Monbat AdBSESOF: MONB

Interim Condensed Consolidated Financial Statements Monbat interimreport 30062025 consolidated EN

· Issued by Monbat AD
CONSOLIDATED INTERIM REPORT ON THE ACTIVITIES OF MONBAT AD

AS AT 30.06.2025 PURSUANT TO article 100o, paragraph 4, item 2 OF LPOS

  1. IMPORTANT DEVELOPMENTS FOR MONBAT AD THAT OCCURRED DURING THE PERIOD (01.01.2025 - 30.06.2025)

    During the period (01.01.2025 - 30.06.2025) Monbat AD has disclosed to the FSC, BSE AD and the public the following information through the information platform x3news.com, available at - https://http://www.x3news.com, as well as on the corporate page of the company, available at https://www.monbatgroup.com/bg

    Table No 1

    Date

    Developments

    15-01-2025

    MONBAT AD announced invitation to an Extraordinary General Meeting of Shareholders

    with the following agenda and proposed resolutions:

    1. Approving a resolution for election of a certified auditor to express assurance regarding the sustainability report of Monbat AD for 2024. Proposal resolution: The General Assembly of Shareholders approves a resolution for election of "Grant Thornton" OOD as a certified auditor to express assurance regarding the sustainability report of Monbat AD for 2024, in accordance with the proposal of the audit committee.

    20-01-2025

    MONBAT AD announced the following information: Inside information under art. 17, para 1, in relation with art. 7 of the Regulation (EU) No 596/2014 - Announcement:

    NOTIFICATION REGARDING LAST PRINCIPAL AND INTEREST PAYMENT MADE ON AN ISSUE

    OF CORPORATE BONDS, ISIN CODE - BG2100023170 MONBAT AD, as issuer of the bond issue, ISIN code BG2100023170, hereby notifies that a payment of principal and interest in the total amount of EUR 14 475 947.64 was made on 20-01-2025, whereby the bond issue was fully repaid.

    The date on which the composition of bondholders who received payment was determined:17-01-2025.

    30-01-2025

    MONBAT AD announced the 2024 Q4 Individual financial report.

    20-02-2025

    MONBAT AD announced the following information: Inside information under art. 17, para 1, in relation with art. 7 of the Regulation (EU) No 596/2014 -

    NOTIFICATION REGARDING GENERAL MEETING OF SHAREHOLDERS NOT CONVENED

    With entry No. 20240528162605 in the Commercial Register and the Register of Not-for Profit Legal Entities, an invitation has been announced for an Extraordinary General Meeting of Shareholders duly convened for February 20, 2025 at 10:30 a.m., 1000 Sofia, "Gurko Blvd."1, Grand Hotel Sofia, Serdika Hall.

    On the previously announced date of the General Meeting, 2 545 993 shares or 6.53% of the Company's capital were registered. Pursuant to Article 29, par. 1 of the Articles of Association

    Date

    Developments

    of MONBAT AD, the General Meeting is legal if more than half of the entire capital of the Company is represented.

    Due to the lack of quorum, the meeting was not held on the first date announced in the invitation for the EGM.

    In accordance with Art. 227 par. 3 of the Commercial Law (LC) and the announced invitation to convene it, the Extraordinary General Meeting of Shareholders will be held on the reserve announced date - 07.03.2025 at 10:30 a.m. (Eastern European Standard Time EET=UTC+3) or 07:30 a.m. (Coordinated Universal Time UTC), at the same place and with the same agenda.

    The agenda of the meeting cannot include items pursuant to 223a of the Commercial Law.

    Registration of shareholders will take place on the day of the General Meeting from 09:00 to 10:00 (Eastern European Standard Time EET=UTC+3) on the day of the General Meeting.

    28-02-2025

    MONBAT AD announced the 2024 Q4 Consolidated financial report

    28-02-2025

    MONBAT AD announced Semi-annual report in pursuance of Art. 100f (1), item 2 in relation to Art. 100f (2) of the POSA about fulfilment of the obligations of an issuer, related to its bond

    issue.

    10-03-2025

    MONBAT AD announced Minutes from a General shareholders meeting.

    27-03-2025

    MONBAT AD announced the 2024 Annual individual financial report.

    25-04-2025

    MONBAT AD announced the 2024 Annual consolidated financial report

    30-04-2025

    MONBAT AD announced the 2025 Q1 Individual financial report.

    20-05-2025

    MONBAT AD announced invitation for convocation of a regular attendance session of the Annual general assembly of the shareholders of MONBAT AD.

