Name of Reporting entity STARA PLANINA HOLD PLC
Country of Registration Republic of Bulgaria
Legal Form Public company
Domicile and Address of Registerred Office 20, Fr. J. Curie Str., 9 floo r, 1113 Sofia
Place of Business Republic of Bulgaria
Nature of Operations Holding company
Change in Name No
Parent Entity None
Ultimate Parent Company None
BGN’000s
ASSETS Note
31.12.2021 31.12.2020
Property, plant and equipment 1
Intangible assets 2
Positive goodwill -
Investments in other companies 3
Other financial assets 4
Trade and other receivables 5
Deferred tax assets 106 101
Total Non-current assets 132 852 127 978
Materials 6
Trade and other receivables 7
Financial assets -
Cash and cash equivalents 8
Prepaid expenses
Total current assets 135 793 107 129
TOTAL ASSETS 268 645 235 107
Share capital 9
Reserves 9
Retained earnings/loss 9
Total equity 115 565 102 967
Non-controlling interest 99 422 92 219
Trade and other payables 10
Deferred tax liabilities 10
Deferred revenues
State financing 10
Total non-current liabilities 6 836 6 405
Trade and other payables 11
Deferred revenues 11
State financing 11
Total current liabilities 46 822 33 516
Total liabilities 53 658 39 921
TOTAL EQUITY AND LIABILITIES 268 645 235 107
Date: 18.04.2021
Prepared by: Kremena Dulgerova
Manager: Vasil Velev
LIABILITIES
Current
Non-current
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
STARA PLANINA HOLD PLC
Non-current assets
For the period ended 31 December 2021
Current assets
EQUITY
Digitally signed by Kremena
Gantcheva Dulgerova
Date: 2022.04.27 15:57:26 +03'00'
Digitally signed by Vasil Georgiev
Velev
Date: 2022.04.27 16:03:22 +03'00'
KATYA
RAYKOVA
ZLATAREVA
Digitally signed by
KATYA RAYKOVA
ZLATAREVA
Date: 2022.04.28
12:23:37 +03'00'
BGN’000s
Note
31.12.2021 31.12.2020
Net sales revenues 12
State finansing revenues
Cost of materials
(139 088 ) (98 959 )
Cost of hired services
(21 679 ) (17 601 )
Depreciation
(15 411 ) (14 528 )
Salaries
(58 814 ) (44 936 )
Social securities
(11 298 ) (8 775 )
Changes in finished goods and work in progress
Cost of disposals
(2 162 ) (2 101 )
Other expenses
(3 105 ) (2 150 )
Operational profit 31 900 23 722
Financial income 13
Financial expenses 14
(431 ) (1 075 )
Profit before tax 33 010 23 369
Tax expenses, net 3 250 2 448
Net profit for the period 29 760 20 921
Profit attributable to:
Non-controlling interest 16 706 12 825
Equity holders of the parent company 13 054 8 096
Other comprehensive income
Investments in equity instruments, reported at FVOCI, net
Other comprehensive income-revaluation of a defined benefit
obligation
(18 ) (9 )
Other comprehensive income, net of taxes 2 326 881
Total comprehensive income 32 086 21 802
Total comprehensive income attributable to:
Non-controlling interest
Equity holders of the parent company
Earnings per share 0,63 0,39
Date: 18.04.2021
Prepared by: Kremena Dulgerova
For the period ended 31 December 2021
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
STARA PLANINA HOLD PLC
Manager: Vasil Velev
Digitally signed by Kremena
Gantcheva Dulgerova
Date: 2022.04.27 15:57:45 +03'00'
Digitally signed by Vasil Georgiev
Velev
Date: 2022.04.27 16:03:45 +03'00'
KATYA
RAYKOVA
ZLATAREVA
Digitally signed by
KATYA RAYKOVA
ZLATAREVA
Date: 2022.04.28
12:24:16 +03'00'
BGN’000s
CASH FLOWS FROM OPERATING ACTIVITIES
31.12.2021 31.12.2020
Cash receipts from customers 282 363 211 610
Cash paid to suppliers (196 572 ) (135 443 )
Cash paid to employees and social security institutions (68 528 ) (54 846 )
Taxes paid/received 5 508 3 920
Interest, fees and commissions paid/received (25 ) (26 )
Other payments/proceeds for operating activities 4 290 6 328
Net cash flow from operating activities 27 036 31 543
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of non-current assets (13 944 ) (16 072 )
Proceeds from sales of non-current assets 193 484
Payments for loans granted (1 100 ) (436 )
Proceeds from loans granted and lease contracts 997 469
Interests from loans received 359 257
Revenues from sale of a subsidiary 2 211 -
Dividends received from investment 1 033 28
Other payments/proceeds for investing activities 134 (109 )
Net cash flow from investing activities (10 117 ) (15 379 )
CASH FLOWS FROM FINANCIAL ACTIVITIES
Proceeds from loans received 17 154 14 971
Payments for loans received (16 892 ) (14 553 )
Payments under to lease contracts (176 ) (157 )
Interest, fees and commissions paid (73 ) (95 )
Dividends paid (12 809 ) (11 721 )
Other payments/proceeds for financial activity 174 (11 )
Net cash flow from financial activities (12 622 ) (11 566 )
Net increase/decrease in cash and cash equivalents 4 297 4 598
Cash and cash equivalents at a beginning of the period 38 214 33 616
Cash and cash equivalents at the end of the period 42 511 38 214
Date: 18.04.2021
Prepared by: Kremena Dulgerova
CONSOLIDATED CASH FLOW STATEMENT
STARA PLANINA HOLD PLC
Manager: Vasil Velev
For the period ended 31 December 2021
Digitally signed by Kremena
Gantcheva Dulgerova
Date: 2022.04.27 15:57:59
+03'00'
Digitally signed by Vasil Georgiev
Velev
Date: 2022.04.27 16:04:05 +03'00'
KATYA
RAYKOVA
ZLATAREVA
Digitally signed by
KATYA RAYKOVA
ZLATAREVA
Date: 2022.04.28
12:24:50 +03'00'
BGN’000s
Share
Capital
Premium
reserve
Revaluation
reserve
Other
reserves
Retained
earnings
Total
Non-
controlling
interest
Balance 01 January 2020 20 724 1 178 19 032 19852 39 940 100 726 88 466
Net result for the period - - - -
Profit sharing for dividents - - - - (5 090 ) (5 090 ) (8 470 )
Other profit sharing - - - - (514 ) (514 ) -
Revaluation of financial assets - - 140 - - 140 162
Other changes in equity - - (72 ) (227 ) (92 ) (391 ) (764 )
Balance 31 December 2020 20 724 1 178 19 100 19 625 42 340 102 967 92 219
Balance 01 January 2021 20 724 1 178 19 100 19 625 42 340 102 967 92 219
Net result for the period - - - -
Profit sharing for dividents - - - - (5 163 ) (5 163 ) (9 932 )
Other profit sharing - - - 342 (1 042 ) (700 ) (161 )
Revaluation of financial assets - - 6 091 - - 6 091 672
Other changes in equity 1 - (292 ) (1 929 ) 1 536 (684 ) (82 )
Balance 31 December 2021 20 725 1 178 24 899 18 038 50 725 115 565 99 422
Date: 18.04.2021
Prepared by: Kremena Dulgerova
Manager: Vasil Velev
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the period ended 31 December 2021
STARA PLANINA HOLD PLC
Digitally signed by Kremena
Gantcheva Dulgerova
Date: 2022.04.27 15:58:13
+03'00'
Digitally signed by Vasil
Georgiev Velev
Date: 2022.04.27 16:04:21
+03'00'
KATYA
RAYKOVA
ZLATAREVA
Digitally signed by
KATYA RAYKOVA
ZLATAREVA
Date: 2022.04.28
12:25:21 +03'00'
To the Annual Consolidated Financial
Statements as of 31.12.2021
GENERAL INFORMATION
STARA PLANINA HOLD Plc was incorporated in Bulgaria on 27.09.1996 for an unlimited period of
time. The Holding is a successor of Central Privatization Fund AD. On 19.12.1997 Central Privatization
Fund AD was renamed to Central Fund Hold Plc, and since 30.04.1999 the company has been operating
under its current name.
Stara Planina Hold Plc is registered in the Registry Agency under UICode 121227995.
The company is not registered under the VAT Act.
Stara Planina Hold Plc is a public company within the meaning of Art. 110 of the Public Offering of
Securities Act.
The registered seat and business address are in the city of Sofia, Izgrev district, 20 Frederic Joliot-Curie,
9th floor; telephone/fax: 02/9634159; 9630577; 9633754; e-mail office@sphold.com, website
www.sphold.com.
The scope of business activity of the holding is: acquisition, management, evaluation and sale of
shareholdings in Bulgarian and foreign companies; acquisition, management and sale of bonds,
evaluation and sale of patents, transfer of licenses for use of patents, belonging to companies where the
holding company has participations; financing companies where the holding company has participations;
other commercial operations, except those prohibited by law.
The registered capital of Stara Planina Hold Plc is BGN 21 000 000 (twenty-one million) leva divided into
21 000 000 (twenty-one million) non-preferred registered voting shares with a nominal value of BGN 1.00
each.
The management body of the company is the Board of Directors with the following members:
Evgeniy Vasilev Uzunov – Chairman of the Board of Directors and representative of the company;
Vasil Georgiev Velev – executive member of the Board of Directors and representative of the
company;
Finance Invest OOD, having its registered seat and business address in the town of Plovdiv, 14,
Maria Luiza Blvd., UIC 115016144, represented for the purpose of performing its obligations as a
member of the Board of Directors by the legal representative Spas Borisov Videv;
Stefan Atanasov Nikolov – member of the Board of Directors.
Shareholders holding more than 5 % of the voting rights as of 31.12.2021:
Potbul Invest Foundation - 4655400 shares, representing 22.17 % of the capital;
Garant-5 Ltd - 2595972 shares, representing 12.36 % of the capital;
ZUPF Allianz Bulgaria AD - 1376254 shares, representing 6.55 % of the capital.
2.
LIST
of subsidiaries included in the consolidated financial statements
Enterprise
Location
Share capital and voting
rights
Hydraulic elements and systems Plc
Yambol
64.53%
Elhim-Iskra Plc
Pazardzhik
51.40%
Fazan Plc
Ruse
92.65%
SPH Invest Jsc
Sofia
99.39%
LIST
of associates included in the consolidated financial statements
Enterprise
Location
Share capital and voting
rights
M+C Hydraulic Plc
Kazanluk
30.61%
Bulgarian Rose Plc
Karlovo
49.99%
Boryana Jsc
Cherven Briag
50.00%
Ustrem Jsc
Svishtov
45.00%
On November 17, 2021 Stara Planina Hold Plc sold its shareholding of 33 492 shares, each with a
nominal value of BGN 2.00, representing 95.69 % of the capital of Vinprom JSC, UIC: 104055430,
Veliko Tarnovo, at the price of BGN 2 250 000. The shareholding in Vinprom JSC was acquired by
Stara Planina Hold Plc in April 2017 at the price of BGN 1 953 595 and for the period until the sale
the holding has received income from its investment in the amount of BGN 1 004 760.
Explanatory information
1. Taking into account the influence of the holding on the decision-making process with regard to the
associates’ operations and the need to provide more comprehensive and correct information to the
shareholders, investors and all interested parties, since 01.01.2011 Stara Planina Hold Plc has been
applying accounting policies to further facilitating investors in making well-informed investment
decisions.
2. The current financial statements of the companies in the Group are consolidated with the current
financial statements of the parent company as of the same date - 31.12.2021.
3. The Investments in the companies of the Group are reported and presented under the acquisition
cost method in the Separate Financial Statements of the Stara Planina hold Plc.
4. Data in the consolidated statement of financial position for the previous reporting period are stated
based on the data presented in the consolidated statement of financial position as of 31.12.2021
prepared on the basis of the financial statements of the companies in the Group as of the same date.
5. Consolidation of the Separate Financial Statements of companies in the Group and the Separate
Financial Statements of the parent company has been made successively for the assets, liabilities,
equity, incomes and expenses.
6. In the consolidation procedure the value of equity shares of the companies in the Group held by
the parent company has been eliminated successively in relation to:
• registered capital;
3.
• reserves;
• accrued profit / loss.
7. The consolidated profit of the Group is BGN 13 054 thousand.
8. In the consolidated statement of financial position, the non-controlled participation amounts to
BGN 99 422 thousand.
9. In the consolidated statement of comprehensive income in the Group under the section “Profit”,
the amount not belonging to the Group is indicated separately and amounts to BGN 16 706 thousand.
Statement of Compliance
Stara Planina Hold Plc presents its consolidated financial statements in accordance with the
International Financial Reporting Standards (IFRS) and retains their use as an applicable basis in
the preparation of the consolidated financial statements for the current period. The company
observes the principles and provisions of the Accountancy Act.
Basis for preparation of the financial statements
The financial statements of Stara Planina Hold Plc have been prepared on the historical cost basis, except
for the following items, which are being measured under an alternative basis at each reporting date:
Position
Equity securities, reported at fair value through other comprehensive income.
Measurement base
Fair value.
Functional currency and presentation currency
These financial statements are presented in Bulgarian levs which is the functional currency of the
Company. All data for 2021 and 2020 are presented in thousands of BGN unless otherwise stated at the
respective place. The income per share is calculated and disclosed in BGN.
Upon initial recognition, a foreign currency transaction is recorded in the functional currency and the
exchange rate at the time of the transaction or operation published by the BNB is applied to the foreign
currency amount. Cash, receivables and payables, such as monetary reporting items denominated in
foreign currency, are valued in Bulgarian levs using the final exchange rate of the BNB.
In preparing these financial statements, the management has made valuations, estimates and
assumptions that affect the application of accounting policies and the reported amounts of assets and
liabilities, income and expenses. The actual result may differ from these estimates.
Estimates and key assumptions are currently under review.
The Company presents comparative information in these financial statements for the previous year, as
the articles on the Statement of Financial Position and the Statement of Changes in Equity, as well as
the notes thereto, include comparative data as of the b
Statement on the impact of Covid-19
This statement is set out under the recommendation of ESMA, dated March 11th, 2020 addressed to the
financial market participants in relation to the influence of Covid-19.
We have undertaken measures that the companies in the group have been implementing sustainably for
a second year in order to guarantee the health and working capacity of the employees, continuity of our
business and the activities related to the regulatory obligations. For the period after 13.03.2020 until the
end of the reporting financial period of 2021 the companies in the group of Stara Planina Hold Plc have
continued their activities with variable deviations from the established mode of operation, in compliance
with the precautionary measures for limiting the spread of the Covid-19 infection.
According to information from the ECB's economic bulletin of March 2022, the Governing Council of the
ECB considers that the risks to the economic outlook have increased significantly and tend to
overestimation. While the pandemic risks decrease, the war in Ukraine could have a stronger impact on
the economic sentiment and worsen supply-side constraints. The future trajectory of energy prices and
the pace at which supply difficulties are being overcome pose risks to the recovery and to the inflation
forecast.
4.
The information we receive from our clients and partners in the country and Europe also continues being
conditioned by the Covid-19 pandemic and the respective measures taken by the governments in terms
of industry. The effect of the restrictive measures taken in relation to Covid-19 will continue affecting
economic sentiment and global, regional and local business conditions. Our expectations are that the last
wave of Covid-19 in our country, as well as each subsequent one, will have a negative impact on the
planned business processes.
The management believes that potential adverse developments do not represent a material uncertainty
for the application of the going concern principle. The management has reasonable expectations that the
Company has sufficient resources to continue the normal development of the activity in the foreseeable
future and does not intend to significantly limit or discontinue the activity. For this reason, in preparing the
financial statements, the Company continues to apply the going concern principle
ACCOUNTING POLICY
Financial instruments
Non-derivative financial instruments
The participation of Stara Planina Hold Plc in subsidiaries and associates is reported in accordance
with the provisions and requirements of IFRS 10: Consolidated financial statements and IAS 28:
Investments in Associates and Joint Ventures.
Subsidiaries are all enterprises under the control of the company. The control over the subsidiaries
finds expression in the possibility of the company to manage and define the financial and business
policies of the subsidiaries so as to benefit from their operations. In the separate financial statements
of the company, investments in subsidiaries are accounted for at their cost price.
The Company recognizes dividend payments from subsidiaries in its profit or loss in the separate
financial statements when the right to receive the dividend is established.
Associates are those entities over which the company is able to exercise significant influence but
which are neither subsidiaries nor jointly controlled entities. Investments in associates are accounted
for using the cost price method. The Company recognizes dividend payments from associates in its
profit or loss in the separate financial statements when the right to receive the dividend is established.
Classification and measurement of investments in equity instruments (minority interests)
Investments in equity instruments (minority interests) are classified as reported at fair value under
other comprehensive income (FVOCI) in accordance with IFRS 9. All changes in the fair value of
these investments will be presented in other comprehensive income and no impairment losses will
be recognized in the profit or loss and the amounts accumulated in other comprehensive income will
not be reclassified in the profit or loss after their derecognition (in case of any future sale of the
investments).
Income from dividends will continue being recognized in the profit or loss for the period.
Loans granted, commercial and other receivables are classified in the category reported at
“amortized cost” in accordance with IFRS 9.
These assets are subsequently measured at amortized cost using the effective interest method.
Amortized cost is reduced with the impairment of losses. Interest income, foreign exchange rate
gains and losses and impairment are recognized in the profit or loss. Any profit or loss from
derecognition is recognized in the profit or loss.
Impairment of financial assets
The 'expected credit loss' impairment model applies to financial assets measured at amortized cost
or fair value through other comprehensive income, excluding investments in equity instruments and
contractual assets. Pursuant to IFRS 9, losses are measured under one of the following two bases:
1. expected credit losses for the next 12 months after the date of the financial statements or 2.
expected credit losses for the entire term of the financial assets. The first basis applies when the
credit risk has not increased significantly from the date of the initial recognition to the date of the
financial statements (and the credit risk is low as of the date of the financial statements), otherwise
the second basis applies. The Company applies the second basis for commercial receivables and
contractual assets (whether with or without a significant financial component). The increase in the
5.
credit risk is monitored and defined on the basis of information on risk factors such as overdue
liabilities, significantly worsen financial standing of the debtor and others.
As a result of the application of IFRS 9, the Company has adopted subsequent amendments to IAS
1 - Presentation of Financial Statements which requires that impairment of financial assets be
presented as a separate item in the profit or loss account and the other comprehensive income.
