, and it became part of the usual business.

 

Accounting policy change

Mol plc. has changed its accounting policy regarding purchased emission quotas. The Company subsequently remeasured emission quotas which has an active market, while other green rights/quotas which has no active market was measured at cost, subject to review for impairment. As new green rights emerged the Company reassessed its policy regarding quotas and decided to unify the treatment of the different quotas to provide more relevant information by treating similar rights in similar way regardless of whether they already have an active market or not. As a consequence, MOL Plc. measure all type of green rights/quotas at cost, subject to review for impairment.

 

Restatement

In the financial year of 2021, the company identified an error in capital expenditures which lead to an overstatement of HUF 6,056 million. The error resulted in a material understatement of other operating expense recognised for the 2020 and prior financial years and a corresponting overstatement of property, plant and equipment, as well as intangible assets. The error has been corrected by restating each of the affected financial statement line items for the prior periods, as follows:

 

Impact on equity (increase/(decrease) in equity):

12/31/2020

1/1/2020

 

HUF million

HUF million

Property, plant and equipment

(656)

(629)

Intangible assets

(5,400)

(4,456)

Total assets

(6,056)

(5,085)

 

 

 

Net impact on equity

(6,056)

(5,085)



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MOL Plc. Financial Statements 31/12/2021

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Impact on statement of profit or loss (increase/(decrease) in profit):

2020

 

HUF million

Other operating expenses

(971)

Net impact on profit for the year

(971)

 

Impact on statement of changes in equity:

1/1/2020

Published

Increase/ (Decrease)

1/1/2020

Restated

12/31/2020

Published

Increase/ (Decrease)

12/31/2020

Restated

 

HUF million

HUF million

HUF million

HUF million

HUF million

HUF million

Share capital

80,939

 -

80,939

80,972

 -

80,972

Retained earnings and other reserves

1,803,981

(5,085)

1,798,896

1,805,083

(5,085)

1,799,998

Profit of the year

 -

 -

 -

(68,669)

(971)

(69,640)

Total equity

1,884,920

(5,085)

1,879,835

1,817,386

(6,056)

1,811,330

 

Impact on property, plant and equipment and intangible assets movement table:

Tangibles

1/1/2020

Published

Increase/ (Decrease) of incorrectly capitalized expenditure

1/1/2020

Restated

12/31/2020

Published

Increase/ (Decrease) of incorrectly capitalized expenditure

Increase/ (Decrease) scrapping of a construction in progress

12/31/2020

Restated

 

HUF million

HUF million

HUF million

HUF million

HUF million

HUF million

HUF million

Construction in progress gross book value

78,555

(629)

77,926

81,283

(656)

(19,770)

60,857

Accumulated depreciation and impairment

(20,127)

 -

(20,127)

(20,126)

 -

19,770

(356)

Opening net book value

58,428

(629)

57,799

61,157

(656)

 -

60,501

Property, plant and equipment

398,235

(629)

397,606

390,922

(656)

 -

390,266

Intangibles

1/1/2020

Published

Increase/ (Decrease) of incorrectly capitalized expenditure

1/1/2020

Restated

12/31/2020

Published

Increase/ (Decrease) of incorrectly capitalized expenditure

12/31/2020

Restated

 

 

HUF million

HUF million

HUF million

HUF million

HUF million

HUF million

 

Exploration and evaluation assets gross book value

63,454

(4,456)

58,998

59,413

(5,400)

54,013

 

Accumulated amortization and impairment

(52,013)

 -

(52,013)

(52,171)

 -

(52,171)

 

Opening net book value

11,441

(4,456)

6,985

7,242

(5,400)

1,842

 

 

Intangible assets

44,118

(4,456)

39,662

50,520

(5,400)

45,120

 

 

 

In addition, the above movement table was restated due to scrapping of a construction in progress which was not presented in 2020. The Gross book value of Construction in progress decreased by HUF 19,770 million and the Accumulated depreciation and impairment of Construction in progress decreased by HUF 19,770 million. The net book value was unchanged. Please refer to Note 8.