    The Board of Directors of Monbat AD, on the grounds of the provisions of Art. 223, para. 1 of the Commercial Act convenes a regular annual attendance session of the General Assembly of the Shareholders on 23.06.2025 at 10.30 EEST (EEST=UTC+3) or 7:30 (UTC) with the Unique identifier of the event MONB23062025RGOSA, ISIN code BG1100075065, in the city of Sofia, No 1, Gurko Blvd., Grand Hotel Sofia, 1 Serdika hall, under the following agenda and draft resolutions:

    1. Approving the audited Annual financial Report on the company's activities for the year 2024 prepared according to the Delegated Regulation (ЕС) 2019/815 and submitted to Financial Supervision Commission (FSC), Bulgarian Stock Exchange (BSE) and to the public. Proposal for a Resolution: The General Assembly of Shareholders approves the audited Annual financial Report on the company's activities for the year 2024 prepared according to the

    Delegated Regulation (ЕС) 2019/815 and submitted to Financial Supervision Commission

    Date

    Developments

    (FSC), Bulgarian Stock Exchange (BSE) and to the public.

    1. Adopting the Report for the implementation of the Remuneration Policy of the members of the Board of Directors of Monbat AD for 2024. Proposal for a Resolution: The General Assembly of Shareholders adopts the Report for the implementation of the Remuneration Policy of the members of the Board of Directors of Monbat AD for 2024.

    2. Approving the audited consolidated Annual financial Report on the company's activities for the year 2024 prepared according to the Delegated Regulation (ЕС) 2019/815 and submitted to Financial Supervision Commission (FSC), Bulgarian Stock Exchange (BSE) and to the public. Proposal for a Resolution: The General Assembly of Shareholders approves the audited consolidated Annual financial Report on the company's activities for the year 2024 prepared according to the Delegated Regulation (ЕС) 2019/815 and submitted to Financial Supervision Commission (FSC), Bulgarian Stock Exchange (BSE) and to the public.

    3. Adopting a decision to release from responsibility the members of the Board of Directors for their activities during 2024. Proposal for a Resolution: The General Assembly of Shareholders releases from responsibility the members of the Board of Directors for their activities during 2024.

    4. Approving the Annual Report on the activities of the IR Director of Monbat AD for the year 2024. Proposal for a Resolution: The General Assembly of Shareholders approves the presented Report on the activities of the IR Director for the year 2024.

    5. Approving the Report on the activities of the audit committee for the year 2024. Proposal for a Resolution: The General Assembly of Shareholders approves the presented Report on the activities of the audit committee of Monbat AD for the year 2024.

    6. Adopting a decision for electing the audit committee of the company. Proposal for a Resolution: The General Assembly of Shareholders elects an audit committee with the following members: Anelia Petkova Angelova - Tumbeva, Iskra Simeonova Atanasova and Sashka Dineva Ileva.

    7. Taking a decision for setting up the mandate of the audit committee and the amount of the remuneration of its members. Proposal for a Resolution: The General Assembly of Shareholders sets up one-year mandate of the audit committee and the amount of the remuneration of its members, as follows: for a participation in each session of the audit committee its members shall receive remuneration in the net amount of BGN 500 and for the Chairman of the audit committee - remuneration in the net amount of BGN 700.

    8. Election of a certified auditor for the year 2025. Proposal for a Resolution: The General Assembly of Shareholders approves a resolution for election of a certified auditor for the year 2025 in accordance with the proposal of the audit committee.

    9. Adopting a resolution for changes of the Board of Directors. Proposal for a Resolution: The General Assembly of Shareholders approves a decision for changes of the Board of Directors, namely: Releases from her position as a member of the Board of Directors of the

    Date

    Developments

    Company Evelina Slavcheva. The General Assembly of the Shareholders elects Krasimira Staneva as a new member of the Board of Directors for 5 year mandate.

    29-05-2025

    MONBAT AD announced The Consolidated Q1 2025 financial report.

    29-05-2025

    MONBAT AD announced Semi-annual report in pursuance of Art. 100f (1), item 2 in relation to Art. 100f (2) of the POSA about fulfilment of the obligations of an issuer, related to its bond

    issue.

    24-06-2025

    MONBAT AD announced the minutes of the general meeting of shareholders held on 23-06-2025 at 10:30 a.m.

    1. Adopting a resolution for set up the remuneration of the new elected member of the Board of Directors. Proposal for a Resolution: The General Assembly of the Shareholders sets up the remuneration of the new elected member of the Board of Directors - net month remuneration amounted to BGN 3 000.

    2. Adopting a resolution for set up the guarantee of the new elected member of the Board of Directors. Proposal for a Resolution: The General Assembly of the Shareholders sets up the guarantee of the new elected member of the Board of Directors - three gross month salaries.