Derivative financial instruments
The company has not used derivative financial instruments for hedging against currency, interest
rate and cash flow risks.
Tangible fixed assets
The company has adopted a threshold of significance in the amount of BGN 700 under which
tangible assets, regardless if fixed or not, are accounted for as current expenditures upon acquisition.
Tangible fixed assets are initially recognized at acquisition price, which includes the purchase price
(including duties and non-recoverable taxes) and all direct costs. Direct costs are those necessary
to turn the asset into working condition in accordance with its intended use.
Following the initial recognition, each individual tangible fixed asset is accounted for at acquisition
price less accrued depreciation and accumulated impairment loss.
Subsequent costs related to a separate tangible fixed asset are used to adjust the book value of the
asset when it is probable for the economic benefits of the company to exceed the initially measured
standard efficiency of the existing asset. All of the other subsequent expenses are recognized as
such during the period when they have incurred.
Tangible fixed assets are written off upon their sale or when no economic benefits are expected from
their use or upon release of the asset.
When a tangible fixed asset is transformed into a commodity, no profit or loss is reported. The
acquisition price of the commodity shall be the book value of the tangible fixed asset which is written
off.
When a tangible fixed asset is acquired as a result of a complete or partial exchange for another
dissimilar in nature asset or other assets, the acquisition price will be defined under the fair value of
the asset received which is equivalent to the fair value of the given asset, adjusted with all transferred
cash. The difference between the acquisition price of the asset received and the book value of the
exchanged asset, along with all transferred cash shall be reported as profit or loss.
Amortized cost of tangible fixed assets is equal to their book value. Tangible fixed assets are
amortized on a straight-line basis according to their expected useful life (service life). Service life is
defined according to the period during which it is assumed that the depreciable assets will be used
by the company taking into account their probable physical wear and obsolescence.
The terms are defined as follows:
Buildings – 25 years
Plant and equipment – 3.33 years
Motor vehicles – 4 years
Computers – 2 years
Other fixed assets – 6.66 years
Impairment of assets
Depreciable assets are regularly tested for impairment when events or changes in circumstances
indicate that the book value of the asset may not be recoverable.
The depreciation loss from an asset is recognized immediately as a current operating expense. In
case that after a depreciation of an asset its recoverable value exceeds the book value, a
depreciation loss recovery shall be reported as a current operating income up to the amount of the
previous depreciation which has been reported as a current operating expense.
6.
Assets for which impairment loss has been recognized are subsequently tested for a possible
recovery of the impairment at each date of preparation of the financial statements.
Intangible fixed assets
The Group recognizes identifiable non-monetary assets without physical substance as intangible
assets when they meet the definition of an intangible asset and the recognition criteria set out under
IAS 38.
Intangible fixed assets are initially recognized at acquisition price, which includes the purchase price
(including duties and non- recoverable taxes) and all direct costs. Direct costs are those necessary
to turn the asset into working condition in accordance with its intended use. Direct costs are the costs
necessary to render the asset operational as per its intended use.
Intangible assets subject to amortization are amortized on a straight-line basis during their expected
useful life.
Inventory
Inventories are initially measured at their delivery cost which is the sum of all purchase and
processing costs, as well as other expenditures incurred in relation to the delivery to their current
location and condition.
The valuation method of inventories when they are written off is "weighted average price".
Inventories are valued at the lower of the delivery cost and net realizable value and the difference
shall be accounted for as other current operating expenses. At the end of the reporting period, the
net realizable value of inventories will be assessed. The net realizable value is the estimated selling
price within the course of normal business operations less the approximately measured sales costs.
Receivables
Receivables are presented and reported at their nominal value, reduced by the amount of impairment
for uncollectible amounts. An estimate for doubtful and uncollectible receivables is made when
collection of the entire amount or part thereof is highly uncertain. Uncollectible receivables are written
off in full when legal grounds for this are established.
Commercial receivables are classified at amortized cost in accordance with IFRS 9.
Cash
Cash funds are short-term financial assets in the form of cash and/or cash equivalents. Cash means
available cash in hand or deposits at demand. Cash equivalents are short-term highly liquid
investments which are easily transferable into respective cash amounts and which bear insignificant
risk from fluctuations in their value.
Cash and cash equivalents include cash in hand and current accounts. For the purpose of preparing
the cash flows statements, cash receipts from customers and cash payments to suppliers are
reported as gross amounts, VAT (20%) included.
Cash funds are classified at amortized cost under IFRS 9.The company considers that there is no
need for impairment of available cash due to the fact that cash is held in a financial institution and
has low credit risk.
Liabilities
Payables to suppliers and other current liabilities in BGN are accounted for at acquiring price which
is assumed to be the fair value of the transaction. Liabilities denominated in foreign currency are
valued in BGN at the exchange rate of the BNB on the day of their occurrence, and are revalued at
the closing exchange rate of the BNB as of December 31, 2021.
Liabilities for dividends are recognized following a decision of the General meeting of shareholders.
Retirement benefits and other liabilities
The employer provides compulsory insurance of the employed personnel for retirement, healthcare
and unemployment.
7.
Social security and retirement plans offered by the company in its capacity of an employer are based
on the Bulgarian legislation and constitute predetermined fixed instalments.
Short term employee benefits (due within 12 months following the end of the period when earned)
are recognized as expenses in the income statement during the period wherein the work has been
performed and as a current liability (less all amounts paid out and any due deductions) in an
undiscounted amount. As of the date of the annual financial statements the company makes an
estimate of the expected costs for the leave subject to compensation to be accumulated which is
expected to be paid as a result of the unused right to accumulated leave. The assessment includes
the costs for remunerations and the amounts for the compulsory social insurance, due by the
employer, in an undiscounted amount.
Provisions
Provisions are recognized when the company has a current legal or constructive obligation resulting
from a past event the repayment of which will require expenditure of economically-beneficial
resources and it is possible to make a reliable estimate of the amount for repayment of the obligation.
When a discount is used, the reported amount of the provision will be increased in each period in
order to reflect the expired time. Such an increase will be recognized as a financial expenditure.
A contingent liability is disclosed in the statement unless the probable need for cash outflows,
including economic benefits to repay the obligation, is deferred.
Temporary tax differences
Temporary tax differences are accrued using the balance sheet method for all temporary differences
between the tax base of the assets and the liabilities and their book value, measured for accounting
purposes. When calculating temporary tax differences, the applicable tax rates for the periods of
reverse occurrence are used. When calculating temporary tax differences, tax rates are used which
refer to the periods of reverse occurrence of the temporary tax differences.
The main temporary differences result from impairment of receivables, revaluations under fair value
and accrued provision expenses.
Recoverable temporary tax differences arising from the transfer of unused tax losses from previous
periods are recognized only when it is probable that future taxable profits will be available against
which the losses can be utilized.
Recognizing income and expenses
IFRS 15 creates a comprehensive framework for defining whether, to what extent and when
revenues shall be recognized. Pursuant to IFRS 15, revenue is recognized when a customer obtains
control over the goods or services. Defining the time when the control is transferred - at a particular
point in time or over time requires judgment.
Interest income is recognized on a current basis in proportion to the time base that takes into account
the effective income from the asset.
Operating expenses are accrued at the time of their occurrence, regardless of the cash receipts and
payments. Reporting and recognition of expenses is performed in compliance with the requirement
for a causal link between income and expenses.
Related parties
For the purpose of preparing these financial statements, members of the Board of Directors have
presented in the annual report the legal entities related to them and controlled by them. Related
parties to the company are the subsidiaries and associates.
Changes in the related parties to Stara Planina Hold Plc are being followed for the entire reporting
period and for the previous reporting period, as far as this information concerns reporting of
transactions and events in the financial statements.
The Board of Directors of Stara Planina Hold Plc has adopted procedures to avoid and disclose
conflicts of interest. They impose obligations for the members to avoid and not to admit actual or
potential conflicts of interest and, if necessary, to immediately disclose conflicts of interest and
8.
provide shareholders with access to information on transactions between them and the company or
any related party.
During the reporting period members of the Board of directors and parties related to them have not
entered into agreements with the company under terms beyond the regular business operations or
deviating significantly from the market conditions.
There are no transactions beyond the regular business operations of the issuer or deviating
significantly from the market conditions.
Transactions between Stara Planina Hold Plc and related parties during the reporting period include
mostly the loans provided to subsidiaries and associates.
Loan agreement dated 25.04.2019 granting Fazan Jsc the amount of BGN 407 000 with maturity until
25.12.2023 at 2.5 % annual interest rate.
Loan agreement dated 09.01.2020 granting Fazan Jsc the amount of BGN 550 000 with maturity until
08.01.2024 at 2.5 % annual interest rate.
Loan agreement dated 16.05.2016 granting Boryana Jsc the amount of up to BGN 500 000 with maturity
until 16.05.2022 at 3 % annual interest. Balance at end of the period BGN 470 000.
Loan agreement dated 22.01.2021 granting Boryana Jsc the amount of up to BGN 200 000 with maturity
until 31.12.2021 at 3 % annual interest. Balance at end of the period BGN 50 000.
Loan agreement dated 18.05.2018 granting Ustrem Jsc. the amount of BGN 100 000 with maturity until
18.05.2022 at 3% annual interest. Balance at end of the period BGN 83 000.
Loan agreement dated 29.01.2020 granting Ustrem Jsc. the amount of BGN 75 000 with maturity until
29.07.2022 at 3% annual interest.
Loan agreement dated 29.03.2021 granting Ustrem Jsc. the amount of BGN 200 000 with maturity until
29.03.2023 at 2.5% annual interest.
Events after the balance sheet date
Events, both favorable or unfavorable, that occur between the end of the reporting period and the
date that the financial statements are approved for issuance, may be: (a) adjusting events – events
that provide further evidence on conditions that existed on the date of the annual financial
statements, and (b) non-adjusting events – events that are indicative of conditions after the date of
the annual financial statements.
The Company adjusts recognized amounts or recognizes amounts which have not been recognized,
in case of reported adjusting events.
The Company does not adjust recognized amounts or does not recognize amounts which have not
been recognized in case of reported non-adjusting events. They are only disclosed in the Notes to
the annual financial statements.
Financial risk management
The Management monitors the overall risk and finds ways to neutralize potential negative effects on
the company’s financial indicators.
Market risk includes three types of risk:
Currency risk - the risk that the value of a financial instrument will vary due to changes in exchange
rates.
Interest rate risk - the risk that the value of a financial instrument will vary due to changes in market
interest rates.
Price risk - this is the risk that the value of a financial instrument will vary as a result of changes in
market prices.
The main sales in the Group are realized in the European Union and from exports to third countries.
Payments are in euros and US dollars. The management monitors exchange rate movements and
takes measures to avoid the negative consequences as a result of their variance.
The interest-bearing financial instruments of Stara Planina Hold Plc are mainly the loans granted.
The majority of them have a fixed interest rate of 2.5 to 3% annual interest.
9.
Investments in subsidiaries and associates are accounted for and presented under the acquisition
price method.
The risk of changes in the market price of equity instruments arises from equity stocks classified as
reported under fair value in other comprehensive income (FVOCI) held for long-term investments.
Credit risk - Stara Planina Hold Plc has granted loans to companies in its portfolio which have a
longstanding and unblemished credit reputation which minimizes the credit risk.
Due to the nature of the financial instruments used by Stara Planina Hold Plc, the liquidity risk and
the interest rate risk of the cash flow are also minimized.
Approximate accounting estimates, fundamental errors and amendments to the accounting
policy
Estimates are subject to revision in case of changes in the circumstances they are based on or
resulting from further experience or subsequent developments. The effects of changes in the
accounting estimates are taken into account when defining the profit or loss, as follows:
a) For the period of the change - if the change affects only that period;
b) For the period of the change and future periods - if the change affects these periods as well.
The effect of the changes in the accounting estimate is included in the same entry of the
comprehensive income statement as previously used for the estimated value. The error related to
prior periods is reported during the current period by increasing or decreasing the retained profit
balance from previous years. The comparative information from the previous reporting period is
recalculated. When the decrease in retained earnings is greater than the balance of retained
earnings before the decrease, the difference is reported as an uncovered loss from previous years.
Changes in the accounting policy are to be made only when required by law, accounting standards,
or if the change will lead to a more adequate representation of the events or transactions reported
in the financial statements.
Changes in the accounting policy are to be applied retrospectively. Any adjustment due to the
change must be recorded as an adjustment to the balance of the retained earnings from previous
years. The comparative information must be recalculated. The difference resulting from the
recalculation of tax expenses in the income statement for the previous period shall be reported as
an adjustment to the retained earnings (uncovered loss). Changes in the accounting policy will not
be applied retroactively when the adjustment to the balance of retained earnings from previous years
cannot be reliably defined. Changes in the accounting policy arising from adoption of new accounting
standards or amendments or supplement to existing ones will be reported in accordance with the
requirements indicated in the new or amended accounting standard, if specified. When the
respective accounting standard does not stipulate specific requirements for reporting changes in the
accounting policy, they are to be reported in accordance with IAS 8. During the reporting period, the
accounting policy has not been changed.
No errors have been found for the current and previous reporting periods. Therefore, changes due
to errors are not reported.
10.
NOTES UNDER THE STATEMENT OF FINANCIAL STANDING
(In all applications amounts are shown in thousands BGN unless otherwise stated)
Note 1
Property, plant and equipment
Property,
plant and
equipment
Land
Buildings and
constructions
Machinery
and
equipment
Facilities
Vehicles
Office
fittings
Expenses
for
acquisition
and
liquidation of
assets in a
business
way
Others
Total
Book value
as of
31.01.2021
5642
56226
181704
12272
4372
3315
7313
1524
272368
Received
during the
period
7
294
12428
1906
632
119
14013
9
29408
Out of use
7
1044
453
89
15193
157
16943
Depreciation
accrued in
the
beginning of
the period
24628
147396
6413
3609
2625
724
185395
Depreciation
accrued
during the
period
2056
11685
519
258
211
183
14912
Depreciation
written off
during the
period
981
449
89
159
1678
Balance as
of
31.12.2021
5642
29836
34988
7246
1133
598
6133
628
86204
Note 2
Intangible assets
Intangible assets
Rights of ownership
Software
R&D
products
Others
Total
Book value as of
31.01.2021
1199
4047
1444
558
7248
Received during
the period
448
173
6
627
Out of use
435
19
454
Depreciation
accrued in the
beginning of the
period
1123
3710
915
473
6221
Depreciation
accrued during
the period
19
341
27
22
409
Depreciation
written off during
the period
435
19
454
Balance as of
31.12.2020
57
444
675
69
1245
11.
Note 3
Investments in Other Companies
Company name and registered seat of
the companies where the investments
were made
Fair
value
Percentage
of the
capital of
the other
company
Investment
in
securities
admitted
to trading
on a stock
exchange
Investment in
securities not
admitted to trading
on a stock
exchange
International Asst Bank JSC, Sofia
15924
12,97
15924
ZAD Asset Insurance JSC, Sofia
7048
40,00
7048
Hydraulic elements and systems Plc,
Yambol
9793
8,28
9793
Elhim - Iskra Plc, Pazardzhik
160
0,80
160
Leasing Company JSC, Sofia
712
5,00
712
SPH Trans Ltd., Sofia
39
95
39
Medical Center “Center for Prevention
of the health” Ltd, Sofia
2
25,00
2
Progres JSC, Stara Zagora
335
4,00
335
Dionisii Jsc, Nikopol
99
68,99
99
TOTAL
34 112
9953
24159
Investments in equity instruments (minority shares), pursuant to IFRS 9 are classified as reported at fair
value through the statement of other comprehensive income (FVOCI). Market valuation of the shares is
prepared at the end of the year.
Note 4
Other financial assets
31.12.2021
31.12.2020
Additional cash contribution in accordance
with art. 246, para 2, item 4 of Commercial Act
1218
1218
In 2016 an additional monetary contribution was made by Stara Planina Hold Plc in accordance with art.
246, para 2, item 4 of Commercial Act in the amount of BGN 609 thousand in the Reserve fund of Asset
Insurance AD - a minority interest company in the portfolio of Stara Planina Hold Plc portfolio.
In 2016 an additional monetary contribution was made by HES Plc in accordance with art. 246, para 2,
item 4 of Commercial Act in the amount of BGN 609 thousand in the Reserve fund of Asset Insurance
AD - a minority interest company in the portfolio of Stara Planina Hold Plc portfolio.
Note 5
Long-term trade and other receivables
31.12.2021
31.12.2020
Trade loans
8400
8977
Financial lease receivables
86
Others
1567
659
Total
9967
9722
Note 6
Inventory
31.12.2021
31.12.2021
Materials
26996
19137
Finished goods
6490
7780
Goods for resale
1483
834
12.
Work in progress
11521
11359
Others
2
24
Total
46492
39134
Note 7
Current trade and other receivables
31.12.2021
31.12.2020
Trade accounts receivables
41732
24299
Advance payments
705
777
Trade loans
1140
600
Court receivables
1
19
Recoverable taxes
2593
1416
Others
225
2338
Total
46396
29449
Note 8
Cash and cash equivalents
31.12.2021
31.12.2020
Cash
101
114
Cash in banks
40909
38086
Restricted cash
1495
8
Cash equivalents
6
6
Total
42511
38214
Note 9
Share capital and Reserves
31.12.2021
31.12.2020
Share capital
21000
21000
Treasury shares
-275
-276
Premium reserves when issuing securities
1178
1178
Reserve from subsequent valuations of assets
and liabilities
24899
19100
General reserves
13341
13336
Special reserves
41
Other reserves
5731
6248
Reserves from transformation
-1034
Undistributed profit
38099
34777
Loss not covered
-428
-533
Current year profit (loss)
13054
8096
Total
115565
102967
The negative reserve for transformation is formed by the change of the legal form of Ustrem Ltd. into
Ustrem Jsc as a result of a decision of the general meeting of the partners of Ustrem Ltd. Pursuant
to this decision, a new amount of the share capital of the transformed company Ustrem Jsc in the
amount of BGN 2 312 thousand was determined. The increase is based on a market valuation of the
company. The increase of the share capital compared to the previous period is by BGN 2 299
thousand. There is no change in the structure of the capital, which is distributed among the owners,
holding the capital. The owners of the capital of the transforming company are also owners of the
newly formed company in the same proportion of the owned capital distributed among them.
13.
