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|  | Annual Financial Report | 1

MOL Group

Annual Financial Report

2022

|  | Annual Financial Report | 2

|  | Management Discussion and Analysis | 3

MOL Hungarian Oil and Gas Plc.

MANAGEMENT DISCUSSION AND ANALYSIS

31 December 2022

Budapest, 23 March 2023

|  | Management Discussion and Analysis | 4

MANAGEMENT DISCUSSION AND ANALYSIS OF 2022 BUSINESS OPERATIONS

|  | Management Discussion and Analysis | 5

1. OVERVIEW OF THE MACROECONOMIC AND INDUSTRY ENVIRONMENT

Macroeconomic environment

Global real GDP growth slowed down significantly from 6.0% in 2021 to 3.4%[1] in 2022, below the historical (2000-2019) average of 3.8%. At the same time headline inflation rates rose to four-decade highs across the developed world and most emerging markets, fuelled by skyrocketing food and energy costs. Tighter monetary conditions to fight rising inflation, post-pandemic and Russia-Ukraine war related supply chain disruptions and the strict ‘zero Covid’ policy of the world’s second largest economy, China, dampened GDP growth last year.

Due to its proximity and energy importer status, the European Union and the Central and Eastern European (CEE) region had the strongest exposure to the war in Ukraine. Despite these headwinds, European economic growth in 2022 was more resilient than expected in the face of the large negative terms-of-trade shock from the energy price crisis. Still, economic activity weakened steadily through 2022. After a strong first half of the year, the Euro Zone real GDP grew by 3.5% in 2022 as a whole.

The CEE region has also coped relatively well with the economic and financial fallout from the Russian invasion of Ukraine mainly due to pent-up household consumption after Covid restrictions were relaxed. Still, the surge in global food and energy prices generated runaway, double-digit inflation rates leading to a freefall in real incomes, weighing on consumer spending, deteriorating business sentiment and forcing central banks to tighten monetary conditions. Natural gas dependence of CEE countries and the high exposure of the region to the German economy, which has been hit especially hard by the recent economic and energy crisis, also put a drag on growth in the second half of 2022. Still, there were substantial disparities across the region: Croatia (6.3%) and Hungary (4.6%) managed to perform above the EU average despite a continuous slowdown over the year, while the Czech (2.5%) and Slovak (1.7%) economic performance significantly fell behind in 2022.[2]

Figure 1 Selected crude, natural gas and coal prices dtd (USD/MWh, 2020-2022, Bloomberg data)

Oil and natural gas market developments

The Dated Brent price strengthened from the 2021 average of 71 USD/bbl to 101 USD/bbl in 2022. Prices rose significantly in the first half of 2022 but generally declined in the second half of the year, closing at 81 USD/bbl on the final trading day of the year. In the immediate aftermath of Russia’s full-scale invasion of Ukraine, the combination of war-related supply fears with low global crude oil inventories lifted the crude oil price to the highest inflation-adjusted price since 2014, 137.6 USD/bbl on 8 March. The Russian invasion of Ukraine and the response from Europe, the U.S., and their allies ended decades-long cooperation between Russia and its energy trading partners, forcing markets to deal with temporary, and perhaps in some cases permanent dislocation of energy supply. As a result, Russian Urals oil's discount to Dated Brent have widened significantly from the 2011-2021 average of -1.2 USD/bbl to -24.9 USD/bbl in 2022. Russian crude diverted from Europe to India and China, but their cost of financing maritime trade and insurance has increased significantly. The oil market remained tight in 2022 despite increased production and slower-than-expected rebound in demand. OPEC production increased by 4 Mmbpd over the first nine months of the year, however weaker prices and demand concerns triggered a 2 Mmbpd headline quota cut in November. In addition, non-OPEC production increased by over 2 million b/d over 2022, driven by strong growth in the U.S. On the demand side, despite the nearly 0.5 Mmbpd of incremental demand that developed due to enhanced gas-to-oil switching, demand only increased by 2.3 Mmbpd in 2022 and remained below its pre-pandemic baseline. While oil demand in most sectors and of most products exceeded pre-pandemic levels in 2022, the aviation sector continued to lag 2019 by a large margin.[3]

[1] IMF (2023): World Economic Outlook, January update.

[2] Eurostat (2023), GDP and employment flash estimate, 14 February and Croatian Statistical Office, 28 February 2022..

[3] IEA (2022): Oil Market Report, December.

|  | Management Discussion and Analysis | 6

European natural gas markets have seen unprecedented turbulence in 2022. The average price of TTF (Title Transfer Facility), Europe’s largest gas trading hub, increased to 130.9 EUR/MWh, meaning prices almost tripled compared to the 46.5 EUR/MWh in 2021 and were nearly 7 times higher than the 2010-2020 historical average of 19 EUR/MWh. Extreme European prices were the result of disruptions in Russian gas flows to Europe while global gas supply remained limited. Intensified competition between Asia and Europe to attract additional non-Russian supply (mainly LNG) kept prices elevated through 2022 despite a significant voluntary and warm weather driven reduction in European demand and record-high levels of gas in storage. On the upside, the EU managed to weather the energy crisis brought on by the Russian invasion in 2022 and proved more resilient than expected without Russian energy imports.

Downstream

European refinery margins increased considerably in 2022 supported by skyrocketing road fuel crack spreads. Strong, pent-up driving demand, gas-to-oil switching, worldwide low inventory levels and still muted refining capacity strengthened fuel cracks already before the outbreak of the Russia-Ukraine war. The fear of Russian supply loss has only stretched markets further. As a result, margins remained robust despite extreme production cost rises and windfall profit hikes.

In contrast, the highly energy-intensive petrochemical producers faced downward margin pressure in 2022. The emerging cost-of-living crisis and the continuously worsening industrial and construction production disrupted petrochemical demand while record high energy prices and the strong U.S. dollar boosted feedstock and production costs. Moreover, easing global supply chain and logistic bottlenecks pressured prices with product availability despite production cuts and accelerated re-convergence in global prices. Both monomer and polymer markets ended the year oversupplied globally.

Macro figures (average) | FY 2022 | FY 2021 | Ch %
Brent dated (USD/bbl) | 101.3 | 70.7 | 43
Ural Blend (USD/bbl)(11) | 75.1 | 68.8 | 9
Urals-Brent spread (USD/bbl) (5) | (24.9) | (1.8) | 1300
TTF gas price (EUR/MWh) | 130.9 | 46.5 | 182
Premium unleaded gasoline 10 ppm (USD/t)(12) | 1,005 | 678 | 48
Gas oil – ULSD 10 ppm (USD/t)(12) | 1,055 | 584 | 81
Naphtha (USD/t)(13) | 722 | 615 | 17
Fuel oil 3.5 (USD/t)(13) | 457 | 381 | 20
Crack spread – premium unleaded (USD/t)(12) | 238 | 142 | 68
Crack spread – gas oil (USD/t)(12) | 288 | 48 | 504
Crack spread – naphtha (USD/t)(13) | (44) | 79 | (156)
Crack spread – fuel oil 3.5 (USD/t)(13) | (309) | (155) | 99
Crack spread – premium unleaded (USD/bbl)(12) | 19.3 | 10.5 | 84
Crack spread – gas oil (USD/bbl)(12) | 40.3 | 7.5 | 436
Crack spread – naphtha (USD/bbl)(13) | (201) | (1.8) | 1020
Crack spread – fuel oil 3.5 (USD/bbl)(13) | (29.1) | (10.7) | 173
Brent-based MOL Group refinery margin (USD/bbl)* | 9.0 | 1.3 | 588
Brent-based Complex refinery margin (MOL + Slovnaft) (USD/bbl)* | 10.0 | 1.9 | 436
Ethylene (EUR/t) | 1,413 | 1,098 | 29
Butadiene-naphtha spread (EUR/t) | 568 | 487 | 17
MOL Group integrated petrochemical margin(9) | 481 | 720 | (33)
NEW MOL Group variable petrochemicals margin (EUR/t)* (10) | 242 | 603 | (60)
HUF/USD average | 373.1 | 303.3 | 23
HUF/EUR average | 391.3 | 358.5 | 9
HUF/HRK average | 51.9 | 47.6 | 9
HRK/USD average | 7.2 | 6.4 | 13
3m USD LIBOR (%) | 2.4 | 0.2 | 1391
3m EURIBOR (%) | 0.3 | (0.5) | (163)
3m BUBOR (%) | 10.0 | 1.5 | 582
Macro figures (closing) | FY 2022 | FY 2021 | Ch %
Brent dated closing (USD/bbl) | 81.3 | 77.0 | 6
HUF/USD closing | 375.7 | 325.7 | 15
HUF/EUR closing | 400.3 | 369.0 | 8
HUF/HRK closing | 53.1 | 49.1 | 8
HRK/USD closing | 7.1 | 6.6 | 7
MOL share price closing (HUF) | 2,602 | 2,520 | 3

*Updated methodology includes purchased energy (enhanced fit to natural gas) and CO2

Notes and special items are listed in Appendix I and II.
Historical macro figures are available in the annual Data Library on the company’s website.

|  | Management Discussion and Analysis | 7

2. INTEGRATED CORPORATE RISK MANAGEMENT

As operators in a high-risk industry MOL Group is committed to manage and maintain its risks within acceptable limits.

The aim of MOL Group Risk Management is to keep the risks of the business within acceptable levels and safeguard the resilience of its operations as well as the sustainable management of the company. For this purpose, as an integral part of our corporate governance structure, MOL Group has developed a comprehensive Enterprise Risk Management (ERM) system which focuses on the organisation’s value creation process, meaning factors critical to the success and threats related to the achievement of objectives but also occurrence of risk events causing potential impact to people, assets, environment or reputation. Within the ERM framework all significant risks throughout the whole Group are identified, assessed, evaluated, treated and monitored, covering all business and functional units, geographies as well as projects, taking into consideration multiple time horizons.

Regular risk reporting to top management bodies, including the Board of Directors with its committees provides oversight on overall the risk profile and the largest risks as well as assurance that updated responses, controls, and appropriate mitigation actions are set and followed.

The Group faces financial, operational and strategic risks, including but not limited to the below.

Risks/processes | Risk description | Risk mitigation methods
Market and financial risks
Commodity price risk | The Group is exposed to commodity price risk on both the purchasing side and the sales side. The main commodity risks stem from its long positions in crude oil, refinery margin and petrochemical margin. | · Integrated business model · Continuous monitoring · When necessary, commodity hedging instruments to mitigate other than ‘business as usual’ risks or general market price volatility
Foreign exchange (FX) risk | The Group has FX exposure due to mismatch of currency composition of cash inflows and outflows, investments, debts. | · Monitoring FX risk and balancing the FX exposures of the operating & investment cash flow with the financing cash flow exposures when necessary and optimal
Interest rate (IR) risk | MOL Group has a mixture of floating and fixed interest rate debts. Floating rate debt are subject to interest rate changes. | · Continuous monitoring · Adequate mix of funding portfolio · When necessary, interest rate swap hedging instruments to mitigate risks
Credit risk | MOL Group provides products and services with deferred payment terms to eligible customers which exposes it to credit risk. | · Diversified customer portfolio · Customer evaluation model, continuous monitoring · Group-wide credit insurance program
Financing/Refinancing risk | MOL Group has significant debt outstanding. Inability to refinance those or inability to draw down funds could cause liquidity problems. | · Diversified funding sources/instruments · Diversified, balanced, and decently long maturity profile · Investment grade rating (BBB-) supports smooth capital markets access
Operational Risks
Physical asset and process safety and equipment breakdown risk | Process Safety Event (Major Industrial accident) due to loss of mechanical integrity, technical, technological or operational issues, process maintenance difficulties, lack of competent human resources. | · Comprehensive HSE activities, a group-wide Process Safety Management system including asset related operational risk management process · Preventive & Predictive maintenance (Uptime program) with thorough equipment criticality assessment behind · Group-wide insurance management program
Crude oil and gas supply risk | Crude supply disruption (insufficient quantity or quality) can disrupt refineries and petchem sites continuous operation. | · Crude oil-supply diversification strategy implemented; · Emergency reserves available

|  | Management Discussion and Analysis | 8

Critical material, equipment or service supply risk | Disruption in critical (raw) materials and/or equipment and/or services may cause delays in operation and/or increase costs | · Stock management · Supplier management · Sourcing and supply chain diversification
Exploration & Production reserve replacement | Higher than expected decline and failure to replace reserves. | · Production optimization programs and organic reserve replacement activities are both focus areas of Exploration & Production operations
Cyber risk | Global trends showing steadily growing frequency and intensity of Cyber-attacks / incidents as well as more specified Cyber Crime Groups targeting Industrial Control System’s weaknesses, which may have increasing economic impact and relevance on MOL Group. UA-RU-conflict: significant investment on attacking methods by all stakeholders, which can be potential threat in the future. | · Continuous improvement of cyber security capabilities · Continuous supervision of cyber security risks (Group and opco level) ensuring the protection of the confidentiality, integrity and availability of data · Cyber security is built into all the MOL Group products and services · Continuous education of employees and partners.
Fraud Risk | Fraudulent activities (external & internal fraud) may cause significant financial and reputational losses | · Control functions on local and group level · Anti-Fraud Awareness (Newsletter, Mandatory trainings) · Anti-Fraud & Investigation procedures, dedicated Team
Pandemic Risk | Pandemics may significantly adversely affect the Group’s business environment, including price and demand on the Group’s products and services, availability of contractors, subcontractors as well as raw materials, creditworthiness of credit customers, availability of the Group’s key personnel. | · Crisis Management plans in place · Our Group Pandemic Preparedness Framework methodology instruction was issued in January 2023, summarizing not only the WHO general approach but entire MOL Group internal experiences of last 2-3 years, ensuring a life-proof and working framework to manage any possible further endemic/ pandemic situations. · Continued and sustainable practices defined, adjusted to country local measures and company internal circumstances
Strategic risks
Regulatory and sanctions risk | MOL has significant exposure to a wide range of laws, regulations and policies on the global, the European and the individual country level, that may change significantly over time and may even require the Group to adjust its core business operation. | · Continuous monitoring of new regulations and sanctions · Strengthened compliance process · Participation in legislative processes, consultations · Adopting MOL strategy in response to changes
Country risk | The international presence of MOL Group contributes to diversification but also exposure to country specific risk at the same time. Government actions may be affected by the elevated risk of economic and, in some regions, (geo)political crisis, increasing their impact on MOL’s operations. | · Continuous monitoring of the (geo)political risk, compliance with local regulations and international sanctions. · Investment opportunities are valuated with quantifying of country risk in discount rate
Reputation risk | MOL, as a major market player and employer in the region with a sizeable operational footprint, operates under special attention from a considerable number of external stakeholders. | · Stakeholder governance processes introduced to monitor and adjust to any reputational risks
Climate change risk | Transition and physical risks associated with climate change have the potential to negatively impact MOL’s current and future revenue streams, expenditures, assets and financing. | · MOL Group’s transformational strategy · Several operational steps taken to mitigate physical risks emanating from climate change
Capex Project Execution Risk | Projects are delayed or less profitable than expected or unsuccessful for numerous reasons, including cost overruns, higher raw material or energy prices, longer lead time in equipment deliveries, limited availability of contractors and execution difficulties. | · Disciplined stage gate process across Capex project pipeline · Dedicated team to identify risks at earlier stages, plan for mitigation or avoidance by linking potential risks with schedule and budget to build realistic estimates and following it up through the project lifecycle · Supplier selection criteria, audits
Human Capital Risk | The Group's ability to implement its 2030+ Strategy is dependent on the capabilities and performance of its people, management, experts and technical personnel. Unavailability of skilled workforce may lead to disruptions in the operation. | · HR framework to attract, develop, reward and retain employees · Capability development for all employee levels to ensure future-proof skillset · Intergenerational collaboration to enhance internal knowledge transfer

|  | Management Discussion and Analysis | 9

|  | · Focus on digital transformation, and employee experience · Developing innovative and collaborative culture · Working environment and conditions framework in order to attract and retain diverse talents
Inflation Risk | Increase in material and service prices impacting opex and capex | · Stock management, contracting strategy

ESG risks are covered and considered as part of the following topics (including but not limited to): Climate Change, Human Capital, Physical asset and process safety and equipment breakdown risk, Cyber Risk, Fraud Risk, Pandemic Risk, Regulatory and sanctions risk.

The Russian – Ukraine conflict has contributed to the increase of several risks of the Group:

· Supply-related risks: in order to mitigate the oil-supply risk, the Group has elaborated the crude diversification strategy; alternative crude slate was defined, relevant capex projects defined and started. Supply chain difficulties may also have an impact on several materials, inputs to the Groups processes, which is mitigated by stock, supply chain and supplier management actions.

· Regulatory and sanctions risks: MOL Group has been continuously and closely monitoring the sanctions imposed against Russia as well as countersanctions. and strengthened the compliance processes. With the energy crisis in several countries where the Group operates price caps and extra (solidarity) taxes were introduced which had material financial impact on the Group.

· Inflation risks, rising energy and raw material prices: the Group faced elevated risk, which have been mitigated with active market intelligence, conscious stock management and contracting strategy.

Risk Review Process in 2022

Risk owners in the Group identified, analysed and evaluated their major risks in 2022 – both on medium-term and long-term time horizon - and defined and/or updated the relevant mitigation plans where it has been necessary. Risk reports have been discussed by the Finance and Risk Management Committee of the Board of Directors.

Main risk management tools

As described above, as a general risk management framework, we operate an Enterprise Risk Management system.

Hedging Policy: to ensure the profitability and the financial stability of the Group, financial risk management is in place to handle short-term, market related risks. Commodity price, FX and interest rate risks are measured regularly by using a complex model based on advanced statistical methods and are managed – if and when necessary - with hedging measures.

Insurance Policy: transferring the financial consequences of our operational risks is done by insurance management, which represents an important risk mitigation tool to cover the most relevant exposures and liabilities arising out of our operations. Insurance is managed through a joint program for the whole Group to exploit considerable synergy effects.

Crisis and Business Continuity Management: following best industry practice and focusing on low probability high potential risks that could disrupt our operations, value chain and cash generation, MOL Group has implemented and is currently working to integrate a crisis management and business continuity program in order to reduce recovery times within tolerable limits for processes critical to our business.

TCFD disclosure on Risk Management

Climate change related risks are covered within the ERM framework, both in the long-term and mid-term risk review process.

Top-down approach is taken to identify and assess risks affecting the long-term strategy of the Group. Climate change risk, including transition and physical risks are assessed, together with mitigation plans within the strategic risk review process. Sponsorship, oversight of management of such risks sits with executive leadership, while operative leaders directly reporting to executive leadership are nominated as risk owners, who are responsible for assessment, mitigation of these risks. Strategic risk reports are discussed by the Finance and Risk Management Committee of the Board of Directors.

Within the bottom-up mid-term risk process several climate change related individual risks (regulatory changes, demand for fossil fuels, legal risks, risks on physical assets) are and may be identified and reviewed regularly. Various organizational levels and geographies are involved in the process, with the aim of covering all material risks, including climate related ones. Operative managers are nominated as risk owners, being responsible for assessing and mitigating the relevant risks. Aggregated, consolidated risk report is discussed by the Finance and Risk Management Committee of the Board of Directors.

|  | Management Discussion and Analysis | 10

Risk owners, with the involvement of subject matter experts, assess risks taking into consideration the probability of occurrence and the potential impact on the Group’s objectives. Depending on the level of risk acceptable for the Group, risk owners define appropriate mitigation plans.

MOL Group’s ESG risk management activity is evaluated by several ESG ratings (including MSCI, CDP, Sustainalytics) which show the high performance based on industry benchmarks.

Climate -related aspects are also part of corporate processes: MOL Group measures the carbon footprint of its products, as well as ESG indicators are part of the management remuneration scheme (e.g. TRIR, CO2, and other relevant strategic objectives) and also includes CO2 emission estimates in project planning and approval documents. In parallel, a monitoring system has been operated to register and forecast project-related CO2 emissions. For more on our governance around climate see Chapter 7.

Identified climate change related risks

• Identified transition risks include a) policy and legal risks (actions that attempt to constrain activities that contribute to climate change and/or actions that encourage adaption/limitation of climate change, including stricter emission rules and carbon pricing), b) technological risks (innovation that supports transition to a low carbon world, including increasingly efficient and lower consumption in transportation), c) market risks (shift in supply/demand for certain products and services due to changes in customer preferences: decline in demand for the fossil fuel, and technology), and d) reputational risks (stakeholder pressure). MOL Group’s long-term strategy seeks not only to mitigate risks associated with the transition to a low carbon economy, but to capitalize on opportunities created by it.

• Identified physical risks include a combination of both acute risks (extreme rainfall and flooding), as well as chronic risks (extreme heat, fluctuating water levels and drought). If any of these events were to occur, they could have an adverse effect on the Group’s assets, operations and staff. MOL Group has incurred and is likely to continue incurring additional costs to protect its assets, operations and staff from physical risks. To the extent such severe weather events or other climate conditions increase in either frequency, severity or both, MOL Group may be required to adjust its operations and incur costs that could adversely affect its financial position.

MOL Group operates Risk Engineering program, where the potential impacts of water related events analysed in main Downstream sites. Below is presented a high- level overview of water related risks.

Physical risk | Risk description | Risk mitigation
Flood Risk & Sea Level Rise | Major Downstream sites are located near to rivers, sea. Flood risk level is considered as low, as the sites’ parameters/design provides enough mitigation capacities (which is supported by risk engineering reports): insurance cover is in place.
Danube Refinery | The refinery site borders the River Danube, and the site is far above the sea level. | The site process is far above the river level, and the site is located outside of a river flood hazard area.
MOL Petrochemicals Tiszaújváros | The site is located about 1 km west of the Tisza River, and the site is far above sea level. | Control measures in place that would allow for the sacrificial flooding of nearby agricultural land to manage this risk.
Bratislava Refinery | The site’s western perimeter is approximately 0.8 km from the River Danube, and the site is far above the sea level. | No event so far (in 2022 flood, site was 1 m above highest water level). Gates in industrial water inflow/outflow canal, emergency & Crisis management plans, possibility of employing mobile flood defences.
Rijeka Refinery | The site is located on the Adriatic Sea, with the minimum elevation being 4 m above mean sea level. | There are no rivers or creeks in the area.
Fluctuating water level, drought risk | In case of drought event low level of Duna/Tisza rivers may hinder barge transport. Very low level of Danube may lead to lack of industrial water supply from the river. | Railroad transportation can be applied as an alternative transport. Monitoring, review of the system’s capability.

|  | Management Discussion and Analysis | 11

Extreme rainfall | Water collecting pits may overflow in extreme rainfalls which may lead to contamination of receiving water body. | Site reviews and mitigation actions (e.g. channel connection supervision, regular cleaning of collecting chambers) are in progress.
Earthquake | Certain assets of the Group are located on earthquake area. | Crisis plans and insurance cover are in place.

3. FINANCIAL AND OPERATIONAL OVERVIEW OF 202 2

| HUF billion | USD million
Summary of results | FY 2022 | FY 2021 restated | Ch % | FY 2022 | FY 2021 restated | Ch %
Net sales | 9,868.2 | 5,766.8 | 71 | 26,331 | 18,978 | 39
EBITDA | 1,734.6 | 1,046.0 | 66 | 4,601 | 3,444 | 34
EBITDA excl. special items(1) | 1,734.6 | 1,047.6 | 66 | 4,601 | 3,449 | 33
Clean CCS-based EBITDA (1) (2) | 1,773.9 | 997.6 | 78 | 4,702 | 3,285 | 43
Profit from operation | 1,259.1 | 567.2 | 122 | 3,337 | 1,871 | 78
Profit from operation excl. special items(1) | 1,253.1 | 585.9 | 114 | 3,308 | 1,929 | 71
Clean CCS-based operating profit (1) (2) | 1,321.0 | 542.1 | 144 | 3,483 | 1,781 | 96
Net financial gain / (expenses) | (74.3) | (34.1) | 118 | (206) | (106) | 94
Net profit attributable to equity holders of the parent | 628.3 | 484.5 | 30 | 1,662 | 1,610 | 3
Operating cash flow before ch. in working capital | 1,871.1 | 1,196.3 | 56 | 5,005 | 3,938 | 27
Operating cash flow | 1,388.7 | 918.1 | 51 | 3,557 | 3,037 | 17
EARNINGS PER SHARE |  |  |  |  |  |
Basic EPS, HUF | 851.0 | 673.4 | 26 | 2.3 | 2.2 | 5
Basic EPS excl. special items, HUF (1) | 882.6 | 676.9 | 30 | 2.4 | 2.2 | 9
INDEBTEDNESS |  |  |  |  |  |
Simplified Net debt/EBITDA | 0.30 | 0.65 | - | 0.30 | 0.65 | -
Net gearing(4) | 11% | 18% | - | 11% | 18% | -

KEY FINANCIAL DATA BY BUSINESS SEGMENTS |  |  |  |  |  |
| HUF billion | USD million
Net Sales (HUF mn) (3) (6) | FY 2022 | FY 2021 restated | Ch % | FY 2022 | FY 2021 restated | Ch %
Upstream | 1,231.1 | 574.7 | 114 | 3,272 | 1,884 | 74
Downstream | 9,066.2 | 5,165.7 | 76 | 24,189 | 17,000 | 42
Gas Midstream | 214.4 | 108.1 | 98 | 577 | 353 | 63
Consumer Services | 3,255.3 | 1,944.1 | 67 | 8,657 | 6,409 | 35
Corporate and other | 306.3 | 241.9 | 27 | 810 | 794 | 2
Total Net Sales | 14,073.2 | 8,034.6 | 75 | 37,505 | 26,440 | 42
Intersegment transfers(7) | (4,205.1) | (2,267.8) | 85 | (11,174) | (7,462) | 50
Total external net sales from cont.op. | 9,868.2 | 5,766.8 | 71 | 26,331 | 18,978 | 39
Total external net sales from discont.op. | 119.0 | 102.0 | 17 | 323 | 337 | (4)
Total External Net Sales(6) | 9,987.1 | 5,868.7 | 70 | 26,654 | 19,315 | 38

|  | Management Discussion and Analysis | 12

EBITDA | FY 2022 | FY 2021 restated | Ch % | FY 2022 | FY 2021 restated | Ch %
Upstream | 827.5 | 395.6 | 109 | 2,212 | 1,297 | 71
Downstream | 804.8 | 500.7 | 61 | 2,127 | 1,653 | 29
Gas Midstream | 61.0 | 41.2 | 48 | 163 | 136 | 20
Consumer Services | 121.2 | 182.5 | (34) | 320 | 605 | (47)
Corporate and other | (66.4) | (41.0) | 62 | (181) | (135) | 34
Intersegment transfers(7) | (13.6) | (33.0) | (59) | (40) | -(112) | (65)
TOTAL EBITDA from cont.op. | 1,734.6 | 1,046.0 | 66 | 4,601 | 3,444 | 34
Total EBITDA from discont.op. | 193.6 | 74.3 | 161 | 512 | 246 | 108
Total EBITDA | 1,928.3 | 1,120.3 | 72 | 5,113 | 3,690 | 39

| HUF billion | USD million
Depreciation | FY 2022 | FY 2021 restated | Ch % | FY 2022 | FY 2021 restated | Ch %
Upstream | 213.6 | 238.7 | (11) | 558 | 783 | (29)
Downstream | 168.7 | 151.8 | 11 | 454 | 500 | (9)
Gas Midstream | 16.7 | 16.6 | 1 | 45 | 55 | (17)
Consumer Services | 44.7 | 39.1 | 14 | 119 | 129 | (7)
Corporate and other | 33.3 | 33.6 | (1) | 90 | 110 | (18)
Intersegment transfers(7) | (1.5) | (1.0) | 51 | (3) | (4) | (30)
Total depreciation from cont.op. | 475.5 | 478.9 | (1) | 1,263 | 1,573 | (20)
Total depreciation from discont.op. | (17.3) | 34.9 | n.a. | (50) | 115 | n.a.
Total Depreciation | 458.2 | 513.7 | (11) | 1,213 | 1,688 | (28)
Operating Profit | FY 2022 | FY 2021 restated | Ch % | FY 2022 | FY 2021 restated | Ch %
Upstream | 613.9 | 156.9 | 291 | 1,654 | 514 | 222
Downstream | 636.1 | 348.9 | 82 | 1,673 | 1,153 | 45
Gas Midstream | 44.3 | 24.5 | 81 | 118 | 81 | 46
Consumer Services | 76.6 | 143.4 | (47) | 201 | 477 | (58)
Corporate and other | (99.7) | (74.6) | 34 | (271) | (245) | 11
Intersegment transfers(7) | (12.1) | (32.0) | (62) | (37) | (109) | (66)
Total operating profit cont.op. | 1,259.1 | 567.2 | 122 | 3,338 | 1,871 | 78
Total operating profit discont.op. | 210.9 | 39.4 | 435 | 562 | 131 | 329
Total Operating Profit | 1,470.0 | 606.6 | 142 | 3,900 | 2,002 | 95
EBITDA Excluding Special Items(1) | FY 2022 | FY 2021 restated | Ch % | FY 2022 | FY 2021 restated | Ch %
Upstream | 827.5 | 399.9 | 107 | 2,212 | 1,310 | 69
Downstream | 804.8 | 500.7 | 61 | 2,127 | 1,653 | 29
Downstream - clean CCS-based(2) | 848.4 | 450.7 | 88 | 2,240 | 1,489 | 50
Gas Midstream | 61.0 | 41.2 | 48 | 163 | 136 | 20
Consumer Services | 121.2 | 182.5 | (34) | 320 | 605 | (47)
Corporate and other | (66.4) | (43.7) | 52 | (181) | (144) | 26
Corporate and other – clean CCS-based(2) | (70.7) | (43.7) | 62 | (193) | (144) | 34
Intersegment transfers(7) | (13.6) | (33.0) | (59) | (40) | (111) | (64)
Total - clean CCS-based(2) (10) | 1,773.9 | 997.6 | 78 | 4,702 | 3,285 | 43
Total EBITDA excluding special items cont.op. | 1,734.6 | 1,047.6 | 66 | 4,601 | 3,449 | 33
TOTAL EBITDA excluding special items discont.op. | 193.6 | 74.3 | 161 | 512 | 246 | 108
Total EBITDA Excluding Special Items | 1,928.3 | 1,121.9 | 72 | 5,113 | 3,695 | 38

|  | Management Discussion and Analysis | 13

| HUF billion | USD million
Operating Profit Excluding Special Items | FY 2022 | FY 2021 restated | Ch % | FY 2022 | FY 2021 restated | Ch %
Upstream | 598.6 | 178.3 | 236 | 1,600 | 580 | 176
Downstream | 645.3 | 348.9 | 85 | 1,697 | 1,153 | 47
Gas Midstream | 44.3 | 24.5 | 81 | 118 | 81 | 46
Consumer Services | 76.6 | 143.4 | (47) | 201 | 477 | (58)
Corporate and other | (99.7) | (77.3) | 29 | (271) | (254) | 7
Intersegment transfers(7) | (12.1) | (32.0) | (62) | (37) | (108) | (66)
Total operating profit excluding special items cont.op. | 1,253.1 | 585.9 | 114 | 3,308 | 1,929 | 71
Total operating profit excluding special items discont.op. | 210.9 | 45.7 | 362 | 562 | 150 | 274
Total Operating Profit Excluding Special Items | 1,464.0 | 631.5 | 132 | 3,870 | 2,079 | 86
Capital Expenditures | FY 2022 | FY 2021 | Ch % | FY 2022 | FY 2021 | Ch %
Upstream | 141.0 | 126.7 | 11 | 375 | 415 | (10)
Downstream | 268.8 | 206.3 | 30 | 720 | 675 | 7
Gas Midstream | 11.6 | 22.4 | (48) | 30 | 74 | (59)
Consumer Services | 250.5 | 49.9 | 402 | 654 | 162 | 303
Corporate and other | 89.0 | 78.8 | 13 | 237 | 256 | (7)
Intersegment transfers(7) | (1.7) | (1.1) | 54 | (5) | (4) | 25
Total | 759.2 | 483.1 | 57 | 2,012 | 1,579 | 27
Notes and special items are listed in Appendix I and II. |  |  |  |  |  |

3.1 KEY ACHIEVEMENTS AND SUMMARY OF 2022 RESULTS

In 2022 MOL Group delivered a record Clean CCS EBITDA of HUF 1,773.9bn (USD 4,702mn), 78% higher in HUF terms than in the previous year and significantly exceeded the original capital market guidance of around USD 2.8bn. At the same time a HUF 482.4bn (USD 1,448mn) working capital build weighed on CF generation; accordingly operating CF generation after working capital stood at HUF 1,388.7bn (USD 3,557mn) in 2022. Furthermore, government interventions such as the fuel price regulation and windfall taxation across the CEE burdened results by USD 1.6bn on EBITDA level in 2022.

Key Financial Highlights

• Upstream segment’s EBITDA, excluding special items, reached HUF 827.5bn (USD 2,212mn) in 2022, representing a 107% increase compared to 2021 on the back of rising oil and gas prices.

• In 2022 Downstream generated HUF 848.4bn (USD 2,240mn) Clean CCS EBITDA, which is 88% higher than the previous year’s performance. The increasing result was attributable to exceptional motor fuel crack spreads, an unprecedented widening of the Brent-Ural spread driving a significant rise of EBITDA, while petrochemical margins decreased significantly.

• Consumer Services EBITDA decreased by 34% in 2022, reaching HUF 121.2bn (USD 320mn) as fuel price regulation in various CEE dented profitability, at the same time fuel sales volumes and non-fuel margin improved.

• Gas Midstream reached HUF 61.0bn (USD 163mn) EBITDA in 2022, representing an increase of 48% compared to 2021, driven by rising cross-border capacities and changes of regulated tariffs evolved favourable as well mostly in line with rising costs.

• Total CAPEX spending reached HUF 759.2bn (USD 2,012mn) in increasingly by 57% year-on-year on, largely due to the acquisition of the Lotos network in Poland. Organic capex spending reached similar levels in USD terms in 2022 as in 2021. The implementation of the transformational projects (Polyol and Rijeka Refinery upgrade) continued, while sustain capex was mainly influenced by the refinery turnarounds, ACG development and the implementation of smaller Downstream projects.

• Operating Cash Flow before Working Capital increased by 56% year-on-year to HUF 1,871.1bn (USD 5,005mn), whilst a significant working capital build drove operating cash flow generation to HUF 1,388.7bn (USD 3,557mn) in 2022.

• Indebtedness on a Net Debt/EBITDA basis declined to 0.30x from 0.65x, since strong operational cash flow generation covered organic and inorganic CAPEX spending and also the record high dividend distributed in 2022.

|  | Management Discussion and Analysis | 14

Key Operational Highlights

• Annual oil and gas production reached 92 mboepd in 2022 above the annual guidance, while organic reserve replacement reached 185% bringing 2P reserve life to 10.5 years.

• MOL made significant progress in the development of the polyol complex and the Rijeka refinery upgrade project. Additionally, preparations have been made to further improve technical capabilities for crude supply diversification of the landlocked refineries.

• The Consumer Services network grew substantially to 2,391 stations mainly through the completion of the acquisition in Poland, in parallel the segment continued the expansion of its non-fuel concept by completing a total 1,179 Fresh corner revamps by 2022 year-end.

• ESG achievements:

o MSCI confirmed MOL’s AA rating for the fifth year in a row.

o MOL maintained its B rating of the CDP climate management survey.

• Key group financial and operational figures and historical financial statements are available in the annual Data Library on the company’s website.

|  | Management Discussion and Analysis | 15

3.2 CORPORATE STRATEGY

Regional supply security

Following that the economic impacts of the coronavirus dissipated by late 2021, 2022 brought completely unexpected and severe challenges again. The breakout of the war in Ukraine created a new reality for all in Central Eastern Europe overnight. The emerging European energy supply security crisis had profound implications to our operations, financials and the supply security theme became central to our strategic actions throughout the year. In this rapidly changing environment despite all regulatory headwinds MOL Group remained a trusted partner and catered for the demand of our customers. We have made significant efforts to diversify our portfolio further in these extraordinary circumstances. During 2022 we have created a clear roadmap to enhance our technical capabilities to be able to maximize alternative crude supply of our landlocked refineries. We have also recognized that the new set of circumstances not only created uncertainties for us, but for others across Europe as well. This creates a unique opportunity to strengthen regional cooperation, therefore we have not only started working on diversification within MOL Group but also work closely with our partners to strengthen regional security of supply.

It is evident to us that the long-term solution to this energy crisis will be the successful implementation of the energy transition, however this requires a steady and continuous implementation process supported by supply security, affordability and an ability to maintain support from a wide group of stakeholders. We remain committed to the transition and are willing to avoid that our fossil fuel dependency is simply substituted by switching between suppliers, yet there is no real alternative for substituting fossil fuel in the energy mix on the short run. Fossil energy sources will still continue to play a significant role, yet with a decreasing share in the upcoming decades.

Transition

The profound shift in supply security matters does not mean however that the long-term directions set out in MOL Group’s 2030 strategy should change, to the contrary, those are more relevant than previously. The launch of the 2030 strategy sought not only to mitigate the low-carbon economy transition risks, but to capitalize on the opportunities created by it. With the strategy, MOL Group sought to gradually diversify the Group’s revenue streams away from traditional hydrocarbons by seeking opportunities for developing new low-emission products and services in new markets. The initial strategic shift rested on two pillars: 1) transform the Group’s refining operations by gradually shifting refining activities away from the production of fuels towards the production of feedstock for the Group’s petrochemical division, whilst simultaneously expanding the chemical value chain towards semi-commodity and specialty chemicals (“from fuel to chemicals”). Initial steps towards the Group’s petrochemical product diversification included expansion towards new products like synthetic rubber, polyol and propylene glycol. 2) The second pillar was to transform a traditional fuel retailer into a convenience retailer and alternative low-carbon mobility player (“from fuel retail to consumer goods”). Initial steps included the launch of the Fresh Corner concept store across the Group’s service station network, as well as the launch of mobility services.

Further to the targets announced in the original 2030 strategy in 2021 an updated strategy was communicated, labelled as 2030+ “Shape Tomorrow”. The strategy update covered commitments in order to decarbonize operations, partly to mitigate the risk of rising carbon costs, MOL Group targets a 20% reduction in Scope 1 and 2 emissions in Downstream by 2030 (2019 as base), as a step on the road towards net-zero economy. Furthermore, MOL also announced ambitious targets to increase the share of EU taxonomy aligned investments to 50% by 2030, this way ensuring that the business mix gradually evolves towards sustainable businesses.

MOL’s Downstream business reached significant interim targets since the announcement of the 2030 strategy update. In an effort to move along the value chain in petrochemicals the polyol plant, which represents the single biggest organic investment of corporate history is nearing mechanical completion. Furthermore, the Rijeka refinery upgrade that also includes the construction of a delayed coker is well underway. In 2022 MOL continued to consider the feasibility of the first cycle fuel to chemicals project. The Downstream business has been continuously working towards building its future product portfolio. These efforts are not only connected to capitalizing on opportunities created by a carbon constrained economy, but also build on the EU’s Fit for 55 targets with an intention to decrease Europe’s energy dependency. MOL took further steps to strengthen the recycling portfolio through the acquisition of the biggest market player in Hungary with a 25 kt mechanic recycling capacity. In addition, we continue to explore opportunities in green hydrogen, biofuel production, mechanical recycling and compounding.

|  | Management Discussion and Analysis | 16

The Consumer Services division saw significant growth between 2016 and 2021, since it was established as a standalone segment. In 2022 however government interventions in the form of price regulatory measures played a major negative role. Despite this significant negative development there was significant focus on the continuous roll-out of the Fresh Corner concept resulting in material increase in non-fuel sales and margins. The extraordinary conditions created by regulatory measures also brought substantial rise in volumes sold at our service stations. The business will be focused at the retention of these customers in 2023, which will be supported by the gradual regional roll out of the recently introduced MOL Move loyalty app that was already downloaded by 700,000 customers following its launch in Hungary, Croatia and Slovenia. Moving forward there will also be enhanced focus on the integration of more than 400 stations acquired in Poland, where MOL is well established to achieve a #2 position in the local market. Through the implementation of the above measures the Consumer Services segment targets to achieve an EBITDA of USD 460mn in 2023. In preparation for the beyond the fuel age, the mobility division within Consumer Services, as part of the 2030 strategy, launched a number of clean, alternative mobility related products and services, with the aim of facilitating the gradual shift towards multimodal, clean and sustainable transportation. In the new strategy, MOL Group will continue to expand the EV charging points across its network and third-party locations, targeting to install 500 EV charging points by 2025 to become a leading mobility service provider in the CEE region.

The Upstream business continues to play a major role in terms of generating substantial free-cash allowing MOL Group to fund investments related to the transition. The Upstream strategy does not include any volumetric growth targets neither on reserves nor on production. The focus will be placed on generating value from current assets both in CEE and in the Group’s international Exploration & Production portfolio combined with opportunistic steps, such as the divestment of the UK portfolio. MOL Group has a proven track record of managing the production decline in its mature CEE assets (Hungary and Croatia), whilst it plans to buck the trend of declining production by implementing development work throughout the E&P portfolio.

As a major initial step towards expanding into new, low-carbon and sustainable businesses MOL was awarded a concession for municipal waste management services in Hungary. Waste management activities are expected to significantly contribute to MOL’s capital allocation target aiming to achieve at least 50% EU Taxonomy Aligned CAPEX ratio by 2030. By entering waste management MOL seeks to boost the efficiency of the current waste management system and works towards significantly reducing landfill waste by increasing recycling and installing waste-to-heat generation capacities.

More information on the new strategy can be obtained from the Group’s investor presentation.

|  | Management Discussion and Analysis | 17

3.2.1 Use of scenarios

In 2021 for the preparation of the long-term strategy, MOL Group applied scenario analysis as a means of assessing the potential implications of transition related risks and opportunities which in principle are still applicable today, while the details of the forecasts are updated based on the developments of the macroeconomic and industry environment. A number of scenarios were constructed, all of which were based on the assumption that the energy transition will occur, especially in the European Union where the Green Deal has accelerated the EU’s energy and climate policy. The difference between the scenarios is the speed of the transition. Each scenario outlines a number of legal, economic and technological constraints that would potentially affect the speed of the transition towards a low-carbon, net zero economy. From the several scenarios created, three scenarios were chosen by Executive Management (and approved by the Board of Directors) for the creation of the strategy. These three scenarios were: “slow transition”, “steady transition” and “net zero emission”. These scenarios helped senior management to frame and assess a wide range of plausible business, strategic and financial impacts associated with the transition to a low-carbon world, including capital allocation, costs, revenues and earnings. The three scenarios are largely based on quantitative modelling, including but not limited to technological and legal developments, macro assumptions and future demand projections for a number of petroleum products that today form part of the core product portfolio of MOL Group. MOL Group considers the ‘Steady transition’ scenario as the most probable, with both of the two other scenarios having more than a marginal probability of realization. Nevertheless, MOL Group ran a number of simulations to assess the viability and resilience of the strategy against an extreme net zero scenario in order to identify potential vulnerabilities. MOL Group did not use existing external scenarios and models provided by third-party vendors or agencies, as the scenario analysis was built in-house.

MOL Group created a “Premises Committee” made up from representatives of the main business divisions and functional areas. The committee is tasked with monitoring the main indicators and assumptions used in the different scenarios and carrying out updates following changes to the external environment. This system can provide early notice that the external environment is moving to a different stage along the chosen scenario path, or potentially moving towards a different scenario altogether, providing senior management the opportunity to reassess and adjust its plans accordingly. Changes to the premises – partially or fully- automatically triggers a notification to the Executive Management and the Board of Directors, and as a result it may cause a modification of the strategy. Any changes to the strategy would need approval from the Board of Directors. Next scenario analysis in line with updating the long-term premises can be expected in 2023.

|  | Management Discussion and Analysis | 18

3.3 UPSTREAM

Segment IFRS results (HUF bn) | FY 2022 | FY 2021 restated | Ch %
EBITDA | 827.5 | 395.6 | 109
EBITDA excl. spec. items | 827.5 | 399.9 | 107
Operating profit/(loss) | 613.9 | 156.9 | 291
Operating profit/(loss) excl. spec. items | 598.6 | 178.3 | 236
CAPEX and investments | 141.0 | 126.7 | 11
o/w exploration CAPEX | 18.0 | 20.7 | (13)
Hydrocarbon Production (mboepd) | FY 2022 | FY 2021 restated | Ch %
Crude oil production | 40.1 | 44.0 | (9)
Hungary | 8.9 | 9.3 | (4)
Croatia | 10.1 | 10.4 | (3)
Kurdistan Region of Iraq | 4.5 | 4.4 | 1
Pakistan | 0.5 | 0.6 | (19)
Azerbaijan | 13.9 | 17.0 | (19)
Other International | 2.2 | 2.3 | (4)
Natural gas production | 37.9 | 39.0 | (3)
Hungary | 20.4 | 20.4 | 0
Croatia | 12.9 | 13.5 | (5)
o/w. Croatia offshore | 3.4 | 3.2 | 6
Pakistan | 4.6 | 5.1 | (10)
Condensate | 4.8 | 4.9 | (1)
Hungary | 2.8 | 2.7 | 2
Croatia | 0.9 | 1.0 | (7)
Pakistan | 1.1 | 1.2 | (5)
Average hydrocarbon production of fully consolidated companies | 82.7 | 87.9 | (6)
Russia (Baitex) | 4.0 | 4.0 | 0
Kurdistan Region of Iraq (Pearl Petroleum)* | 5.3 | 5.1 | 3
Average hydrocarbon production of joint ventures and associated companies | 9.3 | 9.1 | 2
Group level average hydrocarbon production | 92.0 | 97.0 | (5)
Main external macro factors | FY 2022 | FY 2021 restated | Ch %
Brent dated (USD/bbl) | 101.2 | 70.7 | 43
HUF/USD average | 373.1 | 303.3 | 23
TTF month ahead gas price (EUR/MWh) | 130.9 | 46.5 | 182
Average realized hydrocarbon price | FY 2022 | FY 2021 restated | Ch %
Crude oil and condensate price (USD/bbl) | 94.2 | 66.5 | 42
Average realized gas price (USD/boe) | 130.8 | 51.7 | 153
Total hydrocarbon price (USD/boe) | 109.6 | 60.5 | 81
Production cost | FY 2022 | FY 2021 restated | Ch %
Average unit OPEX of fully consolidated companies (USD/boe) | 5.5 | 5.3 | 4
Average unit OPEX of joint ventures and associated companies (USD/boe) | 2.2 | 1.9 | 14
Group level average unit OPEX (USD/boe) | 5.1 | 4.9 | 4

Notes and special items are listed in Appendix I and II.

Capital Expenditures |  |
FY 2022 | Hungary | Croatia | Azerbaijan | Kurdistan Region of Iraq | Pakistan | Norway | Egypt | Angola | Total - FY 2022 | Total - FY 2021 restated
HUF bn
Exploration | 4.9 | 6.6 | 0.0 | 0.0 | 5.5 | 0.2 | 0.9 | 0.0 | 18.0 | 20.7
Development | 13.7 | 22.9 | 56.8 | 7.8 | 0.7 | 0.2 | 4.6 | 0.8 | 107.7 | 82.3
Other | 6.0 | 5.9 | 1.1 | 2.2 | 0.2 | 0.0 | 0.0 | 0.0 | 15.3 | 12.9
Acquisition | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 10.7
Total - FY 2022 | 24.6 | 35.4 | 57.9 | 10.0 | 6.4 | 0.4 | 5.5 | 0.8 | 141.0 |
Total - FY 2021 restated | 30.4 | 20.0 | 48.2 | 3.1 | 3.5 | 12.4 | 7.8 | 1.2 |  | 126.7

Tables regarding Hydrocarbon production (mboepd); Production cost (USD/boe); Average realised hydrocarbon price; Gross reserves (according to SPE rules): 1P – Proved reserve; 2P – Proved and Probable reserve; Costs incurred (HUF mn); Earnings (HUF mn); Exploration and development wells are available in the annual Data Library on the company’s website. * New methodology from 2020.

|  | Management Discussion and Analysis | 19

3.3.1 Financial overview of 2022

Upstream EBITDA, excluding special items, increased by 107% year-on-year in 2022 and amounted to HUF 827.5bn. The financial performance was primarily boosted by the significantly higher average realized hydrocarbon prices (up by 81%, or by 49.1 USD/boe compared to 2021). This was driven by a 42% increase in realized crude prices and a 153% jump in realized gas prices.

Total group production (including JVs and associates) decreased by 5% compared to the previous year, resulting in an average 92 mboepd production for the year. Lower production volume was mainly driven by lower entitlement production from ACG (a consequence of high oil prices on the PSA mechanism in place), and the natural decline in CEE and in Pakistan.

Group-level average direct production cost, excluding DD&A but including JVs and associates, increased moderately by 4% to reach 5.1 USD/boe despite significant cost pressure. The cost position of CEE assets decreasing proportionately owing to natural baseline decline, but still remaining at a very competitive level.

Upstream CAPEX amounted to HUF 141bn in 2022, expanding by 11% year-on-year. This is attributable to foreign exchange effects, and efficient operations allowing for the intensification of all developments aimed at delivering on the objectives of MOL Upstream’s Strategy. Development projects accounted for the largest share of this growth as activities continued in Azerbaijan, and the Adriatic Offshore Campaign, and Production Optimisation projects in Croatia. Altogether, the CEE region and Azerbaijan accounted for more than 83% (HUF 117.9bn) of total segment capital spending, mostly allocated to development activities.

In 2022, Upstream continued to play a vital role in the cash generation ability of MOL Group with HUF 686bn (USD 1.8 bn) simplified free cash flow generated, meaning that 58 USD/boe unit free cash flow was achieved on a portfolio level.

Changes in the Upstream regulatory environment

Hungary: The Mining Act has been modified extensively and numerous occasions, changes touching upon, inter alia, permitting, role of Mining Authority in certain questions. During the year, changes to the royalty regime meant a royalty increase with an existing minimum amount. The change also includes a penalty for lost mining royalty caused by reducing production compared to 2021. Additionally, the Government established the Supervisory Authority of Regulatory Affairs (SZTFH, Szabályozott Tevékenységek Felügyeleti Hatósága) at the end of 2021, which replaced the former authority regulating mining activities, consequently regulating and shaping legislation by presidential decrees of named organisation.

Croatia: a regulated price of 41 EUR/MWh was introduced for domestically produced natural gas, becoming effective with the fourth quarter of 2022.

3.3.2 Operational overview of 2022

Exploration

Total of 9 exploration or appraisal wells were drilled in 3 countries, out of which 4 new discoveries were made in 2022. Besides drilling, seismic acquisition campaigns and interpretation works progressed in Hungary, Croatia, and Pakistan.

In Hungary, the Shallow Gas exploration program continued with the drilling of three wells. Komádi-Kelet-10 well was successfully tested, completed and tied in as a gas producer, while Mezőcsokonya-23 was drilled and abandoned as the well was proven to be dry. As the third well, Komádi-Kelet-4/A, was drilled to penetrate gas saturated levels and now awaits testing, preparations are under way for upcoming wells. A conventional well has also been drilled and since oil discovery was confirmed by the well test, Vecsés-2 started its trial production. The 2022 shallow gas seismic campaign was carried out, with 3D and 2D acquisitions at five locations (Pusztaszőlős, Görgeteg-Babócsa, Barlahida, Nagykörű, Nyírség). Approval was received for a license area extension, at Okány-Nyugat.

In Croatia, with the completion of well site restoration for Bačkovica-1 East well, all contractual obligations of the Second Exploration Phase of Drava-02 block have been fulfilled. On block Drava-03, maturation of drilling prospects progressed based on the interpretation and analysis of newly acquired seismic data. Permitting and documentation activities for drilling are ongoing. On Block Sjeverno-zapadna Hrvatska-01, compilation of 3D seismic interpretation and processing, and geochronological studies were completed. After analysing and consolidating all available geological and geophysical data on block Dinaridi-14, including newly recorded magneto telluric data, the compilation of two geological and geophysical (G&G) studies was finished.

In Romania, activities aimed at delivering the remaining committed work program continued for all licences: EX-1, EX-5, and EX-6.

In Norway, MOL Norge has completed the sale of its remaining exploration licences: 20% interest in PL968 to AkerBP/DNO, 40% interest in PL932 to AkerBP, 40% share in PL820 to Lime Petroleum. Operatorship of PL820 was also transferred to Vår Energi ASA. MOL Norge no longer holds any licences on the Norwegian Continental Shelf.

In Russia, documentation required in previously issued exploration licence for the Devonian project was prepared, and formal approval was granted by State Authority.

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Exploration activities have been concluded in Kazakhstan with U-1 well remediation completed, and the State Committee accepted the relinquishment of the Fedorovskiy Block.

In the Middle East, Asia and Africa region, exploration activities advanced in Pakistan and Egypt. In Pakistan, processed, reprocessed and merged 3D seismic data interpretation, and prospect generation activities were carried out in operated TAL block throughout the year. An application for exploration licence extension was submitted to the regulator. The successful drilling of Tolanj West-2 development well achieved additional exploration targets. In operated Margala block, Tarnol-1 well was drilled, but plug and abandonment was declared. In the non-operated blocks, the drilling of two further wells were finished. Both Surghar X-1 (Karak block) and DGK-1 (DG Khan block) wells were drilled to target depth, but, without a commercial discovery, plug and abandonment got declared. Post-well evaluations are ongoing for these three wells. Furthermore, one-year extension of Margala’s exploration licence was received from the regulator, and a request for further extension has been submitted. Regulatory approval has also been granted for a 30% farm-down in Margala block ownership, to Mari Petroleum Company Limited. In Egypt, East Bir El Nus (block WD-08), a new exploration concession in the Western Desert was awarded to INA and Energean, with a 50-50% participating interest split and Energean as the Operator. Concession Agreement approval and ratification of award is awaited. In the East Damanhur concession, the second exploration well of the block, ED-2X was drilled as a gas discovery, well testing is currently in progress. Preparation of a G&G study is ongoing.

Field Development and Production

In 2022, MOL successfully continued with the drilling of new development wells. Production optimization programs continued in Hungary and Croatia, which resulted in an annualized production uplift of 2.5 mboepd with a total of 107 well workovers. Advances were made in Kurdistan as drilling activity increased both at Pearl and Shaikan, and in Kazakhstan where EPCC execution started and FDP was approved. Group-level organic reserves replacement ratio, with revisions, reached 185% for year-end 2022.

In Hungary, field development activities continued as two wells were drilled. Both Mezősas-Nyugat-30, originally spudded in 2021, and Üllés-Kelet-2 wells have been completed and tied in, production already started. The third well, Sas-Ny-31 was spudded and drilling ongoing, while preparations have started for the following well. In case of Sávoly-Nyugat-7, a development well spudded and drilled in 2021, after the completed well test in the first quarter of 2022 and successful tie-in, the well started producing. Preparations regarding Somogy Phase-3 project progressed, execution of surface scope commenced after relevant permits had been obtained. The production optimization program continued, resulting in a total of 45 well workover operations completed and put into production, consequently adding to production approx. 1.5 mboepd increment on an annualized basis.

In Croatia, Jamarica-183 onshore field development well was tested, preparatory measures are currently being taken for permitting. Two field development wells were drilled in 2022, Dravica-3 and Kozarice-43. After the drilling of Dravica-3 well was completed with negative results, preparation of a pre-FEED study and issuance of location permits are currently ongoing for the Zalata-Dravica project. Kozarice-43 well was proven to be dry and thus abandoned, well site restoration is currently under way. The Enhanced Oil Recovery (EOR) program continued with carbon dioxide injection on Ivanić and Žutica fields. On Šandrovac field the EOR pilot project originally initiated in 2020, a series of well workovers, well logging, production and pressure tests were performed. The carbon dioxide injection cycle finished, and water injection started. Data acquisition and testing results will enable future full-field EOR application. As part of the North Adriatic Offshore Development Program, drilling and completion of the second infill well finished, and so Marica D Dir was put into production, just as Ika B-1 R Dir. Drilling and testing finished for four open sea wells: Ilena-2 ver, Ida D-1 ver, Ira-1 dir and Ida D-2 ver. After conducting the FEED study, EPCI and material supply tendering process was initiated. Investigation report about the late-2020 capsizing of Ivana D unmanned offshore platform was finalized, well plug and abandonment to follow as currently contracting and additional preparatory activities are under way. Implementation of the Production Optimization project continued, and within its scope, a total of 62 well workovers were completed in 2022, contributing 1.0 mboepd additional production on an annualized basis.

Discontinued operations: In the United Kingdom, MOL signed an agreement with Waldorf Production Limited (“Waldorf”) covering the sale of its entire Upstream portfolio in the United Kingdom on 23rd March 2022, with an effective date of 1st January 2021. The closing of the transaction was completed 10th November 2022.

In Norway, MOL Norge has completed the sale of its 6.84% share to Lundin Energy Norway of the unitized Trell-Trine development

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In the CIS region, field development of the operated Baitugan field in Russia continued. The re-assessment program carried on in 2022 with 3 horizontal wells drilled and completed, 5 advanced well workovers and the conversion of 10 wells into injector wells performed. Within scope of the Water Quality Improvement project, the installation of a water filtering unit was completed. Production optimization efforts resulted in a total of 54 well interventions executed as part of the well workover program. In Kazakhstan, activities progressed towards first gas. As part of the roadmap to Production Contract Addendum #6, the updated Rozhkovskoye FDP was approved by the CCED (Central Commission for Exploration and Development). After successful tendering, winner had been announced for the EPCC tender, the contract was signed, and the execution has started. Detailed engineering and long-lead item procurement is currently ongoing. In Azerbaijan, a total of 15 wells were delivered within the 2022 drilling program, of which 12 are producers, 3 are injectors. Further 2 recompletions were also delivered. A planned maintenance program was carried out on East Azeri platform. The Azeri Central East project continued its progress towards first oil, with enabling works on other platforms, fabrication and installation activities. After a suspension due to technical difficulties, the Chirag Gas Lift System is fully operational now since a resolution was found.

In Pakistan, part of TAL block development, Tolanj West-2 well was successfully drilled, tested, completed, and put into production. While the Maramzai Compression Facility and the Produced Water Treatment and Injection Facility at Makori-03 had been commissioned, the Manzalai Secondary Compression project progressed towards completion as execution reached stage where installation of compressor packages is under way. Preparations of various studies (Tolanj West Simulation, Halini Simulation) concluded; compilation of Makori Deep Reservoir Simulation study initiated. Well workover operations were successfully completed at Manzalai-4 and -5 wells. By completing production optimization jobs at several fields, an incremental production of 0.2 mboepd was realized, annualized and net to MOL.

In the Kurdistan Region of Iraq, drilling activities continued on Shaikan field as SH-15 well was drilled and put into production, SH-16 was drilled and completed, and SH-17 was spudded, drilling is ongoing. Dry train expansion project progressed, with civil works brought to completion. Well workovers were carried out at SH-5, SH-8 and SH-13 wells. Dialogue and engagement resumed with the Ministry of Natural Resources with regards to the Field Development Plan. Tendering for the gas reinjection project kicked off. On Pearl, the expansion project of Khor Mor gas plant, KM250, progressed with the completion of engineering, procurement, and fabrication activities. Manufacturing and civil works went on until a Force Majeure was declared, which remains in place and puts construction of major equipment on hold. Well operations continued with the successful drilling and completion of wells KM-13, KM-14, KM-15, and the spud of KM-16.

In Egypt, field development activities continued. On North Bahariya concession, total of 9 wells have been drilled, out of which 5 are producers and 4 water injectors, and further 9 well workovers were performed. Regular maintenance activities and implementation of development projects advanced on all concessions. Divestment of East Yidma concession was finalized as the Sale and Purchase Agreement with National Petroleum Co. South Ramadan (NPC) was signed in August 2022, and the subsequent Deed of Assignment approved in November.

In Angola, maintenance activities were carried out on Block 3/05, while on Block 3/05A, the well workover of GAZ-101ST well finished without success in restoring production from Caco-Gazela field. Re-evaluation study of Caco-Gazela area was completed. On 19th July 2022 Afentra (Angola) Ltd has signed a Sale and Purchase Agreement with INA - Industrija Nafte, d.d. to acquire a 4% interest in Block 3/05 and a 5.33% interest in Block 3/05A, with an effective date of 30th September 2021. The transfer of INA’s participation interests on both blocks was approved by the Minister of Mineral Resources, Petroleum and Gas, executive decrees issued.

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# 3.4 DOWNSTREAM

Segment IFRS results (HUF bn) | FY 2022 | FY 2021 | Ch %
EBITDA | 804.8 | 500.7 | 61
EBITDA excl. spec. items(1) | 804.8 | 500.7 | 61
Clean CCS-based EBITDA(1) (2) | 848.4 | 450.7 | 88
o/w Petrochemicals(1) (2) | 66.5 | 247.2 | (73)
Operating profit/(loss) reported | 636.1 | 348.9 | 82
Operating profit/(loss) excl. spec. items(1) | 645.3 | 348.9 | 85
Clean CCS-based operating profit/(loss)(1) (2) | 688.9 | 298.9 | 131
CAPEX | 268.8 | 206.7 | 30
o/w transformational | 117.7 | 88.7 | 33
MOL Group without INA | FY 2022 | FY 2021 |
EBITDA excl. spec. items(1) | 811.4 | 466.5 | 74
Clean CCS-based EBITDA(1) (2) | 831.7 | 427.7 | 94
o/w Petrochemicals clean CCS-based EBITDA(1) (2) | 66.5 | 247.2 | (73)
Operating profit/(loss) excl. spec. items(1) | 679.7 | 341.2 | 99
Clean CCS-based operating profit/(loss)(1) (2) | 700.0 | 302.3 | 132
INA Group | FY 2022 | FY 2021 |
EBITDA excl. spec. items(1) | (6.6) | 34.2 | n.a.
Clean CCS-based EBITDA(1) (2) | 16.7 | 23.0 | (27)
Operating profit/(loss) excl. spec. items(1) | (34.4) | 7.7 | n.a.
Clean CCS-based operating profit/(loss)(1) (2) | (11.1) | (3.5) | 218
Refinery margin | FY 2022 | FY 2021 | Ch %
MOL Group refinery margin UPDATED (USD/bbl) | 9.0 | 1.3 | 592
Complex refinery margin UPDATED (Mol+Slovnaft, USD/bbl) | 10.0 | 1.9 | 426
Updated MOL Group petrochemicals margin (EUR/t) (10) 2023 | 242 | 603 | (60)
NEW MOL Group petrochemicals margin (EUR/t) (9) 2022 | 481 | 720 | (33)
External refined product and petrochemical sales by country (kt) | FY 2022 | FY 2021 | Ch %
Hungary | 5,482 | 4,788 | 14
Slovakia | 2,178 | 1,783 | 22
Croatia | 2,292 | 2,027 | 13
Italy | 1,477 | 1,645 | (10)
Other markets | 7,483 | 8,273 | (10)
Total | 18,912 | 18,516 | 2

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External refined and petrochemical product sales by product (kt) | FY 2022 | FY 2021 | Ch %
Total refined products | 17,693 | 17,040 | 4
o/w Motor gasoline | 3,569 | 3,302 | 8
o/w Diesel | 10,578 | 10,257 | 3
o/w Fuel oil | 291 | 362 | (20)
o/w Bitumen | 532 | 580 | (8)
Total petrochemicals products | 1,219 | 1,476 | (17)
o/w Olefin products | 156 | 213 | (27)
o/w Polymer products | 994 | 1,167 | (15)
o/w Butadiene products | 69 | 96 | (28)
Total refined and petrochemicals products | 18,912 | 18,516 | 2

CAPEX (in HUF bn) | FY 2022 | FY 2021 | YoY Ch % | Main projects FY 2022
R&M CAPEX and investments | 155.2 | 100.7 | 54 | MOL: Catalyst DR, Periodical maintenance IAS 16, Increasing the eff of Desalters SN: Periodical maintenance, IAS16 SN REF, Catalyst SN REF, BADU5 - F1 heater replacement INA: Rijeka Refinery Upgrade Project
Petrochemicals CAPEX | 110.3 | 102.7 | 7 | MPC: Polyol Project, MPC SC1 Lifetime extension, MPC SC1 Boiler replacement, PSA installations in SC1-2 SN: Ethylene storage tank, Strategic spare parts, Reconstruction of furnaces BA101, BA103, BA104, PP3 unit revamp
Power and other | 3.2 | 3.3 | 0 | SN Power: Periodical maintenance, Transformer replacement
Total | 268.8 | 206.7 | 30 |

Change in regional motor fuel demand | Market | MOL Group sales
FY 2022 vs. FY 2021 in % | Gasoline | Diesel | Motor fuels | Gasoline | Diesel | Motor fuels
Hungary | 5 | 5 | 5 | 23 | 22 | 22
Slovakia | 5 | 2 | 3 | 36 | 19 | 23
Croatia | 5 | 6 | 6 | 3 | 8 | 7
Other | 5 | 3 | 3 | (11) | (15) | (14)
CEE 10 countries | 5 | 3 | 3 | 8 | 4 | 5

3.4.1 FINANCIAL OVERVIEW OF 2022

In 2022 Downstream reached a record high HUF 848.8bn Clean CCS EBITDA, which is 88% higher than the previous year’s performance. The exceptional result was driven by remarkable R&M performance powered by all-time high external environment. R&M segment delivered more than 90% of Downstream Clean CCS EBITDA, despite extra taxes and government measures. Petchem segment lagged behind base level on normalizing external environment and all-time high energy prices.

Governmental decisions in Hungary had an impact on MOL Group’s financial performance, such as the retail price cap regulation entering into force on the 15th of November 2021, maximizing the price for gasoline and diesel at 480 HUF/liter. Later on, the regulation was amended and from 28th February 2022, a wholesale price cap on fuels was introduced with 480 HUF/liter. Windfall taxes were also imposed in Hungary on Brent-Ural spread in 3 phases: 25% rate from 1st of January until the end of July 2022, increased to 40% from 1st of August 2022 till 7th of December, and further increased to 95% from 8th of December 2022.

Important development on the regulatory side is that the wholesale price cap was phased out in early December 2022, causing a significant positive development operationally since market-based pricing prevails again allowing import flows to the country. Meanwhile, on the financial side, the overall picture is mixed since the Brent-Ural taxation increased from 40% to 95%.

In Refining in 2022 increased motor fuel crack spreads resulted in stronger refinery margin, backed by significantly wider discount on Urals. However, gains were limited by the fuel price cap and windfall taxes applied in Hungary as well as high energy prices. Hungarian fuel demand skyrocketed driven mainly by the price cap regulation, leading to diminishing import volumes. In addition, refinery shutdowns also hindered own fuel production, so supplying the Hungarian market proved challenging. In the first half of the year, rising quotations hindered domestic mark-up levels, but the declining quotation environment in the second half of 2022 backed mark-ups.

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MOL Group Petrochemical margin was an average 180 EUR/t lower vs 2021 due to narrower polymer-monomer spreads. On the other hand, polymer price levels were much stronger owing to reduction of spot sales and support of price formula customers. Operations were impacted by heavy April-July maintenance season and unplanned events as well. Polymer sales volumes were limited by product availability related to maintenances, as well as lower demand associated with customers’ cautiousness over the volatile energy market.

Total Downstream investments reached HUF 268.8bn exceeding the base year spending. About 58% of this amount was spent on Refining and Marketing projects. Strategic projects such as Polyol and Rijeka Refinery Upgrade Project continued to play a strong role within strategic organic investments.

Regarding ongoing transformational projects, the construction works of the new polyol complex in Tiszaújváros exceeded 99% mechanical completion by the end of 2022. The Rijeka Refinery Upgrade Project (RRUP) reached 70%, related engineering and purchasing activities finished according to the plans. INA RRUP mechanical completion is expected in 2024 H1.

3.4.2 OPERATIONAL OVERVIEW OF 2022

European energy companies face unprecedented uncertainty as a result of the Russian Ukrainian war. Mol Group’s Downstream have several transformational projects on the way pursuing targets laid down in our 2030+ strategy, topped with a round of new investments aiming for supply diversification, as a consequence a crude diversification program was launched in 2022.

The landlocked Danube Refinery in Hungary and the Bratislava Refinery in Slovakia were designed to process the Russian export blend (REB). Even before the outbreak of the war, the Danube Refinery was capable of processing a maximum of 35% of seaborn crude oil transported via the Adriatic pipeline. After the outbreak of the war, MOL Group accelerated its crude diversification program.

In the short run it is not possible to replace REB crude with similar physical and chemical properties (one-to-one) in either quality or quantity, only with a special blending operation that can ensure the desired quality. The immediate replacement of REB crude oil faces significant technical, transportation, storage, and commercial limitations. MOL Group estimates that 2-4 years will be needed for its refineries and logistics system to be ready to process 100% alternative crude oil with the expected level of safety and reliability. To achieve this, MOL Group started a detailed analysis and a careful planning process. Projects initiation started in 2022, following by the appropriate decision to manifest investments and modernization processes, the estimated required investment is about 500-700 mn USD.

In November 2022 as part of preparation for the period when sanctions on the export of fuels made from Russian crude oil are in force (5th Feb) a new alternative crude, Arab light was tested successfully in Slovnaft refinery. An important milestone reached in ensuring supply security of the region further.

Even with the heavy turnaround season during 2022 and the motor fuel price cap regulation in Hungary (and smaller extent in other CEE countries), Downstream supplied the core markets. The supply security was maintained even though the price cap drove out the imports from the market. In the early December 2022 the price cap regulation was terminated, allowing import again in the market.

Downstream operation continued, we moved forward with the implementation of the MOL Group’s 2030+ ‘Shape Tomorrow’ strategy, the key directions are still valid and confirmed. Downstream has priorities on four areas (Efficiency, Fuel transformation, Diversification, Sustainability) with customer and people focus as an enabler to build a resilient investment portfolio.

Despite of the turbulent external environment Production has closed the year with decent overall availability in Refining (93.9%) and also in Petrochemicals (93.8%), which was a strong enabler to take advantage of stronger refining environment, as a result total crude processing reached 13.7 mn tons in Refining. Production effectively reacted to the changes with re-optimization of maintenance and project related activities and related spending while maintained mechanical availability of the production assets. With a dynamic and thorough crisis management Production successfully reacted to the energy crisis situation, which resulted in a great amount of energy saving via optimizing its energy mix. In order to protect our people, personal and process safety action plan have been developed to reverse the worsening trend of the HSE indices. To ensure the long-term safe and reliable operation, Production has successfully finished its biggest lifetime extension project in the MOL Petrochemicals on Steam Cracker 1 plant. Regardless the crisis situation, Production continued with its greatest transformation program, the PROmotion (Production in Motion) program, to ensure the strategic contribution of our Refining and Petrochemical sites, promising over 150 mn USD (versus 2018) efficiency improvement in the next three years.

Logistics is focused on customers satisfaction through providing competitive services, adapting to everchanging environment, transforming to sustainable operation driven by engaged employees. These are our commitments within the 2025 Roadmap.

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2022 was a challenging year, as traditional supply channels were overloaded or were not functioning at all. We had to find new ways to deliver products to our refineries and our customers. We delivered fuel from Adriatic sea to our inland markets, or even reversed some channels when we started delivering diesel from Constanta up the Danube by barge to Százhalombatta. We supported the Hungarian market with record high volumes of cross country deliveries from Slovakia and supplied Budapest airport with Jet aviation fuel from Rijeka. We delivered a cargo of new non-Russian crude along the Adria and Friendship 1 pipelines, testing transportation capacity with great results. All of these and many more solutions helped stabilize the market balance in our region.