    3. Adopting a decision for distribution of the company's profit generated in 2024 in the amount of BGN 4 966 084.39. Proposal for a Resolution: The company's profit after taxes, generated during the year 2024 in the amount of BGN 4 966 084.39 to be assigned to the Non distributed profit from past years fund.

    All important events that occurred after the date of the annual closing were disclosed through the disclosure system of Monbat AD, namely - the regulated securities market, the Financial Supervision Commission and the public. The information is also available on the company's website https://www.monbatgroup.com.

    No adjusting or other significant non-adjusting events have occurred between the date of the interim condensed financial statements and the date of approval for publication, except for those disclosed in the annual individual and annual consolidated statements of Monbat AD, prepared as of 31.12.2024.

  2. IMPACT OF THE IMPORTANT DEVELOPMENTS FOR MONBAT AD THAT OCCURRED AS AT 30.06.2025 ON THE RESULTS IN THE FINANCIAL STATEMENTS

    For the period 01.01.2025 - 30.06.2025, MONBAT AD reports consolidated revenues from contracts with customers in the amount of BGN 188 678 thousand, which represents an increase of 3.6% compared the revenues for the same period of 2024 in the amount of BGN 182 197 thousand.

    For the reporting period of 2025 normalized EBITDA (profit before interest and amortization, decreased with financial incomes and impairments and increased with financial expenses) from continuing operations of MONBAT AD amounts to BGN 15 759 thousand compared to BGN 20 129 thousand in the same period of 2024. This represents a decrease in EBITDA of 21.7%.

    For the reporting period of 2025 EBIT (earnings before tax, increased by financial expenses and reduced by financial income) from continuing operations of MONBAT AD is BGN 2 863 thousand, compared to EBIT from continuing operations for the same period of 2024 of BGN 8 382 thousand.

    The financial result before taxes from continuing operations of MONBAT AD on a consolidated basis for the reporting period of 2025 is (2 043) thousand BGN, compared to the consolidated profit from continuing operations before taxes of 2 495 thousand BGN reported for 2024.

    The consolidated net financial result of MONBAT AD for the period 01.01.2025 -30.06.2025 is (2 649) thousand BGN compared to the net profit of the company on a consolidated basis for the same period in 2024, which is 1 612 thousand BGN.

    FINANCIAL INDICATORS

    Table No 2

    LIQUIDITY RATIOS

    30.6.2025

    30.6.2024

    Total liquidity ratio

    1.32

    1.31

    Quick liquidity ratio

    0.79

    0.84

    Absolute liquidity ratio

    0.05

    0.08

    Immediate ratio

    0.05

    0.08



    PROFITABILITY RATIOS

    30.6.2025

    30.6.2024

    Profitability of capital

    (0.065)

    0.048

    Return on equity (ROE)

    (0.012)

    0.008

    Return assets (ROA)

    (0.005)

    0.004



    Table No 4

    LEVERAGE RATIOS

    30.6.2025

    30.6.2024

    Financial leverage indicator

    1.11

    1.20

    Debt/Assets

    0.526

    0.545

    Financial autonomy indicator

    0.90

    0.83



    FINANCIAL RATIOS

    30.6.2025

    30.6.2024

    EBITDA (continuing operations)

    15 759

    20 129

    EBIT

    2 863

    8 382



  3. DESCRIPTION OF THE PRINCIPAL RISKS AND UNCERTAINTIES WHICH MONBAT AD WILL FACE DURING THE FOLLOWING FINANCIAL PERIOD

    SYSTEMATIC RISKS

    Systematic risks are related to the market and the macro-environment the Company operates in and therefore could not be managed or controlled by the company management team. The following are examples of systematic risks: political risk, macroeconomic risk, inflation risk, currency risk, interest rate risk, tax risk.

    Table No 6

    Risk type

    Description

    POLITICAL RISK

    Political risk is the probability of a change of government or a sudden change in its policy, of domestic political turmoil and adverse changes in European and/or national legislation, resulting in a negative change in the environment in which local businesses operate and losses for investors.

    The overall systemic political risk is moderate. Bulgaria is a democratic republic and has good international relations. It is a member of the EU and NATO and a candidate for OECD membership. The political risk for Bulgaria is related to the challenges of committing to structural reforms, raising social stability and living standards, reducing inefficient spending and pursuing sustainable EU policies. Despite the functioning of a regular government with an assured parliamentary majority supporting the policies pursued, Bulgaria continues to experience slow progress on EU-required reforms in the judiciary and anti-corruption measures, combined with public dissatisfaction with living standards as well as high vulnerability to external shocks due to high dependence on exports.

    OVERALL

    MACROECONOMIC

    According to data from the National Statistical Institute as of June 30, 2025, the overall business

    RISK

    climate indicator for June 2025 increased by 1.9 points compared to the previous month (from 19.8% to 21.7%). An improvement in the indicator was observed in construction, retail trade, and the service sector, while in industry it remained approximately at its level from May.