Note 10
Long-term trade and other liabilities
31.12.2021
31.12.2020
Due to related parties
347
233
Due to banks under loans received
813
710
Due under trade loans
64
109
Due to staff upon leave
2283
1905
Liabilities on deferred taxes
1751
1601
State financing
1279
1485
Provisions
200
250
Others
99
112
Total
6836
6405
Note 11
Current trade and other liabilities
31.12.2021
31.12.2020
Due for dividends
6829
6316
Due to banks under loans received
682
667
Trade loans
126
140
Trade accounts payables
23765
15858
Advance payments
2220
796
Salaries payable
7531
5158
Social security payable
1749
1163
Tax liabilities
1586
1162
Others
1141
967
Provisions
86
209
Deferred revenues
139
112
State financing
968
968
Total
46822
33516
Off-balance sheet liabilities
An agreement for undertaking a subordinated contingent liability has been concluded between Stara
Planina Hold Plc and ZAD Asset Insurance AD. Pursuant to this agreement, Stara Planina Hold Plc shall
provide ZAD Asset Insurance AD, upon request and upon occurrence of an activating event, the amount
of up to BGN 294 thousand.
An agreement for undertaking a subordinated contingent liability has been concluded between HES Plc
and ZAD Asset Insurance AD. Pursuant to this agreement, HES Plc shall provide ZAD Asset Insurance
AD, upon request and upon occurrence of an activating event the amount of up to BGN 294 thousand.
NOTES UNDER THE COMPREHENSIVE INCOME STATEMENT
(In all applications amounts are shown in thousands BGN unless otherwise stated)
Note 12
Net sales revenues
31.12.2021
31.12.2020
Finished goods
266064
191136
Goods for sale
2160
2799
Services
2994
2363
Others
7148
3730
Total
278366
200028
Note 13
Other financial income
31.12.2021
31.12.2020
Interest revenue
242
249
14.
Dividend income
420
344
Gains from operations with financial assets and
instruments
254
3
Gains from foreign exchange operations
535
109
Other financial income
90
17
Total
1541
722
Note 14
Other financial expenses
31.12.2021
31.12.2020
Interest expenses
94
95
Losses from foreign exchange operations
172
636
Other financial expenses
165
344
Total
431
1075
Chief Accountant: Kremena Dulgerova Executive Director: Vasil Velev
Digitally signed by Kremena
Gantcheva Dulgerova
Date: 2022.04.27 15:58:41 +03'00'
Digitally signed by Vasil Georgiev
Velev
Date: 2022.04.27 16:04:50 +03'00'
CONTENTS
Introduction ........................................................................................................................................................ 2
I. Activity overview ............................................................................................................................................. 2
1. Indicators characterizing the main operational results ............................................................................... 2
2. Investment portfolio .................................................................................................................................... 3
3. Operational results ..................................................................................................................................... 3
4. Major indicators for financial and accounting analysis on a consolidated basis ........................................ 5
5. Risk factors for the activity of the Stara Planina Hold AD group ............................................................... 6
II. Consolidated Non-financial Declaration ...................................................................................................... 10
III. Important developments occurred since the beginning of the year ............................................................ 23
ІV. Expected development of the group .......................................................................................................... 24
V. Research and Development Activity ........................................................................................................... 25
Statement on the impact of Covid-19 ........................................................................................................... 27
VI. Company shares ........................................................................................................................................ 27
1. Own shares. Buy-back ............................................................................................................................. 27
2. Changes in the share price of the companies ......................................................................................... 27
3. Dividend policy ......................................................................................................................................... 29
VІІ. Financial instruments used by the enterprise ........................................................................................... 30
1. Accounting policy ..................................................................................................................................... 30
2. Financial instruments ............................................................................................................................... 30
3. Liquidity .................................................................................................................................................... 31
4. Exposure of the enterprise to price, credit, liquidity and cash flow risk ................................................... 31
VІІІ. Corporate Governance Declaration ......................................................................................................... 31
1. National Corporate Governance Code..................................................................................................... 31
2. Implementation of the National Corporate Governance Code ................................................................. 32
5. Information Art. 10 of Directive 2004/25/EC ............................................................................................ 37
6. Diversity policy ......................................................................................................................................... 38
7. Information on the Board of Directors ...................................................................................................... 38
ІХ. Additional information on Appendix 2 of Ordinance No 2 of the FSC ........................................................ 39
Media............................................................................................................................................................ 42
This document contains information regarding the published estimates feasibility, future period forecasts, as
well as data, which constitutes proprietary information pursuant to Art. 7 Regulation (EU) No 596/2017 on
market abuse. This information could have significant impact on the price of shares issued by the company.
2.
Introduction
The annual consolidated report on the activities of Stara Planina Hold Plc provides comments
and analysis of the financial statements and other material information on the financial standing and
operational results of the company, included in the consolidation as a whole. The report contains an
objective overview presenting faithfully and honestly the development and results of the activities of
the companies in the group of Stara Planina Group Hold Plc, together with a description of the main
risks they face. The Report includes the information required under Art. 45 of the Accountancy Act,
Art. 100n, para. 5 of the Public Offering of Securities Act (POSA), as well as Art. 11 of Ordinance №
2 of the Financial Supervision Commission.
STARA PLANINA HOLD PLC is a public company within the meaning of art. 110 of the
Public Offering of Securities Act. The company is successor of Central Privatization Fund AD
incorporated on 27 September 1996.
The holding is a parent company within the meaning of §1, item 18 of the Additional Provisions
of the Accountancy Act and holds shareholdings in the capital of industrial enterprises in various
fields of production. The company actively participates in the development of the Bulgarian industry
by achieving European and world level of quality and profitability.
I. Activity overview
1. Indicators characterizing the main operational results
Indicator (BGN’000s)
Y2019
Y2020
Y2021
Income from main business activity
224 409
200 028
278 366
Net profit from business activity
6 747
8 096
13 054
Amount of assets
225 266
235 107
268 645
Shareholders' Equity
100 726
102 967
115 565
Structure of the investment portfolio
The economic group of Stara Planina Hold Plc consists of the parent company and its
subsidiaries and associates. The investment portfolio of the holding is distributed mainly in the
following industries:
59.8
16.5
7.5
16.2
Machine Building
Electrical Engineering
Light Industry
Financial
3.
2. Investment portfolio
The participation of Stara Planina Hold Plc in subsidiaries and associates is reported in
accordance with the provisions and requirements of IFRS 10: Consolidated financial statements and
IAS 28: Investments in Associates.
The Company recognizes dividends from a subsidiary or associate company in the profit or
loss account in its separate financial statements when its right to receive the dividend is established.
Subsidiaries are all enterprises under the control of the company. The control over the
subsidiaries of the company is expressed in its ability to manage and define the financial and
operational policy of the subsidiaries so as to derive benefits as a result of their operations. In the
separate financial statements of the company, investments in subsidiaries are accounted for at their
cost value.
Associates are those enterprises over which the company is able to exercise significant
influence but are neither subsidiaries, nor jointly controlled entities. Investments in associates are
accounted for at their cost value.
Major investments in the portfolio of Stara Planina Hold Plc as of 31.12.2021:
Investments in subsidiaries
Hydraulic Elements and Systems Plc
64.53 %
Elhim Iskra Plc
51.40 %
Fazan Jsc
92.65 %
SPH Invest Jsc
99.39 %
Investments in associates
M+C Hydraulic Plc
30.61 %
Bulgarian Rose Plc
49.99 %
Boryana Jsc
50.00 %
Ustrem Jsc
45.00 %
Investments in other companies
Asset Insurance Jsc
20.00 %
Leasing Company Jsc
5.00 %
The subsidiary of Stara Planina Hold Plc SPH Invest Jsc holds 8.28 % of the capital of
Hydraulic Elements and Systems Plc and 0.8 % of the capital of Elhim-Iskra Plc.
Taking into account the influence of the holding on the decision-making process with regard
to the associates and the need to provide more comprehensive and correct information to the
shareholders, investors and all interested parties, as of 01.01.2011 Stara Planina Hold Plc applies
an accounting policy aimed at further facilitating investors in making a well-grounded investment
decision.
3. Operational results
As a holding company, Stara Planina Hold Plc does not perform independent commercial
operations and has only financial income. The consolidated activity results are formed mainly from
the results of the entities within the group which participate in the consolidated statements.
The structure of income within the last three years is summarized in the table below:
4.
INCOME (BGN’000s)
Y2019
Y2020
Y2021
Sales of finished goods
214 808
191 136
266 064
Sales of trading goods and services
5 611
5 162
5 154
Other incomes
3 990
3 730
7 148
Grants
768
11 494
4 633
Financial income
1 009
722
1 541
Total Income
226 186
212 244
284 540
The consolidated sales of the companies in the group as of 31.12.2021 reached BGN 278.4
million which is almost 40 % increase compared to sales in 2020 and an increase by 24 % compared
to the reported sales in the pre-crisis 2019.
Based on the results achieved in the first months of 2022 we expect sales in the first quarter
of 2022 to be 12.5 % higher than the business plan, exceeding BGN 88 million. With these results
we will report an increase by 39.4 % over the same period of 2021 and an increase by 57.2 %
compared to the first quarter of 2020. We expect sales revenues for the first half of 2022 to grow by
nearly 38.5% over the same period of the previous year and by 78.1 % compared to the first half of
2020.
Based on the results achieved in the first months of 2022 and the updated forecast for the
first half of 2022 we revise the sales forecast for 2022 upwards by 9 % compared to the business
plan and expect them to reach BGN 333.7 million.
Annual sales of all companies in the group of Stara Planina Hold group
(million BGN)
* forecast
218.1
242.7
224.4
200.0
278.4
333.7
2017 2018 2019 2020 2021 2022*
5.
Consolidated Net Profit (BGN’000s)
The net consolidated profit as of 31.12.2021 amounts to BGN 13 054 thousand which is an
increase by 61.24 % compared to 2020 and an increase by 93.48 compared to 2019.
Consolidated EBITDA (million BGN)
EBITDA is very important benchmark for any business group. The graph provides data on the
consolidated EBITDA of the Group of Stara Planina Hold Plc for the last 5 years.
The 2021 consolidated EBITDA amounts to BGN 48.6 thousand which is a 27.89 % growth
compared to 2020 and an increase by 42.52 % compared to 2019.
4. Major indicators for financial and accounting analysis on a consolidated basis
Profitability Indicator
31.12.2019
31.12.2020
31.12.2021
K1
0.067
0.079
0.113
K2
0.030
0.034
0.049
К1 Profitability of Shareholders’ equity ratio = Net profit / Shareholders’ equity
К2 Asset capitalization ratio = Net profit / Total assets
7158
7861
7556
6747
8096
13054
2016 2017 2018 2019 2020 2021
35.3
37.1
34.1
38.1
48.6
2017 2018 2019 2020 2021
6.
Profitability (yield) is the ability of the company to provide economic profit to its owners
through the skillful management of the assets, the shareholders’ equity and the borrowed capital and
the other liabilities. It is the most important indicator for the efficiency of the activity carried out by us.
Efficiency Indicator
31.12.2019
31.12.2020
31.12.2021
K3
1.095
1.124
1.131
K4
0.913
0.890
0.884
К3 Expenses efficiency ratio = Total income / Total expenses
К4 Income efficiency ratio = Total expenses / Total income
The analysis of the efficiency of the consolidated revenues and expenses for 2020 shows
that BGN 1.131 revenues were received per BGN 1.00 of the expenses. Revenues fully cover the
expenses on a consolidated basis which is a pre-condition for a positive cash flow from operational
activity, meeting the undertaken dividend commitments as well as for partial financing of the
companies in the portfolio of the Holding.
Liquidity Indicator
31.12.2019
31.12.2020
31.12.2021
K5
3.234
3.196
2.900
K6
1.099
1.140
0.908
К5 Total liquidity ratio = Current assets / Current liabilities
К6 Absolute liquidity ratio = Cash / Current liabilities
In 2021 again the Group of Stara Planina Hold Plc has been covering its current liabilities on
time with the available current assets. The liquid structure of current assets and liabilities allows part
of the funds to be directed to long-term financing of the companies under control.
Financial Autonomy Indicators
31.12.2019
31.12.2020
31.12.2021
K7
2.792
2.579
2.154
K8
0.358
0.388
0.464
К7 Financial Autonomy ratio = Shareholders’ equity / Borrowed capital
К8 Debt ratio = Borrowed capital / Shareholders’ equity
The financial autonomy ratios characterize the financial independence of Stara Planina Hold
Plc from creditors and the ability to meets its liabilities. We achieve good financial autonomy which
guarantees the interests of the owners.
5. Risk factors for the activity of the Stara Planina Hold AD group
A significant effect on the financial standing of Stara Planina Hold Plc has the direct
dependence on the financial condition of the subsidiaries and associates as far as their operations
are primarily export-oriented - mainly to the countries of the European Union.
Stara Planina Hold AD and the companies in the group are exposed to systematic risks
related to the market and the macroenvironment where they operate, therefore they cannot be
managed and controlled by the management team of the holding and the companies in the group.
The main systematic risks for the holding and the companies of the group in 2021 are:
Overall macroeconomic risk: Macroeconomic conditions and trends for the development of
the market and the macro environment where the companies operate represent a systematic risk
that cannot be managed and controlled by the corporate board of the holding and those of the
companies in the Group but has a significant impact on the activities and results of the enterprises.
7.
The macroeconomic forecasts of the ECB’s experts as of March 2022 foresee real GDP
growth of 5.4 % in 2021, 3.7 % in 2022, 2.8 % in 2023 and 1.6 % in 2024. Compared to the forecasts
as of December 2021, the outlook for 2022 and 2023 has been revised downwards. Real GDP
growth (excluding the euro area) is expected to grow to 6.3 % in 2021, then slow to 4.1 % in 2022,
to 3.6 % in 2023 and 2024. The revision reflects the expectations for a significant negative impact of
the military conflict in Ukraine on the economic activity and inflation through higher energy and stock
market prices, disruption of international trade and a weakening of confidence. The scale of these
consequences will depend on the development of the conflict, the impact of ongoing sanctions and
possible future measures.
Pursuant to data of the National Statistical Institute, in December 2021 the composite
indicator "business climate in industry" in the country decreased by 0.7 percentage points. The
assessments of industrial entrepreneurs for the current business situation of enterprises have
worsened and their expectations for the next six months are more reserved. At the same time, there
is a certain decrease of the production assurance with orders. The uncertain economic environment
and labor shortages continue being the main problems for business development in Bulgaria. In the
fourth quarter of 2021 the gross domestic product (GDP) of Bulgaria increased by 4.5 % compared
to the respective quarter of the previous year and by 1.0 % compared to the third quarter of 2021
according to the seasonally adjusted data.
EUROSTAT reported seasonally adjusted GDP growth of 0.3 % in the euro area and 0.4 %
in the EU in the fourth quarter of 2021, compared to the previous quarter, according to preliminary
data. In the third quarter of 2021, GDP grew by 2.3 % in the euro area and by 2.2 % in the EU.
Compared to the same quarter of the previous year, seasonally adjusted GDP grew by 4.6 % in the
euro area and by 4.8 % in the EU in the fourth quarter of 2021.
According to EUROSTAT data, in December 2021 seasonally adjusted industrial production
increased by 1.2 % in the euro area and by 0.7 % in the EU compared to November 2021, and
compared to December 2020 industrial production increased by 1.6 % in the euro area and by 2.5%
in the EU. The average annual industrial production for 2021 compared to 2020 increased by 7.8%
in euro area and by 8.2 % in the EU.
The ESI economic confidence indicator for the EU decreased further in the euro area in
January 2022, falling by 1.1 percentage points to 112.7 per month but overall remains high.
According to EUROFER (the European Steel Association), despite the ongoing pandemic
and disrupted supply chains, the steel sectors saw their third consecutive year-on-year growth (+
3.2%) in the third quarter of 2021. This trend peaked in the second quarter when they reached the
most serious growth rate of + 29.6%. This is due to the recovery of industry but is also the result of
a comparison with the record low levels of the second quarter of 2020. EUROFER forecasts that
total production of steel sectors will recover in 2021 (+7.6%, revised down from + 8.5% in the
previous forecast) and grow more moderately in 2022 (+ 4.0%) and 2023 (+ 2.4%).
According to EUROFER production in the mechanical engineering sector increased by +10.2
% in the third quarter of 2021. Recovery in orders and output is underway, but remains fragile and
exposed to risks. Among those, the general uncertainty of the economic recovery as long as the
COVID-19 threat is not over, and the ongoing global supply chain issues which are considerably
disrupting industrial activity in the EU as well as in other world economies. After a sharp fall (-11.9%)
in 2020 following flat growth in 2019, mechanical engineering output is set to rebound (+11.4%) in
2021 and, at a much more moderate pace in 2022 (+3.4%) and 2023 (+2.1%). Despite the heavy
toll of the pandemic, manufacturing has bounced back quickly - albeit at historically low levels of
output - due to the relatively strong reliance of the EU mechanical engineering sector on export
markets, the investment climate and global trade recovery.
8.
Production Growth Forecast
(Е-28, % change YoY)
Main task for the management of the companies in 2022 will be to increase profitability, keep
the existing and attract new customers with quality and timely delivered products.
The interest rate risk is related to changes in the levels of the market interest rates, which
could lead to an increase in the interest expenses and a corresponding decrease in the financial
result of the companies in the Group. In 2021 the BNB's key interest rate was 0% and remained
unchanged.
At its meeting in March 2022, the Governing Council of the ECB expressed its expectation
that key ECB interest rates would remain at their current levels in line with the strategic commitment
to stabilize inflation at 2% over the medium term.
The change in the interest rates also has an effect depending on the share of bank and
commercial loans taken. In 2021, Euribor continues maintaining negative positions with the annual
trend over the last 4 years being steadily downward. In November 2021 a strong upward trend was
reported, followed by a sharp decline in the last month of the year and at the beginning of this year
the trend recovered from the beginning of 2021.
12-month EURIBOR
(01.01.2020-31.12.2020)
11.4
3.6
2.1
3.2
4.7
3.4
2.1
11
1.2
2.4
3.8
4.5
3
-2.1
Y2021 1Q22 2Q22 3Q22 4Q22 Y2022 Y2023
Mechanical engineering Metal goods
9.
Stara Planina Hold Plc uses optimally the available resource in order to reduce the impact of
the interest rate levels.
Inflation risk is related to the probability for the purchase prices of goods and services to
increase significantly which leads to lower incomes, shrinking consumers’ demand and limiting the
country's economy growth. Inflation can directly affect the real return on a given investment since
with high inflation, even high nominal incomes can appear to have a negative nominal return.