In 2022, internally we continued with actions to reduce the cost and to transform of our operation. Logistics colleagues in Tiszaújváros worked on follow-up solutions to our Polymer Excellence project and the implementation of the Routing & Scheduling process and tool was launched in Hungary. Colleagues in Slovnaft progressed with control room centralization efforts, and the New Rijeka Port project started in Croatia. Our employees remain the cornerstone of our business and we strive to provide a safe work environment: to improve personal safety awareness in Logistics, we launched a dialogue program focusing on slip & trip type events. Although Logistics has a relatively small contribution to the CO2 emission on Downstream level, we strive to make further improvements in this area as well, by reducing fuel consumption in our truck fleet (Scope 1) and designing energy efficiency projects (Scope 2) all over our operations. Challenges continue to remain in attracting new skilled workforce particularly train and truck drivers, we set out a plan to tackle these issues with focusing on employee experience and by working with HR on attracting skilled workforce for our operations.

Volatility and series of unexpected events characterized the Downstream activities in 2022. Due to the Russian-Ukrainian war securing the regional fuel supply became the main theme of 2022. Frequently changing market & regulatory circumstances were constant in 2022, so adaptation and quick reaction was crucial. Commerce & Optimization activities focused on maintaining the continuity of the supply chain, while besides the elevated risk of raw material supply also the drastically changed external environment.

Local Petrochemicals markets were hindered by the high energy prices and weakening demand, a sharp contrast to 2021 where we experienced record high petchem margins. Polymer sales volumes in 2022 have reached 994kt, which represents a decrease of 17% (-172kt) compared to 2021. The Petchem market in 2022 was affected by lower demand of plastic consumers in European markets. One of the main reasons was weaker growth of the global economy in Europe along with inflationary pressures, which has significantly changed consumer behaviour. Despite the turbulent period, we confirmed our position as a reliable supplier in the region with a focus on the customer.

In the Smart Review Project two waves an exhaustive review of the operations and structure was implemented as a focused efficiency improvement program. The goal of the review was to assess Commerce & Optimization activities and further develop processes and structure while improving our customer service with more flexible, reliable and tailor-made products and services. MOL Group keeps increasing B2B customers’ satisfaction by focusing on development of digital business solutions. As part of the Digital Roadmap, CRM project reach the third phase of the implementation with core functionality roll-out. Last year, we introduced MOL Group’s self-developed B2B online ordering platform (ISA) into the Refined products’ export sales area as well in Group Customer Service and already 40+% of orders are placed via this platform by customers. Meanwhile the ISA program crossed a major milestone in 2022, having 10.000 registered customers.

As a response to extremely volatile external environment - let it be market or regulatory driven - and changing customers’ need, we reviewed and adapted our internal operation and processes as well. As a result, 4 new organizations were established with clear focus and ownership from the 1st of October 2022, succeeding Commerce & Optimization. New and Sustainable Businesses will focus on CO2 emission reduction initiatives, scaling up existing non-traditional business lines (Recycling & Compounding) also business development of new value chains (i.e: Hydrogen, Biogas) driving Downstream in its low-carbon transition. Value Chain Management is responsible for setting the DS strategy and optimization framework on any time horizons. Also, this organization is managing the crude and other feedstocks sourcing & trading, risk management. Fuels is responsible for managing MOL Group’s fuel value chain including market supply, sales optimization and sales activity on all Downstream markets. In cooperation with Group Downstream Value Chain Management is responsible for fuel margin maximization and coordinates the management of fuels, fuel cards, biofuel compliance and other refined products on all Subsidiary level. The product portfolio includes motor gasolines and components, diesel and other gas oils, fuel oil, bunker fuel, sulphur, coke and biofuels and the management of fuel cards. Group Chemicals is responsible for managing the sales, purchase and marketing of Petrochemicals, Commodity chemicals, Special chemicals and Polyol businesses and value chain optimization of polymers, monomers and polyols.

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In 2022 DS Development invested thousands of engineering hours, both internal and external, to develop crude diversification project portfolio that will enable MOL Group to gradually increase the intake of non-Russian crudes into its refineries. In line with MOL Group sustainability targets, green hydrogen project in Danube Refinery stepped into the execution phase, while several new energy efficiency and CO2 reduction initiatives were developed. In line with strategic objectives, the execution of major projects continued, like the expansion of production capacities of maleic anhydride in Danube refinery and of polypropylene production in Slovnaft’s Bratislava refinery, construction of the new Olefins Conversion Technology (OCT) Unit and life time extension program of Steam Cracker Unit in MOL Petrochemicals' complex in Tiszaújváros, Hungary.

The flagship Polyol Project of MOL Downstream has reached an overall 99.3% progress by the end of 2022. Construction activities have come close to completion by the end of 2022, with focus of the project management teams shifting towards the complex sequence of commissioning activities. Most of the utility units were taken over from contractor in December 2022 along with as semi-industrial size polyol line that is capable of executing the final steps of product development and serving selected customers with first product samples. The semi-industrial polyol unit shall use purchased raw materials and first will work in isolated mode. The takeover of the aforementioned units are important as they open the route for the cold- and hot commissioning of process units and the scale-up of production. In 2022, all the necessary permits for start-up and trial operations have been organized, raw materials and catalysts are specified and ordered, or ready for ordering. The operating teams have been set up and play an integral role in commissioning as “on the job” training. As for the remaining steps of commissioning, we foresee that process units shall enter the hot commissioning phase by the mid of 2023. Trial production shall start in multiple steps in the second half of the year. The start-up sequence shall be optimized taking into consideration the guarantee tests of units and the market acceptance time of the various products.

Information of Downstream related sustainability developments, including health & safety, environmental performance, employee and community engagement, can be obtained from the Sustainability Report.

3.4.3 DOWNSTREAM FUTURE PRODUCT PORTFOLIO

MOL Group Downstream is in a continuous process of developing its future product portfolio, launching new products and services that not only mitigate low-carbon transition risk, but capitalize on opportunities created by a carbon constrained, circular economy.

Biofuels in MOL Group

During 2022 MOL Group purchased and blended similar amount of biofuels like in the previous year (ca. 650 kt in 8 countries) and continued its efforts to prepare for increasing renewable share obligations in the transport segment.

After the successful introduction of new components and technologies in the past years – co-processing, advanced bio-MTBE, HVO – MOL started to use bio-propane in Autogas (LPG) from own production in Hungary in 2022.

Most of the used biofuels are still biodiesel and bioethanol where the share of advanced and waste-based components in the feedstock portfolio is gradually increasing, leading to an overall better CO2 saving performance. A key contributor of the improvement of the CO2 footprint is a long-term supply contract with a Hungarian biodiesel producer about 40 kt biodiesel with high (ca. 80%) GHG saving.

RED II & Fit for 55

As a result of recent geopolitical risk in Europe leading to a clear intention to decrease energy dependency as well as increased awareness of long-term climate goals, discussions continued on EU level to update the previously announced Fit for 55 package. Final outcome (following the agreement among the European Council, Parliament and Committee) is expected during the course of 2023 but all directions point to more ambitious targets versus the current version.

Based on a solid sustainability framework, MOL Group thrives to be a driver of changes along the low-carbon transition in Central and Eastern Europe. An important pillar of this transition is to gradually replace own hydrogen demand – consumed in refinery processes - with low carbon and renewable alternatives. Beyond the EU compliance MOL Group will leverage its strength of integrated operation via entering the whole renewable hydrogen value chain to play a dominant role in the regional hydrogen ecosystem and serve emerging market demands.

In 2022 MOL Group has made the first steps in the Hydrogen Development Roadmap. In the New and Sustainable Businesses unit a new dedicated Hydrogen team and program management was designed to assure complex hydrogen value chain development. A pilot project was initiated for the implementation of a 10 MW PEM electrolyser with a capacity of 1.6kt green Hydrogen production at Danube Refinery. The project received final investment decision in 2022, expected start of operation is 2024 Q1.

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R&D

In 2022, Downstream R&D continued its activities and projects across three main product fields: Polyol Polyolefin, and Refining. R&D has a vital role in the Polyol Project by continuing the development of product recipes for the upcoming start-up of production. We extended the polyurethane application development know-how to ensure the necessary support for MOL Group’s future customers for polyols. Our Polyol Technical Service team has already visited potential customers to prepare the ground for the market entry. In the polyolefin area, MOL Group continued its key product development projects to address the increasing demand of customers for more sustainable plastic recycling and compounding solutions, as well as in the field of virgin polyethylene/polypropylene for new application segments. As an answer to social responsibility MOL Group launched a new innovative project to reduce the volatile organic components and smell of its polyolefin products to meet increasing requirements in automotive industry. Two advanced feedstocks for refinery diesel co-processing were successfully tested in MOL’s Danube Refinery. To meet the future demand of low carbon fuels and to accelerate the conversion to circular economy, additional small-scale lab reactor tests were successfully completed with increased bio-feedstock/waste ratio. In the field of fuels, despite the significant changes in the market in the past two years, we continued to implement the originally intended development activities, adapted to the new conditions. We continued to intensively support marketing with the aim of educating our customers. New product recipes with improved performance for premium gasoline, diesel, racing gasoline and another one in the bitumen area were also developed and their production was started. Applying new additives, we were able to improve the performance and quality of our motor fuels. MOL Group continued its R&D activity in the field of heavy fuel oil conversion to produce non-fuel products. Besides the laboratory tests two successful test runs were completed in MOL’s refineries upgrading heavy fuel oil to more valuable non-fuel products.

MOL Group is member of the consortia of several nationally funded R&D projects in collaboration with Hungarian universities (Budapest University of Technology and Economics, University of Szeged, University of Pannonia) and other industrial partners.

Compounding Project

In October 2022, the new REMOLEN and PRIMOLEN brand names were launched at the K-FAIR in Düsseldorf, which is the world’s most important trade fair for the plastics industry. There, we showcased our superior Compounding technology solutions, which are fit for very demanding applications. REMOLEN gives polyolefin-based, post-industrial and post-consumer plastics, and additional life-cycle to support environmental goals and close the loop on waste, giving our customers a solution for lowering carbon footprints whilst increasing material quality with customized engineered design.

MOL Group established a partnership with Swiss trading group Meraxis in September 2020. Under such agreement, Meraxis supplies MOL Group with post-consumer and post-industrial recycled feedstock to be converted into new Compounds, offering recycled plastic and virgin resin full-suite compounded solutions, through a wide MOL REMOLEN and PRIMOLEN product portfolio range. In the first stage of growth, these are planned to be produced at Aurora Kunstoffe’s facility. The collaboration with a value chain partner like Meraxis and our expertise and innovation strength in Polymer Compounding is currently helping both companies to create an ever-advancing value proposition to customers, by providing solid application-driven circular materials for Automotive, Aerospace, Home Appliances, Furniture and Construction. In 2022, MOL created the REMOLEN 50 for washer-tank applications using Meraxis post-consumer recycled feedstock, which is an excellent example of our proactive response to customer’s emerging needs. Thereby MOL Group has set new industry benchmark for robust performance in Automotive under-the-hood applications with recycled polypropylene compounds.

Embracing new forms of collaboration, which can lead to innovation, in 2022 MOL Group entered a technical partnership with SAPPI, a leading global provider of wood-fibre based natural feedstock, which led MOL to create: PRIMOLEN NF, an eco-designed polypropylene compound that is lighter in fossil-based materials, integrating natural fibres, aimed to substitute mineral fillers by increasing the scratch resistance and light-weighting for aesthetic Automotive interior and semi-structural applications, consequently unlocking the potential of natural materials in ever-more demanding formulations. All in all, this represents an effective design that we aim to help car manufacturers and consumer brands, contribute to the circular economy.

Recycling Projects

Till the end of 2022 several Post-Consumer Recyclate (PCR) containing HDPE and PP blend recipes were in-house developed: 13 rHDPE blend recipes with 30% or 50% of recyclate content and 3 rPP blends. Three rHDPE blends were successfully manufactured at third party - as MOL has currently no asset for those products - and then tested at the polymer converters targeting the rigid packaging sector, which is the most exposed to potential plastic regulations following the recent EU Green Deal. The customer testing – involving customers from several countries – brought back good initial quality feedback, confirming the expectations of delivering a product with near-virgin qualities, which is a pioneer in MOL’s own recyclate product portfolio to come in the next few years, targeting various segments and applications.

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APK AG, MOL Group’s strategic partner for plastics recycling since 2018 located in Merseburg, Germany, was supported in 2020 in order to stabilize their Post-Industrial Recyclate (PIR) based low-density polyethylene (LDPE) and polyamide (PA) production, with a total annual capacity of 8,000 tons. In 2021, successful trials were carried out with PCR waste processing, and based on detailed investigation, the advanced technical solution will be further developed to be market ready for PCR waste utilization consumption. In 2022 APK’s technology development achieved such level where the different process steps are functioning. The evaluation of the current technology readiness from MOL side continues to be able to define the next step regarding the strategic partnership.

MOL Group acquired ReMat Zrt., a Hungarian market leading plastics recycling company using communal and industrial waste for creating regranules, the transaction was closed at the end of March 2022. The recycler has 2 production plants in Hungary (Tiszaújváros and Rakamaz) and a logistics hub in Bratislava, Slovakia, the annual plastic waste consumption is ~ 25 KT, the company main product line is recycled LDPE, LLDPE. Upon the acquisition integration assessment project started and by the end of the year we strengthen Remat’s team, kept stable operation, all in all the company passed well the first changes.

Lubricant producer and distributor MOL-LUB provides contracted partners and other participants collection of waste oil. Contracted partners deliver the waste oil to the Zala site, where it is recycled (6,017 tons in 2022), thereby re-entering the industrial cycle as an essential element for bitumen production. Through the lubricant waste collecting service, MOL Group ensures that lubricants – such as motor oil or hydraulics oil – which are classified as hazardous waste, are be transformed into fluxing oil, which is an important element for bitumen production. MOL-LUB contributes to recycling 6-7 thousand tons of waste lubricant oil per year and takes care of treating 99% of waste oil product within the company since 2011. MOL Group also ensures collection and treatment of other waste oils: combustible waste is delivered to the Danube Refinery incinerator, while non-combustible waste (e.g. metal) is handed over to contracted partners (490 tons in 2022).

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3.5 Innovative Businesses and services

2022 was a challenging year for the Innovative Businesses and Services segment, as fuel price regulatory measures had major influence on the financial performance.

3.5.1 Consumer Services

Segment IFRS results (HUF bn) | FY 2022 | FY 2021 | Ch %
EBITDA | 121.2 | 182.5 | (34)
EBITDA excl. spec. items(1) | 121.2 | 182.5 | (34)
Operating profit/(loss) reported | 76.6 | 143.4 | (47)
Operating profit/(loss) excl. spec. items(1) | 76.6 | 143.4 | (47)
CAPEX | 250.5 | 49.9 | 402
o/w organic | 63.7 | 47.1 | 35

Total retail sales (kt) | FY 2022 | FY 2021 | Ch %
Hungary | 1,881 | 1,313 | 43
Slovakia | 786 | 709 | 11
Croatia | 1,180 | 1,054 | 12
Romania | 748 | 790 | (5)
Czech Republic | 466 | 486 | (4)
Other(8) | 472 | 419 | 13
Total retail sales | 5,597 | 4,771 | 17

Non-fuel indicators | FY 2022 | FY 2021 | Ch %
Non-fuel margin | 38.2% | 28.6% | 33
Number of Fresh corner sites | 1,179 | 1,070 | 10

Notes and special items are listed in Appendix I and II.

Tables regarding the number of MOL Group service stations, retail sales of refined products (kt) and gasoline and diesel sales by countries (kt) are available in the annual Data Library on the company’s website.

3.5.1.1 Financial overview of 2022

2022 results have been heavily affected by regulatory measures across the CEE. Due to fuel price regulatory measures (which were introduced in 6 of our markets for different periods during 2022) the EBITDA decreased to HUF 121.2bn by 34% YoY and the increased retail tax also represented a significant cost burden. Regulated fuel price on main grade products generated 17% increase in fuel volumes year-on-year, and due to being excluded from the regulations, premium penetration dropped with about 9%. Non-fuel margin expansion (33% increase YoY) and fuel sales volume increase partly mitigated the negative drivers. By the end of 2022, there was a significant change in network size due to Polish acquisition, total number of service stations reached almost 2,400.

3.5.1.2 Operational overview of 2022

The segment consists of two main business lines: “Retail” includes both fuel and non-fuel retailing, while “Mobility” is comprised of all other services provided for people “on-the-go”.

Retail

In December, 2022, MOL has entered to the 10th country in Europe, Poland, by acquiring 417 service stations with the brand, LOTOS Paliwa based on a sets of agreement with PKN Orlen and Grupa LOTOS SA. With the acquisition being completed until the end of 2022, MOL Group’s service station network previously consisted of 2,170, whilst reaching 2,391 stations when combined with the acquired franchise. MOL Group maintained a leading position on the Hungarian, Croatian and Slovakian markets, achieved second place in Serbia, while being the third largest market player in the Czech Republic, Slovenia, Montenegro, Romania and in Poland as well. More information on the installation of EV chargers across the Group service station network can be obtained from the “Mobility” section below.

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Retail completed over 200 reconstructions, including forecourt, car- and jet-wash reconstructions and the installation of the non-fuel concept, Fresh Corner at the stations. 110 Fresh corners were added across the network taking the total number of Fresh Corners to 1,179. To enhance non-fuel transactions further in line with the increased fuel sales in 2022, Retail completed over 400 gastro acceleration projects during the year. Besides, Fresh Corner concept is constantly being developed through the continuous expansion of the gastro and grocery categories. The offering was also expanded by a wider range of convenience services (e.g. self-service and innovative payment solutions), and own branded energy drink and chips offer across the Group in addition to the Fresh Corner milk and coffee beans. French-type hot dog and quality coffee remained the core products together with other options (sandwich, bakery etc.) Fresh Corner concept offers hot snacks for the people on the go.

Retail Customer

Consumer Services systematically collects retail customer insights and tracks overall customer satisfaction through a number of channels. As a result, MOL Group does not operate with (and therefore does not report) a single score for Retail, as several customer satisfaction scores are applied depending on the insight channel.

A customer insight system called Brand Tracking was operational in 7 countries involving overall 3,000 customers per country (so overall 21,000 in MOL Group) in a way of monthly data collection (250 Customers per month per country). It’s providing data for 25 different KPIs including fuel, gastro, store hygiene, loyalty programs and staff behaviour. Besides, brand awareness and brand powers are continuously measured as well. During 2020, MOL Group conducted its biggest research to date called Fresh Corner Usage & Attitude (U&A), involving almost 10,000 customers in 7 countries via 4 different channels in order to understand expectations and certain non-fuel shopping habits. In 2021 it was followed by a fuel U&A research also in 7 countries with more than 7,000 customers. In 2022, it was followed by a one-off Brand tracking research in Poland and Bosnia and Herzegovina (with 1,000-1,000 customers involved) to understand the customers better in these countries as well. Insights gathered from U&As should help in creating a more customer centric decision-making, supporting the retail transformation of the Group. Improvements covered hot sandwich range renewal, new fresh sandwich placement and packaging, improved hot-dog network coverage and fine-tuned activities like prize winning games or promotions. Product quality improvement has key importance as well, which is ensured by continuous customer blind tests in order to adapt to the changing needs.

MOL Retail’s customer loyalty program constitutes a key element in the digital transformation of Consumer Services. A new, digital, gamified, tier-based rewards program was finalized during 2020, allowing personalized and highly automated communication across different channels. The new program was introduced in Croatia in 2020 and by now the number of registered users is more than 300,000 with high share of active users. The program was also rolled out in Slovenia in 2021, an in Hungary in 2022. Altogether, active loyalty customer base reached almost 3 million in 2021, and the mobile application (which is available in seven countries) had more than 700,000 downloads. During 2022 we've developed further our internal capabilities in order to extend researches on our loyalty base to support offer development and react faster the changing habits of the customers.

MOL consciously uses mystery shoppers (selected through tender) when measuring customer satisfaction across different channels to avoid internal biased systems. Digitization is also increasingly present in our internal operation via the extensive use of Artificial Intelligence and Machine learning-based tools and also support the execution via our online, gamified learning tool, eSMILE.

E-smile

As a consumer facing business, employee engagement plays a major role in the transformation of Consumer Services and enhancing customer experience. In 2017 MOL Group introduced a face-to-face training program called ‘Smile’ for more than 15,000 service station staff, covering both hosts and station managers, with the aim to improve customer service. In 2020 MOL Group expanded employee training and development through a digital microlearning training platform called eSMILE, which is available on their smart phones. The mobile training platform expands the Group’s training portfolio on product, process, sales, compliance and HSE relevant topics and reinforces previously shared knowledge. Furthermore, the platform connects the Group directly to each member of staff working at the Group’s service stations. It allows real-time communication from head office about the latest sales promotions, company updates and it was especially important during the pandemic, when we were able to share the latest operational changes, ensuring a safe working environment and safe consumer experience. Since 2021 the platform also supports new-hires in their onboarding experience, helping them to hit the sales floor with higher confidence and shorter preparation. Moreover, for the first time, MOL Group conducted Employee Engagement Survey among frontline employees too, considering the fact we could reach each and one of them. With the help of eSMILE, 96% response rate was achieved, and valuable feedback was gathered. For more detailed information check the Sustainability report.

The platform is based on gamification elements which boosts employee engagement and wellbeing in the workplace. This results in a stable-high usage of the platform, with 96% of frontline staff using eSMILE every day when at work, resulting in an average 17% increase in knowledge from the training topics. These programs not only support the transformation of the Group’s service station network from fuel retail into FMCG retail but also the continuous increase of non-fuel revenues.

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Mobility

In 2018, MOL Group launched MOL Plugee, a new EV charging brand under the Consumer Services division. By year end 2022, 241 Plugee EV chargers were installed throughout the Group’s service station network across the CEE region and in MOL Group’s new headquarter, MOL Campus. In 2022 MOL Group installed ultra-fast charger solutions on 14 new highway locations in Romania, providing 200 kW nominal output for EV users, in a solution that 3 BEV can charge parallelly at the same time on every location. Our new headquarter, MOL Campus has been equipped with 44 AC chargers, that will serve our employees and visitors need on the long run. MOL Group launched its application based service in Hungary in 2020 and in Slovenia, Slovakia, Czech Republic, Croatia and Romania in 2021. At the end of 2022 it enabled our more than 20,000 registered users and other customers to have a seamless charging experience in 6 countries. Energy consumption for all EV chargers in 2022 reached 2,271,772kWh, saving a total of above 640 tonnes of CO2-eq.

The e-mobility goal of MOL Group in 2023 is to cover 7 white spots in Hungary with ultra-fast (150kW) and scalable (60 to 120kW) fast chargers utilize EU subsidy for network development across 6 countries together with E.ON Group under the auspices of the CEF2 (CONNECT-E) program.

In 2018, MOL Group launched a car sharing service in Budapest (Hungary) called MOL LIMO. By 2022, a fleet of 450 shared cars from 14 different models (6 electric, 1 hybrid, 7 petrol) were in operation, number of electric vehicles (EVs) were 132. In 2022, MOL LIMO introduced one new model to its fleet, the electric Dacia Spring. Size of the Limo-zone grew up to 110 km2 during 2022, reaching key transportation hubs. Client base is continuously growing, until the year-end total number of registered users reached approximately 130 thousand. Energy consumption of all LIMO EVs reached 275,244 kWh in 2022, saving an equivalent of around 75 tonnes of CO2-eq., all electricity used from renewable sources.

KEY MOL LIMO SUSTAINABILITY FIGURES | UNIT OF MEASURE | FY 2022 | FY 2021 | SASB
Average fleet size | number of vehicles | 450 | 450 | TR-CR-000.C
o/w electric | percentage | 29 | 32 | -
Average vehicle age at year end | in months | 33.5 | 24.1 | TR-CR-000.A
Vehicles rated by Euro NCAP programs with an overall 5-star safety rating | percentage of fleet | 23 | 11 | TR-CR-250a.1
Vehicles recalled during period | number | 0 | 0 | TR-CR-250a.2

As part of MOL Group’s mobility strategy, a fleet management service called MOL Fleet Solution was launched in 2018. The main target is to finance and manage vehicles owned and used by MOL Group and external clients, as well as the fleets of small-, medium-sized or large businesses in Hungary. The number of financed and managed cars reached almost 5,100 by the end of 2022. MOL Fleet Solutions targets the size of its fleet to reach 10,000 cars by 2026.

KEY MOL FLEET SUSTAINABLITY FIGURES | UNIT OF MEASURE | FY 2022 | FY 2021 | SASB
Average fleet size | number of vehicles | 5,060 | 4,392 | TR-CR-000.C
o/w electric and hybrid | percentage | 8 | 7 | -
Average vehicle age at year end | in months | 32,7 | 28.8 | TR-CR-000.A
Vehicles recalled during period | number | 365 | 503 | TR-CR-250a.2

Neither MOL Limo nor MOL Fleet Solutions registered any incidents concerning a) non-compliance concerning product and service information and label ling, and/or b) non-compliance with marketing communication during 2022. Finally, no incidents or complaints concerning breaches of customer privacy and/or losses of customer data as a result of data breaches were registered at neither MOL Limo nor MOL Fleet Solutions during 2022.

3.5.2 Group Industrial and Corporate Services(14)

The organization was established in February 2022, overseeing Group Maintenance Services Management, Group Ventures, as well as Group Procurement and Asset & Services Management.

The Maintenance Single Service Companies (SSCs) have managed the volatile demands of the external environment and successfully contributed to the completion of high-complexity turnarounds in MPC and Danube Refinery. The overall efficiency and the utilization ratio of the SSCs have improved, coupled with the delivery of cross-country maintenance projects, contributed to an optimized maintenance spending.

Ventures – Energy Efficiency & Renewables organization has exceeded the energy efficiency obligation targets from internal projects. The efficiency savings (worth more than 10 million EUR in value) were realized due to the timely implementation of industrial projects in MOL’s business branches. The installed PV capacities (30 MW) exceeded EBITDA expectations by double digit in 2022, while implementation of 12 MW Croatian capacity will be finished in 2023 as planned. In addition, a pipeline of multi 100 MWs of renewable capacity is to be installed the upcoming years in line with the energy transformation objectives of MOL.

Ventures – Fonte Viva concluded a successful acquisition and integration of a new product line, grew its market share on a stagnating market.

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3.5.3 Group Oilfield Development & Solutions

Group Oilfield Development and Solutions (G-ODS) was established with the aim to provide oilfield services for MOL Group internal customers and third-party companies. The strategic aim of G-ODS is to improve the quality and level of services to internal customers as well as utilizing internal know-how to provide services to third party customers.

In 2022 Russian-Ukrainian war caused economic uncertainties, securing oil and gas supply became a priority and new alternative energy resources came into focus. MOL Group enhanced drilling and workover activities, also third party exploration and field development activity has been increased which generated more projects, works for Oilfield Service (OFS) companies. Participation in the successful oil discovery at Vecsés made their mark in the business sector. Additionally they tested themselves in pioneer geothermal projects. Among OFS companies further location, staff, maintenance and operation management optimization were made, cross-border utilization of the assets were managed. Service flexibility became key to serve the changed, uncertain business requirements and the increased workload. Several actions were taken to optimize CAPEX and OPEX in a business environment burdened in crisis of war, high energy prices and price inflation.

Oilfield Chemicals and Technologies’ international marketing activity has been intensified in 2022 in relation to the enhanced oil recovery (EOR) and rubber modified bitumen technology.

3.5.4 Circular Economy Services – Waste Management

The state published a call for a concession tender for municipal solid waste management services in Hungary for 35 years, on which MOL has submitted a binding bid in June 2022. MOL won the tender and signed the concession contract on 28th July 2022. Based on the contract MOL will be responsible for the collection of nearly 5 million tonnes of annual waste from households and businesses in Hungary, and for organising the pre-treatment and treatment operations necessary to meet the strict waste management and recycling targets of the European Union.

MOL has made the necessary steps and preparations to be able to take on the operation by 1st July 2023 as set in the concession contract. In September 2022 MOL established its concession company (MOHU MOL Hulladékgazdálkodási Private Limited Company), which entered into the concession contract besides MOL, the concessionaire. In October 2022 the Ministry approved the short term investment plan of the company, and in December 2022 the investment plan for the first 10 years. In December the concession company submitted the Capacity Verification Contracts to the Ministry, to prove that the necessary capacity to perform waste management operation was contracted.

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3.6 GAS MIDSTREAM

Segment IFRS results (HUF bn) | FY 2022 | FY 2021 | Ch %
EBITDA | 61.0 | 41.2 | 48
EBITDA excl. spec. items(1) | 61.0 | 41.2 | 48
Operating profit/(loss) reported | 44.3 | 24.5 | 81
Operating profit/(loss) reported excl. spec. items(1) | 44.3 | 24.5 | 81
CAPEX and investments | 11.6 | 22.4 | (48)
o/w organic | 11.6 | 22.4 | (48)

Key Gas Midstream ESG Indicators | Unit of measure | FY 2022 | FY 2021 | SASB
Total Direct GHG emissions (scope 1) | mn tonnes CO2 eq | 0.1 | 0.1 | EM-MD-110a.1
Volume of Spills (> 1m3) | m3 | 0 | 0 | EM-MD-540a.1
Lost Time Injury Frequency (own staff) | per 1 mn worked hours | 0 | 4.11 | EM-MD-540a.4

Tables regarding transmission volumes (million cmc) are available in the annual Data Library on the company’s website.

3.6.1 Financial overview of 2022

FGSZ Földgázszállító Ltd (hereinafter referred to as: FGSZ) reached HUF 61.0bn EBITDA in 2022, a 48% increase from last year, despite challenging external environment throughout 2022. The financial result was determined mainly by deteriorating economic environment (e.g. fluctuating energy prices) and hectic demand for transportation services; at the same time cross-border capacity demands rose significantly and changes of regulated tariffs were favourable, as well.

Aggregated transmission volumes were lower by 3% on YoY basis and FGSZ faced increasing demand for flexibility, which included the relocation of Hungary’s main gas supply route in early 2022 from the Eastern to the Southern part of Hungary. Domestic transmission volumes experienced a significant decrease by 16% YoY in relation with external economic factors and milder weather conditions; while increasing uncertainty in regional gas supply routes resulted in more than doubled YoY transmitted volumes towards gas storages. Export transmission demands to neighbouring countries (e.g. Romania, Ukraine, Serbia and the Slovak Republic) were more hectic compared to previous year and totalled in lower level. Non-regulated transit transmission towards Serbia and BiH stopped in 2021 (as Balkan Stream pipeline was completed) resulting in vanishing non-regulated transit activity.

Regulated revenues were higher by 56% YoY mainly due to the significant increase in short-term and cross-border capacity demands in line with increased injected gas storage volumes and fluctuating export activities. Average regulated tariffs were higher than in the prior year, tariff change was mainly reflecting the challenges of the external economic environment. Fast paced steep price changes, especially high energy cost drove FGSZ’s operational costs significantly higher despite the slightly lower gas consumption of the transmission system, while strict cost control smoothened materially the other expenditures.

Total value of CAPEX and investments almost halved compared to prior year after the completion of Serbian-Hungarian cross-border interconnection point. In 2022 FGSZ focused on mainly sustain-type projects (e.g. pipeline rehabilitation, reconstruction of compressor units) and the completion of the Városföld nod and Kiskundorozsma measurement projects.

3.6.2 Operational overview of 2022

FGSZ’s main activity is the sole operation of the nearly 6,000km long high pressure natural gas transmission system in Hungary, and as a natural monopoly it operates on a regulated basis governed by EU and domestic law. Beside the domestic natural gas transmission, FGSZ is also engaged in international transmission activities and operates bidirectional interconnection points with the Slovak Republic, Ukraine, Romania, Serbia and Croatia and unidirectional inlet point from Austria.

The security of supply of Hungary is inseparable from the energy security of the broader CEE region. Therefore, FGSZ aims to ensure the interoperability of the natural gas networks of the region; while also striving to increase the volume of transmission through Hungary. The developments of the pipeline and trade infrastructure implemented by FGSZ in the recent years helped Hungary and the broader region as well in reaching a more competitive gas market while increasing security of supply and making natural gas accessible as a lower carbon alternative in – among others – electricity generation.

To further enhance regional market integration, FGSZ completed several important agreements and developments on its network in 2022. In October 2022 Csanádpalota interconnection point was developed at the Hungarian-Romanian border to boost the import capacities from the Southern Gas Corridor through Romania towards Hungary. To prepare for the future challenges posed by the accelerating decarbonisation efforts, FGSZ started to evaluate its infrastructure for the transmission of low-carbon and decarbonised gases, such as hydrogen. FGSZ dedicated higher focus on organizational level towards the green targets.

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The Regional Booking Platform (RBP) of FGSZ is an IT application developed in accordance with the EU network code governing the capacity allocation mechanisms used in natural gas transmission networks and with other relevant EU and national legislation. The capacity allocation application enables capacity allocation procedures and secondary capacity trading among other services. Today – beyond FGSZ – sixteen further transmission system operators use it partially or entirely on their system capacities throughout the EU and the Energy Community: Eustream (Slovakia), Transgaz (Romania), Plinacro (Croatia), Bulgartransgaz (Bulgaria), DESFA (Greece), Gas Connect Austria (Austria), Gascade (Germany), Ontras (Germany), Gaz-System (Poland), Gas TSO of Ukraine (Ukraine), Gastrans (Serbia), Moldovatransgaz (Moldavia), NEL Gastransport (Germany), Opal (Germany), ICGB (Bulgaria) and Vestmoldtransgaz (Moldavia).

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4. APPENDICES

APPENDIX I - IMPACT OF SPECIAL ITEMS ON OPERATING PROFIT AND EBITDA

| HUF million | USD million
Special items - operating profit | FY 2022 | FY 2021 restated | Ch % | FY 2022 | FY 2021 restated | Ch %
Operating profit excl.spec.items from continuing operation | 1,253,067 | 585,863 | 114 | 3,308 | 1,929 | 71
Upstream | 15,273 | (21,384) | n.a. | 53 | (66) | n.a.
Impairment on Upstream assets in the Group | 15,273 | (17,089) | n.a. | 53 | (53) | n.a.
Environmental provision (INA) |  | (4,295) | (100) |  | (13) | (100)
Downstream | (9,228) |  | n.a. | (24) |  | n.a.
Impairment of assets under construction at SN | (4,678) |  | n.a. | (12) |  | n.a.
I mpairment of assets under construction at MOL Plc. | (4,550) |  | n.a. | (12) |  | n.a.
Corporate and other |  | 2,707 | (100) |  | 8 | (100)
Provision release for legal claims (Creditor Beta) |  | 2,707 | (100) |  | 8 | (100)
Total impact of special items on operating profit from continuing operation | 6,045 | (18,677) | n.a. | 29 | (57) | n.a.
Operating profit from continuing operation | 1,259,112 | 567,186 | 122 | 3,337 | 1,871 | 78
Special items - EBITDA | FY 2022 | FY 2021 restated | Ch % | FY 2022 | FY 2021 restated | Ch %
EBITDA EXCLUDING SPECIAL ITEMS from continuing operation | 1,734,645 | 1,047,630 | 66 | 4,601 | 3,449 | 33
Upstream |  | (4,295) | (100) |  | (13) | (100)
Environmental provision (INA) |  | (4,295) | (100) |  | (13) | (100)
Corporate and other |  | 2,707 | (100) |  | 8 | (100)
Provision release for legal claims (Creditor Beta) |  | 2,707 | (100) |  | 8 | (100)
TOTAL IMPACT OF SPECIAL ITEMS ON EBITDA from continuing operation |  | (1,588) | (100) |  | (5) | (100)
EBITDA from continuing operation | 1,734,645 | 1,046,042 | 66 | 4,601 | 3,444 | 34

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APPENDIX II – NOTES

Number of footnotes |
(1) | Special items that affected operating profit and EBITDA are detailed in Appendix I.
(2) | As of Q2 2013 our applied Clean CCS methodology eliminates from EBITDA/operating profit inventory holding gain / loss (i.e.: reflecting actual cost of supply of crude oil and other major raw materials); impairment on inventories; FX gains / losses on debtors and creditors; furthermore, adjusts EBITDA/operating profit by accurate CO2 cost recognition and capturing the results of underlying commodity derivative transactions. Clean CCS figures of the base periods were modified as well according to the improved methodology.
(3) | Both the 2022 and 2021 figures have been calculated by converting the results of each month in the period on its actual monthly average HUF/USD rate.
(4) | Net gearing: net debt divided by net debt plus shareholders’ equity including non-controlling interests.
(5) | Brent dated price vs. average Ural MED and Ural ROTT prices.
(6) | Net external sales revenues and operating profit includes the profit arising both from sales to third parties and transfers to the other business segments. Upstream transfers domestically produced crude oil, condensates and LPG to Downstream and natural gas to the Gas Midstream segment. The internal transfer prices used are based on prevailing market prices. The gas transfer price equals the average import price. Divisional figures contain the results of the fully consolidated subsidiaries and the proportionally consolidated joint operations engaged in the respective divisions.
(7) | This line shows the effect on operating profit of the change in the amount of unrealized profit deferred in respect of transfers between segments. Unrealized profits arise where the item transferred is held in inventory by the receiving segment and a third-party sale takes place only in a subsequent quarter. For segmental reporting purposes the transferor segment records a profit immediately at the point of transfer. However, at the company level profit is only reported when the related third-party sale has taken place. Unrealized profits arise principally in respect of transfers from Upstream to Downstream and Gas Midstream.
(8) | From 2016 Austrian retail operations were reclassified into wholesale.
(9) | As of January 2018, an updated formula for calculating the „MOL Group petrochemicals margin” was introduced, replacing the previous „Integrated petrochemical margin”. The purpose of the new formula is to better reflect the petchem product slate of the group.
(10) | As of 2023, a new methodology has been introduced which includes purchased energy (enhanced fit to natural gas) and CO2
(11) | FOB Rotterdam parity
(12) | FOB Med parity
(13) | Retail segment sales are shown in chapter 3.5. (“Innovative businesses and services”).
(14) | Internal corporate governance and external reporting structure of Innovative Businesses and Services are different, thus the financial result of the Industrial Services and new Ventures unit of the Innovative Businesses and Services segment is reported within „Corporate and other” segment.

|  |  | 37

MOL Hungarian Oil and Gas Plc.

Consolidated financial statements prepared in accordance with international financial reporting standards as adopted by the european union (EU) together with the independent auditor’s report

31 December 2022

Budapest, 23 March 2023

|  | Consolidated Financial Statements 2022 | 1

Consolidated Financial Statements Introduction General information MOL Hungarian Oil and Gas Public Limited Company (hereinafter referred to as MOL Plc., MOL or the parent company) was incorporated on 1 October 1991 in Hungary by the transformation of the predecessor National Oil and Gas Trust (OKGT). MOL Plc. and its subsidiaries (hereinafter referred to as the MOL Group or Group) is an integrated, international oil and gas, petrochemicals and consumer retail company, active in over 30 countries with a dynamic international workforce of 24,000 people and a track record of more than 100 years in the industry with its legal predecessor. MOL Group has over 80 years of experience in exploration and production and its diverse portfolio includes active oil and gas presence in 12 countries, with production activity in 8 countries. MOL Group’s Downstream division operates three refineries and two petrochemicals plants in Hungary, Slovakia and Croatia, and is made up of different business activities that are part of an integrated value chain and MOL Group’s retail network is composed of around 2,400 service stations in 10 countries. The registered office address of the Company is 1117 – Budapest, Dombóvári út 28, 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 Group. Authorisation and Statement of Compliance These consolidated financial statements have been approved and authorised for issue by the Board of Directors on 23 March 2023. | These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards and all applicable IFRSs 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. The Mol Group complies with the requirements of European Securities and Markets Authority (ESMA) and publishes its annual financial report in XHTML format from 1 January 2021 and provide the consolidated financial statements prepared in accordance with IFRS as adopted by the European Union (EU) with Inline XBRL to make the consolidated data machine-readable.

|  | Consolidated Financial Statements 2022 | 2

Independent auditor’s report

The Mol Group complies with the requirements of European Securities and Markets Authority (ESMA) and publishes its annual financial report in XHTML format from 1 January 2021 and provide the consolidated financial statements prepared in accordance with IFRS as adopted by the European Union (EU) with Inline XBRL to make the consolidated data machine-readable. The independent auditor’s report is a separate document.

|  | Consolidated Financial Statements 2022 | 3

Consolidated Statement
of profit or loss

|  | 2022 | 2021
|  |  | Restated*
| Notes | HUF million | HUF million
Net sales |  | 9,868,163 | 5,766,751
Other operating income |  | 43,716 | 32,133
Total operating income | 3 | 9,911,879 | 5,798,884
Raw materials and consumables used |  | 7,458,413 | 4,375,291
Employee benefits expense |  | 342,513 | 299,359
Depreciation, depletion, amortisation and impairment |  | 475,533 | 478,856
Other operating expenses |  | 632,864 | 360,861
Change in inventory of finished goods and work in progress |  | (151,056) | (194,282)
Work performed by the enterprise and capitalised |  | (105,500) | (88,387)
Total operating expenses | 4 | 8,652,767 | 5,231,698
Profit from operation |  | 1,259,112 | 567,186
Finance income |  | 164,080 | 104,847
Finance expense |  | 238,412 | 138,930
Total finance expense, net | 5 | (74,332) | (34,083)
Share of after-tax results of associates and joint ventures | 6 | (29,486) | 21,515
Profit/(Loss) before tax |  | 1,155,294 | 554,618
Income tax expense | 7 | 466,343 | 46,936
Profit/(Loss) for the year from continuing operations |  | 688,951 | 507,682
Profit / (Loss) for the period from discontinued operations | 15 | 223,297 | 42,453
PROFIT / (LOSS) FOR THE PERIOD |  | 912,248 | 550,135
Attributable to: |  |  |
Owners of parent from continuing operations |  | 628,293 | 484,469
Non-controlling interest from continuing operations |  | 60,658 | 23,213
Owners of parent from discontinued operations |  | 223,297 | 42,453
Non-controlling interest from discontinued operations |  | - | -
Owners of parent |  | 851,590 | 526,922
Non-controlling interest |  | 60,658 | 23,213
Basic earnings per share attributable to owners of the parent (HUF) cont.op. | 27 | 851.01 | 673.35
Diluted earnings per share attributable to owners of the parent (HUF) cont.op. |  | 848.94 | 668.37
Basic earnings per share attributable to owners of the parent (HUF) discont.op. |  | 302.45 | 59.00
Diluted earnings per share attributable to owners of the parent (HUF) discont.op. |  | 301.71 | 58.57
Basic earnings per share attributable to owners of the parent (HUF) |  | 1,153.46 | 732.36
Diluted earnings per share attributable to owners of the parent (HUF) | 27 | 1,150.65 | 726.94
* more information in Note 1 Restatements in comparative periods |  |  |

|  | Consolidated Financial Statements 2022 | 4

Consolidated statement of
other comprehensive income

|  | 2022 | 2021
|  |  | Restated
| Notes | HUF million | HUF million
Profit/(Loss) for the year from continuing operations |  | 688,951 | 507,682
Profit/(Loss) for the year from discontinued operations |  | 223,297 | 42,453
Profit/(Loss) for the year |  | 912,248 | 550,135
Other comprehensive income |  |  |
Other comprehensive income to be reclassified to profit or loss in subsequent periods: |  |  |
Exchange differences on translating foreign operations, net of tax | 8 | 239,678 | 73,125
Exchange differences on translating discontinued operations, net of tax |  | (11,148) | (3,616)
Net investment hedge, net of tax | 8 | (34,768) | (2,963)
Changes in fair value of debt instruments at fair value through other comprehensive income, net of tax | 8 | (3,330) | (166)
Changes in fair value of cash flow hedges, net of tax | 8 | 527 | 994
Share of other comprehensive income of associates and joint ventures | 8 | 18,715 | 10,200
Other comprehensive income from continuing operation / (loss) for the year, net of tax |  | 220,822 | 81,190
Net other comprehensive income to be reclassified to profit or loss in subsequent periods |  | 209,674 | 77,574
Other comprehensive income not to be reclassified to profit or loss in subsequent periods: |  |  |
Changes in fair value of equity instruments at fair value through other comprehensive income, net of tax | 8 | (4,481) | 17,736
Remeasurement of post-employment benefit obligations | 8 | 1,725 | (716)
Net other comprehensive income not to be reclassified to profit or loss in subsequent periods |  | (2,756) | 17,020
Other comprehensive income from continuing operation / (loss) for the year, net of tax |  | 218,066 | 98,210
Other comprehensive income for the period, net of tax |  | 206,918 | 94,594
Total comprehensive income from continuing operation for the period |  | 907,017 | 605,892
Total comprehensive income from discontinued operation for the period |  | 212,149 | 38,837
Total comprehensive income for the period |  | 1,119,166 | 644,729
Attributable to: |  |  |
Owners of parent from continuing operation |  | 814,979 | 575,271
Non-controlling interest from continuing operation |  | 92,038 | 30,621
Owners of parent from discontinued operation |  | 212,149 | 38,837
Non-controlling interest from discontinued operation |  | - | -
Owners of parent |  | 1,027,128 | 614,108
Non-controlling interest |  | 92,038 | 30,621
* more information in Note 1 Restatements in comparative periods |  |  |

|  | Consolidated Financial Statements 2022 | 5

Consolidated statement
of financial position

|  | 31 Dec 2022 | 31 Dec 2021 | 1 Jan 2021
|  |  | Restated | Restated
| Notes | HUF million | HUF million | HUF million
NON-CURRENT ASSETS |  |  |  |
Property, plant and equipment | 9 | 3,817,879 | 3,378,867 | 3,235,223
Investment property | 9 | 9,459 | 6,863 | 5,140
Intangible assets | 9 | 552,588 | 437,839 | 397,871
Investments in associates and joint ventures | 6 | 190,805 | 213,051 | 209,893
Other non-current financial assets | 21 | 340,291 | 228,087 | 165,937
Deferred tax assets | 7 | 109,899 | 170,318 | 143,499
Other non-current assets | 13 | 85,555 | 76,843 | 86,649
Total non-current assets |  | 5,106,476 | 4,511,868 | 4,244,211
CURRENT ASSETS |  |  |  |
Inventories | 14 | 997,045 | 702,798 | 461,391
Trade and other receivables | 23 | 931,511 | 754,019 | 523,278
Securities | 21 | 7,295 | 845 | 14,511
Other current financial assets | 21 | 177,963 | 61,079 | 24,136
Income tax receivable |  | 12,239 | 7,551 | 13,244
Cash and cash equivalents | 24 | 595,244 | 367,447 | 193,877
Other current assets | 15 | 96,563 | 82,178 | 69,075
Assets classified as held for sale | 19 | 43,363 | 16,379 | 1,463
Total current assets |  | 2,861,223 | 1,992,296 | 1,300,975
Total assets |  | 7,967,699 | 6,504,164 | 5,545,186
EQUITY | 20 |  |  |
Share capital |  | 79,013 | 78,163 | 78,249
Retained earnings and other reserves |  | 2,702,764 | 2,172,065 | 2,168,568
(Loss) / Profit for the year attr. to owners of parent |  | 851,589 | 526,922 | (18,323)
Equity attributable to owners of parent |  | 3,633,366 | 2,777,150 | 2,228,494
Non-controlling interest |  | 378,770 | 312,781 | 282,946
Total equity |  | 4,012,136 | 3,089,931 | 2,511,440
NON-CURRENT LIABILITIES |  |  |  |
Long-term debt | 21 | 650,413 | 866,492 | 820,998
Other non-current financial liabilities | 21 | 20,671 | 36,913 | 49,367
Non-current provisions | 16 | 584,447 | 695,296 | 626,406
Deferred tax liabilities | 7 | 128,482 | 122,379 | 130,701
Other non-current liabilities | 17 | 39,258 | 32,460 | 31,934
Total non-current liabilities |  | 1,423,271 | 1,753,540 | 1,659,406
CURRENT LIABILITIES |  |  |  |
Short-term debt | 21 | 468,686 | 185,616 | 321,790
Trade and other payables | 21 | 1,001,634 | 848,241 | 549,642
Other current financial liabilities | 21 | 231,454 | 244,167 | 228,078
Current provisions | 16 | 115,001 | 70,084 | 49,690
Income tax payable |  | 362,466 | 40,378 | 10,330
Liabilities classified as held for sale | 19 | 2,161 | 3,420 | -
Other current liabilities | 18 | 350,890 | 268,787 | 214,809
Total current liabilities |  | 2,532,292 | 1,660,693 | 1,374,339
Total liabilities |  | 3,955,563 | 3,414,233 | 3,033,745
Total equity and liabilities |  | 7,967,699 | 6,504,164 | 5,545,185
* more information in Note 1 Restatements in comparative periods |  |  |  |

|  | Consolidated Financial Statements 2022 | 6

Consolidated statement
of changes in equity

|  | Share capital | Share premium | Fair valuation reserve | Reserve of exchange differences on translation | Retained earnings with profit for the year attr. to owners of parent | Total reserves | Equity attr. to owners of parent | Non-controlling interests | Total equity
|  | HUF million | HUF million | HUF million | HUF million | HUF million | HUF million | HUF million | HUF million | HUF million
| Notes |  |  |  |  |  |  |  |  |
Opening balance 1 Jan 2021 |  | 78,249 | 219,389 | 8,205 | 376,675 | 1,530,556 | 2,134,825 | 2,213,074 | 271,014 | 2,484,088
Corrections due to restatements |  | - | - | 2,398 | 26,729 | (13,707) | 15,420 | 15,420 | 11,932 | 27,352
Opening balance 1 Jan 2021 Restated |  | 78,249 | 219,389 | 10,603 | 403,404 | 1,516,849 | 2,150,245 | 2,228,494 | 282,946 | 2,511,440
Profit / (loss) for the year from continuing operation |  | - | - | - | - | 484,469 | 484,469 | 484,469 | 23,213 | 507,682
Profit / (loss) for the year from discontinued operation |  | - | - | - | - | 42,453 | 42,453 | 42,453 | - | 42,453
Other comprehensive income / (loss) for the year from continuing operation |  | - | - | 16,964 | 74,590 | (752) | 90,802 | 90,802 | 7,408 | 98,210
Other comprehensive income / (loss) for the year from discontinued operation |  | - | - | - | (3,616) | - | (3,616) | (3,616) | - | (3,616)
Total comprehensive income / (loss) for the year |  | - | - | 16,964 | 70,974 | 526,170 | 614,108 | 614,108 | 30,621 | 644,729
Dividends | 20 | - | - | - | - | (59,417) | (59,417) | (59,417) | - | (59,417)
Dividends to non-controlling interests | 20 | - | - | - | - | - | - | - | (293) | (293)
Equity recorded for share-based payments | 4 | 20 | - | - | - | 1,507 | 1,507 | 1,527 | - | 1,527
Treasury share transactions | 20 | (106) | - | - | - | (1,579) | (1,579) | (1,685) | - | (1,685)
Acquisition / divestment of subsidiaries |  | - | - | - | - | - | - | - | (110) | (110)
Acquisition of non-controlling interests |  | - | - | - | - | 199 | 199 | 199 | (384) | (185)
Other |  | - | - | - | - | (6,076) | (6,076) | (6,076) | 1 | (6,075)
Closing balance 31 Dec 2021 originally presented |  | 78,163 | 219,389 | 25,575 | 446,289 | 1,987,843 | 2,679,096 | 2,757,259 | 301,285 | 3,058,544
Corrections due to restatements |  | - | - | 1,992 | 28,089 | (10,190) | 19,891 | 19,891 | 11,496 | 31,387
Closing balance 31 Dec 2021 Restated |  | 78,163 | 219,389 | 27,567 | 474,378 | 1,977,653 | 2,698,987 | 2,777,150 | 312,781 | 3,089,931
Opening balance 1 January, 2022 |  | 78,163 | 219,389 | 27,567 | 474,378 | 1,977,653 | 2,698,987 | 2,777,150 | 312,781 | 3,089,931
Profit / (loss) for the year from continuing operation |  | - | - | - | - | 628,293 | 628,293 | 628,293 | 60,658 | 688,951
Profit / (loss) for the year from discontinued operation |  | - | - | - | - | 223,297 | 223,297 | 223,297 | - | 223,297
Other comprehensive income / (loss) for the year from continuing operation |  | - | - | (10,090) | 195,261 | 1,515 | 186,686 | 186,686 | 31,380 | 218,066
Other comprehensive income / (loss) for the year from discontinued operation |  | - | - | - | (11,148) | - | (11,148) | (11,148) | - | (11,148)
Total comprehensive income / (loss) for the year |  | - | - | (10,090) | 184,113 | 853,105 | 1,027,128 | 1,027,128 | 92,038 | 1,119,166
Dividends | 20 | - | - | - | - | (191,285) | (191,285) | (191,285) | - | (191,285)
Dividends to non-controlling interests | 20 | - | - | - | - | - | - | - | (26,712) | (26,712)
Equity recorded for share-based payments | 4 | 22 | - | - | - | 3,265 | 3,265 | 3,287 | - | 3,287
Treasury share transactions | 20 | 828 | - | - | - | 16,923 | 16,923 | 17,751 | - | 17,751
Acquisition / divestment of subsidiaries |  | - | - | - | - | - | - | - | - | -
Acquisition of non-controlling interests |  | - | - | - | - | - | - | - | - | -
Other |  | - | - | - | - | (665) | (665) | (665) | 663 | (2)
Closing balance 31 Dec 2022 |  | 79,013 | 219,389 | 17,477 | 658,491 | 2,658,996 | 3,554,353 | 3,633,366 | 378,770 | 4,012,136

* more information in Note 1 Restatements in comparative periods

|  | Consolidated Financial Statements 2022 | 7

Consolidated statement
of cash flows

|  | 2022 | 2021
|  |  | Restated
|  | HUF million | HUF million
Profit/(Loss) before tax from continuing operation |  | 1,155,294 | 554,618
Profit/(Loss) before tax from discontinued operation |  | 225,410 | 37,220
Profit/(Loss) before tax |  | 1,380,704 | 591,838
Adjustments to reconcile profit before tax to net cash provided by operating activities |  |  |
Depreciation, depletion, amortisation and impairment | 4 | 458,242 | 513,735
Increase/(decrease) in provisions | 16 | 31,816 | 25,309
Net (gain)/loss on asset disposal and divestments |  | (98,120) | (4,262)
Net interest expense/(income) | 5 | 5,902 | 27,365
Other finance expense/(income) | 5 | 53,952 | 8,900
Share of after-tax results of associates and joint ventures | 6 | 29,486 | (21,515)
Other items | 26 | 134,088 | 96,109
Income taxes paid | 7 | (124,937) | (41,221)
Cash flows from operations before changes in working capital |  | 1,871,133 | 1,196,258
Change in working capital |  | (482,387) | (278,192)
(Increase)/decrease in inventories | 14 | (271,245) | (244,335)
(Increase)/decrease in trade and other receivables | 23 | (629,517) | (275,229)
Increase/(decrease) in trade and other payables | 21 | 204,818 | 266,673
(Increase)/decrease in other assets and liabilities | 15, 18 | 213,557 | (25,301)
Cash flows from operations |  | 1,388,746 | 918,066
Capital expenditures | 2 | (615,922) | (499,838)
Proceeds from disposal of fixed assets |  | 22,212 | 5,882
Acquisition of businesses (net of cash) | 10 | (193,685) | (2,411)
Proceeds from disposal of businesses (net of cash) | 11, 19 | (34,694) | 1,089
(Increase)/Decrease in other financial assets | 21 | (83,231) | (27,862)
Interest received and other finance income | 5 | 26,559 | 4,595
Dividends received | 5 | 24,266 | 36,976
Cash flows used in investing activities |  | (854,495) | (481,569)
Proceeds from issue of bonds, notes and debentures |  | - | 132,271
Proceeds from borrowings |  | 1,226,532 | 814,220
Repayments of borrowings |  | (1,380,177) | (1,118,156)
Interest paid and other finance expense | 5 | (23,896) | (25,524)
Dividends paid to owners of parent | 20 | (191,236) | (59,404)
Dividends paid to non-controlling interest | 20 | (27,054) | (13,545)
Transactions with non-controlling interest |  | - | (361)
Net issue / repurchase of treasury shares |  | 16,576 | (2,026)
Other changes in equity |  | (1) | -
Cash flows used in financing activities |  | (379,256) | (272,525)
Currency translation differences relating to cash and cash equivalents |  | 72,802 | 10,426
Increase/(decrease) in cash and cash equivalents |  | 227,797 | 174,398
Cash and cash equivalents at the beginning of the year |  | 367,447 | 193,877
Cash and cash equivalents at the end of the year |  | 595,244 | 367,447
Change in Cash and cash equivalents |  | 227,797 | 173,570
Change in cash and cash equivalents classified as asset held for sale |  | - | -
Change in Overdraft |  | - | 828
Increase/(decrease) in cash and cash equivalents |  | 227,797 | 174,398
* more information in Note 1 Restatements in comparative periods |  |  |

|  | Consolidated Financial Statements 2022 | 8

notes to the consolidated financial statements – significant Accounting policies and other explanatory information

This section describes the basis of preparation of the consolidated financial statements and the Group’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. Significant accounting policies and other explanatory information

Basis of preparation

These consolidated 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 2022.

The consolidated financial statements are prepared on a going concern basis. For the purposes of the application of the historical cost convention, the consolidated 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.

Principles of consolidation

The consolidated financial statements as of for the year ended at 31 December 2022 comprise the accounts of the MOL Plc. and the subsidiaries that it controls together with the Group’s attributable share of the results of associates and joint ventures. MOL Plc. and its subsidiaries are collectively referred to as the ‘Group’.

Control is evidenced when the Group is exposed, or has rights, to variable returns from its involvement with a company, and has the ability to affect those returns through its power over the company. Power over an entity means having existing rights to direct its relevant activities. The relevant activities of a company are those activities which significantly affect its returns.

Where the Group has a long-term equity interest in an undertaking and over which it has the power to exercise significant influence, the Group applies the equity method.

An arrangement is under joint control when the decisions about its relevant activities require the unanimous consent of the parties sharing the control of the arrangements.

If the Company has rights to the assets and obligations for the liabilities relating to the arrangement, then the arrangement is qualified as a joint operation. The Company’s interests in a joint operation are accounted for by recognising its relative share of assets, liabilities, income and expenses of the arrangement, combining with similar items in the consolidated financial statements on a line-by-line basis.

If the Company has rights to the net assets of the arrangement, then the arrangement is qualified as a joint venture. The Group’s investments in joint ventures are accounted for using the equity method of accounting.

In case of participation interest in joint operating agreements which do not establish joint control, the Group analyses the parties’ rights to the assets and obligations for the liabilities relating to the arrangement and the parties’ rights to the corresponding revenues and obligations for the corresponding expenses. Given that the joint arrangement is not structured through a separate vehicle, the Group therefore recognises the operations proportionately, based on its share in revenue, costs, assets, and liabilities relating to the joint operation.

New and amended standards adopted by the Group

The Group has applied the following amendments for the first time for the annual reporting period commencing 1 January 2022:

• Amendment to IFRS 3 Business Combinations

• Amendment to IAS 16 Property, Plant and Equipment

• Amendment to IAS 37 Provisions, Contingent Liabilities and Contingent Assets

• Amendment to Annual Improvements 2018-2020

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

|  | Consolidated Financial Statements 2022 | 9

Amendments in accounting policies

Voluntary amendments

Following the fuel price cap enacted in Hungary at the end of 2021, MOL Group has performed an internal, comprehensive review of its pricing procedures. As part of these procedures pricing methodologies were assessed and product prices were broken down into components country by country. Management identified that although EU countries are required to maintain emergency stocks of oil which can be used in case of a disruption to supply emergency oil stocks, governments cover the related expenses in levying a stockpiling fee on wholesalers or incorporating it in the excise duty. Fees collected from customers that must be remitted to a governmental entity do not meet the criteria for recognition as net revenue under IFRS 15. Management believes that it would lead to a more relevant and reliable information being presented if stockpiling association fees were consistently treated with excise duties and excluded from Net sales.

As a result of the revision HUF 36,111 million was netted between net sales and other operating expenses in 2021.

Contracts to buy and sell physical delivery non-financial instruments (e.g. commodities) in the future where the economic substance of the transaction is to trade with the non-financial instrument in the course of normal business activity are contracts with customers under IFRS 15 to deliver the goods and a derivative under IFRS 9 to hedge the price risk. The amendment was required as commodity trading becomes part of the normal course of business due to strategic risk management purposes.

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

Functional and presentation currency

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

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, goodwill and fair value adjustments arising on the acquisition of a foreign operation denominated in foreign currencies are retranslated at exchange rate ruling 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.

Discontinued operation

Discontinued operations are excluded from the results of continuing operations and are presented as a single amount as profit or loss after-tax from discontinued operations in the statement of profit or loss.

Additional disclosures are provided in Note 19. All other notes to the financial statements include amounts for continuing operations, unless indicated otherwise.

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 consolidated 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 2022, the Covid-19 pandemic had no significant impact on operations and financial results, and it became part of the usual business.

|  | Consolidated Financial Statements 2022 | 10

Effect of climate-related matters and energy transition on the significant accounting estimates

As part of the Enterprise Risk Management framework MOL Group identified climate-related matters as a material risk. MOL Group’s long-term transformational strategy was created assessing these risks and represents how MOL Group plans to mitigate the low-carbon economy transition risks. In addition, MOL Group’s strategy was revised in line with the European Union’s Fit for 55 regulation in 2021. For more information on MOL Group’s actions and plans regarding climate-related matters please refer to the respective parts of the Integrated Annual Report of the Group.

MOL Group acknowledges that the energy transition will occur, however there is a significant uncertainty around the pace of the transition. IFRS requires entities to use the latest available and reliable information when developing an accounting estimate. The significant accounting estimates affecting the amounts reported in the financial statements are prepared in line with the long-term strategy of the Group, which represents management’s best estimate of the possible outcomes and risks associated with the transition to a low carbon world. MOL Group expects climate-related matters to have an impact on the financial statements in the long-term and incorporates these factors into accounting estimates. Assumptions and information used like: Brent oil, NCG gas, CO2 quota price assumptions and applied industrial discount rates take into consideration the effects of the climate related matters and are in line with external information. Significant accounting estimates that could be affected by the climate change and energy transition are recoverability of assets, useful lives of tangible and intangible assets and provision for future decommissioning liabilities. For the assumptions and valuation techniques used please refer to the respective notes 9, 16 in the consolidated financial statements.

Significant impact on operation

a) Russia – Ukraine conflict

The economic consequences of Russia’s invasion of Ukraine that commenced on 24 February 2022 may affect MOL Group. Management is continuously investigating and assessing the possible effects of the current geopolitical situation, international sanctions and other possible limitations on the supply chain and business activities. MOL Group has made decisions in its credit policy to minimise the exposure.

MOL Group is exposed to Russia mainly through BaiTex Llc. and related receivables. Payments made by BaiTex Llc. towards MOL Group in 2022 are held on a restricted bank account as a result of counter-sanctions of Russia, therefore the amount is not available for general use. MOL Group impaired all the investment value, receivables, and the restricted bank account balance in 2022 (investment value as at 31 December 2021 was HUF 19,678 million). MOL Group exposure to Ukraine is not material.

MOL Group’s refining business is exposed to the physical flow of crude oil through the transportation system in Russia and Ukraine. The physical flow of the crude oil from Russia has been periodically disrupted due to war damage on Ukrainian energy infrastructure. An alternative supply route from the Mediterranean Sea, via Croatia, exists however that can supply MOL Group refineries in Hungary and Slovakia with seaborne cargoes of crude oil. The European Union has imposed a partial embargo on Russian crude oil imports as of 5 December 2022 and on Russian petroleum product imports as of 5 February 2023. At the same time, a ban on the export of petroleum products obtained from Russian crude oil has been put in place. The regulations however allow for the continued import of Russian crude oil by pipeline, including to Hungary and Slovakia, as well as the continued export of petroleum products obtained from Russian crude a) from Slovakia to the Czech Republic until 5 December 2023 and b) from Hungary and Slovakia indefinitely as long as the percentage of exports do not exceed the percentage of crude of non-Russian origin if blended with Russian crude as refinery feedstock.

Management is taking actions to manage the risk of possible crude oil supply disruption, including consideration of using alternative supply routes of sufficient capacity. MOL Group has access to state reserves which enables it to supply its markets in case of interruptions of the Druzhba pipeline.

b) Windfall Taxes introduced during 2022

As a result of the Russian-Ukrainian conflict and the emerging energy crisis, the governments introduced significant measures, which also affect the MOL Group.

§ Mining royalty effective from 1 August 2022:

§ The Hungarian oil and gas royalty rates have been changed; the fixed parts of the rates were tripled in those categories in which the majority of MOL's production takes place. Final effective rates include unchanged adjusting elements dependent from the spot Brent and TTF prices.

§ The unit values that are determined by Government Decree to be used for calculating royalty base include minimum thresholds for 2022 and 2023.

§ Production has been taken into account for the tax base in the period concerned cannot be lower than the 2021 level. In the event of a technical impediment or vis major situation, approval should be requested from the Mining Authority for the lower production. If the lower production is unjustified, the Mining Authority will impose additional mining royalty.

|  | Consolidated Financial Statements 2022 | 11

§ Extra profit tax on Ural-Brent spread

§ From 01.01.2022, the Hungarian government has introduced a Brent-Ural spread-based tax, which tax 25% of the Brent-Ural spread on Ural type crude oil procurement.

§ According to the amendment to the extra profit tax regulation issued by the Hungarian Government on 30 July 2022 effective from 1 August 2022 the Brent-Ural spread based extra profit tax rate on Ural type crude oil procurement has been modified to 40% prospectively.

§ According to the amendment to the extra profit tax regulation issued by the Hungarian Government on 18 December 2022 the Brent-Ural spread based extra profit tax rate on Ural type crude oil procurement has been modified to 95% prospectively.

§ Retail tax

§ The Hungarian Government modified the retail tax effective from 1 July 2022;

§ 80% of the 2021 tax had to be paid as a one-off additional tax in 2022;

§ For 2023 tax rate per revenue ranges will increase: in the range of HUF 500 million – HUF 30 billion the rate will increase from 0.1% to 0,15%, in the range of HUF 30 billion – HUF 100 billion the rate will increase from 0.4% to 1%, above HUF 100 billion the rate will increase from 2.7% to 4.1%.

§ Solidarity contribution

§ On 6 October 2022, the Council of the European Union adopted a Regulation on „an emergency intervention to address high energy prices”. One of the measures of the Regulation is the temporary Solidarity Contribution. The Solidarity Contribution applies to EU companies and permanent establishments with certain activities in the crude petroleum, natural gas, coal and refinery sectors. The base of the Solidarity Contribution is the taxable profits realised in 2022 and / or 2023 which are above 20% increase of the average taxable profits realised in the four preceding fiscal years. The applicable rate is a minimum of 33%. Member States shall apply the Solidarity Contribution unless they have enacted equivalent national measures. The effects of such taxes is presented in Note 7.

In the statement of profit or loss the mining royalty, the extra profit tax and retail tax are recorded in other operating expenses, the solidarity contribution is recorded as income tax expense. The windfall taxes were considered when assessing the assets recoverability.

c) Price regulations

The Croatian Government introduced a gas sales price cap from Q4 2022 for all domestically produced gas limiting the sales price at 41 EUR/MWh, which will be in force until Q1 2024.

The Hungarian Government introduced a retail fuel price cap on 15 November 2021 and a wholesale price cap on 28 February 2022. The regulation was modified several times, the last version of the retail price cap narrowed the eligibility only to private consumers with Hungarian license plate. Both price cap has been lifted on 7 December 2022.

The Government of Croatia decided in October 2021 to limit the prices on fuel products initially for 90 days. Since then, the regulation has been modified more than 40 times. Currently margin cap is valid on main grade gasoline and diesel for the entire retail network.

The Serbian Government introduced a retail fuel price cap on 12 February 2022 for main grade products which is prolonged at monthly level for further 30 days.

The Bosnian Government introduced a fuel margin cap in April 2021 which is still in force.

The Slovenian Government introduced price cap regulation in March 2022 which changed to margin cap as of 21 June, and it is prolonged till June 2023.

The Romanian government introduced a fuel price compensation from 1 July 2022 allowing fuel companies to grant a fixed amount of discounts and then apply for a partial amount of compensation. The regulation was prolonged and adjusted several times. It was valid until 31st Dec 2022.

Price regulations were considered when assessing the recoverability of assets in case the regulations were effective in the next financial year.

d) Waste management concession

MOL was announced as a winner for the Hungarian state concession tender covering municipal waste management services. The concession agreement covers a period of 35 years with a commencement date of July 1, 2023. According to the agreement, MOL will be responsible for the collection of close to 5 million tonnes of municipal solid waste, will ensure its treatment and will make related investments. MOL’s binding offer for waste management services was submitted on June 3, 2022 in line with the requirements of the concession tender.

|  | Consolidated Financial Statements 2022 | 12

Restatements of comparative periods

MOL Group restated its comparative periods due to the retrospective application of an accounting policy change and due to errors detected during the 2022 financial year. Corrections of errors and effects of accounting policy change are presented below in the primary statements.