    Source: NIS

    In June 2025, the composite indicator "business climate in industry" remained approximately at the same level as in the Previous month (from 18.2% to 18.4%). Industrial entrepreneurs assess current production activity as favorable, while their expectations for activity over the next three months are reserved. The uncertain economic environment and labor shortages continue to be the main obstacles to business development. The majority of managers expect sales prices in industry to remain unchanged over the next three months.

    In June 2025, the composite indicator "business climate in construction" increased by 2.8 points (from 23.3% to 26.1%), which is due to the positive assessments and expectations of construction entrepreneurs for the business situation of enterprises. In their opinion, current construction activity has improved slightly, and their forecasts for the next three months are that activity will remain at the same level. The main factor hampering activity in the sector is the shortage of labor, reported by 43.2% of enterprises. In second and third place are the uncertain economic environment and material prices. Regarding sales prices in construction, managers anticipate a slight increase over the next three months.

    In June 2025, the composite indicator "business climate in the services sector" increased by 3.0 points (from 12.4% to 15.4%), which is due to managers' favorable assessments of the current business situation of enterprises. Their opinions on the current demand for services are also positive, while expectations for the next three months are shifting towards more moderate opinions. The most serious problem for business activity continues to be the uncertain economic environment, followed by competition in the industry and labor shortages. Regarding sales prices in the service sector, managers forecast a slight increase over the next three months.

    According to the macroeconomic forecasts of Eurosystem experts, presented in the European Central Bank's Economic Bulletin No. 4/2025, GDP growth is expected to average 0.9% in 2025, 1.1% in 2026, and 1.3% in 2027. The unrevised growth forecast for 2025 reflects a stronger-than-expected first quarter and a weaker outlook for the rest of the year. Although uncertainty related to trade policies is expected to deter business investment and exports, especially in the short term, rising government investment in defense and infrastructure will increasingly support growth in the medium term. Higher real incomes and a stable labor market will allow households to increase their spending. Together with more favorable financing conditions, this should make the economy more resilient to global shocks.

    The Governing Council is determined to ensure the sustained stabilization of inflation at its medium-term target of 2%. In determining the appropriate monetary policy stance, it will apply a data-driven approach, meeting by meeting, especially in the current environment of exceptional uncertainty. The Governing Council's interest rate decisions will be based on its assessment of the inflation outlook in light of incoming economic and financial data, the dynamics of core inflation

    and the strength of the monetary policy transmission mechanism. The Governing Council does

    not commit itself in advance to a specific interest rate path.

    INTEREST RISK

    Interest rate risk is related to a possible negative change in interest rates established by the financial institutions of the Republic of Bulgaria.

    At its meeting on June 5, 2025, the Governing Council of the European Central Bank decided to decrease the three key ECB interest rates by 25 basis points. In particular, the decision to decrease the interest rate on the deposit facility, through which the Governing Council sets the monetary policy stance, is based on the updated assessment of the inflation outlook, the dynamics of core inflation, and the strength of the monetary policy transmission mechanism.

    Inflation is currently around the Governing Council's medium-term target of 2%. According to the Eurosystem staff macroeconomic forecasts for the Eurozone from June 2025, overall inflation is expected to be 2.0% in 2025, 1.6% in 2026, and 2.0% in 2027. The downward revision compared with the ECB staff macroeconomic forecast for the Eurozone from March 2025 - by 0.3 percentage points for 2025 and 2026 - mainly reflects lower assumptions for energy prices and a higher euro exchange rate. Experts forecast inflation (excluding energy and food) to average 2.4% in 2025 and 1.9% in 2026 and 2027, broadly unchanged from the March forecast.



    * Source:BNB

    INFLATION RISK

    Inflation risk is a general price increase in which money depreciates, and households and firms are likely to incur losses.

    Consumer price index: In June 2025, monthly inflation is 0.4%, and annual inflation for June 2025 compared to June 2024 is 4.4%. Inflation since the beginning of the year (June 2025 compared to December 2024) is 2.4%, and the average annual inflation for the period July 2024 - June 2025 compared to the period July 2023 - June 2024 is 2.9%.

    Harmonized index of consumer prices: In June 2025, monthly inflation is 0.4%, and annual inflation for June 2025 compared to June 2024 is 3.1%. Inflation since the beginning of the year (June 2025 compared to December 2024) is 1.8%, and the average annual inflation for the period July 2024 - June 2025 compared to the period July 2023 - June 2024 is 2.8%.