The March 2022 macroeconomic projections of the ECB’s staff foresee annual inflation of
5.1% in 2022, 2.1 % in 2023 and 1.9 % in 2024 - significantly higher than in the previous December
forecasts, especially for 2022. ECB experts' macroeconomic forecasts for March 2022 forecast
annual inflation of 5.1% in 2022, 2.1% in 2023 and 1.9% in 2024, well above previous December
forecasts, especially for 2022. Inflation (excluding energy and food) is expected to average 2.6 % in
2022, 1.8 % in 2023 and 1.9% in 2024 which is also higher than in the December forecast. Inflation
in energy goods, which reached 31.7 % in February 2022, continues being the main reason for the
high rate of headline inflation and pushes up prices in many other sectors.
From the beginning of 2021 the companies in the Group of Stara Planina Hold Plc report a
significantly higher growth of prices (as opposed to the forecasted and reported inflation) of raw
materials and energy, which respectively affects production prices. By the end of 2021, the
accumulated growth of raw material prices for the companies in the Group compared to January
2021 in some cases reaches 60-70. The shock increase in the price of electricity for non-household
consumers from the middle of the year, the non-market mechanism for its determination, as well as
the unpredictability of the expected price growths represent a serious risk not only for the companies
in the holding's portfolio but also for the entire Bulgarian economy, including the health and social
spheres as well. Initiation and consistent implementation of sustainable policies, ensuring the
adequate functioning of the energy sector in the country, in addition to the already taken temporary
measures, are essential for both the industry and the social development of our country as a whole.
The systematic currency risk is the probability of a possible change in the currency regime of
the country (currency board) which would lead either to the devaluation of the lev or to the
appreciation of the lev against foreign currencies. According to the current legislation in the country,
the Bulgarian lev is fixed to the common European currency - euro in the ratio EUR 1 = BGN 1.95583
and the risk of depreciation of the lev against the European currency is minimal, but there is a risk
of adverse changes in the euro against other major currencies, such as the US dollar, the Swiss
franc, the British pound and others.
Given the export orientation of most of the companies in the group of Stara Planina Hold Plc,
changes in the values of currencies have a certain effect and are a risk factor for their activities.
Exchange rates affect revenues from sales abroad and the cost of deliveries of imported raw
materials. Due to the fact that these companies make their main payments in BGN and EUR and
realize the main part of their sales revenues in EUR, the impact of this risk on their activity is
significantly reduced. The management of the holding observes the movement of the exchange rates
and takes measures to avoid the negative consequences of their change.
Changes in the values of currencies have a certain effect and are a risk factor for the activity.
Exchange rates affect revenues from sales abroad and the cost of supplies of imported raw
materials. The average exchange rate of the euro against the US dollar in 2021 ranged from 1.11 to
1.22. The annual growth of the average monthly US dollar /BGN exchange rate at the end of 2021
is 7.6 % in favor of the lev.
Political risk: As of the date of preparation of this notification, the National Plan for
Reconstruction and Sustainability of the Republic of Bulgaria has already been approved by the
European Commission and should be approved by the Council of the EU within two months. Bulgaria
is expected to receive 6.3 billion euros under the European Mechanism for Reconstruction and
Sustainability to support economic recovery after the COVID-19 pandemic. Apart from the accession
of our country to the instruments for participation in the European Plan "Next Generation EU" and
the Multiannual Financial Framework of the European Union, the timely implementation of adequate
measures to ensure energy and resource security for the Bulgarian business and support the
10.
investment climate in the country in the continuing difficult geopolitical conflict is a significant factor
that determines the risk of slowing down the pace of recovery of our country.
The companies in the group of Stara Planina Hold Plc are also exposed to non-systematic
risks, directly related to the specific nature of their operations and the specific environment of the
industry to which they belong. Non-systematic risks include sectoral and company risks. Detailed
information on the impact of non-systematic risks on the activities of the companies in the group is
presented in their separate activity reports.
Major objective for the management of the companies in the group of Stara Planina Hold Plc
in 2022 again will be to increase profitability, maintain existing and attract new customers with quality
and timely delivery of products.
Influence of the main risks and uncertainties
Indications from our partners that machine-building industry, where the majority of the
holding's investments are concentrated, is overcoming the shock of the Covid crisis worldwide are
consolidated for another quarter. However, the consequences of the Covid crisis are proving to be
only one of the major problems the global economy, and the European economy in particular, is
facing. Disturbed supply chains, energy prices and the forced withdrawal of industrial production
from Asia to Europe appear to be serious challenges. The military conflict in Ukraine also has a
significant impact on the economic activity and inflation through higher energy and stock prices,
disrupting international trade and weakening confidence. The scale of the consequences will depend
on the development and duration of the conflict, the impact of the sanctions imposed and the possible
future measures.
Factors expected to affect costs in 2022 are market prices of raw materials and production
materials, regional market price of labor and energy prices. The non-market determination of a
significant part of the components of the electricity price in Bulgaria, the anti-market behavior of large
electricity producers and traders and the unpredictability of the expected increases in energy price
levels will pose a serious risk not only to the financial results of the Group but also on the whole
Bulgarian economy.
Economic growth continues being shaped by the pandemic, with many EU countries under
pressure from a combination of increased strain on healthcare systems and staff shortages due to
illness, precautionary quarantines or care duties. Logistic and supply bottlenecks, including
shortages of semiconductors and some metal commodities, are also set to keep weighing on
production, at least throughout the first half of the year. Last but not least, energy prices are now
expected to remain elevated for longer than expected thereby exerting a more protracted drag on
the economy and higher inflationary pressures.
Possible changes in the demand for the manufactured products are also risky due to changes
in the price levels, quality, reliability and solvency of the consumers, the technologies used and the
organization of the production.
Given the military conflict in Ukraine, as of the date of this report, we assess the risks
associated with securing the supply of materials, as well as the sale of finished products to partners
related to the affected region as highly increased. Along with the threat to the European and regional
stability, the situation puts an additional risk to the energy supplies and opportunities for sustainable
economic growth. We expect inflation in Bulgaria which accelerated for the 13th consecutive month
in March 2022 reaching 12.4% % compared to 10 % in February and 9.1 % in the previous month,
to continue rowing significantly due to the military conflict and geopolitical tensions.
II. Consolidated Non-financial Declaration
The consolidated non-financial declaration of Stara Planina Hold Plc and the companies in
the group has been prepared on the basis of the provision of art. 51 and according to the
requirements of art. 48 of the Accountancy Act. The declaration provides description of the policies
applied by the group with respect to activities conducted in in the field of ecology, social issues and
those related to employees, respect for human rights, fight against corruption and bribery. All
companies in the group strive to introduce and apply practices of good corporate governance and
social responsibility, applied by Stara Planina Hold Plc as a parent company.
11.
Good corporate governance and social responsibility policy
The corporate policy of Stara Planina Hold Plc is based on responsible, sustainable and
transparent management in accordance with the recognized standards and principles of good
corporate governance, changes in the regulatory, financial and economic environment where the
companies in the group operate and the principles of corporate social responsibility, reflecting the
responsibility of enterprises for their impact on society, environment and the economy as a whole.
Stara Planina Hold Plc and the public companies in the group have their own long-term good
corporate governance programs, subject to the principles of:
• responsibility and independence of the corporate Boards;
• shareholders’ rights protection and ensuring equal treatment of all shareholders;
• ensuring the recognition of the rights of persons interested in the management and
sustainable development of the company and promoting cooperation with them;
• ensuring timely and accurate information disclosure about the financial standing, operational
results, ownership and management of the company;
• effective control over the activities of the board of directors and its accountability to all
stakeholders.
The activities of the non-public companies in the group are in compliance with the main
priorities and directions of the corporate program of Stara Planina Hold Plc.
The corporate governance of the group is carried out in accordance with the constitution,
laws, by-laws and applicable regulations of the Republic of Bulgaria and the jurisdictions where they
operate. In all their actions the companies in the group of Stara Planina Hold Plc comply with the
relevant provisions of the current legislation and monitor the renewal and strict application of the
requirements concerning their operations.
1. Business model
Our mission
Stara Planina Hold Plc unites industrial enterprises dedicated to manufacturing of products
intended to meet various consumer and business needs. Our investment portfolio includes
companies operating in the machine building, electrochemical industry, in the field of finance and in
the field of perfumery, cosmetics and textile.
We participate in the development of the Bulgarian industry by achieving European and global
level of quality, productivity and profitability of our business. Our success is being shared among all
parties involved in its achievement.
Our values
We believe that the world will always need a modern and productive industry that in at the
core of wealth throughout the world.
We believe that the Bulgarian industry can rise to the challenge of accelerated development
imposed by the global economy by focusing on people's knowledge, the resultant innovations and
the investments that make them happen and we sustainably implement these policies in all
companies in the group.
We believe that achieving high goals is a reward for the work and collaboration of all parties
involved in our development and that it is possible to share our success on a large scale.
Our future
Stara Planina Hold Plc will continue managing its subsidiary companies setting high goals in
terms of quality, safety, productivity and profitability.
Our leading priority is to increase productivity along with increasing the satisfaction of our
employees and customers, as well as the quality of the products manufactured.
We will continue investing annually in technological renewal, innovation and infrastructure
12.
improvements, as well as in the development and training of our employees by providing
opportunities for their professional realization.
Important task for 2022 again will be to retain the major markets and expand the customer
base. This will require us to continue offering good prices, high quality and short delivery terms.
Under these conditions, achieving good financial results with the expected volume of
production is the main priority for the companies in the Group, thus guaranteeing the investments of
shareholders and increasing their well-being.
2. Organizational structure
The corporate governance of Stara Planina Hold Plc is a system with clearly defined
functions, rights and responsibilities at all levels - General Meeting of Shareholders, Board of
Directors, Audit Committee, employees. Each of the companies in the group of the holding has an
operating organizational structure compliant with the legal and organizational form of the company
and the nature of the respective business processes. All companies in the group follow the policies
of corporate governance and social responsibility of the parent company Stara Planina Hold Plc.
General Meeting of Shareholders - the main governing body, enabling shareholders in making
decisions on fundamental issues regarding the activities of Stara Planina Hold Plc and the joint stock
companies in the group.
Board of Directors - defines the strategy for development and management of the holding
and the companies in the group by resolving all issues within the scope of activities, except for those
that are the exclusive competence of the General Meeting of Shareholders. The Board of Directors
is elected by the General Meeting of Shareholders with two of the members being independent
directors.
In its capacity of a company of public interest and in accordance with the requirements of the
Independent Financial Audit Act, an audit committee has been established and operates in Stara
Planina Hold Plc.
Employees - Stara Planina Hold Plc has an average number of 7 employees under
employment contracts. The company has outsourced the legal services to a law firm. All company
employees have university degrees and adequate qualifications for the positions occupied.
A total of 2369 employees work for the enterprises in the Group of Stara Planina Hold Plc.
2283 of them or 88.18 % work in the three largest companies.
In 2021 the number of employees in the group of Stara Planina Hold Plc reported a slight
increase of 1.8 %. With these employees we report a significant increase in labor productivity which
is a result of the policy applied in the group of investing in people and in technological improvement
of the working environment.
Number of people employed by all enterprises of the Group of Stara Planina Hold Plc
* forecast
2143
2082
1943
2004
2089
2510
2477
2276
2318
2369
2018 2019 2020 2021 2022*
Total
Three the largest
enterprises
13.
Labor productivity per employee in the Group (thousand BGN)
* forecast
Against the background of the indicated increase in the number of employees in the group in
2021, labor productivity reported an increase by 35.91% compared to the previous 2020.
With the updated expected growth of sales revenues in 2022 by about 20 %, we anticipate a
minimal increase in the number of employees in 2022 by over 5 % with an expected growth of labor
productivity by over 30 % and an increase in the average remunerations in the enterprises in the
group of Stara Planina Hold Plc over 36 % on an annual basis.
3. Infrastructure
The production and administrative facilities of the enterprises are located on their own territory.
The infrastructure of the enterprises of the group consists primarily of:
• Technical infrastructure – includes equipment and machinery, storage facilities and transport
network on the territory of the enterprises
• Social infrastructure – includes activities on the physical working conditions, social
interactions, breaks and healthcare.
• Information structure – includes reliably built information bases.
• Sales infrastructure – The companies in the Group operate in the domestic market, in the
European Union and in third countries. The products of our companies are sold in more than 50
countries and are appreciated by customers such as Palfinger, Pinguely, Terex handlers,
Rostselmash.
4. Production
Low-speed, high-torque orbital hydraulic
motors
Hydrostatic power steering systems
Hydraulic valves, breaks and accessories for
them
Hydraulic piston cylinders
Hydraulic telescopic cylinders
Hydraulic plunger cylinders
Hydraulic rack cylinders
Starter batteries
Traction batteries
Stationary batteries
Production and repair of parts for grain
combines
Production and repair of parts for grain
cleaning machines
Perforated metal sheets
Spare parts and custom equipment
Metal items for furniture industry
Essential oils - rose oil; lavender oil
Natural flower waters
Concretes
Absolutes
Sauces and compositions
Perfumery cosmetics
Perfume compositions
Men's, women's and kid's socks
Sport socks
89.3
96.8
90.6
88.0
119.6
129.3
2017 2018 2019 2020 2021 2022*
14.
Children's tights
Women's top knitwear
Men's top knitwear
5. Raw materials used
Machine building - ferrous metals (steel and cast iron), sintered items, gaskets, springs,
sealing elements and other parts made primarily of polyurethane, fitting kits, packaging and auxiliary
materials. In very limited cases, non-ferrous metals are used. Sheet metal, rails, pipes, powder
coating, fixing elements and plastic elements.
Batteries - lead and lead alloys. The raw material is delivered in the form of blocks and is
stored on a designated site. Polypropylene and polyethylene are also used in the production of
rechargeable batteries for which there are no special transport and storage requirements, nor any
special requirements towards their suppliers.
Light industry - The main raw materials used in the production of rose oil and the perfume
industry are plants and herbs. In the production of vinegar are used quality wine material, apples
supplied from farmers, sugar, alcohol and yeast. The packages are made of PET.
Textile - Cotton and bamboo yarn, small percentages of lycra, polyamide and elastomer. Wool
and combined wool-acryl, wool-polyamide, cotton-acryl, cotton-viscose yarns.
Production inputs are accompanied by the necessary quality certificates.
The companies work primarily with suppliers and contractors that adhere to high
environmental standards and apply the best environmental management practices, including energy
efficiency and effective resource utilization, waste reduction and management.
6. Transport used for the delivery of raw materials and chemicals and for the sale of
production
For delivery of raw materials and chemicals and shipment of finished products is used road
and railroad, sea and air transport. The main criterion when choosing a forwarding company is the
transit time of transport and delivery, as well as strict compliance with safety standards and relevant
regulatory requirements.
A sustainable policy of the companies in the group is to partner with companies that have a
license for international and domestic transport, disposing with the necessary equipment and reliable
certificates to transport dangerous and specialized consignments.
7. Fuel and chemicals used
Natural gas - Mainly used for heating. Supplied to the production facilities over gas pipes that
are subjected to checks by the State Technical Supervision.
Fuels (petrol, diesel, propane-butane) fuels and lubricants. They are used mainly for the
purposes of in-house transport.
Hydraulic oils - Used as a production input for finished hydraulic products.
Concentrated sulfuric acid - Used for the production of batteries. Delivered by a specialized
transport and stored in specially constructed tanks.
Paints and coatings - Used in painting and galvanization processes. This includes varnished
polyurethanes, solvents, hardeners, epoxy primer, specific salts, sodium compounds, acids, etc.
Liquefied oxygen and carbon dioxide - Delivered by a specialized transport – tank trucks
operated by licensed companies holding special permits (ADR). They are stored in specialized
containers which are subjected to checks by the State Technical Supervision.
The STIO checks conducted throughout the year did not find any deviations.
Cleaning chemicals and detergents for textile items – perchlorethylene and silicone softener.
15.
Environmental protection
1. Description of policies and their objectives
Stara Planina Hold AD pays special attention to the impact on the environmental impact that
the productions of the enterprises in the group. They annually report on the assessment of the
environmental impact and the measures taken in this direction and annually make investments in
the implementation of the common corporate policy for transition to a cleaner and greener economy.
The main policies of the companies in the group are focused on compliance with the
environmental norms and standards for the production activities, reduction of harmful emissions from
electricity consumption through construction and commissioning of photovoltaic systems for
generating energy for their own needs and implementing other energy efficiency measures.
With regard to all new projects and investments of Stara Planina Hold Plc and the companies
in the group, including the purchase of new technical equipment, a preliminary assessment is made
on the environmental impact.
М+S Hydraulic Plc - The policy of the company on the environmental protection and
reduction of harmful environmental effects is an integral part of its Development Program. The
company has developed and has been implementing an Environmental Management Program and
for the measures aimed at reducing or eliminating the harmful impact, funds have been provided and
deadlines for their implementation have been set.
A separate Waste Management Program has also been developed. As a result, the
management of hazardous waste: oils, lubricating and cooling fluids, filtering elements, rechargeable
batteries, residues from lapping and grinding, etc. is at the necessary level. The constructed sites
for temporary storage of hazardous waste are maintained in good condition, contracts are in place
with companies certified by the respective Regional Environmental and Water Inspectorates for the
handling of such waste. A contract is concluded with ECOPACK - an organization for utilization of
packaging waste and thus the requirements arising from the Ordinance on packaging waste are
being fulfilled. For 2021 the fees paid to this organization amount to BGN 10.3 thousand.
The company has its own wastewater treatment plant, maintained in good technical condition.
The company carries out its own monitoring of water purity. The quality control of the company’s
waste waters is periodically conducted by the laboratory of the Wastewater Treatment Plant,
Kazanlak, located in the village of Ovoshtnik.
In order to preserve the purity of the atmospheric air, every year an accredited laboratory
performs measurements of the concentration of organic carbon released into the atmosphere from
organized sources /chimneys / in the areas for painting the products. Based on the results of these
measurements, the ecologist prepares a Solvent Management Plan /RMP/, approved by the
Regional Environmental and Water Inspectorates - St. Zagora.
All environment related activities are defined and conducted in accordance with the publicly
disclosed Environmental Policy and the procedures provided for in the Environment Protection
Management System (EPMS) operating in the company thus contributing to the systematization and
improvement of the environment related activities. The Environment Protection Management System
(EPMS) was successfully certified for compliance with the new standard ISO 14001:2015. The
Environment Protection Management System which has been developed and implemented in
accordance with the requirements of both ISO 14001:2004 and OHSAS 18001:2007 (Occupational
Health and Safety Management System) are part of the Integrated Management System which also
includes the existing Quality Management System under ISO 9001:2015.