Detailed description of the errors detected during 2022

a) During 2022, impairment of two oil fields in Egypt was recognised. Since the conditions that led to this impairment existed in the 2020 financial year the Group decided to restate the balance sheet as at 1 January 2021 and decreased property, plant and equipment by HUF 2,562 million, increased deferred tax assets by HUF 461 million and decreased retained earnings by HUF 2,101 million. As at 31 December 2021 property, plant and equipment decreased by HUF 4,202 million, deferred tax assets increased by HUF 756 million, retained earnings decreased by HUF 2,141 million, depreciation increased by HUF 1,591 million and income tax expense decreased by HUF 286 million. As this is a temporary tax difference, a deferred tax asset was recognised on the previously mentioned figures applying the income tax rate of 18%.

b) MOL Group revised its accounting treatment of excise duties calculated on oil derivatives which have not been sold at period end which resulted in understatement of current assets. Excise duty was wrongly recorded in profit and loss when the inventory left the excise warehouse instead of at the time of the sales of the inventory. To correct this error, the Group restated the statement of financial position as at 1 January 2021 and 31 December 2021 by increasing the other current assets in the amount of HUF 4,375 million and HUF 4,443 million respectively and increasing the retained earnings for the same amount as this omission related to periods prior to the ones presented in these consolidated financial statements.

c) Historically the Group measured its 7.75% investment in OMV Slovenia at cost. Since the investment is held as fair value through other comprehensive income as at 1 January 2021 and 31 December 2021 the Group corrected the measurement of the investment to reflect the fair value. The impact on the statement of financial position as at 1 January 2021 and increased the other non-current financial assets by HUF 5,958 million, increased the fair value reserves by HUF 4,885 million and decreased the deferred tax assets by HUF 1,072 million. As at 31 December 2021 as a result of the correction other non-current financial assets increased by HUF 4,949 million, deferred tax assets decreased by HUF 891 million, retained earnings increased with HUF 4,058 million.

d) MOL Group detected property which meets the definition of investment property as per IAS 40. As a result, property in the amount of HUF 5,409 million was reclassified to investment property. To present comparative effects HUF 5,001 million and HUF 5,140 million were reclassified as at 31 December 2021 and 1 January 2021, respectively, with no impact on presented income statements.

e) MOL Group revisited its accounting treatment of a loan given to Ural Group Limited (UGL) and reclassified it to other non-current financial assets. As a result of the restatement investment in associated companies and joint ventures decreased by HUF 7,563 million and HUF 15,233 million as at 01 January 2021 and 31 December 2021 respectively, and other non-current financial asset increased with the same amounts.

f) MOL Group corrected a fair value adjustment connected to the assets under construction which was capitalised in previous years and depreciated to zero. As a result of the correction property, plant and equipment increased by HUF 1,858 million, deferred tax assets decreased by HUF 353 million, retained earnings increased by HUF 1,505 million as at 01 January 2021, property, plant and equipment increased by HUF 2,056 million, deferred tax assets decreased by HUF 388 million, retained earnings increased by HUF 1,668 million as at 31 December 2021.

g) MOL Group revised the valuation method and accounting treatment of the share swap agreement with OTP. As a result, it was detected that the accounting treatment of the dividend paid and received on the shares involved in the swap agreement and the valuation method of the derivative instrument is not appropriate. The MOL shares involved in the swap are deducted from equity, however under the previous accounting treatment the dividend paid on these shares were deducted from the retained earnings and the dividend received was presented as a dividend income. As a result of the accounting treatment’s revision the dividends should modify the fair value of the derivative financial instrument. As a result of the previous accounting treatment and valuation method the derivative financial liabilities and finance expenses were overstated, and the retained earnings were understated in 2020 and 2021. To change the accounting treatment MOL Group restated the statement of financial position as at 1 January 2021 by decreasing the other current financial liabilities and increasing the retained earnings with HUF 1,300 million and as at 31 December 2021 by decreasing the other current financial liabilities with HUF 8,643 million and increasing the retained earnings with HUF 5,108 million. Due to this change the other finance expense was also decreased by HUF 3,535 million in the statement of profit or loss in 2021.

|  | Consolidated Financial Statements 2022 | 13

h) MOL Group revised the equity method consolidated Pearl investment value. As a result of the revision HUF 2,869 million and HUF 2,620 million was recorded in 31 December 2021 and 1 January 2021 on balance sheet lines of investment of associated companies and joint ventures and of retained earnings as increasing items.

i) MOL Group adjusted the impairment reversal recognised on NACA field in 2019. The conditions that led to the impairment reversal adjustment has no more existed in 2020. As a result of the correction retained earnings decreased by HUF 11,775 million, property, plant and equipment decreased by HUF 12,870 million and deferred tax increased by HUF 1,095 million as 1 January 2021 and retained earnings decreased by HUF 11,957 million, property, plant and equipment decreased by HUF 13,069 million and deferred tax increased by HUF 1,112 million as at 31 December 2021.

j) MOL Group adjusted the environmental contingent liability recognised during the acquisition of INA in line with IFRS 3. As a result of the correction HUF 26,544 million was recognised in retained earnings, HUF (32,360) million in non-current provisions and HUF (5,816) million in deferred tax assets as at 1 January 2021 and HUF 26,981 million was recognised in retained earnings, HUF (34,011) million in non-current provisions, HUF (6,202) million in deferred tax assets and HUF 827 million in profit for the period as at 31 December 2021.

k) MOL Group reassessed the accounting treatment of the inventory purchased and sold to the national stockpiling association by MOL Group. As this is a non-monetary exchange only the margin on the transaction should be recorded in net sales. As a result of the revision HUF 30,874 million was netted between net sales and raw materials and consumables used and HUF 23,588 million was netted between net sales and change in inventory of finished goods and work in progress in 2021.

l) MOL Group reassessed the balance of Asset Retirement Obligation of Azeri-Chirag-Gunashli (“ACG”) oil field and detected an error in 2020. As a result of the correction as at 1 January 2021 property, plant and equipment and non-current provision increased by HUF 21,359 million, as at 31 December 2021 property plant and equipment increased by HUF 18,338 million, retained earnings decreased by HUF 188 million, non-current provision increased by HUF 21,939 million, deferred tax liabilities decreased by HUF 900 million, depreciation increased by HUF 4,707 million, finance expenses decreased by HUF 1,356 million and income tax expense decreased by HUF 838 million.

Transactions due to voluntary accounting policy amendments

m) Following the fuel price cap enacted in Hungary at the end of 2021, MOL Group has performed an internal, comprehensive review of its pricing procedures. As part of these procedures pricing methodologies were assessed and product prices were broken down into components country by country. Management identified that although EU countries are required to maintain emergency stocks of oil which can be used in case of a disruption to supply emergency oil stocks, governments cover the related expenses in levying a stockpiling fee on wholesalers or incorporating it in the excise duty. Fees collected from customers that must be remitted to a governmental entity do not meet the criteria for recognition as net revenue under IFRS 15.

Management believes that it would lead to a more relevant and reliable information being presented if stockpiling association fees were treated similar to excise duties and excluded from Net sales.

As a result of the revision HUF 36,111 million was netted between net sales and other operating expenses in 2021.

|  | Consolidated Financial Statements 2022 | 14

Effect of the restatements on the Consolidated statement of profit or loss

|  | Notes | 2022 | 2021 | Increase/ (Decrease) | 2021
|  |  | Restated |
| Reference | HUF million | HUF million | HUF million | HUF million
Net sales | k, m, |  | 9,868,163 | 5,766,751 | (90,572) | 5,857,323
Other operating income |  |  | 43,716 | 32,133 | - | 32,133
Total operating income |  | 3 | 9,911,879 | 5,798,884 | (90,572) | 5,889,456
Raw materials and consumables used | k, |  | 7,458,413 | 4,375,291 | (30,874) | 4,406,165
Employee benefits expense |  |  | 342,513 | 299,359 | - | 299,359
Depreciation, depletion, amortisation and impairment | a, l, |  | 475,533 | 478,856 | 6,298 | 472,558
Other operating expenses | m, |  | 632,864 | 360,861 | (36,111) | 396,972
Change in inventory of finished goods and work in progress | k, |  | (151,056) | (194,282) | (23,588) | (170,694)
Work performed by the enterprise and capitalised |  |  | (105,500) | (88,387) | - | (88,387)
Total operating expenses |  | 4 | 8,652,767 | 5,231,698 | (84,275) | 5,315,973
Profit from operation |  |  | 1,259,112 | 567,186 | (6,297) | 573,483
Finance income |  |  | 164,080 | 104,847 | - | 104,847
Finance expense | g, j, l, |  | 238,412 | 138,930 | (6,005) | 144,935
Total finance expense, net |  | 5 | (74,332) | (34,083) | 6,005 | (40,088)
Share of after-tax results of associates and joint ventures |  | 6 | (29,486) | 21,515 | (1) | 21,516
Profit/(Loss) before tax |  |  | 1,155,294 | 554,618 | (293) | 554,911
Income tax expense | a, j, l, | 7 | 466,343 | 46,936 | (837) | 47,773
Profit/(Loss) for the year from continuing operations |  |  | 688,951 | 507,682 | 544 | 507,138
Profit / (Loss) for the period from discontinued operations |  | 15 | 223,297 | 42,453 | - | 42,453
PROFIT / LOSS FOR THE PERIOD |  |  | 912,248 | 550,135 | 544 | 549,591
Attributable to: |  |  |  |  |  |
Owners of parent from continuing operations |  |  | 628,293 | 484,469 | 787 | 483,682
Non-controlling interest from continuing operations |  |  | 60,658 | 23,213 | (243) | 23,456
Owners of parent from discontinued operations |  |  | 223,297 | 42,453 | - | 42,453
Non-controlling interest from discontinued operations |  |  | - | - | - | -
Owners of parent |  |  | 851,590 | 526,922 | 787 | 526,135
Non-controlling interest |  |  | 60,658 | 23,213 | (243) | 23,456
Basic earnings per share attributable to owners of the parent (HUF) cont.op. |  | 27 | 851.01 | 673.35 | 1.09 | 672.26
Diluted earnings per share attributable to owners of the parent (HUF) cont.op. |  |  | 848.94 | 668.37 | 1.08 | 667.29
Basic earnings per share attributable to owners of the parent (HUF) discont.op. |  |  | 302.45 | 59.00 | - | -
Diluted earnings per share attributable to owners of the parent (HUF) discont.op. |  |  | 301.71 | 58.57 | - | -
Basic earnings per share attributable to owners of the parent (HUF) |  |  | 1,153.46 | 732.36 | 1.10 | 731.26
Diluted earnings per share attributable to owners of the parent (HUF) |  | 27 | 1,150.65 | 726.94 | 1.08 | 725.86

|  | Consolidated Financial Statements 2022 | 15

Effect of the restatements on the Consolidated statement of other comprehensive income

| Notes | 2022 | 2021 | Increase/ (Decrease) | 2021
|  | Restated |
| HUF million | HUF million | HUF million | HUF million
Profit/(Loss) for the year from continuing operations |  | 688,951 | 507,682 | 544 | 507,138
Profit/(Loss) for the year from discontinued operations |  | 223,297 | 42,453 | - | 42,453
Profit/(Loss) for the year |  | 912,248 | 550,135 | 544 | 549,591
Other comprehensive income |  |  |  |  |
Other comprehensive income to be reclassified to profit or loss in subsequent periods: |  |
Exchange differences on translating foreign operations, net of tax | 8 | 239,678 | 73,125 | (607) | 73,732
Exchange differences on translating discontinued operations, net of tax |  | (11,148) | (3,616) | 865 | (4,481)
Net investment hedge, net of tax | 8 | (34,768) | (2,963) | - | (2,963)
Changes in fair value of debt instruments at fair value through other comprehensive income, net of tax | 8 | (3,330) | (166) | - | (166)
Changes in fair value of cash flow hedges, net of tax | 8 | 527 | 994 | - | 994
Share of other comprehensive income of associates and joint ventures | 8 | 18,715 | 10,200 | 250 | 9,950
Other comprehensive income from continuing operation / (loss) for the year, net of tax |  | 220,822 | 81,190 | (357) | 81,547
Net other comprehensive income to be reclassified to profit or loss in subsequent periods |  | 209,674 | 77,574 | 508 | 77,066
Other comprehensive income not to be reclassified to profit or loss in subsequent periods: |  |
Changes in fair value of equity instruments at fair value through other comprehensive income, net of tax | 8 | (4,481) | 17,736 | (827) | 18,563
Remeasurement of post-employment benefit obligations | 8 | 1,725 | (716) | - | (716)
Net other comprehensive income not to be reclassified to profit or loss in subsequent periods |  | (2,756) | 17,020 | (827) | 17,847
Other comprehensive income from continuing operation / (loss) for the year, net of tax |  | 218,066 | 98,210 | (1,184) | 99,394
Other comprehensive income for the period, net of tax |  | 206,918 | 94,594 | (319) | 94,913
Total comprehensive income from continuing operation for the period |  | 907,017 | 605,892 | (640) | 606,532
Total comprehensive income from discontinued operation for the period |  | 212,149 | 38,837 | 865 | 37,972
Total comprehensive income for the period |  | 1,119,166 | 644,729 | 225 | 644,504
Attributable to: |  |  |  |  |
Owners of parent from continuing operation |  | 814,979 | 575,271 | (203) | 575,474
Non-controlling interest from continuing operation |  | 92,038 | 30,621 | (437) | 31,058
Owners of parent from discontinued operation |  | 212,149 | 38,837 | 865 | 37,972
Non-controlling interest from discontinued operation |  | - | - | - | -
Owners of parent |  | 1,027,128 | 614,108 | 662 | 613,446
Non-controlling interest |  | 92,038 | 30,621 | (437) | 31,058

|  | Consolidated Financial Statements 2022 | 16

Effect of the restatements on the Consolidated statement of financial position

|  | Notes | 31 Dec 2022 | 31 Dec 2021 | Increase/ (Decrease) | 31 Dec 2021 | 1 Jan 2021 | Increase/ (Decrease) | 31 Dec 2020 Restated
|  | Restated | Restated
| Reference | HUF million | HUF million | HUF million | HUF million | HUF million | HUF million | HUF million
NON-CURRENT ASSETS |  |  |  |  |  |  |  |  |
Property, plant and equipment | a,d,f,i,l, | 9 | 3,817,879 | 3,378,867 | (1,877) | 3,380,744 | 3,235,223 | 2,646 | 3,232,577
Investment property | d, | 9 | 9,459 | 6,863 | 5,001 | 1,862 | 5,140 | 5,140 | -
Intangible assets |  | 9 | 552,588 | 437,839 | - | 437,839 | 397,871 | - | 397,871
Investments in associates and joint ventures | e,h, | 6 | 190,805 | 213,051 | (12,363) | 225,414 | 209,893 | (4,943) | 214,836
Other non-current financial assets | c,e, | 21 | 340,291 | 228,087 | 20,182 | 207,905 | 165,937 | 13,521 | 152,416
Deferred tax assets | a,c,f,i,j, | 7 | 109,899 | 170,318 | (5,479) | 175,797 | 143,499 | (5,553) | 149,052
Other non-current assets |  | 13 | 85,555 | 76,843 | (2) | 76,845 | 86,649 | - | 86,649
Total non-current assets |  |  | 5,106,476 | 4,511,868 | 5,462 | 4,506,406 | 4,244,211 | 10,810 | 4,233,401
CURRENT ASSETS |  |  |  |  |  |  |  |  |
Inventories |  | 14 | 997,045 | 702,798 | - | 702,798 | 461,391 | - | 461,391
Trade and other receivables |  | 23 | 931,511 | 754,019 | - | 754,019 | 523,278 | - | 523,278
Securities |  | 21 | 7,295 | 845 | - | 845 | 14,511 | - | 14,511
Other current financial assets |  | 21 | 177,963 | 61,079 | - | 61,079 | 24,136 | - | 24,136
Income tax receivable |  |  | 12,239 | 7,551 | - | 7,551 | 13,244 | - | 13,244
Cash and cash equivalents |  | 24 | 595,244 | 367,447 | - | 367,447 | 193,877 | - | 193,877
Other current assets | b, | 15 | 96,563 | 82,178 | 4,443 | 77,735 | 69,075 | 4,375 | 64,700
Assets classified as held for sale |  | 19 | 43,363 | 16,379 | - | 16,379 | 1,463 | - | 1,463
Total current assets |  |  | 2,861,223 | 1,992,296 | 4,443 | 1,987,853 | 1,300,975 | 4,375 | 1,296,600
Total assets |  |  | 7,967,699 | 6,504,164 | 9,905 | 6,494,259 | 5,545,186 | 15,185 | 5,530,001
EQUITY |  | 20 |  |  |  |  |  |  |
Share capital |  |  | 79,013 | 78,163 | - | 78,163 | 78,249 | - | 78,249
Retained earnings and other reserves |  |  | 2,702,764 | 2,172,065 | 19,104 | 2,152,961 | 2,168,568 | 15,420 | 2,153,148
(Loss) / Profit for the year attr. to owners of parent |  |  | 851,589 | 526,922 | 787 | 526,135 | (18,323) | - | (18,323)
Equity attributable to owners of parent |  |  | 3,633,366 | 2,777,150 | 19,891 | 2,757,259 | 2,228,494 | 15,420 | 2,213,074
Non-controlling interest |  |  | 378,770 | 312,781 | 11,496 | 301,285 | 282,946 | 11,932 | 271,014
Total equity |  |  | 4,012,136 | 3,089,931 | 31,387 | 3,058,544 | 2,511,440 | 27,352 | 2,484,088
NON-CURRENT LIABILITIES |  |  |  |  |  |  |  |  |
Long-term debt |  | 21 | 650,413 | 866,492 | - | 866,492 | 820,998 | - | 820,998
Other non-current financial liabilities |  | 21 | 20,671 | 36,913 | - | 36,913 | 49,367 | - | 49,367
Non-current provisions | j,l, | 16 | 584,447 | 695,296 | (12,072) | 707,368 | 626,406 | (11,000) | 637,406
Deferred tax liabilities | l, | 7 | 128,482 | 122,379 | (766) | 123,145 | 130,701 | 132 | 130,569
Other non-current liabilities |  | 17 | 39,258 | 32,460 | - | 32,460 | 31,934 | - | 31,934
Total non-current liabilities |  |  | 1,423,271 | 1,753,540 | (12,838) | 1,766,378 | 1,659,406 | (10,868) | 1,670,274
CURRENT LIABILITIES |  |  |  |  |  |  |  |  |
Short-term debt |  | 21 | 468,686 | 185,616 | - | 185,616 | 321,790 | - | 321,790
Trade and other payables |  | 21 | 1,001,634 | 848,241 | - | 848,241 | 549,642 | - | 549,642
Other current financial liabilities | g, | 21 | 231,454 | 244,167 | (8,643) | 252,810 | 228,078 | (1,300) | 229,378
Current provisions |  | 16 | 115,001 | 70,084 | - | 70,084 | 49,690 | - | 49,690
Income tax payable |  |  | 362,466 | 40,378 | - | 40,378 | 10,330 | - | 10,330
Liabilities classified as held for sale |  | 19 | 2,161 | 3,420 | - | 3,420 | - | - | -
Other current liabilities |  | 18 | 350,890 | 268,787 | (1) | 268,788 | 214,809 | - | 214,809
Total current liabilities |  |  | 2,532,292 | 1,660,693 | (8,644) | 1,669,337 | 1,374,339 | (1,300) | 1,375,639
Total liabilities |  |  | 3,955,563 | 3,414,233 | (21,482) | 3,435,715 | 3,033,745 | (12,168) | 3,045,913
Total equity and liabilities |  |  | 7,967,699 | 6,504,164 | 9,905 | 6,494,259 | 5,545,185 | 15,184 | 5,530,001

|  | Consolidated Financial Statements 2022 | 17

Effect of the restatements on the Consolidated statement of cash flow

| Notes | 2022 | 2021 | Increase/ (Decrease) | 2021
|  | Restated |
| HUF million | HUF million | HUF million | HUF million
Profit/(Loss) before tax from continuing operation |  | 1,155,294 | 554,618 | (293) | 554,911
Profit/(Loss) before tax from discontinued operation |  | 225,410 | 37,220 | 1 | 37,219
Profit/(Loss) before tax |  | 1,380,704 | 591,838 | (292) | 592,130
Adjustments to reconcile profit before tax to net cash provided by operating activities |  |  |  |  |
Depreciation, depletion, amortisation and impairment | 4 | 458,242 | 513,735 | 6,298 | 507,437
Increase/(decrease) in provisions | 16 | 31,816 | 25,309 | - | 25,309
Net (gain)/loss on asset disposal and divestments |  | (98,120) | (4,262) | - | (4,262)
Net interest expense/(income) | 5 | 5,902 | 27,365 | (2,470) | 29,835
Other finance expense/(income) | 5 | 53,952 | 8,900 | (3,535) | 12,435
Share of after-tax results of associates and joint ventures | 6 | 29,486 | (21,515) | 1 | (21,516)
Other items | 26 | 134,088 | 96,109 | (2) | 96,111
Income taxes paid | 7 | (124,937) | (41,221) | 0 | (41,221)
Cash flows from operations before changes in working capital |  | 1,871,133 | 1,196,258 | (0) | 1,196,258
Change in working capital |  | (482,387) | (278,192) | 0 | (278,192)
(Increase)/decrease in inventories | 14 | (271,245) | (244,335) | - | (244,335)
(Increase)/decrease in trade and other receivables | 23 | (629,517) | (275,229) | - | (275,229)
Increase/(decrease) in trade and other payables | 21 | 204,818 | 266,673 | - | 266,673
(Increase)/decrease in other assets and liabilities | 15, 18 | 213,557 | (25,301) | 0 | (25,301)
Cash flows from operations |  | 1,388,746 | 918,066 | (0) | 918,066
Capital expenditures | 2 | (615,922) | (499,838) | - | (499,838)
Proceeds from disposal of fixed assets |  | 22,212 | 5,882 | - | 5,882
Acquisition of businesses (net of cash) | 10 | (193,685) | (2,411) | - | (2,411)
Proceeds from disposal of businesses (net of cash) | 11 | (34,694) | 1,089 | - | 1,089
(Increase)/Decrease in other financial assets | 21 | (83,231) | (27,862) | - | (27,862)
Interest received and other finance income | 5 | 26,559 | 4,595 | - | 4,595
Dividends received | 5 | 24,266 | 36,976 | - | 36,976
Cash flows used in investing activities |  | (854,495) | (481,569) | - | (481,569)
Proceeds from issue of bonds, notes and debentures |  | - | 132,271 | - | 132,271
Repayments of bonds, notes and debentures |  | 0 | - | - | -
Proceeds from borrowings |  | 1,226,532 | 814,220 | - | 814,220
Repayments of borrowings |  | (1,380,177) | (1,118,156) | - | (1,118,156)
Interest paid and other finance expense | 5 | (23,896) | (25,524) | (3,809) | (21,715)
Dividends paid to owners of parent | 20 | (191,236) | (59,404) | 3,809 | (63,213)
Dividends paid to non-controlling interest | 20 | (27,054) | (13,545) | - | (13,545)
Transactions with non-controlling interest |  | - | (361) | - | (361)
Net issue / repurchase of treasury shares |  | 16,576 | (2,026) | - | (2,026)
Other changes in equity |  | (1) | (0) | - | -
Cash flows used in financing activities |  | (379,256) | (272,525) | - | (272,525)
Currency translation differences relating to cash and cash equivalents |  | 72,802 | 10,426 | - | 10,426
Increase/(decrease) in cash and cash equivalents |  | 227,797 | 174,398 | (0) | 174,398
Cash and cash equivalents at the beginning of the year |  | 367,447 | 193,877 | - | 193,877
Cash and cash equivalents at the end of the year |  | 595,244 | 367,447 | - | 367,447
Change in Cash and cash equivalents |  | 227,797 | 173,570 | - | 173,570
Change in cash and cash equivalents classified as asset held for sale |  | - | 0 | - | -
Change in Overdraft |  | - | 828 | - | 828
Increase/(decrease) in cash and cash equivalents |  | 227,797 | 174,398 | - | 174,398

|  | Consolidated Financial Statements 2022 | 18

Results for the year

This section explains the results and performance of the Group for the financial years ended 31 December 2022 and 31 December 2021. 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, share of after-tax results of associates and joint ventures. For taxation, share-based payments, joint ventures and associates, statement of financial position disclosures are also provided in this section.

2. Segmental information

Accounting policies

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

The major segments identified by MOL Group are the following:

Upstream segment consists of oil and gas exploration and production assets and the related activities.

Downstream segment consists of different business activities that are part of an integrated value chain. This value chain turns crude oil into a range of refined products, which are moved and marketed for household, industrial and transport use. The products include, among others, gasoline, diesel, heating oil, aviation fuel, lubricants, bitumen, sulphur and liquefied petroleum gas (LPG).

Consumer Services segment is a leading fuel retail operation in the CEE region, with a 10 million retail customer base and one million daily transactions. MOL Group owns numerous service companies covering oil field services, asset operations and maintenance management.

Gas Midstream segment includes our sole transmission system related activity in the nearly 6,000 km long high-pressure natural gas transmission pipeline system in Hungary.

Corporate and other segment includes all other business units of MOL Group.

2022 | Upstream | Downstream | Consumer Services | Gas Midstream | Corporate and other | Inter-segment transfers | Total
HUF million | HUF million | HUF million | HUF million | HUF million | HUF million | HUF million
Net Revenue |  |  |  |  |  |  |
External sales | 204,594 | 6,167,891 | 3,242,675 | 208,564 | 42,490 | 1,949 | 9,868,163
Inter-segment transfers | 1,026,546 | 2,898,260 | 12,593 | 5,815 | 263,786 | (4,207,000) | -
Total revenue | 1,231,140 | 9,066,151 | 3,255,268 | 214,379 | 306,276 | (4,205,051) | 9,868,163
Profit/(loss) from operation | 613,917 | 636,070 | 76,573 | 44,310 | (99,694) | (12,064) | 1,259,112

2021 | Upstream Restated | Downstream Restated | Consumer Services | Gas Midstream | Corporate and other | Inter-segment transfers | Total Restated
HUF million | HUF million | HUF million | HUF million | HUF million | HUF million | HUF million
Net Revenue |  |  |  |  |  |  |
External sales | 162,415 | 3,547,705 | 1,934,647 | 103,796 | 18,188 | - | 5,766,751
Inter-segment transfers | 412,251 | 1,618,032 | 9,492 | 4,290 | 223,759 | (2,267,824) | -
Total revenue | 574,666 | 5,165,737 | 1,944,139 | 108,086 | 241,947 | (2,267,824) | 5,766,751
Profit/(loss) from operation | 156,904 | 348,901 | 143,404 | 24,534 | (74,574) | (31,983) | 567,186

|  | Consolidated Financial Statements 2022 | 19

2022 | Upstream | Downstream | Consumer Services | Gas Midstream | Corporate and other | Inter-segment transfers | Total
HUF million | HUF million | HUF million | HUF million | HUF million | HUF million | HUF million
Other segment information |  |  |  |  |  |  |
Capital expenditure: | 156,375 | 342,916 | 67,630 | 13,694 | 103,163 | 227 | 684,005
Property, plant and equipment | 141,561 | 281,287 | 57,687 | 11,748 | 74,540 | 227 | 567,050
Intangible assets | 14,814 | 61,629 | 9,943 | 1,946 | 28,623 | - | 116,955
Depreciation, depletion, amortisation and impairment | 213,570 | 168,724 | 44,671 | 16,726 | 33,343 | (1,501) | 475,533
From this: impairment losses recognised in statement of profit or loss (incl. dry-holes) | 51,489 | 10,681 | 2,027 | 488 | 711 | (400) | 64,996
From this: reversal of impairment recognised in statement of profit or loss | 52,191 | 214 | 150 | - | 1,945 | - | 54,500
Provisions made and used during the year and revision of previous estimates | (12,623) | 38,579 | (494) | 1,125 | 1,066 | 130 | 27,783

2021 | Upstream Restated | Downstream | Consumer Services | Gas Midstream | Corporate and other | Inter-segment transfers | Total
HUF million | HUF million | HUF million | HUF million | HUF million | HUF million | HUF million
Other segment information |  |  |  |  |  |  |
Capital expenditure: | 132,352 | 289,296 | 48,209 | 21,070 | 79,390 | - | 570,317
Property, plant and equipment | 119,991 | 210,989 | 42,132 | 20,397 | 69,360 | - | 462,869
Intangible assets | 12,361 | 78,307 | 6,077 | 673 | 10,030 | - | 107,448
Depreciation, depletion, amortisation and impairment | 238,661 | 151,840 | 39,129 | 16,640 | 33,577 | (992) | 478,856
From this: impairment losses recognised in statement of profit or loss (incl. dry-holes) | 64,548 | 4,122 | 1,351 | 256 | 2,857 | (50) | 73,084
From this: reversal of impairment recognised in statement of profit or loss | 23 | 49 | 498 | - | 41 | - | 611
Provisions made and used during the year and revision of previous estimates | 7,709 | 22,255 | (89) | 405 | (2,033) | - | 28,247

The operating profit of the segments includes the profit arising both from external sales and transfers to other business segments. Corporate and other segment provides maintenance, financing and other services to the business segments. The internal transfer prices applied are based on prevailing market prices. Divisional figures contain the results of the fully consolidated subsidiaries engaged in the respective divisions.

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.

a) Assets by geographical areas

2022 | Intangible assets | Property, plant and equipment | Investments in associates and joint ventures | Other non-current assets
(Note 9) | (Note 9) | (Note 6) | (Note 13)
HUF million | HUF million | HUF million | HUF million
Hungary | 159,106 | 1,562,551 | 8,418 | 21,245
Croatia | 71,329 | 726,476 | 1,477 | 10,408
Slovakia | 16,064 | 581,505 | 6,200 | 3,429
Azerbaijan | 210,927 | 445,859 | 977 | -
Rest of European Union | 83,680 | 391,606 | - | 50,473
Rest of Europe | 1,407 | 61,986 | - | -
Rest of the World | 10,075 | 47,896 | 173,733 | -
Total | 552,588 | 3,817,879 | 190,805 | 85,555

|  | Consolidated Financial Statements 2022 | 20

2021 | Intangible assets | Property, plant and equipment | Investment in associates and joint ventures | Other non-current assets
| 31 Dec 2021 | 1 Jan 2021 | 31 Dec 2021 | 1 Jan 2021 |
| Restated | Restated | Restated | Restated |
(Note 9) | (Note 9) | (Note 9) | (Note 6) | (Note 6) | (Note 13)
HUF million | HUF million | HUF million | HUF million | HUF million | HUF million
Hungary | 138,819 | 1,453,252 | 1,287,922 | 15,509 | 19,776 | 10,969
Croatia | 61,363 | 598,743 | 610,577 | 12,057 | 12,303 | 14,256
Slovakia | 8,821 | 544,319 | 563,511 | 6,459 | 4,402 | 423
Azerbaijan | 182,871 | 457,406 | 447,555 | 1,394 | 16,662 | -
Rest of European Union | 31,944 | 193,247 | 215,268 | 19,678 | 12,544 | 51,195
Rest of Europe | 1,678 | 82,221 | 63,406 | - | - | -
Rest of the World | 12,343 | 49,679 | 46,984 | 157,954 | 144,206 | -
Total | 437,839 | 3,378,867 | 3,235,223 | 213,051 | 209,893 | 76,843

|  | Consolidated Financial Statements 2022 | 21

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 the Group 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 Group 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. Under IFRS, the transfer of risk according to Incoterms rules applied by the Group is not a sufficient criterion for recognizing revenue, because IFRS 15 Revenue from Contracts with Customers is based on the control concept. For performance obligations to be satisfied at a particular point in time, the Group has to determine at which point in time the customer obtains control of the promised goods. The transfer of significant risk and rewards of ownership of an asset – which equals the transfer of risk as defined in the Incoterms rules – is only one indicator to consider in determining when control has been transferred. The Group may apply different Incoterms rules to different transactions (nearly all known Incoterms rules are used by the Group), thus the transfer of control shall be assessed individually in each case.

• it is the principal in its revenue arrangements, because it typically controls the goods or services before transferring them to customers (except to those cases, which are explicitly stated in the Consolidated Financial Statements);

• 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 consolidated statement of financial position.

Other operating income

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

a) Sales by product lines

| 2022 | 2021
|  | Restated
| HUF million | HUF million
Sales of crude oil and oil products | 7,194,127 | 3,930,836
Sales of petrochemical products | 1,174,808 | 1,075,344
Sales of natural gas and gas products | 768,823 | 338,412
Sales of services | 264,514 | 153,761
Sales of retail shop products | 240,782 | 165,952
Sales of other products | 225,109 | 102,446
Total | 9,868,163 | 5,766,751

Increase in the Group’s sales revenue is due to the changes in macroeconomic environment, including price hikes in crude oil and consequently product quotations supported by healthier sales volumes influenced by better demand conditions.

|  | Consolidated Financial Statements 2022 | 22

b) Sales by geographical area

| 2022 | 2021
|  | Restated
| HUF million | HUF million
Hungary | 2,817,008 | 1,477,002
Croatia | 1,278,342 | 670,177
Slovakia | 1,148,028 | 548,162
Italy | 748,327 | 454,577
Czech Republic | 732,008 | 467,064
Romania | 602,369 | 418,214
Austria | 426,524 | 261,137
Poland | 414,431 | 291,759
Serbia | 293,361 | 233,689
Bosnia-Herzegovina | 252,820 | 137,210
Germany | 203,850 | 153,812
United Kingdom | 191,543 | 123,594
Slovenia | 169,175 | 105,383
Switzerland | 126,591 | 112,276
The Netherlands | 70,367 | 41,434
Rest of Central-Eastern Europe | 70,338 | 50,735
Rest of Europe | 166,807 | 111,009
Rest of the World | 156,274 | 109,517
Total | 9,868,163 | 5,766,751

The Group has no single major customer the revenue from which would exceed 10% of the total net sales revenues in 2022 (neither in 2021).

The sales revenue is split by the method of the customer's registered office. The data for 2021 have been restated due to using this method.

Based on the IFRS 15 Revenue from Contracts with Customers standard agent-principal consideration, excise duties and similar levies or fees are recognised with net presentation in the financial statements as MOL and its companies act as an „agent” and collects the excise duties from third parties to the state. Total amount of the excise duty collected from customers was HUF 1,666,186 million in 2022 and HUF 1,662,944 million in 2021.

c) Other operating income

| 2022 | 2021
| HUF million | HUF million
Allowances and subsidies received | 11,704 | 6,196
Gain on sales of intangibles, property, plant and equipment | 10,809 | 2,069
Penalties, late payment interest, compensation received | 5,879 | 7,276
Reimbursement of legal costs | 2,276 | 2,826
Gain from the sale of companies | - | 2,327
Other | 13,048 | 11,439
Total | 43,716 | 32,133

The Other operating income includes reimbursement of legal costs (HUF 2,276 million) related to arbitration proceedings between Dana Gas PJSC (Dana) and Crescent Petroleum Company International LTD (Crescent) against MOL Plc. and OMV Upstream International GmbH, where MOL Group was the respondent. The Final Award was issued on 16th December 2022. The tribunal dismissed all of Dana and Crescent’s claims and awarded reimbursement of 100% of MOL’s legal and arbitration costs.

Gain on sales of intangibles, property, plant and equipment increased by HUF 8,740 million compared to 31 December 2021. In previous year gain on sale was realised on several small value sale transactions, while in 2022 an additional gain realised on the sale of properties and obsolete premises which are not used in production anymore.

|  | Consolidated Financial Statements 2022 | 23

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 specific IFRS transaction it is accounted for in line with those regulations.

The Group 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.

| 2022 | 2021
|  | Restated
| HUF million | HUF million
Raw materials and consumables used | 7,458,413 | 4,375,291
Crude oil purchased | 2,806,921 | 1,909,135
Cost of goods purchased for resale | 2,643,273 | 1,142,823
Non-hydrocarbon-based material | 828,612 | 439,832
Other raw materials | 330,222 | 304,536
Value of material-type services used | 296,134 | 242,022
Purchased bio diesel component | 253,161 | 168,446
Utility expenses | 199,895 | 103,028
Value of intermediated services | 100,195 | 65,469
Employee benefits expense | 342,513 | 299,359
Wages and salaries | 242,098 | 219,695
Other employee benefits expense | 54,359 | 34,502
Social security | 46,056 | 45,162
Depreciation, depletion, amortisation and impairment | 475,533 | 478,856
Other operating expenses | 632,864 | 360,861
Mining royalties | 227,410 | 55,210
Net loss of non-hedge commodity price transactions | 98,846 | 88,306
Other | 76,874 | 41,674
Other services | 47,609 | 37,171
Taxes and contributions | 44,755 | 24,372
Provision for greenhouse gas emission over quota allocated free of charge | 30,274 | 24,381
Consultancy fees | 22,392 | 17,350
Rental cost | 21,022 | 19,698
Advertising expenses | 18,238 | 16,211
Insurance fees | 12,816 | 11,053
Bank charges | 11,458 | 6,601
Cleaning costs | 9,515 | 7,976
Site security costs | 7,630 | 6,673
Contribution in strategic inventory storage | 4,025 | 4,185
Change in inventory of finished goods and work in progress | (151,056) | (194,282)
Work performed by the enterprise and capitalised | (105,500) | (88,387)
Total operating expenses | 8,652,767 | 5,231,698

Mining royalty increased in 2022 due to change in the applied rates, the unit values determined by Government Decree including minimum thresholds for 2022 and 2023 and the minimum required production level. MOL Group considers the mining royalty in the cost of inventory.

Based on the IFRS 15 Revenue from Contracts with Customers standard agent-principal consideration, excise duties and similar levies or fees are recognised with net presentation in the financial statements as MOL and its companies act as an „agent” and collects the excise duties from third parties to the state.

Other item line contains several different types of expenses, which are individually not significant.

Employee benefit expenses

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

Share-based payments

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

|  | Consolidated Financial Statements 2022 | 24

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 (which is linked to the share price of the parent company).

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 Group at that date, based on the best available estimate of the number of equity instruments that will ultimately vest.

The dilutive effect of outstanding options is reflected as additional share dilution in the computation of earnings per share.

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.

| 2022 | 2021
| HUF million | HUF million
Absolute Share Value Based Remuneration | (33) | (8)
Relative Market Index Based Remuneration | 47 | (9)
Restricted Share Plan | 156 | 153
Short-term Share Ownership Plan | 337 | 1,223
Share-based retirement benefit | 113 | -
Total cash-settled share-based payment expense | 620 | 1,359
Absolute Share Value Based Remuneration | (1,185) | 650
Relative Market Index Based Remuneration | 1,001 | 52
Restricted Share Plan | 2,306 | 1,039
Short-term Share Ownership Plan | 995 | (496)
Share Incentive scheme for the members of the Board of Directors | 452 | 361
Total equity-settled share-based payment expense | 3,569 | 1,606
Total expense of share-based payment transactions | 4,189 | 2,965

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 Group in the long-term increase of MOL share price and so they serve the strategic interest of the shareholders.

Absolute Share Value Based Remuneration Incentive for management

The Absolute Share Value Based Remuneration Plan is a call option to sell hypothetical MOL shares granted on a past strike price, at a spot price and so realise profit from the difference between these prices. The incentive has the following characteristics:

• Covers a four-year period starting annually, where periods are split into a two-year vesting period (it is not possible to exercise Share Options) and a two-year redeeming period. If unexercised, the Share Option lapses after 31 December of the redeeming period.

• The grants are defined centrally in line with MOL job category.

• The allocation is linked to individual performance.

• Payout is either in the form of providing MOL shares (in Hungary) or in cash payment (outside Hungary).

Payment is upon exercising of option by management. The value of the incentive is the difference between the strike price and a selected spot price for each unit of the entitlement.

In case the Annual General Meeting of MOL Plc. decides on dividend payment after the grant date, the managers, who are entitled to long-term incentives are eligible for a compensation in share equivalent when redeeming the share entitlement. Payment to one manager is the value equal to the dividend payment per share multiplied by the share unit numbers the manager is entitled to. This is paid at redemption.

|  | Consolidated Financial Statements 2022 | 25

Equity-settled share-based payment:

| 2022 | 2021
| 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 | 5,096,873 | 2,981 | 7,494,523 | 3,023
Granted during the year | - | - | 227,992 | 2,918
Forfeited during the year | (158,256) | 2,973 | (296,376) | 3,011
Exercised during the year | (914,214) | 2,918 | - | -
Expired during the year | (2,328,699) | 3,052 | (2,329,266) | 3,107
Outstanding at the end of the year | 1,695,704 | 2,918 | 5,096,873 | 2,981
Exercisable at the end of the year | 1,695,704 | 2,918 | 2,394,100 | 3,052

Cash-settled share-based payment:

| 2022 | 2021
| 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 | 263,578 | 2,987 | 360,351 | 3,026
Granted during the year | - | - | 33,749 | 2,918
Forfeited during the year | (40,000) | 2,985 | (19,736) | 2,918
Exercised during the year | - | - | - | -
Expired during the year | (115,272) | 3,052 | (110,786) | 3,107
Outstanding at the end of the year | 108,306 | 2,918 | 263,578 | 2,987
Exercisable at the end of the year | 108,306 | 2,918 | 135,272 | 3,052

Liabilities in respect of share-based payment plans amount to HUF 39 million as at 31 December 2022 (31 December 2021: HUF 68 million), recorded in Other non-current liabilities and Other current liabilities.

Fair value as of the statement of financial position date has been calculated using the binomial option pricing model.

| 2022 | 2021
Weighted average exercise price (HUF/share) | 2,918 | 2,987
Share price as of 31 December (HUF/share) | 2,602 | 2,520
Expected volatility based on historical data | 36.13% | 34.97%
Expected dividend yield | 10.86% | 4.36%
Estimated maturity (years) | 1.00 | 1.49
Risk free interest rate | 15.25% | 5.14%

Relative Market Index Based Remuneration Incentive for management

The Relative Market Index Based Remuneration Plan is a three-year programme using the Comparative Share Price methodology with following characteristics:

• Programme starts each year on a rolling scheme with a three-year vesting period. Payments are due after the third year.

• Target is the development of MOL’s share price compared to relevant and acknowledged regional and industry specific indicators (the CETOP and MSCI Emerging Markets Energy Index).

• Basis of the evaluation is the average difference in MOL’s year-on-year (12 months) share price performance in comparison to the benchmark indices for three years.

• Payout rates are defined based on the over/underperformance of MOL share price.

• The rate of incentive is influenced by the individual short-term performance.

• Payout is either in the form of providing MOL shares (in Hungary) or in cash payment (outside Hungary).

|  | Consolidated Financial Statements 2022 | 26

Restricted Share Plan for management

From 1 January 2021, the MOL Group established a new share-based payment remuneration plan to supersede Absolute Share Value Based Remuneration and Relative Market Index Based Remuneration programmes: Restricted Share Plan.

The Restricted Share Plan is a three-year incentive programme based on determined corporate and individual performance targets with following characteristics:

• Programme starts each year on a rolling scheme with a three-year vesting period. Payments are due after the third year.

• Target on corporate performance is based on the achievement of business plan for Clean CCS EBITDA.

• Payout rates are defined based on fulfilment of the corporate performance target and individual payout rate which is based on an individual performance.

• Payout is either in the form of providing of MOL shares (in Hungary) or in cash payment (outside Hungary).

• The fair value of the benefit has been determined with reference to the average quoted price of MOL shares at the date of grant of HUF 2,549 per share in 2022 (HUF 2,221 per share in 2021), which is the first trading day of the first year of the programme.

Short-term Share Ownership Incentive for management

Short-term Share Ownership Plan is a one-year programme with the following characteristics:

• Programme starts each year on a rolling scheme with a one-year vesting period. Payments are due in the following year.

• The grants are defined based on participant’s base salary, internal grade and related bonus rate.

• The rate of incentive is influenced by the individual short-term performance during vesting period.

• Payout is in the form of providing MOL shares or in cash payment.

Share Incentive scheme for the members of the Board of Directors

The members of the Board of Directors become entitled to defined annual amount of MOL shares based on the number of days spent in the position. 1,200 shares per month are granted to each director, the Chairman of the Board is entitled to an additional number of 400 shares per month. If not a non-executive director is in charge as the Chairman of the Board, then this additional number of shares should be granted to the non-executive Deputy Chairman. The new incentive system ensures the interest of the Board of Directors in the long-term increase of the MOL share price as 2/3 of the shares vested in the year are under transferring restriction for one year.

According to IFRS 2 – Share-based payment, the incentive qualifies as an equity-settled share-based scheme; therefore, the fair value of the benefit should be expensed during the one-year investing period with a corresponding increase in the equity. The fair value of the benefit has been determined with reference to the average quoted price of MOL shares at the date of grant, which is the first trading day of the year.

| 2022 | 2021
Number of shares vested | 163,200 | 149,155
Share price at the date of grant (HUF/share) | 2,549 | 2,221

Share-based retirement benefit

The MOL Group operates in some Group entities long-term benefit schemes that provide lump sum benefits to all employees at the time of their retirement. As part of the benefit program employees are entitled to the amount of 8 or 10 MOL Plc. shares after every year of services. Qualification of the scheme has been reviewed in 2022 and as a result, it is presented according to IFRS 2 – Share-based payment standard; the benefit qualifies as a cash-settled share-based benefit. The amount of the liability has been determined using the projected unit credit method, based on financial and actuarial variables and assumptions that reflect relevant official statistical data which are in line with those incorporated in the business plan of the Group. The applied MOL Plc. share price is HUF 2,602 as of 31 December 2022, which is the average listed share price.

|  | Consolidated Financial Statements 2022 | 27

5. Finance result

Accounting policies

Foreign exchange gains and losses are aggregated separately on a monthly basis for transactions similar in nature. Foreign exchange gains or losses of each transaction group are aggregated and presented in the statement of profit or loss within finance income and expense.

Non-foreign exchange type items are not aggregated in such manner and presented separately based on the total income/expense for the year.

| 2022 | 2021 Restated
Finance result | HUF million | HUF million
Interest income | 25,192 | 3,594
Dividend income | 1,997 | 9,520
Foreign exchange gains | 125,745 | 89,668
Other finance income | 11,146 | 2,065
Total finance income | 164,080 | 104,847
Interest expense | 15,279 | 15,587
Unwinding of discount on provisions | 12,057 | 12,126
Foreign exchange losses | 198,045 | 105,159
Other finance expense | 13,031 | 6,058
Total finance expense | 238,412 | 138,930
Net finance expense | 74,332 | 34,083

Interest expense on lease liabilities accounted for in the period is HUF 4,673 million (2021: HUF 3,217 million). Finance income on the net investment in the lease accounted for in the period is HUF 382 million (2021: HUF 449 million).

Dividend income relates to equity instruments which are designated upon initial recognition as at fair value through other comprehensive income.

6. Investments in associates and joint ventures

Accounting policies

Statement of financial position

An associate is an entity over which the Group has significant influence, and which is neither a subsidiary nor a joint venture. An arrangement is under joint control when the decisions about its relevant activities require the unanimous consent of the parties sharing the control of the arrangements. Joint arrangements can be joint operation and joint venture. The type of the arrangement should be determined by considering the rights and obligations of the parties arising from the arrangement in the normal course of business. Joint ventures are joint arrangements in which the parties that share control have rights to the net assets of the arrangement.

The Group’s investments in its associates and joint ventures are accounted for using the equity method of accounting. Under the equity method, the investment in the associate is carried at cost plus post acquisition changes in the Group’s share of net assets. Goodwill relating to an undertaking is included in the carrying amount of the investment and is not amortised.

Investments in associates and joint ventures are assessed to determine whether there is any objective evidence of impairment. If there is evidence of impairment the recoverable amount of the investment is determined to identify any impairment loss to be recognised. Where losses were made in previous years, an assessment of the factors is made to determine if any loss may be reversed.

Statement of profit or loss

The statement of profit or loss reflects the share of the results of operations of the associate and joint ventures. Profits and losses resulting from transactions between the Group and the equity accounted undertakings are eliminated to the extent of the interest in the undertaking. Impairment losses on associates and joint ventures for the period is recognised as a reduction on Share of after-tax results of associates and joint ventures line in the Statement of profit or loss.

|  | Consolidated Financial Statements 2022 | 28

Company name | Country | Range of activity | Ownership | Contribution to net income | Net book value of investments
2022 | 2022 | 2021 | 31 Dec 2022 | 31 Dec 2021 Restated | 31 Dec 2021
% | HUF million | HUF million | HUF million | HUF million | HUF million
Investment in joint ventures |  |  |  |  |  |  |  |
BaiTex Llc. / MK Oil and Gas B.V. | Russia / Netherlands | Exploration and production activity / Exploration investment management | 51% | (25,092) | 5,361 | - | 19,678 | 19,678
Terra Mineralna Gnojiva d.o.o. / Petrokemija d.d * | Croatia | Investment management | 27% | (2,051) | (453) | - | 12,057 | 12,057
ENEOS MOL Synthetic Rubber Zrt. | Hungary | Production of synthetic rubber | 49% | (7,700) | (6,924) | 959 | 4,365 | 4,365
Rossi Biofuel Plc. | Hungary | Biofuel component production | 25% | 307 | 2,987 | 7,331 | 8,859 | 8,859
Dunai Vízmű Plc. | Hungary | Water production, supply | 33% | (1,283) | - | 118 | 1,401 | 1,401
Datapac Group | Slovakia | IT services | 25% | 37 | 52 | 725 | 641 | 641
ITK Holding Plc. | Hungary | Mobility and public transport service | 74% | (1,977) | 15 | - | 875 | 875
Other |  |  |  | 8 | 1 | 9 | 9 | 9
Investment in associated companies |  |  |  |  |  |  |
Pearl Petroleum Ltd. | Kurdistan region/Iraq | Exploration of gas | 10% | 8,178 | 11,058 | 173,733 | 157,954 | 155,084
BTC | Cayman Islands | Oil transportation | 9% | 3,386 | 246 | 977 | 1,394 | 1,394
Ural Group Limited | Kazakhstan | Exploration and production activity | 28% | (4,039) | 6,969 | - | - | 15,233
Meroco a.s. | Slovakia | Production of bio-diesel component (FAME) | 25% | 45 | 1,901 | 2,977 | 3,509 | 3,509
DAC ARENA a.s. | Slovakia | Facility management | 28% | 4 | 37 | 1,563 | 1,437 | 1,437
Messer Slovnaft s.r.o | Slovakia | Production of technical gases | 49% | 94 | 265 | 936 | 872 | 872
Plinara d.o.o. Pula ** | Croatia | Distribution and gas trading | 49% | 140 | - | 1,070 | - | -
Plinara Istočne Slavonije d.o.o. za opskrbu plinom ** | Croatia | Distribution nework of gas fuels | 40% | 457 | - | 407 | - | -
Total |  |  |  | (29,486) | 21,515 | 190,805 | 213,051 | 225,414
* Terra Mineralna investment was reclassified to held for sale assets with closing amount 11,004 HUF million |  |  |
** These investments were reclassified as equity consolidated investment starting at 31.12.2022 |  |  |  |

Joint ventures

MK Oil and Gas B.V.

MOL Group has 51% ownership in MK Oil and Gas B.V. being the sole owner of Baitex Llc., where the activities are carried out through a concession agreement on Baitugan and Yerilkinksy blocks. Joint control exists over MK Oil and Gas B.V. as the relevant activities of the company require unanimous consent of the parties sharing the control of the operation giving the parties right to the net assets of the arrangement. MK Oil and Gas B.V. is primarily involved in the exploration and production of oil and gas through its subsidiary at the Baitugan field. As of 31 December 2022, MOL Group impaired all of its assets located in Russia including BaiTex Llc. Please refer to Note 1 a) for further information.

ENEOS MOL Synthetic Rubber Plc.

The company is governed and treated jointly with 51% of total shares held by ENEOS group and 49% of total shares held by MOL Group. JSR, the former majority shareholder of the company, sold its shares to ENEOS group in 2022. Share transfer transaction between JSR and ENEOS group was closed in April 2022 when ENEOS Materials Corporation became the 51% owner. As of May 1st 2022 the company name changed from JSR MOL to ENEOS MOL Synthetic Rubber Ltd. The transaction did not affect the everyday operation of the Tiszaújváros plant, where the company manufactures synthetic rubber.

Terra mineralna gnojiva d.o.o.

INA d.d. has 50% ownership in the joint venture company, Terra mineralna gnojiva d.o.o., which owns 54% shareholder interests of and respective management rights over Petrokemija d.d., a mineral fertilizer producing company in Croatia. As the Group is committed to sell Terra and conditions to be classified as held for sale are met, it is classified as asset held for sale. Please refer to Note 19 for further information.

|  | Consolidated Financial Statements 2022 | 29

Rossi Biofuel Plc.

MOL Group has minority ownership in Rossi Biofuel Plc. and it has joint control over the company. The core activity of Rossi Biofuel is biodiesel production from fresh vegetable oil and used cooking oil. This activity is carried out on the basis of IPPC Permit. The core activity of Rossi Biofuel is biodiesel production from fresh vegetable oil and used cooking oil. This activity is carried out on the basis of IPPC Permit.

| BaiTex Llc. / MK Oil and Gas B.V. | ENEOS MOL Synthetic Rubber (EMSR) Zrt. | Rossi Biofuel Zrt.
| 2022 | 2021 | 2022 | 2021 | 2022 | 2021
| HUF million | HUF million | HUF million | HUF million | HUF million | HUF million
The joint venture’s statement of financial position: |  |  |  |  |  |
Non-current assets | 47,085 | 57,247 | 114,259 | 113,427 | 36,907 | 18,332
Current assets | 9,345 | 6,802 | 33,359 | 17,597 | 33,683 | 34,582
Non-current liabilities | 24,472 | 21,687 | 115,762 | 96,287 | 11,472 | 11,167
Current liabilities | 9,322 | 9,333 | 29,473 | 25,021 | 29,794 | 6,311
Net assets | 22,636 | 33,029 | 2,383 | 9,716 | 29,324 | 35,436
Proportion of the Group's ownership at year end | 51% | 51% | 49% | 49% | 25% | 25%
Group's share of assets | 11,544 | 16,845 | 1,168 | 4,761 | 7,331 | 8,859
Fair value adjustment | 2,238 | 2,833 | - | - | - | -
Inventory consolidation - margin elimination | - | - | (209) | (396) | - | -
Impairment | (13,782) | - | - | - | - | -
Carrying amount of the investment | - | 19,678 | 959 | 4,365 | 7,331 | 8,859
The joint venture’s statement of profit or loss: |  |  |  |  |  |
Net revenue | 73,960 | 52,324 | 33,640 | 11,354 | 135,956 | 89,706
Profit/(loss) from operations | (19,473) | 15,203 | (21,101) | (12,438) | 1,768 | 12,958
Net income attributable to equity holders | (20,023) | 10,740 | (15,714) | (14,130) | 1,227 | 11,947
Group's share of reported profit/(loss) for the year | (10,212) | 5,477 | (7,700) | (6,924) | 307 | 2,987
Fair value adjustment P&L impact | (1,221) | 457 | - | - | - | -
Inventory consolidation P&L impact | 456 | (573) | - | - | - | -
Impairment | (14,115) | - | - | - | - | -
Group's share of profit/(loss) for the year after consolidation | (25,092) | 5,361 | (7,700) | (6,924) | 307 | 2,987

Associates

Pearl Petroleum Company Limited

MOL Group owns 10% stake in Pearl Petroleum Company Limited (Pearl) which holds all of the companies’ legal rights in Khor Mor and Chemchemal gas-condensate fields in the Kurdistan Region of Iraq. Since the agreement between the shareholders grants MOL Group a significant influence on Pearl’s operations, the company is treated as an associated company and is consolidated using the equity method accordingly. On Pearl investment an impairment of HUF 14,422 million was recognised after a conservative assessment of Khor Mor reserves.

Dividend received in 2022 is HUF 16,712 million.

Ural Group Limited

MOL Group has 27.5% of shareholding interest in Ural Group Limited through MOL (FED) Kazakhstan B.V., a holding company. Ural Group Limited is 100% owner of Ural Oil and Gas LLP having license of exploring Fedorovsky block in Kazakhstan. MOL Group has significant influence over the relevant activities of Ural Group Limited therefore the investment is classified as an associate.

Meroco

The Group has 25% ownership in Meroco a.s., a biodiesel producer company located in Slovakia. The biodiesel produced in the company is mixed with diesel fuel, which helps to reduce the dependence on oil imports, since a part of demand for fuel is covered by domestically produced biofuel. Biodiesel is a renewable source of energy that can be counted on in the future, since it is practically inexhaustible.

Dividend received in 2022 is HUF 916 million.

|  | Consolidated Financial Statements 2022 | 30

Below tables include the most relevant associates for the Group based on materiality.

| Pearl Petroleum Ltd. | Ural Group Limited | Meroco a.s.
| 2022 | 2021 Restated | 2022 | 2021 Restated | 2022 | 2021
| HUF million | HUF million | HUF million | HUF million | HUF million | HUF million
The associate’s statement of financial position: |  |  |  |  |  |
Non-current assets | 900,495 | 720,561 | 86,673 | 81,947 | 5,420 | 4,962
Current assets | 192,290 | 115,526 | 2,676 | 1,668 | 25,290 | 31,359
Non-current liabilities | 192,616 | 133,628 | 204,662 | 172,115 | 71 | 11
Current liabilities | 78,706 | 37,108 | 11,176 | 9,096 | 18,732 | 22,274
Net assets | 821,463 | 665,351 | (126,489) | (97,596) | 11,907 | 14,036
Proportion of the Group's ownership at year end | 10.0% | 10% | 27.5% | 27.5% | 25.0% | 25.0%
Group's share of assets | 82,146 | 66,535 | (34,784) | (26,839) | 2,977 | 3,509
Goodwill | 106,008 | 91,908 | - | - | - | -
Accumulated impairment | (14,421) | (489) | - | - | - | -
Impaired from given loan | - | - | 34,784 | 26,839 | - | -
Carrying amount of the investment | 173,733 | 157,954 | 0 | - | 2,977 | 3,509
The associate’s statement of profit or loss: |  |  |  |  |  |
Net revenue | 276,704 | 162,236 | 122 | - | 94,556 | 70,305
Profit/(loss) from operations | 211,474 | 110,940 | (2,992) | 18,947 | 165 | 9,723
Net income attributable to equity holders | 219,377 | 114,995 | (14,686) | 23,702 | 181 | 7,605
Group's share of reported profit/(loss) for the year | 21,938 | 11,500 | (4,039) | 6,518 | 45 | 1,901
Movements on impairment | (13,760) | (442) | - | 451 | - | -
Group's share of consolidated profit/(loss) for the year | 8,178 | 11,058 | (4,039) | 6,969 | 45 | 1,901

7. Income taxes

Accounting policies

Income tax is recognised in the statement of profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity, in which case the related tax is recognised in other comprehensive income or directly in equity.

The current income tax is based on taxable profit for the year. Taxable profit differs from accounting profit because of temporary differences between accounting and tax treatments and due to items that are never taxable or deductible or are taxable or deductible in other years. Full provision for deferred tax is made on the temporary differences between the carrying value of assets and liabilities for financial reporting purposes and their value for tax purposes using the balance sheet liability method. Deferred tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting year and are expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

Deferred tax assets are recognised where it is more likely than not that the assets will be realised in the future. At each balance sheet date, the Company re-assesses unrecognised deferred tax assets and the carrying amount of deferred tax assets. No deferred tax liability is provided in respect of any future remittance of earnings of foreign subsidiaries where the Group is able to control the remittance of earnings and it is probable that such earnings will not be remitted in the foreseeable future, or where no liability would arise on the remittance.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities which relate to income taxes imposed by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

Significant accounting estimates and judgements

Corporate tax is required to be estimated in each tax jurisdiction in which MOL Group operates. The recognition of tax benefits requires management judgement. Tax provisions are based on management’s judgement and interpretation of country specific tax law and the likelihood of settlement. The actual tax liability may differ from the provision and adjustment in subsequent period could have a material effect on the Group’s profit for the year.

MOL Group makes judgements in assessing the likelihood of potentially material exposures and develops estimates to determine provisions where required and considers whether contingent liability disclosures should be made.

The evaluation of deferred tax assets recoverability requires judgements regarding the likely timing and the availability of future taxable income. Deferred tax asset recoverability and any related judgement are based on the Group’s business plans.

a) Analysis of taxation charge for the year

Total applicable income taxes reported in the consolidated financial statements for the years ended 31 December 2022 and 31 December 2021 include the following components:

|  | Consolidated Financial Statements 2022 | 31

| 2022 | 2021
| Restated
| HUF million | HUF million
Current corporate income tax and industry taxes | 208,909 | 54,674
Extra profit tax | 201,813 | -
Local trade tax and innovation fee | 29,481 | 21,144
Deferred taxes | 26,140 | (28,882)
Income tax expense attributable to profit from continuing operation | 466,343 | 46,936
Income tax expense attributable to profit from discontinued operation | 2,114 | (5,234)
Total income tax expense | 468,457 | 41,702

b) Current income taxes

The Group’s current income taxes are determined on the basis of taxable statutory profit of the individual companies of the Group. Group taxation is applied in jurisdictions where local legislation includes such provisions.

Industry taxes include tax on energy supply activities in Hungary with an effective tax rate of 18% (2021: 18%) on taxable statutory profit of MOL Plc. Industry taxes also include tax on oil and gas companies in Norway where tax rates consist of corporate income tax of 22% (2021: 22%) and special petroleum tax of 56% (2021: 56%) both payable on net operating profits derived from extractive activities. Upstream companies in Norway are refunded for the tax loss of exploration activities incurred for the year.

Local trade tax represents an income-based tax for Hungarian entities, payable to local municipalities. Tax base is calculated by deducting material costs, cost of goods sold and remediated services from sales revenue. Tax rates vary between 0-2% dependent on the regulation of local municipalities where the entities carry on business activities.

In 2021, deferred tax benefit was driven by the industry income tax law modification in Hungary, which introduced the future usability of losses carried forward in the industry income tax. The impact of the change in tax law had a HUF 25,565 million decrease in deferred tax at MOL Plc. in the first half of 2021.

Extra profit taxes introduced in Hungary are out of the scope of IAS 12 Income taxes standard, for further information see page 10.

Extra profit tax refers to the Solidarity contribution (see page 11) based on EU regulation or enacted equivalent national measures.

In the statement of profit or loss the extra profit tax is recorded in other operating expenses, the solidarity contribution is recorded as income tax expense.

Change in tax rates

The following changes in corporate income tax rates effective from 1 January 2022 are taken into account:

a) change in the Netherlands to 25.8% (2021: 25%)

c) Deferred tax assets and liabilities

The deferred tax balances as of 31 December 2022 and 31 December 2021 in the consolidated statement of financial position consist of the following items by categories:

| 31 Dec 2022 | 31 Dec 2021 Restated | 1 Jan 2021 Restated
| HUF million | HUF million | HUF million
Property, plant and equipment and intangible assets | (90,259) | (167,191) | (171,093)
Statutory tax losses carried forward | 12,042 | 66,343 | 65,114
Provisions | 102,457 | 92,492 | 65,729
Elimination of intragroup transactions | 15,719 | 18,459 | 15,598
Other temporary differences (1) | (58,542) | 37,836 | 37,450
Net deferred tax (liability)/asset | (18,583) | 47,939 | 12,798
of which: |  |  |
Total deferred tax assets | 109,899 | 170,318 | 143,499
Total deferred tax liabilities | (128,482) | (122,379) | (130,701)
(1) Deferred tax on other temporary differences includes items such as receivables write-off, inventory valuation differences, valuation of financial instruments and foreign exchange differences. |

As of 31 December 2022, deferred tax assets of HUF 109,899 million consist of deferred tax on tax losses carried forward of HUF 8,188 million at MOL Plc. Besides, the amount of HUF 54,937 million at MOL Plc. and HUF 11,476 million at INA Group relates to timing differences of provisions. Additionally, the amount of HUF 31,349 million at INA Group relates to temporary differences on intangible and tangible assets.

|  | Consolidated Financial Statements 2022 | 32

As of 31 December 2022, deferred tax liabilities of HUF 128,482 million include temporary differences on intangible and tangible assets at MOL Azerbaijan Ltd. (HUF 54,181 million), Slovnaft a.s. (HUF 42,745 million) and FGSZ Zrt. (HUF 16,817 million). In the case of Slovnaft a.s. deferred tax assets and liabilities are offset, decreasing the deferred tax liability by HUF 19,152 million arising mainly from differences in provisions and tax losses carried forward. Besides, amount of HUF 11,258 million at MOL Petrochemicals Zrt. relates to establishment of development reserves.

Analysis of movements during the year in the net deferred tax liability:

| 2022 | 2021 Restated
| HUF million | HUF million
Net deferred tax asset as at 1 January | 47,939 | 18,483
Acquisition of business | (8,321) | 299
Recognised in statement of profit or loss from continuing operation | (26,140) | 28,882
Recognised in statement of profit or loss from discontinued operation | (2,114) | 5,234
Recognised directly in equity (as other comprehensive income) | 11,540 | 260
Exchange difference | (7,175) | (5,219)
Sale of business | (30,901) | -
Other | (3,411) | -
Net deferred tax (liability)/asset at 31 December | (18,583) | 47,939

The amount recognised in the statement of profit or loss as an expense is mainly driven by changes related to MOL Plc. (HUF 43,121 million expense) and MOL Azerbaijan Ltd. (HUF 18,122 million income).

The amount recognised as sale of business related to deferred tax assets which have been derecognised due to the sale of UK portfolio.

Change in tax rates

The following change in industry tax rates effective from 1 January 2023 to 31 December 2023 is taken into account in deferred tax calculation only for those temporary differences that are expected to reverse within this time of period:

a) change in Hungary to 41% (2022: 31%)

The following change in corporate income tax rates effective from 1 January 2023 is taken into account in deferred tax calculation:

a) change in Austria to 24% (2022: 25%)

Enacted and substantively enacted changes in tax rates are considered when calculating deferred tax assets and liabilities.

d) Reconciliation of taxation rate

A numerical reconciliation between tax expense and the product of accounting profit multiplied by the applicable tax rates is as follows:

| 2022 | 2021 Restated
| HUF million | HUF million
Profit before tax per consolidated statement of profit or loss from continuing operation | 1,155,294 | 554,618
Profit before tax per consolidated statement of profit or loss from discontinued operation | 225,410 | 37,220
Profit before tax per consolidated statement of profit or loss | 1,380,704 | 591,838
Less: share of profit of joint ventures and associates | 29,486 | (21,515)
Income before taxation and share of profit of joint ventures and associates | 1,410,190 | 570,323
Tax expense at the applicable tax rate (9%) | 126,917 | 51,329
Change in recognition of prior year tax losses carried forward | 1,154 | (38,530)
Current year losses not recognised as deferred tax asset | (6,364) | 4,234
Differences in tax rates at subsidiaries | 80,886 | 11,608
Other tax expenses (local trade tax, extra profit tax, industry tax) | 256,407 | 20,808
Non-taxable income | (1,997) | (9,520)
Tax allowance available | (110) | (1,966)
Permanent differences (tax value - IFRS value) | 11,571 | 3,246
Effect of tax audits | (7) | 493
Total income tax expense for the year | 468,457 | 41,702
Income tax expense reported in the statement of profit or loss | 466,343 | 46,936
Income tax attributable to discontinued operation | 2,114 | (5,234)
Effective tax rate | 34% | 7%

|  | Consolidated Financial Statements 2022 | 33

The table above provides a reconciliation of the Hungarian corporate tax charge to the actual consolidated tax charge. As the Group is operating in multiple countries, the actual tax rates applicable to profits in those countries are different from the Hungarian tax rate. The impact is shown in the table above as differences in tax rates.

e) Income tax recognised in other comprehensive income

The amount of income tax relating to each component of other comprehensive income:

| 2022 | 2021 Restated
| HUF million | HUF million
Net gain/(loss) on hedge of a net investment | 12,707 | 1,079
Revaluations of debt instruments at fair value through other comprehensive income | 1,192 | 52
Revaluations of equity instruments at fair value through other comprehensive income | (2,072) | (692)
Revaluations of financial instruments treated as cash flow hedges | (47) | (98)
Equity recorded for actuarial gain/(loss) on provision for retirement benefit obligation | (240) | (81)
Total income tax recognised in other comprehensive income | 11,540 | 260

f) Unrecognised deferred tax assets

The following deferred tax assets have not been recognised in respect of tax losses and other temporary differences in the Group due to losses in companies whose ability to generate profits is uncertain:

| 31 Dec 2022 | 31 Dec 2021
| HUF million | HUF million
Tax losses - indefinite expiry | 45,018 | 100,077
Tax losses - expiry within 5 years | 59,148 | 30,888
Tax losses - expiry after 5 years | 92 | 260
Other temporary differences | 2,204 | 67,570
Total unrecognised deferred tax asset | 106,462 | 198,795

Unrecognised deferred tax assets decreased significantly due to the divestment of the UK portfolio.

g) Uncertain tax positions

MOL Group entities are subject to periodic tax authority reviews in the normal course of business. In common with all oil and gas companies, taxation is particularly challenging because of industry specific taxes, duties and levies. MOL Group makes judgements in assessing the likelihood of potentially material exposures and develops estimates to determine provisions where required and considers whether contingent liability disclosures should be made. The impact of a more aggressive tax stance by tax authorities to deal with the current energy crisis and changes in local tax regulations could materially impact the tax exposures. The maximum theoretical potential exposure of uncertain tax liabilities is EUR 410 million which is presented among income tax liabilities in the statement of financial position.

8. Components of other comprehensive income

Exchange differences on translating foreign operations

Accounting policies

The difference on translating consolidated foreign operations which functional currency is different from the presentation currency of the Group are recognised in other comprehensive income and cumulated in a separate component of equity until disposal or liquidation of the foreign operation when they become part of the gain or loss on disposal. These exchange differences are not recognised in profit or loss because the changes in exchange rates have little or no direct effect on the present and future cash flows from operations. When a subsidiary that is a foreign operation repays a quasi-equity loan or returns share capital there is a reduction in the parent’s absolute ownership interest, the pro rata share of the CTA should be reclassified to profit and loss.

| 2022 | 2021
|  | Restated
| HUF million | HUF million
Gains/(losses) arising during the year | 265,500 | 74,994
Recycling reserves from OCI to profit or loss due to disposal | (25,822) | (1,869)
Exchange differences on translating continuing foreign operations, net of tax | 239,678 | 73,125
Gains/(losses) arising during the year on discontinued operations | (11,148) | (3,616)
Exchange differences on translating discontinued foreign operations, net of tax | (11,148) | (3,616)

|  | Consolidated Financial Statements 2022 | 34

Translation reserve has increased significantly compared to the previous year due to large fluctuations in exchange rates.

Net investment hedge

Accounting policies

Exchange differences on translating foreign operations are recognised in other comprehensive income and may be designated as hedged items in net investment hedge. The foreign exchange gains or losses on the debts designated as hedging instruments are transferred from finance result to other comprehensive income, until the foreign operation is disposed of or liquidated, when such gains or losses become part of the gain or loss on disposal.

| 2022 | 2021
| HUF million | HUF million
Gains/(losses) arising during the year | (47,475) | (4,042)
Income tax effect | 12,707 | 1,079
Net investment hedge, net of tax | (34,768) | (2,963)

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

Accounting policies

Debt instruments which are held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets are measured at fair value through other comprehensive income. When the asset is derecognised or reclassified, changes in fair value previously recognised in other comprehensive income and accumulated in equity are reclassified to profit and loss.

| 2022 | 2021
| HUF million | HUF million
Gains/(losses) arising during the year | (4,522) | (218)
Income tax effect | 1,192 | 52
Changes in fair value of debt instruments at fair value through other comprehensive income, net of tax | (3,330) | (166)

Changes in fair value of equity instruments at fair value through other comprehensive income

Accounting policies

If an equity investment is not held for trading, an irrevocable election can be made at initial recognition to measure it at fair value through other comprehensive income. When the asset is derecognised changes in fair value previously recognised in other comprehensive income and accumulated in equity remain in other comprehensive income.

| 2022 | 2021
|  | Restated
| HUF million | HUF million
Gains/(losses) arising during the year | (2,409) | 18,428
Income tax effect | (2,072) | (692)
Changes in fair value of equity instruments at fair value through other comprehensive income, net of tax | (4,481) | 17,736

Changes in fair value of cash flow hedges

Accounting policies

Cash flow hedges are hedges of the exposure to variability in cash flows that is attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction that could affect the statement of profit or loss. The effective portion of the gain or loss on the hedging instrument is recognised directly as other comprehensive income.

| 2022 | 2021
| HUF million | HUF million
Gains/(losses) arising during the year | 574 | 1,092
Income tax effect | (47) | (98)
Changes in fair value of cash flow hedges, net of tax | 527 | 994

|  | Consolidated Financial Statements 2022 | 35

Remeasurement of post-employment benefit obligations

Accounting policies

The effects of differences between the previous actuarial assumptions and what has actually occurred and the effects of changes in actuarial assumptions in the model used for determining provision for post-employment benefit obligations, called actuarial gains and losses, are recognised in the other comprehensive income immediately. The recognised amount is not reclassified to profit or loss in subsequent periods.

| 2022 | 2021
| HUF million | HUF million
Gains/(losses) arising during the year | 1,965 | (635)
Income tax effect | (240) | (81)
Remeasurement of post-employment benefit obligations | 1,725 | (716)

Share of other comprehensive income of associates and joint ventures

Accounting policies

The other comprehensive income includes the Group’s share of the associates and joint ventures’ other comprehensive income. When the associate or joint ventures are disposed of or their consolidation with equity method is discontinued all amounts in other comprehensive income in relation to that investment is derecognised.

| 2022 | 2021
|  | Restated
| HUF million | HUF million
Gains/(losses) arising during the year | 18,715 | 10,200
Share of other comprehensive income of associates and joint ventures | 18,715 | 10,200

|  | Consolidated Financial Statements 2022 | 36

Non-financial assets and liabilities

This section describes those non-financial assets that are used, and liabilities incurred to generate the Group’s performance. This section also provides detailed disclosures on the significant exploration and evaluation related matters as well as the Group’s recent acquisitions and disposals.

9. Property, plant and equipment, investment property and intangible assets

a) Property, plant and equipment

Accounting policies

Property, plant and equipment are stated at cost less accumulated depreciation, depletion and accumulated impairment loss. For investment properties, the cost model is applied by MOL Group.

The initial cost of property, plant and equipment comprises its purchase price, including import duties and non-refundable purchase taxes and any directly attributable costs of bringing the asset to its working condition and location for its intended use, such as borrowing costs. Estimated field abandonment and site restoration costs are capitalised upon initial recognition or subsequently, when there is a direct or indirect legal obligation and/or constructive obligation to do so. Expenditures incurred after the property, plant and equipment have been put into operation are charged to statement of profit or loss in the period in which the costs are incurred, except for periodic maintenance costs which are capitalised as a separate component of the related assets.