    *Source:NSI

    CURRENCY RISK

    The currency risk exposure is the dependence on and the effects of the currency exchange rates changes. The systematic currency risk is the probability of possible change in the currency regime of the Country (Currency Board), which would result either in devaluation of the Bulgarian lev

    (BGN) or in appreciation of the BGN against foreign currencies.

    Currency risk will have impact on companies with market shares, which are completed in a currency other than BGN and EUR. Due to the laws in force in the country, the Bulgarian lev is fixed to the Euro at an exchange rate of EUR 1 = BGN 1.95583, and the Bulgarian National Bank has to maintain a level of Bulgarian leva in turnover equal to the currency reserves of the bank, the risk of devaluation of the BGN compared to the European currency is minimum, and for the most part consists in a possible elimination of the currency board in the country. At this stage, this appears to be very unlikely because the Currency Board is expected to be removed at the time of accepting the Euro as official legal tender in Bulgaria.

    At its meeting on June 30, 2021, the Coordination Council for preparation of the Republic of Bulgaria for euro area membership adopted a draft National Plan for the introduction of the euro in the Republic of Bulgaria. Bulgaria's commitment to adopt the single European currency is reaffirmed in the Treaty on the Accession of the Republic of Bulgaria and Romania to the European Union, after it was initially stated at the start of our country's EU membership negotiations.

    According to the Activity Report of the Ministry of Finance for the period 9 April - 26 August 2024, a Partnership Agreement was signed on 12 April 2024 between the European Commission (EC) and the Republic of Bulgaria to organize information and communication campaigns on the introduction of the euro in the country. The document foresees the coordination of the efforts of the Bulgarian and European authorities in order to raise public information about the functioning of the Economic and Monetary Union and to support the smooth changeover from the euro to the lev. On 26 June 2024, the European Commission (EC) and the European Central Bank (ECB) published the Convergence Reports 2024, in which they present their assessment of the progress towards the euro area made by the six Member States obliged to adopt the euro: Bulgaria, the Czech Republic, Hungary, Poland, Romania and Sweden. According to this year's convergence reports, Bulgaria continues to steadily meet three of the four numerical criteria for membership, namely those on the stability of public finances (budget balance and government debt), the exchange rate and the long-term interest rate. Bulgaria does not meet only the price stability criterion, as inflation is expected to fall in the coming months, which would allow Bulgaria to meet the last challenge to its euro area membership. The reports note that of the six countries examined, only Bulgaria's legislation can be considered compatible with EU law, subject to the conditions and interpretations set out in the reports. In the context of full membership of the euro area, Bulgaria should continue its steps towards ensuring a stable and predictable business environment and institutional framework to achieve sustainable convergence with the countries of the euro area.

    On July 8, 2025, the Council of the European Union officially approved Bulgaria's accession to the Eurozone on January 1, 2026, and fixed the exchange rate of the lev at 1.95583 per euro. This is the current central rate of the lev in the exchange rate mechanism (ERM II), in which the currency has participated since July 10, 2020. The exchange rate of the lev is established by an amendment to Regulation (EC) No 2866/98, which will enter into force on January 1, 2026.

    According to data from the Ministry of Finance, on July 10, 2025, Bulgaria's long-term foreign currency credit rating was upgraded to 'BBB+' with a stable outlook with exceptional rating actions by international rating agencies Fitch Ratings and S&P Global Ratings. This is the highest grade of the middle-class investment ratings, according to the Ministry of Finance. The leading factor for the upgrade of the country's rating is the official decision of the Council of the European Union on Bulgaria's accession to the Eurozone, effective January 1, 2026. In its rationale for the rating action, S&P Global Ratings notes that Bulgaria will benefit from the ECB's reliable monetary policy and the developed capital markets of the monetary union, while currency risk will decrease significantly. It considers that Bulgaria's EU membership and its forthcoming accession to the eurozone continue to enable the country to implement important policies. Bulgaria's short-term growth prospects are assessed as stable. The economy is forecast to grow by 2.4% in real terms in 2025 and by an average of 2.8% until 2028. Private consumption will be the main driver of growth, supported by high real wage growth due to the tight labor market. The rating agency notes that Bulgaria's full membership in the Schengen area, effective January 1, 2025, together

    with its accession to the Eurozone, could support trade and international tourism by reducing

    administrative barriers.

    According to data from the Bulgarian National Bank (BNB) as of June 30, 2025 the gross external debt at the end of April 2025 amounted to EUR 47,617.5 million (43.6% of GDP), which is EUR 3,906.5 million (8.9%) more than at the end of April 2024 (EUR 43,711 million, 42.1% of GDP). At the end of April 2025, short-term liabilities amounted to €8,226 million (17.3% of gross debt, 7.5% of GDP), an increase of €660.6 million (8.7%) compared to April 2024 (€7,565.3 million, 17.3% of debt, 7.3% of GDP). Long-term liabilities amounted to €39,391.5 million (82.7% of gross debt, 36% of GDP) at the end of April 2025, increasing by €3,245.9 million (9%) compared to the end of April 2024 (€36,145.6 million, 82.7% of debt, 34.8% of GDP).