Hydraulic Elements and Systems Plc – Since 2005 the company has been maintaining and
developing the implemented management system according to the requirements of the international
standard ISO 9001-2008 by TÜV Rheinland in all its activities and units, in order to increase the
efficiency and quality of work while ensuring healthy and safe working conditions and environmental
protection.
An audit is performed annually /pursuant to order № 254 /16.11.2021/ analyzing the overall
activities of HES Plc for the implementation of the Safety measures management system. The main
16.
organization and coordination activities related to risk management, achievement of healthy, safe
and environmentally friendly working conditions and compliance with the applicable environmental
protection standards related to air, water and waste are reviewed and evaluated.
In order to prevent and limit the impact of the activity on the atmospheric air, a solvent
management plan has been developed and approved by the Regional Environmental and Water
Inspectorates - St. Zagora. The air filters are periodically changed and the technological equipment
- checked. An accredited laboratory regularly monitors the metal surfaces coating installation and
the installation for deposition of metal coatings - galvanization section. An installation has been built
for safe firing and cleaning the painting devices. The paint installation has been replaced with new
primer and paint chambers with automated processes with a minimum of human participation.
Water consumption is carried out with a permit - № 31530045 /07.07.2008, amended and
extended by a decision № RR - 3988 /13.10.2020 for groundwater abstraction. The company has its
own plant for galvanic wastewater treatment, maintained in good technical condition. The company
carries out its own monitoring of water purity. Control over the quality of the company's wastewater
is periodically performed by an accredited laboratory. The chemical analysis of the controlled
parameters is within the permissible norms.
Generated waste is being stored at the place of formation until their transfer to a licensed
company holding a document under Art. 35 of the Waste Management Act for subsequent treatment.
Periodic inspection of warehouses for storage of hazardous waste is carried out.
Elhim-Iskra Plc - The company has a long-term policy in terms of human health and
environmental protection. Activities on preventing air, water and soil pollution are one of the major
priorities of the company. The company has introduced an Environmental Management System. The
system covers implementation of the activities in a way that guarantees protection of the
environment; permanent monitoring, inspection, control and management of the processes and
activities affecting the environment; analysis and assessment of the impact of the used raw materials
and inputs used on the environment; preventive actions so as to avoid environmental pollution;
compliance with all laws and regulations, as well as the internal regulations adopted by the
Company, including the internal environmental protection company rules; constant research and
implementation of new environmental technologies.
The environmental system of Elhim-Iskra Plc has been developed in accordance with the
requirements of the issued Complex Permit, regulating the emission standards and requiring
adoption of good environmental management practices and ensuring a systematic and thorough
approach to environmental issues.
The company monitors periodically all of the identified aspects of environment: air, water, soil,
noise, water use, waste management.
Elhim-Iskra Plc has a Waste Management Company Program approved by the Regional
Environmental and Water Inspectorates - Pazardzhik. According to the Waste Management Act, the
company, as an entity that places products on the market, after the use of which widespread waste
is generated, fulfills its obligations through collective systems, represented by waste recovery
organizations. For all generated industrial and hazardous waste, the company has concluded
contracts with companies that have a permit for their utilization or disposal.
During the annual control measurements conducted by accredited laboratories and the
company itself, no violations of the emission norms prescribed in the Complex Permit have been
found.
In 2021, eight inspections of the company were carried out by the Regional Environmental
and Water Inspectorates and the Basin Directorate. No sanctions have been imposed for violating
the conditions of the permit or non-compliance with the regulations and no discrepancies have been
found in the fulfillment of the conditions.
Bulgarian Rose Plc - The company has adopted a Policy on the reduction of the cost of
natural resources related both to reducing environmental pollution and reducing the financial costs
of energy consumption.
The company has an approved Waste Management Program. Special sites have been set
17.
up for storing household, industrial and hazardous waste which are collected separately and
controlled by the Regional Environmental and Water Inspectorate. For the purpose of recycling
packaging waste, the company has a contract with ECOBULPACK - a national-level organization for
recycling packaging waste.
There is also a permanently operational Industrial and Household Wastewater Treatment
Plant. Waste water is regularly subjected to monitoring of physical and chemical indicators by
submitting samples for analyses at a licensed laboratory.
In order to preserve the air pure, the company conducts regular preventive maintenance and
technical activities on its steam plants. Gas emissions released during boiler operation are subjected
to technical inspections and monitoring.
In order to preserve the purity of the air, the necessary prophylaxis and technical measures
of the boilers in the steam power plants of the company are regularly carried out, which are put into
operation only during the rese picking campaign. Technical supervision and monitoring of the
emissions of gases released during the operation of the boilers is performed.
The company Ustrem Jsc is also certified according to the ISO 9001-2008 standard in order
to increase the efficiency and quality of work in ensuring healthy and safe working conditions and
environmental protection.
Textile industry - The companies follow a policy on environmental issues which is part of the
Program for management of the processes and operations in the company aimed at ensuring
environmental protection. The companies comply with the requirements of the current legislation
governing the acceptable norms and emissions of substances in accordance with the regulation on
industrial wastewater discharge. They have their own treatment plants, the use of which is mandatory
is mandatory in dyeing operations. All sensitive processes are subject to continuous assessment:
materials, inputs, energy, water, emissions, waste and their alternatives which makes it possible to
find ways to reduce the impact of these processes on the environment and reduce them to the
necessary and required limits.
In 2021, no sanctions have been imposed on any of the companies in the Group for
environmental pollution. All industrial enterprises in the Group have waste management programs
approved by the Regional Environmental and Water Inspectorates and fulfill the requirements
provided in the regulations. The companies have their own policies on the reduction of natural
resources costs which costs are related both to the environmental pollution reduction as well as to
reduction in the financial costs of energy consumption.
The companies in the Group of Stara Planina Hold Plc conduct a responsible policy on
environmental protection and reduction of adverse environmental impact of their operations as part
of the development strategy.
2. Main activities completed in 2021
The companies report on and update their environmental protection programs on an annual
basis. The conducted monitoring covers all structural units and processes. The staff training
programs include environmental training at different levels - managers and specialists. There are
also practical classes on simulations of environmental emergencies, such as prevention of
contamination in case of large-scale spillages, etc.
Licensed companies are assigned with measurements of air purity, taking into account the
level of concentration of organic carbon in the atmosphere from organized sources (smoke stacks).
Accredited laboratories periodically monitor specific processes such as the solvent management
system, metal coating installations which falls in the OS consumption category with threshold values
above 15 t/y.
Accredited laboratories make analysis of the water sources used thereby controlling the
chemical parameters in order to achieve compliance with the acceptable limits.
Special waste is being stored under control until handed over to licensed companies certified
under Art. 35 of the Waste Management Act for further treatment. Planned periodic inspections of
facilities and warehouses for storage of hazardous chemicals are carried out.
18.
The larger companies have employed an environmental specialist responsible for the control
of the activities on the management of waste generated by the companies, compliance with
prescriptions and maintenance of relations with the respective state and municipal bodies. The
specialist is also responsible for maintaining the internal regulations updated in compliance with the
current environmental regulatory framework.
The results from the completed activities in the field of environmental protection have been
achieved through the implementation of various projects. Energy efficiency improvement leads to
reduction in the use of natural raw materials and reduction of the generated waste, rational
redistribution of products, separate collection and disposal of waste.
In order to reduce the consumption of purchased electricity and for the purpose of efficient
use of inexhaustible natural resources, in early 2021 a newly built photovoltaic installation with a
capacity of 860 kW began operation in M + S Hydraulic Plc. In 2021, the construction of a new
"Photovoltaic plant for own needs" with an installed peak power of 1000 kWp began. The total value
of the investments for the construction of the photovoltaic systems amounts to BGN 2.29 million and
it is expected that after the commissioning of the second system the company will be able to cover
up to 35 % of the annual electricity consumption for own needs.
On a free area of 9.7 decares on the territory of Hydraulic Elements and Systems Plc in 2021
the company built a photovoltaic power plant /FPP/ with a project capacity of 997.92 kWp. The
investment is worth BGN 1071 thousand. This system is expected to cover 15% of the annual
electricity consumption for own needs. In 2022, as another activity of the sustainable development
strategy, the company plans to build a second photovoltaic system to increase the share of clean
and renewable energy generated for the company's own needs and further reduce dependence on
conventional energy sources.
In 2021 Elhim-Iskra AD invested over BGN 680 thousand for the construction of a photovoltaic
system with a capacity of 997 kWp that was completed, connected and put into operation and is
expected to cover 10-12% of annual electricity consumption for own needs. The company has
developed and implemented in production new types of solar batteries type ES OPzS, for small
medium and large capacities, used in the construction of photovoltaic parks for electricity production.
The large production enterprises in the group of Stara Planina Hold Plc are making efforts to
reduce CO2 emissions by implementing measures for consumption efficiency, energy generation
through construction and commissioning of photovoltaic systems for production of energy from
renewable sources for own needs.
A positive result of the implemented environmental policy is to ensure and achieve at the
same time efficient business, effective cost control, energy saving and reduction of harmful
emissions.
Environmental protection costs (BGN’000s)
* forecast
340
382
358
509
503
2018 2019 2020 2021 2022*
19.
In 2021 the costs for the implementation of environmental protection policies increased by
42.2% compared to the previous year. These costs do not include the investments of M + S Hydraulic
Plc, Hydraulic Elements and Systems Plc and Elhim-Iskra Plc totaling BGN 4.01 million for
construction and commissioning of photovoltaic systems in order to increase the share of clean and
renewable energy, generated for own needs. We anticipate that in 2022 the costs without the
planned investments in this direction will be reduced by about 1% compared to 2021.
3. Future objectives and upcoming tasks
In the field of environmental protection, the Group of Stara Planina Hold Plc is committed to
conduct a policy aimed at effective protection and prevention of pollution; effective and efficient
utilization of natural resources, including energy, in order to preserve it. The companies will operate
in compliance with the regulatory framework in the осева of environmental protection. They will plan
funds for training, awareness and motivation of employees so they can perform their duties in a
quality, safe and environmentally friendly manner and in compliance with the adopted policies.
The companies continue the practical steps on the reduction of natural resources costs which
costs are related both to the environmental pollution reduction as well as to reduction in the financial
costs of energy resources. The investment programs for technological update adopted with the
business plans for the companies will introduce new machinery, equipment and technologies that
reduce the adverse impact on the environment, including activities on the streamlining of recirculated
use of treated water and closed cooling water cycle.
The next step in the implementation of the energy efficiency policy of the companies in the
group is the development and implementation of an energy storage system generated from
renewable sources, which allows for its intelligent use by connecting the photovoltaic system with
storage batteries.
4. Ecological risks
The adoption of an environmental management system ensures a continuous process of
minimizing the risk of pollution and other adverse effects on the environment, efficient use of
resources and higher efficiency of companies’ operations.
Risks that could lead to adverse effects on the environment as a result of the companies’
operations are related to water pollution from the wastewater used in the production process in case
of an accidental spillage of chemicals or air pollution due to accidental release of harmful emissions.
Such risks are minimal but nevertheless the companies have developed early warning
mechanisms and environmental incident response plans. The readiness to react immediately in case
of events with potentially adverse effects on the environment is subject to an ongoing monitoring.
Social issues those related to employees
1. Description of policies and their objectives
Stara Planina Hold AD and the companies in the group apply a corporate policy in the social
field. The rules of conduct set out in the Code of Ethics of Stara Planina Hold Plc and the companies
in the Group are subject to the following basic principles:
• Competence – using the knowledge and experience that managers and employees have in
performing their functions and continuous improvement of their professional skills.
• Confidentiality - protection of the facts and circumstances that have become known to
managers and employees during or on the occasion of performance of their duties.
• Honesty - honest and ethical behavior in accordance with generally accepted rules.
• Independence - not allowing a manager or employee to be influenced by related parties with
regard to his work.
• Objectivity - true, accurate and impartial collection, analysis and evaluation by the manager
and the employee of all facts and circumstances in performance of his duties.
The success of enterprises is based on social responsibility that requires consideration of the
impact that the company's activities have on the local community, society, environment and the
economy as a whole. This approach contributes to achieving the group's long-term goals and
20.
sustainable growth, as well as to establishing transparent and honest relationships with all
stakeholders.
Each company identifies the stakeholders in relation to its activities based on their level and
sphere of influence as well as their role and effect on the company’s sustainable development and
those which in turn may have an impact on company's operations including shareholders,
stakeholders, customers, suppliers, employees, creditors, public groups, and state and local
government bodies, etc.
The companies in the group of Stara Planina Hold Plc have approved human resources
management policies, aimed mainly at improving working conditions, raising qualifications, raising
incomes, social support while respecting basic human rights and carrying out other activities, that
contribute to maintaining the health and working capacity of employees.
The following policies are applied to the persons employed in the companies in the group of
Stara Planina Hold Plc:
• The requirements and standards for safe and healthy working conditions have been
introduced and applied. All companies in the group undergo a mandatory audit of the provided
working conditions in accordance with the requirements of the Bulgarian legislation. Periodically
repairs and renovations of the working premises are carried out in order to improve working
conditions.
• Periodic risk assessments are carried out to identify remaining risks of accidents or illness in
the workplace and to reduce the impact of these risks on employees by taking the necessary
measures in a timely manner.
• The companies in the group maintain effective social dialogue with the trade unions, which,
along with the existing collective agreements, supports the implementation and improvement of good
practices for corporate social responsibility, both for employees and their families.
• All companies adopt and implement annual occupational health and safety programs.
• Free medical examinations and care for all employees of the companies are provided and
regularly performed.
• Equal rights and opportunities for work and career development of employees are provided,
based solely on the qualification, personal qualities and results achieved in the work process. Direct
or indirect discrimination in employment or at work is not allowed.
• The remuneration setting system is based on uniform, objective criteria, and the system for
applying bonuses to the payment of employees is based only on the achieved good results at work.
• A policy for providing social allowances to the remuneration of employees has been
introduced and is being implemented - food vouchers are provided on a monthly basis; travel
expenses for distance from the place of work to the permanent address of the employees are paid;
treatment aids are provided, as well as for personal occasions; bonuses are provided for the Easter
and Christmas holidays.
• On the territory of all companies in the group are separated rest areas, conditions for sports
activities are provided, which are financed by the companies. In some of the companies, sport teams
have been formed in various team sports where each employee has the opportunity to join.
• For the employees of the companies in the group, insurances are concluded, such as life
insurance, “Accident at work” and “Accident and general illness”.
• A policy for continuous promotion of training and qualification is in place - all of the companies
in the group organize and conduct introductory trainings, courses for acquiring professional
qualification and /or trainings for raising the qualification.
• For employees willing to increase their education and qualification in a profession in the
company’s scope of activity, the larger enterprises in the Group pay 50% of the semester fees for
the respective higher education.
• Larger companies work in partnership with vocational secondary technical schools in the
respective city, providing conditions for conducting a dual form of education (work-based learning)
with students from 11th and 12th grade and provide scholarships for student education from 8th to
10th grade.
• Issues related to quality, environment, health and safety are of primary importance and
therefore the major companies maintain and develop integrated management systems in compliance
with the requirements of leading international standards for quality management (ISO 9001: 2015),
21.
environment ISO 14001: 2004), health and safety (OHSAS 18001: 2007), with the active participation
of highly qualified specialists and engineers.
Stara Planina Hold Plc and the companies in the group annually support the development of
the local community by financing various sports and social organizations, cultural events,
construction of infrastructure facilities in partnership with the relevant municipal authorities and
participate in socially significant donations.
2. Main activities completed in 2021
In 2018 Stara Planina Hold Plc contributed 25% of the capital for the incorporation of a
Medical Center for Health Prevention which provides early diagnosis, treatment, rehabilitation and
prevention services to the employees of the companies in the Group.
The actives during the reporting period are being completed on an annual basis. They include
assessment and re-assessment of workplace risk, monitoring staff health, analysis of and
recommendations for action and risk-free behavior at the work place in order to prevent risk and
reduce morbidity; training and professional qualification as well as incentives and bonuses provided
for in the policies.
The machine building companies invest additional funds to provide specialists for the
production. Scholarships are awarded to students and pupils at vocational schools, 50% coverage
is granted for the tuition fees of employees studying at specialized universities, internships and on-
the-job trainings are set up on the territory of the company.
The companies traditionally support local structures in financing various social, sport and
cultural events.
Every year Stara Planina Hold Plc participates in charity events of public importance. Since
2003 the holding has been regularly taking part in all editions of the charity campaign Bulgarian
Christmas carried out under the auspices of the President of the Republic of Bulgaria. Every year
Stara Planina Hold Plc makes a monetary donation for the Support a Dream initiative launched by
the President of the Republic of Bulgaria aimed at organizing a prom night for disadvantaged young
people. Every year Stara Planina Hold Plc participates in the charity campaign Easter for Everyone
conducted by the Bulgarian Red Cross under the auspices of the Ombudsman of the Republic of
Bulgaria. Stara Planina Hold Plc is regularly involved as a major sponsor of the national exhibition
Inventions. Transfer. Innovations.
Social activities costs (BGN’000)
* forecast
In 2021 the total value of expenditures for social activities increased by 27.4% compared to
the previous year. We anticipate that in 2022 the costs for social activities will increase by 6.7%
compared to 2021.
The active implementation of policies related to the sustainable development of the
companies leads to creation of a more favorable social environment and a better quality of life for
employees, providing the necessary conditions and prerequisites for performance of employees’
professional duties, mastering good manufacturing practices, motivation and satisfaction with
2975
3022
2978
3795
4049
2018 2019 2020 2021 2022*
22.
working and payment conditions.
3. Future objectives and upcoming tasks
Stara Planina Hold AD and the companies in the group will continue conducting a socially
responsible policy to regulate labor and employment issues with a priority attention to its social
aspects.
In pursuance of the long-term human resources policies, the companies will continue
adhering to the corporate social responsibility and applying their long-established traditions in the
social sphere as well as the good practices in order to achieve the social objectives.
Following the approved policy and business programs, a large part of the activities in the
social sphere will thus be aimed at retaining highly qualified specialists and qualified workers and
thus generally achieving high efficiency at each workplace.
In 2022 we will continue the activities on monitoring the health status of the employees,
promoting safe behavior at work; training, qualification upgrade and acquisition of new skills and
capacity; improving working conditions and constant monitoring and control on the working
environment factors.