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MOL Plc. Financial Statements 31/12/2021

12

 

 

Results for the year

 

 

 

 

 

 

 

 

This section explains the results and performance of MOL Plc. for the financial years ended 31 December 2021 and 31 December 2020. Disclosures are following the structure of statement of profit or loss and provide information on segmental data, total operating income, total operating expense, finance result. For taxation and share-based payments, disclosures related to the statement of financial position are also provided in this section.

2.      Segmental information

Accounting policies

For management purposes MOL Plc. is organised into four major operating business units: Upstream, Downstream, Consumer Services and Corporate and other segments. The business units are the basis upon which MOL Plc. reports its segment information to the management which is responsible for allocating business resources and assessing performance of the operating segments.

 

2021

Upstream

Downstream

Consumer Services

Corporate and other

Inter-segment transfers

Total

HUF million

HUF million

HUF million

HUF million

HUF million

HUF million

Net Revenue

 

 

 

 

 

 

External sales

11,332

1,534,538

614,426

23,531

 -

2,183,827

Inter-segment transfers

198,216

323,532

732

15,358

(537,838)

 -

Total revenue

209,548

1,858,070

615,158

38,889

(537,838)

2,183,827

 

 

 

 

 

 

Profit / (loss) from operation

78,778

106,678

28,208

(50,506)

(17,743)

145,415

 

2020

Upstream

Downstream

Consumer Services

Corporate and other

Inter-segment transfers

Total

HUF million

HUF million

HUF million

HUF million

HUF million

HUF million

Net Revenue

 

 

 

 

 

 

External sales

8,241

1,126,580

302,519

20,053

 -

1,457,393

Inter-segment transfers

98,747

215,108

583

18,506

(332,944)

 -

Total revenue

106,988

1,341,688

303,102

38,559

(332,944)

1,457,393

Profit / (loss) from operation - restated

(9,426)

56,263

23,988

(31,429)

4,482

43,878

 

2021

Upstream

Downstream

Consumer Services

Corporate and other

Inter-segment transfers

Total

HUF million

HUF million

HUF million

HUF million

HUF million

HUF million

Other segment information

 

 

 

 

 

 

Capital expenditure:

29,235

52,629

9,256

15,678

 -

106,798

      Property, plant and equipment

27,049

39,994

5,234

8,553

 -

80,830

      Intangible assets

2,186

12,635

4,022

7,125

 -

25,968

Depreciation, depletion, amortisation and impairment

39,499

42,243

4,631

13,654

 -

100,027

From this: impairment losses recognised in statement of profit or loss (incl. dry-holes)

11,566

2,487

162

98

 -

14,313

From this: reversal of impairment recognised in statement of profit or loss

23

 -

 -

 -

 -

23

Provisions made and used during the year and revision of previous estimates

3,319

2,487

411

(1,191)

 -

5,025

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MOL Plc. Financial Statements 31/12/2021

13

 

 2020

Upstream

Downstream

Consumer Services

Corporate and other

Inter-segment transfers

Total

HUF million

HUF million

HUF million

HUF million

HUF million

HUF million

Other segment information

 

 

 

 

 

 

Capital expenditure:

20,566

57,245

8,701

21,478

 -

107,990

      Property, plant and equipment

16,985

35,091

5,524

11,566

 -

69,166

      Intangible assets

3,581

22,154

3,177

9,912

 -

38,824

Depreciation, depletion, amortisation and impairment - restated

45,296

36,690

2,737

11,765

 -

96,488

From this: impairment losses recognised in statement of profit or loss (incl. dry-holes)

1,412

277

16

7

 -

1,712

From this: reversal of impairment recognised in statement of profit or loss

1,581

 -

 -

 -

 -

1,581

Provisions made and used during the year and revision of previous estimates

2,877

8,621

52

(11,483)

 -

66

 

The operating profit of the segments includes the profit arising both from external sales and transfers to the other business segments. Corporate and other segment provide maintenance, financing and other services to the business segments. The internal transfer prices applied are based on prevailing market prices.

The differences between the capital expenditures presented above and the additions in the intangible and tangible movement schedule are due to the additions of emission rights, and non-cash items such as capitalisation of field abandonment provisions, and assets received free of charge.