    TAX RISK

    Preservation of the current taxation regime is of defining importance for the financial result of the companies. There is no guarantee that the tax laws, which are of direct consequence for the operation of the company, would not be changed in a direction which would result in a significant overhead expense, and respectively would have an adverse effect on the profit of the company. The taxation system in Bulgaria is still undergoing the process of development and consequently the existence of contradictory tax practices is a possibility.

    RISKS RELATED TO MILITARY CONFLICTS IN THE MIDDLE EAST AND UKRAINE

    The ongoing war in Ukraine and the conflict in the Middle East, determines the rise in energy prices and the resulting higher inflation rates for producer and consumer prices. The escalation of geopolitical conflicts and the further escalation of global trade conflicts, especially between the United States and its trading partners, pose additional risks to economic development.

    The marked decline in consumer price inflation in 2024 and associated increases in real incomes will support consumer purchasing power in the United States and Europe. Short-term interest rates are likely to continue to fall, at least in the euro area. However, long-term interest rates, which are crucial for the development of real estate markets and corporate investment, are no longer expected to fall significantly. Measures to stimulate growth are increasingly constrained by the high level of sovereign debt in many countries, which rose significantly during the coronavirus pandemic. Europe's economic challenges related to demographic change, as well as the effects of accelerated climate policy transformation on corporate competitiveness and household purchasing power, are becoming more evident. High levels of geopolitical and trade uncertainty are expected to weigh on consumer and business confidence. High import tariffs imposed by the United States and reciprocal measures by trading partners could increase global inflation and interest rates, thereby slowing economic growth.

    As regards trends in the European economy, GDP growth is expected to be slightly higher (2025:

    +1.2%, 2024: +0.9%). As leading economic indicators do not point to a recent recovery in industrial demand, growth is expected to be weak in EU countries with a high industrial share.

    Deepening divisions and increasing fragmentation are changing international relations and raise the question whether existing state structures/systems are able to respond to new challenges. Levels of global cooperation in many areas of geopolitics, humanitarian issues, economic relations, environmental, societal and technological challenges may reach their lowest point of treatment and overcoming in the coming years. Key countries are increasingly turning internally, focusing on growing domestic economic and social problems rather than seeking to strengthen multilateral ties and confront shared challenges.

    The global political outlook will be defined by an increasingly multipolar and fragmented order in which middle and major powers will struggle to define and impose new regional rules and norms. On the Russia-Ukraine conflict, the position taken by the new US administration will be crucial to its development. It is not clear from the actions of the new US administration whether the United States will take a tougher stance towards Russia, relying on such a move to act as a deterrent to further Russian escalation or to increase pressure on Ukraine, including by reducing financial support. The spectrum of possible developments in the Russia-Ukraine conflict is extremely broad, ranging from further escalation and development, perhaps involving neighboring states, to an uneasy agreement to freeze the conflict.

    In the Middle East, any move toward full-scale war between Israel and Iran would further commit the United States. Such a war, in addition to having the potential to create extreme instability

    throughout the region, would also negatively affect the economies of the countries in the Middle East.

    Meanwhile, recent political developments in Syria raise both opportunities and risks. The hope is that there can be an economic revival in this region and a more inclusive political environment can be provided. However, building stability across Syria will be challenging, given the many competing interests that are involved. These interests include both local groups and foreign states. If other states decide to intervene more forcefully as the transition unfolds, it could lead to renewed confrontation. For businesses, one of the key lessons learned from ongoing military conflicts is the need to ensure supply chain resilience and diversification. As geopolitical volatility will remain high, business investment in geopolitical risk forecasting and management will be imperative. When the level of uncertainty surrounding conflicts or potential conflicts is high, scenario exercises can be a valuable tool to help businesses prepare for different outcomes. Businesses need to consider not only whether their suppliers and supply routes are vulnerable to conflict, but also make an objective assessment of the reputational implications associated with the risks of partnering or doing business with counterparties that are in some way a party to the conflict.

    In addition to the list of challenges, producers and consumers of goods must navigate changing global politics, including the unpredictable nature of policy changes under the new US administration. The direction of travel in the US is clear in two areas: there will be an increase in protectionist policies, as well as a withdrawal of support for climate change initiatives. With the introduction of a 25% tariff on all aluminium and steel imports into the US in March, producers and consumers are reviewing their supply chains, updating costs and prices and seeking alternative arrangements. Given the likelihood of trade wars escalating, the impact on the global economy is likely to be significant. In the short term, this could create inflationary pressures, but in the longer term, the reversal of global trade flows will act as a restraint on economic growth prospects. The new stance on environmental policy in the US is likely to have an impact on the plans of many energy companies. Leading analysts expect fossil fuel markets, including coal, to be further supported in the coming months by rapidly growing energy demand from data centers and electric vehicles, which is outpacing the growth in renewable capacity.