Construction in progress represents plant and properties under construction and is stated at cost without being depreciated. Construction in progress is reviewed for impairment annually.

| Land and buildings | Machinery and equipment | Other machinery and equipment | Construction in progress | Total
| HUF million | HUF million | HUF million | HUF million | HUF million
At 1 Jan 2021 |  |  |  |  |
Gross book value - Restated | 5,010,989 | 3,316,839 | 332,687 | 650,347 | 9,310,862
Accumulated depreciation and impairment - Restated | (3,254,255) | (2,577,811) | (224,963) | (17,147) | (6,074,176)
Net book value - Restated | 1,756,734 | 739,028 | 107,724 | 633,200 | 3,236,686
From this net value of assets held for sale | (1,463) | - | - | - | (1,463)
|  |  |  |  | 3,235,223
Net book value - at 1 Jan 2021 | 1,756,734 | 739,028 | 107,724 | 633,200 | 3,236,686
Additions and capitalisations | 219,694 | 119,424 | 35,996 | 171,822 | 546,936
Acquisition of subsidiaries | 5,113 | 1,886 | 206 | 9 | 7,214
Depreciation for the year - Restated | (233,351) | (160,739) | (28,986) | - | (423,076)
Impairment - Restated | (11,404) | (11,371) | (222) | (7,500) | (30,497)
Reversal of impairment | 521 | 228 | 21 | 13 | 783
Disposals | (1,232) | (664) | (897) | (46) | (2,839)
Disposal of subsidiaries | - | - | (3) | - | (3)
Exchange differences - Restated | 45,824 | 10,246 | 665 | 8,467 | 65,202
Transfers and other movements - Restated | (8,752) | 4,068 | 430 | (2,049) | (6,303)
Closing net book value - Restated | 1,773,147 | 702,106 | 114,934 | 803,916 | 3,394,103
At 31 Dec 2021 |  |  |  |  |
Gross book value - Restated | 5,133,893 | 3,705,167 | 366,265 | 820,976 | 10,026,301
Accumulated depreciation and impairment - Restated | (3,360,746) | (3,003,061) | (251,331) | (17,060) | (6,632,198)
Net book value - Restated | 1,773,147 | 702,106 | 114,934 | 803,916 | 3,394,103
From this net value of assets held for sale | (12,636) | (1,720) | (880) | - | (15,236)
|  |  |  |  | 3,378,867
Net book value - at 1 Jan 2022 - Restated | 1,773,147 | 702,106 | 114,934 | 803,916 | 3,394,103
Additions and capitalisations | 212,272 | 210,023 | 78,889 | 60,374 | 561,558
Acquisition of subsidiaries | 135,740 | 15,038 | 41,266 | 3,570 | 195,614
Depreciation for the year | (265,939) | (149,686) | (32,437) | - | (448,062)
Impairment | (35,208) | (5,217) | (170) | (10,954) | (51,549)
Reversal of impairment | 45,387 | 25,642 | 67 | - | 71,096
Disposals | (4,721) | (367) | (1,570) | (144) | (6,802)
Disposal of subsidiaries | (136) | (59,379) | (11) | (3) | (59,529)
Exchange differences | 129,920 | 39,668 | 3,738 | 25,528 | 198,854
Transfers and other movements | 2,760 | (15,700) | 6,529 | (3,297) | (9,708)
Closing net book value | 1,993,222 | 762,128 | 211,235 | 878,990 | 3,845,575

|  | Consolidated Financial Statements 2022 | 37

At 31 Dec 2022 |  |  |  |  |
Gross book value | 5,802,963 | 3,574,108 | 498,171 | 898,922 | 10,774,164
Accumulated depreciation and impairment | (3,809,741) | (2,811,980) | (286,936) | (19,932) | (6,928,589)
Net book value | 1,993,222 | 762,128 | 211,235 | 878,990 | 3,845,575
From this net value of assets held for sale | (22,659) | (2,565) | (975) | (1,497) | (27,696)
|  |  |  |  | 3,817,879

Disposal of subsidiaries mainly contains the disposal of the UK portfolio.

Leased assets

Accounting policies

The Group recognises the right-of-use assets and lease liabilities for most leases.

The Group measures the right-of-use asset at cost, less accumulated depreciation and any accumulated impairment losses. Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease term. The lease liability is initially measured at the present value of the lease payments payable over the lease term, discounted at the rate implicit in the lease if that can be readily determined, otherwise the Group as lessee applies incremental borrowing rate. The lease liability is measured subsequently using the effective interest rate method.

The Group has elected not to recognise right-of-use assets and lease liabilities for some leases of low-value assets and short-term leases. Low-value assets mainly comprise those assets which value, when new, do not exceed USD 5,000. Short-term leases are leases with a lease term of 12 months or less. The Group recognises the lease payments associated with these leases as expense on a straight-line basis over the lease term.

The Group presents right-of-use assets from leases in ‘Property, plant and equipment’, the same line item as it presents underlying assets of the same nature that it owns.

Significant accounting estimates and judgements

The Group has applied judgement to determine the lease term for some lease contracts that include renewal or termination options. The assessment of whether the Group is reasonably certain to exercise such options impacts the lease term, which significantly affects the amount of lease liabilities and leased assets recognised.

| Rights | Land and building and related rights | Machinery and equipment | Other machinery and equipment | Total
| HUF million | HUF million | HUF million | HUF million | HUF million
At 31 Dec 2021 |  |  |  |  |
Net book value of leased assets | 28 | 80,448 | 20,574 | 30,701 | 131,751
Period ended 31 Dec 2022 |  |  |  |  |
Additions and capitalisations | 1 | 62,439 | 15,722 | 7,753 | 85,915
Depreciation for the period | (6) | (11,058) | (6,113) | (12,389) | (29,566)
Impairment, termination | (23) | (29) | (2,790) | (165) | (3,007)
Disposal of subsidiaries |  | (88) |  | (5,912) | (6,000)
Closing net book value | 0 | 131,712 | 27,393 | 19,988 | 179,093

The leased assets include land and building related leases (office, land etc), machinery leases that are connected to assets used in the production (e.g. railway wagons), vehicle leases and other office equipment related leases.

MOL Group has presented lease liabilities within loans and borrowings, please refer to Note 20/c.

Borrowing costs

Accounting policies

Borrowing costs (including interest charges and other costs incurred in connection with the borrowing of funds, including exchange differences arising from foreign currency borrowings) directly attributable to the acquisition, construction or production of qualified assets are capitalised until these assets are substantially ready for their intended use or sale. All other costs of borrowing are expensed in the period in which they are incurred.

Property, plant and equipment include borrowing costs incurred in connection with the construction of qualifying assets. Additions to the gross book value of property, plant and equipment include borrowing costs of HUF 16,314 million in 2022 (2021: HUF 9,503 million). In 2022 the applicable capitalisation rate (including the impact of foreign exchange differences) has been 5.16% (2021: 2.3%).

Government grants

Accounting policies

Government grants are recognised at their fair value where there is reasonable assurance that the grant will be received, and all attaching conditions will be complied with. Where the grant relates to an asset, the fair value is credited to a deferred income account and is released to the statement of profit or loss over the expected useful life of the relevant asset. Grant relates to interest expense deducted in reporting the related expense and the borrowings also netted with the deferred income.

|  | Consolidated Financial Statements 2022 | 38

In 2022 property, plant and equipment includes assets with a value of HUF 25,146 million (2021: HUF 19,788 million) financed from government grants. The total amount reflects mainly the government grant received for the construction of the new polyol plant in MOL Petrochemicals which is HUF 11,683 million as of 31 December 2022 (31 December 2021: HUF 10,536 million). Further significant amounts are the assets of FGSZ Zrt. partly financed via a European Union grant for the construction of the Hungarian-Romanian and the Hungarian-Croatian natural gas interconnector and transformation of nodes, and the assets of Slovnaft a.s. financed by the grant received from Slovakian government in order to serve State Authorities in case of state emergencies.

| 2022 | 2021
| HUF million | HUF million
At 1 January | 19,788 | 19,637
Asset related government grants received | 7,296 | 1,479
Release of deferred grants | (2,265) | (1,370)
Foreign exchange differences | 327 | 42
At 31 December 2022 (see Note 17 and 18) | 25,146 | 19,788

Non-current assets pledged as security

The carrying amount of non-currents assets pledged as security for liabilities is HUF 24,207 million as of 31 December 2022 (2021: HUF 14,288 million) which relates to the MOL Fleet Solution Flottakezelő Kft.

b) Investment property

Accounting policies

Investment property is a property (land or a building or part of a building or both) held to earn rentals or for capital appreciation or both, rather than for:

- use in the production or supply of goods or services or for administrative purposes, or

- sale in the ordinary course of business.

For investment properties, the cost model is applied by MOL Group. Transfer to, or from, investment property shall be examined when there is an evident change in use.

Investment properties include real estates held by MOL Group to earn rental income from long-term operating leases. Investment properties are initially measured at cost and the Group applies the cost model for the subsequent measurement of these assets. The Group accounts for depreciation assuming 20 years useful life and applies the straight-line method for measuring depreciation.

The amount recognised in the consolidated statement of profit or loss for 2022 for investment property is HUF 57 million operating expense and HUF 613 million HUF rental income.

The following table provides a reconciliation of the carrying amount of investment property at the beginning and end of the period:

| 2022
| HUF million
Opening gross carrying amount (restated) | 25,960
Opening accumulated depreciation (restated) | (19,097)
Opening carrying amount (restated) | 6,863
Addition from acquisitions | 30
Amortisation additions | (494)
Transfer to / from tangible fixed assets (net value) | 2,562
Other changes (net value) | 498
Closing gross carrying amount | 30,868
Closing accumulated depreciation | (21,409)
Closing carrying amount | 9,459

The fair value of investment property is HUF 39,572 million as of 31 December 2022. The valuation was performed by the Group's own valuation experts.

There are no contractual obligations to purchase, construct, or develop or for repairs, maintenance or enhancements of the Group’s investment property and there are no restrictions on the realisability of it as of 31 December 2022.

c) Intangible assets

Accounting policies

An intangible asset is recognised initially at cost. For intangible assets acquired in a business combination, the cost is the fair value at the acquisition date.

Following initial recognition, intangible assets, other than goodwill are stated at the amount initially recognised, less accumulated amortisation and accumulated impairment losses.

Intangible assets, excluding development costs, created within the business are not capitalised.

|  | Consolidated Financial Statements 2022 | 39

Development costs are capitalised if the recognition criteria according to IAS 38 are fulfilled. Costs in development stage can be not amortised. The carrying value of development costs is reviewed for impairment annually when the asset is not yet in use or more frequently when an indicator of impairment arises during the reporting year indicating that the carrying value may not be recoverable.

Free granted quotas are not recorded in the financial statements, while purchased quotas are initially recorded as intangible assets at cost less impairment, if any, taking into consideration the residual value. The quotas recognised are not amortised if the residual value is at least equal to carrying value.

| Rights | Software and other intellectual property | Exploration and evaluation assets | Goodwill | Total
| HUF million | HUF million | HUF million | HUF million | HUF million
At 1 Jan 2021 |  |  |  |  |
Gross book value | 205,386 | 91,495 | 264,812 | 218,043 | 779,736
Accumulated amortisation and impairment | (136,909) | (55,114) | (126,617) | (63,225) | (381,865)
Net book value | 68,477 | 36,381 | 138,195 | 154,818 | 397,871
From this net value of assets held for sale | - | - | - | - | -
|  |  |  |  | 397,871
Net book value - at 1 Jan 2021 | 68,477 | 36,381 | 138,195 | 154,818 | 397,871
Additions | 82,064 | 12,703 | 12,684 | - | 107,451
Acquisition of subsidiary | 27 | - | - | - | 27
Amortisation for the year | (9,137) | (6,166) | 5,586 | - | (9,717)
Impairment | (3,034) | (168) | (46,445) | (1,479) | (51,126)
Reversal of impairment | - | - | - | - | -
Disposals | (28,339) | - | - | - | (28,339)
Revaluation of emission quotas | (374) | - | - | - | (374)
Disposal of subsidiaries | - | - | - | - | -
Exchange differences | 4,485 | 104 | 9,382 | 12,898 | 26,869
Transfers and other movements | 10,825 | (6,749) | (7,945) | (3) | (3,872)
Closing net book value | 124,994 | 36,105 | 111,457 | 166,234 | 438,790
At 31 Dec 2021 |  |  |  |  |
Gross book value | 272,015 | 96,775 | 272,263 | 231,621 | 872,674
Accumulated amortisation and impairment | (147,021) | (60,670) | (160,806) | (65,387) | (433,884)
Net book value | 124,994 | 36,105 | 111,457 | 166,234 | 438,790
From this net value of assets held for sale | - | - | (465) | (486) | (951)
|  |  |  |  | 437,839
Net book value - at 1 Jan 2022 | 124,994 | 36,105 | 111,457 | 166,234 | 438,790
Additions | 88,482 | 15,644 | 13,375 | 301 | 117,802
Acquisition of subsidiary | 14,286 | 1 | - | 37,743 | 52,030
Amortisation for the year | (12,127) | (7,690) | (523) | - | (20,340)
Impairment | (1,175) | (69) | (12,191) | - | (13,435)
Reversal of impairment | 3 | - | 4,554 | - | 4,557
Disposals | (59,424) | (4) | (503) | - | (59,931)
Disposal of subsidiaries | - | (5) | - | - | (5)
Exchange differences | (5,219) | 800 | 15,194 | 21,022 | 31,797
Transfers and other movements | 10,664 | (9,211) | 360 | - | 1,813
Closing net book value | 160,484 | 35,571 | 131,723 | 225,300 | 553,078
At 31 Dec 2022 |  |  |  |  |
Gross book value | 320,839 | 106,734 | 280,794 | 293,661 | 1,002,028
Accumulated amortisation and impairment | (160,355) | (71,163) | (149,071) | (68,361) | (448,950)
Net book value | 160,484 | 35,571 | 131,723 | 225,300 | 553,078
From this net value of assets held for sale | - | (4) | - | (486) | (490)
|  |  |  |  | 552,588

|  | Consolidated Financial Statements 2022 | 40

Goodwill

Accounting policies

Goodwill acquired in a business combination is initially measured at difference between the consideration transferred and the Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities.

Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash generating units, or groups of cash generating units, that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those units or groups of units.

Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating units (CGUs) that are expected to benefit from that business combination. Before recognition of impairment losses, the carrying amount of goodwill has been allocated as follows:

Goodwill (net book value) | 31 Dec 2022 | 31 Dec 2021
HUF million | HUF million
Upstream | 130,907 | 113,495
ACG field | 130,907 | 113,495
Consumer services | 80,237 | 39,888
Polish retail network (please refer to note 10) | 29,028 | -
Croatian retail network | 19,759 | 18,267
Czech retail network | 9,780 | 8,753
Hungarian retail network | 7,972 | 7,972
Slovak network (please refer to note 10) | 8,387 | -
Romanian retail network | 5,311 | 4,896
Downstream | 12,362 | 11,434
Austrian wholesale and logistic | 10,186 | 9,390
German plastic compounder | 1,699 | 1,567
MOL Petrochemicals | 477 | 477
Corporate | 1,308 | 931
Croatian oil field services | 1,007 | 931
Other production facilities | 301 | -
Total goodwill | 224,814 | 165,748

Oil and natural gas exploration and development expenditures

Accounting policies

Oil and natural gas exploration and development expenditure is accounted for using the Successful Efforts method of accounting.

License and property acquisition costs

Costs of exploration and property rights are capitalised as intangible assets and amortised on a straight-line basis over the estimated period of exploration. Each property is reviewed on an annual basis to confirm that drilling activity is planned, and it is not impaired. If no future activity is planned, the remaining balance of the licence and property acquisition costs is written off. Upon recognition of proved reserves (‘proved reserves’ or ‘commercial reserves’) and internal approval for development, the relevant expenditure is transferred to property, plant and equipment.

Exploration expenditure

Geological and geophysical exploration costs are charged against income statement as incurred. Costs directly associated with an exploration well are capitalised as an intangible asset until the drilling of the well is complete and the results have been evaluated. These costs include employee remuneration, materials and fuel used, rig costs, delay rentals and payments made to contractors. If hydrocarbons are not found, the exploration expenditure is written off as a dry-hole. If hydrocarbons are found and, subject to further appraisal activity, which may include the drilling of further wells (exploration or exploratory-type stratigraphic test wells), are likely to be capable of commercial development, the costs continue to be carried as an asset. All such carried costs are subject to technical, commercial and management review at least once a year to confirm the continued intent to develop or otherwise extract value from the discovery. When this is no longer the case, the costs are written off. When proved reserves of oil and natural gas are determined and development is sanctioned, the relevant expenditure is transferred to property, plant and equipment.

Development expenditure

Expenditure on the construction, installation or completion of infrastructure facilities such as platforms and the drilling of development wells, including unsuccessful development or delineation wells, is capitalised within property, plant and equipment.

|  | Consolidated Financial Statements 2022 | 41

Significant accounting estimates and judgements

Application of Successful Efforts method of accounting for exploration and evaluation assets

Management uses judgement when capitalised exploration and evaluation assets are reviewed to determine capability and continuing intent of further development.

Exploration and evaluation assets

Transfers from exploration and evaluation assets represent expenditures which, upon determination of proved reserves of oil and natural gas are reclassified to property, plant and equipment.

Within exploration and evaluation assets, exploration expenses incurred in 2022 is HUF 3,175 million (2021: HUF 5,449 million), which were not eligible for capitalisation. Consistent with the Successful Efforts method of accounting they were charged to various operating cost captions of the consolidated statement of profit or loss as incurred.

Other research and development costs are less significant compared to exploration expenses. These research and development costs are HUF 991 million in 2022 (2021: HUF 792 million).

Write-offs of dry-holes

Dry-holes | 2022 | 2021
HUF million | HUF million
Norway | 153 | 35,982
Hungary | 14 | 3,196
Croatia | 1,493 | 5,512
Pakistan | 11,329 | 894
Romania | - | -
Total | 12,989 | 45,584

Exploration Surghar-1 well, Tarnol well and DG Khan 1 well located in Pakistan were drilled in 2022. These wells did not achieve the objectives and have been classified as dry.

d) Depreciation, depletion and amortisation

Accounting policies

Depreciation of assets begin when the relevant asset is available for use. Depreciation of each component of an intangible asset, property, plant and equipment and investment property, except for given Upstream assets, is computed on a straight-line basis over their respective useful lives. Usual periods of useful lives for different types of assets are as follows:

• Software: 3 – 5 years

• Buildings: 10 – 50 years

• Refineries and chemicals manufacturing plants: 4 –12 years

• Gas and oil storage and transmission equipment: 7 – 50 years

• Petrol service stations: 5 – 30 years

• Telecommunication and automatization equipment: 3 – 10 years

In Upstream segment depletion and depreciation of production installations and transport systems for oil and gas is calculated for each individual field or field-dedicated transport system using the unit of production method, based on proved and developed commercially recoverable reserves. Recoverable reserves are reviewed on an annual basis prospectively. Transport systems used by several fields and other assets are calculated on the basis of the expected useful life, using the straight-line method. Amortisation of leasehold improvements is provided using the straight-line method over the term of the respective lease or the useful life of the asset, whichever period is less. Periodic maintenance costs are depreciated until the next similar maintenance takes place.

The useful lives of intangible assets are assessed to be either finite or indefinite. Amortisation is charged on assets with a finite useful life over the best estimate of their useful lives using the straight-line method.

The useful life and depreciation methods are reviewed at least annually.

Significant accounting estimates and judgements

The determination of the Group’s estimated oil and natural gas reserves requires significant judgements and estimates to be applied and these are yearly reviewed and updated. Numerous factors have an impact on determination of the Group’s estimates of its oil and natural gas reserves (e.g. geological and engineering data, reservoir performance, acquisition and divestment activity, drilling of new wells, and commodity prices). MOL Group bases its proved and developed reserves estimates on the requirement of reasonable certainty with rigorous technical and commercial assessments based on conventional industry practice and regulatory requirements. Oil and natural gas reserve data are used to calculate depreciation, depletion and amortisation charges for the Group’s oil and gas properties. The impact of changes in these estimations is handled prospectively by amortising the remaining carrying value of the asset over the expected future production. Oil and natural gas reserves also have a direct impact on the value in use calculations applied for determination of the recoverability of assets.

|  | Consolidated Financial Statements 2022 | 42

e) Impairment of assets

Accounting policies

Property, plant and equipment and intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Whenever the carrying amount of an asset exceeds its recoverable amount, an impairment loss is recognised in the statement of profit or loss for items of property, plant and equipment and intangibles carried at cost. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. The fair value is the amount obtainable from the sale of an asset in an arm's length transaction while value in use is the present value of estimated net future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. Recoverable amounts are estimated for individual assets or, if this is not practicable, for the cash-generating unit. Intangible assets with indefinite useful life are not depreciated, instead an impairment test is performed at each financial year-end.

The Group assesses at each reporting date whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. A previously recognised impairment loss is reversed only if there has been a change in the impairment assumptions considered when the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset neither exceeds its recoverable amount, nor is higher than its carrying amount net of depreciation, had no impairment loss been recognised in prior years.

Significant accounting estimates and judgements

Impairment of non-current assets, including goodwill

The impairment calculation requires an estimate of the recoverable amount of the cash generating units. Value in use is usually determined on the basis of discounted estimated future net cash flows. In determination of cash flows the most significant variables are discount rates, terminal values, the period for which cash flow projections are made, as well as the assumptions and estimates used to determine the cash inflows and outflows, including commodity prices, operating expenses, future production profiles and the global and regional supply-demand equilibrium for crude oil, natural gas and refined products. As approved by the year-end RRC, MOL Group has upgraded its reserve estimates of matured oil and gas fields in CEE. By this all reserves are determined at 2P basis consistently with industry best practice.

Impairments

In 2022, the following significant impairment losses and impairment reversals were recognised. Impairment losses are positive, reversals are negative figures.

Impairments and write-offs (without dry-holes) - 2022* | Upstream | Downstream | Consumer services | Corporate and other | Midstream | Total
HUF million | HUF million | HUF million | HUF million | HUF million | HUF million
Hungary | 18,268 | 5,636 | 722 | (124) | 488 | 24,990
Croatia | (46,876) | 65 | 993 | (1,512) | - | (47,330)
United Kingdom | (21,165) | - | - | - | - | (21,165)
Slovakia | - | 4,732 | 29 | 1 | - | 4,762
Other | 14,917 | 34 | 133 | 1 | - | 15,085
Total | (34,856) | 10,467 | 1,877 | (1,634) | 488 | (23,658)

Impairments and write-offs (without dry-holes) - 2021* Restated | Upstream | Downstream | Consumer services | Corporate and other | Midstream | Total
HUF million | HUF million | HUF million | HUF million | HUF million | HUF million
Hungary | 12,097 | 3,206 | 651 | 540 | 256 | 16,749
Croatia | 6,801 | 25 | 578 | 2,265 | - | 9,669
United Kingdom | 6,777 | - | - | - | - | 6,777
Slovakia | - | 846 | (423) | 2 | - | 425
Other | 1,591 | (4) | 47 | 0 | - | 1,634
Total | 27,266 | 4,073 | 853 | 2,808 | 256 | 35,256

In 2022 and 2021 impairment was accounted in:

• Upstream segment for production fields and for assets under construction.

o In the United Kingdom 2022 impairment reversal was recorded due to the divestment of the cash generation unit of the whole UK upstream portfolio. Reversal was made up to the theoretical cap of the assets.

o In Croatia in 2022 impairment reversal was due mainly to the change in macro environment.

o In Hungary in 2022 impairment was recorded due to decrease in the value in use related mainly to Algyő and Füzesgyarmat hubs (cash generating units) due to macro and regulation changes.

o Other line shows mainly the impairment of the Syrian cash generating unit.

|  | Consolidated Financial Statements 2022 | 43

o In Hungary in 2021 impairment was recorded due to decrease in the value in use related mainly to Zala and Füzesgyarmat hubs (cash generating units) driven by the macro changes.

o In the United Kingdom 2021 impairment relates mainly to Scolty-Crathes, Scott and Telford fields and was due to decrease in value in use.

o In Croatia in 2021 impairment was due to reserve decrease in Žutica field.

o Other line shows the impairment on Egypt cash generating unit.

• Downstream segment mainly for unutilised refinery assets.

o In Hungary impairment was recorded on the catalysts and assets under construction in 2021 and in 2022.

o In Slovakia impairment was recognised on assets under construction.

• Consumer services mainly for machineries and equipment in filling stations.

o In Croatia impairment was recorded on a service station due to lower value in use in 2022.

o In Hungary impairment was recorded on land and equipment on service stations where the recoverable amount was lower than the carrying amount.

o In Slovakia impairment reversal in 2021 was accounted for service stations reclassified to assets held for sale due to the future disposal to PKN Orlen Group.

• Corporate and other segment for innovative businesses and IT equipment.

o In Croatia 2022 impairment reversal was recorded due to higher value in use in Crosco onshore and offshore assets.

o In Croatia 2021 impairment was recognised for the Crosco assets.

Impairment indicators

During the financial year the following impairment indicators were identified: change in crude oil and gas prices, change in the discount factors, change in local regulation implementing new industry specific taxes.

Impairment test of Upstream assets

The impairment tests performed by MOL Group were performed using the following assumptions:

• Recoverable amount is calculated with the assumption of using the assets in long-term in the future.

• The recoverable amount of the asset (cash-generating unit) is the value in use.

• Discount rates: the recoverable amount calculations take into account the time value of money, the risks specific to the asset and the rate of return that would be expected by a market participant for an investment with similar risk, cash flow and timing profile. It is estimated from current market transactions for similar assets or from the 'weighted average cost of capital' (WACC) of a listed entity that has a single asset or portfolio of assets that are similar in terms of service potential and risks to the asset under review.

• In assessing value in use, the estimated future cash flows are discounted to their present value using a post-tax discount rate. The pre-tax discount rate is determined by way of iteration.

• Exploration and Production segment post-tax discount factors were calculated using the WACC premise plus country risk premium of the related country. Based on the above, the post-tax discount factors used for the impairment tests in 2022 were in the range from 6.0% to 20.5%.

• The pre-tax discount rates used in 2022 ranged from 6.7% to 25.9% depending on the risk premium and the applicable tax rate in the geographic location of the CGU.

• The pre-tax discount rates used in 2021 ranged from 5.4% to 8.9%.

• Brent oil and NCG gas price assumptions applied in the value in use models in 2021: real flat 50 USD/barrel and real flat EUR 15 MWh on 2021 basis.

• Brent oil and TTF gas price assumptions applied in the value in use models in 2022: 80 USD/barrel nominal flat on short term and continuous decrease from 72 USD/barrel, compensated by the 2% yearly USD inflation assumption on the long term and 83 EUR/MWh nominal flat on the short term and steady decrease from 32 EUR/MWh, compensated by the 2% yearly EUR inflation assumption on the long term.

Sensitivity of Upstream assets

MOL Group performed a sensitivity analysis on Upstream assets. The present values of Upstream assets were tested through the indicators for which the assets are most sensitive: Brent oil price, gas price and the discount factor. The sensitivity analysis had no effect on impairment recognition.

|  | Consolidated Financial Statements 2022 | 44

| Change in present value HUF million
Change in the present value of US assets |
Brent oil price sensitivity |
-10% case | (201,675)
+10% case | 202,020
Natural gas price sensitivity |
-10% case | (120,648)
+10% case | 121,002
Discount factor sensitivity |
-1%point | 146,694
+1%point | (130,862)

Impairment test of Downstream assets

The impairment tests performed by MOL Group were performed using the following assumptions:

• Recoverable amount is calculated with the assumption of using the assets in long-term in the future.

• The recoverable amount of the asset (cash-generating unit) is the value in use.

• Discount rates: the recoverable amount calculations take into account the time value of money, the risks specific to the asset and the rate of return that would be expected by a market participant for an investment with similar risk, cash flow and timing profile. It is estimated from current market transactions for similar assets or from the 'weighted average cost of capital' (WACC) of a listed entity that has a single asset or portfolio of assets that are similar in terms of service potential and risks to the asset under review.

• In assessing value in use, the estimated future cash flows are discounted to their present value using a post-tax discount rate. The pre-tax discount rate is determined by way of iteration.

• Downstream segment post-tax discount factors were calculated using the WACC premise plus country risk premium of the related country. Based on the above, the post-tax discount factors used for the impairment tests in 2022 were in the range from 5.9% to 9.4%.

• The pre-tax discount rates ranged from 8.7% to 11.0% depending on the risk premium and the applicable tax rate in the geographic location of the CGU.

• The pre-tax discount rates used in 2021 ranged from 6.2% to 9.9%.

• Brent oil and NCG gas price assumptions applied in the value in use models in 2021: real flat 50 USD/barrel and real flat EUR 15 MWh on 2021 basis.

• Brent oil and TTF gas price assumptions applied in the value in use models in 2022: 80 USD/barrel nominal flat on short term and continuous decrease from 72 USD/barrel, compensated by the 2% yearly USD inflation assumption on the long term and 83 EUR/MWh nominal flat on the short term and steady decrease from 32 EUR/MWh, compensated by the 2% yearly EUR inflation assumption on the long term.

Sensitivity of Downstream assets

MOL Group performed a sensitivity analysis on the downstream cash generating unit comprising of two refineries and two petrochemical plants. The present value of the cash generating unit were tested through the indicators for which the CGU is most sensitive: Brent oil price, gas price, Co2 quota price and the discount factor. The sensitivity analysis had no effect on impairment recognition.

| Change in present value HUF million
Change in the present value of the CGU |
Brent oil price sensitivity |
-10% case | 230,169
+10% case | (230,169)
Natural gas price sensitivity |
-10% case | 273,271
+10% case | (273,271)
CO2 quota price sensitivity |
150 EUR/t case | (977,077)
Discount factor sensitivity |
-1%point | 1,284,824
+1%point | (847,657)

|  | Consolidated Financial Statements 2022 | 45

f) Impairment of goodwill

Accounting policies

Goodwill is reviewed for impairment, annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of the cash-generating unit (or group of cash-generating units), to which the goodwill relates. Where the recoverable amount of the cash-generating unit (or group of cash-generating units) is less than the carrying amount of the cash-generating unit (or group of cash-generating units) to which goodwill has been allocated, an impairment loss is recognised. Impairment losses relating to goodwill cannot be reversed in future periods. The Group performs its annual impairment test of goodwill as at 31 December.

The Group determines the necessity of impairment of goodwill based on the recoverable amount of cash-generating units (CGUs) to which the goodwill is allocated.

The recoverable amounts of the CGUs are determined by net present value calculations of estimated future cash flows of the cash-generating units. The key assumptions for the calculation of net present values are the nominal cash flows, the growth rates during the period and the post-tax discount rates. Management considers that such post-tax rates shall be used for discounting purposes which reflect the most to the current market circumstances, the time value of money and the risks specific to the CGUs. The pre-tax discount rates are determined by way of iteration.

In MOL Group as the overall result of impairment tests performed at the end of 2022 no impairment or impairment reversal on goodwill was recognised.

Upstream

In the Upstream segment Azeri-Chirag-Gunashli (“ACG”) oil field is the only cash-generating unit for which goodwill is allocated.

Post-tax discount factor calculated using the weighted average cost of capital (WACC) rates and country risk premium (CRP) applied to discount the forecast cash flows reflecting risks specific to the segment for goodwill impairment calculation is 6.0%.

The value in use calculations take into account the time value of money, the risks specific to the asset and the rate of return that would be expected by market for an investment with similar risk, cash flow and timing profile.

The pre-tax discount rate is calculated by way of iteration and is 8.6%.

Brent oil price assumptions applied in the value in use models: 80 USD/barrel on short term and continuous decrease from 72 USD/barrel, compensated by the 2% yearly USD inflation assumption on the long term.

Impairment assessment of the assets of ACG:

• The recoverable amount of the asset (cash-generating unit) is the value in use.

• The value in use of the Azerbaijan assets is HUF 844,704 million.

• The book value of assets including goodwill is HUF 656,787 million.

• Sensitivity analysis of the key assumptions used in impairment test shows the following effects:

§ 1 percentage point increase in the pre-tax discount factor indicates a decrease of HUF 67,230 million, 1 percentage point decrease results in an increase of HUF 77,218 million in the NPV.

§ 5 USD growth in oil price indicates an increase of HUF 62,237 million, 5 USD drop in oil price indicates a decrease of HUF 62,237 million in NPV.

§ +/- 1 percentage point alteration in production indicates HUF 9,854 million difference in NPV.

Consumer Services and Downstream

In assessing recoverable amount, the estimated future cash flows are discounted to their present value using a post-tax discount rate. The pre-tax discount rate is determined by way of iteration.

Post-tax discount factors calculated using weighted average cost of capital (WACC) rates and country risk premium (CRP) applied to discount the forecast cash flows reflecting risks specific to the segment and specific to the certain countries vary between 5.6% and 9.1% in Consumer services while 5.9% and 9.4% in Downstream in current year.

Pre-tax discount rates range from 7.2% to 11.3% in Consumer Service and from 8.7% to 11.0% in Downstream depending on the risk premium and the applicable tax rate in the geographic location of the CGU.

The growth rates are based on industry growth forecasts. The Group prepares cash flow forecasts derived from the most recent financial budgets of Consumer services segment approved by management for financial years 2023-2025 and extrapolates cash flows for the following years based on an estimated growth rates varying between 2% and 3%.

|  | Consolidated Financial Statements 2022 | 46

Corporate and other

Impairment test for the Croatian oil field services related goodwill is performed applying the Upstream segment assumptions, and HUF 1,488 million impairment was recognised in 2021.

10. Business combinations, transactions with non-controlling interests

Accounting policies

The acquisition method of accounting is used for acquired businesses by measuring assets and liabilities at their fair values upon acquisition, the date of which is determined with reference to the settlement date. For each business combination the Group decides whether non-controlling interest is stated either at fair value or at the non-controlling interests’ proportionate share of the acquiree’s fair values of net assets. The income and expenses of companies acquired or disposed of during the year are included in the consolidated financial statements from the date of acquisition or up to the date of disposal.

Intercompany balances and transactions, including intercompany profits and unrealised profits and losses – unless the losses indicate impairment of the related assets – are eliminated. The consolidated financial statements are prepared using uniform accounting policies for like transactions and other events in similar circumstances.

Subsequently the carrying amount of non-controlling interests is the initially recognised amount of those interests adjusted with the non-controlling interests’ share of changes in equity after the acquisition.

Changes in the Group’s interests in subsidiaries that do not result in a loss of control are accounted for as equity transactions and recorded directly in retained earnings.

Acquisitions

a) Acquisition of Lotos Paliwa Sp.z.o.o

On 12 January 2022 the Group signed a set of agreements with PKN Orlen and Grupa Lotos covering the sale and purchase of several portfolio elements within Consumer Services. As a result of the transaction, MOL Group acquired 417 service stations in Poland including 270 company owned sites with a country-wide coverage and the potential to reach a top 3 position in the local fuel retail market. An additional long-term agreement provides motor fuel supply for the acquired network in Poland at competitive terms. MOL Group signed an agreement to acquire the 100% share capital of Normbenz Magyarország Kft on 11 January 2022 consisting of 79 service stations with the aim to resell to PKN Orlen Group. The Group divested a total of 185 service stations to PKN Orlen located in Hungary and Slovakia for a total consideration of EUR 219 million (using year-end FX rate HUF 87,655 million). The divested assets include 143 service stations in Hungary and 39 stations in Slovakia. The closing is expected in 2023 and 2024 years for the divested assets. The two agreements are priced at their respective fair value, that is why reallocation between the two prices is not required.

The European Commission has approved the acquisition of 100% share of Lotos Paliwa Sp. z o.o. of Poland, by MOL and the acquisition of 100% share of Normbenz Magyarország Kft and of a number of assets of MOL, by PKN Orlen S.A. of Poland on 18 July 2022. The Commission concluded that the proposed acquisitions would raise no competition concerns, given the companies' moderate combined market position and the presence of strong competitors in Poland, in Hungary and in Slovakia. The transactions were examined under the normal merger review procedure.

The deal provides an outstanding inorganic expansion opportunity and an excellent fit to the Consumer Services segment’s ambitious growth strategy.

Through the completion of the acquisition MOL’s regional footprint further diversified and the captive market extended in the largest economy of the CEE region. The purchased set of assets provide a basis for future growth in the country, where MOL had limited presence thus far.

The acquired Lotos branded, Lotos Paliwa owned network captured particularly strong market positions amongst highway stations with further organic growth opportunity and significant upside to expand non-fuel sales. The transaction covered trademark licence arrangements and the takeover of fuel cards issued by Lotos Paliwa. The average throughput of the MOL service station network is expected to improve following the closing of the transaction.

Regarding the financial implications, the transaction is expected to have a mid-term positive annual EBITDA generation potential of around USD 70 million (using year-end FX rate HUF 26,298 million) to the Consumer Services segment and it is financed from available liquidity. The deal has no adverse effect to MOL Group’s dividend payment capacity.

The agreed total purchase price amounts to USD 610 million (using year-end FX rate HUF 229,165 million), the sum of a cash consideration and a finance lease liability in relation to the purchase transaction and subject to customary adjustments.

The acquisition was successfully closed on 1 December 2022.

The measurement period is not closed yet for the acquisition of the polish retail network purchase price allocation as the management is still seeking for more information to finalise the calculation, which could affect the deferred tax liability and the goodwill.

|  | Consolidated Financial Statements 2022 | 47

The assets and liabilities recognised as a result of the acquisition are as follows:

Lotos Paliwa
| 1 Dec 2022
| HUF million
Non-current assets | 203,792
Intangible assets | 14,272
Property, plant and equipment | 188,819
Other non-current asset | 701
Current assets | 53,377
Inventories | 12,161
Trade and other receivables | 33,356
Cash and cash equivalents | 2,018
Other current assets | 5,842
Non-current liabilities | (50,683)
Non-current provisions | (1,127)
Long-term debt | (41,446)
Other non-current liabilities | (40)
Deferred tax liability | (8,070)
Current liabilities | (62,139)
Current provisions | (72)
Short-term debt | (1,889)
Trade and other payables | (54,323)
Income tax payable | (1,041)
Other current liabilities | (4,814)
Net assets | 144,347
MOL Group's share of net assets | 144,347
Goodwill on acquisition |
Fair value of consideration transferred | 174,045
Less: fair value of identifiable net assets acquired | (144,347)
Goodwill on acquisition | 29,698
Net cash outflow on acquisition of subsidiaries
Consideration paid in cash | 174,045
Net cash outflow | 174,045

According to IFRS 3 the following intangible assets were identified and recognised: customer relationship in the amount of HUF 2,558 million and fuel supply agreement in the amount of HUF 11,267 million.

Factors that make up the goodwill recognised include expected synergies from the combining operations and potential future prospects in both further organic growth and non-fuel sales. It will not be deductible for tax purposes.

Acquired Company 1 Dec 2022 - 31 Dec 2022 | Net revenue | Profit/(loss) for the period
HUF million | HUF million
Lotos Paliwa | 68,360 | 721

As described above during the acquisition of Lotos Paliwa SP.z.o.o, MOL Group has acquired several portfolio elements and not the whole business of Lotos Paliwa. Disclosing revenue and profit information for the combined entity for 2022 is impracticable, since such data is not readily available for the acquired portfolio elements and the costs of obtaining that information would exceed its utility to readers.

The amount of acquisition-related costs recognised as an expense is HUF 1,769 million, which mainly relate to taxes payable due to the acquisition.

|  | Consolidated Financial Statements 2022 | 48

b) Other acquisitions closed in 2022

MOL Group acquired the 100% of Normbenz Slovakia s.r.o. by Slovnaft that includes 16 service stations in Slovakia operated under the Lukoil brand. The transaction has been closed on 2 May 2022.

MOL Group closed a transaction on 31 March 2022 acquiring 100% of Recrea Asset Management Zrt, a leading Hungarian plastic recycler company.

Both transactions were immaterial for the Group.

c) Ongoing acquisitions

MOL Group reached an agreement with OMV to acquire OMV’s 92.25% stake in OMV Slovenija d.o.o. from OMV Downstream GmbH as direct shareholder. The agreed purchase price is EUR 301 million (100% share of OMV Slovenija). The transaction includes 120 service stations across Slovenia. The transaction is subject to merger clearance.

d) Update on acquisition of Aurora Kunststoffe GmbH and its subsidiaries

On 31 October 2019, MOL Group has acquired 100% shareholding of Aurora Kunststoffe GmbH. As of 31 December 2022, the fair value of contingent consideration is HUF 4,171 million presented in trade and other payables, calculated by the most conservative approach.

11. Disposals

In 2021, MOL Group has sold its shareholding interest in MOL Group Italy L&G S.r.l. with insignificant net book value, the result of the transaction was also insignificant.

On 23 March 2022, MOL Plc. signed an agreement with Waldorf Production Limited covering the sale of its entire Upstream portfolio in the United Kingdom. The deal was closed on 10 November 2022. The gain on sale is 83,498 HUF million.

SWS s.r.o. Slovakian transport supporting service company was also disposed in 2022. Both the net book value and the result of the transaction was immaterial for the Group.

Assets held for sale and discontinued operations are presented in Note 19.

12. Material non-controlling interest

Accounting policies

According to IFRS 12 Disclosure of Interest in Other Entities, MOL Group discloses information about non-controlling interests’ share of the profit or loss, cash flow and net asset of the subsidiaries that have non-controlling interests that are material to the reporting entity. Materiality is assessed by the Group on the basis of the consolidated financial statements. The disclosed information is based on balances before intercompany eliminations.

INA-Industrija nafte d.d.

MOL Group has 49% shareholding interest in INA-Industrija nafte d.d. (hereinafter INA d.d.), however based on the conditions of the shareholders’ agreement MOL Group has been provided control over INA d.d. resulting in full consolidation method with 51% non-controlling interest.

Based on the SHA signed in January 2009 between MOL Plc. and the Government of the Republic of Croatia MOL is entitled to control rights through the majority both in the Supervisory Board and the Management Board. MOL is entitled to nominate 5 members to the Supervisory Board of 9 members, furthermore nominate 3 members and the President to the Management Board of 6 members. In the event of tied vote, the President of the Management Board has the tie-breaking vote.

All other NCI are immaterial for the Group.

|  | Consolidated Financial Statements 2022 | 49

Proportion of equity interest held by non-controlling interests of INA Group:

| Proportion of non-controlling interest
Name | 31 Dec 2022 | 31 Dec 2021 Restated
INA-Industrija nafte d.d. | 51% | 51%
| 31 Dec 2022 | 31 Dec 2021 Restated
| HUF million | HUF million
Accumulated balances of material non-controlling interest | 377,329 | 309,491
Profit/(Loss) allocated to material non-controlling interest | 94,271 | 28,899

The summarised financial information of INA Group is provided below. This information is based on amounts before intercompany eliminations.

Summarised statement of profit or loss | 2022 | 2021 Restated
HUF million | HUF million
Total operating income | 1,855,124 | 1,080,719
Total operating expenses | (1,663,398) | (1,031,090)
Finance income/(expense), net | (6,398) | 4,309
Profit/(loss) before income tax | 185,328 | 53,938
Income tax (expense)/income | (69,875) | (9,143)
Profit/(loss) for the year | 115,453 | 44,794
Total comprehensive income | 185,142 | 56,755
Attributable to non-controlling interests | 94,271 | 28,899
Dividends paid to non-controlling interests | (26,432) | -

Summarised statement of financial position | 31 Dec 2022 | 31 Dec 2021 Restated
HUF million | HUF million
Current assets | 440,524 | 346,362
Non-current assets | 958,632 | 819,548
Total assets | 1,399,156 | 1,165,910
Current liabilities | (324,943) | (255,711)
Non-current liabilities | (333,160) | (302,376)
Total liabilities | (658,103) | (558,087)
Total equity | 741,053 | 607,823
Attributable to owners of parent | 363,724 | 298,332
Attributable to non-controlling interest | 377,329 | 309,491

Summarised cash flow information | 31 Dec 2022 | 31 Dec 2021 Restated
HUF million | HUF million
Cash flows from operations | 181,429 | 153,552
Cash flows used in investing activities | (65,195) | (121,195)
Cash flows used in financing activities | (100,680) | 16,679
Increase/(decrease) in cash and cash equivalents | 15,554 | 49,036

|  | Consolidated Financial Statements 2022 | 50

13. Other non-current assets

| 31 Dec 2022 | 31 Dec 2021
| HUF million | HUF million
Obligatory level of inventory required by state legislations | 49,783 | 50,594
Advance payments for assets under construction | 34,253 | 24,265
Prepaid fees of long-term rental fees | 424 | 391
Advance payments for intangible assets | 276 | 468
Other | 819 | 1,125
Total | 85,555 | 76,843

14. Inventories

Accounting policies

Inventories, including work-in-progress are valued at the lower of cost and net realisable value, after provision for slow-moving and obsolete items. Net realisable value is the selling price in the ordinary course of business, less the costs of making the sale. Cost of purchased goods, including crude oil and purchased gas inventory, is determined primarily on the basis of weighted average cost. The acquisition cost of own produced inventory consists of direct materials, direct wages and the appropriate portion of production overhead expenses including royalty. Inventory with nil net realisable value is fully written off.

| 31 Dec 2022 | 31 Dec 2021
| At cost | Net realisable value | Lower of cost or net realisable value | At cost | Net realisable value | Lower of cost or net realisable value
| HUF million | HUF million | HUF million | HUF million | HUF million | HUF million
Work in progress and finished goods | 579,542 | 564,673 | 564,673 | 410,813 | 409,683 | 409,683
Purchased crude oil | 212,399 | 211,926 | 211,926 | 122,998 | 122,737 | 122,737
Other goods for resale | 126,098 | 122,987 | 122,987 | 80,929 | 79,622 | 79,622
Other raw materials | 114,868 | 96,972 | 96,972 | 102,513 | 87,076 | 87,076
Purchased natural gas | 4,052 | 4,052 | 4,052 | 3,680 | 3,680 | 3,680
Inventories classified as held for sale | (3,565) | (3,565) | (3,565) | - | - | -
Total | 1,033,394 | 997,045 | 997,045 | 720,933 | 702,798 | 702,798

During the year 2022 HUF 6,677,045 million of inventories have been recognised as an expense, of which impairment of HUF 33,813 million has been recorded (2021: HUF 10,726 million), mainly on finished goods and raw materials. In 2022 HUF 28,793 million impairment was accounted for Downstream operation.

15. Other current assets

| 31 Dec 2022 | 31 Dec 2021
|  | Restated
| HUF million | HUF million
Prepaid and recoverable taxes and duties (excluding income taxes) | 48,552 | 61,415
Advance payments | 30,102 | 7,545
Prepaid expenses | 13,804 | 12,204
Dividend receivable | 3,526 | -
Other | 579 | 1,014
Total | 96,563 | 82,178

Other item contains mainly revenue accruals and receivables regarding employees.

|  | Consolidated Financial Statements 2022 | 51

16. Provisions

Accounting policies

Provision is made for the best estimate of the expenditure required to settle the present obligation (legal or constructive) as a result of past event where it is considered to be probable that a liability exists, and a reliable estimate can be made of the outcome. Long-term obligation is discounted to the present value. Where discounting is used, the carrying amount of the provisions increases in each period to reflect the unwinding of the discount by the passage of time. This increase is recognised as interest expense. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate.

Where it is possible that a settlement may be reached or it is not possible to make a reliable estimate of financial impact, appropriate disclosure is made but no provision created.

Provision for Environmental expenditures

Environmental expenditures that relate to current or future economic benefits are expensed or capitalised as appropriate. Liabilities for environmental costs are recognised when environmental assessments or clean-ups are probable, and the amount recognised is the best estimate of the expenditure required. In case of long-term liability, the present value of the estimated future expenditure is recognised.

Provision for Field abandonment

The Group records a provision upon initial recognition for the present value of the estimated future cost of abandonment of oil and gas production facilities following the termination of production. At the time the obligation arises, it is provided for in full by recognising the present value of future field abandonment and restoration expenses as a liability. An equivalent amount is capitalised as part of the carrying amount of long-lived assets. The estimate is based upon current legislative requirements, technology and price levels. A corresponding item of property, plant and equipment of an amount equivalent to the provision is also created. This is subsequently depreciated as part of the capital costs of the facility or item of plant (on a straight-line basis in Downstream and using the unit-of production method in Upstream). Any change in the present value of the estimated expenditure is reflected as an adjustment to the provision and the corresponding property, plant and equipment.

Provision for Redundancy

The employees of the Group are eligible, immediately upon termination, for redundancy payment pursuant to the terms of Collective Agreement between the Group and its employees. The amount of such a liability is recorded as a provision in the consolidated statement of financial position when the workforce reduction programme is defined, adopted, announced or has started to be implemented.

Provision for Long-term employee benefits

The cost of providing benefits under the Group’s defined benefit plans is determined separately for each plan using the projected unit credit actuarial valuation method. Actuarial gains and losses of retirement benefits are recognised as other comprehensive income immediately. Past service costs, resulting from the introduction of, or changes to the defined benefit scheme are recognised as an expense immediately.

Net interest expense is calculated on the basis of the net defined benefit obligation and disclosed as part of the finance result. Differences between the return on plan assets and interest income on plan assets included in the net interest expense is recognised in other comprehensive income.

Provision for Legal claims

Provision is made for legal cases if the negative expected outcome of the legal case is more likely than not.

Provision for Emission quotas

The Group recognises provision for the estimated CO2 emissions costs when actual emission exceeds the emission rights granted and still held. When actual emission exceeds the amount of emission rights granted, provision is recognised for the exceeding emission rights based on carrying amount of purchased quotas held for compliance, the purchase price of allowance concluded in forward contracts, and for any residual excess at market quotations at the reporting date. In addition, the Group recognises provision for estimated costs of Upstream emission reduction quotas (UER) intended to be used to fulfil obligations stipulated by EU Fuel Quality Directive.

Significant accounting estimates and judgements

A judgement is necessary in assessing the likelihood that a claim will succeed, or liability will arise, and to quantify the possible range of any settlement. Due to the inherent uncertainty on this evaluation process, actual losses may be different from the liability originally estimated.

Scope, quantification and timing of environmental and field abandonment provision

The Group holds provisions for the future decommissioning of oil and natural gas production facilities and pipelines at the end of their economic lives. Most of these decommissioning events are many years in the future and the precise requirements that will have to be met when the removal event occurs are uncertain. Decommissioning technologies and costs are constantly changing, as well as political, environmental, safety and public expectations. Management uses its previous experience and its own interpretation of the respective legislation to determine environmental and field abandonment provisions.

Actuarial estimates applied for calculation of retirement benefit obligations

The cost of defined benefit plans is determined using actuarial valuations, which involves making assumptions about discount rates, future salary increases and mortality or fluctuation rates. Due to the long-term nature of these plans, such estimates are subject to significant uncertainty.

Outcome of certain litigations

MOL Group entities are parties to a number of litigations, proceedings and civil actions arising in the ordinary course of business. Other provisions and liabilities are recognised in the period when it becomes probable that there will be a future outflow of funds resulting from past events and the amount of cash outflow can be reliably estimated. The timing of recognition and quantification of the liability require the application of judgement to existing facts and circumstances, which can be subject to change. Since the cash outflows can take place many years in the future, the carrying amounts of provisions and liabilities are reviewed regularly and adjusted to take account of changing facts and circumstances.

|  | Consolidated Financial Statements 2022 | 52

| Environ-mental | Field abandon-ment | Redundancy | Long-term employee benefits | Legal claims | Emission quotas and other | Total
| HUF million | HUF million | HUF million | HUF million | HUF million | HUF million | HUF million
Balance as of 1 Jan 2021 - Restated | 72,784 | 505,881 | 3,794 | 24,640 | 12,435 | 56,562 | 676,096
Acquisition / (sale) of subsidiaries | - | 4 | (77) | - | (9) | (1) | (83)
Additions and revision of previous estimates | 4,174 | 33,902 | 863 | 3,060 | 550 | 59,993 | 102,542
Unwinding of the discount | 937 | 13,006 | - | 240 | - | 243 | 14,426
Currency differences | 496 | 17,729 | 49 | 534 | 71 | (2,843) | 16,036
Provision used during the year | (3,649) | (408) | (2,594) | (2,322) | (4,940) | (29,724) | (43,637)
Balance as of 31 Dec 2021 - Restated | 74,742 | 570,114 | 2,035 | 26,152 | 8,107 | 84,230 | 765,380
Acquisition / (sale) of subsidiaries | - | (119,688) | - | 835 | - | (60) | (118,913)
Additions and revision of previous estimates | 5,635 | (47,867) | 3,075 | 7,878 | 1,999 | 88,464 | 59,184
Unwinding of the discount | 807 | 12,511 | - | 415 | - | 283 | 14,016
Currency differences | 4,476 | 39,496 | 286 | 646 | 549 | (517) | 44,936
Provision used during the year | (6,173) | (130) | (2,582) | (1,777) | (4,859) | (47,105) | (62,626)
Other movements | - | - | - | (2,529) | - | - | (2,529)
Balance as of 31 Dec 2022 | 79,487 | 454,436 | 2,814 | 31,620 | 5,796 | 125,295 | 699,448
Current portion 31 Dec 2021 | 3,823 | 233 | 965 | 2,678 | 3,953 | 58,432 | 70,084
Non-current portion 31 Dec 2021 | 70,919 | 569,881 | 1,070 | 23,474 | 4,154 | 25,798 | 695,296
Current portion 31 Dec 2022 | 4,526 | 8,350 | 1,749 | 4,270 | 766 | 95,340 | 115,001
Non-current portion 31 Dec 2022 | 74,961 | 446,086 | 1,065 | 27,350 | 5,030 | 29,955 | 584,447

Provision for Environmental expenditures

As of 31 December 2022, provision of HUF 79,487 million has been made for the estimated cost of remediation of past environmental damages, primarily soil and groundwater contamination and disposal of hazardous wastes, such as acid tar, in Hungary, Croatia, Slovakia and Italy. The provision is made on the basis of assessments prepared by MOL Group’s internal environmental expert team. The amount of the provision has been determined on the basis of existing technology at current prices by calculating risk-weighted cash flows for a period up to 12 years, in case of upstream segment up to 50 years, discounted using estimated risk-free real interest rates. The amount reported as at 31 December 2022 also includes a contingent liability of HUF 20,219 million recognised upon acquiring IES S.p.A. (see Note 25).

MOL Group prepared a sensitivity analysis on the cash flow period applied on environmental provision. The analysis examined the impact of a +/- five-year change in the cash flow forecast period on the environmental provision compared to the year-end liability recognised. During the assessment the same discount rates were applied.

The results of the analysis are summarised in the table below showing the absolute and percentage change in the liability already recognised in the balance sheet:

|  | - 5 years |  | + 5 years
|  | HUF million |  | HUF million
Sensitivity analysis of environmental provision increase/(decrease) | % change in the amount of the liability |  | % change in the amount of the liability |
MOL | -10.7 | (893) | 10.4 | 873
MPK | -10.4 | (981) | 9.9 | 936
INA | -9.4 | (1,348) | 12 | 1,897
IES | -34 | (118) | 34 | 118
Slovnaft | -41 | (8,806) | 41 | 8,806
Total |  | (12,146) |  | 12,630

|  | Consolidated Financial Statements 2022 | 53

Provision for Field abandonment

As of 31 December 2022, provision of HUF 454,436 million has been made for estimated total costs of plugging and abandoning wells upon termination of production. Approximately 8% of these costs are expected to be incurred between 2023 and 2027 and the remaining 92% between 2028 and 2076. The significant decrease in the liability is due to the divestment of UK portfolio (Note 19). The amount of the provision has been determined on the basis of management’s understanding of the respective legislation, calculated at current prices and discounted using estimated risk-free real interest rates. Activities related to field suspension, such as plugging and abandoning wells upon termination of production and remediation of the area are planned to be performed by hiring external resources. Based on the judgement of the management, there will be sufficient capacity available for these activities in the area. As required by IAS 16 – Property, Plant and Equipment, the qualifying portion of the provision has been capitalised as a component of the underlying fields. Decommissioning rates used in the calculation of the liability are in a range of 3.4% and 6.0% depending on the risk free rate, the inflation and the country risk premium in the given country.

MOL Group performed sensitivity analysis on the field abandonment liability by examining the +/- 1 percentage point change of the decommissioning rate. Decommissioning rate higher by one percentage point reduces the provision by 16%, while a decommissioning rate lower by one percentage point increases the provision by 20%.

Provision for Redundancy

As part of continuing efficiency improvement projects, MOL Plc., INA d.d., IES S.p.A. and other Group members decided to further optimise workforce. As the management is committed to these changes and the restructuring plan was communicated in detail to parties involved, the Group recognised a provision for the net present value of future redundancy payments and related tax and contribution. Relating to the restructuring of activities in Mantova, a provision for redundancy of HUF 9,145 million was recognised at IES S.p.A. in 2013 out of which HUF 520 million remained as of 31 December 2022. In 2015, a provision of HUF 9,804 million, in 2020, of HUF 6,269 million, and in 2022 of HUF 3,015 million was made for redundancy programme at INA d.d. out of which HUF 1,404 million remained as of 31 December 2022. The closing balance of provision for redundancy is HUF 2,814 million as of 31 December 2022 (31 December 2021: HUF 2,035 million).

Provision for Long-term employee benefits

As of 31 December 2022, the Group has recognised a provision of HUF 31,620 million to cover its estimated obligation regarding future retirement and jubilee benefits payable to current employees expected to retire from Group entities. These entities operate benefit schemes that provide lump sum benefit to all employees at the time of their retirement. MOL employees are entitled to 3 times of their final monthly salary regardless of the period of service, while MOL Petrochemicals and Slovnaft, a.s. provide a maximum of 2 and 7 months of final salary respectively, depending on the length of service period. In addition to the above-mentioned benefits, in Hungary the retiring employees are entitled to the absence fee for their notice period – which lasts for 1-3 months depending on the length of the past service – which is determined by the Hungarian Labour Code. None of these plans have separately administered funds; therefore, there are no plan assets. The amount of the provision has been determined using the projected unit credit method, based on financial and actuarial variables and assumptions that reflect relevant official statistical data which are in line with those incorporated in the business plan of the Group.

| 2022 | 2021
| HUF million | HUF million
Present value of total long-term employee benefit obligation at the beginning of the year | 26,152 | 24,640
Acquisitions / (disposals) | 835 | -
Past service cost | 8,620 | 137
Current service cost | 1,862 | 2,464
Interest costs | 415 | 240
Provision used during the year | (1,777) | (2,322)
Net actuarial (gain) / loss | (2,604) | 459
from which: |  |
Retirement benefit (See Note 8) | (1,615) | 206
Jubilee benefit | (989) | 253
Exchange adjustment | 646 | 534
Other movements | (2,529) | -
Present value of total long-term employee benefit obligation at year end | 31,620 | 26,152

The other movements contain reclassification in long-term employee benefits between provision and other current and non-current liabilities.

|  | Consolidated Financial Statements 2022 | 54

The following table summarises the components of net benefit expense recognised in the statement of total comprehensive profit or loss as employee benefit expense regarding provision for long-term employee retirement benefits:

| 2022 | 2021
| HUF million | HUF million
Current service cost | 1,862 | 2,464
Net actuarial (gain)/loss | (989) | 253
Past service cost | 8,620 | 137
Balance as at year end | 9,493 | 2,854

The following table summarises the main financial and actuarial variables and assumptions based on which the amount of retirement benefits has been determined:

| 2022 | 2021
Discount rate in % | 1.82 - 13.04 | (0.59) - 4.80
Average wage increase in % | 0.6 - 10.0 | 0.6 - 3.0
Mortality index (male) | 0.03 - 3.01 | 0.03 - 3.01
Mortality index (female) | 0.02 - 1.33 | 0.02 - 1.33

Actuarial (gains) and losses comprises of the following items:

| Retirement benefits | Jubilee benefits
| 2022 | 2021 | 2022 | 2021
| HUF million | HUF million | HUF million | HUF million
Actuarial (gains)/losses arising from changes in demographic assumptions | 374 | 843 | 48 | (76)
Actuarial (gains)/losses arising from changes in financial assumptions | (4,412) | (1,540) | (1,129) | (428)
Actuarial (gains)/losses arising from experience adjustments | 2,423 | 903 | 92 | 757
Total actuarial (gains)/losses | (1,615) | 206 | (989) | 253

A quantitative sensitivity analysis for significant assumptions as at 31 December is, as shown below:

| Retirement benefits | Jubilee benefits
| 2022 | 2021 | 2022 | 2021
| HUF million | HUF million | HUF million | HUF million
Discount rate: |  |  |  |
0.5% decrease | 3,016 | 856 | 938 | 206
0.5% increase | (2,031) | (789) | (745) | (194)
Termination rate: |  |  |  |
50% decrease | 1,570 | 5,289 | 1,319 | 1,128
50% increase | (1,270) | (3,544) | (1,090) | (828)

Provision for legal claims

As of 31 December 2022, provision of HUF 5,796 million (31 December 2021: HUF 8,107 million) has been made for estimated total future losses from litigations.

Provision for emission quotas and other provisions

As of 31 December 2022, the Group has recognised a provision of HUF 80,482 million for the shortage of emission quotas (31 December 2021: 50,849 million). The amount reported as at 31 December 2022 also includes provision for estimated costs of UER quotas in the amount of HUF 2,487 million (31 December 2021: HUF 4,682 million). For further information regarding the calculation method of estimated cost please refer to the accounting policy section.

|  | Consolidated Financial Statements 2022 | 55

As of 31 December 2022, the Group had available 3,731,675 (31 December 2021: 3,865,641) free emission quotas granted by the Hungarian, Croatian and Slovakian authorities. The total emissions during 2022 amounted to equivalent of 5,775,073 tons of emission quotas (2021: 6,063,036 tons).

As of 31 December 2022, the Group has recognised a provision of HUF 4,710 million in relation to IFRS 9 requirements.

17. Other non-current liabilities

| 31 Dec 2022 | 31 Dec 2021
| HUF million | HUF million
Government grants received (see Note 9) | 22,357 | 18,603
Received and deferred other subsidies | 6,666 | 7,423
Deferred compensation for property, plant and equipment | 4,045 | 3,806
Deferred income for apartments sold | 1,409 | 1,343
Liabilities to government for sold apartments | 338 | 499
Other | 4,443 | 786
Total | 39,258 | 32,460

Other item contains mainly the liability of customer loyalty points and advances received from customers.

18. Other current liabilities

| 31 Dec 2022 | 31 Dec 2021
| HUF million | HUF million
Taxes, contributions payable (excluding corporate tax any mining royalty) | 233,770 | 180,812
Amounts due to employees | 42,886 | 49,707
Mining royalty | 23,878 | 479
Advances from customers | 22,002 | 13,354
Custom fees payable | 10,407 | 10,724
Fee payable for strategic inventory storage | 4,171 | 5,116
Other accrued incomes | 3,830 | 4,266
Government subsidies received and accrued (see Note 9) | 2,789 | 1,185
Dividend payable | 765 | 619
Other | 6,392 | 2,525
Total | 350,890 | 268,787

Taxes, contributions payable mainly contributions to social security, value added tax and excise tax.

19. Asset held for sale and discontinued operation

A. Asset held for sale

Accounting policies

Non-current assets and disposal groups are classified as held for sale if their carrying amounts are to be realised by sale rather than through continued use. This is the case when the sale is highly probable, and the asset or disposal group is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification as held for sale, and actions required to complete the plan of sale should indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

Immediately before the initial classification of the asset as held for sale, impairment test shall be carried out. Non-current assets and disposal groups classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell. Property, plant and equipment and intangible assets are no longer depreciated or amortised once classified as held for sale.

|  | Consolidated Financial Statements 2022 | 56

As of 31 December 2021, assets held for sale contained mainly service stations located in Hungary and Slovakia.

As of 31 December 2022, assets held for sale contained service stations located in Hungary, Slovakia, Slovenia to be sold in 2023 and investment in joint venture Terra mineralna gnojiva. Management is committed to sell Terra, which owns 54.52% stake of Petrokemija, a mineral fertiliser producing company in Croatia. The sale process has begun in 2022 and will be finalised once the conditions from the sale contract are met.

| 31 Dec 2022 | 31 Dec 2021
Assets and liabilities held for sale | HUF million | HUF million
Assets |  |
Property, plant and equipment | 27,696 | 15,237
Intangible assets | 490 | 951
Investment in associated companies and joint ventures | 11,004 | -
Other non-current financial assets | 275 | -
Deferred tax assets | 118 | -
Inventories | 3,565 | -
Trade and other receivables | - | 191
Other current assets | 215 | -
Assets classified as held for sale | 43,363 | 16,379
Liabilities |  |
Deferred tax liabilities | - | 3,409
Trade and other payables | 2,161 | 11
Liabilities related to assets classified as held for sale | 2,161 | 3,420

B. Discontinued operation

Accounting policies

Discontinued operation is a component of an entity that either has been disposed of, or is classified as held for sale and:

• represents a separate major business line or geographical area of operations;

• its cash flows and operations are clearly distinguishable from the rest of the entity (both operationally and from financial reporting point of view);

• a single co-ordinate plan is in place to sell or otherwise dispose of it;

• a subsidiary acquired exclusively to resell it also qualifies as a discontinued operation.

In addition to the measurement and presentation requirements defined for disposal groups, the following disclosures are specified for discontinued operations:

• On the face of the income statement, the post-tax profit or loss from the discontinued operations and on the disposal or measurement to fair value (all other captions of the income statement therefore relate to continuing operations only)

• In the notes a detailed breakdown of this profit or loss

• Net cash flows attributable to the discontinued operations

On 23 March 2022, MOL Plc. signed an agreement with Waldorf Production Limited covering the sale of its entire Upstream portfolio in the United Kingdom.

The divested offshore assets included MOL Plc.’s 20% stake in the Catcher field, a 50% stake in Scolty & Crathes and a 21.8% stake in Scott as well as stakes in a number of other licences. MOL Plc.’s UK working interest production peaked above 18 mboepd in 2019 and was falling in 2020 and 2021, accordingly Q4 2021 production was marginally above 12 mboepd. MOL’s corresponding proved and probable reserves (SPE 2P) amounted to 14.9 MMboe at the end of 2021.

Waldorf offered a base cash consideration of USD 305 million, which was subject to customary purchase price adjustments and was based on an economic effective date of January 1, 2021. In addition, the agreement contained an earn-out scheme mainly dependent on oil prices during 2022-2025. Please refer to Note 22 for further information.

MOL Plc. has successfully closed the deal with Waldorf Production Limited regarding the sale of its entire E&P portfolio in the United Kingdom on 10 November 2022. As a result of the transaction, Waldorf retained all future field abandonment liabilities.

|  | Consolidated Financial Statements 2022 | 57

List of divested assets:

Asset | MOL Working Interest
Greater Catcher Area | 20.00%
Scott | 21.83%
Telford | 1.59%
Rochelle | 20.71%
Scolty & Cratches | 50.00%
Broom | 29.00%
Brent Pipeline System | 1.77%
Sullom Voe Terminal | 0.72%

The following tables include financial performance and cash flow information of the discontinued operation:

|  | 2022 | 2021
| HUF million | HUF million
Net sales |  | 118,983 | 101,984
Other operating income |  | 84,797 | 680
Total operating income |  | 203,780 | 102,664
Raw materials and consumables used |  | 8,828 | 25,276
Employee benefits expense |  | 638 | 647
Depreciation, depletion, amortisation and impairment |  | (17,291) | 34,879
Other operating expenses |  | 672 | 2,461
Change in inventory of finished goods and work in progress |  | 0 | -
Work performed by the enterprise and capitalised |  | 0 | -
Total operating expenses |  | (7,153) | 63,263
Profit from discontinued operation |  | 210,933 | 39,401
Finance income |  | 23,377 | 1,149
Finance expense |  | 8,900 | 3,330
Total finance expense, net |  | 14,477 | (2,181)
Share of after-tax results of associates and joint ventures |  | 0 | -
Profit/(Loss) before tax from discontinued operation |  | 225,410 | 37,220
Income tax expense |  | 2,113 | (5,233)
Profit / (Loss) for the period from discontinued operations |  | 223,297 | 42,453

| 2022 | 2021
| HUF million | HUF million
Profit/(Loss) before tax from discontinued operation | 225,410 | 37,220
Cash flows from operations | 108,062 | 77,631
Cash flows used in investing activities | 61,524 | (7,405)
Cash flows used in financing activities | (120,161) | (11,412)

|  | Consolidated Financial Statements 2022 | 58

|  | 10 Nov 2022
| HUF million
Non-current assets |  | 92,930
Current assets |  | 91,748
Total assets |  | 184,678
Non-current liabilities |  | (137,128)
Current liabilities |  | (45,305)
Total liabilities |  | (182,433)
Non-controlling interest |  | -
Net assets sold |  | 2,245
Cash consideration received |  | 9,122
Fair value of contingent consideration |  | 57,566
Gain on sale before income tax and reclassification of foreign currency translation reserve | 64,443
Reclassification of foreign currency translation reserve |  | 19,055
Income tax expense on gain |  | -
Gain on sale after income tax |  | 83,498
Analysis of cash in/outflow on sales |  |
Cash consideration received |  | 9,122
Net cash disposed of during the sale |  | (43,942)
Net cash in/outflow |  | (34,820)

|  | Consolidated Financial Statements 2022 | 59

Financial instruments, capital and financial risk management

This section explains policies and procedures applied to manage the Group’s capital structure and the financial risks the Group is exposed to. This section also describes the financial instruments applied to fulfil these procedures. Hedge accounting related policies and financial instruments disclosures are also provided in this section.

Accounting policies

Initial recognition

Financial instruments are recognised initially at fair value (including transaction costs, for assets and liabilities not measured at fair value through profit or loss) when the entity becomes a party to the contractual provisions of the instrument. A regular way purchase or sale of financial assets is recognised using settlement date accounting.

Financial assets - Classification

The Group’s financial assets are classified at the time of initial recognition depending on their nature and purpose. To determine which measurement category a financial asset falls into, it should be first considered whether the financial asset is an investment in an equity instrument or a debt instrument. Equity instruments should be classified as fair value to profit or loss, however if the equity instrument is not held for trading, fair value through other comprehensive income option can be elected at initial recognition. If the financial asset is a debt instrument the following assessment should be considered in determining its classification.

Amortised cost

Financial instruments measured at amortised cost are those financial assets that are held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Fair value through other comprehensive income

Financial assets at fair value through other comprehensive income are those financial assets that is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Fair value through profit or loss

Financial assets at fair value through profit or loss include financial assets which are not classified in any of the two preceding categories or financial instruments designated upon initial recognition as at fair value through profit or loss.

Financial liabilities – Classification

By default, financial liabilities are measured at amortised cost, unless they are required to be measured at fair value through profit or loss or the entity has opted to measure a liability at fair value through profit or loss. A financial liability is required to be measured at fair value through profit or loss in case of liabilities that are classified as ‘held for trading’ and derivatives. An entity can, at initial recognition, irrevocably designate a financial liability as measured at fair value through profit or loss (fair value option) where doing so results in more relevant information, because either:

• it eliminates or significantly reduces a measurement or recognition inconsistency, or

• a group of financial liabilities or financial assets and financial liabilities is managed, and its performance is evaluated on a fair value basis.

Subsequent measurement

Subsequent measurement depends on the classification of the given financial instrument.

Amortised cost

The asset or liability is measured at the amount recognised at initial recognition minus principal repayments, plus or minus the cumulative amortisation of any difference between that initial amount and the maturity amount, and any loss allowance. Interest income is calculated using the effective interest method and is recognised in profit and loss. Changes in fair value are recognised in profit and loss when the asset is derecognised or reclassified.