Increasing corporate culture aims to create and maintain strong motivation, creative
environment within the team, high moral and integrity, and confidence in the future.
4. Risks with a potential negative effect on employees’ development
The management of the companies in the Group of Stara Planina Hold Plc strives to achieve
maximum employee satisfaction. Any worsening of the current economic situation in the country and
fluctuations in the markets where our business operates would lead to destabilization of the
companies and thus to a decrease in the efficiency of the conducted social policy.
We take measures to ensure the health and working capacity of employees, the continuity of
our business and activities related to regulatory obligations. The restrictive measures taken by
governments in relation to Covid-19 have a negative impact on business.
Policies with regard to the products and the counterparties of the companies in the
group of Stara Planina Hold Plc
• The companies in the group of Stara Planina Hold Plc consistently apply a policy aimed at
increasing the level of quality and ensuring the safety of manufactured products to meet the growing
needs of customers. Joint analyzes are regularly carried out between the product planning, design,
engineering and quality assurance departments, on the one hand, and the sales and marketing
departments, in order to improve product development, functionality and quality.
• The companies in the group of Stara Planina Hold Plc apply quality management systems
and carry out their production activities in accordance with the highest standards applicable to the
respective production field.
• The companies in the group of Stara Planina Hold Plc apply rules for confidentiality and
protection of commercial information and personal data in order to protect customers, business
partners and other stakeholders.
• The companies in the group of Stara Planina Hold Plc group provide their partners with
correct and timely information on the basic business rules, products, services and technologies and
promote loyal business practices in accordance with the adopted rules for ethical business conduct
and the current regulations.
• The companies in the group of Stara Planina Hold Plc require their customers to comply with
basic internationally recognized anti-corruption standards and those in the field of corporate ethics,
environmental protection, human rights protection in order to establish a sustainable partnership.
• The companies in the group of Stara Planina Hold AD operate only with suppliers who fulfill
their social responsibilities in the areas: clean supplies, compliance with regulatory requirements and
social norms, information security and respect for human rights, labor and safety and health
conditions.
23.
Human rights issues
The corporate policy of Stara Planina Hold Plc and the companies in the group is subject to
the principle of respect for and observance of human rights, without any differences based on
gender, race, nationality, ethnicity, citizenship, origin, religion, beliefs, political affiliation, personal or
social status, age, sexual orientation, marital status, property, social or other status.
We support the principles of the UN Universal Declaration of Human Rights, the International
Labor Organization (ILO) Declaration on Fundamental Rights and Rights at Work, the UN Guiding
Principles on Business and Human Rights, adopted by the UN Human Rights Council. In June 2011
and we apply them in the established labor relations with our employees.
The group of Stara Planina Hold Plc does not allow discrimination in the workplace, in
relations with business contractors - suppliers and customers, as well as in relations with all groups
of stakeholders based on discrimination on any grounds.
Issues related to fight with corruption and bribery
The corporate policy of Stara Planina Hold Plc and the companies in the group is based on
the principle of compliance with high ethical standards in all aspects and directions of corporate
activities and consistent implementation of transparency policy. No forms of corruption, including
bribery, are allowed or tolerated.
The management and employees of Stara Planina Hold Plc and the companies in the group
consistently apply the rules of conduct set out in the adopted Codes of Ethics and responsible work
and business practices in accordance with the adopted rules for ethical business conduct and the
current regulations. The standards adopted in the codes of ethics apply equally to all parties the
companies have or may have relations with, such as shareholders, potential investors, financial
analysts and other stakeholders.
Strict accounting is performed in Stara Planina Hold Plc and the companies in the group,
subject to annual internal and external independent audit control. All transactions are evaluated in
advance and are subject to approval by the relevant corporate Board.
Stara Planina Hold Plc has adopted a Policy on Transactions with Interested and Related
Parties and a Procedure for Avoidance and Disclosure of Conflicts of Interests as well as a Policy
on the Information Provision and Disclosure. They are applied in accordance with our business
model and in the interest of the employees’ rights and those of all stakeholder groups. All processes
and procedures are conducted in a way that excludes all forms of corruption in the companies in the
group.
In 2021, no restrictions of the above stated rights were found related to decisions and actions
of companies in the Group of Stara Planina Hold Plc.
The companies do not apply a diversity policy with respect to their management bodies in
relation to aspects such as age, gender or education and professional experience. The management
structure is defined in the Articles of the companies. Election of members of the Board of Directors
is a right and prerogative of the shareholders.
III. Important developments occurred since the beginning of the year
After the date of the annual accounting closing, the management of Stara Planina Hold Plc is
not aware of any important and material events which may influence the investors’ interest with the
exception of the military conflict in Ukraine, which increases the risks related to securing supplies of
materials and sale of finished products to partners related to the affected region.
24.
ІV. Expected development of the group
Stara Planina Hold Plc and the companies in our group sent off a dynamic and difficult to
predict year during which, despite the effects of the restrictive measures following the Covid-19
pandemic, we managed to achieve high levels of sales and results ahead of the pace of recovery
and growth of the European economy.
Net sales revenue
(Quarterly, BGN’000s)
* forecast
The consolidated sales revenues of the Group for the first half of 2021 reached BGN 131.7
million and reported a 28.5 % growth compared to the sales for the same period of 2020 and a 7.4%
increase compared to the sales for the first half of the pre-crisis 2019. The net consolidated profit of
the Group for the first half of 2021 reached BGN 16.6 million thus reporting a growth by over 125 %
compared to the previous year and an increase by over 47 % compared to profit of the Group for the
first half of 2019.
In the second half of 2021 we reported revenues amounting to BGN 146.69 million which is
a 50.31 % growth compared to the second half of the previous year and an increase by 44.11 %
compared to the second half of 2019.
The annual sales of the companies in the Group reached BGN 278.4 million which means
that the sales revenues as of 31.12.2021 reported almost 40 % growth compared to the sales in
2020 and an increase by 24 % compared to the reported sales in the pre-crisis 2019.
Forming the holding's profit is a process, highly dependent on the mood of our markets.
Despite the arrhythmic manifestation of the pandemic impact and the measures taken by the
governments and the EC, disrupted supply chains, growth in energy prices and the sharply
accelerating inflation, the expected gross profit of the Group for 2021 amounts to BGN 33.0 million
which is an increase by 41.41 % compared to the reported gross consolidated profit for the previous
year and an increase by almost 68 % compared to the 2019 gross consolidated profit.
The level of our export is directly dependent on the markets where the Group operates –
mainly in the European Union. Throughout 2021 we managed to retain our main markets and the
expectations of our main customers are to increase order levels. We anticipate the growth in
consolidated sales revenues to continue in 2022.
The Board of Directors of Stara Planina Hold Plc updates the forecasts, announced in early
2022 and expects the growth in consolidated sales revenues for the first half of 2022 to reach 38.5%
compared to the first half of 2021, and consolidated sales revenues in 2022 to exceed BGN 337.5
million which means an increase by almost 20% compared to 2021 and an increase by almost 67%
compared to 2020.
0
10000
20000
30000
40000
50000
60000
70000
80000
90000
1Q 2Q 3Q 4Q
2020 2021 2022*
25.
It is possible that our estimates will not be reached due to the influence of external factors.
The EU economy continues being posed at risk and apart from the major shock caused by the
governments’ restrictive measures against the pandemic, other factors could also have a negative
impact, such as disturbed supply chains, prices and security of energy resources, disturbance of the
trade balance and the impact of the financial and economic restrictions imposed by the EU and the
USA in relation to the crisis in Ukraine. The non-market determination of components of the electricity
price for the industry is a very important domestic factor for our business due to the fact that it
continuously affects not only our production costs but has also an impact on the energy intensive
production processes of our suppliers, e.g. metal castings and blanks.
In 2022 again we will be led by the purpose of achieving European and world level of quality,
productivity and profitability and thus to retain the major markets and widen our presence in the new
markets. Sustainable achievement of good financial results at the expected sales volumes will
continue being the main task for increasing the market capitalization of the companies in the group
thus ensuring the shareholders’ investments and their profitability.
The lack of qualified specialists and workers continues being a serious factor complicating
production activities, especially for companies in smaller towns. A major objective in 2022 again will
be the implementation of an active policy to preserve the main markets and expand our presence in
new ones. In this context, we will continue being required to offer competitive prices, tailored
customer approach, high quality and operational terms for delivery.
Our companies have planned investments that would result in the launch of new products,
higher productivity and better remuneration for employees respectively. Investments in the entire
group of Stara Planina Hold Plc in 2021 reached BGN 13.6 million, intended mainly for technological
renewal and innovation, infrastructure improvements and construction of own photovoltaic systems
by several companies.
Investments
(Quarterly, BGN’000s)
* forecast
In 2022 we plan to continue our active investment policy expecting investment growth by over
48 %. Investments planned will be mainly focused on improving the product range, introduction of
highly profitable products and productions, innovations for the green and digital transition, increasing
labor productivity and increasing remuneration to employees, respectively. Over 11 % of the
investments are to be made in the area of social activities.
The companies plan to participate in procedures under existing and new European
operational programs aimed at developing human resources and increasing competitiveness.
V. Research and Development Activity
Stara Planina Hold Plc does not perform independent research and development activity. The
holding company provides support to the companies in the Group in their research and development
0
1000
2000
3000
4000
5000
6000
1Q 2Q 3Q 4Q
2020 2021 2022*
26.
activities since it views these activities as an integral part of the annual business plans of the
companies.
The main enterprises in the group have separate divisions, directorates, departments and
laboratories which consistently develop activities to improve production, develop and introduce new
products in mass production, as well as new production methods and technologies.
In 2021 again the main objectives of the units engaged in development activities in the
companies of the group were aimed at meeting the increased requirements and growing
expectations of customers in terms of quality, price and variety of products offered.
Main achievements of companies from the group of Stara Planina Hold Plc in 2021 in
the research and development field
M+S Hydraulic Plc
• Completed various tests of the new type of MMR motor and a two-speed motor based on
MV, as well as connection options that best meet customer requirements.
• New development of a motor brake based on the MS motor, as well as motors with built-in
safety valve type MP and MR.
• Developed version of a M2V two-speed orbital motor; the prototypes have been made,
functional and resource tests are forthcoming.
• joint development of a construction documentation for a two-speed axial-piston hydraulic
motor type MA2V series 3.
• In order to optimize the flows, a line for flat details was organized and positioned, which
helped to specialize and optimize the production of all flat parts in the company.
Hydraulic Elements and Systems Plc
• Developed construction documentation for a two-speed axial-piston hydraulic motor type
MA2V series 3, in order to reduce the size construction cost. The project is coordinated by RR-USA.
Prototypes have been developed that have successfully passed the functional tests. Resource tests
are forthcoming.
• Improvements and modernization in the laboratory for technical control, equipped with high-
class measuring equipment;
• Gradual introduction of robotic welding systems;
Elhim-Iskra Plc
• Development of new technologies related to the introduction of new production facilities with
the main purpose to increase productivity and optimize each stage of the technological process;
• Introduction in the production process of a full range of semi-traction batteries ELF and ELT
series with grease and armor plates, used for autonomous propulsion of vehicles;
• Development and introduction in the production process of new types of stationary batteries
type OPzS monoblock for small, medium and large capacities, used in providing emergency power
supply in Bulgaria and Europe;
• Developed and introduction in the production process new types of solar batteries type ES
OPzS for small medium and large capacities, used in the construction of photovoltaic parks for
electricity production in Bulgaria and Europe and the Middle East.
Bulgarian Rose Plc
• Updating recipes and bringing the manufactured products in line with the new regulatory
requirements for banned substances in cosmetic products;
• Optimization of the production technology and quality of the manufactured products,
compliance with the needs and requirements of the distributors in the country and abroad;
• At the 25th edition of Beauty World Middle East in Dubai held in October 2021, the company
was presented with Bulgarian Rose for men 100 ml eau de toilette product in two categories -
Innovation of the Year and Natural Product of the Year - Fragrance as in both categories were
awarded as one of the 5 finalists among over 200 participants.
27.
Statement on the impact of Covid-19
This statement is set out under the recommendation of ESMA, dated March 11th, 2020
addressed to the financial market participants in relation to the influence of Covid-19.
We have undertaken measures that the companies in the group have been implementing
sustainably for a second year in order to guarantee the health and working capacity of the
employees, continuity of our business and the activities related to the regulatory obligations. For the
period after 13.03.2020 until the end of the reporting financial period of 2021 the companies in the
group of Stara Planina Hold Plc have continued their activities with variable deviations from the
established mode of operation, in compliance with the precautionary measures for limiting the spread
of the Covid-19 infection.
According to information from the ECB's economic bulletin of March 2022, the Governing
Council of the ECB considers that the risks to the economic outlook have increased significantly and
tend to overestimation. While the pandemic risks decrease, the war in Ukraine could have a stronger
impact on the economic sentiment and worsen supply-side constraints. The future trajectory of
energy prices and the pace at which supply difficulties are being overcome pose risks to the recovery
and to the inflation forecast.
The information we receive from our clients and partners in the country and Europe also
continues being conditioned by the Covid-19 pandemic and the respective measures taken by the
governments in terms of industry. The effect of the restrictive measures taken in relation to Covid-
19 will continue affecting economic sentiment and global, regional and local business conditions.
Our expectations are that the last wave of Covid-19 in our country, as well as each subsequent one,
will have a negative impact on the planned business processes.
VI. Company shares
1. Own shares. Buy-back
The General Meeting of Shareholders of Stara Planina Hold Plc, held on 16.05.2019, adopted
a resolution to buy back up to 3 % of the total number of shares issued by the company for a period
not longer than 5 years and appointed the Board of Directors to define the specific parameters.
During 2021 Stara Planina Hold Plc has not acquired its own shares. During the reporting
year the company has sold 928 own shares with a nominal value of BGN 1.00, representing 0.004%
of the capital at a price of BGN 11.60.
As of 31.12.2021 Stara Planina Hold Plc owns 225 337 own shares, representing 1.07 % of
the capital of the holding company. 50 000 shares are also hold by the subsidiary company SPH
Invest Jsc.
Pursuant to the provision of Art. 187a, Para. 3 of the Commercial Act, the exercise of any
rights, including the right to vote, on these 275 337 shares shall cease until their transfer.
In 2021 no joint stock company in the Group has acquired or transferred own shares.
2. Changes in the share price of the companies
The shares of Stara Planina Hold AD are traded on BSE Main Market, Standard segment on
the Bulgarian Stock Exchange AD. Exchange code: SPH.
The main index of the Bulgarian Stock Exchange (BSE) SOFIX ended 2021 on the second
place in terms of growth in the region of Central and Eastern Europe and for one year grew by 42.04
% to 635.68 points at the last session in December 2021.
At the same time the average stock exchange price per share of Stara Planina Hold Plc on
the last business day of 2020 was BGN 5.45 and on the last business day of 2021 was BGN 10.10
which is 82.31 % growth in the share price.
At the end of 2021 the market capitalization of Stara Planina Hold Plc reached BGN 212.1
million compared to BGN 114.45 million at the end of 2020.
28.
Stara Planina Hold Plc
Market capitalization (BGN million)
Price (at closing) per one share of the company at the end of the year
2015
2016
2017
2018
2019
2020
2021
3.95
6.49
8.01
6.55
4.76
5.45
10.10
Four of the companies in the investment portfolio of the holding company are public
companies and their market capitalization is being set by the stock exchange. This allows for the
ratio between the market capitalization of the holding company and the market capitalization of its
holdings to be calculated. Traditionally the price of the holding is lower than the total price of its
holdings.
Market capitalization (BGN million)
M+S Hydraulic Plc
Price (at closing) per one share of the company at the
end of the year
2015
2016
2017
2018
2019
2020
2021
5.10
6.65
8.08
7.65
6.00
6.25
9.15
Market capitalization (BGN million)
Hydraulic Elements and Systems Plc
Price (at closing) per one share of the company at the
end of the year
2015
2016
2017
2018
2019
2020
2021
3.05
4.27
5.19
4.80
4.26
3.84
6.50
0
50
100
150
200
2013
2014
2015
2016
2017
2018
2019
2020
2021
0
50
100
150
200
250
300
350
2013 2014 2015 2016 2017 2018 2019 2020 2021
0
20
40
60
80
100
120
20132014 2015 201620172018201920202021
29.
Market capitalization (BGN million)
Elhim Iskra Plc
Price (at closing) per one share of the company at the
end of the year
2015
2016
2017
2018
2019
2020
2021
1.20
1.24
1.30
0.98
0.88
0.78
0.80
Market capitalization (BGN million)
Bulgarian Rose Plc
Price (at closing) per one share of the company at the
end of the year
2015
2016
2017
2018
2019
2020
2021
1.65
2.65
2.00
2.20
1.89
1.02
1.50
3. Dividend policy
Stara Planina Hold Plc applies a policy of annual dividend distribution. The Board of Directors
assumes that at the regular annual general meeting the shareholders will continue the tradition of
distributing part of the financial profit for dividend.
For each year of its existence Stara Planina Hold Plc has paid a dividend. The total amount
of the distributed dividend until the financial year 2020 incl. is BGN 36.341 million. The initial
investment in the holding has a dividend coverage of 20.8 times.
Distributed dividends from Stara Planina Hold Plc (BGN million)
0
10
20
30
2013201420152016 2017 2018 2019 2020 2021
0
3
6
9
12
15
2013 2014 2015 2016 2017 2018 2019 2020 2021
0.27
0.29
0.32
1.02
2.10
4.27
4.53
4.75
5.04
5.09
5.16
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
30.
For the completed 24 financial years of their existence the companies in the group of Stara
Planina Hold Plc have distributed dividends totaling BGN 189.3 million.
Distributed dividends Total for the Whole Group (BGN million)
4. Branches. Employees
Stara Planina hold Plc and the companies in the group do not have any registerred branches
in the country and abroad.
Information on the employees is presented in Section II of this report - Non-financial
declaration.
VІІ. Financial instruments used by the enterprise
1. Accounting policy
In compliance with the accounting legislation in force in Bulgaria, since the beginning of 2003
Stara Planina Hold Plc has been applying the International Financial Reporting Standards.
The Consolidated Financial Statements of Stara Planina Hold Plc as of 31.12.2021 have been
prepared in compliance with the International Financial Reporting Standards adopted by the
European Union.
The whole accounting policy of the Company is described in the Explanatory Notes presented
together with the Annual Consolidated Financial Statements as of 31.12.2021.
Investments in subsidiaries and associates are reported and presented under the acquisition
cost method in the separate statements of Stara Planina Hold Plc.