 

3.      Total operating income

Accounting policies

Net sales

IFRS 15 established a five-step model to account for revenue arising from contracts with customers and requires that revenue to be recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. Revenue is recognised when it is probable that the economic benefits associated with a transaction will flow to the enterprise and the amount of the revenue can be measured reliably. Sales are recognised when control of the goods or services are transferred to the customer.

The entity has generally concluded that:

• it satisfies performance obligations at a point in time, because control is transferred to the customer on delivery of the goods;

• it is the principal in its revenue arrangements, because it typically controls the goods or services before transferring them to customers;

• significant financing component does not exist, because the period between the transfer of the promised good or service to the customer and when the customer pays for that good or service is expected to be one year or less at contract inception.

Lease income

Lease income from operating lease is recognised on a straight-line basis over the lease term.

Sales taxes

Revenues, expenses and assets are recognised net of the amount of sales tax (e.g. excise duty), except:

          when the sales tax incurred on a purchase of assets or services is not recoverable from the taxation authority (e.g. if the entity is not subject of sales tax), in which case, the sales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item, as applicable

          receivables and payables that are stated with the amount of sales tax included

The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position.

Other operating income

Other operating income is recognised on the same accounting policy basis as the net sales.

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MOL Plc. Financial Statements 31/12/2021

14

a)       Sales by product lines

2021

2020

 

HUF million

HUF million

Sales of crude oil and oil products

1,850,282

1,231,788

Sales of natural gas and gas products

178,228

107,690

Sales of other products

89,666

62,422

Sales of services

65,651

55,493

Total

2,183,827

1,457,393

 

b)       Sales by geographical area

2021

2020

 

HUF million

HUF million

Hungary

1,532,829

991,575

Romania

183,850

109,686

Slovakia

83,929

51,382

Serbia

68,816

70,155

Slovenia

59,447

34,011

Croatia

58,259

37,747

Austria

47,101

37,045

Germany

39,314

27,765

Switzerland

21,843

23,684

Italy

18,185

9,742

Poland

17,628

12,207

Great Britain

4,959

14,792

Rest of Europe

45,249

28,398

Iraq

2

7,891

Rest of the World

2,416

1,313

Total

2,183,827

1,457,393

  

MOL Plc. has one single major customer the revenue from which exceed 10% of the total net sales revenues (MOL Petrolkémia Zrt. with HUF 298,461 million in 2021 and HUF 174,224 million in 2020).

c)       Other operating income

2021

2020

 

HUF million

HUF million

Reimbursement of legal costs

2,826

 -

Gain on sales of intangibles, property, plant and equipment

1,196

2,096

Allowances and subsidies received

432

478

Penalties, late payment interest, compensation received

416

424

Reimbursement of costs from exploration

380

173

Net gain of non-hedge commodity price transactions

 -

32,743

Other

737

522

Total

5,987

36,436

 

The Other operating income includes reimbursement of legal costs (HUF 2,826 million) related to arbitration proceeding between Dana Gas PJSC (Dana) and Crescent Petroleum Company International LTD (Crescent) against MOL Plc. and OMV Upstream International GmbH, where MOL was the respondent. The Final Award was issued on 2nd December 2021.  The tribunal dismissed all of Dana and Crescent’s claims and awarded reimbursement of 90% of MOL’s legal and arbitration costs.

4.      Total operating expenses

Accounting policies

Total operating expense

If specific standards do not regulate, operating expenses are recognised at point in time or through the period basis. When a given transaction is under the scope of a specific IFRS transaction it is accounted for in line with those regulations.

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MOL Plc. Financial Statements 31/12/2021

15

Mol Plc. has classified payments for leases of low value assets, short-term lease payments and variable lease payments not included in the measurement of lease liability within operating activities.