Fair value through other comprehensive income – debt instrument

The asset is measured at fair value. Interest revenue, impairment gains and losses, and a portion of foreign exchange gains and losses, are recognised in profit and loss on the same basis as for amortised cost assets. Changes in fair value are recognised in other comprehensive income. When the asset is derecognised or reclassified, changes in fair value previously recognised in other comprehensive income and accumulated in equity are reclassified to profit and loss on a basis that always results in an asset measured at fair value through other comprehensive income having the same effect on profit and loss as if it were measured at amortised cost.

Fair value through other comprehensive income – equity instrument

Dividends are recognised when the entity’s right to receive payment is established, it is probable the economic benefits will flow to the entity and the amount can be measured reliably. Dividends are recognised in profit and loss unless they clearly represent recovery of a part of the cost of the investment, in which case they are included in other comprehensive income. Changes in fair value are recognised in other comprehensive income and are never recycled to profit and loss, even if the asset is sold or impaired.

Fair value through profit or loss

The asset or liability is measured at fair value. Changes in fair value are recognised in profit and loss as they arise.

|  | Consolidated Financial Statements 2022 | 60

Fair value measurement

Fair value of instruments is determined by reference to quoted market prices at the close of business on the balance sheet date without any deduction for transaction costs. For investments where there is no quoted market price, fair value is determined by reference to the current market value of another instrument which is substantially the same or is calculated based on the expected cash flows of the underlying net asset base of the investment.

Derecognition of Financial Instruments

Derecognition of a financial asset takes place when the Group no longer controls the contractual rights that comprise the financial asset, which is normally the case when the instrument is sold, or all the cash flows attributable to the instrument are passed through to an independent third party. When the Group neither transfers nor retains all the risks and rewards of the financial asset and continues to control the transferred asset, it recognises its retained interest in the asset and a liability for the amounts it may have to pay.

A financial liability should be removed from the balance sheet when, and only when, it is extinguished, that is, when the obligation specified in the contract is either discharged or cancelled or expires.

Hedging

For the purpose of hedge accounting, hedges are classified as either:

• cash flow hedges or

• hedges of a net investment in a foreign operation.

At the inception of a hedge relationship, the Group formally designates and documents the hedge relationship to which the Group wishes to apply hedge accounting together with the risk management objective and strategy for undertaking the hedge. The documentation includes identification of the hedging instrument, the hedged item or transaction, the nature of the risk being hedged and how the entity will assess the hedging instrument’s effectiveness in offsetting the exposure to changes in the hedged item’s fair value or cash flows attributable to the hedged risk. Such hedges are expected to be effective in achieving offsetting changes in fair value or cash flows and are assessed on an ongoing basis to determine that they actually have been highly effective throughout the financial reporting periods for which they were designated.

Hedges which meet the strict criteria for hedge accounting are accounted for as follows:

Cash flow hedges

Cash flow hedges are hedges of the exposure to variability in cash flows that is attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction that could affect the statement of profit or loss. The effective portion of the gain or loss on the hedging instrument is recognised directly as other comprehensive income, while the ineffective portion is recognised in the statement of profit or loss.

Amounts taken to other comprehensive income are transferred to the statement of profit or loss when the hedged transaction affects the statement of profit or loss. Where the hedged item is the cost of a non-financial asset or liability, the amounts previously taken to equity are transferred to the initial carrying amount of the non-financial asset or liability.

If the forecast transaction is no longer expected to occur, amounts previously recognised in other comprehensive income are transferred to the statement of profit or loss. If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover, or if its designation as a hedge is revoked, amounts previously recognised in other comprehensive income remain in other comprehensive income until the forecast transaction occurs. If the related transaction is not expected to occur, the amount is taken to the statement of profit or loss.

Hedges of a net investment

Hedges of a net investment in a foreign operation, including a hedge of a monetary item that is accounted for as part of the net investment, are accounted for in a way similar to cash flow hedges. Gains or losses on the hedging instrument relating to the effective portion of the hedge are recognised as other comprehensive income while any gains or losses relating to the ineffective portion are recognised in the statement of profit or loss. On disposal of the foreign operation, the cumulative value of any such gains or losses recognised as other comprehensive income is transferred to the statement of profit or loss.

Impairment of Financial Assets

The Group assesses at each balance sheet date whether a financial asset or group of financial assets that is measured at amortised cost or fair value through other comprehensive income is impaired.

As a general approach, impairment losses on a financial asset or group of financial assets are recognised for expected credit losses at an amount equal to:

• 12-month expected credit losses (expected credit losses that result from those default events on the financial instrument that are possible within 12 months after the reporting date), or

• full lifetime expected credit losses (expected credit losses that result from all possible default events over the life of the financial instrument).

The loss allowance for financial instruments is measured at an amount equal to full lifetime expected losses if the credit risk of a financial instrument has increased significantly since initial recognition. Unless the credit risk of the financial instrument is low at the reporting date in which case it can be assumed that credit risk on the financial instrument has not increased significantly since initial recognition and 12-month expected credit losses can be applied. The Group determines significant increase in credit risk in case of debt securities based on credit rating agency ratings. As there is a rebuttable presumption that the credit risk on a financial asset has increased significantly since initial recognition when contractual payments are more than 30 days past due assessment is required on a case-by-case basis whether the credit risk significantly increased in that financial asset when such an event occurs.

Additionally, the Group applies the simplified approach to recognise full lifetime expected losses from origination for trade receivables, IFRS 15 contract assets and lease receivables. For all other financial instruments, general approach is applied.

The Group calculates the expected credit loss on trade receivables as the average of yearly historical loss rates of the last three years multiplied by the forward-looking element. The forward-looking element is based on robust positive correlation between banking sector credit losses and one year lag of unemployment rate. In case of other financial assets the expected credit loss of the instrument will be determined by multiplying the probability of default rate of the instrument with the loss given default of the instrument.

An entity shall recognise in profit or loss, as an impairment gain or loss, the amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date.

|  | Consolidated Financial Statements 2022 | 61

Independently of the two approaches mentioned above, impairment losses recognised where there is an objective evidence on impairment due to a loss event and this loss event significantly impacts the estimated future cash flows of the financial asset or group of financial assets. These are required to be assessed on a case-by-case basis. The maximum amount of impairment accounted for by the Group is 100% of the unsecured part of the financial asset. The amount of loss is recognised in the statement of profit or loss.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed. Any subsequent reversal of impairment loss is recognised in the statement of profit or loss, to the extent that the carrying value of the asset does not exceed its amortised cost at the reversal date.

Significant accounting estimates and judgements

For determination of fair value, management applies estimates of the future trend of key drivers of such values, including, but not limited to yield curves, foreign exchange and risk-free interest rates, and in case of the conversion option volatility of MOL share prices and dividend yield.

The loss allowances for financial assets are based on assumptions about risk of default and expected loss rates. The Group uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the Group’s past history and existing market conditions, as well as forward-looking estimates at the end of each reporting period.

20. Financial risk and capital management

Financial risk management

Since financial risk management is a centralised function at MOL Group, it is possible to integrate and measure all financial risks. As a result, Treasury liquidity and Financial Risk Report is submitted to the senior management quarterly.

As a general approach, risk management considers the business as a well-balanced integrated portfolio. MOL Group actively manages its commodity exposures for the following purposes:

Group Level Objectives: protection of financial ratios and targeted financial results

Business Unit Objectives: reducing the exposure of a business unit’s cash flow to market price fluctuations

Management of Covenants

The Group monitors capital structure using net gearing ratio, which is net debt divided by total capital plus net debt. The Group is currently in low net gearing status, the credit metrics have been decreased in 2022. As of 31 December 2022 the net debt/EBITDA is at 0.3x level (2021: 0.6x) while the net gearing is 11% (2021: 18%).

Capital management

The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholder value.

The Group manages its capital structure and makes adjustments to it in light of changes in economic conditions.

2x is the early warning indicator in net debt to EBITDA where MOL Group might consider making changes in its capital structure. Since the ratio is currently low (0.3x in 2022 Q4) there is no open decision point on it.

The long-term healthy net gearing ratio is expected to be 30% debt and 70% equity at MOL Group. If the ratio diverges permanently from this level the Group might consider making changes in its capital structure. Since the ratio does not differ from the 30% significantly (11% in 2022 Q4) there is no open decision point on it. For the calculation of the net gearing and net debt/EBITDA ratio please refer to section 20/C.

To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital from shareholders or issue new shares. Treasury share (put-call option) transactions are also applied for such purposes

a) Key exposures

Risk Management identifies and measures the key risk drivers and quantifies their impact on the MOL Group’s operating results. MOL Group is monitoring key exposures, the diesel crack spread, the crude oil price and gasoline crack spread have the biggest contribution to the cash flow volatility.

Commodity price risk

MOL Group as an integrated oil and gas company is exposed to commodity price risk on demand and supply side as well. The main commodity risks stem from the fact downstream processing more crude oil than our own crude oil production. In Upstream MOL Group has long position in crude oil and in Downstream MOL Group has a long position in refinery margin. Investors buying oil industry shares are generally willing to take the risk of oil business so commodity price risk should not be fully eliminated from the cash flow. When necessary, commodity hedging is considered to eliminate risks other than ‘business as usual’ risks or general market price volatility.

In 2022 MOL Group concluded short and mid-term commodity swap and option transactions. These transactions are mainly conducted for operational hedging purposes, in order to mitigate the effects of the price volatility in our operations and at the same time, when possible to lock in favourable forward curve structure.

|  | Consolidated Financial Statements 2022 | 62

Foreign currency risk

MOL Group relies on economic currency risk management principle that the currency mix of the debt portfolio should reflect the net long-term currency position of profit generation (‘natural hedge’). However in circumstances where insisting to this principle without any flexibility is disadvantageous for the company our practice allows using foreign exchange derivatives as well. The main motivation here is safeguarding the financial covenant compliance.

Interest rate risk

As an energy company, MOL Group has limited interest rate exposure. The ratio of fix / floating interest burdened debt is monitored by Risk Management.

Beside contracting loan agreements with a given fix / float interest rate MOL Group also has the flexibility to manage its level of interest rate risk exposure via interest rate swaps.

Credit risk

MOL Group sells products and services to a diversified customer portfolio - both from business segment and geographical point of view – with a large number of customers representing acceptable credit risk profile.

Policies and procedures are in place to set the framework and principles for customer credit risk management and collection of receivables to minimise credit losses deriving from delayed payment or non-payment of customers, to track these risks on a continuous basis and to provide financial support to sales process in accordance with MOL Group’s sales strategy and ability to bear risk.

Creditworthiness of customers with deferred payment term is thoroughly assessed, regularly reviewed and appropriate credit risk mitigation tools are applied. According to the MOL Group’s policy, customer credit limits should be covered by payment securities where applicable: credit insurance, bank guarantee, letter of credit, cash deposit and lien are the most preferred types of security to cover customer credit risk.

Individual customer credit limits are calculated taking into account external and/or internal assessment of customers as well as the securities provided. Information on existing and potential customers is based on well-known and reliable Credit Agencies and available internal data.

Various solutions support the customer credit management procedures, including monitoring of credit exposures for immediate information on breach and expiry of credit limits or guarantees. When such credit situations occur, deliveries shall be blocked; decisions on the unblocking of deliveries shall be made by authorised persons on both Financial and Business sides.

Credit risk of the investment portfolio is safeguarded by a rating grid concept. For bank deposits, an Internal Rating system is applied to reasonably diversify and mitigate the partner bank counterparty risks of MOL Group by proper distribution of available cash among banks (both group and entity level) based on their external and respective sovereign ratings. For securities, external ratings are taken into account for the limit calculation. Limits, their utilisations and escalation procedures are continuously managed and controlled by Cash Management areas of the Group.

Liquidity risk

The Group aims to manage liquidity risk by covering liquidity needs from bank deposits, other cash equivalents and from adequate amount of committed credit facilities. Besides, on operational level various cash pools throughout the Group help to optimise liquidity surplus and need on a daily basis.

The existing bank facilities ensure both sufficient level of liquidity and financial flexibility for the Group.

The amount of undrawn major committed credit facilities | 31 Dec 2022 | 31 Dec 2021
HUF million | HUF million
Long-term loan facilities available | 1,186,071 | 1,079,285
Short-term facilities available | 125,499 | 156,814
Total loan facilities available | 1,311,570 | 1,236,099

The EUR 570 million revolving credit facility agreement that was signed by MOL Group Finance Zrt. (formerly: MOL Group Finance S.A. Bertrange, Zürich Branch) as Borrower and MOL Plc. as Guarantor on 26 September 2019 with 5 years original maturity and increased to EUR 780 million in 2020, and the maturity date of which was extended by one additional year in 2021 in the amount of EUR 760 million has been extended again by one year in the amount of EUR 585 million with unchanged margin levels. The new maturity date regarding the extended part of the facility is 26 September 2026.

The EUR 575 million revolving credit facility agreement was signed on 29 November 2021 by MOL Group Finance Zrt. as Borrower and MOL Plc. as Guarantor, with 5 years original maturity, has been extended by one additional year with unchanged margin levels in the amount of EUR 441 million. The new maturity date regarding the extended part of the facility is 29 November 2027.

|  | Consolidated Financial Statements 2022 | 63

INA - Industrija nafte, d.d. - signed the EUR 300 million revolving credit facility agreement with eight banking groups represented by international and domestic banks: BNP Paribas, ING Bank N.V. Hungary Branch, MKB Bank Nyrt, OTP banka d.d., Privredna banka Zagreb d.d., Raiffeisenbank Austria d.d., SMBC Bank EU AG, Tatra banka, a.s. and Zagrebačka banka d.d. The facility was arranged as a club-deal and can be used for general corporate purposes, including investments. The facility concluded in 2018 in the amount of USD 300 million has been refinanced with this new facility.

Maturity profile of financial liabilities based on contractual undiscounted payments | Due within 1 month | Due between 1 and 12 months | Due between 1 and 5 years | Due after 5 years | Total
31 Dec 2022 | HUF million | HUF million | HUF million | HUF million | HUF million
Borrowings | 46,172 | 448,086 | 546,367 | 174,613 | 1,215,238
Transferred "A" shares with put&call options | - | 181,656 | - | - | 181,656
Trade and other payables | 536,129 | 465,505 | - | - | 1,001,634
Other financial liabilities | 2,107 | 14,422 | 20,732 | - | 37,261
Non-derivative financial instruments | 584,408 | 1,109,669 | 567,099 | 174,613 | 2,435,789
Derivatives |  | 35,352 | (61) | - | 35,291
Total financial liabilities | 584,408 | 1,145,021 | 567,038 | 174,613 | 2,471,080
Bank guarantees and other commitments* | 977,233 | - | - | - | 977,233
Total Off-balance sheet commitments | 977,233 | - | - | - | 977,233
* the maximum amount of the guarantee is allocated to the earliest period in which the guarantee could be called

Maturity profile of financial liabilities based on contractual undiscounted payments | Due within 1 month | Due between 1 and 12 months Restated | Due between 1 and 5 years | Due after 5 years | Total Restated
31 Dec 2021 | HUF million | HUF million | HUF million | HUF million | HUF million
Borrowings | 46,176 | 145,524 | 497,597 | 413,368 | 1,102,665
Transferred "A" shares with put&call options | - | 182,419 | - | - | 182,419
Trade and other payables | 460,549 | 387,703 | - | - | 848,252
Other financial liabilities | 994 | 8,124 | 32,116 | 877 | 42,111
Non-derivative financial instruments | 507,719 | 723,770 | 529,713 | 414,245 | 2,175,447
Derivatives | 51,659 | 2,084 | 3,920 | - | 57,663
Total financial liabilities | 559,378 | 725,854 | 533,633 | 414,245 | 2,233,110
Bank guarantees and other commitments* | 149,373 | - | - | - | 149,373
Total Off-balance sheet commitments | 149,373 | - | - | - | 149,373
* the maximum amount of the guarantee is allocated to the earliest period in which the guarantee could be called

b) Sensitivity analysis

In line with the international benchmark, Group Risk Management prepares sensitivity analysis. According to the Financial Risk Management Model, the effect of the key risk elements on clean-CCS-based profit/loss are the following:

|  | Consolidated Financial Statements 2022 | 64

| 2022 | 2021 Restated
Effect on Clean CCS-based* (Current Cost of Supply) profit/(loss) from operation | HUF billion | HUF billion
Brent crude oil price (change by +/- 10 USD/bbl; with fixed crack spreads and petrochemical margin)
Upstream | +45.4/-45.4 | +42.7/-42.7
Downstream | -8/+8 | -5.4/+5.4
TTF gas price (change by +/- 15 EUR/MWh; with fixed crack spreads and petrochemical margin)
Upstream | +44.1/-44.1 | +54.8/-54.8
Downstream | -52.6/+52.6 | -57.3/+57.3
Gas Midstream | +2.2/-2.2 | +2.7/-2.7
Exchange rates (change by +/- 15 HUF/USD; with fixed crack spreads)
Upstream | +21.2/-21.2 | +17.6/-17.6
Downstream** | -1.6/+1.6 | -7.5/+7.5
Gas Midstream | n/a | +0.4/-0.4
Exchange rates (change by +/- 15 HUF/EUR; with fixed crack spreads/petrochemical margin)
Upstream | +15.6/-15.6 | +5.9/-5.9
Downstream** | +26.5/-26.5 | +31/-31
Refinery margin (change by +/- 1 USD/bbl)
Downstream | +41.6/-41.6 | +34.9/-34.9
Integrated petrochemical margin (change by +/- 100 EUR/t)
Downstream | +46.4/-46.4 | +50.4/-50.4
*Clean CCS-based profit/(loss) from operation (EBIT) and its calculation methodology is not regulated by IFRS. Please see the reconciliation of reported profit/(loss) from operation (EBIT) and Clean CCS profit/(loss) from operation (Clean CCS EBIT) with the relevant definitions in the Appendix III. **The methodology of Downstream FX sensitivity was refined in 2022

c) Borrowings

Accounting policies

All loans and borrowings are initially recognised at the fair value of the consideration received net of issue costs associated with the borrowing. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method.

|  | Consolidated Financial Statements 2022 | 65

| 31 Dec 2022 | 31 Dec 2021
|  | Restated
| HUF million | HUF million
Long-term debt |  |
Eurobond €750 million due 2023 | - | 275.654
Eurobond €650 million due 2027 | 257.605 | 237.046
HUF bond HUF 28,400 million due 2029 | 28.576 | 28.599
HUF bond HUF 36,600 million due 2030 | 34.958 | 34.758
HUF bond HUF 35,500 million due 2031 | 35.415 | 35.404
HRK bond HRK 2,000 million due 2026 | 105.510 | 97.385
Schuldschein €130 million due between 2020-2027 | 19.987 | 18.409
Bank loans | 12.126 | 11.764
Finance lease liabilities | 156.082 | 127.137
Other | 154 | 336
Total long-term debt | 650.413 | 866.492
Short-term debt |  |
Eurobond €750 million due 2023 | 305.303 | 5.286
Eurobond €650 million due 2027 | 1.009 | 930
HUF bond HUF 28,400 million due 2029 | 146 | 146
HUF bond HUF 36,600 million due 2030 | 161 | 170
HUF bond HUF 35,500 million due 2031 | 486 | 486
HRK bond HRK 2,000 million due 2026 | 75 | 72
Schuldschein €130 million due between 2020-2027 | 180 | 21.434
Bank loans | 129.089 | 121.604
Finance lease liabilities | 31.289 | 34.809
Other | 948 | 679
Total short-term debt | 468.686 | 185.616
Gross debt (long-term and short-term) | 1.119.099 | 1.052.108
Cash and cash equivalents | 595.244 | 367.447
Current debt securities | 7.295 | 845
Net Debt* | 516.560 | 683.816
Total equity | 4.012.136 | 3.089.931
Capital and net debt | 4.528.696 | 3.773.747
Gearing ratio (%)** | 11,4% | 18,1%
Profit from operation | 1.259.112 | 567.186
Depreciation, depletion, amortisation and impairment | 475.533 | 478.856
Reported EBITDA from continuing operations | 1.734.645 | 1.046.042
Net Debt/Reported EBITDA | 0,30 | 0,65
*Long-term debt plus Short-term debt less Cash and cash equivalents less Current debt securities, based on the Group’s capital management policy the other financial liabilities are not included in the Net Debt calculation **Net Debt divided by Net Debt plus Total equity.

|  | Consolidated Financial Statements 2022 | 66

The analysis of the gross debt of the Group by currencies is the following:

Gross debt by currency | 31 Dec 2022 | 31 Dec 2021
HUF million | HUF million |
EUR | 788,801 | 731,611 |
USD | 6,078 | 65,365 |
HUF | 136,782 | 133,480 |
HRK | 110,434 | 110,851 |
CZK | 12,577 | 10,411 |
Other | 64,427 | 390 |
Gross debt | 1,119,099 | 1,052,108 |

The following issued bonds were outstanding as of 31 December 2022:

| Ccy | Amount Issued (orig ccy, million) | Amount Issued (million HUF) | Coupon | Type | Cpn Freq | Issue date | Maturity | Issuer
Eurobond | EUR | 750 | 300,188 | 2.6% | Fixed | Annual | 28.04.2016 | 28.04.2023 | MOL Plc.
Eurobond | EUR | 650 | 260,163 | 1.5% | Fixed | Annual | 08.10.2020 | 08.10.2027 | MOL Plc.
HRK bond | HRK | 2,000 | 106,220 | 0.875% | Fixed | Semi-annual | 06.12.2021 | 06.12.2026 | INA d.d.
HUF bond | HUF | 28,400 | 28,400 | 2.0% | Fixed | Annual | 24.09.2019 | 24.09.2029 | MOL Plc.
HUF bond | HUF | 36,600 | 36,600 | 1.1% | Fixed | Annual | 22.09.2020 | 22.09.2030 | MOL Plc.
HUF bond | HUF | 35,500 | 35,500 | 1.9% | Fixed | Annual | 12.04.2021 | 12.04.2031 | MOL Plc.

The reconciliation between the Group’s total of future minimum lease payments as a lessee and their present value is the following:

| 31 Dec 2022 | 31 Dec 2021
| Minimum lease payments | Lease liability | Minimum lease payments | Lease liability
Leases as a lessee | HUF million | HUF million | HUF million | HUF million
Due within one year | 33,984 | 31,289 | 36,294 | 34,809
Due later than one year but not later than five years | 104,521 | 96,591 | 73,818 | 67,007
Due later than five years | 65,909 | 59,491 | 79,133 | 60,130
Total | 204,414 | 187,371 | 189,245 | 161,946
Future finance charges | 17,043 | n/a | 27,299 | n/a
Lease liability | 187,371 | 187,371 | 161,946 | 161,946

The reconciliation between the Group’s total of future minimum lease payments as a lessor and their present value is the following:

| 31 Dec 2022 | 31 Dec 2021
| Minimum lease payments receivable | Lease receivable | Minimum lease payments receivable | Lease receivable
Finance leases as a lessor | HUF million | HUF million | HUF million | HUF million
Due within one year | 894 | 636 | 894 | 608
Due later than one year but not later than five years | 4,531 | 3,779 | 3,889 | 2,902
Due later than five years | 2,768 | 2,080 | 3,661 | 2,842
Residual value | n/a | 1,487 | n/a | 1,554
Total | 8,193 | 7,982 | 8,444 | 7,906
Future finance income | 211 | n/a | 538 | n/a
Lease receivable | 7,982 | 7,982 | 7,906 | 7,906

|  | Consolidated Financial Statements 2022 | 67

d) Equity

Accounting policies

Retained earnings and other reserves shown in the consolidated financial statements do not represent the distributable reserves for dividend purposes. Reserves for dividend purposes are determined based on the reconciliation of MOL Plc.’s equity prepared in accordance with Act C of 2000 on Accounting (“Hungarian Accounting Law”).

Reserves of exchange differences on translation

The reserves of exchange differences on translation represents translation differences arising on consolidation of financial statements of foreign entities. Exchange differences arising on such monetary items that, in substance, forms part of the company's net investment in a foreign entity are classified as other comprehensive income in the consolidated financial statements until the disposal of the net investment. Upon disposal of the corresponding assets, the cumulative revaluation or reserves of exchange differences on translation are recognised as income or expenses in the same period in which the gain or loss on disposal is recognised. When a subsidiary that is a foreign operation repays a quasi-equity loan or returns share capital there is a reduction in the parent’s absolute ownership interest, the pro rata share of the CTA should be reclassified to profit and loss.

Fair valuation reserves

The fair valuation reserve includes the cumulative net change in the fair value of effective cash flow hedges and financial assets at fair value through other comprehensive income.

Equity component of debt and difference in buy-back prices

Equity component of compound debt instruments includes the residual amount of the proceeds from the issuance of the instrument above its liability component, which is determined as the present value of future cash payments associated with the instrument. The equity component of compound debt instruments is recognised when the Group becomes party to the instrument.

Treasury Shares

The nominal value of treasury shares held is deducted from registered share capital. Any difference between the nominal value and the acquisition price of treasury shares is recorded directly to retained earnings. In order to consistently distinguish share premium and retained earnings impact of treasury share transactions, repurchase and resale of treasury transactions affect retained earnings instead of having impact on share premium.

Share capital

There was no change in the number of issued shares in 2022. As of 31 December 2022, the issued share capital was HUF 102,429 million, consisting of 819,424,824 series “A” shares with par value of HUF 125, one series “B” share with par value of HUF 1,000 and 578 series “C” shares with par value of HUF 1,001. Outstanding share capital as of 31 December 2022 and 31 December 2021 is 79,013 HUF million and HUF 78,163 million, respectively.

Every “A” class share with a par value of HUF 125 each (i.e. one hundred and twenty-five forint) entitles the holder thereof to have one vote and every “C” class share with a par value of 1,001 each (i.e. one thousand one forint) entitles the holder to have eight and eight thousandth vote, with the following exceptions. Based on the Articles of Association, no shareholder or shareholder group may exercise more than 10% of the voting rights with the exception of organisation(s) acting at the Company’s request as depository or custodian for the Company’s shares or securities representing the Company’s shares.

Series “B” shares are voting preference shares with a par value of HUF 1,000 that entitles the holder thereof to preferential rights as specified in the Articles of Association. The "B" series share is owned by MNV Zrt. exercising ownership rights on behalf of the Hungarian State. The “B” series share entitles its holder to eight votes in accordance with its nominal value. The supporting vote of the holder of “B” series of share is required to adopt decisions in the following matters pursuant to Article 12.4. of the Articles of Association: decision on amending the articles regarding the B series shares, the definition of voting rights and shareholder group, list of issues requiring supermajority at the general meeting as well as Article 12.4. itself; further, the “yes” vote of the holder of “B” series of shares is required to adopt decisions on any proposal not supported by the Board of Directors in the following matters: election and dismissal of the members of the Board of Directors, the Supervisory Board and the auditors, decision of distribution of profit after-taxation and amending of certain provisions of the Articles of Association.

Based on the authorisation granted in the Article 17.D of the Articles of Association the Board of Directors is entitled to increase the share capital until 10 April 2024 in one or more instalments by not more than HUF 30 billion in any form and method provided by the Civil Code.

Reserves and retained earnings

Between 2023 and 2026 MOL Group plans to spend more than HUF 100 billion on capital expenditures, therefore it created HUF 100 billion development reserve based on the paragraph 7 of Act LXXXI of 1996 on corporate tax and dividend tax, which amount is transferred from the retained earnings to tied-up reserves on 31 December 2022.

|  | Consolidated Financial Statements 2022 | 68

Changes in the number of ordinary, treasury and authorised shares:

Series “A” and “B” shares | Number of shares issued | Number of treasury shares | Shares under repurchase obligation | Shares under retransfer agreement | Number of shares outstanding | Authorised number of shares
1 Jan 2021 | 819,424,825 | (75,864,139) | (117,571,197) | - | 625,989,489 | 1,059,424,825
Share distribution for the members of the Board of Directors and participants of MRP | - | 164,124 | - | - | 164,124 | -
Settlement of share option agreement with Commerzbank A.G. | - | (888,250) | 888,250 | - | - | -
Settlement of share option agreement with ING Bank N.V. | - | (2,460,040) | 2,460,040 | - | - | -
Treasury share purchase by MOL Vagyonkezelő Kft. | - | (850,000) | - | - | (850,000) | -
Capital contribution to MOL New Europe Foundation | - | 42,977,996 | - | (42,977,996) | - | -
31 Dec 2021 | 819,424,825 | (36,920,309) | (114,222,907) | (42,977,996) | 625,303,613 | 1,059,424,825
Share distribution for the members of the Board of Directors and participants of MRP | - | 190,625 | - | - | 190,625 | -
Settlement of share option agreement with Commerzbank A.G. | - | (9,844,626) | 9,844,626 | - | - | -
Settlement of share option agreement with ING Bank N.V. | - | (2,438,877) | 2,438,877 | - | - | -
Settlement of share option agreement with Unicredit Bank A.G. | - | 6,872,214 | (6,872,214) | - | - | -
Treasury shares sold to MOL Plc. SESOP Organizations | - | 6,609,424 | - | - | 6,609,424 | -
31 Dec 2022 | 819,424,825 | (35,531,549) | (108,811,618) | (42,977,996) | 632,103,662 | 1,059,424,825
Series “C” shares |  |  |  |  |  |
1 Jan 2021 | 578 | (578) | - | - | - | 578
31 Dec 2021 | 578 | (578) | - | - | - | 578
31 Dec 2022 | 578 | (578) | - | - | - | 578

Dividend

In April 2022 the Board of Directors on behalf of the 2022 Annual General Meeting of MOL Plc. approved to pay HUF 241,934 million dividend in respect of 2021, which equals to HUF 302.62 dividend per share. The total amount of reserves legally available for distribution based on MOL Plc.’s reconciliation of equity is HUF 2,081,599 million as of 31 December 2022 (31 December 2021(restated): HUF 1,859,123 million).

The approved dividend (HUF 241,934 million) and the dividend shown in the statement of changes in equity (HUF 191,285 million) are different because the following movements are not presented as dividend payments: dividend of shares under retransfer agreement (HUF 13,006 million) represents in substance MOL's contribution to social responsibility activities and therefore charged to the statement of profit or loss; dividend of shares under put and call option transactions (HUF 20,798 million) presented as a decrease in financial liability; dividend towards MOL Plc.’s Employee Share Ownership Programme Organisation (HUF 4,714 million) has no effect on the statement of financial position because the organisation is consolidated to the group; dividends of shares in OTP-MOL swap agreement(HUF 12,130 million) presented as change in fair value of derivative instruments.

Shares under retransfer agreement

On 13 July 2021, MOL and the Hungarian Government established a new foundation of trusts in public interest with the name of MOL - New Europe Foundation, and with the aim of afteing corporate responsibility objectives especially in the field of sport, culture, health and environment protection. This foundation replaces some of MOL's corporate social responsibility activities carried out in the past. MOL Group transferred 42,977,996 pieces of MOL ordinary shares of series “A” to the foundation. The operation of the foundation shall be primarily financed by the dividends of these shares. The future dividend on these shares represents in substance MOL's contribution to social responsibility activities and therefore charged to the statement of profit or loss. As in substance the deed of foundation is a supporting agreement therefore the transferred MOL shares remain deducted from equity. The Founders in consultation with MOL appointed an asset controller to control the asset management of the Foundation. The Foundation was established for a defined period of 25 years and the Board of Trustees has the right to decide about another 25 years of extension at the end of the period. At termination of the Foundation, MOL Group will receive back the shares held by the Foundation. Two out of the five member of the board of trustees are the members of MOL Group key management personnel. The founders can’t control the appointment and recall of the members of the Board of trustees after the establishment. The Foundation is independent from MOL thus not consolidated by MOL Group, earnings per share is presented accordingly.

|  | Consolidated Financial Statements 2022 | 69

Treasury share put and call option transactions

MOL Plc. has two option agreements concluded with financial institutions in respect of 68,727,610 pieces of series “A” shares (“Shares”) as of 31 December 2022. Under the agreements, MOL Plc. holds American call options and the financial institutions hold European put options in respect of the Shares. The expiry of both the put and call options are identical.

Counterparty | Underlying pieces of MOL ordinary shares | Strike price per share | Expiry
ING Bank N.V. | 34,281,056 | EUR 6.7008 | 23 Jun 2023
UniCredit Bank AG | 34,446,554 | EUR 6.50706 | 23 Jun 2023

MOL agreed with ING Bank N.V. (“ING”) on 20 June 2022, that the option rights in relation to 36,127,167 MOL Series “A” Ordinary shares (“Shares”) under the share option agreement executed between ING and MOL on 24 February 2022 are either fully cash settled or partly physically and partly cash settled on 23 June 2022. Simultaneously, MOL and ING entered into a new share option agreement. According to the new share option agreement MOL received American call options and ING received European put options in relation to 34,281,056 Shares, with the effective date of 27 June 2022. The maturity date of both the call and put options is 23 June 2023, and the strike price of both options is EUR 6.7008 per Share.

MOL agreed with UniCredit Bank AG (“UniCredit”) on 20 June 2022, that the option rights in relation to 39,041,393 MOL Series “A” Ordinary shares (“Shares”) under the share option agreement executed between UniCredit and MOL on 28 February 2022 are partly physically and partly cash settled on 23 June 2022. Simultaneously, MOL and UniCredit entered into a new share option agreement. According to the new share option agreement MOL received American call options and UniCredit received European put options in relation to 34,446,554 Shares, with the effective date of 27 June 2022. The maturity date of both the call and put options is 23 June 2023, and the strike price of both options is EUR 6.50706.

Treasury shares sold to MOL Plc. SESOP Organizations

On 27 of January 2022, based on the authorisation of the Extraordinary General Meeting of the Company held on 22 December 2021 MOL have sold 3,304,712 pieces of „A” Series MOL Ordinary Shares to MOL Plc. SESOP Organization 2021-1 and 3,304,712 pieces of MOL Shares to MOL Plc. SESOP Organization 2021-2.

Share swap agreement with OTP

MOL Plc. and OTP entered into a share-exchange and a share swap agreement in 2009. Under the agreements, initially MOL transferred 40,084,008 “A” series MOL ordinary shares to OTP in return for 24,000,000 pieces OTP ordinary shares. The agreement contains settlement provisions in case of certain movement of relative share prices of the parties, subject to net cash or net share settlement. The agreement, concluded on 16 April 2009 has been further extended in 2022 until 11 July 2027, which did not trigger any movement in MOL Plc.’s treasury shares.

Until the expiration date each party can initiate a cash or physical (i.e. in shares) settlement of the deal.

The accounting treatment of the share swap agreement was revised, for more information please refer to Note 1.

|  | Consolidated Financial Statements 2022 | 70

21. Financial instruments

31 Dec 2022 | Fair value through profit or loss | Derivatives used for hedging hedge acc.* | Amortised cost | Fair value through other comprehensive income | Total carrying amount
Carrying amount of financial instruments | HUF million | HUF million | HUF million | HUF million | HUF million
Financial assets |  | - | - | - | - | -
Other non-current financial assets | Equity instruments | 15,781 | - | - | 104,251 | 120,032
Loans given | - | - | 80,988 | - | 80,988
Deposit | - | - | 391 | - | 391
Finance lease receivables | - | - | 7,346 | - | 7,346
Debt securities | - | - | - | 42,027 | 42,027
Commodity derivatives | 7,141 | - | - | - | 7,141
Other | 28,342 | - | 54,024 | - | 82,366
Total non-current financial assets | 51,264 | - | 142,749 | 146,278 | 340,291
Trade and other receivables | - | - | 931,511 | - | 931,511
Finance lease receivables | - | - | - | - | -
Cash and cash equivalents | - | - | 595,244 | - | 595,244
Debt securities | - | - | - | 7,295 | 7,295
Other current financial assets | Commodity derivatives | 55,792 | - | - | - | 55,792
Loans given | - | - | 3,506 | - | 3,506
Deposit | - | - | 103 | - | 103
Finance lease receivables | - | - | 636 | - | 636
Foreign exchange derivatives | - | - | - | - | -
Other derivatives | 650 | - | - | - | 650
Other | 27,071 | - | 90,205 | - | 117,276
Total current financial assets | 83,513 | - | 1,621,205 | 7,295 | 1,712,013
Total financial assets |  | 134,777 | - | 1,763,954 | 153,573 | 2,052,304
|  |  |  |  |  | -
Financial liabilities |  |  |  |  |  | -
Borrowings (long-term debt) | - | - | 494,331 | - | 494,331
Finance lease liabilities |  | - | - | 156,082 | - | 156,082
Other non-current financial liabilities | Other derivatives | 509 | - | - | - | 509
Other | - | - | 20,732 | - | 20,732
Interest rate derivatives | - | (570) | - | - | (570)
Total non-current financial liabilities | 509 | (570) | 671,145 | n/a. | 671,084
Trade and other payables | - | - | 1,001,634 | - | 1,001,634
Borrowings (short-term debt) | - | - | 437,397 | - | 437,397
Finance lease liabilities |  | - | - | 31,289 | - | 31,289
Other current financial liabilities | Transferred "A" shares with put&call options** | - | - | 179,573 | - | 179,573
Commodity derivatives | 35,349 | - | - | - | 35,349
Foreign exchange derivatives | - | - | - | - | -
Other derivatives | - | - | - | - | -
Other | - | - | 16,529 | - | 16,529
Interest rate derivatives | - | 3 | - | - | 3
Total current financial liabilities | 35,349 | 3 | 1,666,422 | n/a. | 1,701,774
Total financial liabilities | 35,858 | (567) | 2,337,567 | n/a. | 2,372,858
*hedge acc: under hedge accounting **more information about the transferred "A" shares with put&call options is included in Note 20/c

|  | Consolidated Financial Statements 2022 | 71

| Fair value through profit or loss Restated | Derivatives used for hedging | Amortised cost Restated | Fair value through other comprehensive income Restated | Total carrying amount Restated
31 Dec 2021 | hedge acc.*
Carrying amount of financial instruments | HUF million | HUF million | HUF million | HUF million | HUF million
Financial assets |  |  |  |  |  |
Other non-current financial assets | Equity instruments | 8,360 | - | - | 90,931 | 99,291
Loans given | - | - | 68,375 | - | 68,375
Deposit | - | - | 361 | - | 361
Finance lease receivables | - | - | 7,298 | - | 7,298
Debt securities | - | - | - | 19,393 | 19,393
Commodity derivatives | 2,418 | - | - | - | 2,418
Other | - | - | 30,951 | - | 30,951
Total non-current financial assets | 10,778 | - | 106,985 | 110,324 | 228,087
Trade and other receivables | - | - | 753,850 | - | 753,850
Finance lease receivables | - | - | 169 | - | 169
Cash and cash equivalents | - | - | 367,447 | - | 367,447
Debt securities | - | - | - | 845 | 845
Other current financial assets | Commodity derivatives | 43,199 | - | - | - | 43,199
Loans given | - | - | 848 | - | 848
Deposit | - | - | 67 | - | 67
Finance lease receivables | - | - | 608 | - | 608
Foreign exchange derivatives | 277 | - | - | - | 277
Other derivatives | - | - | - | - | -
Other | - | - | 16,080 | - | 16,080
Total current financial assets | 43,476 | - | 1,139,069 | 845 | 1,183,390
Total financial assets |  | 54,254 | - | 1,246,054 | 111,169 | 1,411,477
Financial liabilities |  |  |  |  |  |
Borrowings (long-term debt) | - | - | 739,349 | - | 739,349
Finance lease liabilities |  | - | - | 127,143 | - | 127,143
Other non-current financial liabilities | Foreign exchange derivatives | - | - | - | - | -
Other derivatives | 3,895 | - | - | - | 3,895
Other | - | - | 32,994 | - | 32,994
Interest rate derivatives | - | 24 | - | - | 24
Total non-current financial liabilities | 3,895 | 24 | 899,486 | n/a. | 903,405
Trade and other payables | - | - | 848,241 | - | 848,241
Borrowings (short-term debt) | - | - | 150,807 | - | 150,807
Finance lease liabilities |  | - | - | 34,809 | - | 34,809
Other current financial liabilities | Transferred "A" shares with put&call options** | - | - | 181,669 | - | 181,669
Commodity derivatives | 51,820 | - | - | - | 51,820
Foreign exchange derivatives | 30 | - | - | - | 30
Other derivatives | 1,527 | - | - | - | 1,527
Other | - | - | 9,117 | - | 9,117
Interest rate derivatives | - | 4 | - | - | 4
Total current financial liabilities | 53,377 | 4 | 1,224,643 | n/a. | 1,278,024
Total financial liabilities | 57,272 | 28 | 2,124,129 | n/a. | 2,181,429
*hedge acc: under hedge accounting **more information about the transferred "A" shares with put&call options is included in Note 20/c

The Group does not have any instrument where the Group chose the fair value option to designate an instrument upon initial recognition at fair value through profit or loss in order to reduce a measurement or recognition inconsistency. The Group does not have any financial instrument whose classification has changed as a result of amendments in business model categorisation.

|  | Consolidated Financial Statements 2022 | 72

The Group elected upon initial recognition to measure investments in equity instruments at fair value through other comprehensive income. The managements’ intention regarding these instruments which are measured as at fair value through other comprehensive income did not change, these instruments are not held for trading, so the Group elected the fair value through other comprehensive income measurement at recognition for these equity instruments. Investments in venture funds are measured at fair value through profit or loss. The most significant equity instrument is JANAF interest held by INA d.d., the company that owns and operates the Adria pipeline system. The market value of the shares as of 31 December 2022 amounted to HUF 37,243 million (31 December 2021: HUF 29,762 million).

The most significant items among debt securities are bonds issued by listed entities, banks and Croatian state bonds. For the changes in the other comprehensive income due to the valuation of debt instruments please refer to Note8.

Among other financial assets there is a HUF 60,800 million paid deposit related to the acquisition of Alteo Plc., for more information please refer to Note 29/c.

The Group uses several valuation techniques to determine the fair value of the financial instruments. The fair value of commodity derivatives is determined based on the present value of estimated future cash flows using observable forward prices.

The fair value of debt instruments is calculated by discounting the present value of estimated future cash flows with observable zero coupon bond yield curves adjusted with issuer-specific credit risk factors.

The fair values of financial instruments measured at amortised cost approximate their carrying amounts except for the issued bonds. The fair value of the issued bonds is HUF 667,427 million, while their carrying amount is HUF 769,244 million as of 31 December 2022 (31 December 2021: fair value was HUF 708,965 million, carrying amount was HUF 715,936 million). HUF 521,126 million of the fair value of the issued bonds is categorised as Level 1 and HUF 146,301 million is categorised as Level 2.

Impairment only accounted for on trade receivables and loans given. No impairment is recognised on the remaining financial instruments based on materiality, history, expectations and change in credit risk.

Contract assets and contract liabilities from contracts with customers are not material for the Group.

The carrying amount of hedging instruments designated in hedge accounting programmes are the followings:

| 2022 | 2021
Carrying amounts of hedging instrument | HUF million | HUF million
Net investment hedge | Liabilities | Borrowings | 584,384 | 562,1
Cash flow hedge | Liabilities | Interest rate derivatives | -567 | 28

Hedge of net investments in foreign operations

The Group has EUR and USD denominated net investments in foreign operations and EUR and USD denominated borrowings. These borrowings are being used to hedge the Group’s exposure to EUR and USD foreign exchange risk on these investments. Gains or losses on the retranslation of this borrowing are transferred to other comprehensive income to offset any gains or losses on translation of the net investments in the subsidiaries. There is an economic relationship between the hedged items and the hedging instruments as the net investments creates a translation risk that will match the foreign exchange risk on the borrowings. The Group has established a hedge ratio of 1:1 as the underlying risk of the hedging instrument is identical to the hedged risk component. The hedge ineffectiveness will arise when the amount of the investment in the foreign subsidiary becomes lower than the amount of the borrowing.

The notional amount of the EUR denominated borrowings are EUR 1,460 million and at balance sheet date no USD borrowing remained as a hedging instrument. (31 December 2021: EUR 1,530 million and USD 9 million). The weighted average hedged rates, where the weight is the balance of the hedging instrument, for the year are 391 HUF/EUR and 321 HUF/USD (31 December 2021: 358 HUF/EUR and 298 HUF/USD).

The movements of the currency translation reserve due to net investment hedging are the following:

|  |  | 2022 | 2021
Net investment in foreign operation |  | Notes | HUF million | HUF million
Opening Balance of the foreign currency translation reserve due to hedging, net of tax |  | 150,420 | 147,457
Change in value of hedged item used to determine hedge effectiveness |  | 47,475 | 4,042
Change in carrying amount of borrowings as a result of foreign currency movements recognised in other comprehensive income | 8 | (47,475) | (4,042)
Change in foreign currency translation reserve due to hedging, net of tax |  | 8 | 34,768 | 2,963
Closing Balance of the foreign currency translation reserve due to hedging, net of tax |  | 185,188 | 150,420

The hedging gain recognised in other comprehensive income before tax is equal to the change in fair value used for measuring effectiveness. There was no ineffectiveness to be recorded from net investments in foreign entity hedges.

|  | Consolidated Financial Statements 2022 | 73

22. Fair value measurement of financial instruments

| 31-Dec-2022 | 31-Dec-2021
| Level 1 Unadjusted quoted prices in active markets | Level 2 Valuation techniques based on observable market input | Level 3 Valuation techniques based on unobservable input | Total fair value | Level 1 Unadjusted quoted prices in active markets | Level 2 Restated Valuation techniques based on observable market input | Total fair value Restated
Fair value hierarchy | HUF million | HUF million | HUF million | HUF million | HUF million | HUF million | HUF million
Financial assets |  |  |  |  |  |  |
Equity instruments | 37,243 | 82,789 | - | 120,032 | 29,762 | 69,529 | 99,291
Debt securities | - | 49,322 | - | 49,322 | - | 20,238 | 20,238
Commodity derivatives | - | 62,933 | - | 62,933 | - | 45,617 | 45,617
Foreign exchange derivatives | - | - | - | - | - | 277 | 277
Other derivatives | - | 650 | - | 650 | - | - | -
Other | - | - | 55,413 | 55,413 | - | - | -
Total financial assets | 37,243 | 195,694 | 55,413 | 288,350 | 29,762 | 135,661 | 165,423
Financial liabilities |  |  |  |  |  |  |
Commodity derivatives | - | 35,349 | - | 35,349 | - | 51,820 | 51,820
Foreign exchange derivatives | - | - | - | - | - | 30 | 30
Other derivatives | - | 509 | - | 509 | - | 5,422 | 5,422
Interest rate derivatives | - | (567) | - | (567) |  | 28 | 28
Total financial liabilities | - | 35,291 | - | 35,291 | - | 57,300 | 57,300

In 2021 there was no instrument with fair value categorised as Level 3 (valuation techniques based on significant unobservable market input).

Other financial assets (both current and non-current) relate to the disposal of MOL’s UK portfolio which is classified as a financial asset and measured at fair value through profit or loss. The fair value is determined by multiplying the average daily Brent price exceeding a pre-agreed Brent price and the number of produced oil barrels for the companies’ percentage interest under the relevant Joint Operation Agreements and is considered a level 3 valuation under the fair value hierarchy. Future cash flows are estimated based on inputs including quoted Brent price and production volumes related to the disposed operations.

Quantitative sensitivity analysis for the changes in unobservable inputs

§ A 10% increase in the Brent oil price would result in an increase of the contingent assets in the amount of HUF 12,999 million, while a 10% decrease in the Brent oil price would result in a decrease of the contingent assets in the amount of HUF 12,961 million

§ A 1 percentage point increase in the discount factor would result in a decrease of the contingent assets in the amount of HUF 526 million, a 1 percentage point decrease in the discount factor would result in a increase of the contingent asset in the amount of HUF 526 million

§ A 10% increase in production would result in an increase of the contingent assets in the amount of HUF 2,742 million, a 10% decrease in production would result in a decrease of the contingent asset in the amount of HUF 2,742 million

The following table shows the changes in the value of level 3 financial assets for the period ended at 31 December 2022:

| Amount HUF million
Opening Balance 1 January 2022 | -
Additions | 57,566
Gains/losses arising during the year | (2,153)
Closing Balance 31 December 2022 | 55,413

|  | Consolidated Financial Statements 2022 | 74

23. Trade and other receivables

Accounting policies

Trade and other receivables are amounts due from customers for goods sold and services performed in the normal course of business, as well as other receivables such as margining receivables. Trade and other receivables are initially recognised at fair value less transaction costs and subsequently measured at amortised cost less any provision for doubtful debts. A provision for impairment is made for expected credit losses and when there is objective evidence (such as the probability of insolvency or significant financial difficulties of the debtor) that the Group will not be able to collect all of the amounts due under the original terms of the invoice. Impaired receivables are derecognised when they are assessed as uncollectible.

If collection of trade receivables is expected within the normal business cycle which is one year or less, they are classified as current assets. In other cases, they are presented as non-current assets.

| 31 Dec 2022 | 31 Dec 2021
Trade and other receivables | HUF million | HUF million
Trade receivables | 803,634 | 563,964
Other receivables | 127,877 | 190,055
Total | 931,511 | 754,019

| 31 Dec 2022 | 31 Dec 2021
Trade receivables | HUF million | HUF million
Trade receivables (gross) | 817,239 | 580,131
Loss allowance for receivables | (13,605) | (16,167)
Total | 803,634 | 563,964

The gross amount of trade receivables increased significantly mainly due to the increase in net sales, while the loss allowance for receivables decreased by HUF 2,562 million due to the improvement both in forward looking element and 3-year average historical loss rates applied in the impairment model.

| 2022 | 2021
Movements in the loss allowance for receivables | HUF million | HUF million
At 1 January | 16,167 | 22,206
Additions | 2,684 | 3,773
Reversal | -5,649 | -9,046
Amounts written off | -233 | -765
Foreign exchange differences | 636 | -1
At 31 December 2022 | 13,605 | 16,167

Ageing analysis of trade receivables | 31 Dec 2022 | 31 Dec 2021
Gross book value | Net book value | Gross book value | Net book value
HUF million | HUF million | HUF million | HUF million
Not past due | 731,618 | 730,959 | 526,528 | 525,974
Past due | 85,621 | 72,675 | 53,603 | 37,990
Within 180 days | 69,377 | 65,178 | 35,392 | 34,519
Over 180 days | 16,244 | 7,497 | 18,211 | 3,471
Total | 817,239 | 803,634 | 580,131 | 563,964

Current assets pledged as security

There are no current assets pledged as security as of 31 December 2022.

|  | Consolidated Financial Statements 2022 | 75

24. Cash and cash equivalents

Accounting policies

Cash includes cash on hand and cash at banks. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and that are subject to an insignificant risk of change in value. The Group considers the term “insignificant risk of change in value” not being limited to three-month period.

| 31 Dec 2022 | 31 Dec 2021
| HUF million | HUF million
Short-term bank deposits | 322,290 | 166,065
Demand deposit | 250,065 | 188,222
Cash on hand | 22,889 | 13,160
Total | 595,244 | 367,447

Cash and cash equivalents pledged as security

The carrying amount of cash and cash equivalents pledged as security for liabilities is HUF 13,152 million as of 31 December 2022 (2021: HUF 11,667 million).

|  | Consolidated Financial Statements 2022 | 76

Other financial information

This section includes additional financial information that are either required by the relevant accounting standards or management considers these to be material information for shareholders.

25. Commitments and contingent liabilities

Accounting policies

Contingent liabilities are not recognised in the consolidated financial statements unless they are acquired in a business combination. They are disclosed in the Notes unless the possibility of an outflow of resources embodying economic benefits is remote. A contingent asset is not recognised in the consolidated financial statements but disclosed when an inflow of economic benefits is probable.

d) Guarantees

The total value of bank guarantees, letter of credits and other commitments undertaken to parties outside the Group and equity consolidated investments is contractually HUF 977,233 million.

b) Capital and Contractual Commitments

The total value of capital commitments as of 31 December 2022 is HUF 299,287 million (31 December 2021: HUF 157,802 million), of which HUF 115,400 million relates to operation in Croatia, HUF 91,708 million to Hungarian operation and HUF 23,940 million to operation in Slovakia.

The most significant amounts relate to the Rijeka Refinery Upgrade Project (HUF 67,021 million). MOL is committed to the transformation of the refinery business and raising the competitiveness of the Rijeka Refinery. The investment will make the Rijeka Refinery one of the most modern refineries in Europe and will increase the proportion of profitable "white" products, i.e. motor fuels, to better serve market needs. Other large commitments in Croatia relate to the development projects of the Izabela SE and Irena gas fields in the Adriatic Sea (HUF 14,601 million) and the replacement of condensing turbines with electric drive (HUF 9,517 million).

MOL has further commitments in upstream to drill and complete 16 wells, reach new oil reserves, improve reservoir pressure maintenance and cover annual work programme (HUF 62,325 million).

MOL Group's most significant commitment in Hungary relates to a polyol project of MOL Petrochemicals (HUF 36,747 million), which aims to become a major producer of polyether polyols (high-value intermediate products for the automotive, packaging and furniture industries) in Europe. Further substantial capital commitments in Hungary relate to a metathesis project (HUF 21,077 million) and to expanding the capacity of Maleic Anhydride Unit at Danube Refinery (HUF 9,819 million).

The largest investment commitment in Slovakia relates to a debottlenecking and process optimisation project in petrochemical business (HUF 16,596 million).

MOL Group has a take-or-pay contract with JANAF in the amount of HUF 6,544 million.

As part of corporate social responsibility MOL Group is committed to spending HUF 1,458 million via sponsorship agreements next year.

c) Unrecognised lease commitments

Unrecognised lease commitments* | 31 Dec 2022 | 31 Dec 2021
HUF million | HUF million
Due within one year | 2,266 | 1,867
Due later than one year but not later than five years | 1,328 | 2,026
Due later than five years | 306 | 274
Total | 3,900 | 4,167
*Lease commitments for short-term leases and leases of low-value assets |  |

d) Authority procedures, litigation

General

None of the litigations described below have any impact on the accompanying consolidated financial statements except as explicitly noted. MOL Group entities are parties to a number of civil actions arising in the ordinary course of business. Currently, no further litigation exists that could have a material adverse effect on the financial condition, assets, results or business of the Group.

The value of litigation where members of the MOL Group act as defendant is HUF 21,614 million for which HUF 5,796 million provision has been made.

|  | Consolidated Financial Statements 2022 | 77

ICSID arbitration (MOL Plc. vs. Croatia)

The International Centre for Settlement of Investment Disputes (ICSID) delivered its verdict in the arbitration case between the Republic of Croatia and MOL Plc. on the 5 July 2022. MOL filed a request for arbitration against Croatia in 2013 for breaching contractual obligations on multiple occasions under the agreements signed between the parties in 2009 mainly concerning gas trading.

The ICSID award clearly states that Croatia’s bribery related allegations are unfounded. The three-member council unanimously rejected Croatia’s objection that the 2009 agreements were a result of criminal conduct. Similarly, to the UNCITRAL Tribunal in 2016, this international judicial forum also characterized the story of the Croatian criminal proceedings’ crown witness as weak and full of contradictions. Furthermore, the court expressed strong doubts about the truthfulness and reliability both in the arbitral and criminal proceedings in Zagreb.

According to the ruling of the arbitration tribunal Croatia caused substantial damages to INA, and thus indirectly to MOL by failure to take over the gas trading business of INA as well as by breaching contractual obligations of natural gas pricing and royalty rate increases, thus awarding MOL with damages in the amount of USD 167.8 million. The tribunal awarded a further USD 16.1 million in damages caused by Croatia by forcing the sale of stored natural gas of INA’s subsidiary (Prirodni Plin). Together with interest MOL was awarded a total of around USD 236 million in damages. The contingent asset has not been recognised in the Statement of Financial Position.

CONCESSIONS (INA Group)

On 29 July 2011 the Ministry of Economy, Labour and Entrepreneurship (hereinafter: the Ministry) rendered three Decisions depriving INA of the license to explore hydrocarbons in exploration areas “Sava”, “Drava” and “North-West Croatia”.

On 29 August 2011, INA filed three administrative lawsuits against the Ministry’s Decisions. The Administrative Court annulled the Ministry’s Decisions.

On 10 November 2014, and on 20 February 2015 the Ministry adopted new Decisions in which it again deprived INA of the license to explore hydrocarbons in exploration areas “Sava” and “North-West Croatia” and “Drava”, with the same explanations. INA filed lawsuits against new Ministry Decisions regarding exploration areas “Sava”, “Drava” and “NW Croatia”.

In November 2016 the Administrative Court reached a decision and rejected INA’s claim in the case regarding exploration area “Drava”. INA has filed an appeal against that decision in December 2016.

On 08 September 2017 INA received the judgment brought by the High Administrative Court rejecting INA's appeal against the first instance verdict in the “Drava” case. Thus, the Decision on seizure of hydrocarbon exploration approvals in the "Drava" research area, became final. The court also reached a decision regarding the exploration area “North-West Croatia”. In both cases Constitutional Court reached a decision and rejected INA’s claim.

On 12 July 2018, INA received the decision of the High Administrative Court cancelling previous decision of the Administrative Court and Ministry of Economy decision regarding "Sava" exploration license and has returned a case in its initial state. In reassessment proceedings Administrative Court reached a decision and rejected INA’s claim. INA has filed an appeal against the first instance verdict which was rejected by the High Administrative Court. In November 2021 INA filed lawsuit before the Constitutional Court of Republic of Croatia.

BELVEDERE, INA No Nš-14/17

In July 2017 INA received a lawsuit from Belvedere d.d. Dubrovnik with a claim of HRK 220 million. The claim relates to a loan provided by INA in 2005 to Belvedere d.d. (hotel “Belvedere” in Dubrovnik served as security for the loan). Since Belvedere d.d. has not returned the loan, enforcement procedure was initiated in 2012, and the hotel was sold to a highest bidder on a public auction. Belvedere d.d. now claims that the hotel was sold below its market value and also claims damage to its reputation and loss of profit. Although the outcome of this procedure is uncertain it is more likely in favour of INA than not. Notwithstanding the possible outcome, request for the damage is deemed to set too high considering three independent court experts already discussed the market price issue. Case is interrupted until resolution of case INA No. 018-11/17 which represents preliminary issue for resolving this case. In case INA No. 018-11/17 final decision was reached in favour of INA. Currently this case is before Supreme Court of the Republic of Croatia since Belvedere filled proposal for permission to file a revision. Revision court has rejected proposal for permission to file revision.

Case Nš-14/17 will now continue.

Dana and Crescent vs. MOL Plc.

On 14 February 2020, Dana Gas PJSC (“Dana”) and Crescent Petroleum Company International Limited (“Crescent”) as Claimants commenced arbitration against Hungarian Oil and Gas Public Limited Company (“MOL”) as Respondent.

Dana and Crescent claim that MOL breached the Share Sale Agreement dated 15 May 2009 concluded by Dana, Crescent and MOL (the “SSA”) by refusing to pay earn-out payments that they allege are due.

MOL’s position is that the Claimants have no entitlement to Reserve Based Earn Out Payments, Production Based Earn Out Payments or Crude Oil Earn-Out Payments under the SSA. The facts are substantially the same as those being adjudicated in the JVA Arbitration, in which all of Dana and Crescent’s claims were dismissed, but tested this time against MOL’s obligations under the Share Sale Agreement as opposed to the Joint Venture Agreement. We received the Tribunal’s final award on 16 December 2022 in which all claims of the Claimants were dismissed and MOL was awarded 100% of its costs.

|  | Consolidated Financial Statements 2022 | 78

e) Environmental liabilities

MOL Group’s operations are subject to the risk of liability arising from environmental damage or pollution and the cost of any associated remedial work. MOL Group is currently responsible for significant remediation of past environmental damage relating to its operations. Accordingly, MOL Group has established a provision of HUF 72,701 million for the estimated cost as at 31 December 2022 for probable and quantifiable costs of rectifying past environmental damage (see Note 16). In addition, a provision of HUF 6,786 million was recorded to cover an expected intervention where the timing, cost and nature of the intervention is still uncertain. Although the management believes that these provisions are sufficient to satisfy such requirements to the extent that the related costs are reasonably estimable, future regulatory developments or differences between known environmental conditions and actual conditions could cause a revaluation of these estimates.

Some of the Group’s premises may be affected by contamination where the cost of rectification is currently not quantifiable or legal requirement to do so is not evident. The main case where such contingent liabilities may exist is the Tiszaújváros site, including both the facilities of MOL Petrochemicals Plc. and the area of MOL’s Tisza refinery, where the Group has identified significant underground water and subsurface soil contamination. In accordance with the resolutions of the regional environmental authorities combined for MOL Petrochemicals and MOL Group, the Group completed a detailed investigation and submitted the results and technical specifications to the authorities in July 2021. Based on these documents the authorities brought a resolution on 7 September 2021 requiring MOL Petrochemicals and MOL Group to jointly perform this plan in order to manage the soil and underground water contamination. The total amount of liabilities originating from this plan can be estimated properly and MOL Petrochemicals and MOL Group set the required amount of environmental provision.

Contingent liabilities exist for uncertain remediation tasks; their magnitude cannot be estimated currently, but it is not expected to exceed HUF 4,000 million.

The technology applied in oil and gas exploration and development activities by the Group’s Hungarian predecessor before 1995 may give rise to future remediation of drilling mud produced (in 1995 there was modification in the drilling technology). In accordance with legal requirements the treatment (extraction and disposal) of the resulting pollutant is required. The potential expenses associated with such an obligation depend on the extent, volume and composition of the drilling mud left behind at the various production sites. According to current estimates the amount of the environmental liability is HUF 1,120 million.

Further to more detailed site investigations to be conducted in the future and the advancement of national legislation or authority practice, additional contingent liabilities may arise at the industrial park around Mantova refinery which has been acquired in previous business combinations. As at 31 December 2022, on Group level the amount of environmental liabilities, recorded in the statement of financial position is HUF 20,219 million (31 December 2021: HUF 18,641 million).

26. Notes to the consolidated statements of cash flows

Accounting policies

Bank overdrafts repayable on demand are included as component of cash and cash equivalent in case where the use of short-term overdrafts forms an integral part of the entity’s cash management practices.

The Group has classified cash payments for the principal portion of lease payments and cash payments for the interest portion of lease payments as financing activities.

| 2022 | 2021
Analysis of net cash outflow on acquisition of subsidiaries, joint operations as business combinations | HUF million | HUF million
Cash consideration | (194,477) | (2,795)
Cash at bank or on hand acquired | 796 | 384
Net cash outflow on acquisition of subsidiaries, joint operations | (193,681) | (2,411)

| 2022 | 2021
Analysis of net cash flow related to sale of subsidiaries, joint operations as business combinations | HUF million | HUF million
Cash consideration | 9,415 | 1,101
Cash at bank or on hand disposed | (44,109) | (13)
Net cash inflow/(outflow) related to sale of subsidiaries, joint operations | (34,694) | 1,089

|  | Consolidated Financial Statements 2022 | 79

| 2022 | 2021
Analysis of increas/decrease in other financial assets | HUF million | HUF million
Prepayments for business combination | - | (12,171)
Change of escrow account of decommissioning | (21,991) | -
Bought/sold bonds | (30,166) | (4,875)
Net change of given loans | (15,21) | (5,295)
Other changes | (15,864) | (5,521)
Total change in other financial assets | (83,231) | (27,862)

Analysis of cash flow related to joint ventures and associates | 2022 | 2021
HUF million | HUF million
Cash consideration of acquisition and capital increase | (4) | -
Cash consideration of sale and capital decrease | - | -
Dividend from joint ventures and associates | 21,206 | 27,755
Net movements of loans | (28,253) | (9,368)
Total | (7,051) | 18,387

| 2022 | 2020
Analysis of other items | HUF million | HUF million
Fair value change - commodity | 98,846 | 88,306
Write-off of inventories, net | 33,813 | 10,726
Write-off of receivables, net | 1,451 | -11,475
Other non-highlighted items | -22 | 8,552
Total | 134,088 | 96,109

| 01 Jan 2022 balance Restated | Cash flows used in financing activities | Non-cash changes | Non-financing CF related movements | 31 Dec 2022 balance
Acquisitions/ Disposals | Realised and non-realised FX | FV change on derivatives | Accrued Interest | New lease liabilities
HUF million | HUF million | HUF million | HUF million | HUF million | HUF million | HUF million | HUF million | HUF million
Long-term debt | 866,492 | (301,218) | 18,483 | 15,617 | - | 12,017 | 39,022 | - | 650,413
Other non-current financial liabilities | 36,913 | (595) | - | - | - | - | - | (15,647) | 20,671
Short-term debt | 185,616 | 134,897 | - | 141,498 | - | 6,675 | - | - | 468,686
Other current financial liabilities | 244,167 | (19,357) | - | 15,645 | 933 | - | - | (9,934) | 231,454
Total Cash flows used in financing activities from financial liabilities | (186,273) |  |  |  |  |  |  |
Other items impacting Cash flows used in financing activities | (192,983) |  |  |  |  |  |  |
Total Cash flows used in financing activities | (379,256) |  |  |  |  |  |  |

The total cash outflow for leases in the period is HUF 24,532 million.

|  | Consolidated Financial Statements 2022 | 80

27. Earnings per share

Accounting policies

Basic earnings per share are calculated by dividing the net profit for the period attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period, after deduction of the average number of treasury shares held over the period.

The calculation of diluted earnings per share is consistent with the calculation of basic earnings per share taking into consideration all dilutive potential ordinary shares that were outstanding during the period:

• the net profit for the period attributable to ordinary shares is increased by the after-tax number of dividends and interest recognised in the period in respect of the dilutive potential ordinary shares and adjusted for any other changes in income or expense that would result from the conversion of the dilutive potential ordinary shares.

• the weighted average number of ordinary shares outstanding is increased by the weighted average number of additional ordinary shares which would have been outstanding assuming the conversion of all dilutive potential ordinary shares.

The diluted earnings per share differs from the basic earnings per share due to dilutive effect of outstanding number of shares with conversion option at the end of the year, please refer to Note 4.

| Income | Weighted average number of shares | Earnings/(Loss) per share
| HUF million | HUF
Basic Earnings Per Share cont.op. 2021 Restated | 484,469 | 719,486,566 | 673.35
Diluted Earnings Per Share cont.op. 2021 Restated | 484,469 | 724,847,017 | 668.37
Basic earnings per share attributable to owners of the parent (HUF) discont.op. 2021 Restated | 42,453 | 719,486,566 | 59.00
Diluted earnings per share attributable to owners of the parent (HUF) discont.op. 2021 Restated | 42,453 | 724,847,017 | 58.57
Basic Earnings Per Share 2021 Restated | 526,922 | 719,486,566 | 732.36
Diluted Earnings Per Share 2021 Restated | 526,922 | 724,847,017 | 726.94
Basic Earnings Per Share cont.op. 2022 | 628,293 | 738,288,487 | 851.01
Diluted Earnings Per Share cont.op. 2022 | 628,293 | 740,092,497 | 848.94
Basic earnings per share attributable to owners of the parent (HUF) discont.op. 2022 | 223,297 | 738,288,487 | 302.45
Diluted earnings per share attributable to owners of the parent (HUF) discont.op. 2022 | 223,297 | 740,092,497 | 301.71
Basic Earnings Per Share 2022 | 851,590 | 738,288,487 | 1,153.47
Diluted Earnings Per Share 2022 | 851,590 | 740,092,497 | 1,150.65

28. Related party transactions

a) Transactions with associated companies and joint ventures

| 31 Dec 2022 | 31 Dec 2021
|  | Restated
| HUF million | HUF million
Trade and other receivables due from related parties | 7,313 | 6,993
Long-term loans given to related parties | 71,792 | 42,388
Long-term receivables from related parties due to finance lease | 6,419 | 7,053
Short-term loans given to related parties | 2,644 | 293
Short-term receivables from related parties due to finance lease | 636 | 618
Trade and other payables due to related parties | 14,461 | 14,139
Long-term liabilities to related parties due to finance lease | 3,481 | 3,652
Short-term liabilities to related parties due to finance lease | 541 | 497
Net sales to related parties | 55,947 | 50,149

The Group purchased and sold goods and services with associated companies and joint ventures during the ordinary course of business in 2022 and 2021. All of the transactions were conducted under market prices and conditions.

|  | Consolidated Financial Statements 2022 | 81

b) Remuneration of the members of the Board of Directors

Directors’ remuneration approximated HUF 145 million in 2022 (2021: HUF 147 million). In addition, the directors participate in a long-term incentive scheme details of which are given in Note 4.

Directors are remunerated with the following net amounts in addition to the incentive scheme:

Executive and non-executive directors 25,000 EUR/year

Committee chairmen 31,250 EUR/year

In case the position of the Chairman is not occupied by a non-executive director, it is the non-executive vice Chairman who is entitled to this payment. Directors who are not Hungarian citizens and do not have permanent address in Hungary are provided with EUR 1,500 on each Board meeting (maximum 15 times a year) when travelling to Hungary.

c) Number of shares held by the members of the Board of Directors, Chief Executives’ Committee and the Management

| 2022 | 2021
| Number of shares | Number of shares
Board of Directors | 2,903,184 | 2,871,645
Chief Executives' and Management Committee (except Board of Directors members) | 250,000 | 472,357
Senior Management (except Board of Directors, Chief Executives', Supervisory Board and Management Committee members) | 233,305 | 121,341
Total | 3,386,489 | 3,465,343

d) Transactions with Management, officers and other related parties

In 2022 entities controlled by the members of key management personnel purchased fuel and other retail services from MOL Group in the total value of HUF 3,921 million. MOL Group provided subsidies through sponsorship for sport organisations controlled by key management personnel in the total value of HUF 642 million. MOL Group purchased other services (including PR, media, business operations related services) from companies controlled by key management personnel in the total value of HUF 1,557 million. All of the transactions were conducted under market prices and conditions.

Entities controlled by key management personnel hold 2,100,000 shares.

e) Key management compensation

The amounts disclosed contain the compensation of managers who qualify as a key management member of MOL Group.

| 2022 | 2021
| HUF million | HUF million
Salaries and wages | 958 | 915
Other short-term benefits | 896 | 658
Share-based payments | 331 | 547
Total | 2,185 | 2,120

f) Loans to the members of the Board of Directors and Supervisory Board

No loans have been granted to key management personnel.

29. Events after the reporting period

a) Euro introduction in Croatia

Croatia introduced the euro on 1 January 2023.

The Group applies the translational procedures applicable to the new functional currency of the Croatian subsidiaries prospectively from the date of change using the conversion rate between the euro and the Croatian kuna at 7.53450 kuna per 1 euro set in the legal acts adopted by the Council of the European Union. The resulting translated amounts for non‑monetary items will be treated as their historical cost. Exchange differences arising from the translation of a foreign operation previously recognised in other comprehensive income will not be reclassified from equity to profit or loss until the recycling criteria is met.

|  | Consolidated Financial Statements 2022 | 82

b) EU sanctions against Russia

In June 2022, the Council of the European Union adopted a sixth package of sanctions that, among others, prohibits the purchase, import or transfer of seaborne crude oil and certain petroleum products from Russia to the EU. The restrictions apply from 5 December 2022 for crude oil and from 5 February 2023 for other refined petroleum products.

A temporary exception is applied for imports of crude oil by pipeline into those EU member states that, due to their geographic situation, suffer from a specific dependence on Russian supplies and have no viable alternative options.

Moreover, Croatia specifically will benefit from temporary derogations concerning the import of Russian seaborne crude oil and vacuum gas oil respectively.

During the preparation of the consolidated financial statements the Group has taken into account all EU sanctions against Russia. Please refer to Note 1 for further information.

c) Takeover bid for the shares of Alteo Plc.

The Hungarian National Bank has approved the mandatory public takeover bid for the shares of Alteo Plc on 3 February 2023. The proposed purchase price defined in the mandatory public takeover bid is HUF 3,040 per share. The deadline for the declaration of acceptance regarding the mandatory public takeover bid commenced on 10 February 2023, and ended on 13 March 2023.