Major business operations of the company are sale, purchase and management of
shareholdings in companies. Main part of the 2021 revenues is formed by dividend revenues. These
current incomes are mainly used for financing the companies in the holding's portfolio, meeting the
commitments under the adopted dividend policy, as well as for administrative needs.
In the reporting year, the accounting policy of the company has not been changed compared
to the previous reporting period. No errors have been found for both the current and previous
reporting periods. Therefore, there are no adjustments due to errors.
2. Financial instruments
The most essential part of the financial instruments used by the company is taken by the
holdings of Stara Planina Hold Plc in the subsidiaries and associates.
3.88
6.94
9.42
9.74
15.13
17.64
18.86
20.97
19.16
21.72
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
31.
Financial instruments of the company are detailed in the Explanatory Notes presented
together with the Annual Consolidated Financial Statements as of 31.12.2021.
Typical for the investments of Stara Planina Hold Plc (BSE code SPH) in subsidiaries and
associates is that four of them are public companies with their shared being admitted to trading on
the Bulgarian Stock Exchange: M+S Hydraulic Plc (MSH), Hydraulic Elements and Systems Plc
(HES), Elhim Iskra Plc (ELHM) and Bulgarian Rose Plc (ROZA).
Next, in terms of significance, come the loans granted to the companies in the portfolio of
Stara Planina Hold Plc. They are filed as per their nominal value as of the date of occurrence. At the
end of the reporting period there is no data on the existence of circumstances for impairment of
receivables on them and such has not been made.
The Financial Resources Management Policy of Stara Planina Hold Plc is focused mainly on
the management of the companies in the portfolio. The free cash amounts are directed towards
financing the companies.
3. Liquidity
Given the specifics of the activity, the major part of the incoming cash flows is generally
formed by dividends received and the outgoing cash flows are used for payment of dividends to the
shareholders and for covering administrative expenses related to its maintenance.
It is a long-term corporate governance policy of Stara Planina Hold Plc to use the available
cash resource to fund projects of its portfolio companies.
The company has not undertaken any obligations to incur capital expenses at the end of the
reporting period.
4. Exposure of the enterprise to price, credit, liquidity and cash flow risk
The management monitors the overall risk and provides ways to minimize potential adverse
effects on the financial indicators of the company.
The nature of the financial instruments used by the company indicates that the market risk
does not have a significant effect on the financial results.
The risk of changes in the market price of equity instruments arises from equity securities
classified as reported at fair value through other comprehensive income (FVOCI) held for long-term
investment.
Stara Planina Hold Plc has granted loans to companies included in its portfolio which have a
long-term unblemished credit reputation which minimizes the credit risk.
Due to the nature of the financial instruments used by Stara Planina Hold Plc, the liquidity
risk, the interest rate risk and the cash flow risk are also minimal.
Detailed information on the risk factors to which Stara Planina Hold Plc and the companies in
the group are exposed is presented under Section I, item 4 of this Report.
VІІІ. Corporate Governance Declaration
1. National Corporate Governance Code
Stara Planina Hold Plc implements a long-term Good Corporate Governance Program. The
Program provides for the completion of a number of initiatives in several main areas, the
implementation of which is subordinated to its priority objectives: responsibility and independence of
the corporate Board, shareholders' rights protection; ensuring equal treatment of each shareholder
(including minority and foreign shareholders); ensuring recognition of the rights of the parties
interested in the management and sustainable development of the company and promoting the co-
operation with them; ensuring prompt and accurate disclosure of the statutory required information
related to Stara Planina Hold Plc regarding important issues of the financial standing, activity results,
ownership and management of the company; supporting the strategic management of Stara Planina
Hold Plc, the efficient control over the activity of the Board of Directors and its accountability to all
stakeholders.
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32.
The public companies in the group have also developed and implement their own long-term
corporate governance programs and the activity of the non-public companies is in compliance with
the main priorities and guidelines of the corporate program of Stara Planina Hold Plc.
On 30.10.2007 the Board of Directors of Stara Planina Hold Plc, considering the important
role of modern corporate governance to support sustainable development of the national economy
of the Republic of Bulgaria, and lead by its willingness to continue implementing the internationally
recognized good corporate governance standard, resolved that the holding company will carry out
its activity in compliance with the principles and provisions of the National Corporate Governance
Code (CGCode_July2021_BG.pdf (nkku.bg). The public companies in the group have also joined the
Code.
2. Implementation of the National Corporate Governance Code
The management of Stara Planina Hold Plc and the management bodies of the public
companies in the group apply the National Code based on the “comply or explain” principle. The
application of this principle is based on the Recommendation of the EU Commission on the quality
of reporting in corporate governance.
The main direction when executing the commitments of the code was to bring the internal
acts of the company and its overall activity in accordance with the changing legal regulations. All of
the internal regulations listed below may be found in the Corporate Governance section on the
company website.
Stara Planina Hold Plc participates in discussions of draft amendments and supplements or
projects for new acts in the field of public offering of securities presented by the competent
authorities. As a member of the National Corporate Governance Committee, Stara Planina Hold Plc
participates through its representative in the process of discussion and adoption of amendments to
the National Code, effective as of July 1, 2021.
Chapter One. Corporate Boards
The Board of Directors of Stara Planina Holc Plc and the Boards of the companies in the
group direct and control the company in a responsible and independent manner according to the
vision, objectives and strategies of the company and in the best interest of all shareholders. It
monitors the results of the company's performance and initiates changes in the management of its
operations, when necessary. The Board of Directors treats all shareholders equally, acts in their best
interest and in a diligent manner. The members of the Board of Directors are guided in their activities
by the generally accepted principles of integrity and managerial and professional competence. The
company has adopted and adheres to a Code of Ethics.
The Board of Directors promotes the implementation and monitors the observance of the
adopted principles for sustainable development by the companies in the group; provides and controls
the establishment and proper functioning of a risk management system; ensures and controls the
integrated functioning of the accounting and financial reporting systems; gives guidelines, approves
and controls the business plans implementation of the companies in the Group, the material
transactions as well as other activities, required by the company's Rules of Procedure.
The Board of Directors reports on its activities to the General Meeting of Shareholders. In
case of proposals for election of new members of the Board of Directors, the principles of compliance
of the competence of the nominees with the nature of the company’s activities are observed. The
contracts for assignment of the management, concluded with the members of the Board of Directors,
define their responsibilities and tasks, the criteria for the amount of their remuneration, their
obligations for loyalty to the company and the grounds for dismissal.
The number of Board members of Stara Planina Hold Plc and those of the Board of the
companies in the group is defined by the company’s Articles of Association. The composition of the
Boards is structured in a way that guarantees the professionalism, impartiality and independence of
its decisions related to the management of the company. The Boards of Directors have allocated the
tasks and responsibilities between their members. The independent directors control the executive
management and participate effectively in the company's performance in accordance with the
shareholders’ interests and rights. The Chairman of the Board of Directors is an independent
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33.
director. The members of the Board of Directors have appropriate knowledge and experience and
after their election the new members are acquainted with the main legal and financial issues related
to the company's performance. Enhancing the competence and qualification of the Board members
is a constant practice and their training is encouraged. The succession of mandates ensures efficient
operation of the company and compliance with the legal requirements.
The members of the Board of Directors have sufficient time to perform their tasks and duties.
The Rules of Procedure of the Board of Directors define the maximum number of companies outside
the portfolio of Stara Planina Hold Plc where Board members may hold management positions, as
well as the number of consecutive mandates of the independent members. Such a practice has been
adopted and applied by the public companies in the group.
The amount and the structure of the remuneration to the members of the Board of Directors
are defined by the General Meeting of the Shareholders. They take into account the responsibilities
and contribution of each member, the possibility of selection and retention of qualified and loyal
members, the need to align the interests of members with the long-term interests of the company.
The remuneration of the independent members of the Board of Directors is permanent (fixed).
Pursuant to a decision of the Shareholders, it may also have a variable part.
The regular annual general meetings of the shareholders of the holding and the public
companies of the group, held in 2021, adopted new Remuneration Policies for the members of the
Board of Directors, in line with the amendments to the regulations and aimed at contributing to the
long-term business goals and promoting behavior that supports value creation for the shareholders,
while providing a competitive remuneration sufficient to attract and retain directors with the qualities
necessary for the successful management and development of the company.
The Remuneration Policies define the principles for setting the amount and the structure of
the remuneration and specifies the particular additional incentives which are based on clear criteria
and indicators related to the results of the company and the economic group. Information on the
remunerations of the members of the Board of Directions of the holding company and those of the
public companies in the group is disclosed in an annual report which is a separate document to the
Annual Financial Statements of the company. Shareholders and stakeholders have easy access to
the adopted policies for defining the remuneration of the board members and the reports on their
implementation which are published on the company's website. The companies in the group have
adopted general rules for the members of the board of directors where the functions and obligations
of the board, the procedure for election and dismissal of members are defined.
The Board of Directors of Stara Planina Hold Plc and the Boards of the public companies in
the group have adopted procedures to avoid and disclose conflicts of interest. They impose
obligations for the members to avoid and not to admit actual or potential conflicts of interest and, if
necessary, to immediately disclose conflicts of interest and provide shareholders with access to
information on transactions between them and the company or any related party. On the other hand,
each conflict of interests in the company should be disclosed to the Board of Directors. Stara Planina
Hold Plc and the public companies in the group do not and will not allow transactions between the
company and members of the Board of Directors and any related parties thereto. The rules of Stara
Planina Hold Plc on the avoidance and disclosure of conflicts of interest are also applied by the non-
public companies in the group.
Chapter Two. Audit and Internal Control
In accordance with the requirements of the current legislation and based on the criteria
defined thereof Stara Planina Holc Plc and the public companies in the group have established and
operating audit committees with members that meets the legal requirements and specific needs of
the company.
The audit committee supervises the internal audit activities and monitors the overall relations
with the external auditor, including the nature of non-audit services provided by the latter. Its activities
are aimed at increasing the efficiency of the financial reporting processes, the internal control and
risk management systems.
The Audit Committee prepares a written recommendation, based on which the corporate
board of the respective public company proposes to the General Meeting the election of an
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34.
independent auditor to verify and certify the annual financial statements. In the proposals for election
of an external auditor, the rotation principle is applied in accordance with the requirements of the
relevant regulation.
The Audit Committee operates in accordance with its own rules of procedure and work
schedule. It supervises the internal audit activities and monitors the overall relationship with the
external auditor, including the nature of non-audit services provided by the company's auditor.
Chapter Three. Shareholders' Rights Protection
The corporate Boards of Stara Planina Hold Plc and the public companies in the group ensure
the equal treatment of all shareholders, including minority and foreign shareholders and is
responsible for the protection of their rights. They facilitate the exercising of these rights within the
limits permitted by the applicable legislation and in accordance with the company's internal rules.
The corporate Boards have provided information to all shareholders about their rights, the financial
results of the company and corporate events through the information disclosure system and the
company's website.
All shareholders of the holding company and the public companies in the group have access
to information about the rules under which General meetings are convened and held, including voting
procedures. The companies provide sufficient and timely information on the date and venue of the
General meeting, as well as detailed information on the issues to be discussed and decided on at
the meeting. The corporate Boards ensure the right of all shareholders to express their opinion, as
well as to ask questions at the general meeting.
The invitations for the general meetings of shareholders of Stara Planina Hold Plc and the
public companies in the group include the information required under the Commercial Act and the
Public Offering of Securities Act, as well as additional information on exercising the right to vote and
the possibility to add new items to the agenda under Art. 223a of the Commercial Act.
The invitations and the materials for the general meetings of the shareholders of Stara
Planina Hold Plc and the public companies in the group are announced through the X3 News media
to the public, the Financial Supervision Commission and the regulated securities market. Pursuant
to the legal requirements the companies announce a notice for holding a general meeting of the
shareholders and for dividend payment, upon a decision adopted by the GMS, also through the
corporate actions announcement system of the Central Depository. After presenting the invitation
and the materials for the general meeting of shareholders, they are available on the websites of the
companies. The texts of the written materials related to the agenda of the General Meeting are
particular and clear and do not mislead shareholders. All proposals regarding major corporate events
are presented as separate items on the agenda of the General Meeting, including the profit
distribution proposal.
Shareholders with voting rights have the opportunity to exercise their voting rights at the
General Meeting of the company in person or through representatives/proxies. As part of the
materials for the General Meeting of Shareholders, the Board of Directors presents a sample power
of attorney and Proxy Voting Rules.
Rules for Organization and Holding Regular and Extraordinary Sessions of the General
Meetings of Shareholders of the holding company and the public companies in the group have been
adopter in order to guarantee equal treatment of all shareholders and the right of each shareholder
to express opinion on the items in the agenda of the meeting. The rules and procedures for holding
a general meeting of shareholders do not complicate or increase the cost of voting unnecessarily.
These procedures encourage the participation of shareholders in the general meeting but do not
provide the possibility of remote attendance by technical means, insofar as this would make holding
of the meeting more expensive. Proxy Voting Rules have been adopted. Following the adopted
amendments to the Articles of Association of the company in 2021, the right to vote at the General
Meeting of Shareholders may be exercised by correspondence based on a decision of the Board of
Directors. All members of the corporate Boards attend the general meetings of the shareholders.
When necessary, they assist shareholders with the inclusion of additional items in the agenda of the
General Meeting and guarantee the right of the shareholders to be informed on the adopted
resolutions.
STARA PLANINA HOLD PLC – sphold.com
35.
The Rules for Organizing and Holding General Meetings provide a mechanism for assisting
the shareholders who have exercised the right to include additional items and propose resolutions
on issues already included in the agenda of the meeting. The resolutions of the General Meeting are
published on the company’s website for a period of 10 years. The companies have not issued shares
of a different class. The companies do not have shareholders with control rights.
Increasing the trust of shareholders, investors and stakeholders has been one of the major
commitments of the corporate Board. In this regard, the company is continually strengthening its
position of a stable institution. In 2021, we continued endorsing and applying various ways to
disclose current information on the financial and economic standing of the company and important
corporate events as well as their promotion.
Chapter Four. Disclosure of Financial and Non-financial Information
Stara Planina Hold Plc and the public companies in the group have approved policies and
information disclosure systems in accordance with legal requirements. They guarantee equal access
to information to all addressees (shareholders, stakeholders, investment community) and do not
allow inside information abuse. The information disclosure systems provide complete, timely,
accurate and understandable information that allows for objective and informed decisions and
assessments. The holding and the public companies in the group have internal rules for preparation
of annual and interim reports and information disclosure procedures. The holding annually publishes
a non-financial statement on a consolidated basis where detailed information on the activities and
initiatives of all companies in the holding's portfolio in the field of non-financial reporting is provided.
Stara Planina Hold Plc and the public companies in the group maintain their own websites
providing information about the company, the management bodies, shareholder structure and the
companies in the portfolio. The corporate governance section on the website of the holding company
includes internal regulatory documents, information on the shareholders' rights and their participation
in the general meeting, financial statements for the last 10 years, information for dividend payments
as well as personal data protection information.
Special sections include materials on forthcoming general meetings of the shareholders,
information on the resolutions adopted at the general meetings. Data on the initiatives of the
companies, auditors and media publishing news about the holding company and the public
companies in the group are publicly available.
The news section on the holding's website is particularly rich, providing information on the
company's periodical publications, upcoming events, as well as any important information related to
the holding's activities. The Q&A system for shareholders, stakeholders via electronic means proves
its effectiveness. A procedure for receiving dividends from shareholders for previous years has been
developed. The practice of sending timely answers to letters and inquiries of shareholders on the
part of the holding company and public companies in the group, including those received by e-mail
and their storage in a register duly kept by the Investor Relations Director, continues. A practice has
been introduced by the holding company, regardless of the nature of the question asked, that the
answers include a detailed explanation of the shareholders’ rights.
The procedure for shares inheritance is described in detail. Each shareholder who addresses
the holding on a different occasion is being provided with comprehensive information about his rights
and receives information on various issues regarding the business activities and the current standing
of the company, including the historical prices of the shares of Stara Planina Hold Plc on the stock
exchange.
Stara Planina Hold Plc and the public companies in the group use the X3 News media that
provides equal and timely access to the relevant information to all users.
Chapter Five. Stakeholders. Sustainable Development
The corporate governance of Stara Planina Hold Plc and the companies in the group ensure
effective interaction with the stakeholders, identified by the respective company as such. The
stakeholders’ policy complies with the legal requirements in accordance with the principles of
transparency, accountability and business ethics. Policies have been developed taking into account
the stakeholders’ interests that guarantee the balance between the development of the companies
STARA PLANINA HOLD PLC – sphold.com
36.
and the environment where they operate. Effective relations are maintained with the stakeholders.
The companies periodically inform shareholders, stakeholders and the investment community about
various important issues.
The shares of Stara Planina Hold Plc and the public companies in the group are not admitted
to trading in a different jurisdiction.
Stara Planina Hold Plc and the companies in the group take active part in various forms of
joint collaboration with state institutions and non-government organizations engaged with corporate
governance in the country. Throughout the reporting year we, once again, recognize the benefit from
our co-operation and membership in the Bulgarian Industrial Capital Association. The Investor
Relations Directors of the holding and the public subsidiaries are members of the Association of
Bulgarian Investor Relations Directors. The holding has nominated a representative to the National
Corporate Governance Commission.
The control related to the information disclosure process on the part of Stara Planina Hold
Plc and the public companies in the group is multidirectional. No violations of the provisions and
deadlines for disclosure have been found so far. The financial reports are published on the websites
immediately after they are presented to the regulating authority and the public which provides a
possibility for control by the shareholders, investors and all stakeholders. Another form of control in
terms of the information disclosure process is exercised by the members of the Board of Directors
over the Investor Relations Directors.
The overall policy of the Board of Directors of Stara Planina Hold Plc regarding the
management of the companies in the economic group is in accordance with the principles of socially
justified and environmentally friendly economic development. The corporate Boards of the
companies in the group annually develop and approve business plans of the enterprises which
envisage the specific actions and policies regarding the sustainable development of each company.
In their investment programs, projects aimed at the environmentally friendly development of the
respective company are set and implemented annually, as well as social projects aimed mainly at
employees.
3. Assessment of the Implementation of the Code
Applying the National Corporate Governance Code by Stara Planina Hold Plc and the public
companies in the group is a process to continue throughout the current year as well.
The review of the Code in relation to the implementation of the underlying “comply or explain”
principle leads to the conclusion that Stara Planina Hold Plc and the public companies in the group
comply with the Code as a whole.
