Board of Directors Address


Dear shareholders and investors,

Stara Planina Hold Plc and the enterprises from our group bid good bye to a successful year. The consolidated sales have increased by almost 30% compared to 2010 and are expected to reach 96.5% of the pre-crisis 2008 levels. This is due to a relative stabilization observed in the first half of 2011 at the markets on which the group is active.

This forecast is based on the results achieved in 2011, the business plans of the enterprises for 2012 and the pessimistic expectations for unstable market developments.

The Board of Directors of Stara Planina Hold Plc expects the consolidated income from sales of production the next year to retain its 2011 levels or to increase by up to 1.1%. The individual enterprises of the holding’s group plan from 7% increase to 10% decrease in sales, and the profit, respectively. All enterprises have a backup plan which will be employed, should there be a greater than expected drop in the orders.

In 2012, too, our priority task remains to retain the major markets and to widen our presence on new markets. This will require us to offer good prices, high quality and short delivery times. We do not envisage higher sales prices in the next year. A certain exception here are the Elhim-Iskra products whose prices are highly dependant on the significant changes in the lead prices.

Our enterprises plan significant investments which to result also in the introduction of new products, higher productivity and better remuneration for the employed staff, respectively. The investments in the entire Stara Planina Hold Plc group in 2012 will exceed BGN 16 million which is approximately 20% higher compared to 2011. The major portion of the planned investments will be allocated for the upgrade of production facilities. The companies will rely on their own funds, bank loans or alternative forms of financing for the respective programs. Projects awarded under Operational Programme Competitiveness provided significant support during the most difficult periods of the financial crisis. Their implementation helped us to achieve higher efficiency and quality as well as to lower the energy intensity which resulted in higher cost efficiency.

The financial expenses do not manifest upward trend and the possible lower exchange rate EUR to USD may have a positive impact on our export. Interest rates in the country show stable trend of cautiousness and low trust of banks in the Bulgarian business.

A leading priority for us this year as well was to increase productivity. The enterprise personnel will remain on the level of the last quarter of 2011 but we do not rule out negative growth of the employment in the group.

In the given conditions, the achievement of a good financial result at the expected production volume is a major task to accomplish so as to overcome the negative business trends in order to avoid underlying reasons for decrease in the market capitalization of the enterprises of the group with view of guaranteeing shareholders’ investments and their profitability.

Sofia, 19 December 2011
Stara Planina Hold Plc
Board of Directors

Published forecasts

2012:
January

2011:
Pooled forecasts
November
October
September
August
July
June
May
April
March
February
January

2010:
Anticipation 2011
December
November
October
September
August
July
June
May
April
March
February
January

2009:
Anticipation 2010
December
November
October
September
August
July
June