30. Appendices

a) Appendix I.: Issued but not yet effective International Financial Reporting Standards and Amendments

At the date of authorisation of these financial statements, the following standards and interpretations were in issue but not yet effective:

• IFRS 17 Insurance Contracts including Amendments to IFRS 17 (effective for annual periods beginning on or after 1 January 2023 and endorsed by EU)

• Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting policies (effective for annual periods beginning on or after 1 January 2023 and endorsed by EU)

• Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates (effective for annual periods beginning on or after 1 January 2023 and endorsed by EU)

• Amendment to IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising from Single Transaction (effective for annual periods beginning on or after 1 January 2023 and endorsed by EU)

• Amendment to IFRS 17 Insurance contracts: Initial application of IFRS 17 and IFRS 9 – Comparative Information (effective for annual periods beginning on or after 1 January 2023 and endorsed by EU)

• Amendment to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current – Deferral of Effective Date and Non-current liabilities with Covenants (effective for annual periods beginning on or after 1 January 2024 not yet endorsed by EU)

• Amendments to IFRS 16 Leases: Lease Liability in Sale and Leaseback (effective for annual periods beginning on or after 1 January 2024 not yet endorsed by EU)

MOL is in the process of evaluating the impact of these amendments. They are not expected to have a significant effect on future financial reporting.

|  | Consolidated Financial Statements 2022 | 83

b) Appendix II.: Subsidiaries

| Country (Incorporation/Branch) |  | Ownership
Company name | Range of activity | 2022 | 2021
Integrated subsidiaries |  |  |  |
INA-Industrija nafte d.d. | Croatia | Integrated oil and gas company | 49% | 49%
Upstream |  |  |  |
Adriagas S.r.l. | Italy | Pipeline project company | 49% | 49%
Csanád Szénhidrogén Koncessziós Kft. | Hungary | Exploration and production activity | 100% | 100%
EMSZ Első Magyar Szénhidrogén Koncessziós Kft. | Hungary | Exploration and production activity | 100% | 100%
Kalegran B.V. | Netherlands | Exploration financing | 100% | 100%
Kalegran B.V Erbil Branch Office | Iraq | Exploration and production activity | 100% | 100%
KMSZ Koncessziós Kft. | Hungary | Exploration and production activity | 100% | 100%
MH Oil and Gas BV. | Netherlands | Investment management | 100% | 100%
MNS Oil and Gas B.V. | Netherlands | Exploration financing | 100% | 100%
MOL Energy UK Ltd. 4 | United Kingdom | Exploration and production activity | - | 100%
MOLGrowest (I) Ltd. 4 | United Kingdom | Exploration and production activity | - | 100%
MOLGrowest (II) Ltd. 4 | United Kingdom | Exploration and production activity | - | 100%
MOL Operations UK Ltd. 4 | United Kingdom | Exploration and production activity | - | 100%
MOL UK Facilities Ltd. 4 | United Kingdom | Exploration and production activity | - | 100%
MOL Bázakerettye Szénhidrogén Koncessziós Kft. | Hungary | Exploration and production activity | 100% | 100%
MOL Bucsa Szénhidrogén Koncessziós Kft. | Hungary | Exploration and production activity | 100% | 100%
MOL Crossroads B.V. | Netherlands | Exploration financing | 100% | 100%
MOL Azerbaijan Ltd. | Bermuda | Exploration and production activity | 100% | 100%
MOL Dráva Szénhidrogén Koncessziós Kft. | Hungary | Exploration and production activity | 100% | 100%
MOL (FED) Kazakhstan B. V. - Head office | Netherlands | Exploration financing | 100% | 100%
MOL (FED) Kazakhstan B.V. - Branch office | Kazakhstan | Investment management | 100% | 100%
MOL Jászárokszállás Szénhidrogén Koncessziós Kft. | Hungary | Exploration and production activity | 100% | 100%
MOL Mezőtúr Szénhidrogén Koncessziós Kft. | Hungary | Exploration and production activity | 100% | 100%
MOL Nordsjön B.V. | Netherlands | Exploration financing | 100% | 100%
MOL Norge AS | Norway | Exploration activity | 100% | 100%
MOL Nyírség-Dél Szénhidrogén Koncessziós Kft. | Hungary | Exploration and production activity | 100% | 100%
MOL Nyírség-Észak Szénhidrogén Koncessziós Kft. | Hungary | Exploration and production activity | 100% | 100%
MOL Okány-Nyugat Szénhidrogén Koncessziós Kft. | Hungary | Exploration and production activity | 100% | 100%
MOL Őrség Szénhidrogén Koncessziós Kft. | Hungary | Exploration and production activity | 100% | 100%
MOL Pakistan Oil and Gas Co. B.V. - Head Office | Netherlands | Exploration financing | 100% | 100%
MOL Pakistan Oil and Gas Co. B.V. - Branch Office | Pakistan | Exploration and production activity | 100% | 100%
MOL-RUSS Ooo. | Russia | Management services | 100% | 100%
MOL Somogybükkösd Szénhidrogén Koncessziós Kft. | Hungary | Exploration and production activity | 100% | 100%
MOL Somogyvámos Szénhidrogén Koncessziós Kft. | Hungary | Exploration and production activity | 100% | 100%
MOL SZMDK Szénhidrogén Koncessziós Kft. | Hungary | Exploration and production activity | 100% | 100%
MOL Zala-Nyugat Szénhidrogén Koncessziós Kft. | Hungary | Exploration and production activity | 100% | 100%
Panfora Oil and Gas S.r.l. | Romania | Exploration and production activity | 100% | 100%
Tápió Szénhidrogén Koncessziós Kft. | Hungary | Exploration and production activity | 100% | 100%
Gas-Midstream |  |  |  |
FGSZ Földgázszállító Zrt. | Hungary | Natural gas transmission | 100% | 100%
Downstream |  |  |  |
Croplin, d.o.o. | Croatia | Natural gas trading | 49% | 49%
IES S.p.A. | Italy | Refinery and marketing of oil products | 100% | 100%
Nelsa S.r.l. | Italy | Trading of oil products | 100% | 100%
Panta Distribuzione S.r.l. | Italy | Trading of oil products | 100% | 100%
INA d.o.o. | Serbia | Trading of oil products | 49% | 49%
INA BH d.d. 3 | Bosnia and Herzegovina | Trading of oil products | - | 49%
INA Kosovo d.o.o. | Kosovo | Trading of oil products | 49% | 49%
INA Maziva Ltd. | Croatia | Lubricants production and trading | 49% | 49%
Leodium Investment Kft. | Hungary | Financial services | 100% | 100%
MOL Austria GmbH | Austria | Wholesale trade of lubricants and oil products | 100% | 100%
Roth Heizöle GmbH | Austria | Trading of oil products | 100% | 100%
MOL Commodity Trading Kft. | Hungary | Financial services | 100% | 100%
MCT Slovakia s.r.o. 3 | Slovakia | Financial services | - | 100%
MOL Germany GmbH | Germany | Trading of oil products | 100% | 100%
Aurora Kunststoffe GmbH | Germany | Plastic compounding | 100% | 100%
Aurora Kunststoffe Walldürn GmbH | Germany | Plastic compounding | 100% | 100%
Aurora Kunststoffe VS GmbH | Germany | Plastic compounding | 100% | 100%
MOL Kunststoff Kft. | Hungary | Investment management | 100% | 100%
MOL-LUB Kft. | Hungary | Production and trade of lubricants | 100% | 100%
MOL-LUB Russ LLC | Russia | Production and trade of lubricants | 100% | 100%
MOL Petrolkémia Zrt. | Hungary | Petrochemical production and trading | 100% | 100%
Tisza-WTP Kft. 1 | Hungary | Feed water and raw water supply | 0% | 0%
TVK-Erőmű Kft. | Hungary | Electricity production and distribution | 100% | 100%
MOL REMA Holding Kft. 2 | Hungary | Investment management | 100% | -
Recrea Asset Management Zrt. 2 | Hungary | Business management | 100% | -
ReMat Hulladékhasznosító Zrt. 2 | Hungary | Recycling and wholesale of waste | 100% | -
ReMat Slovakia s.r.o. 2 | Slovakia | Recycling and wholesale of waste | 100% | -
MOL Slovenia Downstream Investment B.V. | Netherlands | Investment management | 100% | 100%
Moltrans Kft. | Hungary | Transportation services | 100% | 100%
MOLTRADE-Mineralimpex Zrt. | Hungary | Importing and exporting of energetical products | 100% | 100%
MOL CZ Downstream Investment B.V. | Netherlands | Investment management | 100% | 100%
MOL Ukraine LLC | Ukraine | Wholesale and retail trade | 100% | 100%
OT Industries Fővállalkozó Zrt. | Hungary | Technical consultancy | 100% | 100%
OT Industries Tervező Zrt. | Hungary | Engineering activity | 100% | 100%
SLOVNAFT a.s. | Slovakia | Refinery and marketing of oil and petrochemical products | 100% | 100%
Dalby a.s. | Slovakia | Wholesale and retail trade | 100% | 100%
Slovnaft Polska S.A. | Poland | Wholesale and retail trade | 100% | 100%
Slovnaft Trans a.s. | Slovakia | Transportation services | 100% | 100%
SWS s.r.o. 4 | Slovakia | Transport support services | - | 51%
Vúrup a.s. | Slovakia | Research and development | 100% | 100%

|  | Consolidated Financial Statements 2022 | 84

| Country (Incorporation/Branch) |  | Ownership
Company name | Range of activity | 2022 | 2021
Terméktároló Zrt. | Hungary | Oil product storage | 74% | 74%
Zväz pre skladovanie zásob a.s. | Slovakia | Wholesale and retail trade, warehousing | 100% | 100%
Consumer Services |  |  |  |
Energopetrol d.d. | Bosnia and Herzegovina | Retail trade | 44% | 44%
Fresh Corner Restaurants Holding Kft. | Hungary | Investment management | 100% | 100%
Fresh Corner Restaurants Kft. | Hungary | Catering services | 100% | 100%
Holdina d.o.o. | Bosnia and Herzegovina | Trading of oil products | 49% | 49%
INA Crna Gora d.o.o. | Montenegro | Trading of oil products | 49% | 49%
INA Maloprodajni servisi d.o.o. | Croatia | Trade agency in the domestic and foreign market | 49% | 49%
INA Slovenija d.o.o. | Slovenia | Trading of oil products | 49% | 49%
MOL Česká republika s.r.o. | Czech Republic | Wholesale and retail trade | 100% | 100%
MOL E-mobilitás Vagyonkezelő Kft. | Hungary | Investment management | 100% | 100%
MOL Fleet Holding Kft. | Hungary | Investment management | 100% | 100%
MOL Fleet Solution Flottakezelő Kft. | Hungary | Fleet management | 100% | 100%
MOL Limitless Mobility Holding Kft. | Hungary | Investment management | 100% | 100%
MOL Limitless Mobility Kft. | Hungary | Car sharing | 100% | 100%
MOL Polska sp. z o.o. 2 | Poland | Retail sale of fuel for motor vehicles at service stations | 100% | -
MOL Retail Holding Kft. | Hungary | Real estate management | 100% | 100%
MOL Kiskereskedelmi Ingatlan Kft. | Hungary | Real estate management | 100% | 100%
MOL Romania PP s.r.l. | Romania | Retail and wholesale trade of fuels and lubricants | 100% | 100%
MOL Serbia d.o.o. | Serbia | Retail trade of fuels and lubricants | 100% | 100%
MOL Slovenia d.o.o. | Slovenia | Retail trade of fuels and lubricants | 100% | 100%
MOL Vendéglátó Kft. | Hungary | Hospitality, operating café houses | 100% | 100%
Slovnaft Mobility Services, s.r.o. | Slovakia | Rental services | 100% | 100%
Slovnaft Retail, s.r.o. 2 | Slovakia | Wholesale and retail trade | 100% | -
Tifon d.o.o. | Croatia | Retail trade of fuels and lubricants | 100% | 100%
Corporate and other |  |  |  |
FER Tűzoltó és Szolgáltató Kft. | Hungary | Fire services | 100% | 100%
Geoinform Kft. | Hungary | Hydrocarbon exploration | 100% | 100%
Hostin d.o.o. | Croatia | Tourism | 49% | 49%
INA Industrijski servisi d.o.o. | Croatia | Investment management | 49% | 49%
Crosco Naftni Servisi d.o.o. | Croatia | Oilfield services | 49% | 49%
Crosco B.V. 3 | Netherlands | Oilfield services | - | 49%
Nordic Shipping Ltd. 3 | Marshall Islands | Platform ownership | - | 49%
Crosco S.A. DE C.V | Mexico | Maintaining services | 49% | 49%
Crosco Ukraine Llc. | Ukraine | Oilfield services | 49% | 49%
Rotary Zrt. | Hungary | Oilfield services | 49% | 49%
Rotary D&WS SRL | Romania | Oilfield services | 49% | 49%
Sea Horse Shipping Inc. | Marshall Islands | Platform ownership | 49% | 49%
Plavi Tim d.o.o. | Croatia | IT services | 49% | 49%
STSI integrirani tehnički servisi d.o.o. | Croatia | Repairs and maintenance services | 49% | 49%
INA Vatrogasni Servisi d.o.o. | Croatia | Firefighting services | 49% | 49%
MOL Aréna Kft. | Hungary | Investment management | 100% | 100%
MOL Biztonsági Szolgáltatások Kft. 2 | Hungary | Security services | 100% | -
MOL CVC Investment Kft. | Hungary | Investment management | 100% | 100%
MOL GBS Magyarország Kft. | Hungary | Accounting services | 100% | 100%
MOL GBS Slovensko s.r.o. | Slovakia | Accounting services | 100% | 100%
MOL Group Finance Zrt. | Hungary | Investment management | 100% | 100%
MOL Group International Services B.V. | Netherlands | Financial and accounting services | 100% | 100%
MOL Ingatlan Holding Kft. | Hungary | Investment management | 100% | 100%
MOL Campus Kft. (former: MOL Ingatlankezelő Kft. ) | Hungary | Real estate management | 100% | 100%
MOL C.F. Kft. | Hungary | Real estate management | 100% | 100%
MOL Investment Kft. | Hungary | Financial services | 100% | 100%
MOL IT & Digital GBS Magyarország Kft. | Hungary | IT services | 100% | 100%
MOL IT & Digital GBS Slovensko, s.r.o. | Slovakia | IT services | 100% | 100%
MOL IT Holding Kft. | Hungary | Investment management | 100% | 100%
MOL Magyarország Társasági Szolgáltató Kft. | Hungary | Company services | 100% | 100%
MOL Reinsurance Co. DAC | Ireland | Captive insurance | 100% | 100%
MOL RES Investments Zrt. (former: CEGE Zrt.) | Hungary | Geothermal energy production | 100% | 100%
MOL Solar Energy Holding Kft. | Hungary | Business services | 100% | 100%
MOL Solar Operator Kft. | Hungary | Power production | 100% | 100%
MOL Transportation Services Kft. 2 | Hungary | Transportation services | 100% | -
MOL Vagyonkezelő Kft. | Hungary | Investment management | 100% | 100%
Multipont Program Zrt. | Hungary | Marketing agent activity | 100% | 100%
Neptunus Investment Kft. | Hungary | Investment management | 100% | 100%
Fonte Viva Kft. | Hungary | Mineral water production and distribution | 100% | 100%
Petrolszolg Kft. | Hungary | Repairs and maintenance services | 100% | 100%
Slovnaft Montáže a opravy a.s. | Slovakia | Repairs and maintenance services | 100% | 100%
MOL Industrial Services Investment Kft. | Hungary | Investment management | 100% | 100%
ISO-SZER Kft. | Hungary | Construction services | 100% | 100%
OT Industries-DKG Gépgyártó Zrt. | Hungary | Manufacturing of machinery and equipment | 100% | 100%
OT Industries Eszközhasznosító Kft. | Hungary | Leasing activity | 100% | 100%
OT Industries-KVV Kivitelező Zrt. | Hungary | Pipeline construction | 100% | 100%
Top Računovodstvo Servisi d.o.o. | Croatia | Accounting services | 49% | 49%
TVK Ingatlankezelő Kft. | Hungary | Real estate management | 100% | 100%
1) Fully consolidated because MOL Petrolkémia Zrt. and TVK Erőmű Kft. is the only costumer of Tisza-WTP Kft.; 2) Fully consolidated from 2022; 3) Liquidated in 2022; 4) Sold in 2022

|  | Consolidated Financial Statements 2022 | 85

c) Appendix III.: Clean CCS profit/(loss) from operation (Clean CCS EBIT)

Clean CCS-based profit/(loss) from operation and its calculation methodology is not regulated by IFRS. CCS stands for Current cost of supply. Clean CCS EBIT is the most closely watched earnings measure in the oil and gas industry as it best captures the underlying performance of a refining operation as it removes non-recurring special items, inventory holding gains and losses, impairment on raw materials, purchased finished products and own-produced inventory and derivative transactions.

Inventory holding gain/loss

EBIT after excluding the inventory holding gain/loss reflects the actual cost of supplies of the analysed period therefore it provides better portray on the underlying production and sales results and makes the results comparable to other companies in the industry.

Impairment on inventory

Inventories must be measured at the lower of cost or net realisable value.

The cost of inventories must be reduced - i.e. impairment must be recognised on closing inventory of the period- if the cost is significantly higher than the expected sales price minus cost to sell.

In case of finished products, impairment should be recognised if the closing value of the inventory at the end of period is above the future sales price of the product minus cost to sell. In case of raw materials and semi-finished products that will be used further in production, it has to be examined whether, following their use in production; their value can be recovered in the selling price of the produced finished products. If their value is not fully recoverable impairment must be recognised to the recoverable level.

Derivative transactions

CCS methodology is based on switching to period average crude oil prices, but the CCS effect together with the effect of commodity derivative transactions would lead to unnecessary duplication, the P&L effect of all commodity derivatives are eliminated.

CO2 adjustment

CO2 adjustment revaluates provisions created in Downstream operation for CO2 consumption above freely allocated quotas, as defined in accounting policy. This adjustment ensures the accurate cost recognition for the given period in the clean CCS result, also including the smoother distribution within the financial year. It consequently eliminates rolled-over impacts between financial years, too.

Non-recurring special items

One-off items are single, significant (more than USD 10 million P&L effect), non-recurring economic events which are not considered as part of the core operation of the segment therefore they do not reflect the actual performance of the given period.

| 2022 | 2021
|  | Restated
Clean CCS profit/(loss) from operation reconciliation | HUF million | HUF million
Profit from operation | 1,259,112 | 567,186
Inventory holding gain/(loss) | (82,167) | (139,733)
Impairment on raw materials and own-produced inventory | 18,693 | 746
- thereof affects raw materials | 134 | (11)
- thereof affects own-produced inventory | 13,426 | 454
- thereof affects purchased goods/products inventory | 5,133 | 303
Cargo commodity derivatives | 103,396 | 80,260
CO2 adjustment | 4,111 | 637
CCS profit from operation | 1,303,145 | 509,097
Impact of derivative transactions | (4,770) | 8,045
Special items | (6,045) | 18,677
Clean CCS profit from operation | 1,292,330 | 535,819

|  | Consolidated Financial Statements 2022 | 86

Special items | 2022 | 2021
| Restated
HUF million | HUF million
Profit from operation excluding special items | 1,253,067 | 585,863
Upstream |  |
Impairment on Upstream assets in the Group | 15,273 | (17,089)
Environmental provision in INA Group | - | (4,295)
Total special items in Upstream | 15,273 | (21,384)
Downstream |  |
Impairment of assets under construction at SN | (4,678) |
Impairment of assets under construction at MOL Plc. | (4,550) |
Total special items in Downstream | (9,228) | -
Corporate and Other |  |
Provision release for legal claims (Creditor Beta) |  | 2,707
Provision release for legal claims (Creditor Gamma) | - |
Crosco impairment | - |
Total special items in Corporate and Other | - | 2,707
Total impact of special items on profit from operation | 6,045 | (18,677)
Profit from operation | 1,259,112 | 567,186

|  | Consolidated Financial Statements 2022 | 87

d) Appendix IV.: Additional presentations according to the Hungarian Accounting Law

Person responsible for supervising transactional accounting and preparation of IFRS financial statements

Name: Ervin Berki

Registration number: 195106 (IFRS specialisation)

Person required to sign the statement of responsibility

Name: József Molnár, Group Chief Executive Officer

Address: HU – 1165 Budapest, Hunyadvár utca 42.

Name: József Simola, Group Chief Financial Officer

Address: HU – 1112 Budapest, Ördögorom út 3/C A ép. 1.

Contacts

Company name: MOL Plc.

Registered address: HU – 1117 Budapest, Dombóvári út 28.

Official website: www.molgroup.info

Presentation of company controls

In accordance with paragraph 89 of the Hungarian Accounting Law the financial statements include the itemised list of the name, registered address and voting percentage of all business associations in which the company has majority control according to the provisions of the Civil Code governing business associations. See Appendix II.

There is no such company which holds majority control or qualified majority control in MOL Plc.

Audit fees

In accordance with paragraph 133 of the Hungarian Accounting Law the financial statements include the total fees for the financial year charged by the auditor or audit firm for the audit of consolidated accounts and for non-audit services. The fee charged by the audit firm (PwC Könyvvizsgáló Kft.) for the statutory audit of the 2022 consolidated and separate financial statements of MOL Plc. is HUF 177 million. The auditor including its network charged HUF 119 million for other non-audit services, HUF 21 million for tax advisory services and HUF 12 million for other audit-related services to MOL Plc. and its subsidiaries for 2022 excluding fees for statutory audits of annual financial statements.

|  | Consolidated Financial Statements 2022 | 88

e) Appendix V.: Presentation of licensed activities

Act LXXXVI of 2007 on Electricity (hereafter “Vet.”) stipulates that an integrated electricity enterprise and an enterprise holding several licenses shall present its various licensed activities independently in the notes of its consolidated financial statements. Separate presentation of licensed activities - in the case of several licensed activities of the same type - means accumulated separate statement of financial position and accumulated statement of profit or loss.

Government Decree No. 273/2007 (X.19.) provide for the implementation of the Act.

Act XL of 2008 on Natural Gas (hereafter “Get.”) stipulates that an integrated natural gas enterprise and an enterprise holding several licenses shall present its various licensed activities independently in the notes of its consolidated financial statements. Separate presentation of licensed activities - in the case of several licensed activities of the same type - means accumulated separate statement of financial position and accumulated statement of profit or loss.

Government Decree No. 19/2009 (I.30.) provide for the implementation of the Act.

Separation method

The separation method is described in the relevant internal policies of the companies. Short description of the policies presented in the below tables.

Companies prepares the activity separation annually.

In case of the separation of the statement of financial position, the individual activity statements of financial position are not closed on their own at certain companies. Any differences are presented on the “Technical income/(expense) for the period” line in conformance with official guidelines.

| STATEMENT OF PROFIT OR LOSS
| 2022 |
| Electricity | Natural gas
| Trading | Manufacturing |  | Transportation | Trading |
| MOL Plc. | TVK-Erőmű Kft. | MOL Solar Operátor Kft. | Total | FGSZ Földgázszállító Zrt. | MOL Commodity Trading Kft. | Total
| HUF million | HUF million | HUF million | HUF million | HUF million | HUF million | HUF million
Net sales | 139,728 | 12,510 | 1,452 | 153,689 | 212,767 | 161,278 | 374,045
Other operating income | 108 | 1 | - | 110 | 1,657 | - | 1,657
Total operating income | 139,836 | 12,510 | 1,452 | 153,798 | 214,424 | 161,278 | 375,702
Raw materials and consumables used | 142,684 | 10,422 | 129 | 153,235 | 140,603 | 157,778 | 298,381
Employee benefits expense | 110 | - | - | 110 | 9,846 | - | 9,846
Depreciation, depletion, amortisation and impairment | 764 | 389 | 612 | 1,765 | 19,651 | - | 19,651
Other operating expenses | 87 | 1,100 | 16 | 1,203 | 4,283 | 150 | 4,433
Change in inventory of finished goods and work in progress | - | - | - | - | - | - | -
Work performed by the enterprise and capitalised | (611) | - | - | (611) | (1,017) | - | (1,017)
Total operating expenses | 143,034 | 11,912 | 757 | 155,703 | 173,366 | 157,928 | 331,294
Profit/(Loss) from operation | (3,198) | 599 | 695 | (1,904) | 41,057 | 3,350 | 44,407
Finance income | (1,015) | 46 | 165 | (804) | 1,119 | 1,786 | 2,905
Finance expense | (11) | 81 | 24 | 94 | 16,910 | 20 | 16,930
Total finance income/(expense) | (1,004) | (35) | 141 | (898) | (15,791) | 1,766 | (14,025)
Profit/(Loss) before tax | (4,202) | 564 | 836 | (2,802) | 25,267 | 5,116 | 30,383
Income tax income/(expense) | - | (453) | (65) | (518) | (3,171) | - | (3,171)
Profit/(Loss) for the year | (4,202) | 111 | 771 | (3,320) | 22,095 | 5,116 | 27,211

|  | Consolidated Financial Statements 2022 | 89

| STATEMENT OF FINANCIAL POSITION
| 31 Dec 2022
| Electricity | Natural gas
| Trading | Manufacturing |  | Transportation | Trading |
| MOL Plc. | TVK-Erőmű Kft. | MOL Solar Operátor Kft. | Total | FGSZ Földgázszállító Zrt. | MOL Commodity Trading Kft. | Total
| HUF million | HUF million |  | HUF million | HUF million | HUF million | HUF million
NON-CURRENT ASSETS |  |  |  |  |  |  |
Property, plant and equipment | 2,501 | 2,533 | 7,498 | 12,532 | 281,091 | - | 281,091
Investment property | - | - | - | - | - | - | -
Intangible assets | - | 503 | - | 503 | 4,194 | - | 4,194
Investments | - | - | - | - | - | - | -
Other non-current financial assets | - | 2,218 | 2,279 | 4,497 | 7,600 | - | 7,600
Deferred tax asset | - | - | - | - | - | - | -
Other non-current assets | 20 | - | - | 20 | 13 | - | 13
Total non-current assets | 2,521 | 5,254 | 9,776 | 17,552 | 292,898 | - | 292,898
CURRENT ASSETS |  |  |  |  |  |  |
Inventories | 604 | 45 | 32 | 681 | 11,334 | 1,507 | 12,841
Trade and other receivables | 18,274 | 1,279 | 123 | 19,676 | 9,721 | 10,208 | 19,929
Securities | - | - | - | - | - | - | -
Other current financial assets | - | - | - | - | 32 | - | 32
Income tax receivable | - | - | - | - | - | - | -
Cash and cash equivalents | - | 19 | - | 19 | 13,378 | 2,779 | 16,157
Other current assets | 57 | 26 | 13 | 96 | 1,706 | 3,342 | 5,048
Assets classified as held for sale | - | - | - | - | - | - | -
Total current assets | 18,935 | 1,369 | 168 | 20,473 | 36,171 | 17,836 | 54,007
Total assets | 21,456 | 6,624 | 9,945 | 38,025 | 329,069 | 17,836 | 346,905
EQUITY |  |  |  |  |  |  |
Share capital | 442 | 700 | 105 | 1,247 | 17,396 | 24 | 17,420
Retained earnings and other reserves | 687 | - | 8,461 | 9,148 | 58,177 | 441 | 58,618
Profit/(Loss) for the year | (4,202) | 111 | 771 | (3,320) | 22,095 | 5,116 | 27,211
Technical income/(expense) for the period | 5,429 | 2,606 | - | 8,086 | 6,861 | 217 | 7,078
Total equity | 2,356 | 3,417 | 9,337 | 15,161 | 104,529 | 5,798 | 110,327
NON-CURRENT LIABILITIES |  |  |  |  |  |  |
Long-term debt | 51 | - | 269 | 320 | 137,368 | - | 137,368
Other non-current financial liabilities | - | - | - | - | - | - | -
Non-current provisions | - | - | - | - | 1,494 | - | 1,494
Deferred tax liabilities | - | - | 112 | 112 | 18,389 | - | 18,389
Other non-current liabilities | - | 0 | - | 0 | 11,601 | - | 11,601
Total non-current liabilities | 51 | 0 | 380 | 432 | 168,852 | - | 168,852
CURRENT LIABILITIES |  |  |  |  |  |  |
Short-term debt | - | - | 23 | 23 | 22,381 | - | 22,381
Trade and other payables | 16,614 | 1,779 | 169 | 18,562 | 10,050 | 10,322 | 20,372
Other current financial liabilities | - | - | - | - | 11,462 | - | 11,462
Current provisions | - | 1,191 | - | 1,191 | 3,903 | - | 3,903
Income tax payable | - | 236 | 16 | 252 | (145) | - | (145)
Liabilities classified as held for sale | - | - | - | - | - | - | -
Other current liabilities | 2,435 | 1 | 19 | 2,455 | 8,036 | 1,716 | 9,752
Total current liabilities | 19,049 | 3,207 | 227 | 22,483 | 55,687 | 12,038 | 67,725
Total liabilities | 19,100 | 3,207 | 608 | 22,915 | 224,539 | 12,038 | 236,577
Total equity and liabilities | 21,456 | 6,624 | 9,945 | 38,075 | 329,069 | 17,836 | 346,905

|  | Consolidated Financial Statements 2022 | 90

| Method of activity separation in the statement of profit or loss
| MOL Plc. | TVK-Erőmű Kft. | MOL Solar Operátor Kft. | FGSZ Földgázszállító Zrt. | MOL Commodity Trading Kft.
Net sales | Can be allocated directly to the activities. | Can be allocated directly to the activities. | Can be allocated directly to the activities. | Can be allocated directly to activities. | Can be allocated directly to the activities.
Other operating income | Can be allocated directly to the activities and adding company level other incomes attributed in proportion of the net sales revenue. | Distributed in proportion to net sales revenue. | - | Can be allocated directly to activities or in proportion to the direct asset. | -
Raw materials and consumables used | Can be allocated directly to the activities and adding company level cost of raw materials in proportion of the net sales revenue. | Distributed in proportion to net sales revenue, except of the contracted services, which are distributed in proportion of fixed assets. | Can be allocated directly to the activities. | Can be allocated directly to activities. | Can be allocated directly to the activities.
Employee benefits expense | Directly attributable employee benefits expenses in proportion of the headcount. | - | - | Distributed based on cost-centre classification of people. | -
Depreciation, depletion, amortisation and impairment | Directly attributable depreciation in proportion of the headcount allocated to the activity. | Can be allocated directly to the activities. | Can be allocated directly to the activities. | Distributed based on cost-centre classification of assets or in proportion to the direct asset. | -
Other operating expenses | Directly attributable other operating expenses and adding company level other operating expenses in proportion of the headcount and the net sales revenue. | Distributed in proportion to net sales revenue, except of the directly attributable authority fees and the insurance fees, which are distributed in proportion of fixed assets. | Can be allocated directly to the activities. | Can be allocated directly to activities. | Can be allocated directly to the activities.
Change in inventory of finished goods and work in progress | - | - | - | Can be allocated directly to activities. | -
Work performed by the enterprise and capitalised | Directly attributable work performed by the enterprise and capitalise in proportion of the headcount and the net sales revenue. | - | - | Can be allocated directly to activities. | -
Finance income | Distributed in proportion to net sales revenue. | Distributed in proportion to net sales revenue. | Can be allocated directly to the activities. | Can be allocated directly to activities or in proportion to the direct asset. | Can be allocated directly to the activities.
Finance expense | Distributed in proportion to net sales revenue. | Distributed in proportion to net sales revenue. | Can be allocated directly to the activities. | Can be allocated directly to activities or in proportion to the direct asset. | Can be allocated directly to the activities.
Income tax income/(expense) | - | Distributed in proportion to net sales revenue, except of the directly attributable industrial tax. | Can be allocated directly to the activities. | Distributed in proportion to profit before tax. | -

|  | Consolidated Financial Statements 2022 | 91

| Method of activity separation in the statement of financial position
| MOL Plc. | TVK-Erőmű Kft. | MOL Solar Operátor Kft. | FGSZ Földgázszállító Zrt. | MOL Commodity Trading Kft.
Property, plant and equipment | Can be allocated directly to the activities. | Distributed in proportion of fixed assets. | Can be allocated directly to the activities. | Distributed based on cost-centre classification of assets. | -
Investment property | - | - | - | - | -
Intangible assets | - | Distributed in proportion of fixed assets. | - | Distributed based on cost-centre classification of assets or in proportion to the direct asset. | -
Investments | - | - | - | - | -
Other non-current financial assets | - | Distributed in proportion of fixed assets. | Can be allocated directly to the activities. | Based on item-by-item inspection. | -
Deferred tax asset | - | - | - | - | -
Other non-current assets | Directly attributable other non-current assets and adding company level other non-current assets in proportion of the employee benefit expenses. | - | Can be allocated directly to the activities. | Based on item-by-item inspection. | -
Inventories | Can be allocated directly to the activities. | Distributed in proportion of fixed assets. | Can be allocated directly to the activities. | It is divided in proportion to the direct asset. | Can be allocated directly to the activities.
Trade and other receivables | Can be allocated directly to the activities. | Can be allocated directly to the activities. | Can be allocated directly to the activities. | Can be allocated directly to activities. | Can be allocated directly to the activities.
Securities | - | - | - | - | -
Other current financial assets | - | - | - | It is divided in proportion to the direct asset. | -
Income tax receivable | - | - | - | - | -
Cash and cash equivalents | - | Distributed in proportion of fixed assets. | Can be allocated directly to the activities. | It is divided in proportion to the direct asset. | Can be allocated directly to the activities.
Other current assets | Directly attributable other current assets and adding company level other current assets in proportion of the employee benefit expenses. | Distributed in proportion of fixed assets. | Can be allocated directly to the activities. | It is divided in proportion to the direct asset. | Based on item-by-item inspection.
Assets classified as held for sale | - | - | - | - | -

|  | Consolidated Financial Statements 2022 | 92

| Method of activity separation in the statement of financial position
| MOL Plc. | TVK-Erőmű Kft. | MOL Solar Operátor Kft. | FGSZ Földgázszállító Zrt. | MOL Commodity Trading Kft.
Share capital | Distributed in proportion of related assets. | Distributed in proportion of fixed assets. | Can be allocated directly to the activities. | Opening balance sheet in proportion to fixed assets. | Distributed in proportion of related assets.
Retained earnings and other reserves | Distributed in proportion of related assets. | - | Can be allocated directly to the activities. | Based on item-by-item inspection. | Distributed in proportion of related assets.
(Loss) / Profit for the year attr. to owners of parent | Can be allocated directly to the activities. | Can be allocated directly to the activities. | Can be allocated directly to the activities. | Activity breakdown of profit and loss account. | Can be allocated directly to the activities.
Technical income/(expense) for the period | Value ensuring equality between allocated assets and liabilities and shareholder's equity. | Value ensuring equality between allocated assets and liabilities and shareholder's equity. | Can be allocated directly to the activities. | Provides accounting equation. | Value ensuring equality between allocated assets and liabilities and shareholder's equity.
Long-term debt | Can be allocated directly to the activities. | - | Can be allocated directly to the activities. | It is divided in proportion to the direct asset. | Value ensuring equality between allocated assets and liabilities and shareholder's equity.
Other non-current financial liabilities | - | - | - | - | -
Non-current provisions | - | Distributed in proportion to net sales revenue. | - | It is divided in proportion to the direct asset. | -
Deferred tax liabilities | - | - | Can be allocated directly to the activities. | It is divided in proportion to the direct asset. | -
Other non-current liabilities | - | Distributed in proportion of fixed assets. | - | It is divided in proportion to the direct asset. | -
Short-term debt | - | - | Can be allocated directly to the activities. | It is divided in proportion to the direct asset. | -
Trade and other payables | Can be allocated directly to the activities. | Distributed in proportion to net sales revenue. | Can be allocated directly to the activities. | It is divided in proportion to the direct asset. | Can be allocated directly to the activities.
Other current financial liabilities | - | Distributed in proportion of the net sales revenue, except of the directly attributable industrial tax and VAT liability. | - | It is divided in proportion to the direct asset. | -
Current provisions | - | Distributed in proportion to net sales revenue. | - | It is divided in proportion to the direct asset. | -
Income tax payable | - | Distributed in proportion to net sales revenue, except of the directly attributable industrial tax liability. | Can be allocated directly to the activities. | Distributed in proportion to profit before tax. | -
Liabilities classified as held for sale | - | - | - | - | -
Other current liabilities | Directly attributable other current liabilities and adding company level liabilities in proportion of the raw material cost and the employee benefit expenses. | Distributed in proportion to net sales revenue. | Can be allocated directly to the activities. | It is divided in proportion to the direct asset. | Based on item-by-item inspection.

|  | MOL Plc. Separate Financial Statements 2022 | 93

Statistical code: 10625790-1920-114-01

Company registration number: 01-10-041683

MOL HUNGARIAN OIL AND GAS PUBLIC LIMITED COMPANY

1117 Budapest, Dombóvári út 28.

2022

Separate FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS as adopted by the european union (EU) TOGETHER WITH THE INDEPENDENT AUDITOR’S REPORT

Budapest, 23 March 2023

|  | MOL Plc. Separate Financial Statements 2022 | 1

Separate 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 by the transformation of the predecessor National Oil and Gas Trust (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, Dombóvári út 28, 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 23 March 2023. These separate financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (EU). Notes to the separate financial statements also contain disclosures required by Act C of 2000 on Accounting (“Hungarian Accounting Law”). Mol Plc. complies with the requirements of European Securities and Markets Authority (ESMA) and publishes its annual separate financial statements in XHTML format from 1 January 2021. |

|  | MOL Plc. Separate Financial Statements 2022 | 2

Independent auditor’s reporT

The independent auditor’s report is a separate document.

|  | MOL Plc. Separate Financial Statements 2022 | 3

Separate Statement of profit or loss

| Notes | 2022 | 2021 Restated*
| HUF million | HUF million
Net sales |  | 3,858,458 | 2,118,563
Other operating income |  | 8,405 | 5,987
Total operating income | 3 | 3,866,863 | 2,124,550
Raw materials and consumables used |  | 3,009,135 | 1,711,839
Employee benefits expense |  | 89,656 | 73,207
Depreciation, depletion, amortisation and impairment | 120,073 | 100,027
Other operating expenses |  | 403,591 | 190,007
Change in inventory of finished goods & work in progress | (96,091) | (83,167)
Work performed by the enterprise and capitalised |  | (12,000) | (12,778)
Total operating expenses | 4 | 3,514,364 | 1,979,135
Profit from operation |  | 352,499 | 145,415
Finance income |  | 452,991 | 371,117
Finance expense |  | 212,013 | 107,887
Total finance income/(expense), net | 5 | 240,978 | 263,230
Profit/(Loss) before tax |  | 593,477 | 408,645
Income tax expense/(benefit) | 6 | 85,573 | (1,721)
PROFIT/(LOSS) FOR THE YEAR |  | 507,904 | 410,366
*more information in Note 1 Restatements in comparative periods |

|  | MOL Plc. Separate Financial Statements 2022 | 4

Separate Statement of Other comprehensive income

| Notes | 2022 | 2021 Restated*
| HUF million | HUF million
Profit/(loss) for the year |  | 507,904 | 410,366
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 | (3,157) | (132)
Other comprehensive income/(loss) to be reclassified to profit/(loss) in subsequent periods |  | (3,157) | (132)
Other comprehensive income not to be reclassified to profit/(loss) in subsequent periods: |  |  |
Remeasurement of post-employment benefit obligations | 7 | 594 | (892)
Other comprehensive income/(loss) not to be reclassified to profit/(loss) in subsequent periods |  | 594 | (892)
Other comprehensive income/(loss) for the year |  | (2,563) | (1,024)
Total comprehensive income/(loss) for the year |  | 505,341 | 409,342
*more information in Note 1 Restatements in comparative periods |  |  |

|  | MOL Plc. Separate Financial Statements 2022 | 5

Separate Statement of financial position

| Notes | 12/31/2022 | 12/31/2021 Restated* | 1/1/2021 Restated*
| HUF million | HUF million | HUF million
NON-CURRENT ASSETS |  |  |  |
Property, plant and equipment | 8 | 379,647 | 415,327 | 390,266
Intangible assets | 8 | 65,919 | 51,372 | 45,120
Investments | 9 | 3,016,528 | 2,810,130 | 2,221,115
Other non-current financial assets | 18 | 98,592 | 51,611 | 16,382
Deferred tax assets | 6 | 50,752 | 80,803 | 56,497
Other non-current assets | 10 | 1,302 | 2,437 | 1,578
Total non-current assets |  | 3,612,740 | 3,411,680 | 2,730,958
CURRENT ASSETS |  |  |  |
Inventories | 11 | 458,359 | 296,786 | 200,061
Trade and other receivables | 20 | 505,842 | 384,542 | 187,713
Securities | 18 | 830 | 26 | 10,685
Other current financial assets | 18 | 52,895 | 16,681 | 15,568
Income tax receivable | 6 | - | - | 1,842
Cash and cash equivalents | 21 | 309,592 | 184,435 | 78,375
Other current assets | 12 | 19,630 | 12,290 | 53,905
Assets classified as held for sale | 16 | 2,586 | 1,121 | -
Total current assets |  | 1,349,734 | 895,881 | 548,149
Total assets |  | 4,962,474 | 4,307,561 | 3,279,107
EQUITY |  |  |  |
Share capital |  | 80,544 | 80,992 | 80,972
Retained earnings and other reserves |  | 1,885,484 | 1,672,703 | 1,731,658
Profit/(Loss) for the year |  | 507,904 | 410,366 | -
Total equity |  | 2,473,932 | 2,164,061 | 1,812,630
NON-CURRENT LIABILITIES |  |  |  |
Long-term debt | 18 | 400,148 | 1,182,058 | 752,259
Other non-current financial liabilities | 18 | 305 | 681 | 1,182
Non-current provisions | 13 | 210,877 | 216,428 | 181,783
Other non-current liabilities | 14 | 3,523 | 1,646 | 708
Total non-current liabilities |  | 614,853 | 1,400,813 | 935,932
CURRENT LIABILITIES |  |  |  |
Short-term debt | 18 | 356,617 | 67,348 | 60,592
Trade and other payables | 18 | 484,262 | 355,919 | 192,595
Other current financial liabilities | 18 | 814,258 | 210,126 | 210,183
Current provisions | 13 | 21,171 | 16,002 | 11,001
Income tax payable | 6 | 36,637 | 11,961 | -
Other current liabilities | 15 | 160,744 | 81,331 | 56,174
Total current liabilities |  | 1,873,689 | 742,687 | 530,545
Total liabilities |  | 2,488,542 | 2,143,500 | 1,466,477
Total equity and liabilities |  | 4,962,474 | 4,307,561 | 3,279,107
*more information in Note 1 Restatements in comparative periods |  |

|  | MOL Plc. Separate Financial Statements 2022 | 6

Separate statement of changes in equity

|  | Issued share capital | Treasury shares 1 | Share capital | Share premium | Fair valuation reserve | Retained earnings | Tied-up reserve | 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 | HUF million
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
Corrections due to restatements |  | - | - | - | - | - | 1,300 | - | 1,300 | - | 1,300
Opening balance 1 January 2021 Restated |  | 102,429 | (21,457) | 80,972 | 219,389 | 188 | 1,581,721 | - | 1,801,298 | (69,640) | 1,812,630
Profit/(loss) for the year |  | - | - | - | - | - | - | - | - | 410,366 | 410,366
Other comprehensive income/(loss) for the year |  | - | - | - | - | (132) | (892) | - | (1,024) | - | (1,024)
Total comprehensive income/(loss) for the year |  | - | - | - | - | (132) | (892) | - | (1,024) | 410,366 | 409,342
Transfer to reserves |  | - | - | - | - | - | (69,640) | - | (69,640) | 69,640 | -
Dividends (restated) |  | - | - | - | - | - | (59,418) | - | (59,418) | - | (59,418)
Equity recorded for share-based payments |  | - | 20 | 20 | - | - | 1,487 | - | 1,487 | - | 1,507
Closing balance 31 December 2021 originally presented |  | 102,429 | (21,437) | 80,992 | 219,389 | 56 | 1,448,150 | - | 1,667,595 | 409,140 | 2,157,727
Corrections due to restatements |  | - | - | - | - | - | 5,108 | - | 5,108 | 1,226 | 6,334
Closing balance 31 December 2021 Restated |  | 102,429 | (21,437) | 80,992 | 219,389 | 56 | 1,453,258 | - | 1,672,703 | 410,366 | 2,164,061
Restated opening balance 1 January 2022 |  | 102,429 | (21,437) | 80,992 | 219,389 | 56 | 1,453,258 | - | 1,672,703 | 410,366 | 2,164,061
Profit/(loss) for the year |  | - | - | - | - | - | - | - | - | 507,904 | 507,904
Other comprehensive income/(loss) for the year |  | - | - | - | - | (3,157) | 594 | - | (2,563) | - | (2,563)
Total comprehensive income/(loss) for the year |  | - | - | - | - | (3,157) | 594 | - | (2,563) | 507,904 | 505,341
Transfer to reserves | 17 | - | - | - | - | - | 310,366 | 100,000 | 410,366 | (410,366) | -
Dividends | 17 | - | - | - | - | - | (191,285) | - | (191,285) | - | (191,285)
MOL share purchase from MOL Vagyonkezelő Kft. |  | - | (1,298) | (1,298) | - | - | (26,233) | - | (26,233) | - | (27,531)
Treasury shares sold to MOL Plc. SESOP Organizations |  | - | 826 | 826 | - | - | 15,750 | - | 15,750 | - | 16,576
Equity recorded for share-based payments |  | - | 24 | 24 | - | - | 4,437 | - | 4,437 | - | 4,461
Other |  | - | - | - | - | - | 2,309 | - | 2,309 | - | 2,309
Closing balance 31 December 2022 |  | 102,429 | (21,885) | 80,544 | 219,389 | (3,101) | 1,569,196 | 100,000 | 1,885,484 | 507,904 | 2,473,932

1 Including shares under repurchase obligation

|  | MOL Plc. Separate Financial Statements 2022 | 7

Separate statement of cash flows

|  | 2022 | 2021
|  |  | Restated*
| Notes | HUF million | HUF million
Profit/(Loss) before tax |  | 593,477 | 408,645
Adjustments to reconcile profit before tax to net cash provided by operating activities |  |  |
Depreciation, depletion, amortisation and impairment | 4 | 120,073 | 100,027
Increase / (decrease) in provisions | 13 | 1,863 | 5,025
Net (gain) / loss on asset disposal and divestments |  | (3,020) | 2,778
Net interest expense / (income) | 5 | 77,818 | 30,981
Other finance expense / (income) | 5 | (318,706) | (294,262)
Other items | 23 | 123,229 | 65,677
Income taxes paid | 6 | (27,386) | (9,227)
Cash flows from operations before changes in working capital |  | 567,348 | 309,644
Change in working capital |  | (253,404) | (163,064)
(Increase) / decrease in inventories | 11 | (159,808) | (99,540)
(Increase) / decrease in trade and other receivables | 20 | (224,617) | (105,522)
Increase / (decrease) in trade and other payables | 18 | 158,764 | 97,047
(Increase)/decrease in other assets and liabilities | 12,15 | (27,743) | (55,049)
Cash flows from operations |  | 313,944 | 146,580
Capital expenditures | 2 | (73,873) | (98,854)
Proceeds from disposal of fixed assets |  | 6,635 | 578
(Increase) / Decrease in other finance assets |  | 54,135 | 29,994
Interest received and other financial income | 5 | 19,344 | 2,136
Dividends received | 5 | 148,506 | 200,799
Cash flows from investing activities |  | 154,747 | 134,653
Proceeds from issue of bonds, notes and debentures |  | - | 35,422
Proceeds from borrowings |  | 312,991 | 302,480
Repayments of borrowings |  | (376,395) | (425,558)
Interest paid and other finance expense | 5 | (96,621) | (30,831)
Dividends paid to owners of parent | 17 | (191,234) | (59,404)
Net issue / repurchase of treasury shares |  | (9,133) | -
Cash flows from financing activities |  | (360,392) | (177,891)
Currency translation differences relating to cash and cash equivalents |  | 16,858 | 2,975
Increase/(decrease) in cash and cash equivalents |  | 125,157 | 106,317
Cash and cash equivalents at the beginning of the year |  | 184,435 | 78,375
Cash and cash equivalents at the end of the year |  | 309,592 | 184,435
Change in Cash and cash equivalents |  | 125,157 | 106,060
Change in Overdraft |  | - | 257
Increase / (decrease) in cash and cash equivalents |  | 125,157 | 106,317
*more information in Note 1 Restatements in comparative periods |  |  |

|  | MOL Plc. Separate Financial Statements 2022 | 8

Notes to the Separate financial statements – significant Accounting policies and other explanatory information

This section describes the basis of preparation of the separate 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. Significant accounting policies and other explanatory information

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 2022. Notes to the separate financial statements also contain 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 2022:

• Amendment to IFRS 3 Business Combinations

• Amendment to IAS 16 Property, Plant and Equipment

• Amendment to IAS 37 Provisions, Contingent Liabilities and Contingent Assets

• Amendment to Annual Improvements 2018-2020

The above-mentioned amendments do not impact significantly 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).

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 separate 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.

|  | MOL Plc. Separate Financial Statements 2022 | 9

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.

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 separate 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 separate 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 2022, the Covid-19 pandemic had no significant impact on operations and financial results, and it became part of the usual business.

Effect of climate-related matters and energy transition on the significant accounting estimates

As part of the Enterprise Risk Management framework MOL Plc identified climate-related matters as a material risk. MOL Plc’s long-term transformational strategy was created assessing these risks and represents how MOL Plc plans to mitigate the low-carbon economy transition risks. In addition, MOL Plc’s strategy was revised in line with the European Union’s Fit for 55 regulation in 2021.

MOL Plc acknowledges that the energy transition will occur, however there is a significant uncertainty around the pace of the transition. IFRS requires entities to use the latest available and reliable information when developing an accounting estimate. The significant accounting estimates affecting the amounts reported in the separate financial statements are prepared in line with the long-term strategy of the Plc, which represents management’s best estimate of the possible outcomes and risks associated with the transition to a low carbon world. MOL Plc expects climate-related matters to have an impact on the separate financial statements in the long-term and incorporates these factors into accounting estimates. Assumptions and information used like: Brent oil, NCG gas, CO2 quota price assumptions and applied industrial discount rates take into consideration the effects of the climate related matters and are in line with external information. Significant accounting estimates that could be affected by the climate change and energy transition are recoverability of assets, useful lives of tangible and intangible assets and provision for future decommissioning liabilities. For the assumptions and valuation techniques used please refer to the respective notes in the separate financial statements (Note 8, Note 13).

Amendments in accounting policies

Voluntary amendments

Following the fuel price cap enacted in Hungary at the end of 2021, MOL Plc has performed an internal, comprehensive review of its pricing procedures. As part of these procedures pricing methodologies were assessed and product prices were broken down into components country by country. Management identified that although EU countries are required to maintain emergency stocks of oil which can be used in case of a disruption to supply emergency oil stocks, governments cover the related expenses in levying a stockpiling fee on wholesalers or incorporating it in the excise duty. Fees collected from customers that must be remitted to a governmental entity do not meet the criteria for recognition as net revenue under IFRS 15. Management believes that it would lead to a more relevant and reliable information being presented if stockpiling association fees were consistently treated with excise duties and excluded from Net sales.

As a result of the revision HUF 17,109 million was netted between net sales and other operating expenses in 2021.

Contracts to buy and sell physical delivery non-financial instruments (e.g. commodities) in the future where the economic substance of the transaction is to trade with the non-financial instrument in the course of normal business activity are contracts with customers under IFRS 15 to deliver the goods and a derivative under IFRS 9 to hedge the price risk. The amendment was required as commodity trading becomes part of the normal course of business due to strategic risk management purposes.

Significant impact on operation

a) Russia – Ukraine conflict

The economic consequences of Russia’s invasion of Ukraine that commenced on 24 February 2022 may affect MOL Plc. Management is continuously investigating and assessing the possible effects of the current geopolitical situation, international sanctions and other possible limitations on the supply chain and business activities. MOL Plc has made decisions in its credit policy to minimise the exposure.

|  | MOL Plc. Separate Financial Statements 2022 | 10

MOL Plc. is exposed to Russia as an indirect minority owner of BaiTex Llc. which is a joint venture. Baitex Llc. is indirectly owned by MH Oil and Gas B.V., which is a MOL Plc. investment, which is fully impaired as at 31 December 2022 (investment value as at 31 December 2021 was HUF 31,426 million). MOL Plc exposure to Ukraine is not material.

MOL Plc’s refining business is exposed to the physical flow of crude oil through the transportation system in Russia and Ukraine. The physical flow of the crude oil from Russia has been periodically disrupted due to war damage on Ukrainian energy infrastructure. An alternative supply route from the Mediterranean Sea, via Croatia, exists however that can supply MOL Plc refineries with seaborne cargoes of crude oil. The European Union has imposed a partial embargo on Russian crude oil imports as of 5 December 2022 and on Russian petroleum product imports as of 5 February 2023. At the same time, a ban on the export of petroleum products obtained from Russian crude oil has been put in place. The regulations however allow for the continued import of Russian crude oil by pipeline, as well as the continued export of petroleum products obtained from Russian crude from Hungary indefinitely as long as the percentage of exports do not exceed the percentage of crude of non-Russian origin if blended with Russian crude as refinery feedstock.

Management is taking actions to manage the risk of possible crude oil supply disruption, including consideration of using alternative supply routes of sufficient capacity. MOL Plc has access to state reserves which enables it to supply its markets in case of interruptions of the Druzhba pipeline.

b) Windfall Taxes introduced during 2022

As a result of the Russian-Ukrainian conflict and the emerging energy crisis, the governments introduced significant measures, which also affect the MOL Plc.

§ Mining royalty effective from 1 August 2022:

§ The Hungarian oil and gas royalty rates have been changed; the fixed parts of the rates were tripled in those categories in which the majority of MOL's production takes place. Final effective rates include unchanged adjusting elements dependent from the spot Brent and TTF prices.

§ The unit values that are determined by Government Decree to be used for calculating royalty base include minimum thresholds for 2022 and 2023.

§ Production has been taken into account for the tax base in the period concerned cannot be lower than the 2021 level. In the event of a technical impediment or vis major situation, approval should be requested from the Mining Authority for the lower production. If the lower production is unjustified, the Mining Authority will impose additional mining royalty.

§ Extra profit tax on Ural-Brent spread

§ From 01.01.2022, the Hungarian government has introduced a Brent-Ural spread-based tax, which tax 25% of the Brent-Ural spread on Ural type crude oil procurement.

§ According to the amendment to the extra profit tax regulation issued by the Hungarian Government on 30 July 2022 effective from 1 August 2022 the Brent-Ural spread based extra profit tax rate on Ural type crude oil procurement has been modified to 40% prospectively.

§ According to the amendment to the extra profit tax regulation issued by the Hungarian Government on 18 December 2022 the Brent-Ural spread based extra profit tax rate on Ural type crude oil procurement has been modified to 95% prospectively.

§ Retail tax

§ The Hungarian Government modified the retail tax effective from 1 July 2022;

§ 80% of the 2021 tax had to be paid as a one-off additional tax in 2022;

§ For 2023 tax rate per revenue ranges will increase: in the range of HUF 500 millions – HUF 30 billions the rate will increase from 0.1% to 0,15%, in the range of HUF 30 billions – HUF 100 billions the rate will increase from 0.4% to 1%, above HUF 100 billions the rate will increase from 2.7% to 4.1%.

§ Solidarity contribution

§ On 6 October 2022, the Council of the European Union adopted a Regulation on „an emergency intervention to address high energy prices”. One of the measures of the Regulation is the temporary Solidarity Contribution. The Solidarity Contribution applies to EU companies and permanent establishments with certain activities in the crude petroleum, natural gas, coal and refinery sectors. The base of the Solidarity Contribution is the taxable profits realised in 2022 and / or 2023 which are above 20% increase of the average taxable profits realised in the four preceding fiscal years. The applicable rate is a minimum of 33%. Member States shall apply the Solidarity Contribution unless they have enacted equivalent national measures. The effects of such taxes presented in Note 6.

|  | MOL Plc. Separate Financial Statements 2022 | 11

In the statement of profit or loss the mining royalty, the extra profit tax and retail tax are recorded in other operating expenses, the solidarity contribution is recorded as income tax expense.

c) Price regulations

The Hungarian Government introduced a retail fuel price cap on 15 November 2021 and a wholesale price cap on 28 February 2022. The regulation was modified several times, the last version of the retail price cap narrowed the eligibility only to private consumers with Hungarian license plate. Both price cap has been lifted on 7 December 2022.

d) Waste management concession

MOL Plc. was announced as a winner for the Hungarian state concession tender covering municipal waste management services. The concession agreement covers a period of 35 years with a commencement date of July 1, 2023. According to the agreement MOL will be responsible for the collection of close to 5 million tonnes of municipal solid waste, will ensure its treatment and will make related investments. MOL’s binding offer for waste management services was submitted on June 3, 2022 in line with the requirements of the concession tender.

Restatements of comparative periods

MOL Plc. restated its comparative periods due to the retrospective application of an accounting policy change and due to errors detected during the 2022 financial year. Corrections of errors and effects of the accounting policy change are presented below in the primary statements.

Detailed description of the errors detected during 2022

MOL Plc. revised the valuation method and accounting treatment of the share swap agreement with OTP. As a result, it was detected that the accounting treatment of the dividend paid and received on the shares involved in the swap agreement and the valuation method of the derivative instrument is not appropriate. The MOL Plc shares involved in the swap are deducted from equity, however under the previous accounting treatment the dividend paid on these shares were deducted from the retained earnings and the dividend received was presented as a dividend income. As a result of the accounting treatment’s revision the dividends should modify the fair value of the derivative financial instrument. As a result of the previous accounting treatment and valuation method the derivative financial liabilities and finance expenses were overstated and the retained earnings were understated in 2020 and 2021. To change the accounting treatment MOL Plc restated the statement of financial position as at 1 January 2021 by decreasing the other current financial liabilities and increasing the retained earnings with HUF 1,300 million and as at 31 December 2021 by decreasing the other current financial liabilities with HUF 8,643 million, and increasing the retained earnings with HUF 5,108 million. Due to this change the other finance expense was also decreased by HUF 3,535 million in the statement of profit or loss in 2021. Income tax effect of this transaction was also restated, as a result income tax expense and income tax payable increased by HUF 2,309 million in 2021.

MOL Plc. reassessed the accounting treatment of the inventory purchased and sold to the national stockpiling association by MOL Plc. As this is a non-monetary exchange only the margin on the transaction should be recorded in net sales.

As a result of the revision HUF 24,567 million was netted between net sales and raw materials and consumables used and HUF 23,588 million was netted between net sales and change in inventory of finished goods and work in progress in 2021.

Transactions due to voluntary accounting policy amendments

Following the fuel price cap enacted in Hungary at the end of 2021, MOL Plc has performed an internal, comprehensive review of its pricing procedures. As part of these procedures pricing methodologies were assessed and product prices were broken down into components country by country. Management identified that although EU countries are required to maintain emergency stocks of oil which can be used in case of a disruption to supply emergency oil stocks, governments cover the related expenses in levying a stockpiling fee on wholesalers or incorporating it in the excise duty. Fees collected from customers that must be remitted to a governmental entity do not meet the criteria for recognition as net revenue under IFRS 15. Management believes that it would lead to a more relevant and reliable information being presented if stockpiling association fees were treated similar to excise duties and excluded from Net sales.

As a result of the revision HUF 17,109 million was netted between net sales and other operating expenses in 2021.

|  | MOL Plc. Separate Financial Statements 2022 | 12

Results for the year

This section explains the results and performance of MOL Plc. for the financial years ended 31 December 2022 and 31 December 2021. 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.

The major segments identified by MOL Plc. are the following:

Upstream segment consists of oil and gas exploration and production assets and the related activities.

Downstream segment consists of different business activities that are part of an integrated value chain. This value chain turns crude oil into a range of refined products, which are moved and marketed for household, industrial and transport use. The products include, among others, gasoline, diesel, heating oil, aviation fuel, lubricants, bitumen, sulphur and liquefied petroleum gas (LPG).

Consumer Services segment is a leading fuel retail operation in the CEE region, with a 10 million retail customer base and one million daily transactions.

Corporate and other segment includes all other business units of MOL Plc.

2022 | 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 | 28,048 | 2,729,858 | 1,072,369 | 28,183 | - | 3,858,458
Inter-segment transfers | 573,336 | 973,416 | 1,127 | 20,455 | (1,568,334) | -
Total revenue | 601,384 | 3,703,274 | 1,073,496 | 48,638 | (1,568,334) | 3,858,458
Profit / (loss) from operation | 261,428 | 172,326 | (4,911) | (76,345) | - | 352,499

2021 | Upstream | Downstream Restated | Consumer Services | Corporate and other | Inter-segment transfers | Total Restated
HUF million | HUF million | HUF million | HUF million | HUF million | HUF million
Net Revenue |  |  |  |  |  |
External sales | 11,332 | 1,469,274 | 614,426 | 23,531 | - | 2,118,563
Inter-segment transfers | 198,216 | 323,532 | 732 | 15,358 | (537,838) | -
Total revenue | 209,548 | 1,792,806 | 615,158 | 38,889 | (537,838) | 2,118,563
Profit / (loss) from operation | 78,778 | 106,678 | 28,208 | (50,506) | (17,743) | 145,415

|  | MOL Plc. Separate Financial Statements 2022 | 13

2022 | 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: | 21,024 | 42,700 | 9,905 | 33,741 | - | 107,370
Property, plant and equipment | 19,843 | 39,409 | 5,245 | 9,364 | - | 73,861
Intangible assets | 1,181 | 3,291 | 4,660 | 24,378 | - | 33,510
Depreciation, depletion, amortisation and impairment | 52,765 | 46,670 | 4,695 | 15,943 | - | 120,073
From this: impairment losses recognised in statement of profit or loss (incl. dry-holes) | 19,743 | 5,288 | 111 | 238 | - | 25,380
From this: reversal of impairment recognised in statement of profit or loss | 2,146 | - | - | - | - | 2,146
Provisions made and used during the year and revision of previous estimates | 152 | 5,259 | (317) | 705 | - | 5,799

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

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 provides 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. Under IFRS, the transfer of risk according to Incoterms rules applied by the MOL Plc. is not a sufficient criterion for recognizing revenue, because IFRS 15 Revenue from Contracts with Customers is based on the control concept. For performance obligations to be satisfied at a particular point in time, the MOL Plc. has to determine at which point in time the customer obtains control of the promised goods. The transfer of significant risk and rewards of ownership of an asset – which equals the transfer of risk as defined in the Incoterms rules – is only one indicator to consider in determining when control has been transferred. The MOL Plc may apply different Incoterms rules to different transactions (nearly all known Incoterms rules are used by the MOL Plc), thus the transfer of control shall be assessed individually in each case.

• it is the principal in its revenue arrangements, because it typically controls the goods or services before transferring them to customers (except to those cases, which are explicitly stated in the Separate Financial Statements);

|  | MOL Plc. Separate Financial Statements 2022 | 14

• 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.

a) Sales by product lines

| 2022 | 2021 Restated
| HUF million | HUF million
Sales of crude oil and oil products | 3,329,743 | 1,766,223
Sales of natural gas and gas products | 334,170 | 177,346
Sales revenue of services | 103,796 | 85,328
Sales of other products | 90,749 | 89,666
Total | 3,858,458 | 2,118,563

Increase in the MOL Plc’s sales revenue is due to the changes in macroeconomic environment, including price hikes in crude oil and consequently product quotations supported by healthier sales volumes influenced by better demand conditions.

e) Sales by geographical area

| 2022 | 2021 Restated
| HUF million | HUF million
Hungary | 2,767,226 | 1,467,565
Romania | 242,978 | 183,850
Slovakia | 212,494 | 83,929
Slovenia | 118,225 | 59,447
Austria | 92,717 | 47,101
Serbia | 71,604 | 68,816
Croatia | 63,888 | 58,259
Germany | 53,546 | 39,314
Switzerland | 30,314 | 21,843
Poland | 30,207 | 17,628
Spain | 29,610 | 469
Great Britain | 27,155 | 4,959
Italy | 23,323 | 18,185
The Netherlands | 21,663 | 8,112
Guernsey | 21,628 | -
Rest of Europe | 47,453 | 36,668
Rest of the World | 4,427 | 2,418
Total | 3,858,458 | 2,118,563

MOL Plc. has one single major customer the revenue from which is around 10% of the total net sales revenues (MOL Petrochemicals Plc with HUF 373,415 million in 2022 and HUF 298,461 million in 2021).

|  | MOL Plc. Separate Financial Statements 2022 | 15

Based on the IFRS 15 Revenue from Contracts with Customers standard agent-principal consideration, excise duties and similar levies or fees are recognised with net presentation in the financial statements as MOL Plc and its companies act as an „agent” and collects the excise duties from third parties to the state. Total amount of the excise duty collected from customers was HUF 505,345 million in 2022 and HUF 493,749 million in 2021.

f) Other operating income

| 2022 | 2021
| HUF million | HUF million
Gain on sales of intangibles, property, plant and equipment | 3,048 | 1,196
Reimbursement of legal costs | 2,276 | 2,826
Penalties, late payment interest, compensation received | 755 | 416
Reimbursement of costs from exploration | 515 | 380
Income due to the termination of a lease (IFRS 16) | 486 | -
Allowances and subsidies received | 418 | 432
Other | 907 | 737
Total | 8,405 | 5,987

The Other operating income includes reimbursement of legal costs (HUF 2,276 million) related to arbitration proceedings between Dana Gas PJSC (Dana) and Crescent Petroleum Company International LTD (Crescent) against MOL Plc. and OMV Upstream International GmbH, where MOL Plc was the respondent. The Final Award was issued on 16th December 2022. The tribunal dismissed all of Dana and Crescent’s claims and awarded reimbursement of 100% 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.

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.

|  | MOL Plc. Separate Financial Statements 2022 | 16

| 2022 | 2021 Restated
| HUF million | HUF million
Raw material and consumables used | 3,009,135 | 1,711,839
Material expenses | 1,949,115 | 1,242,401
Cost of goods purchased for resale | 910,834 | 349,810
Value of material-type services used | 127,765 | 103,825
Value of intermediated services | 21,421 | 15,803
Employee benefits expense | 89,656 | 73,207
Wages and salaries | 55,161 | 52,617
Social security | 8,208 | 9,694
Other employee benefits expenses | 26,287 | 10,896
Depreciation, depletion, amortisation and impairment | 120,073 | 100,027
Other operating expenses | 403,591 | 190,007
Mining royalties | 180,370 | 32,066
Net loss on commodity price transactions | 94,509 | 64,671
Taxes and contributions | 26,312 | 10,940
Other services | 22,573 | 19,968
Rental costs | 15,250 | 11,907
Donation | 14,027 | 5,138
Cost of emission quotas | 13,403 | 9,805
Consultancy fees | 11,501 | 7,532
Advertising expenses | 8,308 | 7,542
Penalties, late payment interest, compensation (net of provision utilised) | 4,307 | 314
Bookkeeping services | 3,791 | 3,381
Insurance fees | 3,523 | 3,079
Environmental provision made during the year | 1,928 | 2,654
Contribution to strategic inventory storage | 1,158 | 760
Net provision for legal and other claims | (150) | (2,707)
Net provision for field abandonment | (4,346) | 3,767
Other | 7,127 | 9,190
Change in inventory of finished goods & work in progress | (96,091) | (83,167)
Work performed by the enterprise and capitalised | (12,000) | (12,778)
Total operating expenses | 3,514,364 | 1,979,135

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

Mining royalty increased in 2022 due to change in the applied rates, the unit values determined by Government Decree including minimum thresholds for 2022 and 2023 and the minimum required production level. MOL Plc considers the mining royalty in the cost of inventory.

Based on the IFRS 15 Revenue from Contracts with Customers standard agent-principal consideration, excise duties and similar levies or fees are recognised with net presentation in the financial statements as MOL Plc and its companies act as an „agent” and collects the excise duties from third parties to the state.

Other item line contains several different types of expenses, which are individually not significant.

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 expenses contain 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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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.

| 2022 | 2021
| HUF million | HUF million
Short-term Share Ownership Plan | 337 | 1,223
Share based retirement benefit | 58 | -
Total cash-settled share-based payment expense | 395 | 1,223
Absolute Share Value Based Remuneration | (128) | 568
Relative Market Index Based Remuneration | 1,001 | 52
Restricted Share Plan | 2,288 | 1,031
Short-term Share Ownership Plan | 945 | (582)
Share Incentive scheme for the members of the Board of Directors | 452 | 361
Total equity-settled share-based payment expense | 4,558 | 1,430
Total expense of share-based payment transactions | 4,953 | 2,653

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.

Equity-settled share based payment:

| 2022 | 2021
| 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 | 5,063,857 | 2,981 | 7,429,907 | 3,023
Granted during the year | - | - | 227,992 | 2,918
Forfeited during the year | (158,256) | 2,973 | (294,376) | 3,012
Exercised during the year | (914,214) | 2,918 | - | -
Expired during the year | (2,313,683) | 3,052 | (2,299,666) | 3,107
Outstanding at the end of the year | 1,677,704 | 2,918 | 5,063,857 | 2,981
Exercisable at the end of the year | 1,677,704 | 2,918 | 2,379,084 | 3,052

Absolute Share Value Based Remuneration Incentive for management

The Absolute Share Value Based Remuneration Plan is a call option to sell hypothetical MOL shares granted on a past strike price, at a spot price and so realise profit from the difference between these prices. The incentive has the following characteristics:

• Covers a four-year period starting annually, where periods are split into a two-year vesting period (it is not possible to exercise Share Options) and a two-year redeeming period. If unexercised, the Share Option lapses after 31 December of the redeeming period.

• The grants are defined centrally in line with MOL job category.

• The allocation is linked to individual performance.

• Payout is in the form of providing MOL shares.

Payment is upon exercising of option by management. The value of the incentive is the difference between the strike price and a selected spot price for each unit of the entitlement.

|  | MOL Plc. Separate Financial Statements 2022 | 18

In case the Annual General Meeting of MOL Plc. decides on dividend payment after the grant date, the managers, who are entitled to long-term incentives are eligible for a compensation in share equivalent when redeeming the share entitlement. Payment to one manager is the value equal to the dividend payment per share multiplied by the share unit numbers the manager is entitled to. This is paid at redemption.

The programme has no longer started from 2021.

Relative Market Index Based Remuneration Incentive for management

The Relative Market Index Based Remuneration Plan is a three-year programme using the Comparative Share Price methodology with following characteristics:

• Programme starts each year on a rolling scheme with a three-year vesting period. Payments are due after the third year.

• Target is the development of MOL’s share price compared to relevant and acknowledged regional and industry specific indicators (the CETOP and MSCI Emerging Markets Energy Index).

• Basis of the evaluation is the average difference in MOL’s year-on-year (12 months) share price performance in comparison to the benchmark indices for three years.

• Payout rates are defined based on the over/underperformance of MOL share price.

• The rate of incentive is influenced by the individual short-term performance.

• Payout is in the form of providing MOL shares.

The programme has no longer started from 2021.

Restricted Share Plan for management

From 1 January 2021, MOL Plc established a new share-based payment remuneration plan to supersede Absolute Share Value Based Remuneration and Relative Market Index Based Remuneration programmes: Restricted Share Plan.

The Restricted Share Plan is a three-year incentive programme based on determined corporate and individual performance targets with following characteristics:

• Programme starts each year on a rolling scheme with a three-year vesting period. Payments are due after the third year.

• Target on corporate performance is based on the achievement of a business plan for Clean CCS EBITDA.

• Payout rates are defined based on fulfilment of the corporate performance target and individual payout rate which is based on an individual performance.

• Payout is in the form of providing MOL shares.