    RISK OF ELECTRICITY PRICE INCREASES

    The Maritsa East and Bobov Dol coal-fired plants produce over 47 per cent of Bulgaria's electricity. As of 01.07.2024, the commitment of Maritsa East 2 TPP to NEK for electricity production will be cancelled and given the high price of emissions and the fact that the plant is to go fully on the free market, contributes to it stopping operation. As of the date of this report, there is no comprehensive analysis of how this circumstance will affect the price of electricity for economic entities, as there is data that the price of household consumers may increase by about 20 percent. The shocks in the domestic electricity generation market caused by the possible shutdown of coal plants are combined with the shocks in the international market. The rise in the prices of electricity and energy carriers, which increased particularly sharply after Russia's invasion of Ukraine, put pressure on European consumers. In 2024, the armed conflict in Gaza, which threatened the supply of energy carriers, was added to the general instability on a global scale. The escalation of the war in Gaza and the involvement of the Houthis from Yemen, Hezbollah from Lebanon and hostilities on the territory of Syria and the subsequent bombing by Israel, the US and the UK have led to serious risks to shipping in the Red Sea and hence to the avoidance of this route by oil suppliers.

    The mentioned military conflicts lead to serious uncertainty in the supply of oil and gas, and hence affect their price, and the price of electricity respectively.

    If the Red Sea is closed to shipping, even for a short period of time, this will cause another spike in

    energy prices.

    UNSYSTEMATIC RISKS

    RISK OF PRICE CHANGES IN THE BASIC PRIME AND RAW MATERIALS

    The principal activity of MONBAT AD is production and trading with accumulator and lead-acid batteries - starter batteries, stationary batteries for telecom application, semi-traction batteries, specialized batteries - army power range and locomotive batteries. Major prime and raw materials for the company's production process are lead and lead alloys, polypropylene, polyethylene separator and sulfuric acid. In 2025 lead takes approximately 62% of the cost structure per unit.



    **Average lead price or the period 01.01.2025 - 30.06.2025 is - 1 958.51 USD/MT

    The risk of price change in the basic raw material - lead is being managed through construction of company's own recycling facilities and through an indexation of sales prices to end customers.

    DEPENDENCE OF MONBAT AD ON DISTRIBUTORS, SUPPLIERS, CUSTOMERS

    There is no dependence of MONBAT AD on customers due to the fact that Group's sales are not made directly with customers but through the mediation of an extensive distribution network in the country and abroad. Significant part of the sales with deferred payment in the country and for export is being insured in the Bulgarian Export Insurance Agency (BAEZ), COFACE or Credendo by reason of which the risk of non-payment on the part of the customers is mitigated.

    As a result of its marketing and distribution strategy, Monbat enjoys excellent market diversification, with sales in more than 75 countries and important markets for this period are Germany, France, Italy, Romania, and Tunisia. With its well-developed distributor network Monbat accesses end customers in from all the major markets in the EU, the Middle East, North and South Africa. Starter batteries ultimately are retailed through automotive retailers and repair shops. Stationary batteries are sold directly to telecom companies and other users.

    Breakdown of the sales by markets of MONBAT AD on a consolidated basis for Q2 2025 is shown in the table below.

    Table No 7

    30.6.2025

    30.6.2024

    Country

    Export (BGN '000)

    %

    Export (BGN '000)

    %

    Germany

    10 547

    12.1

    10 104

    11.7

    France

    8 873

    10.1

    7 987

    9.2

    Tunisia

    5 923

    6.8

    7 251

    8.4

    Romania

    5 511

    6.3

    3 776

    4.4

    Italy

    4 365

    5.0

    6 748

    7.8

    South Africa

    3 416

    3.9

    129

    0.1

    Greece

    3 336

    3.8

    4 506

    5.2

    Hungary

    3 248

    3.7

    1 448

    1.7

    Algeria

    3 209

    3.7

    1 004

    1.2

    Sweden

    2 994

    3.4

    2 778

    3.2

    Serbia

    2 809

    3.2

    1 763

    2.0

    Netherlands

    2 437

    2.8

    3 531

    4.1

    Spain

    2 423

    2.8

    4 677

    5.4

    United Kingdom

    2 317

    2.6

    3 625

    4.2

    Austria

    1 926

    2.2

    369

    0.4

    Israel

    1 909

    2.2

    501

    0.6

    Poland

    1 840

    2.1

    2 003

    2.3

    Ukraine

    1 739

    2.0

    1 414

    1.6

    Ireland

    1 460

    1.7

    1 130

    1.3

    Others

    17 221

    19.7

    21 694

    25.1

    TOTAL

    87 503

    100.0

    86 438

    100.0

    For the period 01.01.2025 - 30.06.2025 MONBAT AD achieved consolidated revenues from international markets amounting to EUR 87 503 thousand, which represents 90.7% of the Group's total net sales revenues.