Implementation of the recommendations in the Code is responsibility of the corporate Boards.
In this sense, applying particular texts of the Code does not depend on the corporate Board, insofar
as the appointment of members of the Board of Directors is a right and prerogative of the
shareholders.
In conclusion, we can summarize that the activities of the Board of Directors of Stara Planina
Hold Plc and the public companies in the group throughout 2021 complied with the National
Corporate Governance Code.
In conclusion we can summarize that the activities of the corporate Board of Stara Planina
Hold Plc and the public companies in the group throughout 2021 have been in accordance with the
National Corporate Governance Code, and the activities of the non-public companies in the group
are in accordance with the main priorities and guidelines of the corporate program of Stara Planina
Hold Plc.
4. Description of the Internal Control and Risk Management Systems
The internal control and risk management systems of the holding company and the
companies in the group ensure effective reporting and information disclosure, identification of the
risks accompanying the activity of the company and their effective management. Their purpose is to
ensure compliance between legal and regulatory requirements and the proper functioning of internal
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37.
processes. These systems are established in accordance with the specifics of the company - its
activities, financial characteristics, industry, needs and resources.
The Board of Directors has the primary responsibility for the internal control and risk
management systems. The Board performs both a management and guidance function as well as
ongoing monitoring, assessing whether the systems are suitable for the company in a changed
environment, whether they operate as well as expected and whether they are being adapted
periodically to the changed conditions.
The management’s responsibility includes implementing an internal control system to
prevent, detect and correct errors and misstatements resulting from the actions of the accounting
system. In this regard, the management observes the following basic principles in its activity:
• adherence to a specific management and accounting policy, disclosed in the financial
statements;
• performance of all operations in accordance with the laws and statutory regulations;
• recording all events and transactions in a timely manner, with the exact amount in the relevant
accounts and for the relevant reporting period, so as to allow the financial statements to be prepared
in accordance with the specified accounting framework;
• observing the principle of prudence in valuation of assets, liabilities, income and expenses;
detection and termination of fraud and errors;
• completeness and correctness of the accounting information;
• preparation of reliable financial information; adherence to international financial reporting
standards and compliance with the going concern principle.
The respective company's Board of Directors is responsible for the risk management which
includes identifying, assessing and controlling potential events or situations that may adversely affect
the achievement of the organization's objectives, and is designed to give reasonable assurance that
the company's business objectives will be achieved.
The corporate Boards of the holding company and the companies in the group prepare annual
activity reports as well as financial statements for every financial year that give an accurate and
honest estimate of the financial standing of the company at the end of the year, its operational
financial results, and the cash flows in compliance with the applicable accounting framework. In order
to ensure an independent and objective assessment of the financial statements the annual audit of
the holding company and the companies in the group is performed by an independent statutory
auditor. All financial statements are prepared in accordance with the International Accounting
Standards. The current financial and accounting activities of the companies is subject to periodic
control and analysis by the management body. There is an established practice for periodic
discussion at meetings of the Board of Directors of the current financial results of the company's
activities, including the implementation of the investment program.
5. Information Art. 10 of Directive 2004/25/EC
The companies in the group do not have significant direct or indirect shareholdings (including
indirect shareholdings through pyramid structures and cross-shareholding) within the meaning of
Art. 85 of Directive 2001/34/EC.
There are no holders of securities with special control rights.
There are no restrictions on the voting right.
The rules that regulate the appointment and replacement of members of the Board of
Directors and the introduction of amendments to the memorandum of association are specified in
the published Articles of Association of the company and are not regulated by the corporate Board.
According to the Articles of Association of Stara Planina Hold Plc and the companies in the group,
only the General Meeting of Shareholders has the right to elect and dismiss members of the Board
of Directors of the company and decisions are taken by a majority of 2/3 of the shares represented.
Only the General Meeting of Shareholders has the right to make amendments and supplements to
the Articles of Association of the company. Decisions are taken by a majority of 2/3 of the shares
represented.
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38.
Resolutions for buy-back procedures or issuance of shares are to be adopted by the
shareholders in accordance with the legislation in force.
The powers of the Board of Directors are regulated in detail in the Articles of Association of
the companies in the group. The Board of Directors of the public company, without being expressly
authorized to do so by the General Meeting, may not carry out transactions specified under Art. 114
of the Public Offering of Securities Act. Transactions of the public companies with the participation
of interested parties, other than those mentioned above, are subject to prior approval by the Board
of Directors.
The Articles of Association of Stara Planina Hold Plc also provide for the powers of the Board
of Directors to increase the capital of the company by issuing shares.
6. Diversity policy
The Companies do not apply diversity policies in terms of the management body in relation
to aspects such as age, gender or education and professional experience. The management
structure is defined in the Articles of Association of the companies. The Board of Directors of Stara
Planina Hold Plc consists of three physical persons and one legal entity, which has respectively
appointed a physical person as its representative. Appointment of members of the Board of Directors
is a right and prerogative of the shareholders.
7. Information on the Board of Directors
Stara Planina Hold Plc has a one-tier management system. The Board of Directors is the
managing body, responsible for the planning and coordination of the company’s overall performance,
as laid down in the scope of its business activity, by means of undertaking all actions for organization,
management and control, provided by law and the Articles of Association. The organization of work,
as well as all duties, responsibilities and competences are regulated and specified by the Rules of
Regulation of the of the Board of Directors of Stara Planina Hold Plc. The Board of Directors takes
its decisions at meetings, held at least once every three months, in accordance with the statutory
requirements of the terma and procedures for their convocation and holding.
As of 31.12.2021 the Board of Directors of Stara Planina Hold Plc includes the following
members:
• Evgeniy Vasilev Uzunov – Chairman of the Board of Directors
• Vasil Georgiev Velev – Member of the Board of Directors and Executive Director
• Finance Invest LTD, Plovdiv, UIC 115016144; represented in the Board of Directors by Spas
Borisov Videv
• Stefan Atanasov Nikolov – Member of the Board of Directors
During the reporting year no changes in the members of the Board of Directors have been
made.
The composition of the Board of Directors elected by the General Meeting guarantees the
independence and objectiveness of the assessments and actions of its members in terms of the
company’s operation.
During the reporting year, members of the Board of Directors or parties related to them have
not entered into transactions with the company which are beyond its usual business activity or
significantly deviate from the market conditions.
The statutory requirement for at least one third of the members of the Board of Directors to
be independent persons is observed. There are no changes in the special criteria for election of
Board members. In its practice so far, the Board of Directors has not encountered a situation of direct
or indirect conflict of interest between a member of the management body and a shareholder. There
has not been found any instance of direct or indirect conflicts between the interest of a Board member
and the company’s interest.
The next sections of the report contain additional data.
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39.
ІХ. Additional information on Appendix 2 of Ordinance No 2 of the FSC
1. Information given in value or quantitative terms about the main categories of commodities,
products and/or provided services, with indication of their share in the sales revenues of the issuer
as a whole and the changes that occurred during the reporting fiscal year
As a holding company, Stara Planina Hold Plc does not perform independent commercial
operations and has only financial income.
2. Information about the revenues allocated by separate categories of activities, domestic
and external markets as well as information about the sources for supply of materials required for
the manufacture of commodities or the provision of services with indication of the degree of
dependence in relation to any individual seller or buyer/user, where if the share of any of them
exceeds 10 per cent of the expenses or revenues from sales, information shall be provided about
every person separately about such person’s share in the sales or purchases and his relations with
the company
As a holding company, Stara Planina Hold Plc does not perform independent commercial
operations and has only financial income.The revenues of the companies in the group are formed
mainly from sales of production as follows:
M+S hydraulic Plc – orbital and hydraulic motors, hydrostatic servo controls and accessories
for them axial-piston motors and pumps;
HES Plc – piston, plunger, telescopic and rail hydraulic cylinders, hydraulic pumps, precision
rotary parts, axial-piston motors and pumps;
Elhim Iskra Plc – starter accumulators, traction, semi-traction and stationary batteries and
elements therefor;
Bulgarian Rose Plc – natural aromatic products, sauces and compositions, perfumery
cosmetics, essences and aromas for the food industry;
Boryana Jsc – fashion ladies' and man's knitwear;
Fazan Jsc – socks and socks items;
Ustrem Jsc – spare parts for grain combines, agricultural machinery and non-standard
equipment.
3. Information on concluded material transactions
On November 17, 2021 Stara Planina Hold Plc sold its shareholding of 33 492 shares, each
with a nominal value of BGN 2.00, representing 95.69 % of the capital of Vinprom JSC, UIC:
104055430, Veliko Tarnovo, at the price of BGN 2 250 000. The shareholding in Vinprom JSC was
acquired by Stara Planina Hold Plc in April 2017 at the price of BGN 1 953 595 and for the period
until the sale the holding has received income from its investment in the amount of BGN 1 004 760.
In 2021 no other transactions of significant importance for the activity of Stara Planina Hold
Plc and the compenies in the group have been concluded.
4. Information about the transactions concluded between the company and related parties
during the reporting period, proposals for conclusion of such transactions as well as transactions
which are outside its usual activity or substantially deviate from the market conditions, to which the
issuer or its subsidiary is a party, indicating the amount of the transactions, the nature of relatedness
and any information necessary for an estimate of the influence over the issuer’s financial status
Transactions concluded between Stara Planina Hold Plc and related parties during the
reporting period are only the loans granted to subsidiaries and associates, specified under item 9 of
this section of the Report.
There are no transactions beyond the scope of issuer's usual business activity or transactions
which significantly deviate from the market conditions.
STARA PLANINA HOLD PLC – sphold.com
40.
5. Information on events and indicators of unusual nature for the issuer which have significant
influence on its activity, the realized incomes and accrued expenses; assessment of their impact on
the results throughout the current year
There are no events and indicators of an unusual nature that had a significant impact on the
issuer's activity, except for the impact of the Covid-19 pandemic and the effect of the restrictive
measures. A statement on the influence of Covid-19 is given in a separate section of this Report.
6. Information on off-balance kept transactions – nature and business objective, indication of
the financial impact of the transactions on the operation, if the risk and benefits of these transactions
are substantial for the assessment of the issuer’s financial status
There are no such transactions.
7. Information about holdings of the issuer, about its main investments in the country and
abroad (in securities, financial instruments, intangible assets and real estate), as well as the
investments in equity securities outside its economic group and the sources/ways of financing
The investments of Stara Planina Hold Plc are in securities and shareholdings in Bulgarian
companies and were made with own funds.The company does not have any real estate property.
Information on the shareholdings of Stara Planina Hold Plc is provided under Section І of this Report
- Investment Portfolio.
8. Information about the concluded by the issuer, by its subsidiary, in their capacity of
borrowers, loan contracts with indication of the terms and conditions thereof, including the deadlines
for repayment as well as information on the provided guarantees and assuming of liabilities
This information is presented in the Annual activity report to the 2021 Separate Annual
Financial Statements (https://www.sphold.com/en/news/64-2022/716-2021-annual-financial-report).
9. Information on the loans granted by the issuer or its subsidiaries, provision of guarantees
or assuming of liabilities in total to one person or its subsidiary, including to related parties, indicating
the name or title and UIC of the person, the nature of relationship between the issuer or their
subsidiaries and the borrower, the amount of outstanding principal, interest rate, date of conclusion
of the contract, repayment period, amount of commitment, specific conditions other than those
specified in this provision, and the purpose for which they were granted, in case they are concluded
as targets
This information is presented in the Annual activity report to the 2021 Separate Annual
Financial Statements (https://www.sphold.com/en/news/64-2022/716-2021-annual-financial-report).
10. Information on the use of the funds from a new issue of securities during the reporting
period
During the reporting period has not been issued a new issue of securities.
11. Analysis of the ratio between the achieved financial results, reflected in the financial
statement for the fiscal year, and previously published forecasts for these results
Stara Planina Hold Plc publishes monthly forecasts for the sales of the companies in the
Group, the gross profit and accordingly reports the real results compared to the forecasts. Forecasts
are being updated on a quarterly basis based on the reported results. The achieved financial results
in the financial statements for the financial year do not differ from the published forecast results.
The public companies in the group of Stara Planina Hold Plc also publish monthly forecasts
for their sales and gross profit and accordingly report the real results compared to the forecasts
made.
12. Analysis and assessment of the policy concerning the management of the financial
resources with indication of the possibilities for servicing of the liabilities, eventual jeopardizes and
measures which the issuer has undertaken or is to undertake with a view to their elimination
The policy of Stara Planina Hold is focused mainly on the management of the companies in
its portfolio. Free funds are used for financing the companies. Indicative of this policy are the loans
STARA PLANINA HOLD PLC – sphold.com
41.
granted to companies from the holding's portfolio. The loans are specified under item 9 of this section
of the Report. An expression of this policy is also the deferre dividend payment to Stara Planina Hold
Plc in its capacity of a majority or major shareholder on the part of the respective companies.
Stara Planina Hold Plc services all of its liabilities in a timely manner hence there are no
possible threats necessitating measures for their elimination.
13. Assessment of the possibilities for realization of the investment intentions, indicating the
amount of the available funds and stating the possible changes in the structure of the financing of
this activity
The activity of Stara Planina Hold is focused mainly on the management of its current
investments. There are no close plans for new investments to be made by the company. The holding
gives priority to the development of the companies in the portfolio.
Information on the planned investments of the companies in the group for 2022 is presented
under section IV Planned development of the group of this Report. The management of Stara Planina
Hold Plc finds the possibilities for realization of these investment intentions as realistic.
14. Information on changes in the major principles for management of the issuer and its
economic group occurred during the reporting period
Stara Planina Hold manages its investments by setting high but achievable goals in the terms
of quality, output and profitability. Particular attention is being paid to the aspect of environmental
protection, human resources development and corporate and social responsibility. During the
reporting period there are no changes in the basic principles of management of Stara Planina Hold
Plc and the companies of the economic group.
15. Information on the main characteristics of the internal control and risk management
system applied by issuer in the process of preparation of the financial statements
In order to ensure an independent and objective assessment of the financial statements the
annual audit of the holding is performed by an independent statutory auditor. All financial statements
are prepared in accordance with the International Accounting Standards. The current financial and
accounting activity of the company is subject to periodic control and analysis on the part of the
management body. The holding has an established practice to periodically discuss the current
financial results of the companies included in its strategic investment portfolio in order to ensure
implementation of their business programs and accurate analysis of the opportunities for future
investment projects.
Detailed information on the internal control and risk management systems is presented under
Section VIII, item 4 of this Report.
16. Information on the changes in the management and supervision bodies during the
reporting fiscal year
Stara Planina Hold Plc has a one-tier management system. The Board of Directors includes
4 persons. During the reporting financial year were not made changes in the members of the Board
of Directors and the representation of the holding company.
Detailed information on the Board of Directors is specified under Section VIII, item 6 of the
Report.
17. Information about the owned by the members of the management and of the control
bodies, procurators and the senior management shares of the issuer, including the shares held by
anyone of them separately or as a percent from the shares of each class, as well as provided to
them options on securities of the issuer by the latter – type and amount of the securities over which
the options have been set up, price of exercising of the options, purchase price, if any, and term of
the options
This information is presented in the Annual activity report to the 2021 Separate Annual
Financial Statements (https://www.sphold.com/en/news/64-2022/716-2021-annual-financial-report).
STARA PLANINA HOLD PLC – sphold.com
42.
18. Information on the arrangements known to the company (including also after the closure
of the fiscal year), as a result of which in future periods may occur changes in the relative portion of
shares or debentures owned by shareholders or debenture holders
The company is not aware of such arrangements.
19. Information on pending court, administrative or arbitrary proceedings related to
obligations or receivables of the issuer amounting to at least 10 percent of its own capital
Stara Planina Hold Plc is not involved in any pending court, administrative or arbitrary
proceedings as well as in any judgments or requests for dissolution or declaration of liquidation.
20. Information on the Investor Relations Director, including telephone and mailing address
Investor Relations Director is Sofia Kirilova Argirova-Atanasova, tel. 02/9634161,
0879899469, address for correspondence: 20, Frederic Joliot Curie Str. 9th floor, 1113 Sofia,
Bulgaria, investor@sphold.com.
Other information at the discretion of the company
The company considers that there is no other information that has not been publicly disclosed
by the company and which would be important for shareholders and investors in making an informed
investment decision.
Media
Stara Planina Hold Plc discloses statutory information to the public through information media
X3 News.
The inside information for Stara Planina Hold Plc under Art. 7 of Regulation (EU) № 596/2014
of the European Parliament and of the Council of 16 April 2014 concerning the circumstances
occurred in 2021 is published on the company's website in the News section -
https://www.sphold.com/novini, as well as in the X3News media -
http://www.x3news.com/?page=Company&target=InsiderInformation&BULSTAT=121227995&MESSAGE_TYPE=2 through which
the company publicly discloses inside information.
Executive Director: Vasil Velev
Digitally signed by Vasil Georgiev
Velev
Date: 2022.04.27 16:05:19 +03'00'
DECLARATION
under Art. 100n, para. 4, item 4 of the POSA
The undersigned Vasil Georgiev Velev - Executive Director of Stara Planina Hold Plc certify
that:
a) the annual consolidated financial statements of Stara Planina Hold Plc as of 31.12.2021,
prepared in accordance with the applicable accounting standards, accurately and fairly reflect the
information on assets and liabilities, financial standing and profit or loss of the issuer and the
companies included in the consolidation as a whole;
(b) the annual consolidated activity report provides a reliable overview of the development and
results of the activities and condition of the companies included in the consolidation as a whole,
together with a description of the main risks and uncertainties they face.
Declarer:
Vasil Velev
DECLARATION
under Art. 100n, para. 4, item 4 of the POSA
The undersigned Kremena Gancheva Dyulgerova - Chief Accountant of Stara Planina Hold
Plc certify that
a) the annual consolidated financial statements of Stara Planina Hold Plc as of 31.12.2021,
prepared in accordance with the applicable accounting standards, accurately and fairly reflect the
information on assets and liabilities, financial standing and profit or loss of the issuer and the
companies included in the consolidation as a whole;
(b) the annual consolidated activity report provides a reliable overview of the development and
results of the activities and condition of the companies included in the consolidation as a whole,
together with a description of the main risks and uncertainties they face.
Declarer:
Kremena Dyulgerova
Digitally signed by Kremena
Gantcheva Dulgerova
Date: 2022.04.27 15:59:11
+03'00'
Digitally signed by Vasil Georgiev
Velev
Date: 2022.04.27 16:05:38 +03'00'