• The fair value of the benefit has been determined with reference to the average quoted price of MOL shares at the date of grant of HUF 2,549 per share in 2022 (HUF 2,221 per share in 2021), which is the first trading day of the first year of the programme.

Short-term Share Ownership Incentive for management

Short-term Share Ownership Plan is a one-year programme with the following characteristics:

• Programme starts each year on a rolling scheme with a one-year vesting period. Payments are due in the following year.

• The grants are defined based on participant’s base salary, internal grade and related bonus rate.

• The rate of incentive is influenced by the individual short-term performance during vesting period.

• Payout is in the form of providing MOL shares or in cash payment. The form of settlement depends on specific circumstances outside the control of the company and the counterparty. The treatment as an equity-settled plan is based on the probability of a contingent event.

Share Incentive scheme for the members of the Board of Directors

The members of the Board of Directors become entitled to defined annual amount of MOL shares based on the number of days spent in the position. 1,200 shares per month are granted to each director, the Chairman of the Board is entitled to an additional number of 400 shares per month. If not a non-executive director is in charge as the Chairman of the Board, then this additional number of shares should be granted to the non-executive Deputy Chairman. The incentive system ensures the interest of the Board of Directors in the long-term increase of the MOL share price as 2/3 of the shares vested in the year are under transferring restriction for one year.

|  | MOL Plc. Separate Financial Statements 2022 | 19

According to IFRS 2 – Share-based payment, the incentive qualifies as an equity-settled share-based scheme, therefore the fair value of the benefit should be expensed during the one year investing period with a corresponding increase in the equity. The fair value of the benefit has been determined with reference to the average quoted price of MOL shares at the date of grant, which is the first trading day of the year.

| 2022 | 2021
Number of shares vested | 163,200 | 149,155
Share price at the date of grant (HUF / share) | 2,549 | 2,221

Share-based retirement benefit

MOL Plc. operates long-term benefit schemes that provide lump sum benefits to all employees at the time of their retirement. As part of the benefit program employees are entitled to the amount of 10 MOL Plc. shares after every year of services. Qualification of the scheme has been reviewed in 2022 and as a result, it is presented according to IFRS 2 – Share-based payment standard; the benefit qualifies as a cash-settled share-based benefit. The amount of the liability has been determined using the projected unit credit method, based on financial and actuarial variables and assumptions that reflect relevant official statistical data which are in line with those incorporated in the business plan of MOL Plc. The applied MOL Plc. share price is HUF 2,602 as of 31 December 2022, which is the listed average share price.

5. Finance result

Accounting policies

Foreign exchange gains and losses are aggregated separately on monthly basis for transactions similar in nature. Foreign exchange gains or losses of each transaction groups are aggregated and presented in the statement of profit or loss within finance income and expense.

Non-foreign exchange type items are not aggregated in such manner, and presented separately based on the total income/expense for the year.

Finance result | 2022 | 2021 Restated
HUF million | HUF million
Dividend income | 333,214 | 182,406
Impairment reversal of investments in subsidiaries | 77,113 | 77,407
Interest income | 21,348 | 1,611
Foreign exchange gains | 16,858 | 4,038
Gain on contribution in kind | - | 104,814
Other finance income | 4,458 | 841
Total finance income | 452,991 | 371,117
Interest expense | 92,959 | 27,016
Foreign exchange losses | 71,516 | 17,193
Impairment of investments in subsidiaries | 39,594 | 57,202
Unwinding of discount on provisions | 6,207 | 5,577
Other finance expense | 1,737 | 899
Total finance expense | 212,013 | 107,887
Net finance income/(expense) | 240,978 | 263,230

An impairment reversal of HUF 77,113 million was recorded during the financial year. Majority of this amount is related to upstream investments which was disposed during the financial year. An impairment of HUF HUF 39,594 million was recorded on investments; from this amount HUF 31,426 million is related to the Russian investment of MOL Plc. Further information on this topic please refer to the significant on operation part of Note 1.

Interest expense on lease liabilities accounted for 2022 is HUF 785 million (2021: HUF 629 million). Finance income on the net investment in the lease accounted for in 2022 is HUF 82 million (2021: HUF 77 million).

|  | MOL Plc. Separate Financial Statements 2022 | 20

6. Income taxes

Accounting policies

Income tax is recognised in the statement of profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity, in which case the related tax is recognised in other comprehensive income or directly in equity.

The current income tax is based on taxable profit for the year. Taxable profit differs from accounting profit because of temporary differences between accounting and tax treatments and due to items that are never taxable or deductible or are taxable or deductible in other years. Full provision for deferred tax is made on the temporary differences between the carrying value of assets and liabilities for financial reporting purposes and their value for tax purposes using the balance sheet liability method. Deferred tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting year and are expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

Deferred tax assets are recognised where it is more likely than not that the assets will be realised in the future. At each balance sheet date, the Company re-assesses unrecognised deferred tax assets and the carrying amount of deferred tax assets.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities which relate to income taxes imposed by the same taxation authority and MOL Plc. intends to settle its current tax assets and liabilities on a net basis.

Significant accounting estimates and judgements

Corporate tax is required to be estimated in each tax jurisdiction in which MOL Plc. operates. The recognition of tax benefits requires management judgement. The actual tax liability may differ from the provision and adjustment in subsequent period could have a material effect on MOL Plc.’s profit for the year.

MOL Plc makes judgements in assessing the likelihood of potentially material exposures and develops estimates to determine provisions where required and considers whether contingent liability disclosures should be made.

The evaluation of deferred tax assets recoverability requires judgements regarding the likely timing and the availability of future taxable income. Deferred tax asset recoverability and any related judgement are based on the MOL Plc’s business plans.

a) Analysis of taxation charge for the year

Total applicable income taxes reported in the separate financial statements for the years ended 31 December 2022 and 31 December 2021 include the following components:

| 2022 | 2021 Restated
| HUF million | HUF million
Local trade tax and innovation fee | 22,880 | 12,722
Deferred taxes | 31,206 | (24,254)
Current corporate tax and industry income taxes | 31,306 | 9,455
Other taxes | 181 | 356
Total income tax (benefit)/expense | 85,573 | (1,721)

b) Current income taxes

The applicable corporate income tax rate on the taxable income was 9% in 2022 and in 2021.

Industry taxes include tax on energy supply activities in Hungary with an effective tax rate of 18% (2021: 18%) on tax base calculated using local regulations.

Local trade tax represents an income-based tax for Hungarian entities, payable to local municipalities. Tax base is calculated by deducting material costs, cost of goods sold, remediated services and subcontracts services from sales revenue. Tax rates vary between 0-2% depending on the regulation of local governments where the entities carry on business activities.

In 2021, deferred tax benefit was driven by the industry income tax law modification in Hungary, which introduced the future usability of losses carried forward in the industry income tax. The impact of the change in tax law had a HUF 25,565 million decrease in deferred tax at MOL Plc. in the first half of 2021.

Extra profit taxes introduced in Hungary are out of the scope of IAS 12 Income taxes standard. Extra profit tax refers to the Solidarity contribution based on EU regulation or enacted equivalent national measures. See details in Note 1.

|  | MOL Plc. Separate Financial Statements 2022 | 21

c) Deferred tax assets and liabilities

The deferred tax balances as of 31 December 2022 and 31 December 2021 in the statement of financial position consist of the following items by categories:

| 12/31/2022 | 12/31/2021
| HUF million | HUF million
Statutory losses carried forward | 8,187 | 38,900
Provisions | 54,937 | 52,982
Property, plant and equipment and intangible assets | (4,602) | (11,150)
Development reserve | (9,000) | -
Other temporary differences | 1,230 | 71
Net deferred tax asset | 50,752 | 80,803
of which: |  |
Total deferred tax assets | 64,354 | 91,973
Total deferred tax liabilities | (13,602) | (11,170)

1 Deferred tax on other temporary differences includes receivables write-off and gains or losses on FVTOCI debt instruments.

MOL Plc. has a deferred tax asset related to the negative tax base cumulated until 2014, which can be utilised until 2030 against taxable incomes according to the corporate income tax law.

Deferred tax income is driven by the industry income tax law modification in 2021 in Hungary, which introduced the future usability of losses carried forward in the industry income tax. For the first time, the 2020 tax loss can be carried forward and used as a tax base reduction for the next 5 years, up to a maximum of 50% of tax base. The full amount of losses carried forward accrued in the industry income tax was used in 2022.

Changes in deferred tax assets and liabilities are recorded against profit or loss in the amount of HUF -31,205 million and against other comprehensive income in the amount of HUF 1,154 million.

Change in tax rates

The following change in industry tax rates effective from 1 January 2023 to 31 December 2023 is taken into account in deferred tax calculation only for those temporary differences that are expected to reverse within this time of period:

a) change in Hungary to 41% (2022: 31%)

d) Reconciliation of taxation rate

A numerical reconciliation between tax expense and the product of accounting profit multiplied by the applicable tax rates is as follows:

| 2022 | 2021 Restated
| HUF million | HUF million
Profit/(loss) before tax | 593,477 | 408,645
Tax expense at the applicable tax rate (2022: 9%, 2021: 9%) | 53,413 | 36,460
Effect of group corporate taxation | (2,457) | -
Other tax expenses | 46,869 | 13,310
of which: |  |
local trade tax | 19,863 | 11,045
innovation fee | 3,017 | 1,676
industry income tax | 25,706 | 5,013
Tax effect of restatements | - | 2,309
Deferred tax impact of industry tax | 17,399 | (26,404)
Change in losses not recognised as deferred tax asset | - | -
Non-deductible expenses | 769 | 219
Effect of tax audit | (32) | 138
Tax allowance available | (25) | (1,904)
Non-taxable income | (30,363) | (25,849)
Total income tax (benefit)/expense for the year | 85,573 | (1,721)
Effective tax rate | 14% | 0%

|  | MOL Plc. Separate Financial Statements 2022 | 22

Non taxable income mainly relates to dividends which are recognised as finance income during the 2022 financial year.

e) Unrecognised deferred tax assets

No deferred tax assets have been recognised in respect of the following tax losses due to uncertainty of realisation:

| 12/31/2022 | 12/31/2021
| HUF million | HUF million
Tax losses - expiry within 5 years | 3,760 | 10,841
Total tax losses | 3,760 | 10,841

f) Uncertain tax positions

MOL Plc is subject to periodic tax authority reviews in the normal course of business. In common with all oil and gas companies, taxation is particularly challenging because of industry specific taxes, duties and levies. MOL Plc makes judgements in assessing the likelihood of potentially material exposures and develops estimates to determine provisions where required and considers whether contingent liability disclosures should be made. The impact of a more aggressive tax stance by tax authorities to deal with the current energy crisis and changes in local tax regulations could materially impact the tax exposures. In respect of uncertain tax position, no provision was created as it is probable that tax authorities would accept all tax positions of MOL Plc as recorded in the separate financial statements as of 31 December 2022.

The tax administration conducted comprehensive tax audit at MOL Plc concerning the years of 2016-2017. The tax administration may inspect the books and records within 6 years following the tax year concerned and may impose additional tax or penalty. The management of MOL Plc is not aware of any such circumstances that may generate material liabilities to MOL Plc under this title.

7. Components of other comprehensive income

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

Accounting policies

Debt instruments which are held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets are measured at fair value through other comprehensive income. When the asset is derecognised or reclassified, changes in fair value previously recognised in other comprehensive income and accumulated in equity are reclassified to profit and loss.

Remeasurement of post-employment benefit obligations

Accounting policies

The effects of differences between the previous actuarial assumptions and what has actually occurred and the effects of changes in actuarial assumptions in the model used for determining provision for post-employment benefit obligations, called as actuarial gains and losses, are recognised in the other comprehensive income immediately. The recognised amount is not reclassified to profit or loss in subsequent periods.

| 2022 | 2021
| HUF million | HUF million
Changes in fair value of debt instruments at fair value through other comprehensive income, net of tax |  |
Gains / (losses) arising during the year | (3,157) | (132)
Total | (3,157) | (132)
Remeasurement of post-employment benefit obligations |  |
Gains / (losses) arising during the year | 594 | (892)
Total | 594 | (892)

|  | MOL Plc. Separate Financial Statements 2022 | 23

Non-financial assets and liabilities

This section describes those non-financial assets that are used, and liabilities incurred to generate MOL Plc.’s performance. This section also provides detailed disclosures on the significant exploration and evaluation related matters as well as MOL Plc.’s recent acquisitions and disposals.

8. Property, plant and equipment and intangible assets

a) Property, plant and equipment

Accounting policies

Property, plant and equipment are stated at cost less accumulated depreciation, depletion and accumulated impairment loss.

The initial cost of property, plant and equipment comprises its purchase price, including import duties and non-refundable purchase taxes and any directly attributable costs of bringing the asset to its working condition and location for its intended use, such as borrowing costs. Estimated field abandonment and site restoration costs are capitalised upon initial recognition or, if decision on field abandonment is made subsequently, at the time of the decision. Expenditures incurred after the property, plant and equipment have been put into operation are charged to statement of profit or loss in the period in which the costs are incurred, except for periodic maintenance costs which are capitalised as a separate component of the related assets.

Construction in progress represents plant and properties under construction and is stated at cost without being depreciated. Construction in progress is reviewed for impairment annually.

| Land and buildings | Machinery and equipment | Other machinery and equipment | Construction in progress | Total
| HUF million | HUF million | HUF million | HUF million | HUF million
At 1 Jan 2021 |  |  |  |  |
Gross book value | 772,093 | 620,754 | 79,755 | 60,857 | 1,533,459
Accumulated depreciation and impairment | (603,206) | (482,748) | (56,883) | (356) | (1,143,193)
Net book value | 168,887 | 138,006 | 22,872 | 60,501 | 390,266
Year ended 31 Dec 2021 |  |  |  |  |
Additions and capitalisations | 36,517 | 57,897 | 9,602 | (8,538) | 95,478
Depreciation for the year | (32,377) | (38,531) | (7,715) | - | (78,623)
Impairment | (9,165) | (2,505) | (76) | (1,207) | (12,953)
Reversal of impairment | 23 | - | - | - | 23
Disposals | (62) | (17) | (326) | (4) | (409)
Transfers and other movements | 29,975 | (1,877) | (518) | (4,914) | 22,666
Closing net book value* | 193,798 | 152,973 | 23,839 | 45,838 | 416,448
At 31 Dec 2021 |  |  |  |  |
Gross book value* | 838,790 | 661,937 | 83,053 | 45,903 | 1,629,683
Accumulated depreciation and impairment* | (644,992) | (508,964) | (59,214) | (65) | (1,213,235)
Net book value* | 193,798 | 152,973 | 23,839 | 45,838 | 416,448
From this net value of assets held for sale | (1) | (637) | (484) | - | (1,121)
|  |  |  |  | 415,327
Net book value - at 1 Jan 2022 | 193,798 | 152,973 | 23,839 | 45,838 | 416,448
Additions and capitalisations | 19,142 | 58,450 | 8,697 | 6,829 | 93,118
Depreciation for the year | (39,752) | (38,630) | (6,829) | - | (85,211)
Impairment | (18,833) | (649) | (8) | (5,231) | (24,721)
Reversal of impairment | 2,146 | - | - | - | 2,146
Disposals | (3,229) | (3) | (372) | (140) | (3,744)
Transfers and other movements | (6,969) | (5,017) | (387) | (3,431) | (15,804)
Closing net book value | 146,303 | 167,124 | 24,940 | 43,865 | 382,232
At 31 Dec 2022 |  |  |  |  |
Gross book value | 843,583 | 707,752 | 86,583 | 43,930 | 1,681,848
Accumulated depreciation and impairment | (697,280) | (540,628) | (61,643) | (65) | (1,299,616)
Net book value | 146,303 | 167,124 | 24,940 | 43,865 | 382,232
From this net value of assets held for sale | (1,410) | (627) | (549) | - | (2,586)
|  |  |  |  | 379,647

*Prior years’s figures were modified with assets held for sale, but it’s consistent with last year’s statement of profit or loss.

|  | MOL Plc. Separate Financial Statements 2022 | 24

Leased assets

Accounting policies

MOL Plc. recognises the right-of-use assets and lease liabilities for most leases.

MOL Plc. measures the right-of-use asset at cost, less accumulated depreciation and any accumulated impairment losses. Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease term. The lease liability is initially measured at the present value of the lease payments payable over the lease term, discounted at the rate implicit in the lease if that can be readily determined, otherwise MOL Plc. as lessee applies incremental borrowing rate. The lease liability is measured subsequently using the effective interest rate method.

MOL Plc. has elected not to recognise right-of-use assets and lease liabilities for some leases of low-value assets and short-term leases. Low-value assets mainly comprise those assets which value, when new, do not exceed USD 5,000. Short-term leases are leases with a lease term of 12 months or less. MOL Plc. recognises the lease payments associated with these leases as expense on a straight-line basis over the lease term.

MOL Plc. presents right-of-use assets from leases in ‘Property, plant and equipment’, the same line item as it presents underlying assets of the same nature that it owns.

Significant accounting estimates and judgements

MOL Plc. has applied judgement to determine the lease term for some lease contracts that include renewal or termination options. The assessment of whether the MOL Plc. is reasonably certain to exercise such options impacts the lease term, which significantly affects the amount of lease liabilities and leased assets recognised.

| Land and building and related rights | Machinery and equipment | Other machinery and equipment | Total
| HUF million | HUF million | HUF million | HUF million
At 31 Dec 2021 |  |  |  |
Net book value of leased assets | 730 | 17,120 | 3,386 | 21,236
Period ended 31 Dec 2022 |  |  |  | -
Additions and capitalisations | 302 | 17,379 | 1,577 | 19,258
Depreciation for the period | (605) | (7,615) | (1,076) | (9,296)
Impairment, termination | (9) | (2,955) | (339) | (3,303)
Closing net book value | 418 | 23,929 | 3,548 | 27,895

Leased assets include land and building related leases (office, land etc), machinery leases which are connected to assets used in production (e.g. railway wagons), vehicle leases and other office equipment related leases.

MOL Plc. has presented lease liabilities within loans and borrowings, please refer to Note 17.

Borrowing costs

Accounting policies

Borrowing costs (including interest charges and other costs incurred in connection with the borrowing of funds, including exchange differences arising from foreign currency borrowings) directly attributable to the acquisition, construction or production of qualified assets are capitalised until these assets are substantially ready for their intended use or sale. All other costs of borrowing are expensed in the period in which they are incurred.

Property, plant and equipment include borrowing costs incurred in connection with the construction of qualifying assets. Additions to the gross book value of property, plant and equipment include borrowing costs of HUF 1,966 million in 2022 (2021: HUF 1,420 million). In 2022 the applicable capitalisation rate (including the impact of foreign exchange differences) has been 6.1 % (2021: 2.4 %).

b) Intangible assets

Accounting policies

An intangible asset is recognised initially at cost.

Following initial recognition, intangible assets, other than goodwill are stated at the amount initially recognised, less accumulated amortisation and accumulated impairment losses.

Intangible assets, excluding development costs, created within the business are not capitalised.

Development costs are capitalised if the recognition criteria according to IAS 38 are fulfilled. Costs in development stage can be not amortised. The carrying value of development costs is reviewed for impairment annually when the asset is not yet in use or more frequently when an indicator of impairment arises during the reporting year indicating that the carrying value may not be recoverable.

Free granted quotas are not recorded in the separate financial statements, while purchased quotas are initially recorded as intangible assets at cost less impairment, if any, taking into consideration the residual value. The quotas recognised are not amortised if the residual value is at least equal to carrying value.

|  | MOL Plc. Separate Financial Statements 2022 | 25

| Rights | Software and other intellectual property | Exploration and evaluation assets | Emission quotas | Goodwill | Total
| HUF million | HUF million | HUF million | HUF million | HUF million | HUF million
At 1 Jan 2021 |  |  |  |  |  |
Gross book value | 93,394 | 40,306 | 54,013 | 1,865 | 281 | 189,859
Accumulated amortisation and impairment | (75,593) | (16,898) | (52,171) | - | (77) | (144,739)
Net book value | 17,801 | 23,408 | 1,842 | 1,865 | 204 | 45,120
Year ended 31 Dec 2021 |  |  |  |  |  |
Additions | 2,020 | 9,520 | 2,883 | 13,645 | - | 28,068
Amortisation for the year | (7,172) | (1,978) | (37) | - | - | (9,187)
Impairment | - | (113) | (1,225) | (6) | (16) | (1,360)
Disposals | - | - | - | (13,001) | (0) | (13,001)
Transfers and other movements | 10,351 | (6,844) | (1,775) | - | - | 1,732
Closing net book value | 23,000 | 23,993 | 1,688 | 2,503 | 188 | 51,372
At 31 Dec 2021 |  |  |  |  |  |
Gross book value | 104,756 | 40,786 | 53,184 | 2,503 | 281 | 201,510
Accumulated amortisation and impairment | (81,756) | (16,793) | (51,496) | (0) | (93) | (150,138)
Net book value | 23,000 | 23,993 | 1,688 | 2,503 | 188 | 51,372
At 31 Dec 2022 |  |  |  |  |  |
Additions | 1,616 | 12,265 | 1,106 | 18,523 | - | 33,510
Amortisation for the year | (8,851) | (2,821) | - | - | - | (11,672)
Impairment | (533) | (69) | (14) | (43) | - | (659)
Disposals | - | - | - | (10,465) | - | (10,465)
Transfers and other movements | 12,647 | (8,911) | 1,225 | (1,128) | - | 3,833
Closing net book value | 27,879 | 24,457 | 4,005 | 9,390 | 188 | 65,919
At 31 Dec 2022 |  |  |  |  |  |
Gross book value | 118,433 | 43,991 | 55,500 | 9,390 | 281 | 227,595
Accumulated amortisation and impairment | (90,554) | (19,534) | (51,495) | - | (93) | (161,676)
Net book value | 27,879 | 24,457 | 4,005 | 9,390 | 188 | 65,919

Oil and natural gas exploration and development expenditures

Accounting policies

Oil and natural gas exploration and development expenditure is accounted for using the Successful Efforts method of accounting.

License and property acquisition costs

Costs of exploration and property rights are capitalised as intangible assets and amortised on a straight-line basis over the estimated period of exploration. Each property is reviewed on an annual basis to confirm that drilling activity is planned, and it is not impaired. If no future activity is planned, the remaining balance of the license and property acquisition costs is written off. Upon recognition of proved reserves (‘proved reserves’ or ‘commercial reserves’) and internal approval for development, the relevant expenditure is transferred to property, plant and equipment.

Exploration expenditure

Geological and geophysical exploration costs are charged against income statement as incurred. Costs directly associated with an exploration well are capitalised as an intangible asset until the drilling of the well is complete and the results have been evaluated. These costs include employee remuneration, materials and fuel used, rig costs, delay rentals and payments made to contractors. If hydrocarbons are not found, the exploration expenditure is written off as a dry-hole. If hydrocarbons are found and, subject to further appraisal activity, which may include the drilling of further wells (exploration or exploratory-type stratigraphic test wells), are likely to be capable of commercial development, the costs continue to be carried as an asset. All such carried costs are subject to technical, commercial and management review at least once a year to confirm the continued intent to develop or otherwise extract value from the discovery. When this is no longer the case, the costs are written off. When proved reserves of oil and natural gas are determined and development is sanctioned, the relevant expenditure is transferred to property, plant and equipment.

Development expenditure

Expenditure on the construction, installation or completion of infrastructure facilities such as platforms and the drilling of development wells, including unsuccessful development or delineation wells, is capitalised within property, plant and equipment.

|  | MOL Plc. Separate Financial Statements 2022 | 26

Significant accounting estimates and judgements

Application of Successful Efforts method of accounting for exploration and evaluation assets

Management uses judgement when capitalised exploration and evaluation assets are reviewed to determine capability and continuing intent of further development.

Exploration and evaluation assets

Transfers from exploration and evaluation assets represent expenditures which, upon determination of proved reserves of oil and natural gas are reclassified to property, plant and equipment.

Within exploration and evaluation assets, exploration expenses incurred in 2022 is HUF 2,308 million (2021: HUF 1,064 million), which were not eligible for capitalisation. Consistent with the Successful Efforts method of accounting they were charged to various operating cost captions of the separate statement of profit or loss as incurred.

Other research and development costs are less significant compared to exploration expenses. These research and development costs are HUF 438 million in 2022 (2021: HUF 489 million).

Write-off of dry-holes

Dry-hole | 2022 | 2021
HUF million | HUF million
Hungary | 14 | 1,225

c) Depreciation, depletion and amortisation

Accounting policies

Depreciation of assets begin when the relevant asset is available for use. Depreciation of each component of an intangible asset and property, plant and equipment, except for given Upstream assets, is computed on a straight-line basis over their respective useful lives. Usual periods of useful lives for different types of property, plant and equipment are as follows:

• Software: 3 – 5 years

• Buildings: 10 – 50 years

• Refineries and chemicals manufacturing plants: 4 –12 years

• Gas and oil storage and transmission equipment: 7 – 50 years

• Petrol service stations: 5 – 30 years

• Telecommunication and automatization equipment: 3 – 10 years

In Upstream segment depletion and depreciation of production installations and transport systems for oil and gas is calculated for each individual field or field-dedicated transport system using the unit of production method, based on proved and developed commercially recoverable reserves. Recoverable reserves are reviewed on an annual basis prospectively. Transport systems used by several fields and other assets are calculated on the basis of the expected useful life, using the straight-line method.

Amortisation of leasehold improvements is provided using the straight-line method over the term of the respective lease or the useful life of the asset, whichever period is less.

Periodic maintenance costs are depreciated until the next similar maintenance takes place.

The useful lives of intangible assets are assessed to be either finite or indefinite. Amortisation is charged on assets with a finite useful life over the best estimate of their useful lives using the straight-line method.

The useful life and depreciation methods are reviewed at least annually.

Significant accounting estimates and judgements

The determination of MOL Plc.’s estimated oil and natural gas reserves requires significant judgements and estimates to be applied and these are yearly reviewed and updated. Numerous factors have an impact on determination of MOL Plc.’s estimates of its oil and natural gas reserves (e.g. geological and engineering data, reservoir performance, acquisition and divestment activity, drilling of new wells, and commodity prices). MOL Plc. bases its proved and developed reserves estimates on the requirement of reasonable certainty with rigorous technical and commercial assessments based on conventional industry practice and regulatory requirements. Oil and natural gas reserve data are used to calculate depreciation, depletion and amortisation charges for MOL Plc.’s oil and gas properties. The impact of changes in these estimations is handled prospectively by amortising the remaining carrying value of the asset over the expected future production. Oil and natural gas reserves also have a direct impact on the value in use calculations applied for determination of the recoverability of assets.

|  | MOL Plc. Separate Financial Statements 2022 | 27

d) Impairment of assets

Accounting policies

Property, plant and equipment and intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Whenever the carrying amount of an asset exceeds its recoverable amount, an impairment loss is recognised in the statement of profit or loss for items of property, plant and equipment and intangibles carried at cost. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. The fair value is the amount obtainable from the sale of an asset in an arm's length transaction while value in use is the present value of estimated net future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. Recoverable amounts are estimated for individual assets or, if this is not practicable, for the cash-generating unit. Intangible assets with indefinite useful life are not depreciated, instead an impairment test is performed at each financial year-end.

MOL Plc. assesses at each reporting date whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. A previously recognised impairment loss is reversed only if there has been a change in the impairment assumptions considered when the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset neither exceeds its recoverable amount, nor is higher than its carrying amount net of depreciation, had no impairment loss been recognised in prior years.

Significant accounting estimates and judgements

Impairment of non-current assets, including goodwill

The impairment calculation requires an estimate of the recoverable amount of the cash generating units. Value in use is usually determined on the basis of discounted estimated future net cash flows. In determination of cash flows the most significant variables are discount rates, terminal values, the period for which cash flow projections are made, as well as the assumptions and estimates used to determine the cash inflows and outflows, including commodity prices, operating expenses, future production profiles and the global and regional supply-demand equilibrium for crude oil, natural gas and refined products. As approved by the year-end RRC, MOL Plc. has upgraded its reserve estimates of matured oil and gas fields in CEE. By this all reserves are determined at 2P basis consistently with industry best practice.

Impairments

In 2022, the following significant impairment losses and impairment reversals were recognised:

Impairments and write-offs (without dry-holes) | 2022 | 2021
HUF million | HUF million
Upstream | 19,728 | 10,340
Downstream | 5,288 | 2,488
Corporate and other | 239 | 98
Consumer services | 111 | 162
Total | 25,366 | 13,088
Impairment reversals |  |
Upstream | 2,146 | 23
Total | 2,146 | 23

In 2022 impairment was accounted in Upstream segment for production fields and for assets under construction. Impairment was recorded due to decrease in the value in use related to Algyő and Füzesgyarmat hubs (cash generating units) due to macro and regulation changes.

Impairment indicators

During the financial year the following impairment indicators were identified: change in crude oil and gas prices, change in the discount factors, change in local regulation implementing new industry specific taxes.

Impairment test of Upstream assets

The impairment tests performed by MOL Plc. were performed using the following assumptions:

• Recoverable amount is calculated with the assumption of using the assets in long-term in the future.

• The recoverable amount of the asset (cash-generating unit) is the value in use.

• Discount rates: the value in use calculations take into account the time value of money, the risks specific to the asset and the rate of return that would be expected by the market for an investment with similar risk, cash flow and timing profile. It is estimated from current market transactions for similar assets or from the 'weighted average cost of capital' (WACC) of a listed entity that has a single asset or portfolio of assets that are similar in terms of service potential and risks to the asset under review.

• In assessing value in use, the estimated future cash flows are discounted to their present value using a post-tax discount rate. The pre-tax discount rate is determined by way of iteration.

• Exploration and Production segment post-tax discount factors were calculated using the WACC premise plus country risk premium of the related country. Based on the above, the post-tax discount factors used for the impairment tests in 2022 was 6.4%.

• The pre-tax discount rate was 6.6% depending on the risk premium and the applicable tax rate in the geographic location of the CGU.

|  | MOL Plc. Separate Financial Statements 2022 | 28

• There is no change in the pre-tax discount rate compared to previous year.

• Brent oil and NCG gas price assumptions applied in the value in use models in 2021: real flat 50 USD/barrel and real flat EUR 15 MWh on 2021 basis.

• Brent oil and TTF gas price assumptions applied in the value in use models in 2022: 80 USD/barrel nominal flat on short term and continuous decrease from 72 USD/barrel, compensated by the 2% yearly USD inflation assumption on the long term and 83 EUR/MWh nominal flat on the short term and steady decrease from 32 EUR/MWh, compensated by the 2% yearly EUR inflation assumption on the long term.

Sensitivity of Upstream assets

MOL Plc. performed a sensitivity analysis on Upstream assets. The present values of Upstream assets were tested through the indicators for which the assets are most sensitive: Brent oil price, gas price and the discount factor. The sensitivity analysis had no effect on impairment recognition.

| Change in the present value HUF million
Change in the present value of the CGU |
Brent oil price sensitivity |
-10% case | (22,564)
+10% case | 24,140
Natural gas price sensitivity |
-10% case | (60,644)
+10% case | 60,753
Discount factor sensitivity |
-1% point | 18,350
+1% point | (17,182)

Impairment test of Downstream assets

The impairment tests performed by MOL Plc. were performed using the following assumptions:

• Recoverable amount is calculated with the assumption of using the assets in long-term in the future.

• The recoverable amount of the asset (cash-generating unit) is the value in use.

• Discount rates: the value in use calculations take into account the time value of money, the risks specific to the asset and the rate of return that would be expected by the market for an investment with similar risk, cash flow and timing profile. It is estimated from current market transactions for similar assets or from the 'weighted average cost of capital' (WACC) of a listed entity that has a single asset or portfolio of assets that are similar in terms of service potential and risks to the asset under review.

• In assessing value in use, the estimated future cash flows are discounted to their present value using a post-tax discount rate. The pre-tax discount rate is determined by way of iteration.

• Downstream segment post-tax discount factors were calculated using the WACC premise plus country risk premium of the related country. Based on the above, the post-tax discount factors used for the impairment tests in 2022 was 6.6%.

• The pre-tax discount rate was 6.8% depending on the risk premium and the applicable tax rate in the geographic location of the CGU.

• There is no change in the pre-tax discount rate compared to previous year.

• Brent oil and NCG gas price assumptions applied in the value in use models in 2021: real flat 50 USD/barrel and real flat EUR 15 MWh on 2021 basis.

• Brent oil and TTF gas price assumptions applied in the value in use models in 2022: 80 USD/barrel nominal flat on short term and continuous decrease from 72 USD/barrel, compensated by the 2% yearly USD inflation assumption on the long term and 83 EUR/MWh nominal flat on the short term and steady decrease from 32 EUR/MWh, compensated by the 2% yearly EUR inflation assumption on the long term.

|  | MOL Plc. Separate Financial Statements 2022 | 29

Sensitivity of Downstream assets

MOL Plc. performed a sensitivity analysis on the downstream cash generating unit comprising of two refineries and two petrochemical plants. The present value of the cash generating unit were tested through the indicators for which the CGU is most sensitive: Brent oil price, gas price, Co2 quota price and the discount factor. The sensitivity analysis had no effect on impairment recognition.

| Change in the present value HUF million
Change in the present value of the CGU | -
Brent oil price sensitivity |
-10% case | 25,930
+10% case | (25,930)
Natural gas price sensitivity |
-10% case | 94,292
+10% case | (94,292)
CO2 quota price sensitivity |
150 EUR/t case | (212,531)
Discount factor sensitivity |
-1%point | 470,790
+1%point | (310,191)

9. Investments in subsidiaries, associated companies and joint ventures

Accounting policies

In the separate financial statements investments in subsidiaries, associated companies and joint ventures are presented at cost according to IAS 27. Cost at initial recognition is the paid amount in cash or cash equivalent, irrevocable obligation to pay or the fair value of other consideration given by the purchaser. Cost include those costs which are directly attributable to the acquisition.

In case of investments paid in foreign currency:

· if the consideration of the purchase is paid before acquiring the owner’s rights, cost is the amount calculated by applying the official foreign currency rate of Hungarian National Bank on the day of the bank transfer,

· if the consideration of the purchase is paid after acquiring the owner’s rights, cost is the amount calculated by applying the official foreign currency rate of the Hungarian National Bank on the day of the transfer of owner’s rights.

There is no subsequent revaluation of investments paid in foreign currency due to foreign exchange rate changes.

Investments in subsidiaries, associated companies and joint ventures are subject of impairment test when indicator of potential impairment exists. When an external or internal indicator of impairment exists, the recoverable amount is to be determined and compared with net investment. If the recoverable amount is materially or permanently lower than net investment, impairment should be recorded. If the recoverable amount is materially or permanently higher than net investment, impairment reversal should be recorded. In case of upstream investments, impairment reversal cannot be recorded, only if the project turns into development phase.

The net recoverable amount is the higher of its fair value less cost of disposal and the present value of future cash flows of the investment proportioned based on ownership except for those upstream investments which are in exploration phase. In such cases recoverability depends on the existence of successful exploration and proved trading reserve. Therefore, future cash flows cannot be properly estimated and considered, until the project is qualified commercially successful. In these cases, net recoverable amount equals the IFRS net assets of the company.

Investments | 12/31/2022 | 12/31/2021
HUF million | HUF million
Subsidiaries | 2,940,796 | 2,733,109
Joint ventures | 461 | 1,750
Associates | 74,837 | 74,837
Other investments | 434 | 434
Total investments | 3,016,528 | 2,810,130

|  | MOL Plc. Separate Financial Statements 2022 | 30

| Subsidiaries | Joint ventures | Associates | Other investments | Total
| HUF million | HUF million | HUF million | HUF million | HUF million
Opening net balance of 2021 | 2,144,094 | 1,750 | 74,837 | 434 | 2,221,115
Capital increase | 460,841 | - | - | - | 460,841
Impairment reversal | 77,407 | - | - | - | 77,407
Acquisition | 3,025 | - | - | - | 3,025
Establishment | 9 | - | - | - | 9
Contribution in kind | 104,814 | - | - | - | 104,814
Impairment | (57,202) | - | - | - | (57,202)
Disposal | (7) | - | - | - | (7)
Other | 128 | - | - | - | 128
Closing net balance of 2021 | 2,733,109 | 1,750 | 74,837 | 434 | 2,810,130
Capital increase | 95,902 | - | - | - | 95,902
Acquisition | 175,814 | - | - | - | 175,814
Impairment reversal | 77,113 |  |  |  | 77,113
Establishment | 16 | - | - | - | 16
Contribution in kind | (54,237) | - | - | - | (54,237)
Dissolution | (353) | - | - | - | (353)
Impairment | (38,305) | (1,289) | - | - | (39,594)
Capital decrease | (48,180) |  |  |  | (48,180)
Other | (83) | - | - | - | (83)
Closing net balance of 2022 | 2,940,796 | 461 | 74,837 | 434 | 3,016,528

On 12 January 2022, MOL Plc. signed a set of agreements with PKN Orlen and Grupa Lotos covering the sale and purchase of several portfolio elements within Consumer Services. As a result of the transaction, MOL Plc. acquired 417 service stations in Poland including 270 company owned sites with a country-wide coverage and the potential to reach a top 3 position in the local fuel retail market.

The acquisition was successfully closed on 1 December 2022 the investment value of the Lotos Paliwa Sp.z.o.o is HUF 175,814 million.

On 23 March 2022, MOL Plc. signed an agreement with Waldorf Production Limited covering the sale of its entire Upstream portfolio in the United Kingdom. Due to the divestment of this portfolio an impairment reversal was made on the related investment. The deal was closed on 10 November 2022. For further information on impairment and impairment reversal please refer to Note 5.

Significant economic events regarding investments in 2022 were the following:

Investments | Capital increase | Acquisition | Impairment reversal | Establishment | Contribution in kind | Dissolution | Impairment | Capital decrease | Other | Total
HUF million | HUF million | HUF million | HUF million | HUF million | HUF million | HUF million | HUF million | HUF million | HUF million
Upstream | 6,296 | - | 77,113 | - | (54,237) | (329) | (37,611) | (47,343) | - | (56,111)
Downstream | 4,034 | - | - | 3 | - | (24) | (1,339) | - | (40) | 2,634
Consumer Services | 670 | 175,814 | - | - | - | - | (465) | - | - | 176,019
Corporate and other | 84,902 | - | - | 13 | - | - | (179) | (837) | (43) | 83,856
Total changes in investments | 95,902 | 175,814 | 77,113 | 16 | (54,237) | (353) | (39,594) | (48,180) | (83) | 206,398

|  | MOL Plc. Separate Financial Statements 2022 | 31

Significant economic events regarding investments in 2021 were the following:

Investments | Capital increase | Impairment reversal | Acquisition | Establishment | Contribution in kind | Impairment | Disposal | Other | Total
HUF million | HUF million | HUF million | HUF million | HUF million | HUF million | HUF million | HUF million | HUF million
Upstream | 75,207 | 77,407 | - | - | - | (29,742) | - | - | 122,872
Downstream | 281,309 | - | - | - | - | (6,462) | (7) | 85 | 274,925
Consumer Services | 11,321 | - | 2,795 | 6 | 4 | (545) | - | (35) | 13,546
Corporate and other | 93,004 | - | 230 | 3 | 104,810 | (20,453) | - | 78 | 177,672
Total changes in investments | 460,841 | 77,407 | 3,025 | 9 | 104,814 | (57,202) | (7) | 128 | 589,015

In case of investments in subsidiaries, joint ventures and associates an impairment test is made, if there is an indication of impairment. The impairment tests performed by MOL Plc. were performed using the following assumptions:

• The recoverable amounts of the investments is the higher of its fair value less cost of disposal and its value in use.

• Discount rates: the value in use calculations take into account the time value of money, the risks specific to the asset and the rate of return that would be expected by the market for an investment with similar risk, cash flow and timing profile. It is estimated from current market transactions for similar assets or from the 'weighted average cost of capital' (WACC) of a listed entity that has a single asset or portfolio of assets that are similar in terms of service potential and risks to the asset under review. Based on the above, the WACC rate (which contains the country risk premium as well) used for the impairment tests in 2022 were in range from 6.5% to 7.1%; for high risk countries 20.5%.

• The WACC rate (which contains the country risk premium as well) used for the impairment tests in 2021 were in range from 4.9% to 8.9%.

• Brent oil and NCG gas price assumptions applied in the value in use models: nominal flat 80 USD/barrel and nominal flat EUR 83 MWh on 2022 basis.

• Brent oil and NCG gas price assumptions applied in the value in use models in 2021: real flat 50 USD/barrel and 15 EUR/MWh.

10. Other non-current assets

| 12/31/2022 | 12/31/2021
| HUF million | HUF million
Advance payments for assets under construction | 1,017 | 1,854
Over-year part of prepaid expenses | 285 | 583
Total | 1,302 | 2,437

11. Inventories

Accounting policies

Inventories, including work-in-progress are valued at the lower of cost and net realisable value, after provision for slow-moving and obsolete items. Net realisable value is the selling price in the ordinary course of business, less the costs of making the sale. Cost of purchased goods, including crude oil and purchased gas inventory, is determined primarily on the basis of weighted average cost. The acquisition cost of own produced inventory consists of direct materials, direct wages and the appropriate portion of production overhead expenses including royalty. Inventory with nil net realisable value is fully written off.

|  | MOL Plc. Separate Financial Statements 2022 | 32

| 12/31/2022 | 12/31/2021
At cost | Lower of cost or net realisable value | At cost | Lower of cost or net realisable value
HUF million | HUF million | HUF million | HUF million
Purchased crude oil | 170,361 | 170,361 | 89,741 | 89,741
Work in progress and semi-finished goods | 130,822 | 130,822 | 76,918 | 76,918
Finished goods | 95,659 | 90,934 | 69,041 | 68,875
Other raw materials | 38,944 | 35,516 | 39,185 | 36,542
Other goods for resale | 31,388 | 30,726 | 25,013 | 24,710
Total | 467,174 | 458,359 | 299,898 | 296,786

During the year 2022 HUF 2,616,225 million of inventories have been recognised as an expense, of which impairment of HUF 6,638 million has been recorded in 2022 (2021: HUF 716 million), mainly on finished goods. Inventory value of purchased crude oil increased significantly compared to previous year due to the higher oil price.

12. Other current assets

| 12/31/2022 | 12/31/2021
| HUF million | HUF million
Prepaid expenses | 7,225 | 6,069
Prepaid and recoverable taxes and duties (excluding income taxes) | 5,347 | 5,660
Advance payments | 4,374 | 439
Dividend receivables | 2,642 | 14
Other | 42 | 108
Total | 19,630 | 12,290

13. Provisions

Accounting policies

Provision is made for the best estimate of the expenditure required to settle the present obligation (legal or constructive) as a result of past event where it is considered to be probable that a liability exists, and a reliable estimate can be made of the outcome. Long-term obligation is discounted to the present value. Where discounting is used, the carrying amount of the provisions increases in each period to reflect the unwinding of the discount by the passage of time. This increase is recognised as interest expense. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate.

Where it is possible that a settlement may be reached or it is not possible to make a reliable estimate of financial impact, appropriate disclosure is made but no provision created.

Provision for Environmental expenditures

Environmental expenditures that relate to current or future economic benefits are expensed or capitalised as appropriate. Liabilities for environmental costs are recognised when environmental assessments or clean-ups are probable, and the amount recognised is the best estimate of the expenditure required. In case of long-term liability, the present value of the estimated future expenditure is recognised.

Provision for Field abandonment

MOL Plc. records a provision upon initial recognition for the present value of the estimated future cost of abandonment of oil and gas production facilities following the termination of production. At the time the obligation arises, it is provided for in full by recognising the present value of future field abandonment and restoration expenses as a liability. An equivalent amount is capitalised as part of the carrying amount of long-lived assets. The estimate is based upon current legislative requirements, technology and price levels. A corresponding item of property, plant and equipment of an amount equivalent to the provision is also created. This is subsequently depreciated as part of the capital costs of the facility or item of plant (on a straight-line basis in Downstream and using the unit-of production method in Upstream). Any change in the present value of the estimated expenditure is reflected as an adjustment to the provision and the corresponding property, plant and equipment.

|  | MOL Plc. Separate Financial Statements 2022 | 33

Provision for Redundancy

The employees of MOL Plc. are eligible, immediately upon termination, for redundancy payment pursuant to the terms of Collective Agreement between the MOL Plc. and its employees. The amount of such a liability is recorded as a provision in the statement of financial position when the workforce reduction programme is defined, adopted, announced or has started to be implemented.

Provision for Long-term employee benefits

The cost of providing benefits under MOL Plc.’s defined benefit plans is determined separately for each plan using the projected unit credit actuarial valuation method. Actuarial gains and losses of retirement benefits are recognised as other comprehensive income immediately. Past service costs, resulting from the introduction of, or changes to the defined benefit scheme are recognised as an expense immediately.

Net interest expense is calculated on the basis of the net defined benefit obligation and disclosed as part of the finance result. Differences between the return on plan assets and interest income on plan assets included in the net interest expense is recognised in other comprehensive income.

Provision for Legal claims

Provision is made for legal cases if the negative expected outcome of the legal case is more likely than not.

Provision for Intercompany obligations

MOL Plc. provides comfort letters to its subsidiaries. This financial support might be necessary in the future for a subsidiary to fulfil its obligations under its loan facilities and accrued interest. Estimated probable expenditure is the outstanding loan liability at balance sheet date which is not covered by the recoverable value of the supported subsidiary.

Provision for Emission quotas

MOL Plc. recognises provision for the estimated CO2 emissions costs when actual emission exceeds the emission rights granted and still held. When actual emission exceeds the amount of emission rights granted, provision is recognised for the exceeding emission rights based on carrying amount of purchased quotas held for compliance, the purchase price of allowance concluded in forward contracts, and for any residual excess at market quotations at the reporting date. In addition, MOL Plc. recognises provision for estimated costs of Upstream Emission Reduction quotas (UER) intended to be used to fulfil obligations stipulated by EU Fuel Quality Directive.

Significant accounting estimates and judgements

A judgement is necessary in assessing the likelihood that a claim will succeed, or liability will arise, and to quantify the possible range of any settlement. Due to the inherent uncertainty on this evaluation process, actual losses may be different from the liability originally estimated.

Scope, quantification and timing of environmental and field abandonment provision

MOL Plc. holds provisions for the future decommissioning of oil and natural gas production facilities and pipelines at the end of their economic lives. Most of these decommissioning events are many years in the future and the precise requirements that will have to be met when the removal event occurs are uncertain. Decommissioning technologies and costs are constantly changing, as well as political, environmental, safety and public expectations. Management uses its previous experience and its own interpretation of the respective legislation to determine environmental and field abandonment provisions.

Actuarial estimates applied for calculation of retirement benefit obligations

The cost of defined benefit plans is determined using actuarial valuations, which involves making assumptions about discount rates, future salary increases and mortality or fluctuation rates. Due to the long-term nature of these plans, such estimates are subject to significant uncertainty.

Outcome of certain litigations

MOL Plc. is party to number of litigations, proceedings and civil actions arising in the ordinary course of business. Other provisions and liabilities are recognised in the period when it becomes probable that there will be a future outflow of funds resulting from past events and the amount of cash outflow can be reliably estimated. The timing of recognition and quantification of the liability require the application of judgement to existing facts and circumstances, which can be subject to change. Since the cash outflows can take place many years in the future, the carrying amounts of provisions and liabilities are reviewed regularly and adjusted to take account of changing facts and circumstances.

|  | MOL Plc. Separate Financial Statements 2022 | 34

| Environmental | Field abandonment | Redundancy | Long-term employee benefits | Legal claims | Emission rights and other | Total
| HUF million | HUF million | HUF million | HUF million | HUF million | HUF million | HUF million
Balance as of 01 Jan 2021 | 9,589 | 163,341 | 134 | 7,193 | 3,109 | 9,418 | 192,784
Additions and revision of previous estimates | 1,193 | 31,186 | 204 | 1,403 | - | 11,564 | 45,550
Unwinding of the discount | 304 | 5,230 | - | 33 | - | 10 | 5,577
Currency differences | - | - | - | - | - | 113 | 113
Provision used during the year | (1,181) | - | (104) | (434) | (2,707) | (7,167) | (11,593)
Balance as of 31 Dec 2021 | 9,905 | 199,757 | 234 | 8,195 | 402 | 13,937 | 232,431
Additions and revision of previous estimates | (480) | (11,246) | 31 | 4,904 | - | 14,336 | 7,545
Unwinding of the discount | 294 | 5,667 | - | 240 | - | 6 | 6,207
Currency differences | - | - | - | - | - | 198 | 198
Provision used during the year | (1,348) | - | (156) | (481) | (150) | (10,997) | (13,132)
Other movement | - | - | - | (1,200) | - | - | (1,200)
Balance as of 31 Dec 2022 | 8,371 | 194,178 | 109 | 11,658 | 252 | 17,480 | 232,048
Current portion 31 Dec 2021 | 1,238 | 1 | 154 | 821 | - | 13,788 | 16,002
Non-current portion 31 Dec 2021 | 8,667 | 199,756 | 80 | 7,374 | 402 | 149 | 216,428
Current portion 31 Dec 2022 | 1,392 | 332 | 29 | 1,877 | 250 | 17,291 | 21,171
Non-current portion 31 Dec 2022 | 6,979 | 193,846 | 80 | 9,781 | 2 | 189 | 210,877

Provision for Environmental expenditures

The closing balance of provision for the estimated cost of remediation of past environmental damages, primarily soil and groundwater contamination and disposal of hazardous wastes, such as acid tar is HUF 8,371 million. The provision is made on the basis of assessments prepared by MOL Plc.’s internal environmental expert team. The amount of the provision has been determined on the basis of existing technology at current prices by calculating risk-weighted cash flows for a period up to 12 years; in case of upstream segment up to 50 years, discounted using estimated risk-free real interest rates.

MOL Plc. prepared a sensitivity analysis on the cash flow period applied on environmental provision. The analysis examined the impact of a +/- five-year change in the cash flow forecast period on the environmental provision compared to the year-end liability recognised. During the assessment the same discount rates were applied.

The results of the analysis are summarised in the table below showing the absolute and percentage change in the liability already recognised in the balance sheet:

|  | - 5 years |  | + 5 years
Sensitivity analysis on environmental provision increase/(decrease) | % | HUF million | % | HUF million
Change in the amount of the liability | -10,7 | (893) | 10,4 | 873

Provision for Field abandonment

As of 31 December 2022, provision of HUF 194,178 million has been made for estimated total costs of plugging and abandoning wells upon termination of production. Approximately 1% of these costs are expected to be incurred between 2023 and 2027 and the remaining 99% between 2028 and 2076. The amount of the provision has been determined conservatively on the basis of previous years’ legislation, as the changes of the law in 2022 regarding wells deemed out-of-use induce transformation in the calculation methodology, which is still in progress. The amount of the provision was calculated at current prices and discounted using estimated risk-free real interest rates, its significant increase compared to last year's value was driven by indexation of prices with 2022 production price index that has reached its highest peak in a decade.

Activities related to field suspension, such as plugging and abandoning wells upon termination of production and remediation of the area are planned to be performed by hiring external resources. Based on the judgement of the management, there will be sufficient capacity available for these activities in the area. As required by IAS 16 – Property, Plant and Equipment, the qualifying portion of the provision has been capitalised as a component of the underlying fields. Decommissioning rates used in the calculation of the liability are in a range of 3.4% and 5.1% depending on the risk free rate, the inflation and the country risk premium in the given country.

|  | MOL Plc. Separate Financial Statements 2022 | 35

MOL Plc performed sensitivity analysis on the field abandonment liability by examining the +/- 1 percentage point change of the decommissioning rate. Decommissioning rate higher by one percentage point reduces the provision by 21%, while a decommissioning rate lower by one percentage point increases the provision by 28%.

Provision for Redundancy

As part of continuing efficiency improvement projects MOL Plc. decided to further optimise workforce. As the management is committed to these changes and the restructuring plan was communicated in detail to parties involved, MOL Plc. recognised a provision for the net present value of future redundancy payments and related tax and contribution. The closing balance of provision for redundancy is HUF 109 million as of 31 December 2022 (31 December 2021: HUF 234 million).

Provision for Long-term employee benefits

As of 31 December 2022, MOL Plc. has recognised a provision of HUF 11,658 million to cover its estimated obligation regarding future retirement and jubilee benefits payable to current employees expected to retire from MOL Plc. The company operates benefit schemes that provide lump sum benefit to all employees at the time of their retirement. Employees of MOL Plc. are entitled to 3 times of their final monthly salary regardless of the period of service. In addition to the above-mentioned benefits, in Hungary the retiring employees are entitled to the absence fee for their notice period – which lasts for 1-3 months depending on the length of the past service – which is determined by the Hungarian Labour Code. None of these plans have separately administered funds, therefore there are no plan assets. The amount of the provision has been determined using the projected unit credit method, based on financial and actuarial variables and assumptions that reflect relevant official statistical data which are in line with those incorporated in the business plan of MOL Plc.

| 2022 | 2021
| HUF million | HUF million
Present value of total retirement and jubilee benefit obligation at the beginning of the year | 8,195 | 7,193
Current service cost | 355 | 471
Past service cost | 5,484 |
Interest expense | 240 | 33
Provision used during the year | (481) | (434)
Net actuarial (gain)/loss | (935) | 932
from which: |  |
Retirement benefit | (550) | 892
Jubilee benefit | (385) | 40
Other movements | (1,200) | -
Present value of total long-term employee benefit obligation at year end | 11,658 | 8,195

The other movements contain reclassification in long-term employee benefits between provision and other current and non-current liabilities.

The following table summarises the components of net benefit expense recognised in the statement of total comprehensive profit or loss as employee benefit expense regarding provision for long-term employee retirement and jubilee benefits:

| 2022 | 2021
| HUF million | HUF million
Current service cost | 355 | 471
Past service cost | 5,484 | -
Net actuarial (gain)/loss | (935) | 932
Balance as at year end | 4,904 | 1,403

|  | MOL Plc. Separate Financial Statements 2022 | 36

The following table summarises the main financial and actuarial variables and assumptions based on which the amount of retirement benefits has been determined:

| 2022 | 2021
Discount rate in % | 13.04-8.09 | 3.57-4.80
Average wage increase in % | 1. year 10.00; after 3.00 | 3.00
Mortality index (male) | 0.04 - 3.01 | 0.04 - 3.01
Mortality index (female) | 0.02 - 1.33 | 0.02 - 1.33

Actuarial (gains) and losses comprises of the following items:

| Retirement benefits | Jubilee benefits
| 2022 | 2021 | 2022 | 2021
| HUF million | HUF million | HUF million | HUF million
Actuarial (gains) / losses arising from changes in demographic assumptions | 54 | 1,632 | 8 | 301
Actuarial (gains) / losses arising from changes in financial assumptions | (1,362) | (1,124) | (384) | (277)
Actuarial (gains) / losses arising from experience adjustments | 758 | 384 | (9) | 16
Total actuarial (gains) / losses | (550) | 892 | (385) | 40

A quantitative sensitivity analysis for significant assumptions as at 31 December is, as shown below:

| Retirement benefits | Jubilee benefits
| 2022 | 2021 | 2022 | 2021
| HUF million | HUF million | HUF million | HUF million
Discount rate: |  |  |  |
0.5% decrease | 175 | 227 | 166 | 56
0.5% increase | (160) | (210) | (148) | (53)
Termination rate: |  |  |  |
50% decrease | 845 | 1,413 | 821 | 259
50% increase | (636) | (1,001) | (668) | (204)

Provision for legal claims

As of 31 December 2022, provision of HUF 252 million (31 December 2021: HUF 402 million) has been made for estimated total future losses from litigations.

Provision for emission quotas

As of 31 December 2022, the MOL Plc. has recognised provision of HUF 12,723 million for the shortage of emission quotas (31 December 2021: HUF 8,156 million). In 2022, MOL Plc. has been granted 1,055,173 tons emission quotas by the Hungarian authorities (in 2021: 1,057,966 tons). The total emissions during 2022 amounted to equivalent of 1,560,741 tons of emission quotas (in 2021: 1,613,301 tons). In addition, MOL Plc. has recognised provision of HUF 1,239 million for Upstream Emission Reduction (UER) liability (31 December 2021: HUF 1,802 million).

MOL Plc. has recognised provision of HUF 1,311 million for Energy Efficiency quota (EKR) on 31 December 2022 (31 December 2021: 1,333 million).

For further information regarding the calculation method of estimated cost please refer to the accounting policies.

|  | MOL Plc. Separate Financial Statements 2022 | 37

14. Other non-current liabilities

| 12/31/2022 | 12/31/2021
| HUF million | HUF million
Retirement benefit (share based payments) | 1,170 | 0
Government grants received | 1,169 | 1,403
Loyalty provision | 996 | 0
Compensation received for pipeline eliciting | 131 | 153
Other | 57 | 90
Total | 3,523 | 1,646

15. Other current liabilities

| 12/31/2022 | 12/31/2021
| HUF million | HUF million
Taxes, contributions payable (excluding corporate tax) | 113,363 | 61,781
Mining royalty | 20,847 | -
Amounts due to employees | 9,739 | 13,596
Advances from customers | 9,665 | 3,768
Other accrued incomes | 4,010 | 244
Deferred revenue from government grants | 2,137 | 407
Other | 983 | 1,535
Total | 160,744 | 81,331

Taxes, contributions payable mainly include value added taxes, excise taxes, extra profit taxes and energy sector extra taxes.

16. Assets classified as held for sale

Accounting policies

Non-current assets and disposal groups are classified as held for sale if their carrying amounts are to be realised by sale rather than through continued use. This is the case when the sale is highly probable, and the asset or disposal group is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification as held for sale, and actions required to complete the plan of sale should indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

Immediately before the initial classification of the asset as held for sale, impairment test shall be carried out. Non-current assets and disposal groups classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell. Property, plant and equipment and intangible assets are no longer depreciated or amortised once classified as held for sale.

As of 31 December 2022, assets held for sale contains service stations at carrying amount, furthermore unused office buildings. These assets classified as held for sale are reported in Consumer Services and Corporate and other segments.

| 12/31/2022 | 12/31/2021
Assets and liabilities held for sale | HUF million | HUF million
Assets |  |
Property, plant and equipment | 2,586 | 1,121
Assets classified as held for sale | 2,586 | 1,121
Liabilities |  |
Liabilities related to assets classified as held for sale | - | -

|  | MOL Plc. Separate Financial Statements 2022 | 38

Financial

instruments, capital and financial risk management

This section explains policies and procedures applied to manage MOL Plc.’s capital structure and the financial risks MOL Plc. is exposed to. This section also describes the financial instruments applied to fulfil these procedures. Financial instruments disclosures are also provided in this section.

Accounting policies

Initial recognition

Financial instruments are recognised initially at fair value (including transaction costs, for assets and liabilities not measured at fair value through profit or loss) when the entity becomes a party to the contractual provisions of the instrument. A regular way purchase or sale of financial assets is recognised using settlement date accounting.

Financial assets - Classification

The MOL Plc.’s financial assets are classified at the time of initial recognition depending on their nature and purpose. To determine which measurement category a financial asset falls into, it should be first considered whether the financial asset is an investment in an equity instrument or a debt instrument. Equity instruments should be classified as fair value to profit or loss, however if the equity instrument is not held for trading, fair value through other comprehensive income option can be elected at initial recognition. If the financial asset is a debt instrument the following assessment should be considered in determining its classification.

Amortised cost

Financial instruments measured at amortised cost are those financial assets that is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Fair value through other comprehensive income

Financial assets at fair value through other comprehensive income are those financial assets that is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Fair value through profit or loss

Financial assets at fair value through profit or loss include financial assets which are not classified in any of the two preceding categories or financial instruments designated upon initial recognition as at fair value through profit or loss.

Financial liabilities – Classification

By default, financial liabilities are measured at amortised cost, unless they are required to be measured at fair value through profit or loss or the entity has opted to measure a liability at fair value through profit or loss. A financial liability is required to be measured at fair value through profit or loss in case of liabilities that is classified as ‘held for trading’ and derivatives. An entity can, at initial recognition, irrevocably designate a financial liability as measured at fair value through profit or loss (fair value option) where doing so results in more relevant information, because either:

• it eliminates or significantly reduces a measurement or recognition inconsistency, or

• a group of financial liabilities or financial assets and financial liabilities is managed, and its performance is evaluated on a fair value basis.

Subsequent measurement

Subsequent measurement depends on the classification of the given financial instrument.

Amortised cost

The asset or liability is measured at the amount recognised at initial recognition minus principal repayments, plus or minus the cumulative amortisation of any difference between that initial amount and the maturity amount, and any loss allowance. Interest income is calculated using the effective interest method and is recognised in profit and loss. Changes in fair value are recognised in profit and loss when the asset is derecognised or reclassified.

Fair value through other comprehensive income – debt instrument

The asset is measured at fair value. Interest revenue, impairment gains and losses, and a portion of foreign exchange gains and losses, are recognised in profit and loss on the same basis as for amortised cost assets. Changes in fair value are recognised in other comprehensive income. When the asset is derecognised or reclassified, changes in fair value previously recognised in other comprehensive income and accumulated in equity are reclassified to profit and loss on a basis that always results in an asset measured at fair value through other comprehensive income having the same effect on profit and loss as if it were measured at amortised cost.

|  | MOL Plc. Separate Financial Statements 2022 | 39

Fair value through other comprehensive income – equity instrument

Dividends are recognised when the entity’s right to receive payment is established, it is probable the economic benefits will flow to the entity and the amount can be measured reliably. Dividends are recognised in profit and loss unless they clearly represent recovery of a part of the cost of the investment, in which case they are included in other comprehensive income. Changes in fair value are recognised in other comprehensive income and are never recycled to profit and loss, even if the asset is sold or impaired.

Fair value through profit or loss

The asset or liability is measured at fair value. Changes in fair value are recognised in profit and loss as they arise.

Fair value measurement

Fair value of instruments is determined by reference to quoted market prices at the close of business on the balance sheet date without any deduction for transaction costs. For investments where there is no quoted market price, fair value is determined by reference to the current market value of another instrument which is substantially the same or is calculated based on the expected cash flows of the underlying net asset base of the investment.

Derecognition of Financial Instruments

Derecognition of a financial asset takes place when the MOL Plc. no longer controls the contractual rights that comprise the financial asset, which is normally the case when the instrument is sold, or all the cash flows attributable to the instrument are passed through to an independent third party. When the MOL Plc. neither transfers nor retains all the risks and rewards of the financial asset and continues to control the transferred asset, it recognises its retained interest in the asset and a liability for the amounts it may have to pay.

A financial liability should be removed from the balance sheet when, and only when, it is extinguished, that is, when the obligation specified in the contract is either discharged or cancelled or expires.

Impairment of Financial Assets

The MOL Plc. assesses at each balance sheet date whether a financial asset or group of financial assets that is measured at amortised cost or fair value through other comprehensive income is impaired.

As a general approach, impairment losses on a financial asset or group of financial assets are recognised for expected credit losses at an amount equal to:

• 12-month expected credit losses (expected credit losses that result from those default events on the financial instrument that are possible within 12 months after the reporting date), or

• full lifetime expected credit losses (expected credit losses that result from all possible default events over the life of the financial instrument).

The loss allowance for financial instruments is measured at an amount equal to full lifetime expected losses if the credit risk of a financial instrument has increased significantly since initial recognition. Unless the credit risk of the financial instrument is low at the reporting date in which case it can be assumed that credit risk on the financial instrument has not increased significantly since initial recognition and 12-month expected credit losses can be applied. MOL Plc. determines significant increase in credit risk in case of debt securities based on credit rating agency ratings. As there is a rebuttable presumption that the credit risk on a financial asset has increased significantly since initial recognition when contractual payments are more than 30 days past due assessment is required on a case-by-case basis whether the credit risk significantly increased in that financial asset when such an event occurs.

Additionally, the MOL Plc. applies the simplified approach to recognise full lifetime expected losses from origination for trade receivables, IFRS 15 contract assets and lease receivables. For all other financial instruments, general approach is applied.

The Company calculates the expected credit loss on trade receivables as the average of yearly historical loss rates of last three years multiplied by the forward-looking element. The forward-looking element is based on robust negative correlation between banking sector credit losses and two years’ lags of real GDP growth. In case of other financial assets the expected credit loss of the instrument will be determined by multiplying the probability of default rate of the instrument with the loss given default of the instrument.

An entity shall recognise in profit or loss, as an impairment gain or loss, the amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date.

Independently of the two approaches mentioned above, impairment losses recognised where there is an objective evidence on impairment due to a loss event and this loss event significantly impacts the estimated future cash flows of the financial asset or group of financial assets. These are required to be assessed on a case-by-case basis. The maximum amount of impairment accounted for by the MOL Plc. is 100% of unsecured part of the financial asset. The amount of loss is recognised in the statement of profit or loss.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed. Any subsequent reversal of impairment loss is recognised in the statement of profit or loss, to the extent that the carrying value of the asset does not exceed its amortised cost at the reversal date.

Significant accounting estimates and judgements

For determination of fair value, management applies estimates of the future trend of key drivers of such values, including, but not limited to yield curves, foreign exchange and risk-free interest rates, and in case of the conversion option volatility of MOL share prices and dividend yield.

The loss allowances for financial assets are based on assumptions about risk of default and expected loss rates. The MOL Plc. uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the MOL Plc’s past history and existing market conditions, as well as forward-looking estimates at the end of each reporting period.

|  | MOL Plc. Separate Financial Statements 2022 | 40

17. Financial risk and capital management

Financial risk management

Since financial risk management is a centralised function at MOL Plc., it is possible to integrate and measure all financial risks. As a result, Treasury liquidity and Financial Risk Report are submitted to the senior management quarterly.

As a general approach, risk management considers the business as a well-balanced integrated portfolio. MOL Plc. actively manages its commodity exposures for the following purpose:

MOL Plc. Level Objectives

· protection of financial ratios and targeted financial results,

· reducing the exposure of cash flow to market price fluctuations

Capital management

The primary objective of the MOL Plc’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholder value.

The MOL Plc manages its capital structure and makes adjustments to it in light of changes in economic conditions.

2x is the early warning indicator in net debt to EBITDA where MOL Plc might consider making changes in its capital structure. Since the ratio is currently low (0.94 in 2022) there is no open decision point on it.

The long-term healthy net gearing ratio is expected to be 30% debt and 70% equity at MOL Plc. If the ratio diverges permanently from this level the MOL Plc might consider making changes in its capital structure. Since the ratio does not differ from the 30% significantly (15% in 2022) there is no open decision point on it. For the calculation of the net gearing and net debt/EBITDA ratio please refer to section C.

To maintain or adjust the capital structure, the MOL Plc may adjust the dividend payment to shareholders, return capital from shareholders or issue new shares. Treasury share (put-call option) transactions are also applied for such purposes.

a) Key exposures

Risk Management identifies and measures the key risk drivers and quantifies their impact on the MOL Plc.’s operating results. MOL Plc. is monitoring key exposures, the diesel crack spread, the crude oil price and gasoline crack spread have the biggest contribution to the cash flow volatility.

Commodity price risk

MOL Plc. as an integrated oil and gas company is exposed to commodity price risk on demand and supply side as well. The main commodity risks stem from the fact downstream processing more crude oil than our own crude oil production. In Upstream MOL Plc. has long position in crude oil and in Downstream MOL Plc. has a long position in refinery margin. Investors buying oil industry shares are generally willing to take the risk of oil business so commodity price risk should not be fully eliminated from the cash flow. When necessary, commodity hedging is considered to eliminate risks other than ‘business as usual’ risks or general market price volatility.

In 2022 MOL Plc. concluded short and mid-term commodity swap and option transactions. These transactions are mainly conducted for operational hedging purposes, in order to mitigate the effects of the price volatility in our operations and at the same time, when possible, to lock in favourable forward curve structure.

Foreign currency risk

MOL Plc. relies on economic currency risk management principle that the currency mix of the debt portfolio should reflect the net long-term currency position of profit generation (‘natural hedge’). However in circumstances where insisting to this principle without any flexibility is disadvantageous for the company our practice allows using foreign exchange derivatives as well. The main motivation here is safeguarding the financial covenant compliance.

Interest rate risk

As an energy company, MOL Plc. has limited interest rate exposure. The ratio of fix / floating interest burdened debt is monitored by Risk Management.

Beside contracting loan agreements with a given fix / float interest rate MOL Plc. also has the flexibility to manage its level of interest rate risk exposure via interest rate swaps.

Credit risk

MOL Plc. sells products and services to a diversified customer portfolio - both from business segment and geographical point of view – with a large number of customers representing acceptable credit risk profile.

|  | MOL Plc. Separate Financial Statements 2022 | 41

Policies and procedures are in place to set the framework and principles for customer credit risk management and collection of receivables to minimise credit losses deriving from delayed payment or non-payment of customers, to track these risks on a continuous basis and to provide financial support to sales process in accordance with MOL Plc.’s sales strategy and ability to bear risk.

Creditworthiness of customers with deferred payment term is thoroughly assessed, regularly reviewed and appropriate credit risk mitigation tools are applied. According to the MOL Plc.’s policy, customer credit limits should be covered by payment securities where applicable: credit insurance, bank guarantee, letter of credit, cash deposit and lien are the most preferred types of security to cover customer credit risk.

Individual customer credit limits are calculated taking into account external and/or internal assessment of customers as well as the securities provided. Information on existing and potential customers is based on well-known and reliable Credit Agencies and available internal data.

Various solutions support the customer credit management procedures, including monitoring of credit exposures for immediate information on breach and expiry of credit limits or guarantees. When such credit situations occur, deliveries shall be blocked; decisions on the unblocking of deliveries shall be made by authorised persons on both Financial and Business side.

Credit risk of the investment portfolio is safeguarded by a rating grid concept. For bank deposits, an Internal Rating system is applied to reasonably diversify and mitigate the partner bank counterparty risks of MOL Plc by proper distribution of available cash among banks based on their external and respective sovereign ratings. For securities, external ratings are taken into account for the limit calculation. Limits, their utilisations and escalation procedures are continuously managed and controlled by Cash Management areas of the MOL Plc.

Liquidity risk

MOL Plc. aims to manage liquidity risk by covering liquidity needs from bank deposits, other cash equivalents and from adequate amount of committed credit facilities. Besides, on operational level various cash pools help to optimise liquidity surplus and need on a daily basis.

The existing bank facilities ensure both sufficient level of liquidity and financial flexibility for MOL Plc.

The amount of undrawn major committed credit facilities* | 2022 | 2021
HUF million | HUF million
Long-term loan facilities available | 1,066,066 | 981,546
Short-term facilities available | 78,994 | 58,688
Total loan facilities available | 1,145,060 | 1,040,234
*The table contains MOL Plc.'s own credit facilities and where the MOL Plc. is a guarantor.

The EUR 570 million revolving credit facility agreement that was signed by MOL Group Finance Zrt. (formerly: MOL Group Finance S.A. Bertrange, Zürich Branch) as Borrower and MOL Plc. as Guarantor on 26 September 2019 with 5 years original maturity. It increased to EUR 780 million in 2020, and the maturity date of which was extended by one additional year in 2021. It has been extended again by one year in the amount of EUR 585 million with unchanged margin levels. The new maturity date regarding the extended part of the facility is 26 September 2026.

The EUR 575 million revolving credit facility agreement was signed on 29 November 2021 by MOL Group Finance Zrt. as Borrower and MOL Plc. as Guarantor, with 5 years original maturity. It has been extended by one additional year with unchanged margin levels in the amount of EUR 441 million. The new maturity date regarding the extended part of the facility is 29 November 2027.