    In 2025, major market for MONBAT AD was Germany with EUR 10 547 thousand revenues, which represents 12.1% of the total consolidated export of the Group.

    Sales revenues generated on the domestic market in 2025 were BGN 17 537 thousand (EUR 8 967 thousand) and represent 9.3% of the net sales revenues of the Group.

    INFLUENCE OF MACROECONOMIC AND GEOPOLITICAL FACTORS

    The ongoing hostilities between Russia and Ukraine, the imposition of sanctions and restrictions by the European Union, the United States, Canada, Great Britain and other countries against Russia, the Russian Central Bank, credit institutions, companies, individuals, caused significant turmoil in the financial markets over the last three years, which brought continued geopolitical tensions, recalibration of economic growth, inflation, rising interest rates in the US and Europe, and rising commodity prices.

    The Group actively analyses and manages the risks associated with the impact of macroeconomic, geopolitical and market factors on its financial performance.

    Risk analysis and measures and actions taken:

    • In the first half of 2025, the Group reported a 6.2% decline in revenue from sales of rechargeable batteries due to lower lead commodity rates (see below) and a 7% decrease in the volume of batteries sold. 1 485 thousand batteries were sold during the reported period, broken down by geographical and product segments as follows:

      • Significant growth in battery sales in targeted high-margin markets such as South Africa and Israel, which offset the lack of sales to customers in Saudi Arabia, where significant volumes were realized in 2024, albeit at low profitability. In 2025, sales to Saudi Arabia were externally constrained due to the negative effects of the volatility of the eurodollar exchange rate and the significant depreciation of the US currency, which is traditionally used for trading in the Middle East region.

      • Growth of over 30% in sales of rechargeable batteries and raw materials for their production (lead plates) by the Nour Tunisia Industrial Group to customers in Europe and, above all, North Africa, while maintaining its leading role in the local Tunisian market.

      • Decline in sales of batteries to specific customers in Italy and Spain, to whom significant volumes were sold in early 2024. The Group expects sales in these countries to recover in the second half of 2025 through optimization of the product segments and customer portfolio, relevant for these markets.

    • In addition to the Group's core business - the production and sale of rechargeable batteries, in 2025 the other segments of the Monbat Group offset the lower battery sales compared to 2024 through:

      • Significantly higher sales of lead and lead alloys (nearly 4 thousand tonnes in 2025) from the Group's recycling plants to third parties, including raw lead produced by the new metallurgical furnace commissioned in early 2025 at the Group's recycling plant in Italy.

      • Higher revenues from consulting, engineering, and logistics services provided by the Group's companies.

    • As a result of market volatility, the 2025 average market price of lead was around 1 795 EUR/MT (2024: 1 962 EUR/MT). A particularly significant decline was observed at the beginning of April 2025, after which the market price for the second quarter of 2025 (EUR 1 717/MT) was significantly lower than that for the first quarter of 2025 (EUR 1 871/MT).

    • Although the Group traditionally addresses market volatility and the dependence of lead prices on stock market indices by applying standard indexation to the selling prices of its products and purchases of lead-containing raw materials, in the second quarter of 2025 the Group reported a significant negative effect on its profitability (of over BGN 3 million) as a result of the above-mentioned collapse in the price of lead and the realization of available material stocks at lower, downwardly indexed sales prices.

    The Group analyzes on an ongoing basis all possible impacts of changing micro and macroeconomic conditions on the Group's future financial position and results of operations. Inflationary processes, expressed in increased costs of direct materials, energy and labour per unit of production, have a significant impact on the Group's operations. The Group has been able to limit the effect of these negative impacts of the macroeconomic environment by refining its customer and product mix (with a focus on higher-margin products and markets) and, where necessary, applying indexation of selling prices to its customers.

  4. INFORMATION ABOUT THE CONCLUDED LARGE TRANSACTIONS WITH RELATED PARTIES AS AT 30.06.2025

All transactions with related parties have been announced in the interim consolidated financial statement of MONBAT as at 30.06.2025.

Date: 29.08.2025

For MONBAT AD:

Viktor Spiriev

/ Executive member of the Board of Directors /