2021

2020

Restated

 

HUF million

HUF million

Raw material and consumables used

1,736,406

1,179,861

Material expenses

1,242,401

831,200

Cost of goods purchased for resale

374,377

238,627

Value of material-type services used

103,825

93,148

Value of intermediated services

15,803

16,886

Employee benefits expense

73,207

64,146

Wages and salaries

52,617

46,535

Social security

9,694

9,391

Other employee benefits expenses

10,896

8,220

Depreciation, depletion, amortisation and impairment

100,027

96,488

Other operating expenses

207,116

99,114

Net loss of non-hedge commodity price transactions*

64,671

 -

Mining royalties

32,066

16,779

Other services

19,968

17,797

Contribution to strategic inventory storage

17,869

14,890

Rental costs

11,907

10,588

Taxes and contributions

10,940

6,784

Net loss of Emission quotas

9,805

8,893

Advertising expenses

7,542

8,608

Consultancy fees

7,532

7,705

Net provision for field abandonment

3,767

1,072

Bookkeeping services

3,381

3,011

Insurance fees

3,079

2,644

Environmental provision made during the year

2,654

2,321

Penalties, late payment interest, compensation (net of provision utilized)

314

466

Net provision for legal and other claims

(2,707)

(11,487)

Other - Restated

14,328

9,043

Change in inventory of finished goods & work in progress

(59,579)

22,534

Work performed by the enterprise and capitalised

(12,778)

(12,192)

Total operating expenses

2,044,399

1,449,951

*The net result of the non-hedge commodity price transactions was gain in prior year (see Note 3/c)

 

Rental costs within other operating expenses relate to short-term leases, leases of low-value assets and variable lease payments.

The Other operating expenses includes release of provisions due to the reason MOL won the legal cases related to Creditor BETA, s.r.o. company (HUF 2,707 million) in 2021, and related to Creditor GAMA, s.r.o. company (HUF 11,606 million) in 2020.

Raw materials and consumables used

Raw materials mainly consist of crude oil and other products, maintenance materials and other chemical and non-chemical materials that are inevitable for production.

Employee benefit expenses

Other employee benefits expense contains fringe benefits, reimbursement of expenses and severance payments.

 

 

 

Share-based payments

Certain employees (including directors and managers) of MOL Plc. receive remuneration in the form of share-based payment transactions, whereby employees render services in exchange for shares or rights over shares.

MOL Plc.’s Employee Share Ownership Programme Organisation works in alignment with the provisions of the so-called employee Share Ownership Programme (’MRP’) legislation.

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MOL Plc. Financial Statements 31/12/2021

16

Equity-settled transactions

The cost of equity-settled transactions is measured at their fair value at grant date. The fair value is determined by applying generally accepted option pricing models (usually binomial model). In valuing equity-settled transactions, only market conditions are taken into consideration.

The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (‘vesting date’). The cumulative expense recognised for equity settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the number of awards that, in the opinion of the directors of the MOL Plc. at that date, based on the best available estimate of the number of equity instruments that will ultimately vest.

Cash-settled transactions

The cost of cash-settled transactions is measured initially at fair value at the grant date using the binomial model. This fair value is expensed over the vesting period with recognition of a corresponding liability. The liability is re-measured at each balance sheet date up to and including the settlement date to fair value with changes therein recognised in the statement of profit or loss.

2021

2020

 

HUF million

HUF million

Absolute Share Value Based Remuneration

 -

221

Short-term Share Ownership Plan

1,223

 -

Total cash-settled share-based payment expense

1,223

221

Absolute Share Value Based Remuneration

568

(614)

Relative Market Index Based Remuneration

52

(80)

Restricted Share Plan

1,031

 -

Short-term Share Ownership Plan

(582)

1,186

Share Incentive scheme for the members of the Board of Directors

361

507

Total equity-settled share-based payment expense

1,430

999

Total expense of share-based payment transactions

2,653

1,220

 

The share-based payments serve as the management’s long-term incentives as an important part of their total remuneration package. They ensure the interest of the top and senior management of MOL Plc. in the long-term increase of MOL share price and so they serve the strategic interest of the shareholders.

 

Cash-settled share based payment:

 

2021

2020 1

Number of shares in conversion option units

Weighted average exercise price

Number of shares in conversion option units

Weighted average exercise price

 

number of shares

HUF/share

number of shares

HUF/share

Outstanding at the beginning of the year

 -

 -

344,216

1,669

Granted during the year

 -

 -

 -

 -

Forfeited during the year

 -

 -

 -

 -

Exercised during the year

 -

 -

(337,552)

1,669

Expired during the year

 -

 -

(6,664)

1,669

Outstanding at the end of the year

 -