Maturity profile of financial liabilities based on contractual undiscounted payments | Due within 1 month | Due between 1 and 12 months | Due between 1 and 5 years | Due after 5 years | Total
2022.12.31 | HUF million | HUF million | HUF million | HUF million | HUF million
Borrowings | 18,776 | 342,010 | 340,522 | 127,726 | 829,034
Transferred "A" shares with put&call options | - | 181,656 | - | - | 181,656
Trade and other payables | 401,256 | 83,006 | - | - | 484,262
Other financial liabilities | 656 | - | 305 | - | 961
Non-derivative financial instruments | 420,688 | 606,672 | 340,827 | 127,726 | 1,495,913
Derivatives | - | 23,131 | - | - | 23,131
Total financial liabilities | 420,688 | 629,803 | 340,827 | 127,726 | 1,519,044
Bank guarantees and other commitments1 | 1,256,454 | - | - | - | 1,256,454
Total off-balance sheet commitments | 1,256,454 | - | - | - | 1,256,454
1The maximum amount of the guarantee is allocated to the earliest period in which the guarantee could be called

|  | MOL Plc. Separate Financial Statements 2022 | 42

Maturity profile of financial liabilities based on contractual undiscounted payments Restated | Due within 1 month | Due between 1 and 12 months | Due between 1 and 5 years | Due after 5 years | Total
2021.12.31 | HUF million | HUF million | HUF million | HUF million | HUF million
Borrowings | 17,953 | 44,104 | 330,033 | 363,071 | 755,161
Transferred "A" shares with put&call options | - | 182,419 | - | - | 182,419
Trade and other payables | 251,817 | 104,102 | - | - | 355,919
Other financial liabilities | 576 | - | 320 | - | 896
Non-derivative financial instruments | 270,346 | 330,625 | 330,353 | 363,071 | 1,294,395
Derivatives | - | 27,881 | 362 | - | 28,243
Total financial liabilities | 270,346 | 358,506 | 330,715 | 363,071 | 1,322,638
Bank guarantees and other commitments1 | 260,642 | - | - | - | 260,642
Total off-balance sheet commitments | 260,642 | - | - | - | 260,642
1The maximum amount of the guarantee is allocated to the earliest period in which the guarantee could be called

b) Sensitivity analysis

In line with the international benchmark, MOL Plc. Risk Management prepares sensitivity analysis. According to the Financial Risk Management Model, the effect of the key risk elements on clean-CCS-based profit/loss are the following:

| 2022 | 2021 Restated
Effect on Clean CCS-based 1 (Current Cost of Supply) profit / (loss) from operations | HUF billion | HUF billion
Brent crude oil price (change by +/- 10 USD/bbl; with fixed crack spreads) |  |
Upstream | +7.6/-7.6 | +9.6/-9.6
Downstream | -2.9/+2.9 | -2.1/+2.1
TTF gas price (change by +/- 15 EUR/MWh; with fixed crack spreads) |  |
Upstream | +31.8/-31.8 | +35.5/-35.5
Downstream | -22.6/+22.6 | -23.7/+23.7
Exchange rates (change by +/- 15 HUF/USD; with fixed crack spreads) |  |
Upstream | +3.1/-3.1 | +2.3/-2.3
Downstream 2 | +14.5/-14.5 | +11.9/-11.9
Exchange rates (change by +/- 15 HUF/EUR; with fixed crack spreads) |  |
Upstream | +10.1/-10.1 | +4.1/-4.1
Downstream 2 | +0.1/-0.1 | +0.5/-0.5
Refinery margin (change by +/- 1 USD/bbl) |  |
Downstream | +19.9/-19.9 | +16.5/-16.5

1 Clean CCS-based profit / (loss) from operation (EBIT) and its calculation methodology is not regulated by IFRS. Please see the reconciliation of reported profit / (loss) from operation (EBIT) and Clean CCS profit / (loss) from operation (Clean CCS EBIT) with the relevant definitions in the Appendix III.

2 Downstream: the methodology of FX sensitivity was refined in 2022

c) Borrowings

Accounting policies

All loans and borrowings are initially recognised at the fair value of the consideration received net of issue costs associated with the borrowing. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method.

|  | MOL Plc. Separate Financial Statements 2022 | 43

|  | 2021
| 2022 | Restated
| HUF million | HUF million
Long-term debt |  |
Eurobond €650 million due 2027 | 257,605 | 237,046
HUF bond III. HUF 35.500 million due 2031 | 35,415 | 35,404
HUF bond II. HUF 36,600 million due 2030 | 34,958 | 34,758
HUF bond I. HUF 28,400 million due 2029 | 28,576 | 28,599
Finance lease liabilities | 23,608 | 18,730
Schuldschein €130 million due between 2020-2027 | 19,987 | 18,409
Eurobond €750 million due 2023 | - | 275,654
Bank loans | - | 20
Liabilities to subsidiaries | - | 533,438
Other | (1) | -
Total long-term debt | 400,148 | 1,182,058
Short-term debt |  |
Eurobond €750 million due 2023 | 305,303 | 5,286
Liabilities to subsidiaries | 21,800 | 11,786
Bank loans | 18,114 | 19,641
Finance lease liabilities | 9,418 | 7,468
Eurobond €650 million due 2027 | 1,009 | 930
HUF bond III. HUF 35.500 million due 2031 | 486 | 486
Schuldschein €130 million due between 2020-2027 | 180 | 21,434
HUF bond II. HUF 36,600 million due 2030 | 161 | 170
HUF bond I. HUF 28,400 million due 2029 | 146 | 146
Other | - | 1
Total short-term debt | 356,617 | 67,348
Gross debt (long-term and short-term) | 756,765 | 1,249,406
Cash and cash equivalents | 309,592 | 184,435
Current debt securities | 830 | 26
Net Debt* | 446,343 | 1,064,945
Total equity | 2,473,932 | 2,164,061
Capital and net debt | 2,920,275 | 3,229,006
Gearing ratio (%)** | 15% | 33%
Profit from operation | 352,499 | 145,415
Depreciation, depletion, amortisation and impairment | 120,073 | 100,027
Reported EBITDA | 472,572 | 245,442
Net Debt / Reported EBITDA | 0.94 | 4.34
*Long-term debt plus Short-term debt less Cash and cash equivalents less Current debt securities, based on the MOL Plc’s capital management policy the other financial liabilities are not included in the Net Debt calculation **Net Debt divided by Net Debt plus Total equity.

|  | MOL Plc. Separate Financial Statements 2022 | 44

The analysis of the gross debt of MOL Plc. by currencies is the following:

| 12/31/2022 | 12/31/2021
HUF million | HUF million
EUR | 588,754 | 569,126
HUF | 149,283 | 667,683
USD | 18,728 | 12,597
Gross debt | 756,765 | 1,249,406

The following issued bonds were outstanding as of 31 December 2022:

| Ccy | Amount Issued (orig ccy, millions) | Amount Issued (HUF million) | Coupon | Type | Cpn Freq | Issue date | Maturity | Issuer
Eurobond | EUR | 750 | 300,188 | 2.6% | Fixed | Annual | 28.04.2016 | 28.04.2023 | MOL Plc.
Eurobond | EUR | 650 | 260,163 | 1.5% | Fixed | Annual | 08.10.2020 | 08.10.2027 | MOL Plc.
HUF bond | HUF | 28,400 | 28,400 | 2.0% | Fixed | Annual | 24.09.2019 | 24.09.2029 | MOL Plc.
HUF bond | HUF | 36,600 | 36,600 | 1.1% | Fixed | Annual | 22.09.2020 | 22.09.2030 | MOL Plc.
HUF bond | HUF | 35,500 | 35,500 | 1.9% | Fixed | Annual | 12.04.2021 | 12.04.2031 | MOL Plc.

The reconciliation between the total of future minimum lease payments as a lessee and their present value is the following:

Leases as a lessee | 12/31/2022 | 12/31/2021
Minimum lease payments | Lease liability | Minimum lease payments | Lease liability
HUF million | HUF million | HUF million | HUF million
Due within one year | 10,848 | 9,418 | 7,884 | 7,468
Due later than one year but not later than five years | 11,695 | 19,050 | 12,684 | 13,420
Due later than five years | 5,778 | 4,558 | 6,532 | 5,310
Total | 28,321 | 33,026 | 27,100 | 26,198
Future finance charges | 4,705 | n/a | (902) | n/a
Lease liability | 33,026 | 33,026 | 26,198 | 26,198

The reconciliation between the total of future minimum lease payments as a lessor and their present value is the following:

Finance leases as a lessor | 12/31/2022 | 12/31/2021
Minimum lease payments receivable | Lease receivable | Minimum lease payments receivable | Lease receivable
HUF million | HUF million | HUF million | HUF million
Due within one year | 344 | 275 | 371 | 303
Due later than one year but not later than five years | 542 | 106 | 395 | 161
Due later than five years | 1,066 | 868 | 1,200 | 954
Total | 1,952 | 1,249 | 1,966 | 1,418
Future finance income | 703 | n/a | 548 | n/a
Lease receivable | 1,249 | 1,249 | 1,418 | 1,418

|  | MOL Plc. Separate Financial Statements 2022 | 45

d) Equity

Accounting policies

Retained earnings and other reserves shown in the financial statements do not represent the distributable reserves for dividend purposes. Reserves for dividend purposes are determined based on the reconciliation of equity prepared in accordance with the Hungarian Accounting Law, which is disclosed in Appendix IV.

Fair valuation reserves

The fair valuation reserve includes the cumulative net change in the fair value of effective cash flow hedges and financial assets at fair value through other comprehensive income.

Equity component of debt and difference in buy-back prices

Equity component of compound debt instruments includes the residual amount of the proceeds from the issuance of the instrument above its liability component, which is determined as the present value of future cash payments associated with the instrument. The equity component of compound debt instruments is recognised when the MOL Plc. becomes party to the instrument.

Treasury Shares

The nominal value of treasury shares held is deducted from registered share capital. Any difference between the nominal value and the acquisition price of treasury shares is recorded directly to retained earnings. In order to consistently distinguish share premium and retained earnings impact of treasury share transactions, repurchase and resale of treasury transactions affect retained earnings instead of having impact on share premium.

Share capital

There was no change in the number of issued shares in 2022. As of 31 December 2022, the issued share capital was HUF 102,429 million, consisting of 819,424,824 series “A” shares with par value of HUF 125, one series “B” share with par value of HUF 1,000 and 578 series “C” shares with par value of HUF 1,001. Outstanding share capital as of 31 December 2022 and 31 December 2021 is HUF 80,544 million and HUF 80,992 million, respectively.

Every “A” class share with a par value of HUF 125 each (i.e. one hundred and twenty-five forint) entitles the holder thereof to have one vote and every “C” class share with a par value of 1,001 each (i.e. one thousand one forint) entitles the holder to have eight and eight thousandth vote, with the following exceptions. Based on the Articles of Association, no shareholder or shareholder group may exercise more than 10% of the voting rights with the exception of organisation(s) acting at the Company’s request as depository or custodian for the Company’s shares or securities representing the Company’s shares.

Series “B” shares are voting preference shares with a par value of HUF 1,000 that entitles the holder thereof to preferential rights as specified in the Articles of Association. The "B" series share is owned by MNV Zrt., exercising ownership rights on behalf of the Hungarian State. The “B” series share entitles its holder to eight votes in accordance with its nominal value. The supporting vote of the holder of “B” series of share is required to adopt decisions in the following matters pursuant to Article 12.4. of the Articles of Association: decision on amending the articles regarding the B series shares, the definition of voting rights and shareholder group, list of issues requiring supermajority at the general meeting as well as Article 12.4. itself; further, the “yes” vote of the holder of “B” series of shares is required to adopt decisions on any proposal not supported by the Board of Directors in the following matters: election and dismissal of the members of the Board of Directors, the Supervisory Board and the auditors, decision of distribution of profit after taxation and amending of certain provisions of the Articles of Association.

Based on the authorisation granted in the Article 17.D of the Articles of Association the Board of Directors is entitled to increase the share capital until 10 April 2024 in one or more instalments by not more than HUF 30 billion in any form and method provided by the Civil Code.

Reserves and retained earnings

Between 2023 and 2026 MOL Plc plans to spend more than HUF 100 billion on capital expenditures, therefore it created HUF 100 billion development reserve based on the paragraph 7 of Act LXXXI of 1996 on corporate tax and dividend tax, which amount is transferred from the retained earnings to tied-up reserves on 31 December 2022.

|  | MOL Plc. Separate Financial Statements 2022 | 46

Changes in the number of ordinary, treasury and authorised shares:

Series “A” and “B” shares | Number of shares issued | Number of treasury shares | Shares under repurchase obligation | Shares under retransfer agreement | Number of shares outstanding | Authorised number of shares
01 Jan 2021 | 819,424,825 | (54,085,505) | (117,571,197) | - | 647,768,123 | 1,059,424,825
Share distribution for the members of the Board of Directors and participants of MRP | - | 164,124 | - | - | 164,124 | -
Settlement of share option agreement with Commerzbank AG | - | (888,250) | 888,250 | - | - | -
Settlement of share option agreement with ING Bank N.V. | - | (2,460,040) | 2,460,040 | - | - | -
Capital contribution to MOL New Europe Foundation | - | 30,737,356 | - | (30,737,356) | - | -
31 Dec 2021 | 819,424,825 | (26,532,315) | (114,222,907) | (30,737,356) | 647,932,247 | 1,059,424,825
Share distribution for the members of the Board of Directors and participants of MRP | - | 190,625 | - | - | 190,625 | -
Settlement of share option agreement with Commerzbank A.G. | - | (9,844,626) | 9,844,626 | - | - | -
Settlement of share option agreement with ING Bank N.V. | - | (2,438,875) | 2,438,875 | - | - | -
Settlement of share option agreement with Unicredit Bank A.G. | - | 6,872,214 | (6,872,214) | - | - | -
MOL share purchase from MOL Vagyonkezelő Kft. | - | (10,387,994) | - | - | - | -
Treasury shares sold to MOL Plc. SESOP Organizations | - | 6,609,424 | - | - | 6,609,424 | -
31 Dec 2022 | 819,424,825 | (35,531,547) | (108,811,620) | (30,737,356) | 654,732,296 | 1,059,424,825
Series “C” shares |  |  |  |  |  |
31 Dec 2021 | 578 | - | - | - | 578 | 578
31 Dec 2022 | 578 | - | - | - | 578 | 578

Dividend

In April 2022 the Board of Directors on behalf of the 2022 Annual General Meeting of MOL Plc. approved to pay HUF 241,934 million dividend in respect of 2021, which equals to HUF 302.62 dividend per share.

The total amount of reserves legally available for distribution based on the reconciliation of equity (see Appendix IV. f)) is HUF 2,081,599 million as of 31 December 2022 (31 December 2021 (restated) : HUF 1,859,123 million).

The approved dividend (HUF 241,934 million) and the dividend shown in the statement of changes in equity (HUF 191,285 million) are different because the following movements are not presented as dividend payments: dividend of shares under retransfer agreement (HUF 13,006 million) represents in substance MOL's contribution to social responsibility activities and therefore charged to the statement of profit or loss; dividend of shares under put and call option transactions (HUF 20,798 million) presented as a decrease in financial liability; dividend towards MOL Plc.’s Employee Share Ownership Programme Organisation (HUF 4,714 million) has no effect on the statement of financial position because the organisation is the extension of MOL Plc; dividends of shares in OTP-MOL swap agreement (HUF 12,130 million) presented as change in fair value of derivative instrument.

|  | MOL Plc. Separate Financial Statements 2022 | 47

Shares under retransfer agreement

On 13 July 2021, MOL and the Hungarian Government established a new foundation of trusts in public interest with the name of MOL - New Europe Foundation, and with the aim of fulfilling corporate responsibility objectives especially in the field of sport, culture, health and environment protection. This foundation replaces some of MOL's corporate social responsibility activities carried out in the past.

MOL Plc. transferred 30,737,356 pieces of MOL ordinary shares of series “A” to the foundation. The operation of the foundation shall be primarily financed by the dividends of these shares.

The future dividend on these shares represents in substance MOL's contribution to social responsibility activities and therefore charged to the statement of profit or loss. As in substance the deed of foundation is a supporting agreement therefore the transferred MOL shares remain deducted from equity. The Founders in consultation with MOL appointed an asset controller to control the asset management of the Foundation. The Foundation was established for a defined period of 25 years and the Board of Trustees has the right to decide about another 25 years of extension at the end of the period. At termination of the Foundation, MOL Plc. will receive back the shares held by the Foundation. Two out of the five members of the board of trustees are the members of MOL Group key management personnel. The founders can’t control the appointment and recall of the members of the Board of trustees after the establishment. The Foundation is independent from MOL thus not consolidated by MOL Group, earnings per share is presented accordingly.

Treasury share put and call option transactions

MOL Plc. has two option agreements concluded with financial institutions in respect of 68,727,610 pieces of series “A” shares (“Shares”) as of 31 December 2022. Under the agreements, MOL Plc. holds American call options and the financial institutions hold European put options in respect of the Shares. The expiry of both the put and call options are identical. (More information about the treasury shares with put&call options are included in Note 18.)

Counterparty | Underlying pieces of MOL ordinary shares | Strike price per share | Expiry
ING Bank N.V. | 34,281,056 | EUR 6.70080 | 23 Jun 2023
UniCredit Bank AG | 34,446,554 | EUR 6.50706 | 23 Jun 2023

MOL agreed with ING Bank N.V. (“ING”) on 20 June 2022, that the option rights in relation to 36,127,167 MOL Series “A” Ordinary shares (“Shares”) under the share option agreement executed between ING and MOL on 24 February 2022 are either fully cash settled or partly physically and partly cash settled on 23 June 2022. Simultaneously, MOL and ING entered into a new share option agreement. According to the new share option agreement MOL received American call options and ING received European put options in relation to 34,281,056 Shares, with the effective date of 27 June 2022. The maturity date of both the call and put options is 23 June 2023, and the strike price of both options is EUR 6.7008 per Share.

MOL agreed with UniCredit Bank AG (“UniCredit”) on 20 June 2022, that the option rights in relation to 39,041,393 MOL Series “A” Ordinary shares (“Shares”) under the share option agreement executed between UniCredit and MOL on 28 February 2022 are partly physically and partly cash settled on 23 June 2022. Simultaneously, MOL and UniCredit entered into a new share option agreement. According to the new share option agreement MOL received American call options and UniCredit received European put options in relation to 34,446,554 Shares, with the effective date of 27 June 2022. The maturity date of both the call and put options is 23 June 2023, and the strike price of both options is EUR 6.50706.

Treasury shares sold to MOL Plc. SESOP Organizations

On 27 of January 2022, based on the authorisation of the Extraordinary General Meeting of the Company held on 22 December 2021 MOL have sold 3,304,712 pieces of „A” Series MOL Ordinary Shares (“MOL Shares”) to MOL Plc. SESOP Organization 2021-1 and 3,304,712 pieces of MOL Shares to MOL Plc. SESOP Organization 2021-2.

Share swap agreement with OTP

MOL Plc. and OTP entered into a share-exchange and a share swap agreement in 2009. Under the agreements, initially MOL transferred 40,084,008 “A” series MOL ordinary shares to OTP in return for 24,000,000 pieces OTP ordinary shares. The agreement contains settlement provisions in case of certain movement of relative share prices of the parties, subject to net cash or net share settlement. The agreement, concluded on 16 April 2009 has been further extended in 2022 until 11 July 2027, which did not trigger any movement in MOL Plc.’s treasury shares.

Until the expiration date each party can initiate a cash or physical (i.e. in shares) settlement of the deal.

The accounting treatment of the share swap agreement was revised, for more information please refer to Note 1.

|  | MOL Plc. Separate Financial Statements 2022 | 48

18. Financial instruments

| Fair value through profit or loss | Amortised cost | Fair value through other comprehensive income | Total carrying amount
12/31/2022
Carrying amount of financial instruments | HUF million | HUF million | HUF million | HUF million
Financial assets |  |  |  |  |
Other non-current financial assets | Loans given | - | 50,001 | - | 50,001
Finance lease receivables | - | 974 | - | 974
Commodity derivatives | 6,513 | - | - | 6,513
Debt securities | - | - | 41,104 | 41,104
Total non-current financial assets |  | 6,513 | 50,975 | 41,104 | 98,592
Trade and other receivables |  | - | 505,842 | - | 505,842
Debt securities |  | - | - | 830 | 830
Other current financial assets | Loans given | - | 2,558 | - | 2,558
Commodity derivatives | 41,331 | - | - | 41,331
Finance lease receivables | - | 275 | - | 275
Other derivatives | 650 |  |  | 650
Other | - | 8,081 | - | 8,081
Cash and cash equivalents |  | - | 309,592 | - | 309,592
Total current financial assets |  | 41,981 | 826,348 | 830 | 869,159
Total financial assets |  | 48,494 | 877,323 | 41,934 | 967,751
Financial liabilities |  |  |  |  |
Borrowings |  | - | 376,540 | - | 376,540
Finance lease liabilities |  | - | 23,608 | - | 23,608
Other non-current financial liabilities | Commodity derivatives | - | - | - | -
Other | - | 305 | - | 305
Total non-current financial liabilities |  | - | 400,453 | n/a | 400,453
Borrowings |  | - | 347,199 | - | 347,199
Finance lease liabilities |  | - | 9,418 | - | 9,418
Trade and other payables |  | - | 484,262 | - | 484,262
Other current financial liabilities | Cash-pool liabilities | - | 586,250 | - | 586,250
Transferred "A" shares with put&call options* | - | 179,573 | - | 179,573
Commodity derivatives | 23,131 | - | - | 23,131
Other derivatives | - | - | - | -
Other | - | 25,304 | - | 25,304
Total current financial liabilities |  | 23,131 | 1,632,006 | n/a | 1,655,137
Total financial liabilities |  | 23,131 | 2,032,459 | n/a | 2,055,590
*More information about the transferred “A” shares with put&call options are included in the Note 17 D).

|  | MOL Plc. Separate Financial Statements 2022 | 49

| Fair value through profit or loss | Amortised cost | Fair value through other comprehensive income | Total carrying amount
Restated 12/31/2021
Carrying amount of financial instruments | HUF million | HUF million | HUF million | HUF million
Financial assets |  |  |  |  |
Other non-current financial assets | Loans given | - | 32,722 | - | 32,722
Finance lease receivables | - | 1,115 | - | 1,115
Commodity derivatives | 450 | - | - | 450
| Debt securities | - | - | 17,324 | 17,324
Total non-current financial assets |  | 450 | 33,837 | 17,324 | 51,611
Trade and other receivables |  | - | 384,542 | - | 384,542
Debt securities |  | - | - | 26 | 26
Other current financial assets | Loans given | - | 25 | - | 25
Commodity derivatives | 14,536 | - | - | 14,536
Finance lease receivables | - | 303 | - | 303
Other derivatives | - | - | - | -
Other | - | 1,817 | - | 1,817
Cash and cash equivalents |  | - | 184,435 | - | 184,435
Total current financial assets |  | 14,536 | 571,122 | 26 | 585,684
Total financial assets |  | 14,986 | 604,959 | 17,350 | 637,295
Financial liabilities |  |  |  |  |
Borrowings |  | - | 1,163,328 | - | 1,163,328
Finance lease liabilities |  | - | 18,730 | - | 18,730
Other non-current financial liabilities | Commodity derivatives | 362 | - | - | 362
Other | - | 319 | - | 319
Total non-current financial liabilities |  | 362 | 1,182,377 | n/a | 1,182,739
Borrowings |  | - | 59,880 | - | 59,880
Finance lease liabilities |  | - | 7,468 | - | 7,468
Trade and other payables |  | - | 355,919 | - | 355,919
Other current financial liabilities | Transferred "A" shares with put&call options* | - | 181,669 | - | 181,669
Commodity derivatives | 26,354 | - | - | 26,354
Other derivatives | 1,527 | - | - | 1,527
Other | - | 576 | - | 576
Total current financial liabilities |  | 27,881 | 605,512 | n/a | 633,393
Total financial liabilities |  | 28,243 | 1,787,889 | n/a | 1,816,132
*More information about the transferred “A” shares with put&call options are included in the Note 17 D).

The MOL Plc. does not have any instrument that the MOL Plc. designated upon initial recognition as at fair value through profit or loss in order to reduce a measurement or recognition inconsistency.

The MOL Plc. does not have any financial instrument whose classification has changed as a result of amendments in business model categorization. The Cash-pool liabilities were reclassified from long-term borrowings to the other current financial liabilities in 2022.

The fair values of financial instruments measured at amortised cost approximate their carrying amounts except for the issued bonds. The fair value of the issued bonds is HUF 574,113 million, while their carrying amount is HUF 663,658 million as of 31 December 2022 (31 December 2021: fair value was HUF 611,192 million, carrying amount was HUF 618,479 million). HUF 521,126 million of the fair value of the issued bonds is categorised as Level 1 and HUF 52,987 million is categorised as Level 2. (Classification of the debt securities are Level 2 fair value category. See note 19).

|  | MOL Plc. Separate Financial Statements 2022 | 50

MOL Plc. uses several valuation techniques to determine the fair value of the financial instruments. The fair value of commodity derivatives is determined based on the present value of estimated future cash-flows using observable forward prices. The fair value of debt instruments is calculated by discounting the present value of estimated future cash-flows with observable zero coupon bond yield curves adjusted with issuer-specific credit risk factors. The most significant item among debt securities are bonds issued by listed entities and banks. For the changes in the other comprehensive income due to the valuation of debt instruments please refer to Note 7.

Impairment only accounted for on trade receivables and loans given. No impairment is recognised on the remaining financial instruments based on materiality, history, expectations and change in credit risk.

Contract assets and contract liabilities from contracts with customers are not material for MOL Plc.

19. Fair value measurement of financial instruments

| 12/31/2022 | 12/31/2021 Restated
| Level 2 Valuation techniques based on observable market input | Total fair value | Level 2 Valuation techniques based on observable market input | Total fair value
Fair value hierarchy | HUF million | HUF million | HUF million | HUF million
Financial assets |  |  |  |
Debt securities | 41,934 | 41,934 | 17,350 | 17,350
Commodity derivatives | 47,844 | 47,844 | 14,986 | 14,986
Other derivatives | 650 | 650 | - | -
Total financial assets recognised at fair value | 90,428 | 90,428 | 32,336 | 32,336
Financial liabilities |  |  |  |
Commodity derivatives | 23,131 | 23,131 | 26,716 | 26,716
Other derivatives | - | - | 1,527 | 1,527
Total financial liabilities recognised at fair value | 23,131 | 23,131 | 28,243 | 28,243

Neither in 2022 nor in 2021, MOL Plc. had any instruments with fair value categorised as Level 1 (Unadjusted quoted prices in active markets) and Level 3 (valuation techniques based on significant unobservable market input).

20. Trade and other receivables

Accounting policies

Trade and other receivables are amounts due from customers for goods sold and services performed in the normal course of business, as well as other receivables such as margining receivables. Trade and other receivables are initially recognised at fair value less transaction costs and subsequently measured at amortised cost less any provision for doubtful debts. A provision for impairment is made for expected credit losses and when there is objective evidence (such as the probability of insolvency or significant financial difficulties of the debtor) that the MOL Plc. will not be able to collect all of the amounts due under the original terms of the invoice. Impaired receivables are derecognised when they are assessed as uncollectible.

If collection of trade receivables is expected within the normal business cycle which is one year or less, they are classified as current assets. In other cases, they are presented as non-current assets.

| 12/31/2022 | 12/31/2021
Trade and other receivables | HUF million | HUF million
Trade receivables | 346,604 | 241,008
Other receivables | 159,238 | 143,534
Total | 505,842 | 384,542

|  | MOL Plc. Separate Financial Statements 2022 | 51

| 12/31/2022 | 12/31/2021
Trade receivables | HUF million | HUF million
Trade receivables (gross) | 347,479 | 242,090
Loss allowance for receivables | (875) | (1,082)
Total | 346,604 | 241,008

The gross amount of trade receivables increased significantly mainly due to the increase in net sales, while the loss allowance for receivables decreased by HUF 207 million due to the improvement both in forward looking element and 3-year average historical loss rates applied in the impairment model.

Movements in the allowance for doubtful trade receivables |  |
2022 | 2021
HUF million | HUF million
At 1 January | 1,082 | 1,438
Additions | 498 | 325
Reversal | (140) | (369)
Amounts written off | (526) | (315)
Foreign exchange differences | (39) | 3
At 31 December | 875 | 1,082

Aging analysis of trade receivables | 12/31/2022 | 12/31/2021
Gross book value | Net book value | Gross book value | Net book value
HUF million | HUF million | HUF million | HUF million
Not past due | 298,102 | 297,674 | 238,553 | 238,126
Past due | 49,377 | 48,930 | 3,537 | 2,882
Within 180 days | 48,434 | 48,382 | 2,596 | 2,573
Over 180 days | 943 | 548 | 941 | 309
Total | 347,479 | 346,604 | 242,090 | 241,008

21. Cash and cash equivalents

Accounting policies

Cash includes cash on hand and cash at banks. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and that are subject to an insignificant risk of change in value. MOL Plc. considers the term “insignificant risk of change in value” not being limited to three-month period.

| 12/31/2022 | 12/31/2021
| HUF million | HUF million
Short-term bank deposits | 272,909 | 139,241
Demand deposit | 31,581 | 42,931
Cash on hand | 5,102 | 2,263
Total | 309,592 | 184,435

Cash and cash equivalents pledged as security

The carrying amount of cash and cash equivalents pledged as security for liabilities is HUF 904.4 million as of 31 December 2022 (31 December 2021: HUF 1,006 million).

|  | MOL Plc. Separate Financial Statements 2022 | 52

Other financial information

This section includes additional financial information that are either required by the relevant accounting standards or management considers these to be material information for shareholders.

22. Commitments and contingent liabilities

Accounting policies

Contingent liabilities are not recognised in the separate financial statements. They are disclosed in the notes unless the possibility of an outflow of resources embodying economic benefits is remote. A contingent asset is not recognised in the separate financial statements but disclosed when an inflow of economic benefits is probable.

a) Guarantees

The total value of guarantees undertaken to related parties is HUF 423,201 million in 2022 and HUF 255,920 million in 2021. The value of third-party guarantees which are bank guarantees is HUF 845,599 million in 2022 and HUF 4,722 million in 2021.

b) Capital and Contractual Commitments

The total value of capital commitments as of 31 December 2022 is HUF 31,336 million (31 December 2021: HUF 13,426 million). The most significant amount relates to expand the capacity of Maleic Anhydride Unit at Danube Refinery by revamping the existing unit (HUF 9,819 million).

As part of corporate social responsibility MOL Plc. is committed to spending HUF 1,458 million via sponsorship agreements in the next year.

MOL Plc. has a take-or-pay contract with JANAF in amount of HUF 6,661 million. Also, contingent liability exists from crude oil contract with INA in the amount of HUF 26,673 million by promissory note.

c) Unrecognised lease commitments

| 12/31/2022 | 12/31/2021
Unrecognised lease commitments* | HUF million | HUF million
Due within one year | 13,542 | 9,724
Due later than one year but not later than five years | - | -
Due later than five years | - | -
Total | 13,542 | 9,724

d) Authority procedures, litigation

General

None of the litigations described below have any impact on the accompanying separate financial statements except as explicitly noted. MOL Plc. is party to a number of civil actions arising in the ordinary course of business. Currently, no further litigation exists that could have a material adverse effect on the financial condition, assets, results or business of MOL Plc.

The value of litigation where MOL Plc. acts as defendant is HUF 353 million for which HUF 252 million provision has been made.

ICSID arbitration (MOL Plc. vs. Croatia)

The International Centre for Settlement of Investment Disputes (ICSID) delivered its verdict in the arbitration case between the Republic of Croatia and MOL Plc. on the 5 July, 2022. MOL filed a request for arbitration against Croatia in 2013 for breaching contractual obligations on multiple occasions under the agreements signed between the parties in 2009 mainly concerning gas trading.

|  | MOL Plc. Separate Financial Statements 2022 | 53

The ICSID award clearly states that Croatia’s bribery related allegations are unfounded. The three-member council unanimously rejected Croatia’s objection that the 2009 agreements were a result of criminal conduct. Similarly, to the UNCITRAL Tribunal in 2016, this international judicial forum also characterized the story of the Croatian criminal proceedings’ crown witness as weak and full of contradictions. Furthermore, the court expressed strong doubts about the truthfulness and reliability both in the arbitral and criminal proceedings in Zagreb. According to the ruling of the arbitration tribunal Croatia caused substantial damages to INA, and thus indirectly to MOL by failure to take over the gas trading business of INA as well as by breaching contractual obligations of natural gas pricing and royalty rate increases, thus awarding MOL with damages in the amount of USD 167.8 million. The tribunal awarded a further USD 16.1 million in damages caused by Croatia by forcing the sale of stored natural gas of INA’s subsidiary (Prirodni Plin). Together with interest MOL was awarded a total of around USD 236 million in damages. The contingent asset has not been recognized in the Statement of Financial Position.

Dana and Crescent vs. MOL Plc.

On 14 February 2020, Dana Gas PJSC (“Dana”) and Crescent Petroleum Company International Limited (“Crescent”) as Claimants commenced arbitration against Hungarian Oil and Gas Public Limited Company (“MOL”) as Respondent.

Dana and Crescent claim that MOL breached the Share Sale Agreement dated 15 May 2009 concluded by Dana, Crescent and MOL (the “SSA”) by refusing to pay earn-out payments that they allege are due.

MOL’s position is that the Claimants have no entitlement to Reserve Based Earn Out Payments, Production Based Earn Out Payments or Crude Oil Earn-Out Payments under the SSA. The facts are substantially the same as those being adjudicated in the JVA Arbitration, in which all of Dana and Crescent’s claims were dismissed, but tested this time against MOL’s obligations under the Share Sale Agreement as opposed to the Joint Venture Agreement. We received the Tribunal’s final award on 16 December 2022 in which all claims of the Claimants were dismissed and MOL was awarded 100% of its costs.

e) Environmental liabilities

MOL Plc.’s operations are subject to the risk of liability arising from environmental damage or pollution and the cost of any associated remedial work. MOL Plc. is currently responsible for significant remediation of past environmental damage relating to its operations. Accordingly, MOL Plc. has established a provision of HUF 8,371 million for the estimated cost as at 31 December 2022 for probable and quantifiable costs of rectifying past environmental damage (see Note 13). Although the management believes that these provisions are sufficient to satisfy such requirements to the extent that the related costs are reasonably estimable, future regulatory developments or differences between known environmental conditions and actual conditions could cause a revaluation of these estimates.

In addition, some of MOL Plc.’s premises may be affected by contamination where the cost of rectification is currently not quantifiable or legal requirement to do so is not evident. The main case where such contingent liabilities may exist is the Tiszaújváros site, including both the facilities of MOL Petrochemicals Plc. and area of MOL’s Tisza refinery, where MOL Plc. has identified significant underground water and subsurface soil contamination. In accordance with the resolutions of the regional environmental authorities, MOL Plc. completed a detailed investigation and submitted the results and technical specifications to the authorities in July 2021. Based on these documents the authorities brought a resolution on 7 September 2021 requiring MOL Plc. to perform this plan in order to manage the soil and underground water contamination. The total amount of liabilities originating from this plan can be estimated properly and MOL Plc. sets the required amount of environmental provision.

Furthermore, the technology applied in oil and gas exploration and development activities by the MOL Plc.’s Hungarian predecessor before 1995 may give rise to future remediation of drilling mud produced (in 1995 there was modification in the drilling technology). In accordance with legal requirements the treatment (extraction and disposal) of the resulting pollutant is required. The existence of such obligation, and consequently the potential expenditure associated with it is dependent on the extent, volume and composition of drilling mud left behind at the numerous production sites. According to current estimates the amount of the environmental liability is HUF 791 million.

23. Notes to the statement of cash flows

Accounting policies

Bank overdrafts repayable on demand are included as component of cash and cash equivalent in case where the use of short‑term overdrafts forms an integral part of the entity’s cash management practices.

|  | MOL Plc. Separate Financial Statements 2022 | 54

Analysis of Other items related to the Cash flows from operations before changes in working capital:

| 2022 | 2021
Analysis of other items | HUF million | HUF million
Realised and unrealised (gain) / loss of fair valuation of commodity derivatives | 94,509 | 64,671
Transferred "A" shares with put&call options | 19,131 | -2,252
Write-off of inventories, net | 6,594 | 550
Share-based payments | 2,64 | 1,528
Write-off of receivables, net | 340 | 354
Other non-highlighted items | 15 | 826
Total | 123,229 | 65,677

Analysis of the cash flows from financing activities:

| 12/31/2021 balance Restated | Cash flows used in financing activities | Realised and non-realised FX | FV change on derivatives | Accrued Interest | Liabilities to subsidiaries | New lease liabilities | 12/31/2022 balance |
HUF million | HUF million | HUF million | HUF million | HUF million | HUF million | HUF million | HUF million |
Long-term debt | 1,182,059 | (77,989) | (254,815) | - | 93,390 | (533,438) | (9,059) | 400,148 |
Short-term debt | 67,348 | (36,030) | 324,031 | - | 1,429 | - | (161) | 356,617 |
Other current financial liabilities | 210,126 | (46,006) | 116,977 | (277) | - | 533,438 | - | 814,258 |
Total Cash flows used in financing activities from financial liabilities | (160,025) |  |  |  |  |  |  |
Other items impacting Cash flows used in financing activities 1 | (200,367) |  |  |  |  |  |  |
Total Cash flows used in financing activities | (360,392) |  |  |  |  |  |  |
1 HUF 191,234 million from Other items impacting Cash flows Used in financing activities is Dividends paid to owners.

The total cash outflow for leases in the period is HUF 19,258 million.

|  | MOL Plc. Separate Financial Statements 2022 | 55

24. Related party transactions

a) Transactions with subsidiaries in the normal course of business

| 12/31/2022 |
| 12/31/2021
| HUF million | HUF million
Loans given | 7,498 | 2,032
Loans received | 753,571 | 453,572
| 12/31/2022 |
| 12/31/2021
| HUF million | HUF million
Trade receivables | 31,828 | 100,031
Trade payables | 122,483 | 50,750
| 12/31/2022 |
| 12/31/2021
| HUF million | HUF million
Other receivables, other financial assets and other current assets | 294,623 | 221,289
Other payables, other financial assets and other current liabilities | 75,381 | 53,576

| 2022 | 2021
| HUF million | HUF million
Net sales | 1,191,571 | 839,816
Other operating income | 3,312 | 5,813
Finance income | 403,301 | 353,171
from which |  |
dividend | 313,394 | 170,104
interests | 1,508 | 150
Finance expense | 97,717 | 65,083
from which |  |
impairment of investments, loss of capital decrease and loss of loan receivables | 39,594 | 57,202
interests | 75,194 | 10,982

b) Transactions with associated companies in the normal course of business

| 12/31/2022 | 12/31/2021
| HUF million | HUF million
Trade and other receivables due from related parties | 5,433 | 4,049
Trade and other payables due to related parties | 2,308 | 14,924
Net sales to related parties | 5,522 | 2,249

MOL Plc. purchased and sold goods and services with associated companies during the ordinary course of business in 2022 and 2021. All of these transactions were conducted under market prices and conditions.

c) Guarantees

See note 22. Commitments and contingent liabilities a) Financial contingent liabilities.

|  | MOL Plc. Separate Financial Statements 2022 | 56

d) Remuneration of the members of the Board of Directors

Directors’ remuneration approximated HUF 145 million in 2022 (2021: HUF 147 million). In addition, the directors participate in a long-term incentive scheme details of which are given in Note 4.

Directors are remunerated with the following net amounts in addition to the incentive scheme:

• Executive and non-executive directors | 25,000 EUR / year
• Committee chairmen | 31,250 EUR / year

In case the position of the Chairman is not occupied by a non-executive director, it is the non-executive vice Chairman who is entitled to this payment. Directors who are not Hungarian citizens and do not have permanent address in Hungary are provided with EUR 1,500 on each Board meeting (maximum 15 times a year) when travelling to Hungary.

e) Number of shares held by the members of the Board of Directors, Chief Executives’ Committee, and the Management

| 2022 | 2021
| Number of shares | Number of shares
Board of Directors | 2,903,184 | 2,871,645
Chief Executives' and Management Committee (except Board of Directors members) | 250,000 | 472,357
Senior Management (except Board of Directors, Chief Executives', Supervisory Board and Management Committee members) | 233,305 | 121,341
Total | 3,386,489 | 3,465,343

f) Transactions with Management, officers and other related parties

In 2022 entities controlled by the members of key management personnel purchased fuel and other retail services from MOL Plc. in the total value of HUF 3,857 million. MOL Plc. provided subsidies through sponsorship for sport organisations controlled by key management personnel in the total value of HUF 642 million. MOL Plc. purchased other services (business operations related services) from companies controlled by key management personnel in the total value of HUF 1,535 million.

Entities controlled by key management personnel hold 2,100,000 shares.

g) Key management compensation

The amounts disclosed contain the compensation of managers who qualify as a key management member of MOL Plc.

| 2022 | 2021
| HUF million | HUF million
Salaries and wages | 958 | 915
Other short-term benefits | 896 | 658
Share-based payments | 331 | 547
Total | 2,185 | 2,120

h) Loans to the members of the Board of Directors and Supervisory Board

No loans have been granted to key management personnel.

25. Events after the reporting period

a) EU sanctions against Russia

In June 2022, the Council of the European Union adopted a sixth package of sanctions that, among others, prohibits the purchase, import or transfer of seaborne crude oil and certain petroleum products from Russia to the EU. The restrictions apply from 5 December 2022 for crude oil and from 5 February 2023 for other refined petroleum products.

|  | MOL Plc. Separate Financial Statements 2022 | 57

A temporary exception is applied for imports of crude oil by pipeline into those EU member states that, due to their geographic situation, suffer from a specific dependence on Russian supplies and have no viable alternative options.

During the preparation of the separate financial statements the MOL Plc. has taken into account all EU sanctions against Russia. Please refer to Note 1 for further information.

26. Appendices

Appendix I.: Issued but not yet effective International Financial Reporting Standards and Amendments

At the date of authorisation of these financial statements, the following standards and interpretations were in issue but not yet effective:

• IFRS 17 Insurance Contracts including Amendments to IFRS 17 (effective for annual periods beginning on or after 1 January 2023 and endorsed by EU)

• Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting policies (effective for annual periods beginning on or after 1 January 2023 and endorsed by EU)

• Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates (effective for annual periods beginning on or after 1 January 2023 and endorsed by EU)

• Amendment to IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising from Single Transaction (effective for annual periods beginning on or after 1 January 2023 and endorsed by EU)

• Amendment to IFRS 17 Insurance contracts: Initial application of IFRS 17 and IFRS 9 – Comparative Information (effective for annual periods beginning on or after 1 January 2023 and endorsed by EU)

• Amendment to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current – Deferral of Effective Date and Non-current liabilities with Covenants (effective for annual periods beginning on or after 1 January 2024 not yet endorsed by EU)

• Amendments to IFRS 16 Leases: Lease Liability in Sale and Leaseback (effective for annual periods beginning on or after 1 January 2024 not yet endorsed by EU)

MOL is in the process of evaluating the impact of these amendments. They are not expected to have a significant effect on future financial reporting.

|  | MOL Plc. Separate Financial Statements 2022 | 58

Appendix II.: Investments in subsidiaries, associated companies and joint ventures

|  |  | Carrying value | Direct ownership
Company name | Country | Range of activity | 12/31/2022 | 12/31/2021 | 12/31/2022 | 12/31/2021
|  |  | HUF million | HUF million | % | %
MOL Group Finance Zrt. (formerly: OT Industries Vagyonkezelő Zrt.) 1 | Hungary | Investment management | 492,709 | 492,709 | 100% | 100%
MOL Crossroads B.V. | Netherlands | Financial holding | 434,275 | 446,148 | 100% | 100%
INA d.d. | Croatia | Integrated oil and gas company | 423,096 | 423,096 | 49% | 49%
MOL Petrolkémia Zrt. | Hungary | Petrochemical production and trading | 405,164 | 405,175 | 100% | 100%
Slovnaft a.s. | Slovakia | Refinery and marketing of oil and petrochemical products | 233,867 | 233,867 | 100% | 100%
MOL Ingatlan Holding Kft. | Hungary | Investment management | 142,234 | 122,413 | 100% | 100%
FGSZ Földgázszállító Zrt. | Hungary | Natural gas transmission | 83,589 | 83,589 | 100% | 100%
Pearl Petroleum Company Ltd. | British Virgin Islands | Oil and gas exploration, production and transportation | 74,837 | 74,837 | 10% | 10%
MOL Retail Holding Kft. | Hungary | Real estate management | 56,151 | 56,151 | 100% | 100%
MOL Vagyonkezelő Kft. | Hungary | Investment management | 56,083 | 56,083 | 100% | 100%
Kalegran BV | Netherlands | Exploration financing | 0 | 54,237 | 100% | 100%
MNS Oil & Gas B.V. | Netherlands | Exploration financing | 83,869 | 44,443 | 100% | 100%
MOL Romania PP Srl. | Romania | Retail and wholesale trade of fuels and lubricants | 39,239 | 39,239 | 100% | 100%
MOL Slovenia DS Investment BV | Netherlands | Investment management | 32,366 | 32,366 | 100% | 100%
TIFON d.o.o. | Croatia | Retail trade of fuels and lubricants | 31,384 | 31,384 | 100% | 100%
MH Oil and Gas B.V. | Netherlands | Investment management | 0 | 31,328 | 100% | 100%
MOL Serbia (Intermol) d.o.o. | Serbia | Retail trade of fuels and lubricants | 22,003 | 22,003 | 100% | 100%
MOL (FED) Kazakhstan B.V. | Netherlands | Exploration financing | 20,726 | 17,896 | 100% | 100%
Zväz pre skladovanie zásob, a.s. | Slovakia | Wholesale and retail trade, warehousing | 16,667 | 16,668 | 90% | 90%
MOL Reinsurance Co. | Ireland | Captive insurance | 15,790 | 15,790 | 100% | 100%
Leodium Investment Kft. | Hungary | Financial services | 19,430 | 15,453 | 100% | 100%
MOL Industrial Services Investment Kft. (formerly: MOL Solar Investments Kft.) | Hungary | Investment management | 12,162 | 12,162 | 100% | 100%
MOL Nordsjön B.V. | Netherlands | Exploration financing | 11,609 | 11,935 | 100% | 100%
MOL CVC Investment Kft. | Hungary | Investment management | 18,558 | 11,723 | 100% | 100%
MOL Solar Energy Holding Kft. (formerly: MOL Magyarország Szolgáltató Központ Kft.) | Hungary | Business services | 9,514 | 9,514 | 100% | 100%
MOL CZ Downstream Investment B.V. | Netherlands | Investment management | 6,971 | 6,971 | 15% | 15%
MOL Austria GmbH. | Austria | Wholesale trade of lubricants and oil products | 5,365 | 5,365 | 100% | 100%
FER Tűzoltóság és Szolgáltató Kft. | Hungary | Fire service, ambulance service | 3,170 | 3,178 | 100% | 100%
Neptunus Investment Kft. | Hungary | Investment management | 2,913 | 2,913 | 100% | 100%
Fresh Corner Restaurants Holding Kft. | Hungary | Property management | 2,802 | 2,802 | 100% | 100%
MOL Fleet Holding Kft. | Hungary | Investment management | 2,657 | 2,649 | 100% | 100%
Tápió Szénhidrogén Koncessziós Kft. | Hungary | Exploration and production activity | 2,640 | 2,640 | 100% | 100%
MOL-LUB Kft. | Hungary | Production and trade of lubricants | 2,603 | 2,603 | 100% | 100%
Csanád Szénhidrogén Koncessziós Kft. | Hungary | Exploration and production activity | 2,280 | 2,280 | 100% | 100%
Geofizikai Szolgáltató Kft. "va" | Hungary | Engineering activity, engineering consultancy | 1,882 | 1,882 | 100% | 100%
MOL E-mobilitás Vagyonkezelő Kft. | Hungary | Electrical traffic solutions | 1,642 | 1,625 | 100% | 100%
Dunai Vízmű Zrt. | Hungary | Water production, -treatment, -supply | 111 | 1,400 | 33% | 33%
MOLTRADE-Mineralimpex Zrt. | Hungary | Importing and exporting of energetical products | 1,340 | 1,340 | 100% | 100%

|  | MOL Plc. Separate Financial Statements 2022 | 59

|  |  | Carrying value | Direct ownership
Company name | Country | Range of activity | 12/31/2022 | 12/31/2021 | 12/31/2022 | 12/31/2021
|  |  | HUF million | HUF million | % | %
MOL Aréna Kft. | Hungary | Investment management | 1,298 | 1,298 | 100% | 100%
Geoinform Kft. | Hungary | Hydrocarbon exploration | 1,129 | 1,132 | 100% | 100%
MOL Investment Kft. | Hungary | Financial services | 728 | 840 | 100% | 100%
MOL Somogyvámos Szénhidrogén Koncessziós Kft. | Hungary | Exploration and production activity | 637 | 757 | 100% | 100%
MOL Pakistan Oil and Gas Co. B.V. (formerly: MOL Pakistan Ltd.) | Netherlands | Exploration financing | 671 | 671 | 100% | 100%
MOLTRANS Kft. | Hungary | Transportation services | 625 | 629 | 100% | 100%
MOL Bucsa Szénhidrogén Koncessziós Kft. | Hungary | Exploration and production activity | 569 | 569 | 100% | 100%
MOL Germany GmbH | Germany | Trading of oil products | 556 | 556 | 100% | 100%
MOL Bázakerettye Szénhidrogén Koncessziós Kft. | Hungary | Exploration and production activity | 531 | 552 | 100% | 100%
MOL IT Holding Kft. | Hungary | Financial holding | 538 | 538 | 100% | 100%
Budapesti Értéktőzsde Zrt. | Hungary | Stock exchange | 431 | 431 | 2% | 2%
MOL Zala-Nyugat Szénhidrogén Koncessziós Kft. | Hungary | Exploration and production activity | 382 | 431 | 100% | 100%
MOL Nyírség-Észak Szénhidrogén Koncessziós Kft. | Hungary | Exploration and production activity | 106 | 352 | 100% | 100%
Rossi Biofuel Zrt. | Hungary | Biofuel production | 350 | 350 | 25% | 25%
Platounko Investments Ltd. | Cyprus | Exploration financing | 0 | 329 | 100% | 100%
MOL Nyírség-Dél Szénhidrogén Koncessziós Kft. | Hungary | Exploration and production activity | 253 | 305 | 100% | 100%
MOL Dráva Szénhidrogén Koncessziós Kft. | Hungary | Oil and gas production | 431 | 295 | 100% | 100%
MOL Okány-Nyugat Szénhidrogén Koncessziós Kft. | Hungary | Exploration and production activity | 356 | 256 | 100% | 100%
MOL GBS Magyarország Kft | Hungary | Accounting, bookkeeping and auditing activities, tax consultancy | 229 | 248 | 100% | 100%
MOL SZMDK Szénhidrogén Koncessziós Kft. | Hungary | Oil and gas production | 503 | 243 | 100% | 100%
Panfora Oil & Gas S.r.l. | Romania | Exploration and production activity | 0 | 233 | 100% | 99%
KMSZ Kelet-Magyarországi Szénhidrogén Koncessziós Kft. | Hungary | Exploration and production activity | 185 | 185 | 100% | 100%
MOL Group International Services B.V. | Netherlands | Financial and accounting services | 54,401 | 164 | 100% | 100%
Petrolszolg Kft. | Hungary | Repairs and maintenance services | 154 | 159 | 100% | 100%
MOL Vendéglátó Kft. | Hungary | Restaurants and mobile food service activities | 330 | 150 | 100% | 100%
CEGE Közép-európai Geotermikus Energia Termelő Zrt. | Hungary | Geothermal energy production | 109 | 109 | 100% | 100%
MOL-Russ Ooo | Russia | Management services | 0 | 87 | 100% | 100%
MULTIPONT Program Zrt. | Hungary | Marketing agent activity | 80 | 80 | 100% | 100%
MOL Commodity Trading Kft. | Hungary | Financial services | 60 | 60 | 100% | 100%
MOL Racing Kft. (formerly: Hexán Kft.) | Hungary | Chemical material refining, filling, retail and wholesale trade | 25 | 50 | 100% | 100%
MOL IT & Digital GBS Kft | Hungary | Computer facilities management activities | 37 | 45 | 100% | 100%
MOL Ukraine Llc. | Ukraine | Wholesale and retail trade | 41 | 41 | 100% | 100%
MOL Trading&Shipping SA | Switzerland | Trading, shipping | 28 | 28 | 100% | 100%
MCT Slovakia s.r.o. | Slovakia | Financial services | 0 | 24 | 0% | 30%
Terméktároló Zrt. | Hungary | Oil product storage | 24 | 24 | 74% | 74%
Alfagas Kft. | Hungary | LPG gas transloading, chemical analysis of incoming gases, issuance of certifications | 23 | 23 | 60% | 60%
MOL-Aspect DNY-Magyarországi Közös Szénhidrogén Kutató és Termelő Kft. | Hungary | Exploration and production activity | 11 | 10 | 50% | 50%
RMB-Russ LLC | Russia | Production, marketing and sale of synthetic rubber bitumen | 15 | 7 | 51% | 51%
MOL Biztonsági Szolgáltatások Kft | Hungary | Private security activity | 3 | 3 | 100% | 100%
MOL Magyarország Társasági Szolgáltatások Kft | Hungary | Combined office administrative service activities | 3 | 3 | 100% | 100%

|  | MOL Plc. Separate Financial Statements 2022 | 60

|  |  | Carrying value | Direct ownership
Company name | Country | Range of activity | 12/31/2022 | 12/31/2021 | 12/31/2022 | 12/31/2021
|  |  | HUF million | HUF million | % | %
MOL Sustainable Future Holding Kft. | Hungary | Investment management | 3 | 3 | 100% | 100%
OIL Insurance Limited | Bermuda | Financial services | 3 | 3 | 1% | 1%
EMSZ Első Magyar Szénhidrogén Koncessziós Kft. | Hungary | Exploration and production activity | 0 | 0 | 100% | 100%
MOL Somogybükkösd Szénhidrogén Koncessziós Kft. | Hungary | Exploration and production activity | 0 | 0 | 100% | 100%
MOL Jászárokszállás Szénhidrogén Koncessziós Kft. | Hungary | Exploration and production activity | 0 | 0 | 100% | 100%
MOL Kunststoff Kft. | Hungary | Investment management | 0 | 0 | 100% | 100%
Italiana Energia e Servizi S.p.A. | Italy | Refinery and marketing of oil products | 0 | 0 | 100% | 100%
MOL Cameroon B.V. | Netherlands | Exploration financing | 0 | 0 | 100% | 100%
MOL Central Asia B.V. | Netherlands | Exploration and production activity | 38 | 0 | 100% | 100%
MOL Limitless Mobility Holding Kft. | Hungary | Investment management | 0 | 0 | 100% | 100%
MOL Mezőtúr Szénhidrogén Koncessziós Kft. | Hungary | Exploration and production activity | 0 | 0 | 100% | 100%
MOL Őrség Szénhidrogén Koncessziós Kft. | Hungary | Exploration and production activity | 0 | 0 | 100% | 100%
MOL West Oman B.V. | Netherlands | Exploration financing | 0 | 0 | 100% | 100%
MOL Group Finance SA | Luxembourg | Financial services | 0 | 0 | 100% | 100%
OTP Bank Nyrt. | Hungary | Banking services | 0 | 0 | 9% | 9%
OVERDOSE Vagyonkezelő Kft. "va" | Hungary | Asset management | 0 | 0 | 10% | 10%
MOL REMA Holding Kft. | Hungary | Property management | 3 | 0 | 100% | 0%
MOL Körforgásos Gazdálkodás Kft. | Hungary | Collection of non-hazardous waste | 5 | 0 | 100% | 0%
MOL Transportation Services Kft. | Hungary | Air passenger transport | 3,110 | 0 | 100% | 0%
MOL Hulladékgazdálodási Zrt. | Hungary | Collection of non-hazardous waste | 5 | 0 | 100% | 0%
LOTOS Paliwa Sp.z o.o. | Poland | Retail sale of fuel for motor vehicles at service stations | 175,814 | 0 | 100% | 0%
Total |  |  | 3,016,528 | 2,810,130 |  |

|  | MOL Plc. Separate Financial Statements 2022 | 61

Appendix III.: Clean CCS profit / (loss) from operation (Clean CCS EBIT)

Clean CCS-based profit / (loss) from operation and its calculation methodology is not regulated by IFRS. CCS stands for Current cost of supply. Clean CCS EBIT is the most closely watched earnings measure in the oil and gas industry as it best captures the underlying performance of a refining operation as it removes non-recurring special items, inventory holding gains and losses, impairment on raw materials and own-produced inventory and derivative transactions.

Inventory holding gain/(loss)

EBIT after excluding the inventory holding gain/loss reflects the actual cost of supplies of the analysed period therefore it provides better portray on the underlying production and sales results and makes the results comparable to other companies in the industry.

Impairment on raw materials and own-produced inventory and goods

Inventories must be measured at the lower of cost or net realisable value.

The cost of inventories must be reduced - i.e. impairment must be recognised on closing inventory of the period- if the cost is significantly higher than the expected sales price minus cost to sell.

In case of finished products and goods impairment should be recognised if the closing value of them at the end of period is above the future sales price of the product minus cost to sell. In case of raw materials and semi-finished products that will be used further in production, it has to be examined whether, following their use in production; their value can be recovered in the selling price of the produced finished products. If their value is not fully recoverable impairment must be recognised to the recoverable level.

Derivative transactions

CCS methodology is based on switching to period average crude oil prices, but the CCS effect together with the effect of commodity derivative transactions would lead to unnecessary duplication, the P&L effect of all commodity derivatives are eliminated.

Non- recurring special items

One-off items are single, significant (more than USD 10 million P&L effect), non-recurring economic events which are not considered as part of the core operation of the segment therefore they do not reflect the actual performance of the given period.

| 2022 | 2021
Clean CCS EBIT Reconciliation | HUF million | HUF million
Reported EBIT total | 352,499 | 145,415
inventory holding gain/(loss) | (93,175) | (68,989)
impairment on raw materials and own-produced inventory and goods | 5,133 | 419
- thereof affects goods | 5,133 | 253
- thereof affects own-produced inventory | - | 166
cargo hedge | 94,509 | 64,671
CCS EBIT | 358,966 | 141,516
Impact of derivative transactions | - | -
GHG one-off items | (5) | (946)
special items | 4,550 | 7,581
Clean CCS EBIT | 363,511 | 148,151
| 2022 | 2021 |
Special items | HUF million | HUF million |
Operating profit excluding special items | 357,049 | 152,996 |
Upstream |  |  |
MOL US impairments | - | (10,288) |
Downstream |  |  |
MOL DS impairments | (4,550) | - |
Total special items on impairments | (4,550) | (10,288) |
Corporate and Other |  |  |
Creditor Beta legal case revenue | - | 2,707 |
Total special items in Corporate and Other | - | 2,707 |
Total impact of special items on operating profit | (4,550) | (7,581) |
Operating profit | 352,499 | 145,415 |

|  | MOL Plc. Separate Financial Statements 2022 | 62

Appendix IV.: Additional presentations according to the Hungarian Accounting Law

a) Person responsible for supervising transactional accounting and preparation of IFRS financial statements

Name: Ervin Berki

Registration number: 195106 (IFRS specialisation)

b) Person required to sign the statement of responsibility

Name: József Simola, Group Chief Financial Officer

Address: HU – 1112 Budapest, Ördögorom út 3/C A ép. 1.

Name: József Molnár, Group Chief Executive Officer

Address: HU – 1165 Budapest, Hunyadvár utca 42.

c) Contacts

Company name: MOL Plc.

Registered address: HU – 1117 Budapest, Dombóvári út 28.

Official website: www.molgroup.info

d) Presentation of company controls

In accordance with paragraph 89 of the Hungarian Accounting Law the separate financial statements include the itemised list of the name, registered address, the amount of subscribed capital and voting percentage of all business associations in which the company has majority control or qualified majority control, according to the provisions of the Civil Code governing business associations. See Appendix II.

There is no such company which holds majority control or qualified majority control in MOL Plc.

e) Audit fees

In accordance with paragraph 88 of the Hungarian Accounting Law the separate financial statements include the total fees for the financial year charged by the auditor or audit firm for the audit of annual accounts and for non-audit services. The fee charged by the audit firm (PwC Könyvvizsgáló Kft.) for the statutory audit of the 2022 consolidated and stand-alone financial statements of MOL Plc. is HUF 177 million. The auditor including its network charged HUF 119 million for other non-audit services, HUF 21 million for tax advisory services, and HUF 10 million for other audit-related services to MOL Plc. for non-audit services excluding fees for statutory audits of annual separate financial statements. Audit fee charged by previous auditor for 2022 interim financial statements was HUF 19.6 million.

f) Reconciliation of equity

Basis of preparation of equity reconciliation

In accordance with paragraph 114/B of the Hungarian Accounting Law the separate financial statements include a reconciliation of the equity per financial statement prepared in accordance with the basis of preparation note and the equity per Hungarian Accounting Law.

The reconciliation of the equity per financial statement prepared in accordance with the basis of preparation and the equity per Hungarian Accounting Law contains the balances as of 31 December 2021 and 31 December 2022 for the following equity elements:

Equity

• Issued (share) capital

• Capital reserve

• Retained earnings

• Revaluation reserve

• Net profit or loss

• Tied-up reserves

The equity reconciliation schedule also discloses:

• the reconciliation of the amount of capital registered by the registry court and the share capital per the financial statement prepared in accordance with the basis of preparation note above;

• retained earnings available for distribution which is the amount of retained earnings which also include the net profit for last financial year closed with annual financial statements.

|  | MOL Plc. Separate Financial Statements 2022 | 63

| 2022 | 2021 Restated
| HUF million | HUF million
Section 114 B (4) Equity under IFRS |  |
Share capital | 80,544 | 80,992
Reserves | 1,885,484 | 1,672,703
Profit/(loss) for the year | 507,904 | 410,366
Total equity | 2,473,932 | 2,164,061
Section 114 B (4) a) Equity |  |
Equity under IFRS | 2,473,932 | 2,164,061
Supplementary payments as liabilities under IFRS (+) | - | -
Supplementary payments as assets under IFRS (-) | (25) | (25)
Sum of the deferred income from cash, assets that received and transferred to the capital reserve under legislation (+) | - | -
Sum of receivables from owners classified as equity instrument under capital contribution (-) | - | -
Total equity | 2,473,907 | 2,164,036
Section 114 B (4) b) Share capital under IFRS |  |
Share capital according to the effective articles of association if classified as an equity instrument | 102,429 | 102,429
Treasury shares at nominal value (-) | (21,885) | (21,437)
Total share capital | 80,544 | 80,992
Section 114 B (4) c) Registered but unpaid capital |  |
Unpaid capital under IFRS | - | -
Total registered but unpaid capital |  |
Section 114 B (4) d) Capital reserve |  |
Sum of all equity components that are not considered as share capital, registered but unpaid capital, retained earnings, revaluation reserve, profit/(loss)for the period or tied-up reserve | 223,865 | 223,865
Total capital reserve | 223,865 | 223,865

|  | MOL Plc. Separate Financial Statements 2022 | 64

| 2022 | 2021 Restated
| HUF million | HUF million
Section 114 B (4) e) Retained earnings |  |
Accumulated profit after taxation of previous' years under IFRS that is not yet distributed among owners and not include other comprehensive income (±) | 1,664,720 | 1,448,782
Supplementary payments as assets under IFRS (-) | (25) | (25)
Unused reserve for development purposes (-) | (100,000) | -
Unused reserve for development purposes net of deferred tax liabilities under IAS 12 (+) | 9,000 | -
Total retained earnings | 1,573,695 | 1,448,757
Section 114 B (4) f) Revaluation reserve |  |
Accumulated other comprehensive income from statement of other comprehensive income (±) | (3,101) | 56
Accumulated and current year other comprehensive income from statement of other comprehensive income (±) | - | -
Total revaluation reserve | (3,101) | 56
Section 114 B (4) g) Profit after taxation |  |
Net profit/(loss) after tax from ongoing activities in the comprehensive income statement or in the statement of profit/(loss) (±) | 507,904 | 410,366
Net profit/(loss) after tax from discontinued activities in the comprehensive income statement or in the statement of profit/(loss) (±) | - | -
Total profit/(loss) after taxation | 507,904 | 410,366
Section 114 B (4) h) Tied-up reserve |  |
Supplementary payments as liabilities under IFRS (+) | - | -
Unused reserve for development purposes (+) | 100,000 | -
Unused reserve for development purposes net of deferred tax liabilities under IAS 12 (-) | (9,000) | -
Total tied-up reserve | 91,000 | -
Section 114 B (5) a) Reconciliation of registered capital with the share capital under IFRS |  |
Registered share capital | 102,429 | 102,429
Share capital under IFRS | 80,544 | 80,992
Difference (treasury shares at nominal value) | 21,885 | 21,437
Section 114 B (5) b) Retained earnings available for distribution |  |
Retained earnings (include the net profit after tax for last financial year closed with annual financial statements) | 2,081,599 | 1,859,123
Accumulated, unrealised profit from the increase of fair value of investment properties under IAS 40 | - | -
Retained earnings available for distribution | 2,081,599 | 1,859,123

|  | MOL Plc. Separate Financial Statements 2022 | 65

g) Licensed electricity statements

Accounting policies

In order to achieve the Company’s aims, MOL Plc. has started electricity trading activity and connected services on 1 March 2011. The Company mainly concentrates on fulfilling the electrical energy requirements of MOL Plc. utilizing the synergies of purchases and other electricity trading activities.

The electricity trading activity of MOL Plc. is in effect under Act LXXXVI of 2007 on Electricity (hereafter “Vet.”). On the basis of Vet., the Company is classified as horizontally integrated electricity enterprise, therefore is obliged to present the licensed activity in the notes as an independent activity.

The presentation of the equity and financial position of the licensed electricity trading activity based on the Company’s internal methodology prepared as “Methodology on Accounting Separation of Electricity Trading Activity”. The separation methodology of MOL Plc.’s licensed activity conforms to law and legal rules, as well as the accounting rules and controlling principles of the Company.

The year-ended separate Financial Statements is prepared on the basis of actual data (actual naturals, actual comparison basis).

Principles of activity separation based on law:

• principle of completeness

• principle of transparency and simplicity principle

• principle of going constancy

• principle of continuity

• principle of consistency

• principle of matching

• principle of cost-benefit

The activity separation based on artificial separation method does not provide a totally balanced Statement of financial position. That is the reason why the required balance between assets and liabilities prescribed by accounting law provided by a technical balancing line on the liability side of Statement of financial position.

Principles of activity separation on the basis of business rationality

• The purchased and consumed electrical energy are presented in the Statement of profit or loss account among incomes and expenditures as purchased for trading, or rather sold to third parties by the Company.

• The services used at MOL Plc. are presented as services provided by third parties and these internal transfer accounts are recorded in the appropriate statements of profit or loss lines. The amounts recorded in the proper Statement of profit or loss account equals the value of recorded internal performance accounted in the internal accounting system of MOL Plc.

The Company prepares the activity separation annually for the whole reporting period. The itemised revision and the separation of expenditures and assets are not prepared on monthly basis.

Method of separation:

The regulation of separation and the method are established by principles mentioned below. During the elaboration of detailed separation rules, the possibilities of the applied accounting system (SAP) in MOL Plc. and the principle of cost-benefit were taken into account.

• Directly related Cost centres/Profit centres of the licensed electricity trading activity

Cost centres/Profit centres related directly to the licensed activity shall be recorded directly. In the course of separation the main goal is to account the significant part of assets, liabilities, incomes and costs/expenditures reported directly as licensed activity. The direct items shall be maximised with proper assignment of costs object and the indirect ones shall be minimised.

|  | MOL Plc. Separate Financial Statements 2022 | 66

• Indirectly related Cost centres/Profit centres of the licensed electricity trading activity

Separation of indirect items is prepared by appropriate determined comparison method. Assets, liabilities, incomes and costs, expenditures not related directly to the licensed activity shall be separated on the basis of appropriate determined comparison method or itemised examination. If the internal service item is appropriate to licensed activity in connection of items separable, the procedure of that shall be applied.

• Non-related Cost centres/Profit centres of the licensed electricity trading activity

Based on the activity and organisation structure of the Company, there are some assets, liabilities, incomes and costs, expenditures not related to the licensed activity at all. These shall be left out of consideration during the separation process.

Licensed electricity statement of Profit OR loss

| 2022 | 2021
| HUF million | HUF million
Net sales | 139,728 | 59,064
Other operating income | 108 | 158
Total operating income | 139,836 | 59,222
Raw materials and consumables used | 142,684 | 59,851
Employee benefits expense | 110 | 69
Depreciation, depletion, amortisation and impairment | 764 | 448
Other operating expenses | 87 | 51
Change in inventory of finished goods & work in progress | - | -
Work performed by the enterprise and capitalised | (611) | -
Total operating expenses | 143,034 | 60,419
Profit / (loss) from operation | (3,198) | (1,197)
Finance income | (1,015) | (322)
Finance expense | (11) | 1
Total finance income, net | (1,004) | (323)
Profit / (loss) before tax | (4,202) | (1,520)
Income tax expense (benefit) | - | -
PROFIT / (LOSS) FOR THE YEAR | (4,202) | (1,520)

|  | MOL Plc. Separate Financial Statements 2022 | 67

Licensed electricity statement of financial position

| 12/31/2022 | 12/31/2021
| HUF million | HUF million
NON-CURRENT ASSETS |  |
Property, plant and equipment | 2,501 | 1,280
Intangible assets | - | -
Investments | - | -
Other non-current financial assets | - | -
Deferred tax asset | - | -
Other non-current assets | 20 | -
Total non-current assets | 2,521 | 1,280
CURRENT ASSETS |  |
Inventories | 604 | 698
Trade and other receivables | 18,274 | 10,621
Securities | - | -
Other current financial assets | - | -
Income tax receivable | - | -
Cash and cash equivalents | - | -
Other current assets | 57 | 25
Total current assets | 18,935 | 11,344
Total assets | 21,456 | 12,624
EQUITY |  |
Share capital | 442 | 270
Retained earnings and other reserves | 687 | 227
Profit / (loss) for the year | (4,202) | (1,520)
Technical net income for the period | 5,429 | 7,522
Total equity | 2,356 | 6,499
NON-CURRENT LIABILITIES |  |
Long-term debt | 51 | -
Other non-current financial liabilities | - | -
Non-current provisions | - | -
Other non-current liabilities | - | -
Total non-current liabilities | 51 | -
CURRENT LIABILITIES |  |
Short-term debt | - | -
Trade and other payables | 16,614 | 4,479
Other current financial liabilities | - | -
Current provisions | - | -
Other current liabilities | 2,435 | 1,646
Total current liabilities | 19,049 | 6,125
Total liabilities | 19,100 | 6,125
Total equity and liabilities | 21,456 | 12,624

|  | Statement of responsibility 2022 | 68

Statement of responsibility

Undersigned, authorized representatives of MOL Hungarian Oil and Gas Public Limited Company (MOL Plc.) the issuer of MOL ordinary shares, hereby declare that MOL Plc. takes full responsibility for its announced 2022 consolidated financial statement, and parent company financial statement which has been prepared to the best of our knowledge based on Section 10 of the Hungarian Accounting Act, in accordance with International Financial Reporting Standards (IFRS), and give a true and fair view of the assets, liabilities, financial position, and profit and loss of MOL Plc.

Moreover, we hereby declare that MOL Plc. takes full responsibility for its announced 2022 parent company financial statement, which has been prepared to the best of our knowledge based on Section 9/A of the Hungarian Accounting Act, in accordance with the International Financial Reporting Standards as adopted by the European Union (IFRS), and give a true and fair view of the assets, liabilities, financial position, and profit and loss of MOL Plc.

Finally, we declare that the Management Discussion and Analysis presents a fair review of the position, development and performance of MOL Plc. and its consolidated companies with a description of principal risks and uncertainties.

Budapest, 23 March 2023

József Molnár |  | József Simola
Group Chief Executive Officer |  | Group Chief Financial Officer